SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 14, 1998
FRANCHISE FINANCE CORPORATION OF AMERICA
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(Exact name of Registrant as Specified in Charter)
Delaware 1-13116 86-0736091
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification Number)
17207 North Perimeter Drive, Scottsdale, AZ 85255
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (602) 585-4500
NONE
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(Former Name or Former Address, if Change Since Last Report)
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Item 5. Other Events.
On August 14, 1998, the Registrant entered into a $600 million loan sale
facility with Morgan Stanley Securitization Funding Inc. ("MSSF"), an affiliate
of Morgan Stanley & Co. Incorporated. The loan sale facility permits
subsidiaries of the Registrant to sell loans (the "Loans") on a regular basis to
FFCA Franchise Loan Owner Trust 1998-1 (the "Trust") for an agreed upon advance
rate. The Loans will be originated by FFCA Acquisition Corporation, which will
sell the Loans to FFCA Loan Warehouse Corporation ("Warehouse"). Warehouse will
deposit the Loans into the Trust and the Trust will issue notes (the "Notes")
which will be secured by the Loans. MSSF will purchase the Notes from the Trust.
Upon the sale of the Loans, the Registrant will act as the servicer for the
Loans and Warehouse will retain a subordinate interest in the Trust.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.01 Sale and Servicing Agreement dated as of August 14, 1998,
among FFCA Franchise Loan Owner Trust 1998-1, FFCA Loan
Warehouse Corporation, FFCA Acquisition Corporation, Franchise
Finance Corporation of America and LaSalle National Bank.
99.02 Loan Purchase Agreement dated as of August 14, 1998, between
FFCA Loan Warehouse Corporation and FFCA Acquisition
Corporation.
99.03 Indenture dated as of August 14, 1998, between FFCA Franchise
Loan Owner Trust 1998-1 and LaSalle National Bank.
99.04 Indenture Supplement dated as of August 14, 1998, between FFCA
Franchise Loan Owner Trust 1998-1 and LaSalle National Bank.
99.05 Note Purchase Agreement dated as of August 14, 1998, among
FFCA Franchise Loan Owner Trust 1998-1, FFCA Acquisition
Corporation, FFCA Loan Warehouse Corporation, and Morgan
Stanley Securitization Funding Inc.
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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.
FRANCHISE FINANCE CORPORATION OF
AMERICA (Registrant)
Dated: October 9, 1998 By /s/ John Barravecchia
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John Barravecchia, Executive
Vice President and Chief
Financial Officer
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SALE AND SERVICING AGREEMENT
Dated as of August 14, 1998
among
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
(Issuer)
FFCA LOAN WAREHOUSE CORPORATION
(Depositor)
FFCA ACQUISITION CORPORATION
(Loan Originator)
FRANCHISE FINANCE CORPORATION OF AMERICA
(Servicer)
and
LASALLE NATIONAL BANK
(Indenture Trustee)
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
FRANCHISE LOAN BACKED NOTES ISSUABLE IN SERIES
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions......................................................1
Section 1.02 Other Definitional Provisions...................................31
ARTICLE II
CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL
NOTE PRINCIPAL BALANCES
Section 2.01 Conveyance of the Trust Estate; Additional Note Principal
Balances..................................................31
Section 2.02 Ownership and Possession of Loan Files..........................33
Section 2.03 Books and Records; Intention of the Parties.....................33
Section 2.04 Delivery of Loan Documents......................................34
Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain
Substitutions and Repurchases; Certification by the
Custodian..................................................37
Section 2.06 Conditions Precedent to Transfer Dates and Collateral
Value Excess Dates.........................................38
Section 2.07 Termination of Revolving Period.................................40
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor.................40
Section 3.02 Representations and Warranties of the Loan Originator...........43
Section 3.03 Representations, Warranties and Covenants of the Servicer.......45
Section 3.04 Representations and Warranties Regarding Loans..................48
Section 3.05 Purchase and Substitution.......................................56
Section 3.06 Securitizations.................................................59
Section 3.07 Loan Originator Put; Servicer Call..............................60
Section 3.08 Modification of Underwriting Guidelines.........................60
Section 3.09 Environmental Policy and Business Interruption Insurance........60
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ARTICLE IV
ADMINISTRATION AND SERVICING OF THE LOANS
Section 4.01 Duties of the Servicer..........................................61
Section 4.02 Vacancies and Inspections.......................................63
Section 4.03 Fidelity Bond; Errors and Omissions Insurance...................64
Section 4.04 Filing of Continuation Statements...............................64
Section 4.05 Establishment and Administration of Escrow Account..............65
Section 4.06 Subservicing....................................................66
Section 4.07 Successor Servicers.............................................68
Section 4.08 Maintenance of Insurance........................................68
Section 4.09 Periodic Advances...............................................68
Section 4.10 Foreclosure; Repossession and Alternatives......................69
Section 4.11 Title, Management and Disposition of Foreclosure Property.......70
Section 4.12 Compliance With Request for Information.........................72
Section 4.13 Lockbox Trigger Event; Lockbox Account..........................72
Section 4.14 Valuation of Loans, Hedge Value and Retained Securities
Value; Market Value Agent..................................73
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 Collection Account and Distribution Account.....................74
Section 5.02 Payments to Securityholders.....................................78
Section 5.03 Trust Accounts; Trust Account Property..........................79
Section 5.04 Advance Account.................................................81
Section 5.05 Transfer Obligations; Transfer Obligations Account..............81
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 Statements......................................................83
Section 6.02 Specification of Certain Tax Matters............................86
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 Due-On-Sale; Due-on-Encumbrance.................................87
Section 7.02 Release of Loan Files...........................................88
Section 7.03 Servicing Compensation..........................................89
Section 7.04 Statement as to Compliance and Financial Statements.............89
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Section 7.05 Independent Public Accountants'Servicing Report.................90
Section 7.06 Right to Examine Servicer Records...............................90
Section 7.07 Reports to the Indenture Trustee; Collection Account
Statements.................................................91
Section 7.08 Access to Information...........................................91
ARTICLE VIII
HEDGING
Section 8.01 Hedging Instruments.............................................92
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.............................93
Section 9.02 Merger or Consolidation of the Servicer.........................95
Section 9.03 Limitation on Liability of the Servicer and Others..............95
Section 9.04 Servicer Not to Resign; Assignment..............................95
Section 9.05 Relationship of Servicer to Issuer and the Indenture Trustee....96
Section 9.06 Servicer May Own Securities.....................................96
ARTICLE X
DEFAULT
Section 10.01 Events of Default..............................................97
Section 10.02 Appointment of Successor.......................................98
Section 10.03 Waiver of Defaults............................................100
Section 10.04 Accounting Upon Termination of Servicer.......................100
ARTICLE XI
TERMINATION
Section 11.01 Termination...................................................100
Section 11.02 Optional Termination..........................................101
Section 11.03 Notice of Termination.........................................101
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Acts of Noteholders...........................................101
Section 12.02 Amendment.....................................................101
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Section 12.03 Recordation of Agreement......................................102
Section 12.04 Duration of Agreement.........................................102
Section 12.05 Governing Law.................................................103
Section 12.06 Notices.......................................................103
Section 12.07 Severability of Provisions....................................104
Section 12.08 No Partnership................................................104
Section 12.09 Counterparts..................................................104
Section 12.10 Successors and Assigns........................................104
Section 12.11 Headings......................................................104
Section 12.12 Actions of Securityholders....................................104
Section 12.13 Non-Petition Agreement........................................105
Section 12.14 Holders of the Trust Certificates.............................105
Section 12.15 FFCA to Guarantee Certain Loan Originator Obligations.........105
Section 12.16 Reports in Electronic Form....................................106
EXHIBIT A - Form of Notice of Additional Note Principal Balance
EXHIBIT B - Form of Servicer's Remittance Report to Trustee
EXHIBIT C - Form of S&SA Assignment
EXHIBIT D - Referenced Documents
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This Sale and Servicing Agreement is entered into effective as
of August 14, 1998, among FFCA FRANCHISE LOAN OWNER TRUST 1998-1, a Delaware
business trust (the "Issuer" or the "Trust"), FFCA LOAN WAREHOUSE CORPORATION, a
Delaware corporation, as Depositor (the "Depositor"), FFCA ACQUISITION
CORPORATION, a Delaware corporation, as Loan Originator (the "Loan Originator"),
FRANCHISE FINANCE CORPORATION OF AMERICA, a Delaware corporation ("FFCA"), as
Servicer (the "Servicer"), and LASALLE NATIONAL BANK, a national banking
association, as Indenture Trustee on behalf of the Noteholders (in such
capacity, the "Indenture Trustee").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained,
the Issuer, the Depositor, the Loan Originator, the Servicer and the Indenture
Trustee hereby agree as follows for the benefit of each of them and for the
benefit of the holders of the Notes and the Trust Certificates issued hereunder:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations of
interest described herein shall be made on the basis of a 360-day year and the
actual number of days elapsed in each Accrual Period.
ACCRUAL PERIOD: With respect to the Notes, the period
commencing on and including the preceding Payment Date (or, in the case of the
first Payment Date, the period commencing on and including the first Transfer
Date) and ending on the day preceding the related Payment Date.
ACT OR SECURITIES ACT: The Securities Act of 1933, as amended.
ADDITIONAL NOTE PRINCIPAL BALANCE:
(a) With respect to each Transfer Date, the lesser of (i) the
product of (x) an amount equal to the average of the Advance Factors
with respect to the Loans conveyed on such date, weighted by Transfer
Cut-off Date Principal Balances multiplied by (y) the sum of the
Transfer Cut-off Date Principal Balances of the Loans conveyed as of
such Transfer Date, and (ii) the product of (x) the average Maximum
Advance Factors of the Loans conveyed on such date weighted by Transfer
Cut-off Date Principal Balances multiplied by (y) the sum of the Market
Value of all Loans conveyed on such date, in either case subtracting
from the product any Overcollateralization Shortfall as of such date.
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(b) With respect to each Collateral Value Excess Date, an
amount equal to the Additional Note Principal Balance that the Issuer
sells to the Initial Noteholder pursuant to the Note Purchase Agreement
on such Collateral Value Excess Date.
ADJUSTABLE RATE LOAN: Any Loan, the Loan Interest Rate with
respect to which is subject to adjustment; provided that under the terms of such
Loan, such adjustments may not modify the Loan Interest Rate to a rate that is
more than six percent above or two percent below the Loan Interest Rate at the
origination of such Loan.
ADMINISTRATION AGREEMENT: The Administration Agreement, dated
as of August 14, 1998, among the Issuer and FFCA, as Administrator and as
Servicer.
ADVANCE ACCOUNT: The account established and maintained
pursuant to SECTION 5.04.
ADVANCE FACTOR: With respect to each Loan, (a) as of the
related Transfer Date, the lesser of (x) 85% (or such other percentage specified
in writing by the Issuer as the Advance Factor with respect to such Loan) and
(y) the Maximum Advance Factor with respect to such Loan and (b) thereafter, the
Maximum Advance Factor with respect to such Loan.
AFFILIATE: With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, the term "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 corresponding meanings.
AGREEMENT: This Sale and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association and its successors
in interest.
ASSIGNMENT: A LPA Assignment or S&SA Assignment.
ASSIGNMENT OF LOAN DOCUMENTS: With respect to each Loan, a
blanket assignment of the related Loan File (other than those Loan Documents in
the Loan File specifically assigned by another Loan Document) with the assignee
in blank, assigning all of the Loan Originator's right, title and interest in
the related Loan File, including but not limited to, the Promissory Note, the
Mortgage and Security Agreement.
ASSIGNMENT OF MORTGAGE: With respect to any Mortgage Loan, an
assignment in blank of the related Mortgage, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect the assignment and
pledge of such Mortgage.
BASIC DOCUMENTS: This Agreement, the Administration Agreement,
the Custodial Agreement, the Indenture, the Loan Purchase Agreement, the Note
Purchase Agreement, the
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Trust Agreement, the Collection Account Letter Agreement, each Hedging
Instrument and, as and when required to be executed and delivered, the
Assignments and the Lockbox Agreement.
BORROWER: The obligor or obligors on a Promissory Note;
including any person who has assumed or guaranteed the obligations of the
obligor or obligors under such Promissory Note. With respect to each Borrower
that is a special purpose entity, "Borrower" shall be deemed to include the
lessee (including all Affiliates of such lessee and any guarantor of the
lessee's obligations under the lease) of the related Loan Collateral.
BRAND: With respect to each Loan, the franchise concept, if
any, used by the Borrower in operating the related Loan Collateral.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in New York City or in the city in
which the corporate trust office of the Indenture Trustee is located or the city
in which the Servicer's servicing operations are located are authorized or
obligated by law or executive order to be closed.
C&G STORE MORTGAGE LOANS: Mortgage Loans secured by
convenience and gasoline stores.
CD FACILITY MORTGAGE LOANS: Mortgage Loans secured by casual
dining or family dining establishments.
CERTIFICATEHOLDER: A holder of a Trust Certificate.
CERTIFICATE REGISTER: The register established pursuant to
SECTION 3.4 of the Trust Agreement.
CLEAN-UP CALL DATE: The first Payment Date occurring on or
after the end of the final Revolving Period on which the Note Principal Balance
declines to 10% or less of the aggregate Note Principal Balance as of the end of
such final Revolving Period.
CLOSING DATE: August 14, 1998, or with respect to a Series of
Notes subsequent to the Series issued on the date hereof, as set forth in the
related Indenture Supplement.
CODE: The Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated by the United States Treasury
thereunder.
COLLATERAL VALUE: With respect to each Loan and each Business
Day, an amount equal to (i) the product of the lesser of (x) the Principal
Balance of such Loan after giving effect to all payments received in respect of
principal thereon prior to such Business Day and (y) the Market Value of such
Loan, multiplied by the Advance Factor applicable to such Loan less (ii) the
aggregate unreimbursed Servicing Advances and Periodic Advances attributable to
such Loan; provided, however, that the Collateral Value shall be zero with
respect to each Loan that is 30 or more days Delinquent or which the Loan
Originator is required to repurchase pursuant to SECTION 2.05 or SECTION 3.05
hereof.
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COLLATERAL VALUE EXCESS: With respect to any Business Day, an
amount equal to the positive difference, if any, between (a) (i) the aggregate
Collateral Value of all Loans in the Loan Pool on such Business Day, or (ii) in
the event that a Performance Trigger shall have occurred and not been Deemed
Cured, the aggregate Collateral Value of all Loans in the Loan Pool on such
Business Day multiplied by 0.98 and (b) the Note Principal Balance on such
Business Day.
COLLATERAL VALUE EXCESS DATE: Any Business Day on which a
Collateral Value Excess exists and on which the Initial Noteholder purchases
Additional Note Principal Balance in respect thereof pursuant to SECTION 2.01
hereof.
COLLECTION ACCOUNT: The account designated as such,
established and maintained by the Servicer in accordance with SECTION 5.01(a)(1)
hereof.
COLLECTION ACCOUNT LETTER AGREEMENT: the Letter Agreement
dated August 14, 1998, between FFCA and the Issuer and acknowledged and agreed
to by Norwest Bank Arizona, N.A., Norwest Investment Services, Inc. and the
Indenture Trustee.
CONDEMNATION PROCEEDS: With respect to a Mortgage Loan, all
awards or settlements in respect of the related Mortgaged Property, whether
permanent or temporary, partial or entire, by exercise of the power of eminent
domain or condemnation.
CUSTODIAL AGREEMENT: The custodial agreement dated as of
August 14, 1998, among the Issuer, the Loan Originator, the Servicer, the
Indenture Trustee and the Custodian, providing for the retention of the
Indenture Trustee's Loan Files by the Custodian on behalf of the Indenture
Trustee.
CUSTODIAN: Any custodian appointed by the Indenture Trustee
pursuant to the Custodial Agreement, which custodian shall not be affiliated
with the Servicer, the Loan Originator, any Subservicer or the Depositor.
LaSalle National Bank shall be the initial Custodian pursuant to the terms of
the Custodial Agreement.
CUSTODIAN FEE: If applicable, the annual fee payable to the
Custodian, calculated and payable monthly on each Payment Date pursuant to
SECTION 5.01(c)(3)(i) hereof equal to the fee, if any, set forth in the
Custodial Agreement.
DAILY INTEREST ACCRUAL AMOUNT: With respect to each day,
interest accrued at the Note Interest Rate with respect to such day on the Note
Principal Balance as of the preceding Business Day after giving effect to all
changes to the Note Principal Balance on or prior to such preceding day.
DCR: Duff & Phelps Credit Rating Co.
DEEMED CURED: A Performance Trigger or Rapid Amortization
Trigger shall be Deemed Cured on the 25th consecutive Business Day on which the
condition that originally gave rise to such event has not continued.
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DEFAULT: Any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
DEFAULTED LOAN: With respect to any date of determination, any
Loan, including, without limitation, any Liquidated Loan with respect to which
any of the following has occurred as of the end of the preceding Due Period: (a)
foreclosure or similar proceedings have been commenced; (b) any portion of a
Monthly Payment becomes 59 days past due by the related Borrower; or (c) the
Servicer or any Subservicer has determined in good faith and in accordance with
the Servicing Standard that such Loan is in default or imminent default.
DEFECTIVE LOAN: As defined in SECTION 3.05(a) hereof.
DELETED LOAN: A Loan replaced or to be replaced by one or more
than one Qualified Substitute Loan.
DELINQUENT: A Loan is "Delinquent" if any Monthly Payment due
thereon is not made by the close of business on the day such Monthly Payment is
required to be paid. A Loan is "30 days Delinquent" if any Monthly Payment due
thereon has not been received by the close of business on the corresponding day
of the month immediately succeeding the month in which such Monthly Payment was
required to be paid 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 required to be paid
on the 31st day of such month), then on the last day of such immediately
succeeding month. The determination of whether a Loan is "60 days Delinquent,"
"90 days Delinquent", etc. shall be done in like manner.
DELIVERY: When used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of SECTION 9-105(1)(i) of
the UCC and are susceptible of physical delivery (except with respect
to Trust Account Property consisting of certificated securities (as
defined in SECTION 8-102(a)(4) of the UCC)), physical delivery to the
Indenture Trustee or its custodian endorsed to the Indenture Trustee or
its custodian or endorsed in blank;
(b) with respect to a certificated security (i) delivery of
such certificated security endorsed to, or registered in the name of,
the Indenture Trustee or endorsed in blank to a securities intermediary
(as defined in SECTION 8-102(a)(14) of the UCC) and the making by such
securities intermediary of appropriate entries in its records
identifying such certificated securities as credited to the securities
account (as defined in SECTION 8-501(a) of the UCC) of the Indenture
Trustee, or (ii) by delivery thereof to a "clearing corporation" (as
defined in SECTION 8-102(5) of the UCC) and the making by such clearing
corporation of appropriate entries in its records crediting the
securities account of a securities intermediary by the amount of such
certificated security and the making by such securities intermediary of
appropriate entries in its records identifying such certificated
securities as credited to the securities account of the Indenture
Trustee (all of the Trust Account Property described in subsections (a)
and (b), "Physical Property");
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and, in any event, any such Physical Property in registered form shall
be registered in the name of the Indenture Trustee or its nominee or
custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of
ownership of any such Trust Account Property (as defined herein) to the
Indenture Trustee or its nominee or custodian, consistent with then
applicable law or regulations or the interpretation thereof;
(c) with respect to any security issued by the U.S. Treasury,
FNMA or FHLMC that is a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: the
making by a Federal Reserve Bank of an appropriate entry crediting such
Trust Account property to an account of a securities intermediary that
is also a "participant" pursuant to applicable federal regulations; the
making by such securities intermediary of appropriate entries in its
records crediting such book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations and Articles
8 and 9 of the UCC to the securities account of the Indenture Trustee;
and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or its nominee or custodian,
consistent with then applicable law or regulations or the
interpretation thereof; and
(d) with respect to any item of Trust Account Property that is
an uncertificated security (as defined in SECTION 8-102(a)(18) of the
UCC) and that is not governed by clause (c) above, registration in the
records of the Issuer thereof in the name of the securities
intermediary, and the making by such securities intermediary of
appropriate entries in its records crediting such uncertificated
certificates to the Indenture Trustee.
DENOMINATION: With respect to a Note, the portion of the Note
Principal Balance represented by such Note as specified on the face thereof.
DEPOSITOR: FFCA Loan Warehouse Corporation, a Delaware
corporation, and any successor thereto.
DETERMINATION DATE: With respect to any Payment Date, the
tenth calendar day of the month in which such Payment Date occurs or if such day
is not a Business Day, the immediately preceding Business Day.
DISTRIBUTION ACCOUNT: The account established and maintained
pursuant to SECTION 5.01(a)(2) hereof.
DUE DATE: The day of the month on which the Monthly Payment is
due from the Borrower with respect to a Loan.
DUE DILIGENCE PACKAGE: With respect to a Loan, collectively,
(i) a complete and accurate internal credit write-up with respect to the related
Borrower, (ii) a site inspection and
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valuation report with respect to the Mortgaged Property consistent with the
Underwriting Guidelines, (iii) (x) if such Loan is a C&G Store Mortgage Loan, a
copy of the schedule to the insured properties declaration of the Environmental
Policy or letter from an Environmental Insurer evidencing that such Mortgage
Loan is covered by the Environmental Policy and (y) in the case of each other
Mortgage Loan, (I) (x) a copy of a Phase I environmental assessment conducted
with respect to the related Mortgaged Property, that concluded that no further
investigation of the related Mortgaged Property was necessary or (y) in those
cases where the Phase I environmental assessment concluded that further
investigation of such Mortgaged Property was necessary, copies of the Phase II
environmental assessments conducted with respect to the related Mortgaged
Property, evidencing that no remediation or other further action was required
with respect to such Mortgaged Property or (II) a copy of the schedule to the
insured properties declaration of the Environmental Policy or letter from an
Environmental Insurer evidencing that such Mortgage Loan is covered by the
Environmental Policy, (iv) a complete description of any modifications made to
such Loan since the completion of funding contemplated under the applicable Loan
Documents, without limitation, any information concerning any prior borrower
with respect to any of the related Loan Collateral and (v) such other
information as may be reasonably requested by the Majority Noteholders from time
to time.
DUE PERIOD: With respect to any Determination Date or Payment
Date, the calendar month immediately preceding such Determination Date or
Payment Date, as the case may be.
ELIGIBLE ACCOUNT: At any time, an account which is: (i)
maintained with a depository institution or trust company (a) the long-term debt
obligations of which are at such time rated by each Rating Agency in one of
their three highest long-term rating categories or (b) the short-term debt
obligations of which are then rated by each Rating Agency in their highest
short-term rating category; (ii) fully insured by either the Bank Insurance Fund
or the Savings Association Insurance Fund of the FDIC; (iii) a trust account
(which shall be a "segregated trust account") maintained with the corporate
trust department of a federal or state chartered depository institution or trust
company with trust powers and acting in its fiduciary capacity for the benefit
of the Indenture Trustee and the Issuer, which depository institution or trust
company shall have capital and surplus of not less than $50,000,000; or (iv)
with the prior written consent of the Majority Noteholders, any other account.
(Each reference in this definition of "Eligible Account" to the Rating Agency
shall be construed as a reference to Moody's and DCR).
ELIGIBLE SERVICER: A Person that (a) (i) has demonstrated the
ability professionally and competently to service a portfolio of commercial
mortgage loans similar to the Loans and (ii) has a net worth calculated in
accordance with GAAP of at least $5,000,000 or (b) any other Person to which the
Majority Noteholders may consent in writing.
ENVIRONMENTAL INSURER: American International Specialty Lines
Insurance Company, a member company of American International Group, Inc., or
such other environmental insurer as the Majority Noteholders in their sole
discretion may consent to in writing.
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ENVIRONMENTAL POLICY: Any one of the secured creditor impaired
property policies issued by an Environmental Insurer, together with any
endorsements thereto, insuring the Loan Originator and the Indenture Trustee, as
their interests appear, for losses with respect to certain Mortgage Loans caused
by the presence of hazardous substances on or the migration of hazardous
substances from the related Mortgage Properties, acceptable to the Majority
Noteholders in their reasonable discretion, provided that the Environmental
Policy issued by American International Specialty Lines Insurance Company shall
be deemed acceptable to the Majority Noteholders.
EQUIPMENT: All personalty, furniture, securities and any other
property or assets of any kind securing an Equipment Loan.
EQUIPMENT LOAN: A Loan secured by a valid and enforceable
security interest in Equipment of the related Borrower, evidenced by a Security
Agreement and, if applicable, Loan Agreement with respect to such Equipment.
ESCROW ACCOUNT: The separate account or accounts, each of
which shall be an Eligible Account, created and maintained pursuant to SECTION
4.05 hereof.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire, hazard, liability and other insurance premiums,
condominium charges, and any other payments required to be escrowed by the
related Borrower with the lender pursuant to the Mortgage or any other document.
EVENT OF DEFAULT: As described in SECTION 10.01 hereof.
EXTENSION DATE: Any day on which there occurs a Securitization
of Loans with an aggregate Principal Balance at least equal to 66.67% (or such
lesser amount as may be agreed to in writing by the Majority Noteholders) of the
Pool Principal Balance as of the closing date with respect to such
Securitization, and with respect to which Securitization (i) the sum of (x) the
cash Securitization Proceeds and (y) the Retained Securities Value of any
Retained Securities issued in connection therewith was at least equal to the
aggregate Principal Balance of the Loans included in such Securitization as of
the closing date with respect to such Securitization and (ii) immediately after
giving effect to the sale of Loans pursuant to such Securitization, no Borrower
has an Individual Borrower Concentration greater than $30,000,000.
FDIC: The Federal Deposit Insurance Corporation and any
successor thereto.
FFCA: Franchise Finance Corporation of America, a Delaware
corporation.
FFCA ACQUISITION CORP.: FFCA Acquisition Corporation, a
Delaware corporation.
FHLMC: The Federal Home Loan Mortgage Corporation and any
successor thereto.
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FIDELITY BOND: As described in SECTION 4.03 hereof.
FIXED CHARGE COVERAGE RATIO: With respect to a Loan, as of any
date of determination and for any period, the applicable "Fixed Charge Coverage
Ratio" determined in accordance with, and defined in, the Underwriting
Guidelines.
FNMA: The Federal National Mortgage Association and any
successor thereto.
FORECLOSED LOAN: As of any date of determination, (a) any
Mortgage Loan that has been discharged as a result of (i) the completion of
foreclosure or comparable proceedings; (ii) the Owner Trustee's acceptance of
the deed or other evidence of title to the related Mortgaged Property in lieu of
foreclosure or other comparable proceeding; or (iii) the acquisition by the
Owner Trustee of title to the related Mortgaged Property by operation of law and
(b) any Equipment Loan that has been discharged as a result of a repossession or
comparable conversion of the ownership of the related Equipment.
FORECLOSURE PROPERTY: Any real property securing a Foreclosed
Loan that has been acquired by the Servicer through foreclosure, deed in lieu of
foreclosure or similar proceedings in respect of the related Loan if such
Foreclosed Loan is a Mortgage Loan or personalty securing a Foreclosed Loan
acquired by the Servicer pursuant to a foreclosure or other appropriate
procedure in accordance with applicable law if such Foreclosed Loan is an
Equipment Loan.
GAAP: Generally accepted accounting principles as in effect in
the United States.
GROUND LEASE: A lease for which the related Borrower has a
leasehold interest as a lessee of either the land, or the land and the
improvements, located at the related Mortgaged Property.
HAZARDOUS MATERIAL: Each of (a) those substances included
within the definitions of any one or more of the terms "contaminants,"
"pollutants," "hazardous substances," "hazardous materials" and "toxic
substances" in CERCLA, RCRA, and the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. ss.ss. 1801 et seq., and in the regulations promulgated
pursuant thereto; (b) those substances listed in the United States Department of
Transportation Table (49 CFR ss. 172. 101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) (40 CFR ss. 302 and
amendments thereto) as hazardous substances; (c) such other substances,
materials and wastes that are or become regulated under applicable local, state
or federal laws or regulations, or that are classified as hazardous or toxic
under federal, state or local laws or regulations; and (d) any materials, wastes
or substances that are (i) petroleum, (ii) polychlorinated biphenyl, (iii)
within the definition of "hazardous substance" set forth in SECTION 311 of the
Clean Water Act, (33 U.S.C. ss. 1321) or designated as "toxic pollutants"
subject to Chapter 26 of the Clean Water Act pursuant to SECTION 307 to the
Clean Water Act (33 U.S.C. ss. 1317), (iv) flammable substances or explosives,
or (v) radioactive materials.
HEDGE FUNDING REQUIREMENT: With respect to any day, all
amounts required to be paid or delivered by the Issuer under any Hedging
Instrument, whether in respect of payments thereunder or in order to meet
margin, collateral or other requirements thereof.
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HEDGE VALUE: With respect to any Business Day and a specific
Hedging Instrument, the positive amount, if any, that is equal to the amount
that would be paid to the Issuer in consideration of an agreement between the
Issuer and an unaffiliated third party, that would have the effect of preserving
for the Issuer the net economic equivalent, as of such Business Day, of all
payment and delivery requirements payable to and by the Issuer under such
Hedging Instrument until the termination thereof, as determined by the Market
Value Agent in accordance with SECTION 4.14 hereof.
HEDGING COUNTERPARTY: A Person (i) (a) the long-term and
commercial paper or short-term deposit ratings of which are acceptable to the
Majority Noteholders and (b) which shall agree in writing that, in the event
that any of its long-term or commercial paper or short-term deposit ratings
cease to be at or above the levels deemed acceptable by the Majority
Noteholders, it shall secure its obligations in accordance with the reasonable
request of the Majority Noteholders, (ii) that has entered into a Hedging
Instrument and (iii) that is acceptable to the Majority Noteholders; provided,
that as of the date hereof, NationsBank, N.A., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and the Bank of Montreal shall be deemed to be acceptable to
the Majority Noteholders.
HEDGING INSTRUMENT: Any interest rate cap agreement, interest
rate floor agreement, interest rate swap agreement or other interest rate
hedging agreement entered into by the Issuer with a Hedging Counterparty, and
which requires the Hedging Counterparty to deposit all amounts payable thereby
directly to the Collection Account. Each Hedging Instrument shall meet the
requirements set forth in Article VIII hereof with respect thereto.
INDENTURE: The Indenture dated as of August 14, 1998, together
with the Indenture Supplement, between the Issuer and the Indenture Trustee.
INDENTURE SUPPLEMENT: With respect to a Series of Notes, the
Indenture Supplement pursuant to which such Series of Notes was issued.
INDENTURE TRUSTEE: LaSalle National Bank, a national banking
association, as Indenture Trustee under the Indenture and this Agreement acting
on behalf of the Noteholders, or any successor indenture trustee under the
Indenture or this Agreement.
INDENTURE TRUSTEE FEE: As to any Payment Date, $750.
INDENTURE TRUSTEE'S LOAN FILE: As defined in SECTION 2.04(a)
hereof.
INDEPENDENT: When used with respect to any specified Person,
such Person (i) is in fact independent of the Loan Originator, the Servicer, the
Depositor or any of their respective Affiliates, (ii) does not have any direct
financial interest in, or any material indirect financial interest in, any of
the Loan Originator, the Servicer, the Depositor or any of their respective
Affiliates and (iii) is not connected with any of the Loan Originator, the
Servicer, the Depositor or any of their
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respective Affiliates, as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Loan Originator, the
Servicer, the Depositor or any of their respective Affiliates merely because
such Person is the beneficial owner of 1% or less of any class of securities
issued by the Loan Originator, the Servicer, the Depositor or any of their
respective Affiliates, as the case may be.
INDEPENDENT ACCOUNTANTS: A firm of nationally recognized
certified public accountants which is Independent.
INDIVIDUAL BORROWER CONCENTRATION: With respect to each
Borrower and as of any date of determination, the aggregate Principal Balance of
Loans in the Loan Pool with respect to which such Borrower (including all
Affiliates thereof) is an obligor or guarantor under the related Promissory
Note.
INITIAL CERTIFICATION: The meaning set forth in the Custodial
Agreement.
INITIAL NOTEHOLDER: MSSFI.
INSURANCE POLICIES: With respect to any Loan Collateral, any
related insurance policy.
INSURANCE PROCEEDS: With respect to any Loan Collateral, all
amounts collected in respect of Insurance Policies and not required either
pursuant to applicable law or the related Loan Documents to be applied to the
restoration of the related Loan Collateral or paid to the related Borrower.
INTEREST CARRY-FORWARD AMOUNT: With respect to any Payment
Date, the excess, if any, of (a) the Interest Payment Amount for such Payment
Date plus the Interest Carry-Forward Amount for the prior Payment Date over (b)
the amount in respect of interest that is actually paid from the Distribution
Account on such Payment Date in respect of the interest for such Payment Date.
INTEREST PAYMENT AMOUNT: With respect to any Payment Date, the
sum of the Daily Interest Accrual Amounts for all days in the related Accrual
Period.
LASALLE NATIONAL BANK: LaSalle National Bank, a national
banking association.
LIBOR: With respect to each day, the rate for United States
dollar deposits for one month that appears on the Telerate Screen Page 3750 as
of 11:00 a.m., London time, on the related LIBOR Determination Date. If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Initial Noteholder), LIBOR for the applicable day will be the Reference Bank
Rate. If no such quotations can be obtained by the Initial Noteholder and no
Reference Bank Rate is available, LIBOR will be LIBOR applicable to the first
preceding day on which LIBOR has been determined in accordance with this
definition.
LIBOR BUSINESS DAY: Any day on which banks are open for
dealing in foreign currency and exchange in London and New York City.
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LIBOR DETERMINATION DATE: With respect to each day that is a
LIBOR Business Day, such LIBOR Business Day, and with respect to any day that is
not a LIBOR Business Day, the LIBOR Business Day preceding such day, as
determined by the Initial Noteholder.
LIBOR MARGIN: With respect to each day, a percentage equal to
0.70%.
LIQUIDATED LOAN: With respect to any date of determination,
any Foreclosure Property or any Loan in respect of which a Monthly Payment is in
excess of 30 days past due and as to which the Servicer has determined, in
accordance with the Servicing Standard, that all amounts which it reasonably and
in good faith expects to collect have been recovered from or on account of such
Loan or the related Foreclosure Property; provided, however, that in any event
such Loan or the related Foreclosure Property shall be deemed uncollectible and
therefore be a Liquidated Loan upon the earliest to occur of: (a) the
liquidation of the related Foreclosure Property, (b) the determination by the
Servicer, in accordance with the Servicing Standard, that no further amounts are
collectible from the Loan and any related Loan Collateral, or (c) the date on
which any portion of a Monthly Payment on any Loan is in excess of 59 days past
due (without regard to any applicable grace periods).
LIQUIDATED LOAN LOSSES: With respect to any date of
determination, the difference between (i) the aggregate Principal Balances as of
such date of all Loans that became Liquidated Loans and (ii) all Liquidation
Proceeds allocable to principal received prior to such date.
LIQUIDATION PROCEEDS: With respect to a Liquidated Loan, any
cash amounts received in connection with the liquidation of such Liquidated
Loan, whether through trustee's sale, foreclosure sale or other disposition, any
cash amounts received in connection with the management of the Loan Collateral
from Defaulted Loans and any other amounts required to be deposited in the
Collection Account pursuant to SECTION 5.01(b)(1) hereof, in each case other
than Insurance Proceeds, Released Loan Collateral Proceeds and any proceeds of
Retained Interests, provided, however, that no Liquidation Proceeds shall be
allocated to Retained Interest until all other amounts owing under the
Promissory Note shall have been paid.
LOAN: Any Equipment Loan or Mortgage Loan.
LOAN AGREEMENT: With respect to each Loan, the related loan
agreement between the Borrower and the Loan Originator.
LOAN COLLATERAL: With respect to an Equipment Loan, all of the
Equipment securing such Equipment Loan, with respect to a Mortgage Loan, all of
the Mortgaged Property securing such Mortgage Loan and with respect to a Senior
Loan, all of the Equipment and/or Mortgaged Property securing such Senior Loan.
LOAN DOCUMENTS: With respect to a Loan, the documents
comprising the Indenture Trustee's Loan File for such Loan.
LOAN FILE: With respect to each Loan, the Indenture Trustee's
Loan File and the Servicer's Loan File.
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LOAN INTEREST RATE: With respect to each Loan, the annual rate
of interest borne by the related Promissory Note, as shown on the Loan Schedule,
as the same may be modified by the Servicer in accordance with SECTION 4.01(a)
hereof and, in the case of an Adjustable Rate Loan, as the same may be
periodically adjusted in accordance with the terms of such Loan.
LOAN ORIGINATOR: FFCA Acquisition Corp., in its capacity as
the Loan Originator hereunder.
LOAN ORIGINATOR PUT: The mandatory repurchase by the Loan
Originator, at the option of the Majority Noteholders, of a Loan pursuant to
SECTION 3.07(a) hereof.
LOAN POOL: As of any date of determination, the pool of all
Loans conveyed to the Issuer pursuant to this Agreement on all Transfer Dates up
to and including such date of determination, which Loans have not been released
from the Lien of the Indenture pursuant to the terms thereof, together with the
rights and obligations of a holder thereof, and the payments thereon and
proceeds therefrom received after the applicable Transfer Cutoff Date, as
identified from time to time on the Loan Schedule.
LOAN PURCHASE AGREEMENT: The Loan Purchase Agreement between
the Loan Originator and the Depositor, dated as of August 14, 1998, and all
supplements thereto.
LOAN SCHEDULE: The schedule of Loans conveyed to the Issuer
and delivered to the Initial Noteholder in the form of a computer-readable
transmission specifying the following information with respect to each Loan
conveyed on such date: (i) the Loan Originator's internal loan identifying
number; (ii) the Borrower's name as it appears on the related Promissory Note;
(iii) the name of the Borrower group (to be input consistently for purposes of
computing the Individual Borrower Concentration); (iv) in the case of a Mortgage
Loan, the street address, city, state and zip code of the Mortgaged Property;
(v) the original Principal Balance; (vi) the Transfer Cutoff Date Principal
Balance; (vii) the Loan Interest Rate at origination; (viii) the date of
origination; (ix) the industry segment (e.g., CD Facility, C&G Store, QSR
Store); (x) the type of Loan (e.g., Mortgage, Equipment); (xi) the Monthly
Payment as of such Transfer Cutoff Date; (xii) the scheduled maturity date under
the Promissory Note; (xiii) the Fixed Charge Coverage Ratio; (xiv) a flag
indicating whether the figure listed in item (xiii) is a calculation of Fixed
Charge Coverage Ratio with respect to the single unit or in the aggregate; (xv)
the Brand; (xvi) a Prepayment Code; (xvii) a Product Code with respect to such
Loan; (xviii) if such Loan is an Adjustable Rate Loan, the interest rate spread
over LIBOR; (xix) in the case of a Mortgage Loan, the loan to replacement cost
ratio for the related Mortgaged Property (if obtained); and (xx) such other
information as may be reasonably requested by the Majority Noteholders.
LOAN SCHEDULE AND EXCEPTIONS REPORT: The meaning set forth in
the Custodial Agreement.
LOCKBOX ACCOUNT: A demand deposit account or an Eligible
Account held by the Lockbox Bank acceptable to the Majority Noteholders.
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LOCKBOX AGREEMENT: An agreement acceptable to the Indenture
Trustee and the Majority Noteholders among the Lockbox Bank, the Servicer, the
Depositor, the Issuer and the Indenture Trustee.
LOCKBOX BANK: A depository institution named by the Servicer
and agreed to by the Majority Noteholders.
LOCKBOX TRIGGER EVENT: The Majority Noteholders, in their sole
discretion may declare the occurrence of a Lockbox Trigger Event at any time
after the Closing Date if the long-term unsecured debt obligations of FFCA (i)
fail to be rated at least BBB- by DCR and Baa3 by Moody's or are not rated by
either of DCR or Moody's and (ii) such condition continues for 30 days after the
occurrence thereof.
LONDON BUSINESS DAY: A day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
LPA ASSIGNMENT: An Assignment of Loans from the Loan
Originator to the Depositor under the Loan Purchase Agreement.
MAJORITY NOTEHOLDERS: The holder or holders of in excess of
50% of the Note Principal Balance. In the event of the release of the Lien of
the Indenture in accordance with the terms thereof, the Majority Noteholders
shall mean the Majority Certificateholders.
MAJORITY CERTIFICATEHOLDERS: The meaning set forth in the
Trust Agreement.
MARKET VALUE: With respect to each Loan and each Business Day,
the Market Value of such Loan as of such Business Day as determined by the
Market Value Agent in accordance with SECTION 4.14 hereof.
MARKET VALUE AGENT: Morgan Stanley & Co. Incorporated and its
successors and assigns.
MATURITY DATE: With respect to the Notes of a given Series, as
set forth in the related Indenture Supplement or such later date as may be
agreed in writing by the Majority Noteholders.
MAXIMUM ADVANCE FACTOR: With respect to each Loan and any date
of determination, a percentage determined as follows:
(i) with respect to QSR Store Mortgage Loans with the
related Borrower's Individual Borrower Concentration
of (a) less than $20,000,000, 92.5%, (b) equal to or
greater than $20,000,000 and less than $40,000,000,
90.0% and (c) equal to or greater than $40,000,000,
85.0%;
(ii) with respect to C&G Store Mortgage Loans with the
related Borrower's Individual Borrower Concentration
of (a) less than $20,000,000, 92.5%,
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(b) equal to or greater than $20,000,000 and less
than $40,000,000, 90.0% and (c) equal to or greater
than $40,000,000, 85.0%;
(iii) with respect to CD Facility Mortgage Loans with the
related Borrower's Individual Borrower Concentration
of (a) less than $20,000,000, 85.0%, (b) equal to or
greater than $20,000,000 and less than $40,000,000,
80.0% and (c) equal to or greater than $40,000,000,
0.0%;
(iv) with respect to Other Mortgage Loans, the percentage
or percentages to which the Majority Noteholders and
the Issuer have agreed in writing prior to the
Transfer Date relating thereto; and
(v) with respect to each Equipment Loan, and the related
Borrower, the Maximum Advance Factor applicable to
the related Mortgage Loan;
provided that, with respect to Loans (a) having Retained Interests, to the
extent the aggregate Principal Balance of such Loans equals or exceeds 5% of the
Pool Principal Balance as of such date, each such Loan in excess thereof shall
have a Maximum Advance Factor of 0.0%, (b) that have been included in the Trust
Estate (i) for a period in excess of one year from the Transfer Date thereof or
(ii) after completion of two Securitizations since the applicable Transfer Date
for such Loan, each such Loan shall have a Maximum Advance Factor of 0.0% and
(c) which are Senior Loans (ignoring the proviso to the definition thereof), to
the extent that the aggregate Principal Balance of such Senior Loans equals or
exceeds 20% of the Pool Principal Balance as of such date, each such Senior Loan
in excess thereof shall have a Maximum Advance Factor of 0.0%. The Maximum
Advance Factor with respect to each Loan may also be reduced as provided in
SECTION 3.09(c) hereof.
MAXIMUM NOTE PRINCIPAL BALANCE: For any Series of Notes, as
set forth in the related Indenture Supplement.
MONTHLY PAYMENT: The scheduled monthly payment of principal
and/or interest required to be made by an Borrower on the related Loan, as set
forth in the related Promissory Note.
MOODY'S: Moody's Investors Service, Inc., or any successor
thereto.
MORTGAGE: With respect to any Mortgage Loan, the mortgage,
deed of trust or other instrument securing the related Promissory Note, which
creates a first lien on the fee in real property and/or a first lien on the
leasehold estate in real property securing the Promissory Note and the
assignment of rents and leases related thereto.
MORTGAGE LOAN: Any C&S Store Mortgage Loan, CD Facility
Mortgage Loan, QSR Store Mortgage Loan or Other Mortgage Loan pledged to the
Indenture Trustee pursuant to the Indenture, and which Mortgage Loan includes,
without limitation, (i) a Mortgage Note and related Mortgage and (ii) all right,
title and interest of the Loan Originator in and to the Mortgaged Property
covered by such Mortgage. The term Mortgage Loan shall be deemed to
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include the related Mortgage Note, related Mortgage and related Foreclosure
Property, if any. The term Mortgage Loan shall exclude any Retained Interest.
MORTGAGED PROPERTY: With respect to a Mortgage Loan, the
related mortgagor's fee and/or leasehold interest in the real property (and/or
all improvements, buildings, fixtures, building equipment and personal property
thereon (to the extent applicable) and all additions, alterations and
replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by the related Promissory
Note.
MSSFI: Morgan Stanley Securitization Funding Inc.
NEGATIVE AMORTIZATION: With respect to each Adjustable Rate
Loan, any amounts in respect of interest accrued thereon for any Payment Period
in excess of the amount of the Monthly Payment thereon for the related Due Date,
which amounts are capitalized and added to the Principal Balance of such
Adjustable Rate Loan.
NEGATIVE AMORTIZATION CAP: With respect to any Adjustable Rate
Loan, the fixed percentage specified in the related Promissory Note as the
percentage of the original principal balance of such Loan for purposes of
determining whether any Negative Amortization Payment is payable as a part of
the Monthly Payment on such Loan for any Due Date.
NEGATIVE AMORTIZATION PAYMENT: With respect to any Adjustable
Rate Loan and any Due Date immediately succeeding a Due Date on which the
addition of Negative Amortization to the Principal Balance of such Loan caused
such Principal Balance to be more than the product of the Negative Amortization
Cap for such Loan and the original principal balance of such Loan, a prepayment
of principal that is payable (without penalty) by the related Borrower on such
immediately succeeding Due Date in an amount equal to the difference between the
Principal Balance of such Loan and the original principal balance of such Loan.
NET LIQUIDATION PROCEEDS: With respect to any Payment Date,
Liquidation Proceeds received during the period commencing on the preceding
Payment Date and ending on the Business Day immediately prior to such Payment
Date, net of any reimbursements to the Servicer made from such amounts for any
unreimbursed Servicing Compensation, Servicing Advances and Periodic Advances
(including Nonrecoverable Servicing Advances and Nonrecoverable Periodic
Advances) made and any other fees and expenses paid in connection with the
foreclosure, conservation and liquidation of the related Liquidated Loans or
Foreclosure Properties pursuant to SECTION 4.11 hereof.
NET LOAN INTEREST RATE: With respect to each Loan, the related
Loan Interest Rate, less the rate at which the Servicing Fee is calculated.
NET LOAN LOSSES: With respect to any Defaulted Loan that is
subject to a modification pursuant to SECTION 4.01(e) hereof, an amount equal to
the portion of the Principal Balance, if any, released in connection with such
modification.
NONRECOVERABLE PERIODIC ADVANCE: Any portion of a Periodic
Advance previously made or proposed to be made in respect of a Loan which has
not been previously reimbursed to
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the Servicer and which, in the good faith judgment of the Servicer, will not, or
in the case of a proposed Periodic Advance would not, be ultimately recoverable
from Liquidation Proceeds or other recoveries in respect of the related Loan.
The determination by the Servicer that (i) it has made a Nonrecoverable Periodic
Advance or (ii) that any proposed advance, if made, would constitute a
Nonrecoverable Periodic Advance, shall be evidenced by a certificate of a
Servicing Officer promptly delivered to the Initial Noteholder detailing the
reasons for such determination.
NONRECOVERABLE SERVICING ADVANCE: With respect to any
Foreclosure Property, (a) any Servicing Advance previously made and not
reimbursed from late collections, Liquidation Proceeds, Insurance Proceeds or
the Released Property Proceeds or (b) a Servicing Advance proposed to be made in
respect of a Loan or Foreclosure Property either of which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Initial Noteholder, would not be ultimately recoverable.
NOTE: The meaning assigned thereto in the Indenture.
NOTE INTEREST RATE: Interest will accrue on the Notes on each
day at a per annum interest rate equal to LIBOR for the related LIBOR
Determination Date plus the LIBOR Margin for such day.
NOTE PRINCIPAL BALANCE: With respect to the Notes, as of any
date of determination (a) the sum of the Additional Note Principal Balances of
all Notes purchased on or prior to such date pursuant to the Note Purchase
Agreement less (b) all amounts previously distributed in respect of principal of
the Notes prior to such day.
NOTE PURCHASE AGREEMENT: The Note Purchase Agreement among
MSSFI, the Issuer, the Depositor and the Loan Originator, dated as of August 14,
1998.
NOTE REDEMPTION AMOUNT: As of any date of determination, an
amount without duplication equal to the sum of (i) then outstanding Note
Principal Balance plus all accrued and unpaid interest thereon (ii) any Trust
Fees and Expenses due and unpaid on such date, (iii) any Servicing Advance
Reimbursement Amount and (iv) any Nonrecoverable Periodic Advances.
NOTEHOLDER: The meaning assigned thereto in the Indenture.
OFFICER'S CERTIFICATE: A certificate delivered to the
Indenture Trustee or the Issuer signed by the President or a Vice President or
an Assistant Vice President of the Depositor, the Servicer or the Loan
Originator, in each case, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel who may be
employed by the Loan Originator, the Servicer, the Depositor or any of their
respective Affiliates.
OPTIMAL PRINCIPAL PAYMENT AMOUNT: On each Payment Date, an
amount equal to the sum of (a) the positive difference, if any, between (i)
aggregate Collateral Value of all Loans in the Loan Pool for the prior Payment
Date and (ii) the aggregate Collateral Value of all Loans in the Loan Pool for
such Payment Date, (b) the Overcollateralization Shortfall for such Payment
Date, and (c) on each Payment Date on which a Securitization shall occur, an
amount equal to the
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cash Securitization Proceeds, provided, however, that on (a) the Maturity Date,
or (b) the Payment Date on which the Trust is to be terminated pursuant to
SECTION 11.02 hereof, the Optimal Principal Payment Amount shall be equal to the
Note Principal Balance. Notwithstanding anything to the contrary herein, in no
event shall the Optimal Principal Payment Amount with respect to any Payment
Date exceed the Note Principal Balance as of such date.
OTHER MORTGAGE LOANS: Senior Loans and Mortgage Loans other
than QSR Store Mortgage Loans, C&G Store Mortgage Loans, CD Facility Mortgage
Loans or Equipment Loans and as to which the Majority Noteholders, in their sole
discretion, have consented in writing delivered pursuant to the terms hereof and
which may include, without limitation, truck stops, automotive parts and/or
service facilities and car washes.
OUTSTANDING: As defined in the Indenture.
OVERCOLLATERALIZATION SHORTFALL: With respect to any Business
Day, an amount equal to the positive difference, if any, between (a) the Note
Principal Balance on such Business Day and (b) (i) the aggregate Collateral
Value of all Loans in the Loan Pool on such Business Day, or (ii) in the event
that a Performance Trigger shall have occurred and not been Deemed Cured, the
aggregate Collateral Value of all Loans in the Loan Pool on such Business Day
multiplied by 0.98. With the written consent of the Majority Noteholders in
their sole discretion, if as of such Business Day, no Rapid Amortization Trigger
or Default under this Agreement or under the Indenture shall be in effect, the
Overcollateralization Shortfall shall be reduced (but in no event to an amount
below zero) by all or any portion of the aggregate Hedge Value as of such
Business Day as the Majority Noteholders may, in their sole discretion,
designate in writing.
OWNER TRUSTEE: Wilmington Trust Company, as owner trustee
under the Trust Agreement, and any successor owner trustee under the Trust
Agreement.
OWNER TRUSTEE FEE: The annual fee of $2,500 pursuant to the
agreement mentioned in SECTION 8.1 of the Trust Agreement, payable in equal
monthly installments to the Servicer which shall in turn pay, in one lump sum,
such $2,500 to the Owner Trustee on the Payment Date occurring in April each
year during the term of this Agreement, commencing in April 1999.
PAYMENT DATE: The 12th day of each calendar month commencing
on the first such 12th day to occur after the first Transfer Date, or if any
such day is not a Business Day, the first Business Day immediately following
such day. From time to time, the Majority Noteholders and the Issuer may agree,
upon written notice to the Indenture Trustee, to additional Payment Dates in
accordance with SECTION 5.01(c)(3).
PAYMENT PERIOD: With respect to each Adjustable Rate Loan, the
period commencing on the first day of each calendar year and ending on the last
day of such calendar year.
PAYMENT RESET DATE: With respect to each Adjustable Rate Loan,
the first day of the calendar year or, if such day is not a Business Day, the
next succeeding Business Day.
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PAYMENT STATEMENT: As defined in SECTION 6.01(b) hereof.
PERCENTAGE INTEREST: As defined in the Trust Agreement.
PERFORMANCE TRIGGER: With respect to any Business Day, a
Performance Trigger shall mean the existence of one or more of the following
conditions as of such Business Day:
(i) (x) the aggregate Principal Balance of all Loans that
are 30 days or more Delinquent as of such Business
Day divided by (y) the Pool Principal Balance as of
such Business Day is greater than 1.0%; and
(ii) the aggregate Liquidated Loan Losses from the later
of (a) the Closing Date or (b) the most recent
Securitization, through such Business Day are greater
than $25,000.
A Performance Trigger shall continue to exist until Deemed
Cured.
PERIODIC ADVANCE: The aggregate of the advances made by the
Servicer on any Payment Date pursuant to SECTION 4.09, the amount of any such
advances being equal to the total of all Monthly Payments (net of the related
Servicing Fee) on the Loans, that (x) were Delinquent as of the close of
business on the Business Day preceding the related Payment Date and (y) have not
been determined by the Servicer to be Nonrecoverable Periodic Advances.
PERMITTED INVESTMENTS: Each of the following:
(1) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof if
backed by the full faith and credit of the United States;
(2) direct U.S. government obligations or obligations of a
federal agency that are backed by the full faith and credit of the U.S.
government or by FNMA or FHLMC, which are subject to a repurchase
agreement that satisfies the following criteria: (a) it must be between
the Indenture Trustee and either (x) primary dealers on the Federal
Reserve reporting dealer list which are rated in one of the three
highest categories for long-term unsecured debt obligations by each
Rating Agency or (y) banks or bank holding companies rated in one of
the three highest categories for long-term unsecured debt obligations
by each Rating Agency; and (B) it must be in writing and include the
following terms: (a) a term no greater than 60 days for any repurchase
transaction; (b) except as may be otherwise provided in the Collection
Account Letter Agreement with respect to the investment of funds on
deposit in the Collection Account, the collateral must be delivered to
the Indenture Trustee or a third party custodian acting as agent for
the Indenture Trustee by appropriate book entries and confirmation
statements, and must have been delivered before or simultaneously with
payment (i.e., perfection by possession of certificated securities);
and (c) the securities sold thereunder must be valued weekly,
marked-to-market at current market price plus accrued interest and the
value of the collateral must be equal to at least 104% of the amount of
cash transferred by or on behalf of the Indenture Trustee under the
repurchase agreement and, if the value of the securities
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held as collateral declines to an amount below 104% of the cash
transferred by or on behalf of the Indenture Trustee plus accrued
interest (i.e., a margin call), then additional cash and/or acceptable
securities must be transferred to the Indenture Trustee (except as may
be otherwise provided in the Collection Account Letter Agreement with
respect to the investment of funds on deposit in the Collection
Account) to satisfy such margin call; provided, however, that if the
securities used as collateral are obligations of FNMA or FHLMC, then
the value of the securities held as collateral must equal at least 105%
of the cash transferred by or on behalf of the Indenture Trustee under
such repurchase agreement;
(3) certificates of deposit, time deposits and bankers
acceptances of any United States depository institution or trust
company incorporated under the laws of the United States or any state
thereof, including the Indenture Trustee; provided, however, that the
debt obligations of such depository institution or trust company at the
date of the acquisition thereof have been rated by each Rating Agency
in one of its three highest long-term rating categories;
(4) deposits, including deposits with the Indenture Trustee,
that are fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC;
(5) commercial paper of any corporation incorporated under the
laws of the United States or any state thereof, including corporate
Affiliates of the Indenture Trustee, which at the time the investment
is made is rated by each Rating Agency in its highest short-term rating
category and which has an original maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time
the investment is made in one of its three highest long-term rating
categories (or those investments specified in paragraph (3) above with
depository institutions which have debt obligations rated by each
Rating Agency in one of its three highest long-term rating categories);
(7) money market funds that are rated by each Rating Agency at
the time the investment is made in one of its three highest long-term
rating categories; provided, that money market funds that allow for
withdrawals on demand shall be deemed to satisfy any maturity
requirements for Permitted Investments set forth in this Agreement; or
(8) any other investments that the Majority Noteholders may
consent to in writing prior to the time at which such investment is
made;
PROVIDED, HOWEVER, that no instrument described in foregoing subparagraphs (1)
through (7) shall evidence either the right to receive (a) only interest with
respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument where the
interest and principal payments with respect to such instrument provide 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 in
the foregoing
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subparagraphs 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 its
stated maturity.
Each reference in this definition of "Permitted Investments"
to the Rating Agency shall be construed, in the case of each subparagraph above
referring to each Rating Agency, as a reference to each of DCR and Moody's.
PERSON: Any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
PHYSICAL PROPERTY: As defined in clause (b) of the definition
of "Delivery" above.
POOL PRINCIPAL BALANCE: With respect to any date of
determination, the aggregate Principal Balances of the Loans as of the end of
the preceding day; provided, however, that the Pool Principal Balance on any
Distribution Date on which the Termination Price is to be paid to Noteholders
will be deemed to have been equal to zero as of such date.
POSTSECURITIZATION UNFUNDED TRANSFER OBLIGATION: With respect
to any Series of Notes and any date of determination after an Extension Date, an
amount equal to (x) the sum of (a) the Transfer Obligation Carry-Forward Amount,
plus (b) 10% of the aggregate Collateral Value of all Loans sold hereunder since
such Extension Date plus (c) any amounts withdrawn from the Transfer Obligation
Account for return to the Loan Originator pursuant to SECTION 5.05(j) hereof
since such Extension Date less (y) the sum of the aggregate amount of payments
actually made by the Loan Originator in respect of the Transfer Obligation
pursuant to SECTION 2.3(b) of the Loan Purchase Agreement since such Extension
Date and the aggregate amount of the Purchase Prices paid by Servicer in respect
of any Loan Originator Puts since such Extension Date. With respect to any
Series of Notes subsequent to the first Series of Notes, the Postsecuritization
Unfunded Transfer Obligation may be modified as set forth in the Indenture
Supplement.
PREPAYMENT CODE: With respect to each Loan, a code agreed to
in writing by the Loan Originator and the Initial Noteholder, which code shall
identify certain prepayment terms with respect to such Loan as may be agreed in
writing from time to time between the Loan Originator and the Initial
Noteholder.
PRINCIPAL BALANCE: With respect to any Loan or related
Foreclosure Property, (i) at the Transfer Cutoff Date, the outstanding unpaid
principal balance of the Mortgage Loan as of the Transfer Cutoff Date and (ii)
with respect to any other date of determination, the outstanding unpaid
principal balance of the Loan as of the prior Business Day (after giving effect
to all payments received thereon and the allocation of any Net Loan Losses with
respect thereto for a Defaulted Loan on such Business Day); provided, however,
that any Liquidated Loan shall be deemed to have a Principal Balance of zero.
PRINCIPAL CARRY-FORWARD AMOUNT: With respect to any Payment
Date, the excess, if any, of (a) the Optimal Principal Payment Amount for such
Payment Date plus the Principal
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Carry-Forward Amount for the prior Payment Date over (b) the amount in respect
of principal that is actually distributed from the Distribution Account on such
Payment Date.
PRINCIPAL PREPAYMENT: With respect to any Loan and any day,
any principal amount received on a Loan in excess of the principal of the
Monthly Payment due on such day.
PRODUCT CODE: With respect to each Loan, a code agreed to in
writing by the Loan Originator and the Initial Noteholder, which code shall
identify whether such Loan is an Adjustable Rate Loan or a fixed rate Loan,
whether such Loan has a Retained Interest and such other attributes of such Loan
as may be agreed in writing from time to time between the Loan Originator and
the Initial Noteholder.
PROMISSORY NOTE: With respect to a Loan, the original executed
promissory note or other evidence of the indebtedness of the related Borrower or
Borrowers.
PURCHASE PRICE: With respect to a Loan, the Principal Balance
thereof as of the date of purchase or repurchase, plus all accrued and unpaid
interest on such Loan to and including the date of purchase or repurchase
computed at the applicable Loan Interest Rate, plus the amount of any
unreimbursed Servicing Advances and any unreimbursed Periodic Advances made by
the Servicer with respect to such Loan (after deducting therefrom any amounts
received in respect of such purchased or repurchased Loan and being held in the
Collection Account for future distribution to the extent such amounts represent
recoveries of principal not yet applied to reduce the related Principal Balance
or interest (net of the Servicing Fee) for the period from and after the date of
repurchase). To the extent the Servicer does not reimburse itself for amounts,
if any, in respect of the Servicing Advance Reimbursement Amount or
Nonrecoverable Periodic Advances pursuant to SECTION 5.01(c)(1) hereof, with
respect to such Loan, the Purchase Price shall be reduced by such amounts.
QSR STORE MORTGAGE LOANS: Mortgage Loans secured by quick
service restaurants.
QUALIFIED INSURER: An insurance company duly qualified as such
under the laws of the states in which any applicable Loan Collateral is located,
duly authorized and licensed or otherwise qualified in such states to transact
the applicable insurance business and to write the insurance provided, approved
as an insurer in accordance with the Servicing Standard, and whose claims-paying
ability is rated "A" or better (or the equivalent in any successor rating
system) by Best's Key Rating Guide or rated "A" or better by Standard & Poor's
Ratings Services or the equivalent by any Rating Agency as to claims-paying
ability with respect to hazard and flood insurance.
QUALIFIED SUBSTITUTE LOAN: A Loan or Loans substituted for a
Deleted Loan pursuant to SECTION 3.05 hereof, which (i) has or have been
approved in writing by the Majority Noteholders and (ii) complies or comply as
of the date of substitution with each representation and warranty set forth in
SECTION 3.04 hereof and is or are not more than 29 days Delinquent as of the
date of substitution for such Deleted Loan or Loans.
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RAPID AMORTIZATION TRIGGER: With respect to any Business Day,
a Rapid Amortization Trigger shall mean the existence of one or more of the
following conditions as of such Business Day:
(i) the aggregate Principal Balance of all Loans that are
30 to 59 days Delinquent as of such Business Day
divided by the Pool Principal Balance as of such
Business Day is greater than 2.0%;
(ii) the aggregate Principal Balance of all Loans that are
60 to 89 days Delinquent as of such Business Day
divided by the Pool Principal Balance as of such
Business Day is greater than 1.0%;
(iii) the aggregate Principal Balance of all Loans that are
90 days or more Delinquent as of such Business Day
divided by the Pool Principal Balance as of such
Business Day is greater than 0.50%;
(iv) the aggregate Liquidated Loan Losses since the Reset
Date are greater than $100,000; and
(v) (x) the aggregate Liquidated Loan Losses for the
three calendar month period preceding such Business
Day divided by (y) the average Transfer Cutoff Date
Principal Balance of all Loans conveyed to the Issuer
hereunder during such three calendar month period is
greater than 0.10%.
A Rapid Amortization Trigger shall continue to exist until it
is Deemed Cured.
RATING AGENCIES: DCR and Moody's or such other nationally
recognized credit rating agencies as may from time to time be designated in
writing by the Majority Noteholders in their sole discretion.
RECORD DATE: With respect to each Payment Date, the close of
business on the prior Business Day.
REFERENCE BANK RATE: With respect to any day, the arithmetic
mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent)
of the offered rates for United States dollar deposits for one month that are
offered by the Reference Banks as of 11:00 a.m., New York City time, on the
related LIBOR Determination Date to prime banks in the London interbank market
for a period of one month in amounts approximately equal to the Note Principal
Balance, provided that at least two such Reference Banks provide such rate. If
fewer than two offered rates appear, the Reference Bank Rate will be arithmetic
mean of the rates quoted by one or more major banks in New York City, selected
by the Initial Noteholder, as of 11:00 a.m., New York City time, on such day for
loans in U.S. Dollars to leading European Banks for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance. If no
such quotation can be obtained, the Reference Bank Rate will be the Reference
Bank Rate applicable to the preceding day.
REFERENCE BANKS: Three money center banks selected by the
Initial Noteholder.
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RELEASED LOAN COLLATERAL PROCEEDS: With respect to any Loan,
proceeds received by the Servicer in connection with (i) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(ii) any release of part of the Loan Collateral from the lien of the related
Mortgage or Security Agreement, as the case may be, whether by partial
condemnation, sale or otherwise; which proceeds in either case are not released
to the Borrower in accordance with applicable law, the Servicing Standard or
this Agreement.
RESET DATE: The later of the latest Closing Date and the
latest Extension Date.
RESPONSIBLE OFFICER: When used with respect to (i) the initial
Indenture Trustee or the initial Custodian, any officer in its Asset Backed
Securities Trust Services Group with particular responsibility for the
transactions contemplated by this Agreement and (ii) any successor Indenture
Trustee or Custodian, any officer within the corporate trust office of such
successor Indenture Trustee or Custodian, including any Vice President,
Assistant Vice President, Secretary, Assistant Secretary or any other officer of
such successor Indenture Trustee or Custodian customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Issuer, any officer in the
corporate trust administration department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and this Agreement
on behalf of the Issuer. When used with respect to the Depositor, the Loan
Originator or the Servicer, the President or any Executive Vice President,
Senior Vice President or the Treasurer.
RETAINED INTEREST: With respect to any Loan, any interest
payable under the related Promissory Note other than default interest and
interest at the related Loan Interest Rate (and excluding any prepayment charges
and yield maintenance premiums). Without limiting the generality of the
foregoing, Retained Interest shall include interest designated or defined as
"Shared Appreciation," "Contingent Interest," "Participating Interest,"
"Additional Interest," "Fixed Bumps" or "Payment Escalations" under the terms of
any Loan.
RETAINED SECURITIES: With respect to a Securitization, any
subordinated securities issued or expected to be issued, or excess collateral
value retained or expected to be retained, in connection therewith to the extent
the Loan Originator or an Affiliate thereof decides in its sole discretion to
retain, instead of sell, such securities.
RETAINED SECURITIES VALUE: With respect to any Business Day
and a Retained Security, the market value thereof as determined by the Market
Value Agent in accordance with SECTION 4.14(d) hereof.
REVOLVING PERIOD: The period commencing on the Closing Date
and ending on the earlier of (i) the date on which the Revolving Period is
terminated pursuant to SECTION 2.07 and (ii) with respect to a Note of a given
Series, the date set forth in the related Indenture Supplement.
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S&SA ASSIGNMENT: An Assignment, in the form of Exhibit C
hereto, of Loans and other property from the Depositor to the Issuer pursuant to
this Agreement.
SECURITIES: The Notes or Trust Certificates.
SECURITIZATION: A sale or transfer of loans, including Loans,
to an Affiliate of the Depositor in order to effect one or a series of
structured-finance securitization transactions involving the issuance of
securities treated for federal income tax purposes as indebtedness of FFCA or
one or more of its wholly-owned subsidiaries.
SECURITIZATION PARTICIPANT: With respect to a Securitization,
any "depositor" with respect to such Securitization, the Majority Noteholders,
the Issuer, the Servicer, the trustee and the custodian thereunder, any
nationally recognized credit rating agency, the related underwriters, the
related placement agent, the related credit enhancer, the related purchaser of
securities and/or any other party necessary or, in the good faith belief of any
of the foregoing, desirable to effect a Securitization.
SECURITIZATION PROCEEDS: With respect to a Securitization, (x)
the proceeds of the Securitization remitted to the Issuer in respect of the
Loans transferred on the date of and with respect to such Securitization,
including without limitation, any cash and Retained Securities created in such
Securitization less all costs, fees and expenses incurred in connection with
such Securitization, including, without limitation, all amounts deposited into
any reserve funds upon the closing thereof plus or minus (y) the net positive or
net negative value of all Hedging Instruments terminated in connection with such
Securitization minus (z) all other amounts agreed upon in writing by the Initial
Noteholder, the Issuer and the Servicer.
SECURITY AGREEMENT: (a) With respect to any Equipment Loan,
the pledge agreement, security agreement or similar instrument that secures the
related Promissory Note and creates a lien on the related Equipment and (b) with
respect to any Mortgage Loan, any security agreement, contract, instrument or
other document related to security for repayment thereof (other than the related
Mortgage and Promissory Note), executed by the Borrower and/or others in
connection with such Mortgage Loan, and in either case including without
limitation, any guaranty, title insurance policy, hazard insurance policy,
chattel mortgage, letter of credit or certificate of deposit, other pledged
accounts, pledge of stock or other equity interest in the related Borrower, and
any other documents and records relating to any of the foregoing.
SECURITYHOLDER: Any Noteholder or Certificateholder.
SENIOR LOAN: A Loan secured by Loan Collateral with respect to
which a Fixed Charge Coverage Ratio is not provided on the related Loan
Schedule, provided, however, that (i) a Senior Loan which is secured only by
Equipment shall be deemed an Equipment Loan for purposes of this Agreement, (ii)
a Senior Loan which is secured by Mortgaged Property shall be deemed a Mortgage
Loan for purposes of this Agreement, and (iii) a Senior Loan which is secured
only by both Equipment and Mortgaged Property shall be deemed a Mortgage Loan
for purposes of this Agreement.
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<PAGE>
SERIES: With respect to a Note, the related series of which
such Note is a part, as specified in the Indenture Supplement.
SERVICER: FFCA, in its capacity as the servicer hereunder, or
any successor appointed as herein provided.
SERVICER CALL: The optional repurchase by the Servicer of a
Loan pursuant to SECTION 3.07(b) hereof.
SERVICER'S FISCAL YEAR: January 1st through December 31st of
each year.
SERVICER'S LOAN FILE: With respect to each Loan, the file held
by the Servicer, consisting of originals of all documents relating to such Loan
that are not delivered to the Custodian, copies of all of the Loan Documents
included in the related Indenture Trustee's Loan File and (i) a closing
instruction letter (if any) with respect to the Loan, (ii) a copy of the
Borrower's opinion of counsel (if any), (iii) a copy of the franchise agreement
with all amendments thereto (if any), (iv) a copy of the site inspection and
valuation report and (v) if such Loan is a Mortgage Loan, a survey (if any) of
the related Mortgaged Property and a Title Matters Indemnity Agreement (if any).
SERVICER'S REMITTANCE REPORT: A report prepared and computed
by the Servicer in substantially the form of Exhibit B attached hereto.
SERVICER TERMINATION EVENT: The termination of the Servicer
pursuant to SECTION 10.01(b) hereof.
SERVICING ADVANCE REIMBURSEMENT AMOUNT: With respect to any
date of determination, the amount of any Servicing Advances that have not been
reimbursed as of such date, including Nonrecoverable Servicing Advances.
SERVICING ADVANCES: Subject to SECTION 4.01(b) hereof, all
reasonable, customary and necessary "out of pocket" costs and expenses advanced
or paid by the Servicer with respect to the Loans in accordance with the
performance by the Servicer of its servicing obligations hereunder, including,
but not limited to, the costs and expenses for (i) the preservation, restoration
and protection of Loan Collateral, including without limitation, advances in
respect of real estate taxes and assessments, (ii) any collection, enforcement
or judicial proceedings, including, without limitation, foreclosures,
collections, reports and liquidations pursuant to SECTION 4.10 hereof and (iii)
the conservation, management and sale or other disposition of a Foreclosure
Property pursuant to SECTION 4.11 hereof.
SERVICING COMPENSATION: The Servicing Fee and other amounts to
which the Servicer is entitled pursuant to SECTION 7.01 and SECTION 7.03 hereof.
SERVICING FEE: As to each Loan (including any Loan that has
been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Loan), the fee payable monthly to the Servicer on each Payment Date,
which (i) in the case of fixed rate Loans shall be the product of 0.25% ( 25
basis points) and the Principal Balance of such Loan as of the beginning of the
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immediately preceding Due Period, divided by 12 and (ii) in the case of
Adjustable Rate Loans shall be the product of 0.375% ( 37.5 basis points) and
the Principal Balance of such Loan as of the beginning of the immediately
preceding Due Period, divided by 12. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer, which fees shall be paid from the
Servicing Fee.
SERVICING OFFICER: Any officer of the Servicer or Subservicer
involved in, or responsible for, the administration and servicing of the Loans
whose name and specimen signature appears on a list of servicing officers
annexed to an Officer's Certificate furnished by the Servicer or the
Subservicer, respectively, on the Closing Date to the Issuer and the Indenture
Trustee, on behalf of the Noteholders, as such list may from time to time be
amended.
SERVICING STANDARD: With respect to the servicing of the
Loans, the servicing and administration of the Loans with the same care, skill,
prudence and diligence with which prudent institutional commercial lenders and
loan servicers service comparable loans which are owned, for federal income tax
purposes, by entities which qualify as real estate investment trusts under
Section 856 of the Code (and at least with the same care, skill, prudence and
diligence with which the Servicer generally services loans owned by it), with a
view to the timely collection of all scheduled payments of principal and
interest under the Loans or, if a Loan comes into and continues in default and
no satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery on such Loan to the Noteholders on a
present value basis (the relevant discounting of anticipated collections to be
performed at the related Loan Interest Rate), but without regard to:
(i) any relationship that the Servicer, any Subservicer
or any Affiliate of the Servicer or any Subservicer
may have with the related Borrower;
(ii) the ownership of any Notes or the Trust Certificates
by the Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make Servicing Advances
or Periodic Advances; or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services or reimbursement of its
costs hereunder or with respect to any particular
transaction.
SUBSERVICER: Any Person with which the Servicer has entered
into a Subservicing Agreement and which is an Eligible Servicer and satisfies
any requirements set forth in SECTION 4.06(a) hereof in respect of the
qualifications of a Subservicer.
SUBSERVICING ACCOUNT: An account established by a Subservicer
pursuant to a Subservicing Agreement, which account must be an Eligible Account.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and
any Subservicer relating to subservicing and/or administration of any or all
Loans as provided in
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SECTION 4.06(a) hereof, copies of which shall be made available, along with any
modifications thereto, to the Issuer and the Indenture Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a
substitution occurs pursuant to SECTION 2.05 or SECTION 3.05 hereof, the amount,
if any, by which (a) the sum of the aggregate principal balance (after
application of principal payments received on or before the date of
substitution) of any Qualified Substitute Loans as of the date of substitution,
plus any accrued and unpaid interest thereon to the date of substitution, is
less than (b) the sum of the aggregate of the Principal Balances, together with
accrued and unpaid interest thereon to the date of substitution, of the related
Deleted Loans.
TEN YEAR TREASURY YIELD: As of any date of determination, the
yield on United States treasury securities with maturities of ten years, as most
recently reported in the Wall Street Journal, or in the event that the Wall
Street Journal ceases publication, in such source as shall be designated in
writing by the Indenture Trustee.
TERMINATION PRICE: As of any date of determination, an amount
without duplication equal to the greater of (a) the Note Redemption Amount and
(b) the sum of (i) the Principal Balance of each Loan included in the Trust as
of the Payment Date of the termination of the Trust; (ii) all unpaid interest
accrued on the Principal Balance of each such Loan at the related Net Loan
Interest Rate to such Payment Date; and (iii) the aggregate fair market value of
each Foreclosure Property included in the Trust on such Payment Date, as
determined by an Independent appraiser acceptable to the Majority Noteholders as
of a date not more than 30 days prior to such Payment Date.
TITLE MATTERS INDEMNITY AGREEMENT: With respect to each
Mortgage Loan, an agreement (if any) between the Borrower and the Loan
Originator, indemnifying the Loan Originator for any losses arising from title
matters, including without limitation, zoning, use, covenants, conditions and
restrictions and encroachments.
TITLE POLICY: With respect to any Mortgaged Property, an ALTA
(extended coverage) loan title insurance policy or such other form as is
customarily acceptable to prudent lending institutions in the jurisdiction in
which the Mortgaged Property is located (or other satisfactory title insurance
as confirmed in writing by the Majority Noteholders) consistent with the
Underwriting Guidelines.
TRANSFER CUTOFF DATE: With respect to each Loan, the first day
of the month in which the Transfer Date with respect to such Loan occurs.
TRANSFER CUTOFF DATE PRINCIPAL BALANCE: As to each Loan for
which its Transfer Date occurs (i) from and including the first of a calendar
month to and including the Business Day preceding the Payment Date in such
calendar month, its Principal Balance as of the opening of business on the
Transfer Cutoff Date (after giving effect to any payments received on the Loan
before the Transfer Cutoff Date) and (ii) from and including the Payment Date to
and including the last day of a calendar month, its Principal Balance as of the
close of business on the Transfer
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Cutoff Date (after giving effect to any payments due on the Loan on or before
the Transfer Cutoff Date).
TRANSFER DATE: With respect to each Loan, the day such Loan is
sold to the Depositor pursuant to the Loan Purchase Agreement and to the Issuer
pursuant to SECTION 2.01 hereof.
TRANSFER OBLIGATION: The obligation of the Loan Originator
under SECTION 2.3(b) of the Loan Purchase Agreement to make certain payments in
connection with Securitizations and other related matters.
TRANSFER OBLIGATION ACCOUNT: The account designated as such,
established and maintained pursuant to SECTION 5.05 hereof.
TRANSFER OBLIGATION CARRY-FORWARD AMOUNT: With respect to any
Extension Date, the lesser of (x) the Unfunded Transfer Obligation as of such
date (immediately after giving effect to any Securitization occurring on such
date) and (y) 10% of the aggregate Collateral Value of all Loans remaining in
the Loan Pool as of such date.
TRANSFER OBLIGATION TARGET AMOUNT: With respect to any date of
determination, the cumulative total of all withdrawals pursuant to SECTION
5.05(e), 5.05(f), 5.05(g) and 5.05(h) hereof from the Transfer Obligation
Account since the Closing Date, after deducting from such total all amounts
returned to the Loan Originator pursuant to SECTION 5.05(j) hereof.
TRUST: The Issuer.
TRUST ACCOUNT PROPERTY: The Trust Accounts, all amounts and
investments held from time to time in the Trust Accounts and all proceeds of the
foregoing.
TRUST ACCOUNTS: The Distribution Account, the Collection
Account, the Transfer Obligation Account, the Lockbox Account, if any, and each
Escrow Account, if any.
TRUST AGREEMENT: The Trust Agreement dated as of March 13,
1998, as amended, among the Depositor, the Loan Originator and the Owner
Trustee.
TRUST CERTIFICATE: The meaning assigned thereto in the Trust
Agreement.
TRUST ESTATE: The assets subject to this Agreement, the Trust
Agreement and the Indenture and assigned to the Trust, which assets consist of:
(i) such Loans as from time to time are subject to this Agreement as listed in
the Loan Schedule, as the same may be amended or supplemented on each Transfer
Date, by the removal of Deleted Loans and by the addition of Qualified
Substitute Loans, together with the Servicer's Loan Files and the Indenture
Trustee's Loan Files relating thereto and all proceeds thereof, (ii) the
Mortgages, Security Agreements and security interests in Loan Collateral, (iii)
all payments in respect of interest due with respect to each Loan on or after
the related Transfer Cutoff Date and all payments in respect of principal
received after such Transfer Cutoff Date net of any Retained Interest (iv) such
assets as from time to time are identified as Foreclosure Property, (v) such
assets and funds as are from time to
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time deposited in the Distribution Account, Collection Account, the Transfer
Obligation Account, the Lockbox Account, if any, and each Escrow Account, if
any, including, without limitation, amounts on deposit in such accounts that are
invested in Permitted Investments, (vi) lenders' rights under all Insurance
Policies and to any Insurance Proceeds, (vii) lenders' rights to any
Condemnation Proceeds, (viii) Net Liquidation Proceeds and Released Loan
Collateral Proceeds, (ix) all right, title and interest of the Issuer (but none
of the obligations) in and to the obligations of Hedging Counterparties under
Hedging Instruments, (x) all right, title and interest of the Depositor in and
to the obligations of the Loan Originator under the Loan Purchase Agreement
pursuant to which the Depositor acquired the Loans from the Loan Originator, and
all proceeds of any of the foregoing and (xi) all of the Loan Originator's
right, title and interest in, to and under (but none of its obligations) any
Environmental Policy to the extent relating to Mortgage Loans.
TRUST FEES AND EXPENSES: As of each Payment Date, an amount
equal to the Servicing Compensation, the Indenture Trustee Fee, the Owner
Trustee Fee and the Custodian Fee, if any.
UCC: The Uniform Commercial Code as in effect in the State of
New York.
UCC-1 FINANCING STATEMENT: A financing statement meeting the
requirements of the Uniform Commercial Code of the relevant jurisdiction.
UCC ASSIGNMENT: A form "UCC-2" or "UCC-3" statement meeting
the requirements of the Uniform Commercial Code of the relevant jurisdiction to
reflect an assignment of a secured party's interest in collateral.
UNDERWRITING GUIDELINES: The underwriting guidelines
(including the loan origination guidelines) provided to the Initial Noteholder
on or prior to the Closing Date by the Loan Originator or an Affiliate thereof.
UNFUNDED TRANSFER OBLIGATION: With respect to any Series of
Notes and any date of determination on or prior to an Extension Date, an amount
equal to (x) the sum of (a) 10% of the aggregate Collateral Value of all Loans
sold hereunder since the related Closing Date, plus (B) any amounts withdrawn
from the Transfer Obligation Account for return to the Loan Originator pursuant
to SECTION 5.05(j) hereof since the related Closing Date less (y) the sum of the
aggregate amount of payments actually made by the Loan Originator in respect of
the Transfer Obligation pursuant to SECTION 2.3(b) of the Loan Purchase
Agreement since the related Closing Date and the aggregate amount of the
Purchase Prices paid by Servicer in respect of any Loan Originator Puts since
the related Closing Date. With respect to any Series of Notes subsequent to the
first Series of Notes, the Unfunded Transfer Obligation may be modified as set
forth in the Indenture Supplement.
WILMINGTON TRUST COMPANY: Wilmington Trust Company, a Delaware
banking corporation.
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Section 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Indenture and the Trust
Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under GAAP. To the extent that the definitions of accounting terms
in this Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL BALANCES
Section 2.01 CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE
PRINCIPAL BALANCES.
(a) (i) On the terms and conditions of this Agreement, on each
Transfer Date, the Depositor agrees to offer for sale and to sell Loans and
deliver related Loan Documents to or at the direction of the Issuer. To the
extent the Issuer has or is able to obtain sufficient funds for the purchase
thereof, the Issuer agrees to purchase such Loans offered for sale by the
Depositor.
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(ii) In consideration of the payment of the Additional Note
Principal Balance pursuant to SECTION 2.06 hereof, the Depositor, as of the
Closing Date and concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and otherwise convey to the Issuer,
without recourse, but subject to the other terms and provisions of this
Agreement, all of the right, title and interest of the Depositor in and to the
Trust Estate.
(iii) During the Revolving Period, on each Transfer Date,
subject to the conditions precedent set forth in SECTION 2.06(a) and in
accordance with the procedures set forth in SECTION 2.01(c), the Depositor,
pursuant to an S&SA Assignment, will assign to the Issuer without recourse all
the right, title and interest of the Depositor in and to the Loans and all
proceeds thereof listed on the Loan Schedule attached to such S&SA Assignment,
including all interest and principal (i) for each Loan having a Transfer Date
from and including the first day of a calendar month to and including the
Business Day preceding a Payment Date, received on or after the opening of
business of the Transfer Cutoff Date and (ii) for each Loan having a Transfer
Date from and including a Payment Date to and including the last day of a
calendar month, due on the Loan after the Transfer Cutoff Date, in each case
whether received by the Loan Originator, the Depositor or the Servicer, together
with all right, title and interest in and to the proceeds of any related
Insurance Policies and all of the Depositor's right, title and interest in and
to (but none of its obligations under) the Loan Purchase Agreement and all
proceeds of the foregoing.
(iv) The foregoing sales, transfers, assignments, set overs
and conveyances do not, and are not intended to, result in a creation or an
assumption by the Issuer of any obligation of the Depositor, the Loan Originator
or any other Person in connection with the Trust Estate or under any agreement
or instrument relating thereto except as specifically set forth herein.
(b) As of the Closing Date and as of each Transfer Date, the
Issuer acknowledges (or will acknowledge pursuant to the S&SA Assignment) the
conveyance to it of the Trust Estate, including all right, title and interest of
the Depositor in and to the Trust Estate, receipt of which is hereby
acknowledged by the Issuer. Concurrently with such delivery, as of the Closing
Date and as of each Transfer Date, the Issuer pledges (or will pledge pursuant
to the S&SA Assignment) the Trust Estate to the Indenture Trustee. In addition,
concurrently with such delivery and in exchange therefor, the Owner Trustee,
pursuant to the instructions of the Depositor, has executed (not in its
individual capacity, but solely as Owner Trustee on behalf of the Issuer) and
caused the Trust Certificates to be authenticated and delivered to the
Depositor.
(c) (i) Pursuant to and subject to the Note Purchase
Agreement, the Issuer may, at its sole option, from time to time request that
the Initial Noteholder advance on any Transfer Date and on any Collateral Value
Excess Date, Additional Note Principal Balances and the Initial Noteholder shall
remit on such Transfer Date or Collateral Value Excess Date, as the case may be,
to the Advance Account an amount equal to the Additional Note Principal Balance.
(ii) Notwithstanding anything to the contrary herein, in no
event shall the Initial Noteholder be required to advance Additional Note
Principal Balances on a Transfer Date if the conditions precedent to a transfer
of the Loans under SECTION 2.06(a) and the conditions precedent to the purchase
of Additional Note Principal Balances set forth in SECTION 3.01 of the Note
Purchase Agreement have not been fulfilled.
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(iii) Notwithstanding anything to the contrary herein, in no
event shall the Initial Noteholder be required to advance Additional Note
Principal Balance on a Collateral Value Excess Date if the conditions precedent
thereto set forth in SECTION 2.06(b) and the conditions precedent to the
purchase of Additional Note Principal Balances set forth in SECTION 3.01 of the
Note Purchase Agreement have not been fulfilled.
(iv) The Servicer shall appropriately note such Additional
Note Principal Balance (and the increased Note Principal Balance) in the next
succeeding Payment Statement; provided, however, that failure to make any such
notation in such Payment Statement or any error in such notation shall not
adversely affect any Noteholder's rights with respect to its Note Principal
Balance and its right to receive interest and principal payments in respect of
the Note Principal Balance held by such Noteholder. The Initial Noteholder shall
record on the schedule attached to such Noteholder's Note, the date and amount
of any Additional Note Principal Balance advanced by it; provided, that failure
to make such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder's rights with respect to its Note Principal
Balance and its right to receive interest payments in respect of the Note
Principal Balance held by such Noteholder.
(v) Absent manifest error, the Note Principal Balance of each
Note as set forth in the Initial Noteholder's records shall be binding upon the
Noteholders and the Issuer, notwithstanding any notation made by the Servicer in
its Payment Statement pursuant to the preceding paragraph.
Section 2.02 OWNERSHIP AND POSSESSION OF LOAN FILES.
With respect to each Loan, as of the related Transfer Date the
ownership of the related Promissory Note, the related Mortgage or Security
Agreement and the contents of the related Servicer's Loan File and Indenture
Trustee's Loan File shall be vested in the Issuer and pledged to the Indenture
Trustee for the benefit of the Securityholders, although possession of the
Servicer's Loan File (other than items required to be maintained in the
Indenture Trustee's Loan Files) on behalf of and for the benefit of the
Securityholders shall remain with the Servicer, and the Custodian shall take
possession of the Indenture Trustee's Loan Files as contemplated in SECTION 2.05
hereof.
Section 2.03 BOOKS AND RECORDS; INTENTION OF THE PARTIES.
(a) As of each Transfer Date, the sale of each of the Loans
conveyed on such Transfer Date shall be reflected on the balance sheets and
other financial statements of the Depositor or the Loan Originator, as the case
may be, as a sale of assets by the Depositor or the Loan Originator, as the case
may be, under GAAP. Each of the Servicer and the Custodian shall be responsible
for maintaining, and shall maintain, a complete set of books and records for
each Loan which shall be clearly marked to reflect the ownership of each Loan,
as of the related Transfer Date, by the Owner Trustee and pledged, as of such
Transfer Date, to the Indenture Trustee for the benefit of the Securityholders.
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(b) It is the intention of the parties hereto that, other than
for federal, state and local income or franchise tax purposes, the transfers and
assignments of the Trust Estate on the Closing Date, on each Transfer Date and
as otherwise contemplated by the Basic Documents and the Assignments shall
constitute a sale of the Trust Estate including, without limitation, the Loans
and all other property comprising the Trust Estate specified in SECTION 2.01(a)
hereof, from the Depositor to the Issuer and such property shall not be property
of the Depositor. The parties hereto shall treat the Notes as indebtedness for
federal, state and local income and franchise tax purposes.
(c) If any of the assignments and transfers of the Loans and
the other property of the Trust Estate specified in SECTION 2.01(a) hereof to
the Owner Trustee pursuant to this Agreement or the conveyance of the Loans or
any of such other property of the Trust Estate to the Owner Trustee, other than
for federal, state and local income or franchise tax purposes, is held or deemed
not to be a sale or is held or deemed to be a pledge of security for a loan, the
Depositor intends that the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement and that, in such event,
with respect to such property, (i) consisting of Loans and related property, the
Depositor shall be deemed to have granted, as of the related Transfer Date, to
the Owner Trustee a first priority security interest in the entire right, title
and interest of the Depositor in and to such Loans and proceeds and all other
property conveyed to the Owner Trustee as of such Transfer Date, (ii) consisting
of any other property specified in SECTION 2.01(a), the Depositor shall be
deemed to have granted, as of the Closing Date, to the Owner Trustee a first
priority security interest in the entire right, title and interest of the
Depositor in and to such property and the proceeds thereof. In such event, with
respect to such property, this Agreement shall constitute a security agreement
under applicable law.
(d) Within ten (10) days of the date first above written, the
Depositor shall, at Depositor's sole expense, cause to be filed UCC-1 financing
statements naming the Owner Trustee as "secured party" and describing the Trust
Estate being sold by the Depositor to the Issuer with the office of the
Secretary of State of the state in which the Depositor is located.
Section 2.04 DELIVERY OF LOAN DOCUMENTS.
(a) With respect to each Loan, the Loan Originator and/or the
Depositor, as the case may be, shall, on or before the related Transfer Date,
deliver or cause to be delivered to the Custodian, as the designated agent of
the Indenture Trustee, each of the following documents (collectively, the
"INDENTURE TRUSTEE'S LOAN FILE"):
(i) With respect to each Mortgage Loan:
(1) The original Promissory Note, endorsed by the Loan
Originator in blank in the following form: "Pay to the order of
______________________, without recourse", with all prior and
intervening endorsements showing a complete chain of endorsement from
origination of the Mortgage Loan to the Loan Originator;
(2) The original Mortgage with evidence of recording thereon
(or, if the original Mortgage has not been returned from the applicable
public recording office or is
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not otherwise available, a copy of the original Mortgage submitted for
recording) and, if the Mortgage was executed pursuant to a power of
attorney, the original power of attorney with evidence of recording
thereon (or, if the original power of attorney has not been returned
from the applicable public recording office or is not otherwise
available, a copy of the original power of attorney submitted for
recording);
(3) The original executed Assignment of Mortgage, in
recordable form. The Assignment of Mortgage may be a blanket
assignment, to the extent such assignment is effective under applicable
law, for Mortgages covering Mortgaged Properties situated within the
same county. If the Assignment of Mortgage is in blanket form, an
Assignment of Mortgage need not be included in the individual Indenture
Trustee's Loan File;
(4) All original intervening assignments of mortgage, with
evidence of recording thereon, showing a complete chain of assignment
from origination of the Mortgage Loan to the Loan Originator (or, if
any such assignment of mortgage has not been returned from the
applicable public recording office or is not otherwise available, a
copy of such assignment of mortgage submitted for recording);
(5) The original of the guaranty (if any) executed in
connection with the Promissory Note or related lease;
(6) The originals of all assumption, modification,
consolidation or extension agreements relating to the Mortgage with
evidence of recording thereon, (or, if the originals have not been
returned from the applicable public recording office or are not
otherwise available, a copy of such originals submitted for recording);
(7) The original attorney's opinion of title and abstract of
title or the original mortgagee title insurance policy, or if the
original mortgagee title insurance policy has not been issued, the
irrevocable commitment to issue the same;
(8) The original of any security agreement, chattel mortgage
or equivalent document executed in connection with the Mortgage Loan;
(9) The original assignment of leases and rents, if separate
from the related Mortgage, with evidence of recording thereon, or a
copy of the original that has been or will, on or prior to the related
Transfer Date be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged
Property is located;
(10) The original assignment of assignment of leases and
rents, if the assignment of leases and rents is separate from the
related Mortgage, from the Loan Originator in blank, in form and
substance acceptable for recording;
(11) A copy of the UCC-1 Financing Statements and all
necessary UCC continuation statements with evidence of filing and/or
recording thereon or copies thereof that have been sent for filing
and/or recording on or promptly after closing, and UCC
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Assignments executed by the Loan Originator in blank, which UCC
Assignments shall be in form and substance acceptable for filing and/or
recording;
(12) An environmental indemnity agreement (if any);
(13) An Assignment of Loan Documents; and
(14) the original Loan Agreement.
(ii) With respect to each Equipment Loan:
(1) The original Promissory Note, endorsed by the Loan
Originator in blank in the following form: "Pay to the order of
______________________, without recourse", with all prior and
intervening endorsements showing a complete chain of endorsement from
origination of the Loan to the Loan Originator;
(2) The original Security Agreement and, if the Security
Agreement was executed pursuant to a power of attorney, the original
power of attorney;
(3) The original Loan Agreement, to the extent not encompassed
in the Loan Agreement with respect to the related Mortgage Loan;
(4) The original of the guaranty (if any) executed in
connection with the Promissory Note or related lease;
(5) The originals of all assumption, modification,
consolidation or extension agreements relating to the Security
Agreement, or true and correct copies thereof;
(6) A true and correct copy of the UCC-1 Financing Statements
and all necessary UCC continuation statements with evidence of filing
and/or recording thereon or true copies thereof that have been sent for
filing and/or recording on or promptly after closing, and UCC
Assignments executed by the Loan Originator in blank, which UCC
Assignments shall be in form and substance acceptable for filing and/or
recording; and
(7) An Assignment of Loan Documents.
(b) With respect to each Loan, the Loan Originator and the
Depositor shall, on the related Transfer Date, deliver or caused to be delivered
to the Servicer for the benefit of the Indenture Trustee, as secured party on
behalf of the Noteholders, the related Servicer's Loan File.
(c) The Indenture Trustee shall cause the Custodian to take
and maintain continuous physical possession of the Indenture Trustee's Loan
Files in the State of Illinois and, in connection therewith, shall act solely as
agent for the Securityholders in accordance with the terms hereof and not as
agent for the Loan Originator, the Servicer or any other party.
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(d) Upon the delivery by the Loan Originator to the Custodian
of any copies of Loan Documents, the Loan Originator shall be deemed to certify
and hereby certifies that each such copy is a true, correct and complete copy of
the related original.
Section 2.05 ACCEPTANCE BY THE INDENTURE TRUSTEE OF THE LOANS;
CERTAIN SUBSTITUTIONS AND REPURCHASES; CERTIFICATION BY THE CUSTODIAN.
(a) The Indenture Trustee declares that it will cause the
Custodian to hold the Indenture Trustee's Loan Files and any additions,
amendments, replacements or supplements to the documents contained therein, as
well as any other assets included in the Trust Estate and delivered to the
Custodian, in trust, upon and subject to the conditions set forth herein. The
Indenture Trustee further agrees to cause the Custodian to execute and deliver
such certifications as are required under the Custodial Agreement and to
otherwise direct the Custodian to perform all of its obligations with respect to
the Indenture Trustee's Loan Files in strict accordance with the terms of the
Custodial Agreement.
(b) (i) With respect to any Loans which are set forth as
exceptions in the Initial Certification or the Loan Schedule and Exceptions
Report, the Loan Originator shall cure such exception by delivering such missing
documents to the Custodian or otherwise curing the defect no later than (a) 5
Business Days after the receipt of the Initial Certification or the first Loan
Schedule and Exceptions Report with respect to such Mortgage Loan or (b) in the
case of Loan Documents which have been delivered to recording or filing offices
and have not been returned to the Loan Originator to permit their delivery to
the Custodian at the time required, 90 days after the related Transfer Date.
(ii) In the event that, with respect to any Loan, the
Loan Originator does not comply with the document delivery requirements of this
SECTION 2.05, the Loan Originator shall purchase such Loan at the Purchase Price
with respect to such Loan by depositing such Purchase Price in the Collection
Account. The Loan Originator shall provide the Servicer, the Indenture Trustee,
the Issuer and the Initial Noteholder with a certification of a Responsible
Officer prior to such repurchase indicating that the Loan Originator intends to
repurchase such Loan. In lieu of such a repurchase, the Depositor and Loan
Originator may comply with the substitution provisions of SECTION 3.05 hereof.
(iii) It is understood and agreed that the obligation
of the Loan Originator to repurchase any such Loan pursuant to this SECTION
2.04(b) shall constitute the sole remedy against it with respect to such failure
to comply with the foregoing delivery requirements.
(c) In performing its reviews of the Indenture Trustee's Loan
Files pursuant to the Custodial Agreement, the Custodian shall have no
responsibility to determine the genuineness of any document contained therein
and any signature thereon. The Custodian shall not have any responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form, whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any applicable
jurisdiction.
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(d) The Servicer's Loan File shall be held in the custody of
the Servicer (i) for the benefit of, and as agent for, the Noteholders and (ii)
for the benefit of the Indenture Trustee, as secured party on behalf of the
Noteholders, for so long as the Indenture continues in full force and effect;
after the Indenture is terminated in accordance with the terms thereof, the
Servicer's Loan File shall be held in the custody of the Servicer for the
benefit of, and as agent for, the Certificateholders. It is intended that, by
the Servicer's agreement pursuant to this SECTION 2.05(d), the Indenture Trustee
shall be deemed to have possession of the Servicer's Loan Files for purposes of
Section 9-305 of the UCC of the state in which such documents or instruments are
located. The Servicer shall promptly report to the Indenture Trustee any failure
by it to hold the Servicer's Loan File as herein provided and shall promptly
take appropriate action to remedy any such failure. In acting as custodian of
such documents and instruments, the Servicer agrees not to assert any legal or
beneficial ownership interest in the Loans or such documents or instruments. The
Servicer agrees to indemnify the Securityholders and the Indenture Trustee, its
officers, directors, employees, agents and "control persons" as such term is
used under the Act and under the Securities Exchange Act of 1934, as amended for
any and all liabilities, obligations, losses, damages, payments, costs or
expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Securityholders or the Indenture Trustee as the result of any act or
omission by the Servicer relating to the maintenance and custody of such
documents or instruments which have been delivered to the Servicer; provided,
however, that the Servicer will not be liable for any portion of any such amount
resulting from the negligence or willful misconduct of any Securityholders or
the Indenture Trustee; and provided, further, that the Servicer will not be
liable for any portion of any such amount resulting from the Servicer's
compliance with any instructions or directions consistent with this Agreement
issued to the Servicer by the Indenture Trustee. The Indenture Trustee shall
have no duty to monitor or otherwise oversee the Servicer's performance as
custodian hereunder.
Section 2.06 CONDITIONS PRECEDENT TO TRANSFER DATES AND
COLLATERAL VALUE EXCESS DATES.
(a) On each Transfer Date, the Depositor shall convey to the
Issuer, the Loans and the other property and rights related thereto described in
the related S&SA Assignment, the Issuer, only upon the satisfaction of each of
the conditions set forth below on or prior to such Transfer Date, shall deposit
or cause to be deposited cash in the amount of the Additional Note Principal
Balance in the Advance Account in respect thereof, and the Servicer shall,
promptly after such deposit, withdraw the amount deposited in respect of
applicable Additional Note Principal Balance from the Advance Account, and
distribute such amount to or at the direction of the Depositor.
(i) the Depositor shall have delivered to the Issuer
and the Initial Noteholder duly executed
Assignments, which shall have attached thereto a
Loan Schedule setting forth the appropriate
information with respect to all Loans conveyed
on such Transfer Date and shall have delivered
to the Initial Noteholder a computer readable
transmission of such Loan Schedule;
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(ii) the Depositor shall have deposited in the
Collection Account all collections received with
respect to each of the Loans after but not
including the applicable Transfer Cutoff Date;
(iii) as of such date, neither the Loan Originator,
the Issuer nor the Depositor shall (a) be
insolvent, (b) be made insolvent by its
respective sale of Loans or (c) have reason to
believe that its insolvency is imminent;
(iv) the Revolving Period shall not have terminated;
(v) the Initial Noteholder shall have received the
Due Diligence Packages for such Loans as are to
be transferred on such Transfer Date at least
five Business Days prior to the related Transfer
Date, shall have such completed its due
diligence investigation of such Loans and shall
have approved, in its sole discretion, each such
Loan;
(vi) the Issuer shall have delivered the Indenture
Trustee's Loan File to the Custodian in
accordance with the Custodial Agreement and the
Initial Noteholder shall have received a copy of
the Loan Schedule and Exceptions Report
reflecting such delivery;
(vii) each of the representations and warranties made
by the Depositor pursuant to SECTION 3.04 with
respect to the Loans shall be true and correct
as of the related Transfer Date with the same
effect as if then made, and the Depositor shall
have performed all obligations to be performed
by it under the Basic Documents on or prior to
such Transfer Date;
(viii) the Depositor shall, at its own expense, on or
prior to the Transfer Date, indicate in its
computer files that the Loans identified in the
LPA Assignment and S&SA Assignment have been
sold to the Issuer pursuant to this Agreement
and the S&SA Assignment;
(ix) the Depositor shall have taken any action
required to maintain the ownership interest of
the Issuer in the Trust Estate and the first
perfected security interest therein of the
Indenture Trustee;
(x) no selection procedures believed by the
Depositor to be adverse to the interests of the
Noteholders shall have been utilized in
selecting the Loans to be conveyed on such
Transfer Date;
(xi) the Depositor shall have provided the Issuer,
the Indenture Trustee and the Initial Noteholder
no later than two Business Days prior to such
date a Notice of Additional Note Principal
Balance in the form of Exhibit A hereto;
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(xii) after giving effect to the Additional Note
Principal Balance associated therewith, the Note
Principal Balance will not exceed the Maximum
Note Principal Balance;
(xiii) all conditions precedent to the Depositor's
purchase of Loans pursuant to the Loan Purchase
Agreement shall have been fulfilled as of such
Transfer Date; and
(xiv) all conditions precedent to the Noteholders'
purchase of Additional Note Principal Balance
pursuant to the Note Purchase Agreement shall
have been fulfilled as of such date.
(b) On each Collateral Value Excess Date, the Issuer shall
deposit or cause to be deposited into the Advance Account cash in the amount
equal to the Additional Note Principal Balance with respect to such Collateral
Value Excess Date, only upon the satisfaction of conditions set forth in
subclauses (iii), (iv), (ix), (xi), (xii) and (xiv) of SECTION 2.06(a) on such
Collateral Value Excess Date. The Servicer shall withdraw the amount deposited
in respect of Additional Note Principal Balance from the Advance Account in
respect of such deposit and distribute such amount to or at the direction of the
Depositor.
Section 2.07 TERMINATION OF REVOLVING PERIOD .
Upon the occurrence of (i) an Event of Default or Default
under this Agreement or the Indenture or (ii) a Rapid Amortization Trigger, the
Initial Noteholder (if still a Noteholder) may, in its sole discretion,
terminate the Revolving Period.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Loan
Originator, the Servicer, the Indenture Trustee, the Owner Trustee and the
Noteholders that as of the Closing Date, as of each Transfer Date and as of each
Collateral Value Excess Date:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has, and had at all relevant times, full power to own its property,
to carry on its business as currently conducted, to enter into and
perform its obligations under each Basic Document to which it is a
party;
(b) The execution and delivery of each Basic Document to which
it is a party by the Depositor and its performance of and compliance
with all of the terms thereof will not violate the Depositor's
certificate of incorporation or by-laws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach or acceleration of, any
material contract, agreement or other
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instrument to which the Depositor is a party or which may be applicable
to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter
into and consummate the transactions contemplated by each Basic
Document to which it is a party, has duly authorized the execution,
delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is
a party. Each Basic Document to which it is a party, assuming due
authorization, execution and delivery by the other party or parties
thereto, constitutes a valid, legal and binding obligation of the
Depositor, enforceable against it in accordance with the terms thereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, 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) The Depositor is not in violation of, and the execution
and delivery of each Basic Document to which it is a party by the
Depositor and its performance and compliance with the terms of each
Basic Document to which it is a party will not constitute a violation
with respect to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency
having jurisdiction, which violation would materially and adversely
affect the condition (financial or otherwise) or operations of the
Depositor or its properties or materially and adversely affect the
performance of its duties hereunder;
(e) There are no actions or proceedings against, or
investigations of, the Depositor currently pending with regard to which
the Depositor has received service of process and no action or
proceeding against, or investigation of, the Depositor is, to the
knowledge of the Depositor, threatened or otherwise pending before any
court, administrative agency or other tribunal that (a) if determined
adversely to the Depositor, would prohibit its entering into any of the
Basic Documents to which it is a party or render the Notes invalid, (b)
seek to prevent the issuance of the Notes or the consummation of any of
the transactions contemplated by any of the Basic Documents to which it
is a party or (c) if determined adversely to the Depositor, would
prohibit or materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability
of, any of the Basic Documents to which it is a party or the Notes;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, any of the Basic Documents to which it is a party or the Notes,
or for the consummation of the transactions contemplated by any of the
Basic Documents to which it is a party, except for such consents,
approvals, authorizations and orders, if any, that have been obtained
prior to the Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be
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rendered insolvent by the execution and delivery of any of the Basic
Documents to which it is a party or the assumption of any of its
obligations thereunder; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Depositor;
(h) As of the Transfer Date related thereto, the Depositor did
not sell the Mortgage Loans sold thereon to the Trust with any intent
to hinder, delay or defraud any of its creditors; nor will the
Depositor be rendered insolvent as a result of such sale;
(i) As of the Transfer Date related thereto, the Depositor had
good title to, and was the sole owner of, each Loan sold thereon free
and clear of any lien other than any such lien released simultaneously
with the sale contemplated herein, and, immediately upon each transfer
and assignment herein contemplated, the Depositor will have delivered
to the Trust good title to, and the Trust will be the sole owner of,
each Mortgage Loan transferred thereon free and clear of any lien;
(j) As of the Transfer Date related thereto, the Depositor
acquired title to each of the Loans sold thereon in good faith, without
notice of any adverse claim;
(k) The Basic Documents and other information identified in
Exhibit D hereto (collectively, the "Referenced Documents"), when taken
as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made,
not misleading. All written information furnished after the date hereof
by or on behalf of the Depositor to the Initial Noteholder or any
Affiliate thereof in connection with the Referenced Documents and the
transactions contemplated thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is
stated or certified. Except as disclosed in writing to the Initial
Noteholder, there is no fact known to a Responsible Officer of the
Depositor, after due inquiry, that could reasonably be expected to have
a material adverse effect on (a) the property, business, operations,
financial condition or prospects of the Depositor, (b) the ability of
the Depositor to perform its obligations under any Basic Document to
which it is a party, (c) the validity or enforceability of any of the
Basic Documents, (d) the rights and remedies of the Noteholders and the
Indenture Trustee under any of the Basic Documents, (e) the timely
payment of the principal of or interest on the Notes or other amounts
payable in connection therewith or (f) the Loans;
(l) The Depositor is not required to be registered as an
"investment company" under the Investment Company Act of 1940, as
amended; and
(m) As of the Transfer Date related thereto, the transfer,
assignment and conveyance of the Loans by the Depositor thereon
pursuant to this Agreement is not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable
jurisdiction.
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(n) The Depositor's principal place of business and chief
executive offices are located at The Perimeter Center, 17207 North
Perimeter Drive, Scottsdale, Arizona 85255.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF THE LOAN
ORIGINATOR.
The Loan Originator hereby represents and warrants to the
Servicer, the Indenture Trustee, the Owner Trustee, the Noteholders and
the Depositor that as of the Closing Date, as of each Transfer Date and
as of each Collateral Value Excess Date:
(a) The Loan Originator is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and (i) is duly qualified, in good standing and licensed to
carry on its business in each state where any Loan Collateral is
located and (ii) is in compliance with the laws of any such state, in
both cases, to the extent necessary to ensure the enforceability of the
Loans in accordance with the terms thereof and had at all relevant
times, full corporate power to originate the Loans, to own its
property, to carry on its business as currently conducted and to enter
into and perform its obligations under each Basic Document to which it
is a party;
(b) The execution and delivery by the Loan Originator of each
Basic Document to which it is a party and its performance of and
compliance with the terms thereof will not violate the Loan
Originator's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or
acceleration of, any contract, agreement or other instrument to which
the Loan Originator is a party or which may be applicable to the Loan
Originator or any of its assets;
(c) The Loan Originator has the full power and authority to
enter into and consummate all transactions contemplated by the Basic
Documents to be consummated by it, has duly authorized the execution,
delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is
a party. Each Basic Document to which it is a party, assuming due
authorization, execution and delivery by each of the other parties
thereto, constitutes a valid, legal and binding obligation of the Loan
Originator, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, 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) The Loan Originator is not in violation of, and the
execution and delivery of each Basic Document to which it is a party by
the Loan Originator and its performance and compliance with the terms
of each Basic Document to which it is a party will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or
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otherwise) or operations of the Loan Originator or its properties or
materially and adversely affect the performance of its duties under any
Basic Document to which it is a party;
(e) There are no actions or proceedings against, or
investigations of, the Loan Originator currently pending with regard to
which the Loan Originator has received service of process and no action
or proceeding against, or investigation of, the Loan Originator is, to
the knowledge of the Loan Originator, threatened or otherwise pending
before any court, administrative agency or other tribunal that (a) if
determined adversely to the Loan Originator, would prohibit its
entering into any Basic Document to which it is a party or render the
Notes invalid, (b) seek to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by any Basic
Document to which it is a party or (c) if determined adversely to the
Loan Originator, would prohibit or materially and adversely affect the
sale of the Loans to the Depositor, the performance by the Loan
Originator of its obligations under, or the validity or enforceability
of, any Basic Document to which it is a party or the Notes;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for: (1) the execution,
delivery and performance by the Loan Originator of, or compliance by
the Loan Originator with, any Basic Document to which it is a party,
(2) the issuance of the Notes, (3) the sale of the Loans under the Loan
Purchase Agreement or (4) the consummation of the transactions required
of it by any Basic Document to which it is a party, except such as
shall have been obtained before such date;
(g) Immediately prior to the Transfer Date related thereto,
the Loan Originator had good title to the Loans sold on such Transfer
Date without notice of any adverse claim;
(h) The information, reports and schedules furnished in
writing by or on behalf of the Loan Originator to the Initial
Noteholder or any Affiliate thereof with regard to the Loans, the Due
Diligence Packages, the Basic Documents and other information
identified in Exhibit D hereto (collectively, the "Referenced
Documents"), when taken as a whole, do not contain any untrue statement
of material fact or omit to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under
which they were made, not misleading. All written information furnished
after the date hereof by or on behalf of the Loan Originator to the
Initial Noteholder or any Affiliate thereof in connection with the
Referenced Documents and the transactions contemplated thereby will be
true, complete and accurate in every material respect, or (in the case
of projections) based on reasonable estimates, on the date as of which
such information is stated or certified. Except as disclosed in writing
to the Initial Noteholder, there is no fact known to a Responsible
Officer of the Loan Originator, after due inquiry, that could
reasonably be expected to have a material adverse effect on (a) the
property, business, operations, financial condition or prospects of the
Loan Originator, (b) the ability of the Loan Originator to perform its
obligations under any Basic Document to which it is a party, (c) the
validity or enforceability of any of the Basic Documents, (d) the
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rights and remedies of the Noteholders and the Indenture Trustee under
any of the Basic Documents, (e) the timely payment of the principal of
or interest on the Notes or other amounts payable in connection
therewith or (f) the Loans;
(i) The Loan Originator is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its business
and its obligations under each Basic Document to which it is a party;
it will not be rendered insolvent by the execution and delivery of this
Agreement or by the performance of its obligations under each Basic
Document to which it is a party; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Loan Originator
prior to the date hereof;
(j) As of the Transfer Date related thereto, the Loan
Originator has transferred the Loans transferred on or prior to such
Transfer Date without any intent to hinder, delay or defraud any of its
creditors; and
(k) As of the Transfer Date related thereto, the Loan
Originator has received fair consideration and reasonably equivalent
value in exchange for the Loans sold on such Transfer Date to the
Depositor.
It is understood and agreed that the representations and
warranties set forth in this SECTION 3.02 shall survive delivery of the
respective Indenture Trustee's Loan Files to the Custodian (as the agent of the
Indenture Trustee) and shall inure to the benefit of the Securityholders, the
Depositor, the Servicer, the Indenture Trustee, the Owner Trustee and the Trust.
Upon discovery by any of the Loan Originator, the Depositor, the Servicer, the
Indenture Trustee or the Owner Trustee of a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of any Loan or the interests of the Securityholders therein, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such discovery) to the other parties. The
obligations of the Loan Originator set forth in Sections 2.05 and 3.05 hereof to
cure any breach or to substitute for or repurchase an affected Loan shall
constitute the sole remedies available hereunder to the Securityholders, the
Depositor, the Servicer, the Indenture Trustee or the Owner Trustee respecting a
breach of the representations and warranties contained in this SECTION 3.02. The
fact that the Initial Noteholder has conducted or has failed to conduct any
partial or complete due diligence investigation of the Loan Files shall not
affect the Noteholders' rights to demand repurchase or substitution as provided
under this Agreement.
Section 3.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER.
The Servicer hereby represents and warrants to and covenants
with the Owner Trustee, the Indenture Trustee, the Noteholders, the Depositor
and the Loan Originator that as of the Closing Date, as of each Transfer Date
and as of each Collateral Value Excess Date:
(a) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (i) is duly qualified, in good standing and licensed to carry on
its business in each state where any Loan Collateral is located, and
(ii) is in compliance with the laws of any such state, in both cases,
to the
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extent necessary to ensure the enforceability of the Loans in
accordance with the terms thereof and to perform its duties under each
Basic Document to which it is a party and had at all relevant times,
full corporate power to own its property, to carry on its business as
currently conducted, to service the Loans and to enter into and perform
its obligations under each Basic Document to which it is a party;
(b) The execution and delivery by the Servicer of each Basic
Document to which it is a party and its performance of and compliance
with the terms thereof will not violate the Servicer's articles of
incorporation or by-laws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach or acceleration of, any material
contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;
(c) The Servicer has the full power and authority to enter
into and consummate all transactions contemplated by each Basic
Document to which it is a party, has duly authorized the execution,
delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is
a party. Each Basic Document to which it is a party, assuming due
authorization, execution and delivery by each of the other parties
thereto, constitutes a valid, legal and binding obligation of the
Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, 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) The Servicer is not in violation of, and the execution and
delivery of each Basic Document to which it is a party by the Servicer
and its performance and compliance with the terms of each Basic
Document to which it is a party will not constitute a violation with
respect to, any order or decree of any court or any order or regulation
of any federal, state, municipal or governmental agency having
jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or
materially and adversely affect the performance of its duties under any
Basic Document to which it is a party;
(e) There are no actions or proceedings against, or
investigations of, the Servicer currently pending with regard to which
the Servicer has received service of process and no action or
proceeding against, or investigation of, the Servicer is, to the
knowledge of the Servicer, threatened or otherwise pending before any
court, administrative agency or other tribunal that (a) if determined
adversely to the Servicer, would prohibit its entering into any Basic
Document to which it is a party, (b) seek to prevent the consummation
of any of the transactions contemplated by any Basic Document to which
it is a party or (c) if determined adversely to the Servicer, would
prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability
of, any Basic Document to which it is a party or the Notes;
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(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
any Basic Document to which it is a party or the Notes, or for the
consummation of the transactions contemplated by any Basic Document to
which it is a party, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to
such date;
(g) The Basic Documents and other information identified in
Exhibit D hereto (collectively, the "Referenced Documents"), when taken
as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made,
not misleading. All written information furnished after the date hereof
by or on behalf of the Servicer to the Initial Noteholder or any
Affiliate thereof in connection with the Referenced Documents and the
transactions contemplated thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is
stated or certified. Except as disclosed in writing to the Initial
Noteholder, there is no fact known to a Responsible Officer of the
Servicer, after due inquiry, that could reasonably be expected to have
a material adverse effect on (a) the property, business, operations,
financial condition or prospects of the Servicer, (b) the ability of
the Servicer to perform its obligations under any Basic Document to
which it is a party, (c) the validity or enforceability of any of the
Basic Documents, (d) the rights and remedies of the Noteholders and the
Indenture Trustee under any of the Basic Documents, (e) the timely
payment of the principal of or interest on the Notes or other amounts
payable in connection therewith or (f) the Loans;
(h) The Servicer is solvent and will not be rendered insolvent
as a result of the performance of its obligations pursuant to under the
Basic Documents to which it is a party; and
(i) The Servicer acknowledges and agrees that the Servicing
Fee represents reasonable compensation for the performance of its
services hereunder and that the entire Servicing Fee shall be treated
by the Servicer, for accounting purposes, as compensation for the
servicing and administration of the Loans pursuant to this Agreement.
It is understood and agreed that the representations,
warranties and covenants set forth in this SECTION 3.03 shall survive delivery
of the respective Indenture Trustee's Loan Files to the Indenture Trustee and
shall inure to the benefit of the Depositor, the Noteholders and the Indenture
Trustee. Upon discovery by any of the Loan Originator, the Depositor, the
Servicer, the Indenture Trustee or the Owner Trustee of a breach of any of the
foregoing representations, warranties and covenants that materially and
adversely affects the value of any Loans or the interests of the Noteholders
therein, the party discovering such breach shall give prompt written notice (but
in no event later than two Business Days following such discovery) to the other
parties. The fact that the Initial Noteholder has conducted or has failed to
conduct any partial or complete due diligence investigation shall not affect the
Noteholders' rights to exercise their remedies as provided under this Agreement.
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Section 3.04 REPRESENTATIONS AND WARRANTIES REGARDING LOANS.
The Loan Originator hereby represents and warrants to the
Depositor, the Issuer, the Indenture Trustee and the Noteholders, with respect
to each Loan as of the related Transfer Date (except as otherwise expressly
agreed in writing by the Majority Noteholders):
(a) Immediately prior to sale to the Depositor, the Loan
Originator is the sole owner and holder of the Loan.
(b) Immediately prior to sale to the Depositor, the Loan
Originator has full right and authority to sell, assign, transfer and pledge the
Loan.
(c) The Loan Originator is transferring the Loan free and
clear of any and all liens, pledges, equities, charges, claims or security
interests of any nature encumbering the Loan, except those removed immediately
prior to sale to the Depositor and except any security interest created pursuant
to the terms of this Agreement.
(d) With respect to each Mortgage Loan, the related Servicer's
Loan File includes a survey, certified to the Loan Originator and the title
insurance company, which is prepared in accordance with minimum standards for
surveys as determined by ALTA or equivalent at the time of origination of such
Mortgage Loan and contains the signature and seal of a licensed engineer or
surveyor affixed thereto.
(e) With respect to each Mortgage Loan, the related Assignment
of Mortgage and assignment of assignment of leases and rents (if any), except
for the name of the assignee, which is left blank, constitutes the legal, valid
and binding assignment of the Mortgage and the related assignment of leases and
rents from the Loan Originator. The endorsement of each Promissory Note, except
for the name of the assignee, which is left blank, constitutes the legal, valid
and binding assignment of the Promissory Note, and together with the Assignment
of Mortgage and Assignment of Loan Documents, legally and validly conveys all
right, title and interest in the subject Loan to the Indenture Trustee.
(f) With respect to each Equipment Loan, the endorsement of
the related Promissory Note, except for the name of the assignee, which is left
blank, constitutes the legal, valid and binding assignment of the Promissory
Note, and together with the Assignment of Loan Documents, legally and validly
conveys all right, title and interest in the subject Equipment Loan to the
Indenture Trustee.
(g) With respect to each Mortgage Loan, the lien of the
related Mortgage is insured by an ALTA lender's title insurance policy (or a
policy on an equivalent form), issued (or to be issued pursuant to a binding
irrevocable commitment therefor) by a Qualified Insurer, insuring (subject to
the exceptions referred to in subsection (ac) below) the Loan Originator, its
successors and assigns, that the related Mortgage is a valid first lien on the
Mortgaged Property. Such title insurance policy is in full force and effect and
will inure to the benefit of the owner of such Mortgage Loan. Such title
insurance policy insures the Mortgaged Property for not less than the original
principal amount of the Mortgage Loan after all advances of principal. The title
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policy does not contain any special exceptions (other than the standard
exclusions) for zoning or uses to the extent that such exceptions would, in the
aggregate, materially and adversely affect the value of the related Mortgaged
Property or the intended use thereof and, where available, has been marked to
delete the standard survey exception or to replace the standard survey exception
with a specific survey reading. No Person claiming through the Loan Originator
has done, by act or omission, anything, or has knowledge of any fact, which
would materially impair the coverage of any such title insurance policy. The
title policy has been marked to delete the intervening lien exception. All
premiums for such policy, including any premiums for endorsements and special
endorsements, have been paid. With respect to each Adjustable Rate Loan, the
related title policy contains an ALTA 6.02 endorsement, or its equivalent, to
the extent available.
(h) With respect to the Indenture Trustee's Loan File for such
Loan, all copies contained therein are true, correct and complete copies of the
related originals.
(i) The Fixed Charge Coverage Ratio for such Loan, to the
extent applicable, is not less than that specified in the Underwriting
Guidelines.
(j) (i) With respect to each Mortgage Loan that is secured by
the related Borrower's fee simple ownership interest in the related Mortgaged
Property, such Borrower is the owner and holder of the landlord's interest under
any lease for use and occupancy of all or any portion of the related Mortgaged
Property. Each Mortgage provides for the appointment of a receiver for rents in
the event of default or allows the mortgagee to enter into possession to collect
the rents. Neither the Loan Originator nor the Borrower has made any assignments
of the landlord's interest in any such lease or any portion of the rents,
additional rents, charges, issues or profits due and payable or to become due
and payable under any such lease, which assignments are presently outstanding
and have priority over the related Mortgage or any related assignment of leases,
rents and profits given in connection with the origination of the related
Mortgage, other than as may be disclosed in the related lender's title insurance
policy referred to in subsection (g) above. An assignment of leases and/or rents
and any security agreement, chattel mortgage or equivalent document related to
and delivered in connection with the Mortgage Loan establishes and creates a
valid and enforceable first lien and first priority security interest on the
property described therein except as enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and (c) applicable state laws, which state laws will not materially
interfere with the practical realization of the principal benefits or security
provided thereby.
(ii) With respect to each Equipment Loan, all Equipment
subject to the related Security Agreement is either subject to a UCC-1 Financing
Statement filed and/or recorded (or sent for filing and/or recording on or prior
to the Transfer Cutoff Date) in all places necessary to perfect a valid first
priority lien thereon or, to the extent the related Equipment is securities or
other instruments, the Loan Originator or its agent has a valid first priority
lien thereon perfected by possession.
(k) In reliance on the Borrower's counsel's opinion contained
in the Servicer's Loan File, if any, and the Title Policy contained in the
Indenture Trustee's Loan File, with respect
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to each Mortgage that is a deed of trust, a trustee, duly qualified under
applicable law to serve as such, has either been properly designated and
currently so serves or may be substituted in accordance with applicable law.
Except in connection with a trustee's sale or as otherwise required by
applicable law, after default by the Borrower, no fees or expenses are payable
to such trustee.
(l) The Servicer's Loan File contains a site inspection and
valuation report of the related Mortgaged Property which site inspection and
valuation report conforms to the requirements contained in the Underwriting
Guidelines and such site inspection and valuation report was conducted by a
Person whose compensation was and is not affected by the approval or disapproval
of such Loan.
(m) The information set forth in the Loan Schedule for such
Loan is true, correct and complete in all material respects.
(n) The Loan has been originated in accordance with applicable
law and the Underwriting Guidelines.
(o) The Borrower and/or its lessees and/or operator are in
possession of all material licenses, permits, and authorizations required for
use and/or possession of the Loan Collateral.
(p) The Loan has been serviced in accordance with applicable
law and the terms of the related Loan Documents.
(q) Since the completion of funding contemplated under the
applicable Loan Documents of the Loan, the terms of the related Promissory Note,
Mortgage, if applicable, and Security Agreements, if applicable, have not been
impaired, waived, modified, altered, satisfied, canceled or subordinated by the
Loan Originator in any respect, except, in each of the foregoing instances, by
written instruments that are a part of the related Indenture Trustee's Loan
File, recorded in the applicable public recording office if necessary to
maintain the priority of the lien of the related Mortgage, if applicable, and
Security Agreements, if applicable, delivered to the Indenture Trustee or its
designee.
(r) No fraud, error, omission, misrepresentation or negligence
with respect to the origination of a Loan has taken place on the part of any
Person, including, without limitation, the Borrower, any appraiser or any other
party involved in the origination of the Loan. The Loan Originator has reviewed
all of the documents constituting the Indenture Trustee's Loan File, the
Servicer's Loan File and internal credit write-up and has made such inquiries as
it deems necessary to make and confirm the accuracy of the representations set
forth herein.
(s) The Loan is not a participation interest in a loan, but is
a whole loan, and the Loan Originator does not own and is not entitled to own
any equity interest in the Borrower. Except as disclosed in the Due Diligence
Package related thereto, such Loan does not provide for any Retained Interest.
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(t) The Loan does not contain a shared appreciation feature or
any terms providing for a contingent interest.
(u) No taxes, ground rents, water charges, sewer rents,
insurance premiums, governmental assessments (including the current portion of
assessments payable in future installments) or other charges affecting the
related Loan Collateral that, prior to the related Transfer Cutoff Date became
due and owing in respect of such Loan Collateral, are delinquent.
(v) Any escrow deposits and payments relating to the Loan are
under the control of the Loan Originator or Servicer and any amounts required to
be deposited by the Borrower have been deposited.
(w) There is no material default, breach, violation or event
of acceleration on the part of the related Borrower existing under the related
Mortgage or Security Agreement or the related Promissory Note, and no event
which, with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration occurred during
the preceding twelve months. The Loan Originator has not waived any material
default, breach, violation or event of acceleration of any of the foregoing,
and, pursuant to the terms of the related Mortgage or Security Agreement or the
related Promissory Note, no person or party other than the holder of such
Promissory Note may declare any event of default or accelerate the related
indebtedness under either of such Mortgage or Promissory Note.
(x) There is no pending total or partial condemnation of the
related Mortgaged Property, and the Loan Collateral is free and clear of any
damage or waste that would materially and adversely affect its value or
marketability as security for the Loan and the related Loan Collateral is in
good repair and has not been materially damaged by fire, wind or other cause,
which damage has not been fully repaired or for which insurance proceeds have
not been received or are not expected to be received.
(y) With respect to each Mortgage Loan, none of the
improvements that are or are intended to be, security for the Mortgage Loan lie
outside of the boundaries and building restriction lines of the Mortgaged
Property except for certain immaterial encroachments therefrom, and no
improvements on adjoining properties materially encroach upon the Mortgaged
Property, except for those material encroachments insured over by title
insurance or the subject of a Title Matters Indemnity Agreement contained in the
Servicer's Loan File with respect to such Mortgage Loan.
(z) The Loan Collateral is covered by acceptable insurance
meeting the minimum requirements set forth in the Mortgage or Security
Agreement. The Loan Collateral is insured by a fire and extended perils
insurance policy that provides coverage in an amount not less than the lesser of
the Principal Balance of the related Promissory Note and full replacement value
of the Loan Collateral.
(aa) With respect to each Mortgage Loan, the related Loan
Documents require that the related Mortgaged Property be insured by a fire and
extended perils insurance policy, issued by a Qualified Insurer that has a
claims-paying ability rated at least "A:VI" by A.M. Best's
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Key Rating Guide, providing coverage against loss or damage sustained by reason
of fire, lightning, windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles and smoke, and, to the extent required under
such Loan Documents, against earthquake and other risks insured against by
Persons operating like properties in the locality of such Mortgaged Property, in
an amount that is not less than 100% of the full insurable replacement cost of
such Mortgaged Property (exclusive of land, footings and foundations). If such
Mortgaged Property is located in a Special Flood Hazard Area (as defined by the
Federal Emergency Management Agency) and flood insurance is available, such Loan
Documents require that a flood insurance policy be in effect. The related Loan
Documents also require the related Mortgaged Property to be covered by
comprehensive general liability insurance in amounts generally required by
institutional lenders for similar properties. The related Loan Documents require
that each such Insurance Policy (i) contain a standard mortgagee clause naming
the Loan Originator, its successors and assigns as mortgagee and (ii) provide
for prior notice to the mortgagee, as additional insured, of termination or
cancellation (and no such notice has been received). In addition, each such
Insurance Policy will be required to be subject to deductibles not greater than
those customarily carried for similar Mortgaged Property, considering the
creditworthiness of the Borrower. The Loan Documents for such Mortgage Loan
obligate the related Borrower to maintain all such insurance, and if such
Borrower fails to do so, authorize the mortgagee to obtain and maintain such
insurance at such Borrower's cost and expense and to seek reimbursement therefor
from such Borrower;
(ab) The Loan is not thirty (30) or more days delinquent in
payment of principal or interest and has not been delinquent by thirty (30) or
more days more than once during the preceding twelve (12) months.
(ac) With respect to each Mortgage Loan, the related Mortgage
is a valid and enforceable first lien on the fee or leasehold estate of the
Borrower in the related Mortgaged Property (as applicable), which Mortgaged
Property is free and clear of all encumbrances and liens having priority over
the first lien of the Mortgage, except (i) for liens for real estate taxes and
special assessments either not yet delinquent or not yet due and payable, (ii)
for covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, which
exceptions do not, in the aggregate, materially and adversely affect the value
of the related Mortgaged Property or the intended use thereof, (iii) to the
extent such Loan Collateral consists of patents, trademarks or copyrights, or
property as to which perfection of a security interest is effected through
possession, notation on a document of title or recording or filing under any law
other than the UCC, such security interest is perfected as a first priority
security interest under the UCC and (iv) for other matters to which like
properties are commonly subject which do not, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by such Mortgage.
(ad) With respect to each Mortgage Loan, no claims have been
made by the Loan Originator under the related Title Policy. No prior holder of
the related Mortgage has done, by act or omission, anything which would
materially impair the coverage of any such Title Policy and such Title Policy is
in full force and effect, is freely assignable and will inure to the benefit of
the Indenture Trustee or its designee as mortgagee of record. All applicable
premiums for the Title Policy, endorsements and all special endorsements, if
any, have been paid.
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(ae) The Loan Originator has, and all parties to the related
Promissory Note, Mortgage or Security Agreement, and any related agreements or
guaranties had, the power, authority and legal capacity to enter into, execute
and deliver the same and such Promissory Note, Mortgage or Security Agreement,
related agreements and guaranties, if any, have been duly and properly executed
and delivered by the Loan Originator and all other parties.
(af) In connection with each Loan, the related Promissory
Note, Mortgage or Security Agreement and other agreements executed in connection
therewith:
(i) have been completed in compliance with, or are
exempt from, applicable state, federal and local laws and rules and regulations
relating to the origination of and performance under the Loan, including,
without limitation, usury, land sales, the offer and sale of securities and
equal credit opportunity or disclosure, the Federal Truth-in-Lending Act, the
Real Estate Settlement Procedure Act and other consumer protection laws and
neither origination of such Loan nor consummation of the transactions
contemplated hereby involved or will involve the violation of any such laws; and
(ii) are genuine and are the legal, valid and binding
obligation of the Borrower or Borrowers thereof (subject to any non-recourse
provisions therein), and enforceable in accordance with their respective terms,
without defense, offset, counterclaim or right of rescission, except as
enforcement may be limited by (a) bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally, (b)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and (c) applicable state laws,
which state laws will not materially interfere with the practical realization of
the principal benefits or security provided thereby.
(ag) The related Promissory Note, Mortgage or Security
Agreement, as applicable, and other agreements executed in connection therewith
contain enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Loan Collateral of the
benefits of the security provided thereby.
(ah) The Loan Documents have not been modified to (i) provide
for any holdbacks, other than any holdbacks previously approved by the parties
hereto, (ii) require future advances thereunder, or (iii) require disbursements
of any escrow funds for completion of any on-site or off-site improvements,
other than any requirements for disbursement of escrow funds held pursuant to
the applicable Loan Documents. All applicable costs, fees and expenses incurred
in making, closing or recording such Loan will have been paid on or before the
related Transfer Cutoff Date.
(ai) With respect to each Mortgage Loan, the Loan Originator
has a first lien priority perfected security interest in all Condemnation
Proceeds and casualty proceeds relating to such Mortgaged Property.
(aj) The Loan Collateral is not in construction or substantial
rehabilitation.
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(ak) The Loan is not cross-collateralized with any obligation
other than a Loan. For each Senior Loan, the related Borrower's obligations
thereunder are cross-defaulted with such Borrower's obligations under the
Mortgage Loans and the Equipment Loans (if any) associated with such Senior
Loan.
(al) The conveyance of the Loan on such Transfer Date shall be
deemed a certification by a Responsible Officer of the Loan Originator that no
default by a Borrower is threatened or imminent with respect to such Loan.
(am) With respect to each Mortgage Loan, there is access to
the Mortgaged Property and such access is insured by title insurance (to the
extent available), and each Mortgaged Property, in every case, is serviced by
public or private water and sewer systems. The Loan Originator inspected, or
caused to be inspected, the related Mortgaged Property in connection with the
origination of such Mortgage Loan and the Loan Originator has inspected, or
caused to be inspected, such Mortgaged Property in accordance with the
Underwriting Guidelines.
(an) [Reserved.]
(ao) The Loan Originator has not, directly or indirectly,
advanced funds under the related Promissory Note to a party other than the
related Borrower or its designee. The Loan Originator has not received any
advance of funds by a party other than the related Borrower, for the payment of
any amount required by the related Promissory Note or the related Mortgage or
Security Agreement, as the case may be.
(ap) The related Borrower is not a debtor in any state or
federal bankruptcy or insolvency proceeding.
(aq) The Mortgage or Security Agreement, as the case may be,
prohibits any further pledge or lien on the Loan Collateral, whether equal or
subordinate to the lien of the Mortgage or Security Agreement, as the case may
be, without the prior written consent of the holder.
(ar) All Loan Collateral is located within one of the 50
United States or the District of Columbia.
(as) Each Loan that is a Mortgage Loan is a C&G Store Mortgage
Loan, a QSR Store Mortgage Loan, a CD Facility Mortgage Loan or an Other
Mortgage Loan that is secured by the related Borrower's (x) fee simple estate
("Fee Interest") or (y) leasehold estate in a Ground Lease. With respect to each
Ground Lease:
(i) Such Ground Lease, or a memorandum thereof, has
been recorded, and either any provisions of such Ground Lease that prohibit the
related leasehold estate to be mortgaged have been waived or the lessor has
consented to the leasehold mortgage;
(ii) Except as disclosed in the Due Diligence Package
related to such Loan, such Ground Lease or the related estoppel certificate
provides that the Borrower's interest
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in such Ground Lease is assignable to successors and assigns of the mortgagee
with the consent of, the lessor thereunder which consent shall not be
unreasonably withheld;
(iii) The lessor has delivered an estoppel
certificate stating that at the date of delivery of such estoppel certificate,
such Ground Lease is in full force and effect and no default has occurred under
such Ground Lease nor is there any existing condition which, but for the passage
of time or the giving of notice, or both, would result in a default thereunder;
(iv) The mortgagee under such Ground Lease is
permitted a reasonable opportunity to cure any default under such Ground Lease
which is curable after the receipt of notice of such default before the lessor
thereunder may terminate such Ground Lease;
(v) Such Ground Lease or applicable estoppel
certificate does not restrict the use of the related Mortgaged Property by the
related Borrower, its successors or assigns in a manner that would materially
and adversely affect the security provided by the related Mortgage. The Ground
Lease or applicable estoppel certificate contains a covenant or agreement that
the lessor thereunder is not permitted, in the absence of an uncured default, to
disturb the possession, interest or quiet enjoyment of any lessee in the
relevant portion of the Mortgaged Property for any reason; and
(vi) Such Ground Lease has an original term that,
together with any term or terms for which such Ground Lease may be renewed or
extended by the related Borrower, extends to not earlier than the fifth
anniversary of the stated maturity date of the related Mortgage Loan.
(at) (i) Each Mortgage Loan that is a C&G Store Mortgage Loan
is insured under the Environmental Policy; and
(ii) With respect to each Mortgage Loan that is not a
C&G Store Mortgage Loan, either (a) (x) a Phase I environmental assessment was
conducted with respect to the related Mortgaged Property, that concluded that no
further investigation of the related Mortgaged Property was necessary or (y) if
such Phase I environmental assessment concluded that further investigation of
such Mortgaged Property was necessary, a Phase II environmental assessment was
conducted with respect to the related Mortgaged Property, and such Phase II
environmental assessment evidenced that no remediation or further action was
required with respect to the related Mortgaged Property or (B) such Mortgage
Loan is insured under the Environmental Policy.
(au) With respect to each Mortgage Loan, the related Mortgage
provides that the Borrower will defend and hold the Loan Originator and its
successors and/or assigns harmless from and against claims of any kind
whatsoever (including attorney's fees and costs) paid, incurred, or suffered by,
or asserted against, any such other party resulting from a breach of any
representation, warranty or covenant given by the Borrower under the related
Mortgage.
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(av) As of the related Transfer Date, after giving effect to
the transfer of such Loan, the aggregate Principal Balance of all CD Facility
Mortgage Loans in the Loan Pool will not exceed the greater of (i) 15% of the
Pool Principal Balance and (ii) $30,000,000.
(aw) With respect to each Equipment Loan, the related Security
Agreement creates a valid, existing and enforceable first priority security
interest in the related Equipment and such security interest is perfected as a
first priority security interest under the UCC.
(ax) The information contained in the Due Diligence Package
covering the characteristics of such Loan and the related Borrower and Loan
Collateral is true and correct in all material respects.
(ay) (i) With respect to each Loan that is not identified as
an Adjustable Rate Loan on the Loan Schedule, the Loan Interest Rate with
respect thereto is fixed throughout the term to maturity of such Loan (without
regard to any Retained Interest). The amount of interest accrued on each such
Loan will be calculated based on a 360-day year consisting of twelve 30-day
months.
(ii) With respect to each Loan that is an Adjustable Rate
Loan, the Loan Interest Rate is subject to adjustment on the first day of each
calendar month to equal the sum of LIBOR (as defined in the related Loan
Documents) for such date and a fixed percentage, subject to a maximum rate and
minimum rate in accordance with the terms thereof. The initial amount of the
Monthly Payment related to each Adjustable Rate Loan will fully amortize the
original Principal Balance of such Loan over its original term to maturity at
the initial Loan Interest Rate thereon. The Monthly Payments on each such Loan
will be equal to such amount until the first Payment Reset Date for such Loan,
at which time, and on each succeeding Payment Reset Date thereafter, the amount
of the Monthly Payments to be paid by the related Borrower will be adjusted for
the next succeeding Payment Period to an amount that will fully amortize the
Principal Balance of such Loan on such Payment Reset Date at the Loan Interest
Rate for such Loan as determined on each December 15th prior to the next Payment
Period over its remaining term to maturity. The amount of interest accrued on
each of the Adjustable Rate Loans will be calculated based on a 360-day year and
the actual number of days elapsed. Any Negative Amortization will be added to
the Principal Balance of such Loan on such Due Date. If the Principal Balance of
any Adjustable Rate Loan exceeds the product of the related Negative
Amortization Cap and the original Principal Balance thereof after adding any
Negative Amortization thereto, the related Borrower will be required to prepay
such Loan on the immediately succeeding Due Date in an amount equal to the
difference between such Principal Balance and such original principal balance.
All adjustments to the Loan Interest Rate on any Adjustable Rate Loan have been
made in compliance with the terms of applicable law and the related Promissory
Note.
Section 3.05 PURCHASE AND SUBSTITUTION.
(a) It is understood and agreed that the representations and
warranties set forth in SECTION 3.04 hereof shall survive the conveyance of the
Loans to the Issuer, the pledge of the Loans to the Indenture Trustee and the
delivery of the Notes to the Noteholders. Upon discovery
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by the Depositor, the Servicer, the Loan Originator, the Custodian, the Issuer,
the Indenture Trustee or any Securityholder of a breach of any of such
representations and warranties or the representations and warranties set forth
in SECTION 3.02 which materially and adversely affects the value of the Loans or
the interests of the Securityholders in the related Loan (notwithstanding that
such representation and warranty was made to the Loan Originator's best
knowledge), the party discovering such breach shall give prompt written notice
to the others. The Loan Originator shall within 5 Business Days of any breach of
a representation or warranty, including any breach of the representation set
forth in SECTION 3.04(aw) hereof as a result of an attribute of the aggregate
Loan Pool which would not otherwise cause a breach of any other representation
or warranty, promptly cure such breach in all material respects. If within 5
Business Days after the earlier of the Loan Originator's discovery of such
breach or the Loan Originator's receiving notice thereof such breach has not
been remedied by the Loan Originator and such breach materially and adversely
affects the interests of the Securityholders or in the related Loan (the
"DEFECTIVE LOAN"), the Loan Originator shall promptly upon receipt of written
instructions from the Majority Noteholders either (i) remove such Defective Loan
from the Trust (in which case it shall become a Deleted Loan) and substitute one
or more Qualified Substitute Loans in the manner and subject to the conditions
set forth in this SECTION 3.05 or (ii) purchase such Defective Loan at a
purchase price equal to the Purchase Price with respect to such Defective Loan
by depositing such Purchase Price in the Collection Account. The Loan Originator
shall provide the Servicer, the Indenture Trustee, the Initial Noteholder and
the Issuer with a certification of a Responsible Officer on the Determination
Date next succeeding the end of such 5 Business Days period indicating whether
the Loan Originator is purchasing the Defective Loan or substituting in lieu of
such Defective Loan a Qualified Substitute Loan.
Any substitution of Loans pursuant to this SECTION 3.05(a)
shall be accompanied by payment by the Loan Originator of the Substitution
Adjustment, if any, to be deposited in the Collection Account pursuant to
SECTION 5.01(b)(1) hereof.
It is understood and agreed that the obligation of the Loan
Originator to repurchase or substitute any such Loan pursuant to this SECTION
3.05 shall constitute the sole remedy against it with respect to such breach of
the foregoing representations or warranties or the existence of the foregoing
conditions. With respect to representations and warranties made by the Loan
Originator pursuant to SECTION 3.04 hereof that are made to the Loan
Originator's best knowledge, if it is discovered by any of the Depositor, the
Loan Originator, the Indenture Trustee or the Owner Trustee that the substance
of such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Loan, notwithstanding the Loan
Originator's lack of knowledge, such inaccuracy shall be deemed a breach of the
applicable representation and warranty.
(b) As to any Deleted Loan for which the Loan Originator
substitutes a Qualified Substitute Loan or Loans, the Loan Originator shall
effect such substitution by delivering to the Issuer (i) a certification
executed by a Responsible Officer of the Loan Originator to the effect that the
Substitution Adjustment has been credited to the Collection Account and (ii) the
documents constituting the Indenture Trustee's Loan File for such Qualified
Substitute Loan or Loans.
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The Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Loans on or before the date of substitution will be
retained by the Loan Originator. The Issuer will be entitled to all payments
received on the Deleted Loan on or before the date of substitution and the Loan
Originator shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Loan. The Loan Originator shall give written
notice to the Issuer, the Servicer (if the Loan Originator is not then acting as
such), the Indenture Trustee and Owner Trustee that such substitution has taken
place and the Servicer shall amend the Loan Schedule to reflect (i) the removal
of such Deleted Loan from the terms of this Agreement and (ii) the substitution
of the Qualified Substitute Loan. The Loan Originator shall promptly deliver to
the Issuer, the Servicer (if the Loan Originator is not then acting as such),
the Indenture Trustee and Owner Trustee, a copy of the amended Loan Schedule.
Upon such substitution, such Qualified Substitute Loan or Loans shall be subject
to the terms of this Agreement in all respects, and the Loan Originator shall be
deemed to have made with respect to such Qualified Substitute Loan or Loans, as
of the date of substitution, the covenants, representations and warranties set
forth in SECTION 3.04 hereof. On the date of such substitution, the Loan
Originator will deposit into the Collection Account an amount equal to the
related Substitution Adjustment, if any. In addition, on the date of such
substitution, the Servicer shall cause the Indenture Trustee to release the
Deleted Loan from the lien of the Indenture and the Servicer will cause such
Qualified Substitute Loan to be pledged to the Indenture Trustee under the
Indenture as part of the Trust Estate.
(c) With respect to all Defective Loans or other Loans
repurchased by the Loan Originator pursuant to this Agreement, upon the deposit
of the Purchase Price therefor into the Collection Account, the Indenture
Trustee shall assign to the Loan Originator, without recourse, representation or
warranty, all the Indenture Trustee's right, title and interest in and to such
Defective Loans or Loans, which right, title and interest were conveyed to the
Indenture Trustee pursuant to SECTION 2.01 hereof. The Indenture Trustee shall,
at the expense of the Loan Originator, take any actions as shall be reasonably
requested by the Loan Originator to effect the repurchase of any such Loans.
(d) It is understood and agreed that the obligations of the
Loan Originator set forth in this SECTION 3.05 to cure, purchase or substitute
for a Defective Loan (and to indemnify the Trust for certain losses as described
herein in connection with a Defective Loan) constitute the sole remedies
hereunder of the Depositor, the Issuer, the Indenture Trustee, Owner Trustee and
the Securityholders respecting a breach of the representations and warranties
contained in SECTION 3.02 and SECTION 3.04 hereof. Any cause of action against
the Loan Originator relating to or arising out of a defect in a Indenture
Trustee's Loan File as contemplated by SECTION 2.05 hereof or against the Loan
Originator relating to or arising out of a breach of any representations and
warranties made in SECTION 3.04 hereof shall accrue as to any Loan upon (i)
discovery of such defect or breach by any party and notice thereof to the Loan
Originator or notice thereof by the Loan Originator to the Indenture Trustee,
(ii) failure by the Loan Originator to cure such defect or breach or purchase or
substitute such Loan as specified above, and (iii) demand upon the Loan
Originator, as applicable, by the Issuer or the Majority Noteholders for all
amounts payable in respect of such Loan.
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(e) Neither the Issuer nor the Indenture Trustee shall have
any duty to conduct any affirmative investigation other than as specifically set
forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Loan pursuant to this Section or the
eligibility of any Loan for purposes of this Agreement.
Section 3.06 SECURITIZATIONS.
(a) In accordance with the terms of SECTION 2.3(a) of the Loan Purchase
Agreement, the Loan Originator shall effect Securitizations at the direction of
the Majority Noteholders. In connection therewith, the Issuer agrees to assist
the Loan Originator in such Securitizations and accordingly it shall, at the
request and direction of the Majority Noteholders:
(i) transfer, deliver and sell all or a portion of the
Loans, as of the "cutoff dates" of the related
Securitizations, to such Securitization Participants
as may be necessary to effect the Securitizations;
provided, that any such sale shall be for "fair
market value," as determined by the Majority
Noteholders in their reasonable discretion;
(ii) deposit the cash Securitization Proceeds into the
Collection Account pursuant to SECTION 5.01(b)(1) and
retain any Retained Securities created in
Securitizations in accordance with the terms of the
Trust Agreement;
(iii) to the extent that a Securitization creates any
Retained Securities, to accept such Retained
Securities as a part of the Securitization Proceeds,
PROVIDED, THAT any such acceptance of such Retained
Securities shall be subject to the Issuer's
reasonable approval; and
(iv) take such further actions as may be reasonably
necessary to effect such Securitizations.
(b) The Servicer hereby covenants that it will take such actions as may
be reasonably necessary to effect Securitizations as the Majority Noteholders
may request and direct.
(c) The right of the Majority Noteholders to require the Issuer and the
Loan Originator to effect Securitizations is subject to (i) the conditions set
forth in Section 2.3(a) of the Loan Purchase Agreement and (ii) the Issuer's
right of approval with respect to the Securitization.
(d) The Issuer covenants that no Loan shall remain pledged as
Collateral for a single Series of Notes past the date ending on the second
Securitization which occurs while such Loan was pledged as Collateral.
(e) The Loan Originator shall, in connection with a Securitization,
cause FFCA to obtain an Opinion of Counsel to the effect that the securities
issued shall be treated as the issuance of debt instruments by FFCA or an
Affiliate thereof.
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Section 3.07 LOAN ORIGINATOR PUT; SERVICER CALL.
(a) LOAN ORIGINATOR PUT. The Loan Originator shall promptly repurchase,
upon the written demand of the Majority Noteholders, (i) any Loan that has
become 30 or more days Delinquent, (ii) any Defaulted Loan, (iii) any Loan that
has been in default for a period of 30 days or more, (iv) any Loan that has been
determined to be ineligible for a Securitization by mutual agreement of the
Majority Noteholders and the Servicer and (v) any Mortgage Loan with respect to
which the Loan Originator did not enforce a due-on-sale or due-on-encumbrance
clause pursuant to SECTION 7.01 hereof (each such Loan, a "Put/Call Loan").
(b) SERVICER CALL. The Servicer may repurchase any Put/Call Loan (as
defined in SECTION 3.07(a) hereof). Such Servicer Calls shall be solely at the
option of the Servicer. Prior to exercising a Servicer Call, the Servicer shall
deliver written notice to the Majority Noteholders and the Indenture Trustee
which notice shall identify each Loan to be repurchased and the Purchase Price
therefor.
(c) In connection with each Loan Originator Put, the Loan Originator
shall remit to the Servicer for deposit into the Collection Account, the
Purchase Price for the Loans to be repurchased. In connection with each Servicer
Call, the Servicer shall deposit into the Collection Account the Purchase Price
for the Loans to be repurchased. The aggregate Purchase Price of all Loans
transferred pursuant to SECTION 3.07(a) shall in no event exceed the Unfunded
Transfer Obligation or the Postsecuritization Unfunded Transfer Obligation, as
applicable, at the time of such Loan Originator Put.
Section 3.08 MODIFICATION OF UNDERWRITING GUIDELINES.
The Loan Originator shall give the Initial Noteholder prompt written
notification of any material modification or change to the Underwriting
Guidelines.
Section 3.09 ENVIRONMENTAL POLICY AND BUSINESS INTERRUPTION
INSURANCE.
(a) The Loan Originator shall perform all actions required under the
Environmental Policy to validly assign such policy to the Indenture Trustee with
respect to each Mortgage Loan insured thereunder.
(b) The Loan Originator shall remit to the Collection Account all
amounts received by it under the Environmental Policy with respect to each Loan
insured thereunder; provided that to the extent the Servicer decides in
accordance with the Servicing Standard to apply such proceeds to remediate the
related Mortgaged Property, the Servicer shall retain such amounts for such use.
(c) The Loan Originator hereby covenants that in the event that the
Majority Noteholders determine that it is generally required by national
statistical rating organizations, in connection with securitization transactions
with respect to the Loans (regardless of whether such a Securitization is
expected to occur with respect to the Loans), it shall promptly obtain or cause
to be obtained for each Mortgaged Property, business interruption or rent
insurance, in an amount at least equal to six (6) months of operations of such
Mortgaged Property, or if the Loan
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Originator shall not obtain or cause such insurance to be obtained for any
Mortgage Loan, the parties hereto agree that the Majority Noteholders may
proportionately reduce the Maximum Advance Factor for such Mortgage Loan in an
amount equal to the aggregate reduction in anticipated Securitization Proceeds
attributable to such failure to obtain such insurance.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE LOANS
Section 4.01 DUTIES OF THE SERVICER.
(a) SERVICING STANDARD. The Servicer, as an independent
contractor, shall remain an Eligible Servicer and shall service and administer
the Loans in the best interests of and for the benefit of the Noteholders, in
accordance with applicable state and Federal Laws, the terms of this Agreement
and the Servicing Standard. To the extent consistent with such terms and in
accordance with such terms, the Servicer shall have full power and authority,
acting alone, to service and administer the Loans with a view toward the
maximization of timely recovery of principal and interest thereon.
Notwithstanding anything to the contrary contained herein, the Servicer, in
servicing and administering the Loans, shall employ or cause to be employed
procedures (including collection, foreclosure, liquidation and Foreclosure
Property management and liquidation procedures) and exercise the same care that
it customarily employs and exercises in servicing and administering loans of the
same type as the Loans for its own account, all in accordance with the Servicing
Standard of prudent lending institutions and servicers of commercial loans of
the same type as the Loans and giving due consideration to the Noteholders'
reliance on the Servicer. In the event of a conflict between this Agreement and
the Servicing Standard, this Agreement shall control. The Servicer has and shall
maintain the facilities, procedures and experienced personnel necessary to
comply with the servicing standard set forth in this subsection (a) and the
duties of the Servicer set forth in this Agreement relating to the servicing and
administration of the Loans. In performing its obligations hereunder the
Servicer shall at all times act in good faith in a commercially reasonable
manner in accordance with applicable law and the Promissory Notes and Mortgages
or Security Agreements, as the case may be.
(b) The Servicer shall notify the Initial Noteholder in
writing in advance of any action taken by the Servicer to (i) release, or agree
to the substitution or exchange of any collateral for, any portion of any Loan
Collateral or related collateral, (ii) release from liability any Person liable
for any obligation under a Mortgage or Security Agreement, as the case may be,
(iii) consent (to the extent the Servicer is entitled under the Mortgage or
other agreement to withhold such consent) to the transfer (direct or indirect)
or encumbrance of any Loan Collateral, (iv) with respect to any lease, consent
(to the extent the Servicer is entitled under the Mortgage or other agreement to
withhold such consent) to the execution, assignment, termination or modification
of such lease if, in the case of the termination of such lease or the execution
of new lease, such would result in a reduction of the monthly rent most recently
payable in respect of the related portion of the Mortgaged Property, or, in the
case of an assignment or modification of such lease, such assignment would
reduce the term thereof or the rental payable thereunder, (v) grant
non-disturbance to any tenant under any lease, (vi) apply Insurance Proceeds or
proceeds of
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a partial condemnation in excess of $50,000 received with respect to a Loan to
the restoration or repair of the related Loan Collateral unless otherwise
required pursuant to the related Loan Documents or applicable law, (vii) waive
any prepayment premium or otherwise waive, amend or modify any term of any Loan,
(viii) accelerate the maturity of any Loan, (ix) take possession of or acquire
title to any Loan Collateral, or (x) sell any Loan Collateral or Foreclosure
Property.
(c) SERVICING ADVANCES. In accordance with the preceding
general servicing standard, the Servicer, or any Subservicer on behalf of the
Servicer, shall make all Servicing Advances in connection with the servicing of
each Loan hereunder. Notwithstanding any provision to the contrary herein,
neither the Servicer nor any Subservicer on behalf of the Servicer shall have
any obligation to satisfy or keep current the indebtedness secured by any on the
related Loan Collateral. No costs incurred by the Servicer or any Subservicer in
respect of Servicing Advances shall, for the purposes of distributions to
Securityholders, be added to the amount owing under the related Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect to a Loan, before making any Servicing Advance, the
Servicer shall assess the reasonable likelihood of (i) recovering such Servicing
Advance and any prior Servicing Advances for such Loan and (ii) recovering any
amounts attributable to outstanding interest and principal owing on such Loan
for the benefit of the Securityholders in excess of the costs, expenses and
other deductions to obtain such recovery, including without limitation any
Servicing Advances therefor and, if applicable, the outstanding indebtedness of
all. The Servicer shall only make a Servicing Advance with respect to a Loan to
the extent that the Servicer determines in its reasonable, good faith judgment
that such Servicing Advance would likely be recovered as aforesaid; provided,
however, that the Servicer will be entitled to be reimbursed for any
Nonrecoverable Servicing Advances in accordance with the terms of this
Agreement.
(d) WAIVERS, MODIFICATIONS AND EXTENSIONS; SUBORDINATION. The
Servicer shall make reasonably diligent efforts to collect all payments called
for under the terms and provisions of the Loans and shall, to the extent such
procedures shall be consistent with this Agreement, follow the Servicing
Standard. The Servicer may in its discretion waive or permit to be waived any
penalty interest or any other fee or charge which the Servicer would be entitled
to retain hereunder as servicing compensation and extend the Due Date on a
Promissory Note for a period (with respect to each payment as to which the Due
Date is extended) not greater than 90 days after the initially scheduled due
date for such payment. Notwithstanding anything in this Agreement to the
contrary, the Servicer shall not permit any additional extension or modification
with respect to any Loan other than that permitted by the immediately preceding
sentence unless the Loan is a Defaulted Loan. The Servicer may in its discretion
enter in subordination agreements with respect to any Loan, provided that the
Servicer determines, consistent with this Agreement and the Servicing Standard
that the entering into of such subordination agreement is in the best interests
of the Trust; provided further, that the Servicer shall not enter into such a
subordination agreement with respect to any Mortgage Loan if, after giving
effect to such agreement, such Mortgage Loan would fail to constitute a real
estate asset, as described in Section 856 of the Code. The Servicer shall
provide written notice to the Initial Noteholder prior to entering into any
agreement to modify the terms of any Loan after the Transfer Date with respect
thereto, including, without limitation, any cross-default or
cross-collateralization provisions with respect thereto.
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(e) INSTRUMENTS OF SATISFACTION OR RELEASE. Without limiting
the generality of subsection (d) of this SECTION 4.01, the Servicer, in its own
name or in the name of a Subservicer, is hereby authorized and empowered, when
the Servicer believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Securityholders and the Trust or any of them, and upon
notice to the Indenture Trustee, any and all instruments of satisfaction or
cancellation or of partial or full release or discharge, and all other
comparable instruments with respect to the Loans and the Loan Collateral and to
institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as
to convert the ownership of such properties, and to hold or cause to be held
title to such properties, on behalf of the Trust and Securityholders. The
Servicer shall service and administer the Loans in accordance with applicable
state and federal law and shall provide to the Borrowers any reports required to
be provided to them thereby. The Indenture Trustee shall execute, at the written
direction of the Servicer, any limited or special powers of attorney and other
documents reasonably acceptable to the Indenture Trustee to enable the Servicer
or any Subservicer to carry out their servicing and administrative duties
hereunder, including, without limitation, limited or special powers of attorney
with respect to any Foreclosure Property as well as pursuant to SECTION 4.10(c)
hereof, and the Indenture Trustee shall not be accountable for the actions of
the Servicer or any Subservicers under such powers of attorney and shall be
indemnified by such parties with respect to such actions.
(f) TERMINATION OF SERVICING. (i) In the event of a
Securitization or other removal of a Loan from the Trust Estate, the Servicer
shall be terminated with respect to such Loan.
(ii) The Servicer agrees that in the event that any Notes are
Outstanding on the Maturity Date, the Servicer will resign and the Majority
Noteholders shall appoint a successor in accordance with provisions of SECTION
10.02. The Majority Noteholders may, by written notice to the Servicer and the
Indenture Trustee, elect to have the Servicer continue its duties hereunder.
Section 4.02 VACANCIES AND INSPECTIONS .
(a) The Servicer shall promptly notify the Issuer, the
Indenture Trustee and the Initial Noteholder of any actual knowledge on the part
of the Servicer of any material vacancy in any Mortgaged Property, of any
abandonment of any Loan Collateral, of any material adverse change in the
condition or value of any Loan Collateral, of any waste committed thereon, of
any failure on the part of a Borrower to keep the related Loan Collateral in
good condition and repair, of any permanent or substantial injury to the Loan
Collateral through unreasonable use, abuse or neglect or of any other matter
which would materially and adversely affect the value of or the Noteholders'
interest in any Loan Collateral. The Servicer shall also promptly notify the
Issuer, the Indenture Trustee and the Majority Noteholders upon learning thereof
of any state or federal insolvency or bankruptcy proceedings in which any
Borrower is seeking relief or is a defendant debtor provided, however, that
Servicer shall not be deemed to be in default under this Agreement for failure
to give such notice if Servicer has no knowledge of any such proceeding and
could not reasonably be expected to have such knowledge in the ordinary course
of Servicer's business.
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(b) The Servicer shall inspect or cause to be inspected the
Loan Collateral with respect to each Loan at such times and in such manner as
are consistent with the Servicing Standard; provided that if any Monthly Payment
becomes more than 45 days Delinquent, or if the Fixed Charge Coverage Ratio with
respect to any Loan Collateral is less than 105%, the related Loan Collateral
shall be inspected as soon as practicable thereafter.
(c) The Servicer shall make a written report of each
inspection required pursuant to paragraph (b) above, on a form reasonably
acceptable to the Initial Noteholder and shall submit a copy of each such report
to the Initial Noteholder.
Section 4.03 FIDELITY BOND; ERRORS AND OMISSIONS INSURANCE.
The Servicer shall maintain with a responsible company, and at
its own expense, a blanket fidelity bond and an errors and omissions insurance
policy or policies, which policy or policies shall be in such form and amount as
would permit it to be a qualified Federal National Mortgage Association
seller-servicer of multi-family mortgage loans, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Loans
("Servicer Employees"). Any such fidelity bond and errors and omissions
insurance shall protect and insure the Servicer against losses, including losses
resulting from forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts (including acts relating to the origination and servicing of
loans of the same type as the Loans) of such Servicer Employees. Such fidelity
bond shall also protect and insure the Servicer against losses in connection
with the release or satisfaction of a Loan without having obtained payment in
full of the indebtedness secured thereby. In the event of any loss of principal
or interest on a Loan for which reimbursement is received from the Servicer's
fidelity bond or errors and omissions insurance, the process from any such
insurance will be deposited in the Collection Account. No provision of this
SECTION 4.03 requiring such fidelity bond and errors and omission insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon the request of the Issuer or the Indenture
Trustee, the Servicer shall cause to be delivered to the requesting party a
certified true copy of such fidelity bond and insurance policy.
Section 4.04 FILING OF CONTINUATION STATEMENTS.
On or before the fifth anniversary of the filing of any
financing statements by the Loan Originator and the Depositor, respectively,
with respect to the assets conveyed to the Trust, the Loan Originator and the
Depositor shall prepare, have executed by the necessary parties and file in the
proper jurisdictions all financing and continuation statements necessary to
maintain the liens, security interests and priorities of such liens and security
interests that have been granted by the Loan Originator and the Depositor,
respectively, and the Loan Originator and the Depositor shall continue to file
on or before each fifth anniversary of the filing of any financing and
continuation statements such additional financing and continuation statements
until the Trust has terminated pursuant to Section 9.1 of the Trust Agreement.
The Indenture Trustee agrees to reasonably cooperate with the Loan Originator
and the Depositor in preparing, executing and filing such statements, at the
expense of the Loan Originator or the Depositor, as applicable; provided,
however, that the Indenture Trustee shall have no responsibility to prepare or
file such
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statements. The Servicer agrees to notify the Loan Originator and the Depositor
on the third Payment Date prior to each such fifth anniversary of the
requirement that they file such financing and continuation statements. The
filing of any such statement with respect to the Loan Originator and the
Depositor shall not be construed as any indication of an intent of any party
contrary to the expressed intent set forth in SECTION 2.03 hereof. If the Loan
Originator or the Depositor has ceased to do business whenever any such
financing and continuation statements must be filed or the Loan Originator or
the Depositor fails to file any such financing statements or continuation
statements at least one month prior to the expiration thereof, each of the Loan
Originator and the Depositor does hereby make, constitute and appoint the
Indenture Trustee its attorney-in-fact, with full power and authority, to
execute and file in the Depositor's name and on the Depositor's behalf and at
the Depositor's expense any such financing statements or continuation statements
required under this SECTION 4.04.
Section 4.05 ESTABLISHMENT AND ADMINISTRATION OF ESCROW
ACCOUNT.
(a) The Servicer shall maintain accurate records with respect
to all Loan Collateral reflecting the status of taxes, basic carrying costs and
other similar items that are or may become a lien thereon and the status of
insurance premiums and ground rent, if applicable, payable in respect thereof.
(b) After the occurrence of a Default or Event of Default
under this Agreement or the Indenture, the Majority Noteholders may, in their
sole discretion, direct the Servicer to, upon the occurrence and continuation of
a default under a Mortgage Loan, direct the Borrower thereunder to remit amounts
in respect of Escrow Payments to the Escrow Account, for application by the
Servicer in accordance with the Servicing Standard. In such event, the Servicer
shall establish the Escrow Account under an arrangement consented to in writing
by the Majority Noteholders in their reasonable discretion.
(c) The Servicer may direct any depository institution or
trust company in which the Escrow Accounts (to the extent permitted by law and
subject to the related Loan Documents) are maintained to invest the funds held
therein in one or more Permitted Investments; provided, however, that such funds
must be either (i) immediately available or (ii) available in accordance with a
schedule which will permit the Servicer to meet its payment obligations
hereunder. The Servicer shall be entitled to all income and gain realized from
the investment of funds deposited in the Escrow Accounts (to the extent
permitted by law and subject to the related Loan Documents). The Servicer shall
deposit amounts from its own funds in such Escrow Accounts to make whole any
loss incurred in respect of any such investment of funds therein immediately
upon the realization of such loss.
(d) Notwithstanding anything to the contrary in this SECTION
4.05, upon the occurrence of a Lockbox Trigger Event, the Servicer shall cause
each Borrower required to make Escrow Payments to directly remit to the Lockbox
Account, such Escrow Payments for deposit into the Escrow Account.
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Section 4.06 SUBSERVICING.
(a) The Servicer may, with the prior written consent of the
Majority Noteholders, which consent shall not be unreasonably withheld, enter
into Subservicing Agreements for any servicing and administration of Loans with
any institution that is an Eligible Servicer and in compliance with the laws of
each state necessary to enable it to perform its obligations under such
Subservicing Agreement. The Servicer shall give prior written notice to the
Issuer and the Indenture Trustee of the appointment of any Subservicer. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and to either
service the related Loans directly or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder. In the event that the Majority
Noteholders fail to respond to a request by the Servicer for consent to enter
into a Subservicing Agreement within three Business Days after receipt of such
request, the requested consent shall be deemed to have been granted.
In the event of termination of any Subservicer, and unless a
successor Subservicer has otherwise been appointed, all servicing obligations of
such Subservicer shall be assumed simultaneously by the Servicer without any
additional act or deed on the part of such Subservicer or the Servicer, and the
Servicer shall service directly the related Loans.
Each Subservicing Agreement shall include the provision that
such agreement may be immediately terminated by the Indenture Trustee in the
event that the Servicer shall, for any reason, no longer be the Servicer. In no
event shall any Subservicing Agreement require the Indenture Trustee, as
successor Servicer, for any reason whatsoever to pay compensation to a
Subservicer in order to terminate such Subservicer.
(b) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Issuer, the Indenture Trustee and the Securityholders for the servicing and
administration of the Loans in accordance with the provisions of this Agreement
without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Loans. For purposes of
this Agreement, the Servicer shall be deemed to have received payments on Loans
when the Subservicer has actually received such payments and, unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer on behalf of the Servicer. The Servicer shall be entitled to enter
into any agreement with a Subservicer for indemnification of the Servicer by
such Subservicer, and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
(c) In the event the Servicer shall for any reason no longer
be the Servicer (including by reason of an Event of Default with respect to the
Servicer), the successor Servicer, on behalf of the Issuer, the Indenture
Trustee and the Securityholders pursuant to SECTION 4.07 hereof, shall thereupon
assume all of the rights and obligations of the Servicer under each
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Subservicing Agreement that the Servicer may have entered into, unless the
successor Servicer elects to terminate any Subservicing Agreement in accordance
with its terms. The successor Servicer shall be deemed to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party to
each Subservicing Agreement to the same extent as if the Subservicing Agreements
had been assigned to the assuming party, except that the Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreements which accrued prior to the transfer of servicing to the successor
Servicer. The Servicer, at its expense and without right of reimbursement
therefor, shall, upon request of the successor Servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Loans then being serviced and an accounting of amounts collected and held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Subservicing Agreements to the assuming party.
(d) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Issuer, the Indenture Trustee and the
Securityholders, shall enforce the obligations of each Subservicer under the
related Subservicing Agreement. Such enforcement, including, without limitation,
the legal prosecution of claims and the pursuit of other appropriate remedies,
shall be in such form and carried out to such an extent and at such time as the
Servicer, in its good faith business judgment, would require were it the owner
of the related Loans. The Servicer shall pay the costs of such enforcement at
its own expense and shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement to the extent, if any, that such
recovery exceeds all amounts due in respect of the related Loan or (ii) from a
specific recovery of costs, expenses or attorneys' fees against the party
against which such enforcement is directed.
(e) Any Subservicing Agreement that may be entered into and
any other transactions or services relating to the Loans involving a Subservicer
shall be deemed to be between the Subservicer and the Servicer alone and none of
the Issuer, the Indenture Trustee or the Securityholders shall be deemed parties
thereto or shall have any claims, rights, obligations, duties or liabilities
with respect to the Subservicer in its capacity as such except as set forth in
subsection (c) of this SECTION 4.06.
(f) In those cases where a Subservicer is servicing a Loan
pursuant to a Subservicing Agreement, the Subservicer will be required to
establish and maintain one or more accounts (collectively, the "SUBSERVICING
ACCOUNT"). The Subservicing Account shall be an Eligible Account. The
Subservicer will be required to deposit into the Subservicing Account, no later
than the first Business Day after receipt, all proceeds of Loans received by the
Subservicer and remit such proceeds to the Servicer for deposit in the
Collection Account not later than the Business Day following receipt thereof by
the Subservicer. Notwithstanding anything in this subsection (f) to the
contrary, the Subservicer shall only be able to withdraw funds from the
Subservicing Account for the purpose of remitting such funds to the Servicer for
deposit into the Collection Account. The Servicer shall require the Subservicer
to cause any collection agent of the Subservicer to send a copy to the Servicer
of each statement of monthly payments collected by or on behalf of the
Subservicer within five Business Days after the end of every month, and the
Servicer shall compare the information provided in such reports with the
deposits made by the Subservicer into the Collection Account for the same
period. The Servicer shall be deemed
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to have received payments on the Loans on the date on which the Subservicer has
received such payments.
Section 4.07 SUCCESSOR SERVICERS.
In the event that the Servicer is terminated pursuant to
SECTION 10.01 hereof, or resigns pursuant to SECTION 9.04 hereof or otherwise
becomes unable to perform its obligations under this Agreement, the Majority
Noteholders will appoint a successor servicer in accordance with the provisions
of SECTION 10.02 hereof.
Section 4.08 MAINTENANCE OF INSURANCE.
(a) The Servicer shall cause to be maintained for each
Foreclosure Property acquired by the Trust such types and amounts of insurance
coverage as the Servicer shall deem reasonable.
(b) Any amounts collected by the Servicer under any Insurance
Policies shall be paid over or applied by the Servicer as follows:
(i) In the case of amounts received in respect of any Loan:
(A) for the restoration or repair of the
affected Loan Collateral, in which event
such amounts shall be released to the
Borrower in accordance with the terms of the
related Promissory Note or
(B) to the extent not so used, in reduction of
the Principal Balance of the related Loan,
in which event such amounts shall be
deposited into the Collection Account,
unless the related instruments require a different application, in which case
such amounts shall be applied in the manner provided therein; and
(ii) Subject to SECTION 4.10 hereof, in the case of amounts
received in respect of any Foreclosure Property, for the restoration or
repair of such Foreclosure Property, unless the Servicer determines,
consistent with the servicing standard set forth in SECTION 4.01
hereof, that such restoration or repair is not in the best economic
interest of the Trust, in which event such amounts shall be deposited
into the Collection Account as a payment received from the operation of
such Foreclosure Property.
(c) The Servicer will cause to be performed any and all acts
required to be performed by the Servicer to preserve the rights and remedies of
the Trust and the Indenture Trustee in any Insurance Policies applicable to the
Loans including, without limitation, in each case, any necessary notifications
of insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Trust and the
Indenture Trustee.
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Section 4.09 PERIODIC ADVANCES.
(a) If, on any Payment Date, the Servicer determines that any
Monthly Payments due on the Due Date immediately preceding such Payment Date
have not been received as of the close of business on the Business Day preceding
such Payment Date, the Servicer shall determine the amount of any Periodic
Advance required to be made with respect to the related Payment Date. The
Servicer shall, on or prior to such Payment Date, furnish a statement to the
Indenture Trustee (the information in such statement to be made available to the
Initial Noteholder upon request) setting forth the amount of such Monthly
Payments which were not received as of the close of business on the Business Day
preceding the related Payment Date, and shall include in the amount to be
deposited in the Collection Account on such Payment Date an amount equal to the
Periodic Advance, if any, from its own funds.
(b) The Servicer shall designate on its records the specific
Loans and related installments (or portions thereof) as to which such Periodic
Advance shall be deemed to have been made for purposes of withdrawals from the
Collection Account pursuant to SECTION 5.01(c)(1).
Section 4.10 FORECLOSURE; REPOSSESSION AND ALTERNATIVES.
(a) If any monthly payment due under any Loan is not paid when
the same is due and payable, or if the Borrower fails to perform any other
covenant or obligation under such Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interest of the Trust, including but not limited to proceeding
against the Loan Collateral securing such Loan, pursuing collection litigation
or alternative court proceedings to foreclosure or repossession actions. In the
event that the Servicer determines not to proceed against the Loan Collateral or
Borrower, as applicable, on or before the Determination Date following such
determination, the Servicer shall determine in good faith in accordance with the
Servicing Standard that all amounts which it expects to receive with respect to
such Loan have been received. If the Servicer makes such a determination, it
shall give notice to such effect to the Issuer and the Indenture Trustee.
(b) In accordance with the criteria for proceeding against the
Loan Collateral set forth in subsection (a) of this SECTION 4.10, unless
otherwise prohibited by applicable law or court or administrative order, the
Servicer, on behalf of the Trust and the Indenture Trustee, may, at any time,
institute repossession or foreclosure proceedings to the extent permitted by
law, exercise any power of sale to the extent permitted by law, obtain a deed in
lieu of foreclosure, or otherwise acquire possession of or title to the related
Loan Collateral, by operation of law or otherwise.
In accordance with the criteria for proceeding against the
Loan Collateral set forth in subsection (a) of this SECTION 4.10, the Servicer
shall institute foreclosure proceedings, repossess, exercise any power of sale
to the extent permitted by law, obtain a deed in lieu of foreclosure or
otherwise acquire possession of or title to any Loan Collateral, by operation of
law or otherwise, only in the event that in the Servicer's reasonable judgment
such action is likely to result in a positive economic benefit to the Trust by
creating net liquidation proceeds (after reimbursement of all amounts owed with
respect to such Loan to the Servicer).
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With respect to any Mortgage Loan not covered under the
Environmental Policy, prior to acquiring any Foreclosure Property, however, the
Servicer shall cause a review to be performed, in accordance with the Servicing
Standard, on the related Mortgaged Property by a company such as Equifax, Inc.
or Toxicheck, and the scope of such review shall be limited to the review of
public records and documents for indications that such Mortgaged Property has on
it, has under it, or is near hazardous or toxic material or waste. 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 provide a copy to the Indenture Trustee of the related report
with an attached certification of a Responsible Officer that based on an
analysis of all available information (including potential clean up costs and
liability claims) at the time it is the best judgment of such Responsible
Officer that such foreclosure shall increase Net Liquidation Proceeds to the
Indenture Trustee and the Trust shall take title to such Mortgaged Property. The
Indenture Trustee shall promptly forward such report and certification to the
Noteholders.
(c) The Indenture Trustee shall furnish the Servicer, within 5
days after request of the Servicer therefor, any powers of attorney and other
documents necessary and appropriate to carry out its duties hereunder, including
any documents or powers of attorney necessary to foreclose any Mortgage or
Security Agreement, as the case may be. The forms of any such powers or
documents shall be appended to such requests.
Section 4.11 TITLE, MANAGEMENT AND DISPOSITION OF FORECLOSURE
PROPERTY.
In the event that any Loan Collateral becomes a Foreclosure
Property, the deed or certificate of sale shall be taken in the name of the
Indenture Trustee for the benefit of the Securityholders. The Servicer shall
manage, conserve, protect and operate each Foreclosure Property for the
Indenture Trustee and the Securityholders solely for the purpose of the prudent
and prompt disposition and sale of such Foreclosure Property. The Servicer
shall, either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate the Foreclosure Property in the same manner that
it manages, conserves, protects and operates other foreclosure property for its
own account.
Subject to SECTION 4.10 hereof, the Servicer shall, consistent
with the Servicing Standard, foreclose upon or otherwise comparably convert the
ownership of Properties securing such of the Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments. In connection with realization upon defaulted Loans, the
Servicer shall follow such practices and procedures as it shall deem necessary
or advisable, as shall be normal and usual in accordance with the Servicing
Standard and as shall meet the requirements of insurers under any insurance
policy required to be maintained hereunder with respect to the related Loan. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Servicer as contemplated herein.
The Servicer shall not be required to make any Servicing
Advance, to foreclose upon or repossess any Loan Collateral, or otherwise expend
its own funds toward the restoration of any Loan Collateral that shall have
suffered damage from any cause of damage to Loan
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Collateral such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies required to be maintained pursuant
to this Agreement unless it shall determine in its reasonable judgment, as
evidenced by a certificate of a Servicing Officer, that such foreclosure or
restoration, as the case may be, will increase the proceeds of liquidation of
the related Loan after reimbursement to itself of Servicing Advances. Any
Servicing Advances made with respect to a Loan shall be recoverable by the
Servicer only from recoveries on such Loan except to the extent such Servicing
Advance is deemed a Nonrecoverable Servicing Advance.
The Servicer may offer to sell to any Person any Foreclosure
Property, if and when the Servicer determines, in a manner consistent with the
Servicing Standard, that such a sale would be in the best interests of the
Trust. The Servicer shall, consistent with the Servicing Standard, use its best
efforts to dispose of any Foreclosure Property acquired under SECTION 4.10
hereof within three years of the date of its acquisition on behalf of the Trust.
The Servicer shall give the Indenture Trustee not less than five days' prior
notice of its intention to sell any Foreclosure Property and shall accept the
highest bid received from any Person for any Foreclosure Property in an amount
at least equal to the sum of:
(1) the Principal Balance of the related foreclosed Loan; and
(2) all unpaid interest accrued thereon at the related Loan
Interest Rate through the date of sale.
In the absence of any such bid, the Servicer shall accept the
highest bid received from any Person that is determined to be a fair price for
such Foreclosure Property by the Servicer, if the highest bidder is a Person
other than an Interested Person, or by an Independent appraiser retained by the
Servicer, if the highest bidder is an Interested Person. In the absence of any
bid determined to be fair as aforesaid, the Servicer shall offer the affected
Foreclosure Property for sale to any Person, other than an Interested Person, in
a commercially reasonable manner for a period of not less than 10 or more than
30 days, and shall accept the highest cash bid received therefor in excess of
the highest bid previously submitted. If no such bid is received, any Interested
Person may resubmit its original bid and the Servicer shall accept the highest
outstanding cash bid, regardless of from whom received. No Interested Person
shall be obligated to submit a bid to purchase any Foreclosure Property and,
notwithstanding anything to the contrary herein, neither the Indenture Trustee,
in its individual capacity, nor any of its Affiliates may bid for or purchase
any Foreclosure Property pursuant hereto.
In determining whether any bid constitutes a fair price for
any Foreclosure Property, the Servicer shall take into account, and any
appraiser or other expert in real estate matters shall be instructed to take
into account, as applicable, among other factors, the financial standing of any
tenant of the Foreclosure Property, the physical condition of the Foreclosure
Property and the state of the local and national economies.
Subject to the provisions of SECTION 4.10 hereof, the Servicer
shall act on behalf of the Indenture Trustee in negotiating and taking any other
action necessary or appropriate in connection with the sale of any Foreclosure
Property, including the collection of all amounts
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payable in connection therewith. Any sale of a Foreclosure Property shall be
without recourse to the Indenture Trustee, the Servicer or the Trust and, if
consummated in accordance with the terms of this Agreement, neither the Servicer
nor the Indenture Trustee shall have any liability to any Securityholder with
respect to the purchase price therefor accepted by the Servicer or the Indenture
Trustee.
The Servicer may contract with any independent contractor for
the operation and management of any Foreclosure Property; provided, however,
that:
(i) the terms and conditions of any such contract shall not be
inconsistent with this Agreement;
(ii) any such contract shall require, or shall be administered
to require, that the independent contractor pay all costs and expenses
incurred in connection with the operation and management of such
Foreclosure Property, remit all related revenues (net of such costs and
expenses) to the Servicer as soon as practicable, but in no event later
than 30 days following the receipt thereof by such independent
contractor;
(iii) none of the provisions of this SECTION 4.11 relating to
any such contract or to actions taken through any such independent
contractor shall be deemed to relieve the Servicer of any of its duties
and obligations hereunder with respect to the operation and management
of any such Foreclosure Property; and
(iv) the Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such
Foreclosure Property.
The Servicer shall be entitled to enter into any agreement with any
independent contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Servicer by such
independent contractor, and nothing in this Agreement shall be deemed
to limit or modify such indemnification. The Servicer shall not be
liable for any fees owed by it to any such independent contractor and
any amounts so expended shall be deemed Servicing Advances. Each
liquidation of a Foreclosure Property shall be carried by the Servicer
at such price and upon such terms and conditions as the Servicer shall
deem necessary or advisable and as shall be normal and usual in its
several servicing activities, and the resulting Net Liquidation
Proceeds shall be deposited into the Collection Account pursuant to
SECTION 5.01(b)(1) hereof.
Section 4.12 COMPLIANCE WITH REQUEST FOR INFORMATION. The
Servicer shall provide to the Indenture Trustee, upon its request, information
regarding the Notes and the Loans and such other information as the Indenture
Trustee shall be required to deliver to any Noteholder and any prospective
transferee designated by a Noteholder to satisfy a condition of eligibility set
forth under Rule 144A(d)(4) under the Securities Act of 1933, as amended.
Section 4.13 LOCKBOX TRIGGER EVENT; LOCKBOX ACCOUNT.
In the event of the occurrence of a Lockbox Trigger Event:
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(a) The Servicer, Depositor and Issuer shall each promptly
execute and deliver the Lockbox Agreement.
(b) The Servicer shall promptly cause Borrowers to make all
payments on the Loans (including, without limitation, Escrow Payments),
irrespective of method of payment, directly to the Lockbox Bank pursuant to the
Lockbox Agreement. Amounts received by a Lockbox Bank in respect of the Loans
may initially be deposited into a demand deposit account maintained by the
Lockbox Bank for the benefit of the Indenture Trustee, as secured party on
behalf of the Noteholders. The Lockbox Agreement shall require the Lockbox Bank
to deposit all payments on the Loans in the Lockbox Account no later than the
Business Day after receipt, and to cause all amounts credited to the Lockbox
Account on account of such payments to be transferred to the Collection Account
or Escrow Account, as the case may be, in accordance with the written
instructions of the Servicer, no later than the second Business Day after
receipt of such payments. The Servicer shall pay all fees and costs incurred
connection with the entering into of the Lockbox Agreement, the establishment of
the Lockbox Account and the administration of the provisions of the Lockbox
Agreement.
Section 4.14 VALUATION OF LOANS, HEDGE VALUE AND RETAINED
SECURITIES VALUE; MARKET VALUE AGENT .
(a) The Loan Originator hereby irrevocably appoints the Market
Value Agent to determine the Market Value of each Loan, the Hedge Value of each
Hedging Instrument and the Retained Securities Value of all Retained Securities.
(b) The Market Value Agent shall determine the Market Value of
each Loan in its reasonable judgment. In determining the Market Value of each
Loan, the Market Value Agent may consider any information that it may deem
relevant and may base such determination solely on its estimate of the projected
proceeds from such Loan's inclusion in a Securitization and the projected
Retained Securities Value of any Retained Securities to be issued in connection
with such Securitization, net of such Loan's ratable share of all costs and fees
associated with such Securitization, including, without limitation the costs of
issuance, underwriting and funding reserve accounts. The Market Value Agent's
determination, in its reasonable judgment, of Market Value shall be conclusive
and binding upon the parties hereto.
(c) On each Business Day the Market Value Agent shall
determine in its reasonable judgment the Hedge Value of each Hedging Instrument
as of such Business Day. In making such determination the Market Value Agent may
rely exclusively on quotations provided by the Hedging Counterparty, by leading
dealers in instruments similar to such Hedging Instrument, which leading dealers
may include the Market Value Agent and its Affiliates and such other sources of
information as the Market Value Agent may deem appropriate.
(d) On each Business Day, the Market Value Agent shall
determine in its reasonable judgment the Retained Securities Value of the
Retained Securities, if any, expected to be issued pursuant to such
Securitization as of the closing date of such Securitization. In making such
determination the Market Value Agent may rely exclusively on quotations provided
by leading dealers in instruments similar to such Retained Securities, which
leading dealers may
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include the Market Value Agent and its Affiliates and such other sources of
information as the Market Value Agent may deem appropriate.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT .
(a) (1) ESTABLISHMENT OF COLLECTION ACCOUNT. The Servicer, for the
benefit of the Securityholders, shall cause to be established and
maintained one or more Collection Accounts (collectively, the
"Collection Account"), which shall be separate Eligible Accounts
entitled "Collection Account, LaSalle National Bank, as Indenture
Trustee, in trust for the FFCA Franchise Loan Backed Notes, Series
1998-1". The Collection Account may be maintained with the Indenture
Trustee or any other depository institution which satisfies the
requirements set forth in the definition of Eligible Account. The
creation of any Collection Account other than one maintained with the
Indenture Trustee shall be evidenced by a letter agreement between the
Servicer and the depository institution acceptable to the Majority
Noteholders. A copy of such letter agreement shall be furnished to the
Majority Noteholders and the Indenture Trustee and, upon request of any
Securityholder, to such Securityholder. Funds in the Collection Account
shall be invested in accordance with SECTION 5.03 hereof.
The Collection Account shall be established, as of the date
hereof, as an Eligible Account pursuant to the definition thereof. The
Collection Account may, upon written notice to the Issuer and the
Indenture Trustee, be transferred by the Servicer to a different
depository institution so long as such transfer is to an Eligible
Account acceptable to the Majority Noteholders.
(2) ESTABLISHMENT OF DISTRIBUTION ACCOUNT. No later than the
date hereof, the Servicer, for the benefit of the Noteholders, shall
cause to be established and maintained with LaSalle National Bank one
or more Distribution Accounts (collectively, the "Distribution
Account"), which shall be separate Eligible Accounts and may be
interest bearing, entitled "Distribution Account, LaSalle National
Bank, as Indenture Trustee, in trust for the FFCA Franchise Loan Backed
Notes, Series 1998-1." Funds in the Distribution Account shall not be
invested.
(b) (1) DEPOSITS TO COLLECTION ACCOUNT. The Servicer shall deposit or
cause to be deposited (without duplication), within two (2) Business
Days after receipt thereof, into the Collection Account and retain
therein in trust for the benefit of the Securityholders:
(i) all payments on or in respect of each Loan conveyed
pursuant to SECTION 2.01(a)(iii) hereof;
(ii) all Net Liquidation Proceeds pursuant to SECTION 4.11
hereof;
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(iii) all Insurance Proceeds not required to be applied to
restoration or repair of Loan Collateral pursuant to
SECTION 4.05;
(iv) all Released Loan Collateral Proceeds;
(v) any amounts payable in connection with the repurchase
of any Loan and the amount of any Substitution
Adjustment pursuant to Sections 2.05 and 3.05 hereof;
(vi) any Purchase Price payable in connection with a
Servicer Call pursuant to SECTION 3.07 hereof;
(vii) the deposit of the Termination Price under SECTION
11.01 hereof;
(viii) any Periodic Advances pursuant to SECTION 4.09;
(ix) any cash Securitization Proceeds pursuant to SECTION
3.06; and
(x) any payments received under Hedging Instruments or
the return of amounts by the Hedging Counterparty
pledged pursuant to prior Hedge Funding Requirements;
(xi) all proceeds paid under the Environmental Policy and
not retained by the Servicer in connection with
remediation of Mortgaged Properties pursuant to
SECTION 3.09 hereof; and
(xii) any Purchase Price payable in connection with a Loan
Originator Put remitted by the Loan Originator
pursuant to SECTION 3.07 hereof.
(c) WITHDRAWALS FROM COLLECTION ACCOUNT; DEPOSITS TO
DISTRIBUTION ACCOUNT.
(1) WITHDRAWALS FROM COLLECTION ACCOUNT -- REIMBURSEMENT
ITEMS. Periodically, the Indenture Trustee (except as may be otherwise
provided in writing by the Collection Account Letter Agreement), at the
direction of the Servicer, shall make the following withdrawals from
the Collection Account prior to any other withdrawals, in no particular
order of priority:
(i) to withdraw any amount not required to be deposited
in the Collection Account or deposited therein in
error;
(ii) to withdraw the Servicing Advance Reimbursement
Amount;
(iii) to clear and terminate the Collection Account in
connection with the termination of this Agreement;
(iv) to reimburse the Servicer for any Nonrecoverable
Periodic Advances;
(v) to make the payments set forth in SECTION 9.01(e)
hereof;
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(vi) to make any payments in respect of Servicer
indemnities pursuant to SECTION 9.01(f) hereof;
(vii) to pay to the Loan Originator any Retained Interest
actually received with respect to the related Loan;
and
(viii) to reimburse the Servicer for unreimbursed Periodic
Advances, the Servicer's right to reimburse itself,
pursuant to this clause (viii) with respect to any
Periodic Advance (other than Nonrecoverable Advances,
which are reimbursable pursuant to clause (iv) above)
being limited to amounts that represent collections
of interest (net of any related Retained Interest)
and principal received in respect of the particular
Loan as to which such Periodic Advance was made;
(2) INDENTURE TRUSTEE DEPOSITS TO DISTRIBUTION ACCOUNT -
PAYMENT DATES. (a) On the Business Day prior to each Payment Date, the
Indenture Trustee shall deposit into the Distribution Account such
amounts as are required from the Transfer Obligation Account pursuant
to SECTION 5.05(e), 5.05(f) and 5.05(g).
(b) After making all withdrawals specified in SECTION
5.01(c)(1) above, on the Business Day prior to each Payment Date, the
Indenture Trustee, except as may be otherwise provided in the
Collection Account Letter Agreement, (based on information provided by
the Servicer for such Payment Date) shall withdraw from the Collection
Account not later than 2:00 p.m. Phoenix, Arizona time and deposit into
the Distribution Account all remaining funds on deposit therein,
provided that on or after any date on which the long term senior
unsecured debt of the Servicer is unrated or rated at or below "BB" by
Standard & Poor's Ratings Group, the Indenture Trustee, except as may
be otherwise provided in the Collection Account Letter Agreement, shall
make such withdrawal of remaining amounts from the Collection Account
on every other Business Day and deposit such funds in the Distribution
Account.
(3) WITHDRAWALS FROM DISTRIBUTION ACCOUNT -- PAYMENT DATES. On
each Payment Date, to the extent funds are available in the
Distribution Account, the Indenture Trustee (based on the information
provided by the Servicer contained in the Servicer's Remittance Report
for such Payment Date) shall make withdrawals therefrom by 3:00 p.m.
(New York City time), for application in the following order of
priority:
(i) to distribute on such Payment Date the following
amounts pursuant to the Indenture in the following
order: (a) to the Indenture Trustee, an amount equal
to the Indenture Trustee Fee and all unpaid Indenture
Trustee Fees from prior Payment Dates, (b) to the
Custodian, an amount equal to the Custodian Fee, if
any, and all unpaid Custodian Fees from prior Payment
Dates, (c) to the Servicer, (x) only if Servicer is
not FFCA or any Affiliate thereof, an amount equal to
the Servicing Compensation and all unpaid Servicing
Compensation from prior Payment Dates and (y) all
Nonrecoverable Servicing Advances not previously
reimbursed, (d) to the
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Servicer, in trust for the Owner Trustee, an amount
equal to the Owner Trustee Fee and all unpaid Owner
Trustee Fees from prior Payment Dates, and;
(ii) to distribute on such Payment Date, the Hedge Funding
Requirement to the appropriate Hedging
Counterparties; provided, that only cash on or in
respect of fixed rate Loans (including cash
Securitization Proceeds received therefrom) shall be
distributed for such purpose and; provided, further,
that amounts distributed pursuant to clause (i) above
to the extent not attributable to a specific Loan
shall be deemed paid from Loans bearing a fixed Loan
Interest Rate, pro rata based on their aggregate
Principal Balances relative to the Pool Principal
Balance on such Payment Date;
(iii) to the holders of the Notes pro rata, the sum of the
Interest Payment Amount for such Payment Date and the
Interest Carry-Forward Amount for the preceding
Payment Date;
(iv) to the holders of the Notes pro rata, the sum of the
Optimal Principal Payment Amount for such Payment
Date and the Principal Carry-Forward Amount for the
preceding Payment Date; provided, however, that if
(a) a Rapid Amortization Trigger shall have occurred
and not been Deemed Cured or (b) an Event of Default
or Default under this Agreement or the Indenture
shall have occurred, the holders of the Notes shall
receive, in respect of principal, all remaining
amounts on deposit in the Collection Account.
(v) to the Servicer if the Servicer is the Loan
Originator or an Affiliate thereof, an amount equal
to the Servicing Compensation for the related Payment
Date and all unpaid Servicing Compensation from prior
Payment Dates;
(vi) to the Transfer Obligation Account, all remaining
amounts until the balance therein equals the Transfer
Obligation Target Amount;
(vii) to each Indemnified Party (as defined in the Trust
Agreement) until all amounts due and owing under
Issuer/Depositor Indemnities (as defined in the Trust
Agreement) are paid in full; and
(viii) to the holders of the Trust Certificates of record on
the next preceding Record Date, pro rata, all amounts
remaining therein.
The Majority Noteholders and the Issuer may agree, upon
written notice to the Indenture Trustee, to additional Payment Dates. In
addition, there shall be an additional Payment Date on (i) any day which
Securitization Proceeds, Purchase Prices or proceeds in respect of Put/Call
Loans are deposited into the Collection Account on or before 2 p.m. Phoenix,
Arizona time, and (ii) the Business Day after any day on which Securitization
Proceeds, Purchase Prices or proceeds in respect of Put/Call Loans are deposited
into the Collection Account after 2 p.m. Phoenix, Arizona
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time. The Issuer and the Majority Noteholders shall give the Indenture Trustee
at least one (1) Business Day's written notice prior to such additional Payment
Date and such notice shall specify each amount in SECTION 5.01(c) to be
withdrawn from the Collection Account and Distribution Account on such day.
Notwithstanding that the Notes have been paid in full, the
Indenture Trustee and the Servicer shall continue to maintain the Distribution
Account hereunder until this Agreement has been terminated.
Section 5.02 PAYMENTS TO SECURITYHOLDERS.
(a) All distributions made on the Notes on each Payment Date
will be made on a pro rata basis among the Noteholders of record of the Notes on
the next preceding Record Date based on the Percentage Interest represented by
their respective Notes, without preference or priority of any kind, and, except
as otherwise provided in the next succeeding sentence, shall be made by wire
transfer of immediately available funds to the account of such Noteholder, if
such Noteholder shall own of record Notes in original Denominations aggregating
at least $250,000 and shall have so notified the Indenture Trustee, and
otherwise by check mailed to the address of such Noteholder appearing in the
Notes Register. The final distribution on each Note will be made in like manner,
but only upon presentment and surrender of such Note at the location specified
in the notice to Noteholders of such final distribution.
(b) All distributions made on the Trust Certificates on each
Payment Date will be made pro rata among the holders of the Trust Certificates
of record on the next preceding Record Date based on their Percentage Interests
(as defined in the Trust Agreement), without preference or priority of any kind,
and, except as otherwise provided in the next succeeding sentence, shall be made
by wire transfer of immediately available funds to the account of each such
holder, if such holder shall own of record a Trust Certificate in an original
denomination aggregating at least 50% of the Percentage Interests (as defined in
the Trust Agreement) and shall have so notified the Indenture Trustee, and
otherwise by check mailed to the address of such Certificateholder appearing in
the Certificate Register. The final distribution on each Trust Certificate will
be made in like manner, but only upon presentment and surrender of such Trust
Certificate at the location specified in the notice to holders of the Trust
Certificates of such final distribution. Any amount distributed to the holders
of the Trust Certificates on any Payment Date shall not be subject to any claim
or interest of the Noteholders. In the event that at any time there shall be
more than one Certificateholder, the Indenture Trustee shall be entitled to
reasonable additional compensation from the Servicer for its obligations
hereunder, including, without limitation, its obligations to distribute funds
and produce and deliver statements.
(c) For purposes of this SECTION 5.02, the sole holder of the
Trust Certificates shall be deemed to be the Depositor until such time as the
Depositor provides written notice to the contrary to the Indenture Trustee and
the Initial Noteholder.
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Section 5.03 TRUST ACCOUNTS; TRUST ACCOUNT PROPERTY.
(a) CONTROL OF TRUST ACCOUNTS. Each of the Trust Accounts
established hereunder has been pledged by the Issuer to the Indenture Trustee
under the Indenture and shall be subject to the lien of the Indenture. In
addition to the provisions hereunder, each of the Trust Accounts shall also be
established and maintained pursuant to the Indenture. Amounts distributed from
each Trust Account in accordance with the Indenture and this Agreement shall be
released from the lien of the Indenture upon such distribution thereunder or
hereunder. The Indenture Trustee shall possess all right, title and interest in
and to all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Trust Account Property and the Trust
Estate. If, at any time, any Trust Account ceases to be an Eligible Account, the
Indenture Trustee (or the Servicer on its behalf) shall, within ten Business
Days (or such longer period, not to exceed 30 calendar days, with the prior
written consent of the Majority Noteholders) (i) establish a new Trust Account
as an Eligible Account, (ii) terminate the ineligible Trust Account, and (iii)
transfer any cash and investments from such ineligible Trust Account to such new
Trust Account.
Except as may be otherwise provided in the Collection Account
Letter Agreement, with respect to the Trust Accounts, the Indenture Trustee
agrees, by its acceptance hereof, that each such Trust Account shall be subject
to the sole and exclusive custody and control of the Indenture Trustee for the
benefit of the Noteholders, and, except as may be otherwise provided in the
Collection Account Letter Agreement or as may be consented to in writing by the
Majority Noteholders, the Indenture Trustee shall have sole signature and
withdrawal authority with respect thereto.
The Servicer shall have the power, revocable by the Majority
Noteholder or by the Owner Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee or Owner Trustee to make withdrawals and payments
from the Trust Accounts for the purpose of permitting the Servicer to carry out
its duties hereunder or permitting the Indenture Trustee or Owner Trustee to
carry out their respective duties herein or under the Indenture or the Trust
Agreement, as applicable.
(b) (1) INVESTMENT OF FUNDS. Funds held in the Collection Account and
the Transfer Obligation Account may be invested (to the extent
practicable and consistent with any requirements of the Code) in
Permitted Investments, as directed by the Servicer prior to the
occurrence and continuation of an Event of Default, and by the Majority
Noteholders thereafter, in writing or by telephone or facsimile
transmission confirmed in writing by the Loan Originator or Majority
Noteholders, as applicable. In any case, funds in the Collection
Account and the Transfer Obligation Account must be available for
withdrawal without penalty, and any Permitted Investments must mature
or otherwise be available for withdrawal, not later than the Business
Day following the date of such investment and, in any event one
Business Day prior to the next Payment Date and shall not be sold or
disposed of prior to its maturity subject to subsection (b)(2) of this
Section. All interest and any other investment earnings on amounts or
investments held in the Collection Account and the Transfer Obligation
Account shall be deposited into the
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Collection Account or the Transfer Obligation Account, as the case may
be, immediately upon receipt by the Indenture Trustee. All Permitted
Investments in which funds in the Collection Account or the Transfer
Obligation Account are invested must be held by or registered in the
name of "LaSalle National Bank, as Indenture Trustee, in trust for the
FFCA Franchise Loan Backed Notes, Series 1998-1".
(2) INSUFFICIENCY AND LOSSES IN TRUST ACCOUNTS. If any amounts
are needed for disbursement from the Collection Account or the Transfer
Obligation Account held by or on behalf of the Indenture Trustee and
sufficient uninvested funds are not available to make such
disbursement, the Indenture Trustee (or the Servicer, as applicable)
shall cause to be sold or otherwise converted to cash a sufficient
amount of the investments in the Collection Account or the Transfer
Obligation Account, as the case may be. The Indenture Trustee shall not
be liable for any investment loss or other charge resulting therefrom,
unless such loss or charge is caused by the failure of the Indenture
Trustee to perform in accordance with written directions provided
pursuant to this SECTION 5.03.
If any losses are realized in connection with any investment
in the Collection Account or the Transfer Obligation Account pursuant to this
Agreement and the Indenture, then the Loan Originator shall deposit the amount
of such losses (to the extent not offset by income from other investments in the
Collection Account or the Transfer Obligation Account, as the case may be) into
the Collection Account or the Transfer Obligation Trust Account, as the case may
be, immediately upon the realization of such loss. All interest and any other
investment earnings on amounts held in the Collection Account and the Transfer
Obligation Account shall be taxed to the Issuer and for federal and state income
tax purposes the Issuer shall be deemed to be the owner of the Collection
Account and/or the Transfer Obligation Account, as the case may be.
(c) Subject to SECTION 6.01 of the Indenture, the Indenture
Trustee shall not in any way be held liable by reason of any insufficiency in
any Trust Account held by the Indenture Trustee resulting from any investment
loss on any Permitted Investment included therein (except to the extent that the
Indenture Trustee is an obligor and has defaulted thereon).
(d) With respect to the Trust Account Property, the Indenture
Trustee acknowledges and agrees that:
(1) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject to the
last sentence of subsection (a) of this SECTION 5.03; and, except as
may be otherwise provided in the Collection Account Letter Agreement,
each such Eligible Account shall be subject to the sole and exclusive
dominion, custody and control of the Indenture Trustee; and, without
limitation on the foregoing, except as may be otherwise provided in the
Collection Account Letter Agreement, the Indenture Trustee shall have
sole signature authority with respect thereto;
(2) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" in SECTION 1.01 hereof
and shall be held, pending maturity or disposition,
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solely by the Indenture Trustee or a securities intermediary (as such
term is defined in section 8-102(a)(14) of the UCC) acting solely for
the Indenture Trustee;
(3) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" in SECTION 1.01 hereof and shall be maintained
by the Indenture Trustee, pending maturity or disposition, through
continued book-entry registration of such Trust Account Property as
described in such paragraph; and
(4) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(3) above shall be delivered to the Indenture Trustee in accordance
with paragraph (c) of the definition of "Delivery" in SECTION 1.01
hereof and shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued registration of the
Indenture Trustee's (or its nominee's) ownership of such security.
(e) The Servicer shall have the power, revocable by the
Majority Noteholders or by the Issuer with the consent of the Majority
Noteholders, to instruct the Indenture Trustee to make withdrawals and payments
from the Trust Accounts for the purpose of permitting the Servicer or the Issuer
to carry out their respective duties hereunder or permitting the Indenture
Trustee to carry out its duties under the Indenture.
Section 5.04 ADVANCE ACCOUNT
(a) The Servicer shall cause to be established and maintained
in its name, an Advance Account (the "ADVANCE ACCOUNT"), which need not be a
segregated account. The Advance Account shall be maintained with any financial
institution the Servicer elects.
(b) DEPOSITS AND WITHDRAWALS. Amounts in respect of the
purchase of Additional Note Principal Balances and Loans shall be deposited in
and withdrawn from the Advance Account as provided in Sections 2.01(c) and 2.06
hereof, SECTION 3.01 of the Note Purchase Agreement and SECTION 2.1 of the Loan
Purchase Agreement.
Section 5.05 TRANSFER OBLIGATION; TRANSFER OBLIGATION ACCOUNT
(a) The Servicer, for the benefit of the Noteholders, shall
cause to be established and maintained in the name of the Indenture Trustee a
Transfer Obligation Account (the "TRANSFER OBLIGATION ACCOUNT"), which shall be
a separate Eligible Account and may be interest-bearing, entitled "Transfer
Obligation Account, LaSalle National Bank, as Indenture Trustee, in trust for
the FFCA Franchise Loan Backed Notes, Series 1998-1." The Transfer Obligation
Account may be maintained with the Indenture Trustee or any other depository
institution which satisfies the requirements set forth in the definition of
Eligible Account. The establishment of a Transfer Obligation Account with a
depositary institution other than the Indenture Trustee shall be evidenced by a
letter agreement between the Servicer and such depository institution acceptable
to the Indenture Trustee. A copy of such letter agreement shall
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be furnished to the Indenture Trustee and, upon request of any Securityholder,
to such Securityholder. Amounts in the Transfer Obligation Account shall be
invested in accordance with SECTION 5.03.
(b) In accordance with SECTION 2.3(b) of the Loan Purchase
Agreement, the Loan Originator shall deposit into the Transfer Obligation
Account such amounts as may be required thereby.
(c) On each Payment Date, the Indenture Trustee will deposit
in the Transfer Obligation Account any amounts required to be deposited therein
pursuant to SECTION 5.01(c)(3)(vi).
(d) On the date of each Securitization, the Indenture Trustee
shall withdraw from the Transfer Obligation Account such amount on deposit
therein as may be requested by the Majority Noteholders in writing to effect
such Securitization.
(e) On each Payment Date, the Indenture Trustee, upon the
written direction of the Servicer shall withdraw from the Transfer Obligation
Account and deposit into the Distribution Account on such Payment Date the
lesser of (x) the amount then on deposit in the Transfer Obligation Account and
(y) the Interest Carry-Forward Amount as of such date.
(f) If with respect to any Payment Date the
Overcollateralization Shortfall exceeds the greater of (x) 1% of the aggregate
Principal Balance of all Loans as of the prior Business Day and (y) $250,000,
the Indenture Trustee, upon the written direction of the Servicer shall withdraw
from the Transfer Obligation Account and deposit into the Distribution Account
on the Business Day prior to such Payment Date the lesser of the amount then on
deposit in the Transfer Obligation Account and the amount of such
Overcollateralization Shortfall as of such date.
(g) If with respect to any Payment Date there shall exist a
Hedge Funding Requirement, the Indenture Trustee, upon the written direction of
the Servicer shall withdraw from the Transfer Obligation Account and deposit
into the Distribution Account on the Business Day prior to such Payment Date the
lesser of (x) the amount then on deposit in the Transfer Obligation Account
(after making all other required withdrawals therefrom with respect to such
Payment Date) and (y) the amount of such Hedge Funding Requirement as of such
date.
(h) In the event of the occurrence of an Event of Default
under the Indenture, the Indenture Trustee shall withdraw all remaining funds
from the Transfer Obligation Account and apply such funds in satisfaction of the
Notes as provided in SECTION 5.04(b) of the Indenture.
(i) Upon the date of the termination of this Agreement
pursuant to Article XI, the Indenture Trustee, at the written direction of the
Loan Originator, shall withdraw any remaining amounts from the Transfer
Obligation Account and remit all such amounts to the Loan Originator.
(j) The Indenture Trustee shall (i) at the direction of the
Majority Noteholders, return to the Loan Originator in the manner specified to
the Indenture Trustee by
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the Majority Noteholders in such direction all amounts deposited in the Transfer
Obligation Account by the Loan Originator in connection therewith pursuant to
SECTION 2.3(b)(v) of the Loan Purchase Agreement, in the event that an Event of
Default is waived by the Noteholders and (ii) return to the Loan Originator at
the written direction of the Servicer, all amounts on deposit in the Transfer
Obligation Account until the Majority Noteholders provide written notice to the
Indenture Trustee (with a copy to the Loan Originator) of the occurrence of a
default or event of default (however defined) under any Basic Document with
respect to the Issuer, FFCA or the Depositor.
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 STATEMENTS.
(a) On each Determination Date, the Servicer shall deliver to
the Indenture Trustee and the Initial Noteholder by facsimile, the receipt and
legibility of which shall be confirmed by telephone, and with hard copy thereof
to be delivered no later than one (1) Business Day after such Determination
Date, the Servicer's Remittance Report, setting forth the date of such Report
(day, month and year), the name of the Issuer (i.e., "FFCA Franchise Loan Owner
Trust 1998-1"), the Series designation of the Notes (i.e., "Series 1998-1") and
the date of this Agreement, all in substantially the form set out in Exhibit B
hereto. Furthermore, on each Determination Date, the Servicer shall deliver to
the Indenture Trustee and the Initial Noteholder a magnetic tape or computer
disk providing, with respect to each Loan in the Loan Pool as of such
Determination Date: (i) the Loan Originator's internal loan identifying number;
(ii) if such Loan is an Adjustable Rate Loan, the current Loan Interest Rate;
(iii) the current Principal Balance with respect to such Loan; (iv) the date of
the last Monthly Payment paid in full; (v) the current Fixed Charge Coverage
Ratio (if updated from information provided in the Loan Schedule); (vi) a flag
indicating whether the figure listed in item (v) is a calculation of Fixed
Charge Coverage Ratio with respect to the single unit or in the aggregate; and
(vii) such other information as may be reasonably requested by the Majority
Noteholders.
(b) (i) On any Business Day, upon the request of the Initial
Noteholder, the Servicer shall prepare and provide a statement setting forth the
following information as of the close of business on the prior Business Day:
(a) for each Loan with respect to which a Servicing
Advance or Periodic Advance is outstanding, (i) the
aggregate amount of Servicing Advances outstanding,
(ii) the aggregate amount of Periodic Advances
outstanding and (iii) the outstanding Principal
Balance of such Loan; and
(b) the Pool Principal Balance.
(ii) On each Determination Date, the Servicer shall prepare
and provide to the Indenture Trustee for distribution to the Issuer, the Initial
Noteholder and each Certificateholder, a statement (the "PAYMENT STATEMENT"),
stating each date of a purchase of Additional Note
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Principal Balance (day, month and year), the name of the Issuer (i.e., "FFCA
Franchise Loan Owner Trust 1998-1"), the Series designation of the Notes (i.e.,
"Series 1998-1"), the date of this Agreement and the following information:
(a) the aggregate amount of collections in respect of
principal of the Loans received by the Servicer
during the preceding Due Period;
(b) the aggregate amount of collections in respect of
interest on the Loans received by the Servicer during
the preceding Due Period;
(c) all Insurance Proceeds received by the Servicer and
not required to be applied to restoration or repair
of the related Loan Collateral during the preceding
Due Period;
(d) all Net Liquidation Proceeds deposited by the
Servicer into the Collection Account during the
preceding Due Period;
(e) all Released Loan Collateral Proceeds deposited by
the Servicer into the Collection Account during the
preceding Due Period;
(f) the aggregate amount of all Periodic Advances and all
Servicing Advances, set forth separately, made by the
Servicer during the preceding Due Period;
(g) the aggregate of all amounts deposited into the
Collection Account in respect of the repurchase of
Defective Loans and the repurchase of Loans pursuant
to SECTION 2.05 hereof during the preceding Due
Period;
(h) the aggregate Principal Balance of all Loans for
which a Servicer Call was exercised during the
preceding Due Period;
(i) the aggregate Principal Balance of all Loans for
which a Loan Originator Put was exercised during the
preceding Due Period;
(j) the aggregate amount of all payments received under
Hedging Instruments during the preceding Due Period;
(k) the aggregate amount of proceeds received in respect
of the Environmental Policy during the preceding Due
Period;
(l) when applicable, the aggregate amount of cash
Securitization Proceeds received during the preceding
Due Period;
(m) withdrawals from the Collection Account in respect of
the Servicing Advance Reimbursement Amount during the
preceding Due Period;
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(n) withdrawals from the Collection Account in respect of
Nonrecoverable Periodic Advances during the preceding
Due Period;
(o) the number and aggregate Principal Balance of all
Loans that are (i) 30-59 days Delinquent, (ii) 60-89
days Delinquent, (iii) 90 or more days Delinquent as
of the related Payment Date;
(p) the aggregate amount of Liquidated Loan Losses
incurred (i) during the preceding Due Period, (ii)
during the preceding three Due Periods and (iii)
since the Reset Date;
(q) the aggregate of the Principal Balances of all Loans
in the Loan Pool as of the related Payment Date; and
(r) the aggregate amount of all withdrawals from the
Collection Account pursuant to SECTION 5.01(c)(1)(i)
hereof during the preceding Due Period.
(iii) On the Business Day following each Business Day on which
money is deposited into the Collection Account, the Servicer shall cause to be
delivered to the Initial Noteholder by facsimile, the receipt and legibility of
which shall be confirmed by telephone, a statement setting forth the total
deposits into the Collection Account on the prior Business Day and the balance
in the Collection Account as of the close of business on the prior Business Day.
(c) On each Determination Date, the Indenture Trustee shall
deliver to the Initial Noteholder a magnetic tape or computer disk in a form
mutually agreed the Initial Noteholder and the Indenture Trustee, setting forth
the following information:
(a) the aggregate amount of all deposits into the
Distribution Account from the Transfer Obligation
Account pursuant to SECTION 5.05(e), 5.05(f) AND
5.05(g) on the preceding payment Date;
(c) if the Servicer is not FFCA or an Affiliate thereof,
the aggregate amount of distributions in respect of
Servicing Compensation to the Servicer, and unpaid
Servicing Compensation from prior Payment Dates for
the related Payment Date;
(d) the aggregate amount of distributions in respect of
Indenture Trustee Fees and unpaid Indenture Trustee
Fees from prior Payment Dates for the related payment
Date;
(e) the aggregate amount of distributions in respect of
Owner Trustee Fees and unpaid Owner Trustee Fees from
prior Payments Dates for the related Payment Date;
(f) the aggregate amount of distributions in respect of
the Custodian Fee and unpaid Custodian Fees from
prior Payment Dates for the related Payment Date;
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(g) if a Rapid Amortization Trigger shall have occurred
and not been Deemed Cured or a Default or Event of
Default shall have occurred hereunder or under the
Indenture, the aggregate amount of distributions on
the Notes in respect of principal in excess of the
Optimal Principal Payment Amount and the Principal
Carry-Forward Amount for the related Payment Date;
(h) the aggregate amount of distributions in respect of
Servicing Compensation and unpaid Servicing
Compensation from prior Payment Dates, to the
Servicer, if FFCA or an Affiliate thereof is the
Servicer, for the related Payment Date;
(i) the aggregate amount of distributions to the Transfer
Obligation Account for the related Payment Date;
(j) the aggregate amount of distributions in respect of
Issuer/Depositor Indemnities (as defined in the Trust
Agreement) for the related Payment Date;
(k) the aggregate amount of distributions to the holders
of the Trust Certificates for the related Payment
Date; and
(l) the Note Principal Balance of the Notes before and
after giving effect to distributions made to the
holders of the Notes for the related Payment Date.
All reports prepared by the Indenture Trustee of the
withdrawals from and deposits into the Collection Account will be based in whole
or in part upon the information provided to the Indenture Trustee by the
Servicer, and the Indenture Trustee may fully rely upon and shall have no
liability with respect to such information provided by the Servicer.
(d) On each Payment Date, the Indenture Trustee shall forward
to the holders of the Trust Certificates a copy of the Payment Statement in
respect of such Payment Date and a statement setting forth the amounts actually
distributed to such holders of the Trust Certificates on such Payment Date,
together with such other information as the Indenture Trustee deems necessary or
appropriate.
Section 6.02 SPECIFICATION OF CERTAIN TAX MATTERS.
The Indenture Trustee shall comply with all requirements of
the Code and applicable state and local law with respect to the withholding from
any distributions made to any Noteholder of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith, giving due effect to any applicable exemptions from such
withholding and effective certifications or forms provided by the recipient. Any
amounts withheld pursuant to this SECTION 6.02 shall be deemed to have been
distributed to the Noteholders, as the case may be, for all purposes of this
Agreement or the Indenture.
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ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 DUE-ON-SALE; DUE-ON-ENCUMBRANCE.
(a) When any Borrower proposes to convey all or any portion of
its interests in Loan Collateral, or if such a conveyance has actually occurred,
the Servicer shall immediately give notice to the Initial Noteholder of such
conveyance and shall enforce any due-on-sale clause or due-on-encumbrance clause
contained in any Promissory Note or Mortgage or Security Agreement, to the
extent permitted under the terms of the Loan and applicable law and governmental
regulations. In the event that the Servicer determines, in accordance with the
Servicing Standard, that waiver of such clauses would be in accordance with the
Servicing Standard, the Servicer shall promptly give written notice to the
Majority Noteholders of its approval of any such subordinate lien. If a Borrower
applies for approval to place a subordinate monetary lien on Loan Collateral in
accordance with the terms of the Loan Documents, the Servicer shall promptly
give written notice to the Majority Noteholders of the requested encumbrance and
obtain and deliver to the Majority Noteholders such appraisals and other
supporting documentation as are required by the terms of the Loan Documents
together with such additional information as the Majority Noteholders shall
request to facilitate review and approval of the requested encumbrance. In the
event that the Servicer determines, in accordance with the Servicing Standard,
that permitting such subordinate lien would be in accordance with the Servicing
Standard, the Servicer may consent to such lien and shall promptly give written
notice to the Majority Noteholders thereof. Any processing fees paid by a
Borrower in connection with an application for a subordinate monetary lien (net
of any fees and expenses of the Majority Noteholders including the Majority
Noteholders' counsel's fees and expenses) shall be retained by the Servicer as
Servicing Compensation. The Servicer shall not approve any request to
subordinate the lien of any Mortgage Loan to any other lien.
(b) If any Loan Collateral is to be conveyed to a Person by a
Borrower, and such Person is to enter into an assumption agreement or supplement
to the Promissory Note or Mortgage or Security Agreement which requires the
signature of the Indenture Trustee, or if an instrument of release signed by the
Indenture Trustee is required releasing the Borrower from liability on the Loan,
the Servicer shall deliver or cause to be delivered to the Majority Noteholders
for review, and upon the written approval thereof, to the Indenture Trustee for
signature the assumption agreement with the Person to whom the Loan Collateral
is to be conveyed and such modification agreement or supplement to the
Promissory Note or Mortgage or Security Agreement or other instruments as are
reasonable or necessary to carry out the terms of the Promissory Note or
Mortgage or Security Agreement or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Loan Collateral to such Person. The
Servicer shall also deliver or cause to be delivered to the Majority Noteholders
with the foregoing documents a letter explaining the nature of such documents
and the reason or reasons why the Indenture Trustee's signature is required.
With such letter the Servicer shall deliver to the Majority Noteholders and the
Indenture Trustee a certificate of a servicing officer certifying that: (i) a
Servicing Officer has examined and approved such documents as to form and
substance, (ii) the Indenture Trustee's execution and delivery thereof will not
conflict with or
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violate any terms of this Agreement (iii) any required consents of insurers
under any insurance policies required by this Agreement have been obtained, (iv)
there are no changes or modifications other than the identity of the Borrower
other than those previously approved in writing by the Majority Noteholders and
(v) if the seller/transferor of the Loan Collateral is to be released from
liability on the Loan, such release will not (based on the Servicer's good faith
determination) adversely affect the collectability of the Loan. Upon the closing
of the transactions contemplated by such documents, the Servicer shall cause the
originals of the assumption agreement, the release (if any) or the modification
or supplement to the Promissory Note or Mortgage or Security Agreement to be
delivered to the Indenture Trustee and deposited with the Indenture Trustee's
Loan File for such Loan.
Section 7.02 RELEASE OF LOAN FILES.
If with respect to any Loan:
(i) the outstanding Principal Balance of such Loan plus
all interest accrued thereon shall have been paid;
(ii) the Servicer shall have received, in escrow, payment
in full of such Loan in a manner customary for such
purposes;
(iii) such Loan has become a Defective Loan and has been
repurchased or a Qualified Substitute Loan has been
conveyed to the Trust pursuant to SECTION 3.05
hereof;
(iv) such Loan or the related Foreclosure Property has
been sold in connection with the termination of the
Trust pursuant to SECTION 11.01 hereof;
(v) such Loan has been purchased by the Loan Originator
in accordance with the terms of SECTION 3.07;
(vi) the related Foreclosure Property has been sold
pursuant to SECTION 4.11 hereof; or
(vii) such Loan has been included in a Securitization and
concurrently with such release the Securitization
Proceeds associated therewith will be deposited into
the Collection Account.
In each such case, the Servicer shall deliver a certificate to
the effect that the Servicer has complied with all of its obligations under this
Agreement with respect to such Loan and requesting that the Indenture Trustee
release to the Servicer the related Indenture Trustee's Loan File, and the
Indenture Trustee shall, within five Business Days or such shorter period as may
be required by applicable law, release, or cause the Custodian to release
(unless such Indenture Trustee's Loan File has previously been released), the
related Indenture Trustee's Loan File to the Servicer and execute and deliver
such instruments of transfer or assignment prepared and delivered to it by the
Servicer, in each case without recourse, representation or warranty as
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shall be necessary to vest ownership of such Loan in the Servicer or such other
Person as may be specified in such certificate, the forms of any such instrument
to be appended to such certificate.
Section 7.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall
be entitled to receive from the Collection Account the Servicing Fee, out of
which the Servicer shall pay any servicing fees owed or payable to any
Subservicer. Additional servicing compensation in the form of assumption fees,
modification fees, and other administrative fees (exclusive of any prepayment
premiums), insufficient funds charges, amounts remitted pursuant to SECTION 7.01
hereof and late payment charges shall be part of the Servicing Compensation
payable to the Servicer hereunder and shall be paid either by the Servicer's
retaining such additional servicing compensation prior to deposit into the
Collection Account pursuant to SECTION 5.01(b)(1) hereof or, if deposited into
the Collection Account, as part of the Servicing Compensation withdrawn
therefrom pursuant to SECTION 5.01(c)(1) hereof.
The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided for herein.
The Loan Originator also agrees to pay all reasonable costs and expenses
incurred by any successor Servicer or the Indenture Trustee in replacing the
Servicer in the event of a default by the Servicer in the performance of its
duties under the terms and conditions of this Agreement.
Section 7.04 STATEMENT AS TO COMPLIANCE AND FINANCIAL
STATEMENTS.
The Servicer will deliver to the Initial Noteholder:
(a) not later than 90 days following the end of each fiscal
year of the Servicer (beginning on March 31, 1999), an Officer's Certificate
stating that (i) a review of the activities of the Servicer during the preceding
year and of performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all of its 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 and what action the Servicer proposes to take with
respect thereto.
(b) As soon as available and in no event later than 45 days
after the end of each of the first three quarterly fiscal periods of FFCA, a
Quarterly Report on "Form 10-Q" filed by FFCA with the Securities and Exchange
Commission.
(c) As soon as available and in no event later than 90 days
after the end of each fiscal year of FFCA, an Annual Report on "Form 10-K" filed
by FFCA with the Securities and Exchange Commission.
(d) As soon as available and in any event within 90 days after
the end of each fiscal year of FFCA, the annual report that is delivered to its
shareholders.
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(e) Within 10 days after service of process on any of the
following, notice of all legal or arbitrable proceedings affecting the Servicer
or any of its subsidiaries that questions or challenges the validity or
enforceability of any of the Basic Documents or as to which there is a
reasonable likelihood of adverse determination which would result in a material
adverse effect with respect to the value of the Loans or the interests of any of
the Securityholders therein. The Servicer shall also furnish and certify to the
requesting party such other information as to (i) its organization, activities
and personnel relating to the performance of the obligations of the Servicer
hereunder, (ii) its financial condition, (iii) the Loans and (iv) the
performance of the obligations of any Subservicer under the related Subservicing
Agreement, in each case as the Indenture Trustee or the Depositor may reasonably
request from time to time.
Section 7.05 INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
Not later than 90 days following the end of each fiscal year
of the Servicer (beginning on March 31, 1999), the Servicer at its expense shall
cause a nationally recognized firm of Independent Certified Public Accountants
(which may also render other services to the Servicer) to furnish a statement to
the Indenture Trustee, the Depositor and the Initial Noteholder to the effect
that such firm has examined certain documents and records relating to the
servicing of the Loans under this Agreement or of loans under pooling and
servicing agreements (including the Loans and this Agreement) substantially
similar to one another (such statement to have attached thereto a schedule
setting forth the pooling and servicing agreements covered thereby) and that, on
the basis of such examination conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC, such firm confirms that such servicing has been
conducted in compliance with such pooling and servicing agreements except for
such significant exceptions or errors in records that, in the opinion of such
firm, the Uniform Single Attestation Program for Mortgage Bankers or the
Attestation Program for Mortgages serviced for FHLMC requires it to report, each
of which errors and omissions shall be specified in such statement. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of loans by Subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC (rendered
within one year of such statement) of Independent certified public accountants
with respect to the related Subservicer.
Section 7.06 RIGHT TO EXAMINE SERVICER RECORDS.
Each Securityholder, the Indenture Trustee, the Issuer and
each of their respective agents shall have the right upon reasonable prior
notice, during normal business hours and as often as reasonably required, to
examine, audit and copy, at the expense of the Person making such examination
(but, in the case of the Indenture Trustee, at the expense of the Servicer), any
and all of the books, records or other information of the Servicer (including
without limitation any Subservicer to the extent provided in the related
Subservicing Agreement), whether held by the Servicer or by another on behalf of
the Servicer, which may be relevant to the performance or observance by the
Servicer of the terms, covenants or conditions of this Agreement. In the case of
the supervisory agents and examiners of the Issuer, Indenture Trustee and the
Securityholders, access to the documentation regarding the Loans required by
applicable state and federal
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regulations shall be afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Servicer designated by
it.
The Servicer also agrees to make available on a reasonable
basis to the Securityholders or any prospective Securityholder 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 Securityholders and any prospective
Securityholder to inspect the Servicer's servicing facilities during normal
business hours for the purpose of satisfying the Securityholders and such
prospective Securityholder that the Servicer has the ability to service the
Loans in accordance with this Agreement.
Section 7.07 REPORTS TO THE INDENTURE TRUSTEE; COLLECTION
ACCOUNT STATEMENTS.
If the Collection Account is not maintained with the Indenture
Trustee, then not later than 25 days after each Record Date, the Servicer shall
forward to the Indenture Trustee a statement, certified by a Servicing Officer,
setting forth the status of the Collection Account as of the close of business
on the preceding Record Date and showing, for the period covered by such
statement, the aggregate of deposits into the Collection Account for each
category of deposit specified in SECTION 5.01(b)(1) hereof, the aggregate of
withdrawals from the Collection Account for each category of withdrawal
specified in SECTION 5.01(c)(1) hereof, in each case, for the related Due
Period.
Section 7.08 ACCESS TO INFORMATION.
(a) The Servicer understands that, in connection with the
transfer of the Notes, Noteholders may request that the Servicer make available
to the Noteholders and to prospective Noteholders annual audited financial
statements of the Servicer for any or all of the most recently completed five
fiscal years for which such statements are available, which request shall not be
unreasonably denied.
(b) So long as any Notes remain outstanding, each of the
Issuer and any Noteholder shall, at any time and from time to time during
regular business hours, or at such other times upon reasonable notice to the
Servicer and the Servicer shall permit the Issuer and any Noteholder, or its
agents or representatives to:
(i) examine all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Servicer
relating to the Loans, the servicing of the Loans and the compliance of the
terms of the Basic Documents, as may be reasonably requested;
(ii) visit the offices and property of the Servicer for the
purpose of examining such materials described in clause (b)(i) above;
(iii) consult with such professionals as may reasonably be
aware of the operations or condition of the Servicer, including, without
limitation, accountants and auditors, and the Servicer shall cause such
professionals to cooperate with any examination conducted in
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accordance with the terms of this SECTION 7.08 and to provide access to those
materials listed in subclause (b)(i) above in the possession or under the
control of such professionals.
ARTICLE VIII
HEDGING
Section 8.01 HEDGING INSTRUMENTS.
(a) The Issuer, promptly upon the request of the Market Value
Agent, on behalf of the Majority Noteholders, shall enter into such Hedging
Instruments as the Market Value Agent, on behalf of the Majority Noteholders,
may deem appropriate to hedge the interest rate risk associated with the Notes
attributable to Loans bearing a fixed Loan Interest Rate and relative to the
expected Securitization Proceeds therefrom; provided that payments thereunder to
the Collection Account pursuant to SECTION 5.01(b)(1)(x) constitute qualifying
income under SECTION 856(c)(5)(G) of the Code. The Market Value Agent shall
determine, in its sole discretion, whether any Hedging Instrument conforms to
the requirements of SECTION 8.01(b) and (c).
(b) Each Hedging Instrument shall expressly provide that in
the event of a Securitization, such portion of the Hedging Instrument shall
terminate as the Majority Noteholders deem appropriate to facilitate the hedging
of the risks specified in SECTION 8.01(a).
(c) Any Hedging Instrument that provides for any payment
obligation on the part of the Issuer must (i) be without recourse to the assets
of the Issuer, (ii) contain a non-petition covenant provision in the form of
SECTION 12.l3, (iii) limit payment dates thereunder to Payment Dates and (iv)
contain a provision limiting any cash payments due on any day under such Hedging
Instrument solely to funds available therefor in the Collection Account on such
day pursuant to SECTION 5.01(c)(3)(ii) hereof and funds available therefor in
the Transfer Obligation Account.
(d) Each Hedging Instrument must (i) provide for the direct
payment of any amounts thereunder to the Collection Account pursuant to SECTION
5.01(b)(1)(x), (ii) contain an assignment of all of the Issuer's rights (but
none of its obligations) under such Hedging Instrument to the Indenture Trustee
and shall include an express consent of the Hedging Counterparty to such
assignment, (iii) provide that in the event of the occurrence of an Event of
Default, such Hedging Instrument shall terminate upon the direction of the
Majority Noteholders, (iv) prohibit the Hedging Counterparty from "setting-off"
or "netting" other obligations of the Issuer or its Affiliates against such
Hedging Counterparty's payment obligations thereunder and (v) provide that the
appropriate portion of the Hedging Instrument will terminate upon the removal of
the related Loans from the Trust Estate.
(e) The Issuer shall not pledge or otherwise transfer or
encumber any of its assets in order to secure its obligations in respect of any
Hedge Funding Requirements.
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ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer shall indemnify the Loan Originator, the
Owner Trustee, the Trust, the Depositor, the Indenture Trustee and the
Noteholders, their respective officers, directors, employees, agents and
"control persons," as such term is used under the Act and under the Securities
Exchange Act of 1934 as amended (each an "INDEMNIFIED PARTY") and hold harmless
each of them against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of any of the Servicer's
representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and
service the Loans in compliance with the terms of this Agreement; provided,
however, that if the Servicer is not liable pursuant to the provisions of
SECTION 9.01(d) hereof for its failure to perform its duties and service the
Loans in compliance with the terms of this Agreement, then the provisions of
this SECTION 9.01 shall have no force and effect with respect to such failure.
(b) The Loan Originator, the Depositor, the Indenture Trustee
or the Noteholders, as the case may be, shall promptly notify the Servicer if a
claim is made by a third party with respect to a breach of any of the Servicer's
representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and
service the Loans in compliance with the terms of this Agreement. The Servicer
shall promptly notify the Indenture Trustee and the Depositor of any claim of
which it has been notified pursuant to this SECTION 9.01 by a Person other than
the Depositor, and, in any event, shall promptly notify the Depositor of its
intended course of action with respect to any claim.
(c) The Servicer shall be entitled to participate in and, upon
notice to the Indemnified Party, assume the defense of any such action or claim
in reasonable cooperation with, and with the reasonable cooperation of, the
Indemnified Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Servicer, but the
fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (i) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Servicer, (ii) the Servicer has
not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Servicer and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Servicer. The Servicer shall not be
liable for any settlement of any such claim or action unless the Servicer shall
have consented thereto or be in default on its obligations hereunder. Any
failure by an Indemnified Party to comply with the provisions of this SECTION
9.01 shall relieve the Servicer of liability only
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if such failure is materially prejudicial to the defense of the Servicer of such
claim or action and then only to the extent of such prejudice.
(d) None of the Loan Originator, the Depositor or the Servicer
or any of their respective Affiliates, directors, officers, employees or agents
shall be under any liability to the Owner Trustee, the Issuer, the Indenture
Trustee or the Securityholders 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 Loan
Originator, the Depositor, the Servicer or any of their respective Affiliates,
directors, officers, employees, agents against the remedies provided herein for
the breach of any warranties, representations or covenants made herein, or
against any expense or liability specifically required to be borne by such party
without right of reimbursement pursuant to the terms hereof, or against any
expense or liability which would otherwise be imposed by reason of misfeasance,
bad faith or negligence in the performance of the respective duties of the
Servicer, the Depositor or the Loan Originator, as the case may be. The Loan
Originator, the Depositor, the Servicer and any of their respective Affiliates,
directors, officers, employees, agents may rely in good faith on any document of
any kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder.
(e) The Servicer, the Loan Originator, the Depositor, the
Indenture Trustee and any of their respective directors, officers, employees,
agents, Affiliates and "control persons," as such term is used under the Act and
the Securities Exchange Act of 1934, as amended, shall be indemnified by the
Trust and held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or
the Securities, other than any loss, liability or expense related to any
specific Loan or Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Except as otherwise provided herein, none of
the Loan Originator, the Depositor, the Servicer or the Indenture Trustee shall
be under any obligation to appear in, prosecute or defend any legal action that
is not related to its respective duties under this Agreement and which may
involved it in any expenses or liability; provided, however, that, except as
otherwise provided herein, any of the Loan Originator, the Depositor, the
Servicer or the Indenture Trustee may, with the prior consent of the Majority
Noteholders, in its discretion undertake any such action which it may deem
necessary or desirable with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Issuer hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be reimbursed therefor out of the Collection Account, to the
extent that funds are available therein, as provided in SECTION 5.01(c)(1).
(f) The Servicer and any Affiliate thereof shall be
indemnified and held harmless by the Owner Trust against any liability or
expense incurred in connection with any third party claims brought against the
Servicer and any Affiliate thereto, which are related to the servicing of the
Loans in accordance with this Agreement, including actions taken by the Servicer
in accordance with written instructions given to the Servicer by the
Noteholders, other
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than any liability or expense: (i) specifically required to be borne thereby
pursuant to the terms hereof or otherwise incidental to the performance of
obligations and duties hereunder, including the prosecution of enforcement
actions in respect of any specific Loan or Loans (except as any such liability
or expense shall be otherwise reimbursable pursuant to this Agreement); (ii)
incurred in connection with any breach of a representation, warranty or covenant
made therein; (iii) incurred by reason of misfeasance, bad faith or negligence
by the Servicer or its Affiliates in the performance of its or their obligations
or duties hereunder; (iv) incurred in connection with any violation by the
Servicer or its Affiliates of any state or federal securities law; (v) claims
for which the Servicer is required to indemnify any Person pursuant to this
SECTION 9.01; or (vi) which result from the failure of the Servicer to service
and administer the Loans in strict compliance with the terms of this Agreement.
(g) SERVICER TO INDEMNIFY INDENTURE TRUSTEE. The Servicer
agrees to perform all of its obligations set forth in SECTION 6.07 of the
Indenture.
Section 9.02 MERGER OR CONSOLIDATION OF THE SERVICER.
The Servicer shall 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 and maintain such other licenses and
permits in each jurisdiction necessary to protect the validity and
enforceability of each Basic Document to which it is a party and each of the
Loans and to perform its duties under each Basic Document to which it is a
party; provided, however, that the Servicer may merge or consolidate with any
other corporation upon the satisfaction of the conditions set forth in the
following paragraph.
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 Eligible Servicer and shall be the
successor of the Servicer, as applicable hereunder, 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, conversion, consolidation or succession to the Indenture
Trustee and the Issuer.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND
OTHERS.
The Servicer and any director, officer, employee or agent of
the Servicer may rely on any document of any kind which it in good faith
reasonably believes to be genuine and to have been adopted or signed by the
proper authorities respecting any matters arising hereunder. Subject to the
terms of SECTION 9.01 hereof, the Servicer shall have no obligation to appear
with respect to, prosecute or defend any legal action which is not incidental to
the Servicer's duty to service the Loans in accordance with this Agreement.
Section 9.04 SERVICER NOT TO RESIGN; ASSIGNMENT.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) with the consent of the Indenture Trustee or (b)
upon determination that its duties
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hereunder are no longer permissible under applicable law. Any such determination
pursuant to clause (b) of the preceding sentence permitting the resignation of
the Servicer shall be evidenced by an independent opinion of counsel to such
effect delivered (at the expense of the Servicer) to the Indenture Trustee. No
resignation of the Servicer shall become effective until a successor servicer,
appointed pursuant to the provisions of SECTION 10.02 hereof and satisfying the
requirements of SECTION 4.07 hereof with respect to the qualifications of a
successor Servicer, shall have assumed the Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.
Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder and any agreement, instrument or act
purporting to effect any such assignment, transfer, delegation or appointment
shall be void.
The Servicer agrees to cooperate with any successor Servicer
in effecting the transfer of the Servicer's servicing responsibilities and
rights hereunder pursuant to the first paragraph of this SECTION 9.04,
including, without limitation, the transfer to such successor of all relevant
records and documents (including any Loan Files in the possession of the
Servicer) and all amounts received with respect to the Loans and not otherwise
permitted to be retained by the Servicer pursuant to this Agreement. In
addition, the Servicer, at its sole cost and expense, shall prepare, execute and
deliver any and all documents and instruments to the successor Servicer
including all Loan Files in its possession and do or accomplish all other acts
necessary or appropriate to effect such termination and transfer of servicing
responsibilities.
Section 9.05 RELATIONSHIP OF SERVICER TO ISSUER AND THE
INDENTURE TRUSTEE.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Issuer and the Indenture
Trustee under this Agreement is intended by the parties hereto to be that of an
independent contractor and not of a joint venturer, agent or partner of the
Issuer or the Indenture Trustee.
Section 9.06 SERVICER MAY OWN SECURITIES.
Each of the Servicer and any Affiliate of the Servicer may in
its individual or any other capacity become the owner or pledgee of Securities
with the same rights as it would have if it were not the Servicer or an
Affiliate thereof except as otherwise specifically provided herein. Securities
so owned by or pledged to the Servicer or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Securities; provided,
however, that any Securities owned by the Servicer or any Affiliate thereof,
during the time such Securities are owned by them, shall be without voting
rights for any purpose set forth in this Agreement. The Servicer shall notify
the Indenture Trustee promptly after it or any of its Affiliates becomes the
owner or pledgee of a Security.
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ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default by
the Servicer shall occur and be continuing, that is to say:
(i) any failure by Servicer to deposit (a) into the Collection
Account in accordance with SECTION 5.01(b) any amount required to be
deposited by it under any Basic Document to which it is a party, which
failure continues unremedied for two days following the date on which
such deposit was first requested to be made or (b) the full amount of
any Periodic Advance required to be made on the day such Periodic
Advances are required to be made, which failure continues unremedied
until 12:00 p.m. New York City time on the Business Day following such
day; or
(ii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the material covenants
or agreements on the part of the Servicer, contained in any Basic
Document to which it is a party, which continues unremedied for a
period of 30 days (or, in the case of payment of insurance premiums,
for a period of 15 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 any other party hereto or to the Servicer (with copy to
each other party hereto), by Holders of 25% of the Percentage Interests
(as defined in the Indenture) of the Notes or the Certificates; or
(iii) any breach on the part of the Servicer of any
representation or warranty contained in any Basic Document to which it
is a party that materially and adversely affects the interests of any
of the parties hereto or any Securityholder and which continues
unremedied for a period of 30 days after the date on which notice of
such breach, requiring the same to be remedied, shall have been given
to the Servicer by any other party hereto or to the Servicer (with copy
to each other party hereto), by the Initial Noteholder or Holders of
25% of the Percentage Interests of the Notes or the Certificates; or
(iv) there shall have been commenced before a court or agency
or supervisory authority having jurisdiction in the premises an
involuntary proceeding against the Servicer under any present or future
federal or state bankruptcy, insolvency or similar law for the
appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, which action shall not
have been dismissed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator, receiver, liquidator, trustee or similar official in any
bankruptcy, insolvency, readjustment of debt,
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marshalling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its
property; or
(vi) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization
statute, make an assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations, or take any corporate
action in furtherance of the foregoing.
(b) Then, and in each and every such case, so long as an Event
of Default shall not have been remedied, the Indenture Trustee or the Majority
Noteholders, by notice in writing to the Servicer may, in addition to whatever
rights such Person may have at law or in equity to damages, including injunctive
relief and specific performance, may terminate all the rights and obligations of
the Servicer under this Agreement and in and to the Loans and the proceeds
thereof, as servicer under this Agreement. Upon receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Loans or otherwise, shall, subject to SECTION 10.02
hereof, pass to and be vested in a successor servicer, and the successor
servicer is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, 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 Loans and
related documents. The Servicer agrees to cooperate with the successor servicer
in effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the successor servicer
for administration by it of all amounts which shall at the time be credited by
the Servicer to each Collection Account or thereafter received with respect to
the Loans.
(c) Immediately upon the occurrence hereunder or under the
Indenture of an Event of Default or a Default, the Loan Originator, shall, upon
the request of the Majority Noteholders provide to the Indenture Trustee and the
Initial Noteholder for each (i) Mortgage, (ii) power of attorney pursuant to
which a Mortgage was executed, (iii) assumption, modification, consolidation or
extension agreement relating to a Mortgage, (iv) Assignment of Mortgage, (v)
assignment of leases or rents, (vi) UCC-1 Financing Statement and UCC
continuation statement, (vii) Security Agreement and (viii) assumption,
modification, consolidation or extension agreement relating to a Security
Agreement with respect to which the Indenture Trustee's Loan File does not
contain the original, a certificate or certificates of (x) in the case of items
(i) and (ii) a Responsible Officer of the Loan Originator, the closing attorney
or an officer of the title insurer or agent of the title insurer that issued the
related Title Policy and (y) in the case of the remaining items, a Responsible
Officer of the Loan Originator, certifying that such copy is a true, correct and
complete copy of the related original, which original has not been returned from
the applicable public recording office.
Section 10.02 APPOINTMENT OF SUCCESSOR.
On and after the date the Servicer receives a notice of
termination pursuant to SECTION 10.01 hereof, or the Indenture Trustee receives
the resignation of the Servicer evidenced
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by an Opinion of Counsel or accompanied by the consents required by SECTION 9.04
hereof, or the Servicer is removed as servicer pursuant to this Article X or
SECTION 4.01(f)(ii), then, subject to SECTION 4.07 hereof, the Majority
Noteholders shall appoint a successor servicer to 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; provided, however, that the
successor servicer shall not be liable for any actions of any servicer prior to
it.
The successor servicer shall be obligated to make Servicing
Advances hereunder. As compensation therefor, the successor servicer appointed
pursuant to the following paragraph, shall be entitled to all funds relating to
the Loans which the Servicer would have been entitled to receive from the
Collection Account pursuant to SECTION 5.01(c) hereof as if the Servicer had
continued to act as servicer hereunder, together with other Servicing
Compensation in the form of assumption fees, late payment charges or otherwise
as provided in SECTION 7.03 hereof. The Servicer shall not be entitled to any
termination fee if it is terminated pursuant to SECTION 10.01 hereof but shall
be entitled to any accrued and unpaid Servicing Fee to the date of termination.
Any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly to the successor servicer. The compensation of any successor servicer
appointed shall be the Servicing Fee, together with other Servicing Compensation
provided for herein. The Indenture Trustee, the Issuer, any Custodian, the
Servicer and any such successor servicer shall take such action, consistent with
this Agreement, as shall be reasonably necessary to effect any such succession.
Any costs or expenses incurred by the Indenture Trustee in connection with the
termination of the Servicer and the succession of a successor servicer shall be
an expense of the outgoing Servicer and, to the extent not paid thereby, an
expense of such successor servicer. 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 successor servicer 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 successor servicer all amounts which then have been or
should have been deposited in any Trust Account maintained by the Servicer or
which are thereafter received with respect to the Loans. No successor servicer
shall be held liable by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof caused by (i) the failure of
the Servicer to deliver, or any delay in delivering, cash, documents or records
to it or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. No appointment of a successor to the
Servicer hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Indenture Trustee to the Initial
Noteholder, the Issuer and the Depositor and the Depositor, the Majority
Noteholders and the Issuer shall have consented in writing thereto.
In connection with such appointment and assumption, the
Majority Noteholder may make such arrangements for the compensation of such
successor servicer out of payments on the Loans as they and such successor
servicer shall agree.
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Section 10.03 WAIVER OF DEFAULTS.
The Majority Noteholders may waive any events permitting
removal of the Servicer as servicer pursuant to this Article X; provided,
however, that the Majority Noteholders may not waive a default in making a
required distribution on a Note or Trust Certificate without the consent of the
related Noteholder or Certificateholder. Upon any waiver of a past default, such
default shall cease to exist and any Event of Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereto except to the extent expressly so waived.
Section 10.04 ACCOUNTING UPON TERMINATION OF SERVICER.
Upon termination of the Servicer under this Article X, the
Servicer shall, at its own expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee the funds in any Trust Account maintained by
the Servicer;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee all Loan Files and related documents and
statements held by it hereunder and a Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee and to the Issuer and the Securityholders 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 payments or
charges with respect to the 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 Loans to its successor and to more fully and definitively vest
in such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon either: (a) the later of
(i) the satisfaction and discharge of the Indenture and the provisions thereof
or (ii) the disposition of all funds with respect to the last Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable (including, without limitation, indemnification payments payable
pursuant to any Basic Document) to the Indenture Trustee, the Owner Trustee, the
Issuer and the Custodian, written notice of the occurrence of either of which
shall be provided to the Indenture Trustee by the Servicer; or (b) the mutual
consent of the Servicer, the Depositor, the Loan
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Originator and all Securityholders in writing and delivered to the Indenture
Trustee by the Servicer.
Section 11.02 OPTIONAL TERMINATION.
The Majority Certificateholders may, at their option, effect
an early termination of the Trust on any Payment Date on or after the Clean-up
Call Date. The Majority Certificateholders shall effect such early termination
by providing notice thereof to the Indenture Trustee and Owner Trustee and by
purchasing all of the Loans at a purchase price, payable in cash, equal to or
greater than the Termination Price. The expense of any Independent appraiser
required under this SECTION 11.02 shall be a nonreimbursable expense of the
Majority Certificateholders.
Any such early termination by the Majority Certificateholders
shall be accomplished by depositing into the Collection Account on the third
Business Day prior to the Payment Date on which the purchase is to occur the
amount of the Termination Price to be paid. The Termination Price and any
amounts then on deposit in the Collection Account (other than any amounts
withdrawable pursuant to SECTION 5.01(c)(1) hereof) shall be distributed by the
Indenture Trustee (except as may be otherwise provided in the Collection Account
Letter Agreement) pursuant to SECTION 5.01(c)(3) and SECTION 9.1 of the Trust
Agreement on the next succeeding Payment Date; and any amounts received with
respect to the Loans and Foreclosure Properties subsequent to the final Payment
Date shall belong to the purchaser thereof.
Section 11.03 NOTICE OF TERMINATION.
Notice of termination of this Agreement or of early redemption
and termination of the Trust shall be sent (i) by the Indenture Trustee to the
Noteholders in accordance with SECTION 10.02 of the Indenture and (ii) by the
Owner Trustee to the Certificateholders in accordance with SECTION 9.1(d) of the
Trust Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 ACTS OF NOTEHOLDERS.
Except as otherwise specifically provided herein, whenever
action, consent or approval of the Securityholders 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 Securityholders if the
Majority Securityholders agree to take such action or give such consent or
approval.
Section 12.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the
Depositor, the Servicer, the Loan Originator, the Indenture Trustee and the
Issuer by written agreement with notice thereof to the Securityholders, without
the consent of any of the Securityholders, to cure
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any error or ambiguity, to correct or supplement any provisions hereof which may
be defective or inconsistent with any other provisions hereof or to add any
other provisions with respect to matters or questions arising under this
Agreement; provided, however, that such action will not adversely affect in any
material respect the interests of the Securityholders. An amendment described
above shall be deemed not to adversely affect in any material respect the
interests of the Securityholders if an Opinion of Counsel is obtained to such
effect.
(b) This Agreement may also be amended from time to time by
the Depositor, the Servicer, the Loan Originator, the Indenture Trustee and the
Issuer by written agreement, with the prior written consent of the Majority
Noteholders, 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 Securityholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Loans or distributions which are required to be made
on any Security, without the consent of the holders of 100% of the Notes, (ii)
adversely affect in any material respect the interests of any of the holders of
the Notes in any manner other than as described in clause (i), without the
consent of the holders of 100% of the Notes, or (iii) reduce the percentage of
the Notes, the consent of which is required for any such amendment, without the
consent of the holders of 100% of the Notes.
(c) It shall not be necessary for the consent of
Securityholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
Prior to the execution of any amendment to this Agreement, the
Issuer and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Issuer's
own rights, duties or immunities of the Issuer or the Indenture Trustee, as the
case may be, under this Agreement.
Section 12.03 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
Loan Collateral is 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 of the Majority Noteholders 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 Loans.
Section 12.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until
terminated as herein provided.
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Section 12.05 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06 NOTICES.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered personally,
mailed by overnight mail, certified mail or registered mail, postage prepaid, or
(ii) transmitted by telecopy, upon telephone confirmation of receipt thereof
(with a copy delivered by overnight courier), as follows: (I) in the case of the
Depositor, to FFCA Loan Warehouse Corporation, The Perimeter Center, 17207 North
Perimeter Drive, Scottsdale, Arizona 85255, Attention: Dennis L. Ruben, telecopy
number: (602) 585-2226, telephone number: (602) 585-4500 or such other addresses
or telecopy or telephone numbers as may hereafter be furnished to the
Securityholders and the other parties hereto in writing by the Depositor; (II)
in the case of the Issuer, to FFCA Franchise Loan Owner Trust 1998-1, c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration, telecopy
number: (302) 651-8882, telephone number: (302) 651-1000 or such other address
or telecopy or telephone numbers as may hereafter be furnished to the
Securityholders and the other parties hereto in writing by the Depositor; (III)
in the case of the Loan Originator, to FFCA Acquisition Corporation, The
Perimeter Center, 17207 North Perimeter Drive, Scottsdale, Arizona 85255, Dennis
L. Ruben, telecopy number: (602) 585-2226, telephone number: (602) 585-4500 or
such other addresses or telecopy or telephone numbers as may hereafter be
furnished to the Securityholders and the other parties hereto in writing by the
Loan Originator, (IV) in the case of the Servicer, to Franchise Finance
Corporation of America, The Perimeter Center, 17207 North Perimeter Drive,
Scottsdale, Arizona 85255, Attention: Dennis L. Ruben, telecopy number: (602)
585-2226, telephone number: (602) 585-4500 or such other addresses or telecopy
or telephone numbers as may hereafter be furnished to the Securityholders and
the other parties hereto in writing by the Servicer; (V) in the case of the
Indenture Trustee, to LaSalle National Bank, 135 South LaSalle Street, Suite
1625, Chicago, Illinois 60674-4107, Attention: Asset-Backed Securities Trust
Services Group, FFCA Franchise Loan Owner Trust 1998-1 telecopy number: (312)
904-2084, telephone number: (312) 904-7830 or such other addresses or telecopy
or telephone numbers as may hereafter be furnished to the Securityholders and
the other parties hereto in writing by the Indenture Trustee; (VI) in the case
of the Initial Noteholder, to Morgan Stanley Securitization Funding Inc., 1585
Broadway, New York, New York 10036, Attention: Peter Woroniecki, telecopy
number: (212) 761-0710, telephone number: (212) 761-2063; and (VII) in the case
of the Securityholders, 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 or telephone confirmation thereof by such party, except;
provided, that notices to the Securityholders shall be effective upon mailing or
personal delivery.
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<PAGE>
Section 12.07 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 12.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to
create any partnership or joint venture between the parties hereto and the
services of the Servicer shall be rendered as an independent contractor.
Section 12.09 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 12.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding
upon the Servicer, the Loan Originator, the Depositor, the Indenture Trustee,
the Issuer and the Noteholders and their respective successors and permitted
assigns.
Section 12.11 HEADINGS.
The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
Section 12.12 ACTIONS OF SECURITYHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Securityholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Securityholders in person or by
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 Depositor, the Servicer or the Issuer. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Depositor, the Servicer and the Issuer if made in the manner provided in this
SECTION 12.12.
(b) The fact and date of the execution by any Securityholder
of any such instrument or writing may be proved in any reasonable manner which
the Depositor, the Servicer or the Issuer deems sufficient.
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<PAGE>
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Securityholder shall bind every holder of
every Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, the Servicer or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Security.
(d) The Depositor, the Servicer or the Issuer may require
additional proof of any matter referred to in this SECTION 12.12 as it shall
deem necessary.
Section 12.13 NON-PETITION AGREEMENT
Notwithstanding any prior termination of any Basic Document,
the Loan Originator, the Servicer, the Depositor and the Indenture Trustee each
severally and not jointly covenants that it shall not, prior to the date which
is one year and one day after the payment in full of the all of the Notes,
acquiesce, petition or otherwise, directly or indirectly, invoke or cause the
Trust or the Depositor to invoke the process of any governmental authority for
the purpose of commencing or sustaining a case against the Trust or Depositor
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust or Depositor or any substantial part of their
respective property or ordering the winding up or liquidation of the affairs of
the Trust or the Depositor.
Section 12.14 HOLDERS OF THE TRUST CERTIFICATES.
(a) Any sums to be distributed or otherwise paid hereunder or
under the Trust Agreement to the holders of the Trust Certificates shall be paid
to such holders pro rata based on their Percentage Interests (as defined in the
Trust Agreement);
(b) Where any act or event hereunder is expressed to be
subject to the consent or approval of the holders of the Trust Certificates,
such consent or approval shall be capable of being given by the holder or
holders evidencing in the aggregate not less than 51% of the Percentage
Interests (as defined in the Trust Agreement).
Section 12.15 FFCA TO GUARANTEE CERTAIN LOAN ORIGINATOR
OBLIGATIONS.
(a) FFCA hereby unconditionally guarantees to the Indenture
Trustee and the Noteholders the due and punctual payment of all amounts payable
by the Loan Originator under Sections 2.3 and 3.1 of the Loan Purchase Agreement
and Sections 2.05, 3.05 and 3.07(a) hereof (collectively, the "Guaranteed
Obligations") when and as such obligations thereunder shall become due and
payable. In case of the inability of the Loan Originator to pay punctually any
such amounts, FFCA hereby agrees, upon written demand by the Indenture Trustee
or the Majority Noteholders, to pay or cause to be paid any such amounts
punctually when and as the same shall become due and payable (exclusive of any
grace period).
(b) FFCA hereby agrees that its obligations under this SECTION
12.15 constitute a guaranty of payment when due and not of collection.
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<PAGE>
(c) FFCA hereby agrees that its obligations under this SECTION
12.15 shall be unconditional, irrespective of the validity, regularity or
enforceability of any Basic Document to which the Loan Originator is a party
against the Loan Originator, the absence of any action to enforce the Loan
Originator's obligations under any Basic Document to which it is a party, any
waiver or consent by the Indenture Trustee or the Majority Noteholders with
respect to any of the Guaranteed Obligations or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a FFCA
(other than the defenses of statute of limitations or payment (as such defenses
may apply to FFCA), which are not waived); provided, however, that FFCA shall be
entitled to exercise any right that the Loan Originator could have exercised
under each Basic Document to which the Loan Originator is a party to cure any
default in respect of the Guaranteed Obligations.
(d) FFCA hereby waives (i) promptness, diligence, presentment,
demand of payment, protest, order and, except as set forth in paragraph (a)
hereof, notice of any kind in connection with each Basic Document to which the
Loan Originator is a party, or (ii) any requirement that the Indenture Trustee
or the Noteholders exhaust any right to take any action against the Loan
Originator or any other person prior to or contemporaneously with proceeding to
exercise any right against FFCA under this SECTION 12.15.
Section 12.16 REPORTS IN ELECTRONIC FORM.
Notwithstanding anything to the contrary in this Agreement,
any report required to be furnished by a party to this Agreement to the Initial
Noteholder may be furnished by magnetic tape or computer disk in a form mutually
agreed to by the Initial Noteholder and the party providing such information,
provided that such report is delivered timely in accordance with the terms
herein.
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<PAGE>
IN WITNESS WHEREOF, the Issuer, the Depositor, the Servicer,
the Loan Originator and the Indenture Trustee have caused their names to be
signed by their respective officers thereunto duly authorized, as of the day and
year first above written, to this Sale and Servicing Agreement.
FFCA FRANCHISE LOAN OWNER TRUST 1998-1,
as Issuer
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee
By: /s/ Ann E. Roberts
-----------------------------------------
Name: Ann E. Roberts
Title: Senior Financial Services Officer
FFCA LOAN WAREHOUSE CORPORATION,
as Depositor
By: /s/ Dennis L. Ruben
-----------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President
FFCA ACQUISITION CORPORATION
as Loan Originator
By: /s/ Dennis L. Ruben
-----------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President
FRANCHISE FINANCE CORPORATION OF AMERICA,
as Servicer
By: /s/ Dennis L. Ruben
-----------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President
LASALLE NATIONAL BANK,
as Indenture Trustee
By: /s/ Michael Evans
-----------------------------------------
Name: Michael Evans
Title: First Vice President
<PAGE>
THE STATE OF ___________ )
)
COUNTY OF ______________ )
BEFORE ME, the undersigned authority, a Notary Public, on this
_____ day of August 1998 personally appeared _______________, known to me to be
a person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said _________________, not
in its individual capacity but in its capacity as Owner Trustee of FFCA
FRANCHISE LOAN OWNER TRUST 1998-1 as Issuer, and that he executed the same as
the act of such corporation for the purpose and consideration therein expressed,
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF _____________________________,
this the ____ day of August, 1998.
___________________________________________
Notary Public, State of ___________________
<PAGE>
THE STATE OF ____________ )
)
COUNTY OF _______________ )
BEFORE ME, the undersigned authority, a Notary Public, on this
_____ day of August 1998 personally appeared Dennis L. Ruben, known to me to be
a person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FFCA LOAN WAREHOUSE
CORPORATION, as the Depositor, and that he executed the same as the act of such
corporation for the purpose and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF _____________________________,
this the ____ day of August, 1998.
_________________________________________
Notary Public, State of _________________
<PAGE>
THE STATE OF ___________ )
)
COUNTY OF ______________ )
BEFORE ME, the undersigned authority, a Notary Public, on this
_____ day of August 1998 personally appeared Dennis L. Ruben, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said FFCA ACQUISITION
CORPORATION, as the Loan Originator and Servicer, and that he executed the same
as the act of such corporation for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF FFCA ACQUISITION CORPORATION,
this the ____ day of August, 1998.
___________________________________________
Notary Public, State of ___________________
<PAGE>
THE STATE OF ___________ )
)
COUNTY OF ______________ )
BEFORE ME, the undersigned authority, a Notary Public, on this
_____ day of August 1998 personally appeared Dennis L. Ruben, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said FRANCHISE FINANCE
CORPORATION OF AMERICA, as the Loan Originator and Servicer, and that he
executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF FRANCHISE FINANCE CORPORATION
OF AMERICA, this the ____ day of August, 1998.
________________________________________
Notary Public, State of ________________
<PAGE>
THE STATE OF ___________ )
)
COUNTY OF ______________ )
BEFORE ME, the undersigned authority, a Notary Public, on this
day of August 1998 personally appeared Michael Evans, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said LASALLE NATIONAL BANK,
as the Indenture Trustee, and that she executed the same as the act of such
entity for the purposes and consideration therein expressed, and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF LASALLE NATIONAL BANK this the
____ day of August, 1998.
________________________________________
Notary Public, State of ________________
<PAGE>
EXHIBIT D
LIST OF REFERENCED DOCUMENTS
1. Financial Statements of FFCA.
2. Loan delinquency history reports.
3. Default/Loss history reports.
4. Underwriting Guidelines.
5. Index of Form Documents:
(a) Loan Agreement;
(b) Promissory Note;
(c) Deed of Trust;
(d) Mortgage;
(e) Guaranty - Multi Guarantors;
(f) Guaranty - Single Guarantors;
(g) Environmental Indemnity Agreement;
(h) Underlying Borrower's Legal Opinion; and
(i) Form of Estoppel.
6. Environmental Policy entitled "Secured Creditor - Secured Creditor
Impaired Property Policy."
7. Servicing Procedures & Policy Manual.
8. Hedging Procedures & Policy Manual.
9. Geographic Information Systems Procedures & Policy Booklet.
10. Asset Management Presentation dated January 27, 1998.
11. List of FFCA Approved Concepts/Brands.
12. FFCA written research reports on Approved Concepts/Brands.
13. Example of FFCA regression model entitled; "Burger King Regression
Model."
All of such Referenced Documents are attached hereto.
================================================================================
LOAN PURCHASE AGREEMENT
between
FFCA LOAN WAREHOUSE CORPORATION,
as Depositor,
and
FFCA ACQUISITION CORPORATION,
as Loan Originator,
================================================================================
Dated as of August 14, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions..................................................1
ARTICLE II.
SALE OF LOANS; PAYMENT OF PURCHASE PRICE
Section 2.1 Sale of Loans to Depositor...................................1
Section 2.2 Obligations of Loan Originator...............................3
Section 2.3 Securitizations; Transfer Obligation.........................5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.1 Loan Originator Representations and Warranties...............7
ARTICLE IV.
LOAN ORIGINATOR'S COVENANTS
Section 4.1 Covenants of the Loan Originator.............................8
ARTICLE V.
INDEMNIFICATION BY THE LOAN ORIGINATOR
Section 5.1 Indemnification..............................................8
Section 5.2 Limitation on Liability of the Loan Originator...............9
Section 5.3 Indemnification..............................................9
Section 5.4 Procedure....................................................9
Section 5.5 Defense of Claims............................................9
ARTICLE VI.
TERMINATION
Section 6.1 Termination.................................................10
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1 Amendment...................................................10
Section 7.2 Governing Law...............................................10
Section 7.3 Notices.....................................................10
Section 7.4 Severability of Provisions..................................11
Section 7.5 Counterparts................................................11
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<PAGE>
Section 7.6 Further Agreements..........................................11
Section 7.7 Intention of the Parties....................................11
Section 7.8 Successors and Assigns; Assignment of Purchase Agreement....12
Section 7.9 Survival....................................................12
Section 7.10 Successors and Assigns......................................12
EXHIBIT
Exhibit A Form of LPA Assignment
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<PAGE>
LOAN PURCHASE AGREEMENT (the "PURCHASE AGREEMENT"), dated as
of August 14, 1998, between FFCA ACQUISITION CORPORATION("FFCA ACQUISITION
CORP." or the "LOAN ORIGINATOR"), and FFCA LOAN WAREHOUSE CORPORATION (the
"DEPOSITOR").
W I T N E S S E T H
-------------------
WHEREAS, the Loan Originator owns and from time to time
originates Loans secured primarily by mortgages, deeds of trust and security
deeds on certain Loan Collateral and the Loan Documents related thereto;
WHEREAS, the parties hereto desire that on each Transfer Date
the Loan Originator sell all its right, title and interest in and to the Loans
and the related Loan Documents to Depositor pursuant to the terms of this
Purchase Agreement; and
WHEREAS, pursuant to the terms of a Sale and Servicing
Agreement, dated as of August 14, 1998 (the "SALE AND SERVICING AGREEMENT"),
among FFCA Franchise Loan Owner Trust 1998-1, as issuer (the "ISSUER"), the
Depositor, FFCA Acquisition Corp., as Loan Originator, Franchise Finance
Corporation of America, as Servicer and LaSalle National Bank, as indenture
trustee (the "INDENTURE TRUSTEE"), the Depositor will sell, transfer, assign and
otherwise convey to the Issuer all of its right, title and interest in and to
the Loans and related Loan Documents and this Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used but not
defined herein have the meanings assigned thereto in the Sale and Servicing
Agreement.
ARTICLE II.
SALE OF LOANS; PAYMENT OF PURCHASE PRICE
Section 2.1 SALE OF LOANS TO DEPOSITOR. (a) On the terms and
conditions of this Purchase Agreement, on each Transfer Date, the Loan
Originator agrees to offer for sale and sell Loans and deliver the related Loan
Documents to or at the direction of the Depositor. To the extent the Depositor
has or is able to obtain sufficient funds for the purchase thereof, the
Depositor agrees to purchase such Loans offered for sale by the Loan Originator.
(b) The price paid by the Depositor for the Loans sold on each
Transfer Date (the "SALE Price") shall be the lesser of (i) the product of (x)
an amount equal to the average of the Advance Factors with respect to the Loans
conveyed on such date, weighted by Transfer Cut-off Date Principal Balances
multiplied by (y) the sum of the Transfer Cut-off Date Principal Balances of the
Loans conveyed as of such Transfer Date, and (ii) the product of (x) the average
<PAGE>
Maximum Advance Factors of the Loans conveyed on such date weighted by Transfer
Cut-off Date Principal Balances multiplied by (y) the sum of the Market Value of
all Loans conveyed on such date, in either case subtracting from the product any
Overcollateralization Shortfall as of such date.
(c) On each Transfer Date, the Loan Originator shall convey to
the Depositor the Loans and the other property and rights related thereto
described in the related LPA Assignment, the Depositor shall cause the deposit
of cash in the amount of the Sale Price in the Advance Account, and the Servicer
shall, promptly after such deposit, withdraw the Sale Price deposited in respect
of applicable Additional Note Principal Balance from the Advance Account, and
distribute such amount to or at the direction of the Loan Originator, only upon
the satisfaction of each of the following conditions on or prior to such
Transfer Date:
(i) the Loan Originator shall have delivered to the Issuer,
the Depositor and the Initial Noteholder duly executed Assignments,
which shall have attached thereto a Loan Schedule setting forth the
appropriate information with respect to all Loans conveyed on such
Transfer Date and shall have delivered to the Initial Noteholder a
computer readable transmission of such Loan Schedule;
(ii) the Loan Originator shall have deposited in the
Collection Account, all collections received with respect to each of
the Loans after but not including the applicable Transfer Cutoff Date;
(iii) as of such date, neither the Loan Originator nor the
Depositor shall (a) be insolvent, (b) be made insolvent by its
respective sale of Loans or (c) have reason to believe that its
insolvency is imminent;
(iv) the Revolving Period shall not have terminated;
(v) the Loan Originator shall have delivered to the Initial
Noteholder the Due Diligence Packages for such Loans as are to be
transferred on such Transfer Date at least five Business Days prior to
such Transfer Date, and the Initial Noteholder shall have completed its
due diligence investigation of such Loans and shall have approved, in
its sole discretion, each such Loan;
(vi) the Loan Originator shall have delivered the Indenture
Trustee's Loan File to the Custodian in accordance with the Custodial
Agreement and the Initial Noteholder shall have received a copy of the
Loan Schedule and Exceptions Report;
(vii) each of the representations and warranties made by the
Loan Originator pursuant to SECTION 3.04 of the Sale and Servicing
Agreement with respect to the Loans shall be true and correct as of the
related Transfer Date with the same effect as if then made, and the
Loan Originator shall have performed all obligations to be performed by
it under each of the Basic Documents on and prior to such Transfer
Date;
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<PAGE>
(viii) the Loan Originator shall, at its own expense, on or
prior to the Transfer Date, indicate in its computer files that the
Loans identified in the related LPA Assignment have been sold to the
Depositor pursuant to this Purchase Agreement;
(ix) the Loan Originator shall have taken any action required
to maintain the ownership interest of the Depositor in the Trust Estate
and the first perfected security interest therein of the Indenture
Trustee;
(x) no selection procedures believed by the Loan Originator to
be adverse to the interests of the Noteholders shall have been utilized
in selecting the Loans to be conveyed on such Transfer Date;
(xi) the Loan Originator shall have provided the Depositor,
the Issuer, the Indenture Trustee and the Initial Noteholder no later
than two Business Days prior to the issuance of Additional Note
Principal Balance, a Notice of Additional Note Principal Balance;
(xii) after giving effect to the Additional Note Principal
Balance purchased on such date, the Note Principal Balance will not
exceed the Maximum Note Principal Balance; and
(xiii) all conditions precedent to the Initial Noteholder's
purchase of Additional Note Principal Balance pursuant to the Note
Purchase Agreement shall have been fulfilled as of such date.
(d) Subject to Section 7.7 hereof, the parties hereto intend
that each of the conveyances contemplated hereby be sales from the Loan
Originator to the Depositor of all of the Loan Originator's right, title and
interest in and to the Loans and other property described above. In the event
the transactions set forth herein are deemed not to be a sale, the Loan
Originator hereby grants to the Depositor a security interest in all of the Loan
Originator's right, title and interest in, to and under the Loans and other
property described above, whether now existing or hereafter created, to secure
all of the Loan Originator's obligations hereunder; and this Purchase Agreement
shall constitute a security agreement under applicable law.
Section 2.2 OBLIGATIONS OF LOAN ORIGINATOR.
(a) On or prior to the Closing Date and each Transfer Date,
the Initial Noteholder shall have received evidence satisfactory to it of (i)
the completion of all recordings, registrations and filings as may be necessary
or, in the opinion of the Initial Noteholder, desirable to perfect or evidence
the assignment by the Loan Originator to the Depositor of the Loan Originator's
ownership interest in the Trust Estate including, without limitation, the Loans
and related property and the proceeds thereof, (ii) the completion of all
recordings, registrations and filings as may be necessary or, in the opinion of
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<PAGE>
the Initial Noteholder, desirable to perfect or evidence the assignment by the
Depositor to the Issuer of the Depositor's ownership interest in the Trust
Estate including, without limitation, the Loans and the proceeds thereof and
(iii) the completion of all recordings, registrations and filings as may be
necessary or, in the opinion of the Initial Noteholder, desirable to perfect or
evidence the grant of a first priority perfected security interest in the
Trust's ownership interest in the Trust Estate including, without limitation,
the Loans and the proceeds thereof in favor of the Indenture Trustee. The Loan
Originator agrees to file all necessary continuation statements and any
amendments to the UCC-1 financing statements required to reflect a change in the
name or corporate structure of the Loan Originator, Depositor or Issuer and to
file any additional UCC-1 financing statements required due to a change in the
principal office of the Loan Originator, Depositor or Issuer as are necessary to
perfect the interest of the Depositor, the Trust and the Indenture Trustee in
and to the Trust Estate and to take such other action as may be necessary or, in
the opinion of the Depositor or the Initial Noteholder, desirable to perfect or
evidence the Depositor's, Trust's and Indenture Trustee's interest in the Loans
and Loan Documents conveyed under the Basic Documents.
(b) In connection with each sale of a Loan hereunder, the Loan
Originator shall deliver to, and deposit with the Custodian, on behalf of the
Indenture Trustee, as assignee of the Depositor, on or before the related
Transfer Date the Indenture Trustee's Loan File with respect to each Loan
conveyed on such Transfer Date.
It is understood and agreed that the obligations set forth in
this Section 2.2(b) shall survive delivery of the respective Indenture Trustee's
Loan Files to the Custodian (as the agent of the Indenture Trustee) and shall
inure to the benefit of the Securityholders, the Depositor, the Servicer, the
Indenture Trustee and the Owner Trustee, for the benefit of the Issuer.
With respect to any Loans which are set forth as exceptions in
the Loan Schedule and Exceptions Report, the Loan Originator shall cure such
exception, repurchase such Loan or provide a Qualified Substitute Loan in
accordance with Sections 2.05 and 3.05 of the Sale and Servicing Agreement. The
obligations of the Loan Originator set forth in Sections 2.05 and 3.05 of the
Sale and Servicing Agreement to cure any breach or to substitute for or
repurchase an affected Loan shall constitute the sole remedies available
hereunder to the Depositor respecting a breach of the Loan Originator's
obligations contained in this Section 2.2(b).
(c) In connection with each sale of a Loan hereunder, the Loan
Originator shall deliver to, and deposit with the Servicer, as the designated
agent of the Indenture Trustee, as assignee of the Depositor, on or before the
related Transfer Date the Servicer's Loan File with respect to each Loan
conveyed on such Transfer Date.
(d) The Loan Originator hereby further confirms to the
Depositor that, on or prior to each Transfer Date it shall cause the portions of
the Loan Originator's electronic ledger relating to the Loans to be clearly and
unambiguously marked to indicate that the Loans have been sold to the Depositor.
(e) On and after each Transfer Date, the Depositor shall own
the Loans which have been identified as being sold to the Depositor under
Section 2.1 hereof and the Loan Originator shall not take any action
inconsistent with such ownership and shall not claim any ownership interest in
any such conveyed Loan.
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<PAGE>
Section 2.3 SECURITIZATIONS; TRANSFER OBLIGATION.
(a) SECURITIZATIONS. (i) In consideration of the consideration
received from the Depositor under this Purchase Agreement, the Loan Originator
hereby agrees and covenants that in connection with each Securitization it shall
effect the following at the direction of the Majority Noteholders:
(A) make such representations and warranties concerning the
Loans as of the "cutoff date" of the related Securitization to the
Securitization Participants as may be necessary to effect the
Securitization and such additional representations and warranties as
may be necessary, in the reasonable opinion of any of the
Securitization Participants, to effect such Securitization; provided,
that neither the Loan Originator nor the Depositor shall be required to
make any representation or warranty beyond the scope or substance of
the representations and warranties delineated in the Sale and Servicing
Agreement;
(B) supply such information, opinions of counsel, letters from
law and/or accounting firms and other documentation and certificates
regarding the origination and servicing of the Loans as any
Securitization Participant shall reasonably request to effect a
Securitization and enter into such indemnification agreements relating
to or in connection with the Securitization as the Majority Noteholders
may reasonably require;
(C) make itself available for and engage in good faith
consultation with the Securitization Participants concerning
information to be contained in any document, agreement, private
placement memorandum, or filing with the Securities and Exchange
Commission relating to the Loan Originator or the Loans in connection
with a Securitization and shall use reasonable efforts to compile any
information and prepare any reports and certificates, into a form,
whether written or electronic, suitable for inclusion in such
documentation;
(D) to implement the foregoing and to otherwise effect a
Securitization, enter into insurance and indemnity agreements,
underwriting or placement agreements, servicing agreements, purchase
agreements and any other documentation which may be required of or
deemed appropriate by the Securitization Participants in order to
effect a Securitization; and
(E) take such further actions as may be reasonably necessary
to effect the foregoing.
PROVIDED, that notwithstanding anything in this Purchase
Agreement to the contrary, (a) the Loan Originator shall have no
liability for the Loans arising from or relating to the ongoing ability
of the related Borrowers to pay under the Loans; (b) none of the
indemnities hereunder shall constitute an unconditional guarantee by
the Loan Originator of collectibility of the Loans; (c) the Loan
Originator shall have no obligation with respect to the financial
inability of any Borrower to pay principal, interest or other amount
owing by such Borrower under a Loan and (d) the Loan Originator shall
only be
-5-
<PAGE>
required to enter into documentation in connection with Securitizations
that is consistent with industry practice with respect to
Securitizations among similarly situated parties.
(ii) In connection with Securitizations, the Loan Originator
shall retain such underwriters as shall be agreed in writing between
the Loan Originator and the Initial Noteholder.
(iii) CONDITIONS TO SECURITIZATIONS. The following conditions
shall apply to all Securitizations:
(A) As long as no Event of Default or Default shall have
occurred and be continuing under the Sale and Servicing Agreement or
the Indenture, the Servicer shall continue to service the Loans
included in any Securitization.
(B) The Loan Originator shall, in connection with a
Securitization, cause FFCA to obtain an Opinion of Counsel to the
effect that the securities issued shall be treated as the issuance of
debt instruments by FFCA or a wholly-owned Affiliate thereof.
(b) TRANSFER OBLIGATION. In consideration of the consideration
received from the Depositor under this Purchase Agreement and the other Basic
Documents, the Loan Originator hereby agrees and covenants that:
(i) In connection with each Securitization it shall fund, or
cause to be funded, reserve funds, pay credit enhancer fees, pay, or
cause to be paid, underwriting fees, fund any difference between the
cash Securitization Proceeds and the aggregate Note Principal Balance
at the time of such Securitization, and make, or cause to be made, such
other payments as may be, in the reasonable opinion of the
Securitization Participants, necessary to effect Securitizations as
required by the Majority Noteholders;
(ii) In connection with Hedging Instruments, on the Business
Day prior to each Payment Date, it shall deliver to the Indenture
Trustee for deposit into the Transfer Obligation Account any Hedge
Funding Requirement (to the extent amounts available on the related
Payment Date pursuant to Section 5.01(c)(2)(ii) of the Sale and
Servicing Agreement are insufficient to make such payment), when as and
if due to any Hedging Counterparty;
(iii) If any Interest Carry-Forward Amount shall occur, it
shall deposit into the Transfer Obligation Account any such Interest
Carry-Forward Amount on or before the related Payment Date;
(iv) If on any Business Day, the Overcollateralization
Shortfall exceeds the greater of (x) 1% of the aggregate Principal
Balance of all Loans in the Loan Pool as of the prior Business Day and
(y) $250,000, it shall, on such Business Day, deposit into the Transfer
Obligation Account the full amount of the Overcollateralization
Shortfall as of such date; and
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(v) Notwithstanding anything to the contrary herein, in the
event of the occurrence of an Event of Default under the Indenture, the
Loan Originator shall promptly deposit into the Transfer Obligation
Account the entire amount of the Unfunded Transfer Obligation or the
Postsecuritization Unfunded Transfer Obligation, as applicable;
provided, that if such Event of Default is waived by the Majority
Noteholders, all such deposited funds shall be returned to the Loan
Originator by the Indenture Trustee in accordance with Section 5.05(j)
of the Sale and Servicing Agreement;
PROVIDED, that notwithstanding anything to the contrary contained herein, the
Loan Originator's cumulative payments under or in respect of the Transfer
Obligations (after subtracting therefrom any amounts returned to the Loan
Originator pursuant to clause (v) above), together with (i) the aggregate amount
of reductions to the Sale Price in respect of Overcollateralization Shortfalls
and (ii) the Servicer's payments in respect of any Servicer Puts, shall not in
the aggregate exceed the Unfunded Transfer Obligation or the Postsecuritization
Unfunded Transfer Obligation, as applicable.
(c) The Loan Originator agrees that the Noteholders, as
ultimate assignee of the rights of the Depositor under this Purchase Agreement
and the other Basic Documents, may enforce the rights of the Depositor directly
against the Loan Originator.
ARTICLE III.
REPRESENTATIONS AND
WARRANTIES; REMEDIES FOR BREACH
Section 3.1 LOAN ORIGINATOR REPRESENTATIONS AND WARRANTIES.
(a) The Loan Originator makes each of the representations and warranties to the
Depositor as of the Closing Date and as of each Transfer Date as are set forth
in Section 3.02 of the Sale and Servicing Agreement.
(b) The Loan Originator further makes each of the
representations and warranties to the Depositor as of each Transfer Date as are
set forth in Section 3.04 of the Sale and Servicing Agreement with respect to
the Loans conveyed on such Transfer Date.
(c) It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the
respective Indenture Trustee's Loan Files to the Custodian (as the agent of the
Indenture Trustee) and shall inure to the benefit of the Securityholders, the
Depositor, the Servicer, the Indenture Trustee and the Issuer. Upon the
discovery by either of the Loan Originator or the Depositor that any of the
representations and warranties of the Loan Originator in Sections 3.02 and 3.04
of the Sale and Servicing Agreement are determined to be untrue in a manner that
materially and adversely affects the value of the Loans, or the interests of the
Securityholders in, any Loan with respect to which such representation or
warranty is made and the Loan Originator shall fail to cure such breach within
the time period specified in Section 3.05 of the Sale and Servicing Agreement,
the Loan Originator shall be obligated to repurchase or substitute the affected
Loan(s) in accordance with the provisions of Sections 2.05 and 3.05 of the Sale
and Servicing Agreement promptly upon receipt of written instructions from the
Majority Noteholders. The obligations of the Loan
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<PAGE>
Originator set forth in Sections 2.05 and 3.05 of the Sale and Servicing
Agreement to cure any breach or to substitute for or repurchase an affected Loan
shall constitute the sole remedies available hereunder to the Depositor
respecting a breach of the representations and warranties contained in this
Section 3.1(b).
ARTICLE IV.
LOAN ORIGINATOR'S COVENANTS
Section 4.1 COVENANTS OF THE LOAN ORIGINATOR. The Loan
Originator hereby covenants that except for the sales hereunder, the Loan
Originator will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any lien on, any Loan, or any
interest therein; and the Loan Originator will defend the right, title and
interest of the Trust, as assignee of the Depositor, in, to and under the Loans,
against all claims of third parties claiming through or under the Loan
Originator.
Whenever and so often as requested by the Depositor or the
Loan Originator or the Lender, the other party promptly will execute and deliver
or cause to be executed and delivered all such other and further instruments,
documents, or assurances, and promptly do or cause to be done all such other
things, as may be necessary and reasonably required to vest more fully in the
requesting party all rights, interests, powers, benefits, privileges and
advantages conferred or intended to be conferred upon it by this Purchase
Agreement.
ARTICLE V.
INDEMNIFICATION BY THE LOAN ORIGINATOR
Section 5.1 INDEMNIFICATION. The Loan Originator agrees to
indemnify and hold harmless the Depositor and the Noteholders, as the ultimate
assignees from the Depositor, from and against any loss, liability, expense,
damage, claim or injury arising out of or based on any breach of any
representation, warranty or covenant of the Loan Originator in this Purchase
Agreement or any other Basic Document, including, without limitation, in
connection with the origination or prior servicing of the Loans by reason of any
acts, omissions, or alleged acts or omissions arising out of activities of the
Loan Originator, including reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; PROVIDED that the Loan Originator shall not
indemnify the Depositor if such loss, liability, expense, damage or injury is
due to either the Depositor's willful misfeasance, bad faith or negligence or by
reason of the Depositor's reckless disregard of its obligations hereunder;
provided, further, that the Loan Originator shall not be so required to
indemnify the Depositor or any Noteholder or to otherwise be liable to the
Depositor or any Noteholder for any losses in respect of the performance of the
Loans, the creditworthiness of the Borrowers under the Loans, changes in the
market value of the Loans or other, similar investment risks associated with the
Loans arising from a breach of any representation or warranty set forth in
Section 3.1(a) or (b) hereof, a remedy for the breach of which is provided in
Section 3.1(c) hereof. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof.
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Section 5.2 LIMITATION ON LIABILITY OF THE LOAN ORIGINATOR.
None of the directors or trustees or officers or employees or agents of the Loan
Originator shall be under any liability to the Depositor or the Noteholders, it
being expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the execution of this
Purchase Agreement; PROVIDED, HOWEVER, that this provision shall not protect any
such Person against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder. Except as expressly provided herein and in the other Basic Documents,
the Loan Originator shall not be under any liability to the Trust, the Trustee
or the Securityholders. The Loan Originator and any director or officer or
employee or agent of the Loan Originator may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 5.3 INDEMNIFICATION. The Loan Originator hereby agrees
to indemnify and hold harmless the Depositor and the Noteholders as the
Depositor's ultimate assignees, and their respective officers, directors and
Affiliates (each, an "INDEMNIFIED PARTY") against any and all losses, claims,
damages, liabilities or expenses (including legal and accounting fees)
(collectively, "LOSSES"), as incurred (payable promptly upon written request),
for or on account of or arising from or in connection with any untrue statement
by the Loan Originator of any material fact or the Loan Originator's failure to
state a material fact necessary to make such statements not misleading with
respect to any Referenced Documents (as defined in Section 3.02(h) of the Sale
and Servicing Agreement); provided, however, that the Loan Originator shall not
be so required to indemnify the Depositor or any Noteholder or to otherwise be
liable to the Depositor or any Noteholder hereunder for any such losses arising
from a breach of any representation or warranty set forth in Section 3.1(a) or
3.1(b) hereof, a remedy for the breach of which is provided in Section 3.1(c)
hereof.
Section 5.4 PROCEDURE. With respect to a claim subject to
indemnity hereunder made by any Person against an Indemnified Party (a "THIRD
PARTY CLAIM"), such Indemnified Party shall notify the Loan Originator in
writing of the Third Party Claim within a reasonable time after receipt by such
Indemnified Party of written notice of the Third Party Claim unless the Loan
Originator shall have previously obtained actual knowledge thereof. Thereafter,
the Indemnified Party shall deliver to the Loan Originator, within a reasonable
time after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating to
the Third Party Claim. No failure to give such notice or deliver such documents
shall effect the rights to indemnity hereunder.
Section 5.5 DEFENSE OF CLAIMS. If a Third Party Claim is made
against an Indemnified Party, (a) the Loan Originator will be entitled to
participate in the defense thereof and, (b) if it so chooses, to assume the
defense thereof with counsel selected by the Loan Originator, provided that in
connection with such assumption (i) such counsel is not reasonably objected to
by the Indemnified Party and (ii) the Loan Originator first admits in writing
its liability to indemnify the Indemnified Party with respect to all elements of
such claim in full. Should the Loan Originator so elect to assume the defense of
a Third Party Claim, the Loan Originator will not be liable to the Indemnified
Party for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. If the Loan Originator
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<PAGE>
elects to assume the defense of a Third Party Claim, the Indemnified Party will
(i) cooperate in all reasonable respects with the Loan Originator in connection
with such defense and (ii) not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Loan Originator's
prior written consent, as the case may be. If the Loan Originator shall assume
the defense of any Third Party Claim, the Indemnified Party shall be entitled to
participate in (but not control) such defense with its own counsel at its own
expense. If the Loan Originator does not assume the defense of any such Third
Party Claim, the Indemnified Party may defend the same in such manner as it may
deem appropriate, including settling such claim or litigation after giving
notice to the Loan Originator of such terms and the Loan Originator will
promptly reimburse the Indemnified Party upon written request. Anything
contained in this Note Purchase Agreement to the contrary notwithstanding, the
Loan Originator shall not be entitled to assume the defense of any part of a
Third Party Claim that seeks an order, injunction or other equitable relief or
relief for other than money damages against an Indemnified Party unless the Loan
Originator has demonstrated to such Indemnified Party reasonable financial
capacity to meet its obligations with respect to such Third Party Claim.
ARTICLE VI.
TERMINATION
Section 6.1 TERMINATION. The respective obligations and
responsibilities of the Loan Originator and Depositor created hereby shall
terminate, except for the Loan Originator's and Depositor's indemnity
obligations as provided herein, upon the termination of the Trust as provided in
Article XI of the Sale and Servicing Agreement.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1 AMENDMENT. This Purchase Agreement may be amended
from time to time with the prior written consent of the Majority Noteholders, in
their sole discretion, by a written agreement signed by the Loan Originator and
the Depositor.
Section 7.2 GOVERNING LAW. This Purchase Agreement shall be
governed by and construed in accordance with the laws of the State of New York
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
Section 7.3 NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given upon
receipt thereof if (i) personally delivered or mailed by registered mail,
postage prepaid, or (ii) transmitted by facsimile (with a copy delivered by
overnight courier) upon telephone confirmation of receipt of such transmission,
as follows:
(a) if to the Loan Originator:
FFCA Acquisition Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
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<PAGE>
Attention: Dennis L. Ruben
Facsimile: (602) 585-2226
Confirmation: (602) 585-4500
or, such other addresses, facsimile numbers and confirmation numbers as may
hereafter be furnished to the Depositor in writing by the Loan Originator.
(b) if to the Depositor:
FFCA Loan Warehouse Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Attention: Dennis L. Ruben
Facsimile: (602) 585-2226
Confirmation: (602) 585-4500
or such other addresses, facsimile numbers and confirmation numbers as may
hereafter be furnished to the Loan Originator in writing by the Depositor.
Section 7.4 SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions of terms of this Purchase 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 Purchase Agreement and shall in no way
affect the validity of enforceability of the other provisions of this Purchase
Agreement.
Section 7.5 COUNTERPARTS. This Purchase 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 and such counterparts, together, shall constitute one and the same
agreement.
Section 7.6 FURTHER AGREEMENTS. The Loan Originator and the
Depositor each agree to execute and deliver to the other such amendments to
documents and such additional documents, instruments or agreements as may be
necessary or appropriate to effectuate the purposes of this Purchase Agreement
or in connection with the offering of securities representing interests in the
Loans.
Section 7.7 INTENTION OF THE PARTIES. It is the intention of
the parties, other than for federal, state and local income and franchise tax
purposes, that the Depositor is purchasing, and the Loan Originator is selling,
the Loans rather than pledging the Loans to secure a loan by the Depositor to
the Loan Originator. The parties hereto each intend to treat the transaction for
accounting purposes as a sale by the Loan Originator, and a purchase by the
Depositor, of the Loans. The Depositor will have the right to review the Loans
and the related Loan Files to determine the characteristics of the Loans which
will affect the federal income tax consequences
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of owning the Loans and the Loan Originator will cooperate with all reasonable
requests made by the Depositor in the course of such review.
Section 7.8 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE
AGREEMENT. The Agreement shall bind and inure to the benefit of and be
enforceable by the Loan Originator, the Depositor, the Indenture Trustee and the
Noteholders. The obligations of the Loan Originator under this Purchase
Agreement cannot be assigned or delegated to a third party without the consent
of the Depositor, which consent shall be at the Depositor's sole discretion,
except that the Depositor acknowledges and agrees that the Loan Originator may
assign its obligations hereunder to any Person into which the Loan Originator is
merged or any corporation resulting from any merger, conversion or consolidation
to which the Loan Originator is a party or any Person succeeding to the business
of the Loan Originator. The parties hereto acknowledge that the Depositor is
acquiring the Loans for the purpose of contributing them to the Trust that will
issue (i) the Trust Certificates representing undivided interests in such Loans
and (ii) the Notes which will be secured by such Loans. As an inducement to the
Depositor to purchase the Loans, the Loan Originator acknowledges and consents
to the assignment by the Depositor to the Trust of all of the Depositor's rights
against the Loan Originator pursuant to this Purchase Agreement and to the
enforcement or exercise of any right or remedy against the Loan Originator
pursuant to this Purchase Agreement by the Owner Trustee, for the benefit of the
Issuer, under the Sale and Servicing Agreement. Such enforcement of a right or
remedy by the Owner Trustee, for the benefit of the Issuer, shall have the same
force and effect as if the right or remedy had been enforced or exercised by the
Depositor directly.
Section 7.9 SURVIVAL. The representations and warranties set
forth in Article III and the provisions of Article V shall survive the purchase
of the Loans hereunder.
Section 7.10 SUCCESSORS AND ASSIGNS . This Purchase Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
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IN WITNESS WHEREOF, the Loan Originator and the Depositor have
caused this Loan Purchase Agreement to be duly executed on their behalf by their
respective officers thereunto duly authorized as of the day and year first above
written.
FFCA LOAN WAREHOUSE CORPORATION,
as Depositor
By: /s/ Dennis L. Ruben
---------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President
FFCA ACQUISITION CORPORATION,
as Loan Originator
By: /s/ Dennis L. Ruben
---------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President
<PAGE>
STATE OF ARIZONA )
) ss.:
COUNTY OF MARICOPA )
On the 12th day of August, 1998 before me, a Notary Public in
and for said State, personally appeared Dennis L. Ruben, known to me to be an
Executive Vice President of FFCA LOAN WAREHOUSE CORPORATION, the corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Mary E. Lorenz
----------------------------------------------
Notary Public
<PAGE>
STATE OF ARIZONA )
) ss.:
COUNTY OF MARICOPA )
On the 12th day of August, 1998 before me, a Notary Public in
and for said State, personally appeared Dennis L. Ruben, known to me to be an
Executive Vice President of FFCA ACQUISITION CORPORATION, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Mary E. Lorenz
----------------------------------------------
Notary Public
<PAGE>
EXHIBIT A
FORM OF LPA ASSIGNMENT
----------------------
================================================================================
INDENTURE
between
FFCA FRANCHISE LOAN OWNER TRUST 1998-1,
as Issuer
and
LASALLE NATIONAL BANK,
as Indenture Trustee
Dated as of August 14, 1998
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
Franchise Loan Backed Notes, Issuable in Series
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................2
Section 1.02. Rules of Construction...................................6
ARTICLE II
GENERAL PROVISIONS WITH RESPECT TO THE NOTES; INDENTURE SUPPLEMENT
Section 2.01. Method of Issuance and Form of Notes....................7
Section 2.02. Execution, Authentication, Delivery and Dating..........8
Section 2.03. Registration; Registration of Transfer and Exchange.....9
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes.............10
Section 2.05. Persons Deemed Noteholders.............................11
Section 2.06. Payment of Principal and/or Interest; Defaulted
Interest............................................11
Section 2.07. Cancellation...........................................11
Section 2.08. Conditions Precedent to the Authentication of Each
Series of Notes.....................................12
Section 2.09. Release of Collateral..................................14
Section 2.10. Additional Note Principal Balance......................14
Section 2.11. Tax Treatment..........................................14
Section 2.12. Limitations on Transfer of the Notes...................15
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and/or Interest...................15
Section 3.02. Maintenance of Office or Agency........................15
Section 3.03. Money for Payments to Be Held in Trust.................15
Section 3.04. Existence..............................................17
Section 3.05. Protection of Collateral...............................17
Section 3.06. Reserved...............................................18
Section 3.07. Performance of Obligations; Servicing of Loans.........18
Section 3.08. Negative Covenants.....................................19
Section 3.09. Annual Statement as to Compliance......................20
Section 3.10. Covenants of the Issuer................................21
Section 3.11. Servicer's Obligations.................................21
Section 3.12. Restricted Payments....................................21
Section 3.13. Treatment of Notes as Debt for All Purposes............21
Section 3.14. Notice of Events of Default............................21
Section 3.15. Further Instruments and Acts...........................21
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture................22
Section 4.02. Application of Trust Money.............................23
Section 4.03. Repayment of Moneys Held by Paying Agent...............23
ARTICLE V
REMEDIES
Section 5.01. Events of Default......................................23
Section 5.02. Acceleration of Maturity; Rescission and Annulment.....25
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee................................26
Section 5.04. Remedies; Priorities...................................28
Section 5.05. Optional Preservation of the Collateral................29
Section 5.06. Limitation of Suits....................................30
Section 5.07. Unconditional Rights of Noteholders to Receive
Principal and/or Interest...........................30
Section 5.08. Restoration of Rights and Remedies.....................30
Section 5.09. Rights and Remedies Cumulative.........................31
Section 5.10. Delay or Omission Not a Waiver.........................31
Section 5.11. Control by Noteholders.................................31
Section 5.12. Waiver of Past Defaults................................32
Section 5.13. Undertaking for Costs..................................32
Section 5.14. Waiver of Stay or Extension Laws.......................32
Section 5.15. Action on Notes........................................33
Section 5.16. Performance and Enforcement of Certain Obligations.....33
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee............................33
Section 6.02. Rights of Indenture Trustee............................35
Section 6.03. Individual Rights of Indenture Trustee.................35
Section 6.04. Indenture Trustee's Disclaimer.........................36
Section 6.05. Notices of Default.....................................36
Section 6.06. Reports by Indenture Trustee to Holders................36
Section 6.07. Compensation and Indemnity.............................36
Section 6.08. Replacement of Indenture Trustee.......................37
Section 6.09. Successor Indenture Trustee by Merger..................37
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Section 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee...................................38
Section 6.11. Eligibility............................................39
ARTICLE VII
NOTEHOLDERS'LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders............................39
Section 7.02. Preservation of Information............................39
Section 7.03. 144A Information.......................................40
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money....................................40
Section 8.02. Trust Accounts; Distributions..........................40
Section 8.03. General Provisions Regarding Trust Accounts............41
Section 8.04. Servicer's Statements..................................42
Section 8.05. Release of Collateral..................................42
Section 8.06. Opinion of Counsel.....................................42
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without the Consent of the
Noteholders.........................................42
Section 9.02. Supplemental Indentures with Consent of Noteholders....43
Section 9.03. Execution of Supplemental Indentures...................45
Section 9.04. Effect of Supplemental Indentures......................45
Section 9.05. Reference in Notes to Supplemental Indentures..........45
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.............................................45
Section 10.02. Form of Redemption Notice..............................45
Section 10.03. Notes Payable on Redemption Date; Provision for
Payment of Indenture Trustee........................46
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc..............46
Section 11.02. Form of Documents Delivered to Indenture Trustee.......47
Section 11.03. Acts of Noteholders....................................48
Section 11.04. Notices, etc., to Indenture Trustee and Issuer.........48
Section 11.05. Notices to Noteholders; Waiver.........................48
Section 11.06. Effect of Headings and Table of Contents...............49
Section 11.07. Successors and Assigns.................................49
Section 11.08. Separability...........................................49
Section 11.09. Benefits of Indenture..................................49
Section 11.10. Legal Holidays.........................................49
Section 11.11. Governing Law..........................................50
Section 11.12. Counterparts...........................................50
Section 11.13. Recording of Indenture.................................50
Section 11.14. Trust Obligation.......................................50
Section 11.15. No Petition............................................50
Section 11.16. Inspection.............................................51
EXHIBITS
EXHIBIT A - Form of Notes
EXHIBIT B-1 - Form of Transferor Affidavit (144A)
EXHIBIT B-2 - Form of Transferee Affidavit (Accredited Investor)
EXHIBIT B-3 - Form of Transfer Affidavit
EXHIBIT C - Form of Securities Legend
EXHIBIT D - Form of Indenture Supplement
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This Indenture entered into effective August 14, 1998, between
FFCA FRANCHISE LOAN OWNER TRUST 1998-1, a Delaware business trust, as Issuer
(the "ISSUER"), and LASALLE NATIONAL BANK, as Indenture Trustee (the "INDENTURE
TRUSTEE"),
W I T N E S S E T H T H A T:
In consideration of the mutual covenants herein contained, the
Issuer has duly authorized the execution and delivery of this Indenture to
provide for one or more Series of Notes, issuable as provided in this Indenture.
Each Series of such Notes will be issued only under a separate Indenture
Supplement to this Indenture duly executed and delivered by the Issuer and the
Trustee and limited to the amount therein prescribed; provided that only one
such Series may be Outstanding at any time. All covenants and agreements made by
the Issuer herein are for the benefit and security of the Noteholders.
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby
Grants on the Closing Date, to the Indenture Trustee, as Indenture Trustee for
the benefit of the Noteholders, all of the Issuer's right, title and interest,
whether now owned or hereafter acquired, in and to: (i) the Trust Estate (as
defined in the Sale and Servicing Agreement); (ii) all right, title and interest
of the Issuer in and to the Sale and Servicing Agreement (including the Issuer's
right to cause the Loan Originator to repurchase Loans from the Issuer under
certain circumstances described therein); (iii) all present and future claims,
demands, causes of action and choses in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing; (iv) all funds on deposit from time to time in the Trust Accounts
including, without limitation, amounts on deposit in such accounts that are
Permitted Investments; and (v) all other property of the Trust from time to time
(collectively, the "COLLATERAL").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Noteholders, acknowledges such Grant, accepts the trusts hereunder and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of the Noteholders may adequately and effectively be
protected.
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ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. (a) Except as otherwise specified
herein, in an Indenture Supplement or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"ACT" has the meaning specified in Section 11.03(a) hereof.
"ADMINISTRATION AGREEMENT" means the Administration Agreement
dated as of August 14, 1998, among the Issuer and FFCA, as Administrator, and as
Servicer.
"ADMINISTRATOR" means FFCA, or any successor Administrator
under the Administration Agreement.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any
officer of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the Closing
Date (as such list may be modified or supplemented from time to time thereafter)
and, so long as the Administration Agreement is in effect, any Vice President or
more senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"CERTIFICATE OF TRUST" means the certificate of trust of the
Issuer substantially in the form of Exhibit C to the Trust Agreement.
"CLOSING DATE" means August 14, 1998, or with respect to a
Series of Notes subsequent to the Series 1998-1 Notes, as set forth in the
Indenture Supplement related to such Series.
"COLLATERAL" has the meaning specified in the Granting Clause
of this Indenture.
"COMMISSION" means the Securities and Exchange Commission.
"CORPORATE TRUST OFFICE" means the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at date of execution of this Agreement is
located at 135 South LaSalle Street, Suite 1625, Chicago, Illinois 60674-4107,
Attention: Asset-Backed Securities Trust Services Group, FFCA Franchise Loan
Owner Trust 1998-1, telecopy number: (312) 904-2084, telephone number: (312)
904-7830, or at such other address as the Indenture Trustee may designate from
time to time by notice to the Noteholders and the Issuer, or the principal
corporate trust office of any successor Indenture Trustee at the address
designated by such successor Indenture Trustee by notice to the Noteholders and
the Issuer.
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"DEFAULT" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"DEPOSITOR" shall mean FFCA Warehouse Lending Corporation, a
Delaware corporation, in its capacity as depositor under the Sale and Servicing
Agreement, or any successor in interest thereto.
"DEPOSITORY INSTITUTION" means any depository institution or
trust company, including the Indenture Trustee, that (a) is incorporated under
the laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated at a rating to which the Majority Noteholders consent
in writing.
"EVENT OF DEFAULT" has the meaning specified in Section 5.01
hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER" means, with respect to (i) FFCA, FFCA
Acquisition Corporation, FFCA Loan Warehouse Corporation or any Affiliate of any
of them, the President, any Executive Vice President, any Senior Vice President
or the Treasurer of such corporation; and with respect to any partnership, any
general partner thereof, (ii) the Note Registrar, any Responsible Officer of the
Indenture Trustee, (iii) any other corporation, the Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, President, Executive Vice
President, any Vice President, the Secretary or the Treasurer of such entity and
(iv) any partnership, any general partner thereof.
"FFCA" means Franchise Finance Corporation of America, a
Delaware corporation.
"FFCA ACQUISITION CORP." means FFCA Acquisition Corporation, a
Delaware corporation.
"GRANT" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, 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.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note
is registered on the Note Register.
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"INDENTURE" means this Indenture as supplemented by each
Indenture Supplement.
"INDENTURE SUPPLEMENT" means, with respect to a Series of
Notes, the Indenture Supplement, substantially in the form of Exhibit D hereto,
pursuant to which such Series of Notes was issued.
"INDENTURE TRUSTEE" means LaSalle National Bank, a national
banking association, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee hereunder.
"ISSUER" means FFCA Franchise Loan Owner Trust 1998-1.
"ISSUER ORDER" and "ISSUER REQUEST" mean a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"LOAN ORIGINATOR" means FFCA Acquisition Corp.
"MATURITY DATE" means, with respect to the Notes of a given
Series, as set forth in the related Indenture Supplement.
"NOTE" means any Note authorized by and authenticated and
delivered under this Indenture and the related Indenture Supplement.
"NOTE INTEREST RATE" means for each day the Notes are
Outstanding, a per annum interest rate equal to LIBOR for the related LIBOR
Determination Date plus the LIBOR Margin for such day.
"NOTE REGISTER" and "Note Registrar" have the respective
meanings specified in SECTION 2.03 hereof.
"OFFICER'S CERTIFICATE" means a certificate signed by any
Authorized Officer of the Issuer or the Administrator, under the circumstances
described in, and otherwise complying with, the applicable requirements of
SECTION 11.01 hereof, and delivered to the Indenture Trustee. Unless otherwise
specified, any reference in this Indenture to an Officer's Certificate shall be
to an Officer's Certificate of any Authorized Officer of the Issuer or the
Administrator.
"OPINION OF COUNSEL" means one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be an
employee of or counsel to the Issuer, and which opinion or opinions shall be
addressed to the Indenture Trustee, as Indenture Trustee, and shall comply with
any applicable requirements of SECTION 11.01 hereof and shall be in form and
substance satisfactory to the Initial Noteholder.
"OUTSTANDING" means, with respect to any Note and as of the
date of determination, any Note theretofore authenticated and delivered under
this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
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(ii) Notes or portions thereof the payment for which money in
the necessary amount has theretofore been deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
for such notice satisfactory to the Indenture Trustee has been made);
(iii) 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; provided, however, that in
determining whether the Noteholders representing the requisite
Percentage Interests of the Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder
or under any Basic Document, Notes owned by the Issuer, any other
obligor upon the Notes, the Loan Originator or any Affiliate of any of
the foregoing Persons 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 actually knows to be owned in such manner shall
be disregarded. Notes owned in such manner that have been pledged in
good faith may be regarded as Outstanding if the pledgee certifies to
the Indenture Trustee (i) that the pledgee has the right so to act with
respect to such Notes and (ii) that the pledgee is not the Issuer, any
other obligor upon the Notes, the Loan Originator or any Affiliate of
any of the foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred.
"OWNER TRUSTEE" means Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor Owner Trustee under the Trust Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
SECTION 6.11 hereof (unless the Paying Agent is the Administrator) and is
authorized by the Issuer to make payments to and distributions from the
Collection Account and the Distribution Account, including payment of principal
of or interest on the Notes on behalf of the Issuer.
"PAYMENT DATE" means the 12th day of each calendar month
commencing on the first such 12th day to occur after the first Transfer Date, or
if any such day is not a Business Day, the first Business Day immediately
following such day.
"PERCENTAGE INTEREST" means, with respect to any Note and as
of any date of determination, the percentage equal to a fraction, the numerator
of which is the principal balance of such Note as of such date of determination
and the denominator of which is the Note Principal Balance.
"PREDECESSOR NOTE" means, 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,
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for the purpose of this definition, any Note authenticated and delivered under
SECTION 2.04 hereof in lieu of a mutilated, lost, destroyed or stolen Note shall
be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Note.
"PROCEEDING" means any suit in equity, action at law or other
judicial or administrative proceeding.
"REDEMPTION DATE" means in the case of a redemption of the
Notes pursuant to SECTION 10.01 hereof, the Payment Date specified by the
Servicer or the Issuer pursuant to such SECTION 10.01.
"REGISTERED HOLDER" means the Person in the name of which a
Note is registered on the Note Register on the applicable Record Date.
"TRUST CERTIFICATE" has the meaning assigned to such term in
SECTION 1.1 of the Trust Agreement.
"SALE AGENT" has the meaning assigned to such term in SECTION
5.11 hereof.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement dated as of August 14, 1998, among the Issuer, FFCA Warehouse Lending
Corporation, as Depositor, FFCA Acquisition Corp., as the Loan Originator, FFCA,
as Servicer, and the Indenture Trustee.
"SERIES" means a separate series of Notes issued pursuant to
this Indenture per the terms of this Indenture as supplemented by the related
Indenture Supplement.
"SERVICER" shall mean FFCA, in its capacity as servicer under
the Sale and Servicing Agreement, and any successor servicer thereunder.
"SERVICING DEFAULT" means an Event of Default under the Sale
and Servicing Agreement.
"STATE" means any one of the States of the United States of
America or the District of Columbia.
"TRUST AGREEMENT" means the Trust Agreement dated as of March
13, 1998, as amended, among FFCA Warehouse Lending Corporation, as Depositor,
FFCA and Wilmington Trust Company, as Owner Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture.
Section 1.02. RULES OF CONSTRUCTION. Unless the context
otherwise requires:
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(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular;
(vi) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented (as provided in such agreements)
and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and
assigns; and
(vii) to the extent that any of the terms of this Indenture
conflict with the terms of an Indenture Supplement; the terms of such
Indenture Supplement shall govern.
ARTICLE II
GENERAL PROVISIONS WITH RESPECT TO THE NOTES; INDENTURE SUPPLEMENT
GENERAL PROVISIONS WITH RESPECT TO THE NOTES; INDENTURE SUPPLEMENT
Section 2.01. METHOD OF ISSUANCE AND FORM OF NOTES.
(a) ISSUANCE PURSUANT TO INDENTURE SUPPLEMENT. The Notes may,
as provided herein, be issued in one or more Series and shall be designated
generally as the "Franchise Loan Backed Notes Series _______" of the Issuer,
with such further particular designations added or incorporated in such title
for the Notes of any particular Series as the Issuer may determine; provided
that only one such Series may be Outstanding at any given time. Each Note within
a Series shall bear upon its face the designation so selected for such Series.
All Notes of the same Series shall be identical in all respects except for the
denominations thereof. All Notes of a particular Series issued under this
Indenture shall be in all respects equally and ratably entitled to the benefits
thereof without preference, priority or distinction on account of the actual
time or times of authentication and delivery, all in accordance with the terms
and provisions of this Indenture.
Each Series of Notes shall be created by an Indenture
Supplement authorized by the Issuer by Issuer Order, which Indenture Supplement
shall establish certain of the terms and provisions of such Series of Notes. The
several Series, only one of which may be Outstanding at any given time, may
differ as between Series in respect of any of the following matters, which, as
applicable to a particular Series of Notes will be specified in the related
Indenture Supplement:
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(i) designation of the Series;
(ii) the Closing Date;
(iii) the Maximum Note Principal Balance;
(iv) the Revolving Period termination date; and
(v) the Maturity Date.
(b) FORM. The Notes of each Series shall bear the Series
designation set forth in the related Indenture Supplement.
The Notes may be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The
terms of the Notes of each Series will be set forth in the related Indenture
Supplement.
The Notes of each Series shall be in definitive form and shall
bear a legend substantially in the form of EXHIBIT C attached hereto.
Section 2.02. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Issuer by an Authorized Officer of
the Owner Trustee or the Administrator. The signature of any such Authorized
Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Owner Trustee or the
Administrator shall bind the Issuer, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in
SECTION 2.08 hereof, the Indenture Trustee shall upon Issuer Order authenticate
and deliver the Notes.
The Notes that are authenticated and delivered by the
Indenture Trustee to or upon the order of the Issuer on the Closing Date shall
be dated as of such Closing Date. All other Notes that are authenticated after
the Closing Date for any other purpose under the Indenture shall be dated the
date of their authentication. The Notes shall be issued in such denominations as
may be agreed by the Issuer and the Initial Noteholder.
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 herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be
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conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.03. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE. The Issuer shall cause to be kept a register (the "NOTE REGISTER") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "NOTE REGISTRAR" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Noteholders and the
principal amounts and number of the Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in SECTION 3.02
hereof, the Issuer shall execute, and the Indenture Trustee shall authenticate
and the Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes in any authorized
denominations, of a like aggregate Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which 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 Issuer, 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 by, or be accompanied by a written
instrument of transfer in the form attached to the form of Note attached as
Exhibit C hereto duly executed by, the Holder thereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Securities Transfer
Agents' Medallion Program ("STAMP").
No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Notes, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or
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exchange of Notes, other than exchanges pursuant to SECTION 9.05 hereof not
involving any transfer.
The preceding provisions of this SECTION 2.03 notwithstanding,
the Issuer shall not be required to make, and the Note Registrar need not
register, transfers or exchanges of Notes selected for redemption or of any Note
for a period of 15 days preceding the due date for any payment with respect to
such Note.
Section 2.04. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If
(i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Issuer and Indenture Trustee
such security or indemnity as may reasonably be required by it to hold the
Issuer and the Indenture Trustee, as applicable, harmless, then, in the absence
of notice to the Issuer, the Note Registrar or the Indenture Trustee that such
Note has been acquired by a bona fide purchaser, an Authorized Officer of the
Owner Trustee or the Administrator on behalf of the Issuer shall execute, and
upon its written request the Indenture Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note; provided, however, that if any such destroyed, lost or
stolen Note, but not a mutilated Note, shall have become or within seven days
shall be due and payable, or shall have been called for redemption, instead of
issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer
shall be entitled to recover such replacement Note (or such payment) from the
Person to which it was delivered or any Person taking such replacement Note from
such Person to which such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and the Issuer and the Indenture Trustee
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this SECTION
2.04, the Issuer may require the payment by the Holder of such Note 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 Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this SECTION 2.04 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, 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.
The provisions of this SECTION 2.04 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.
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Section 2.05. PERSONS DEEMED NOTEHOLDERS. Prior to due
presentment for registration of transfer of any Note, the Issuer, the Indenture
Trustee and any agent of the Issuer or the Indenture Trustee may treat the
Person in the name of which any Note is registered (as of the day of
determination) as the Noteholder for the purpose of receiving payments of
principal of and interest, if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Issuer, the
Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
Section 2.06. PAYMENT OF PRINCIPAL AND/OR INTEREST; DEFAULTED
INTEREST. (a) The Notes shall accrue interest at the Note Interest Rate, and
such interest shall be payable on each Payment Date, subject to SECTION 3.01
hereof. Any installment of interest or principal, if any, payable on any Note
that is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in the name of which such Note (or one
or more Predecessor Notes) is registered on the Record Date by wire transfer if
written instructions therefor are provided to the Indenture Trustee no later
than five Business Days prior to such Payment Date, and otherwise by check
mailed first-class postage prepaid to such Person's address as it appears on the
Note Register on such Record Date, except that with respect to Notes registered
on the Record Date in the name of the nominee of the Initial Noteholder, payment
will be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final installment of principal
payable with respect to such Note on a Payment Date or on the Maturity Date (and
except for the Termination Price for any Note called for redemption pursuant to
SECTION 10.01) hereof, which shall be payable as provided in SECTION 2.06(B)
below. The funds represented by any such checks returned undelivered shall be
held in accordance with SECTION 3.03 hereof.
(b) The principal of each Note shall be payable in
installments on each Payment Date as provided in the form of the Notes set forth
in EXHIBIT A hereto. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
earlier of (i) the Maturity Date, (ii) the Redemption Date or (iii) the date on
which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee or the Majority Noteholders shall have declared the Notes to
be immediately due and payable in the manner provided in SECTION 5.02 hereof.
All principal payments on the Notes shall be made pro rata to
the Noteholders based on their respective Percentage Interests. The Indenture
Trustee shall notify the Person in the name of which a Note is registered at the
close of business on the Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest on such
Note will be paid. Such notice shall be mailed or transmitted by facsimile prior
to such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be provided
to Noteholders as set forth in SECTION 10.02 hereof.
Section 2.07. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall promptly be cancelled by the Indenture
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Trustee. The Issuer may at any time deliver to the Indenture Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall promptly be cancelled by the Indenture Trustee. No Notes shall
be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this SECTION 2.07, except as expressly permitted by this Indenture. All
cancelled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided, however, that such Issuer Order is timely and the
Notes have not been previously disposed of by the Indenture Trustee.
Section 2.08. CONDITIONS PRECEDENT TO THE AUTHENTICATION OF
EACH SERIES OF NOTES. The Notes of each Series may be authenticated by the
Indenture Trustee, upon Issuer Request and upon receipt by the Indenture Trustee
of the following:
(a) An Issuer Order authorizing the execution and
authentication of such Notes by the Issuer.
(b) All of the items of Collateral which shall be delivered to
the Indenture Trustee or its designee.
(c) An executed counterpart of the related Indenture
Supplement and each other Basic Document.
(d) An Opinion of Counsel addressed to the Indenture Trustee
to the effect that:
(i) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with;
(ii) the Owner Trustee has power and authority to execute,
deliver and perform its obligations under the Trust Agreement;
(iii) the Issuer has been duly formed, is validly existing as
a business trust under the laws of the State of Delaware, 12 Del. C.
Section 3801 et seq., and has power, authority and legal right to
execute and deliver this Indenture, the Administration Agreement and
the Sale and Servicing Agreement;
(iv) assuming due authorization, execution and delivery hereof
by the Indenture Trustee, the Indenture, as supplemented by the related
Indenture Supplement, is a valid, legal and binding obligation of the
Issuer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent or preferential conveyance and other similar laws of general
application affecting the rights of creditors generally and to general
principles of equity (regardless of whether such enforcement is
considered in a Proceeding in equity or at law);
(v) the Notes, when executed and authenticated as provided
herein and delivered against payment therefor, will be the valid, legal
and binding obligations of the
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Issuer pursuant to the terms of this Indenture, as supplemented by the
related Indenture Supplement, entitled to the benefits of this
Indenture, as supplemented by the related Indenture Supplement, and
will be enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent or preferential conveyance and other similar laws of general
application affecting the rights of creditors generally and to general
principles of equity (regardless of whether such enforcement is
considered in a Proceeding in equity or at law);
(vi) the Trust Agreement authorizes the Issuer to Grant the
Collateral to the Indenture Trustee as security for the Notes;
(vii) this Indenture is not required to be registered under
the Trust Indenture Act;
(viii) no authorization, approval or consent of any
governmental body having jurisdiction in the premises which has not
been obtained by the Issuer is required to be obtained by the Issuer
for the valid issuance and delivery of the Notes, except that no
opinion need be expressed with respect to any such authorizations,
approvals or consents as may be required under any state securities or
"blue sky" laws;
(ix) with respect to each Series after the initial Series,
that such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any Indenture Supplement
or other supplement hereto or amendment hereof and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the
lien and security interest created by this Indenture, with recitals of
the details of such action or stating that in the opinion of such
counsel all necessary action to maintain such lien and security
interest has been taken, and describing the recording, filing,
re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution
and filing of any financing statements and continuation statements that
will, in the opinion of such counsel, be required to maintain the lien
and security interest of this Indenture until the issuance of the next
succeeding Series of Notes; and
(x) any other matters that the Indenture Trustee may
reasonably request.
(e) An Officer's Certificate complying with the requirements
of SECTION 11.01 hereof and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any breach of any
of the terms, conditions or provisions of, or constitute a default
under, the Trust Agreement, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Issuer 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 Issuer 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 applied for have been complied with;
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(ii) the Issuer is the owner of all of the Loans, has not
assigned any interest or participation in the Loans (or, if any such
interest or participation has been assigned, it has been released) and
has the right to Grant all of the Loans to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of
its right, title and interest in and to the Collateral, and has
delivered or caused the same to be delivered to the Indenture Trustee;
and
(iv) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with.
Section 2.09. RELEASE OF COLLATERAL. (a) Except as otherwise
provided by the terms of the Basic Documents, the Indenture Trustee shall
release property from the lien of this Indenture only upon receipt of an Issuer
Request accompanied by the written consent of the Majority Noteholders.
(b) The Indenture Trustee shall, if requested by the Servicer,
temporarily release or cause the Custodian temporarily to release to the
Servicer the Indenture Trustee's Loan File pursuant to the provisions of SECTION
5(B) of the Custodial Agreement upon compliance by the Servicer with the
provisions thereof; provided, however, that the Indenture Trustee's Loan File
shall have been stamped to signify the Issuer's pledge to the Indenture Trustee
under the Indenture.
Section 2.10. ADDITIONAL NOTE PRINCIPAL BALANCE. In the event
of an advance of Additional Note Principal Balance by the Noteholders as
provided in SECTION 2.01(C) of the Sale and Servicing Agreement, each Noteholder
shall, and is hereby authorized to, record on the schedule attached to its Note
the date and amount of any Additional Note Principal Balance advanced by it, and
each repayment thereof; provided that failure to make any such recordation on
such schedule or any error in such schedule shall not adversely affect any
Noteholder's rights with respect to its Additional Note Principal Balance and
its right to receive interest payments in respect of the Additional Note
Principal Balance held by such Noteholder.
Absent manifest error, the Note Principal Balance of each Note
as set forth in the notations made by the related Noteholder on such Note shall
be binding upon the Indenture Trustee and the Issuer; provided that failure by a
Noteholder to make such recordation on its Note or any error in such notation
shall not adversely affect any Noteholder's rights with respect to its Note
Principal Balance and its right to receive principal and interest payments in
respect thereof.
Section 2.11. TAX TREATMENT. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that for all
purposes, including federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note, agree to treat the Notes for all
purposes, including federal, state and local income, single business and
franchise tax purposes, as indebtedness of the Issuer.
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Section 2.12. LIMITATIONS ON TRANSFER OF THE NOTES. The Notes
have not been and will not be registered under the Securities Act and will not
be listed on any exchange. No transfer of a Note shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and all applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In order to assure compliance with the Securities Act and state securities
laws, any transfer of a Note shall be made (a) in reliance on Rule 144A under
the Securities Act, in which case, the Indenture Trustee shall require that the
transferor deliver a certification substantially in the form of EXHIBIT B-1
hereto, or (b) to an institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that is
not a "qualified institutional buyer," in which case the Indenture Trustee shall
require that the transferee deliver a certification substantially in the form of
EXHIBIT B-2 hereto. In the event of a transfer of a Note, other than pursuant to
an effective registration statement under the Securities Act and all applicable
state securities laws, the Indenture Trustee shall require that the transferee
deliver a certification substantially in the form of EXHIBIT B-3 hereto.
ARTICLE III
COVENANTS
Section 3.01. PAYMENT OF PRINCIPAL AND/OR INTEREST. The Issuer
will duly and punctually pay (or will cause to be paid duly and punctually) the
principal of and interest on the Notes in accordance with the terms of the Notes
and this Indenture. Without limiting the foregoing, subject to and in accordance
with SECTION 8.02(b) and (c) hereof, the Issuer will cause to be distributed all
amounts on deposit in the Collection Account and the Distribution Account on
each applicable Payment Date deposited therein pursuant to the Sale and
Servicing Agreement. Amounts properly withheld under the Code by any Person from
a payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture. The Notes shall be non-recourse obligations of the Issuer and shall
be limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be 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 shall maintain at the Corporate Trust Office an office or agency where
Notes may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes and to serve as Paying
Agent with respect to the Notes. The Indenture Trustee shall give prompt written
notice to the Issuer of the location, and of any change in the location, of any
such office or agency.
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As
provided in SECTION 8.02(a) and (b) hereof, all payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn
from the Distribution Account pursuant to SECTION 8.02(c) hereof shall be made
on behalf of the Issuer by the Indenture Trustee or by the Paying
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Agent, and no amounts so withdrawn from the Distribution Account for payments of
Notes shall be paid over to the Issuer except as provided in this SECTION 3.03.
Any Paying Agent (except the Administrator) shall be appointed
by Issuer Order with written notice thereof to the Indenture Trustee. Any Paying
Agent appointed by the Issuer shall be the Administrator or a Person which would
be eligible to be Indenture Trustee hereunder as provided in SECTION 6.11
hereof. The Issuer shall not appoint any Paying Agent (other than the Indenture
Trustee) which is not, at the time of such appointment, a Depository
Institution.
The Issuer will cause each Paying Agent other than the
Administrator and the Indenture Trustee to execute and deliver to the Indenture
Trustee 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:
(i) 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;
(ii) give the Indenture Trustee notice of any Default by the
Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect
to the Notes;
(iii) 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;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the 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 the Notes, the Issuer
shall have first provided the calculations pertaining thereto to the
Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent 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 the 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.
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Subject to applicable laws with respect to escheat of funds or
abandoned property, 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 years after such amount has become due and payable
shall be discharged from such trust and be paid to the Issuer on Issuer Request;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof (but only to the extent of the
amounts so paid to the Issuer), and all liability of the Indenture Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, shall at the expense and direction of the
Issuer cause to be published, once in a newspaper of general circulation in the
City of New York customarily published in the English language on each Business
Day, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the Issuer.
The Indenture Trustee shall also adopt and employ, at the expense and direction
of the Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Noteholders
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 at the last
address of record for each such Noteholder determinable from the records of the
Indenture Trustee or of any Paying Agent.
Section 3.04. EXISTENCE. (a) Subject to subparagraph (b) of
this SECTION 3.04, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other State or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) 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 Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to
SECTION 10.2 of the Trust Agreement shall be the successor Owner Trustee 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.
(c) Upon any consolidation or merger of or other succession to
the Owner Trustee, the Person succeeding to the Owner Trustee under the Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 3.05. PROTECTION OF COLLATERAL. The Issuer will from
time to time execute and deliver all such reasonable supplements and amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) provide further assurance with respect to the Grant of all
or any portion of the Collateral;
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(ii) maintain or preserve the lien and security interest (and
the priority thereof) 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 rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights
of the Indenture Trustee and the Noteholders in such Collateral against
the claims of all Persons and parties.
The Issuer hereby designates the Administrator, its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this SECTION 3.05.
Section 3.06. RESERVED.
Section 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF LOANS.
(a) The Issuer will 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 material covenants or obligations under any
instrument or agreement included in the Collateral or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the
assistance of other Persons (including, without limitation, the Administrator
under the Administration Agreement) to assist it in performing its duties under
this Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officer's Certificate of the Issuer shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer and the Administrator to assist the Issuer in performing its duties
under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, in the Basic Documents
and in the instruments and agreements included in the Collateral, including but
not limited to (i) filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this Indenture
and the Sale and Servicing Agreement and (ii) recording or causing to be
recorded all Mortgages, Assignments of Mortgage, all intervening Assignments of
Mortgage and all assumption and modification agreements required to be recorded
by the terms of the Sale and Servicing Agreement, in accordance with and within
the time periods provided for in this Indenture and/or the Sale and Servicing
Agreement, as applicable. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee
and the Majority Noteholders.
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(d) If the Issuer shall have knowledge of the occurrence of a
Servicing Default, the Issuer shall promptly notify the Indenture Trustee and
the Majority Noteholders thereof, and shall specify in such notice the action,
if any, the Issuer is taking with respect to such default. If a Servicing
Default shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Sale and Servicing Agreement with respect to the
Loans, the Issuer shall take all reasonable steps available to it to remedy such
failure.
(e) Reserved.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee. As soon as a successor servicer is appointed, the
Indenture Trustee shall notify the Issuer of such appointment, specifying in
such notice the name and address of such successor servicer.
(g) Without derogating from the absolute nature of the
assignment granted to the Indenture Trustee under this Indenture or the rights
of the Indenture Trustee hereunder, the Issuer agrees (i) that it will not,
without the prior written consent of the Indenture Trustee, amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Collateral (except to the extent otherwise permitted by the Sale and Servicing
Agreement) or the Basic Documents, or waive timely performance or observance by
the Servicer or the Depositor under the Sale and Servicing Agreement; and (ii)
that any such amendment shall not (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are required
to be made for the benefit of the Noteholders or (b) reduce the aforesaid
percentage of the Notes that is required to consent to any such amendment,
without the consent of Noteholders evidencing 100% Percentage Interests of the
Outstanding Notes. If any such amendment, modification, supplement or waiver
shall so be consented to by the Indenture Trustee, the Issuer agrees, promptly
following a request by the Indenture Trustee to do so, to execute and deliver,
in its own name and at its own expense, such agreements, instruments, consents
and other documents as the Indenture Trustee may deem necessary or appropriate
in the circumstances.
Section 3.08. NEGATIVE COVENANTS. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by the Basic Documents,
sell, transfer, exchange or otherwise dispose of any of the properties
or assets of the Issuer, including those included in the Collateral,
unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the
Collateral;
(iii) engage in any business or activity other than as
expressly permitted by the Trust Agreement and the other Basic
Documents, other than in connection with, or relating to, the issuance
of Notes pursuant to this Indenture, or amend the Trust
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Agreement as in effect on the Closing Date other than in accordance
with SECTION 11.1 thereof;
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any
indebtedness of any Person, except for such indebtedness as may be
incurred by the Issuer in connection with the issuance of the Notes
pursuant to this Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (a) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may expressly be
permitted hereby, (b) except as provided in the Basic Documents, permit
any lien, charge, excise, claim, 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 Collateral or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of law,
in each case on any of the Loan Collateral and arising solely as a
result of an action or omission of the related Obligors) or (c) permit
the lien of this Indenture not to constitute a valid first priority
(other than with respect to any such tax, mechanics' or other lien)
security interest in the Collateral;
(viii) remove the Administrator without the prior written
consent of the Majority Noteholders; or
(ix) take any other action or fail to take any action which
may cause the Issuer to be taxable as (a) an association pursuant to
Section 7701 of the Code and the corresponding regulations, other than
a REIT, as described in Section 856(a) of the Code, or a qualified REIT
subsidiary, as described in Section 856(i) of the Code, or (b) as a
taxable mortgage pool pursuant to Section 7701(i) of the Code and the
corresponding regulations that is not part of a REIT or a qualified
REIT subsidiary, as described in the previous clause.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer
will deliver to the Indenture Trustee, within 120 days after the end of each
fiscal year of the Issuer (commencing in the fiscal year 1998), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout
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such year, or, if there has been a default in its compliance with any
such condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
Section 3.10. COVENANTS OF THE ISSUER. All covenants of the
Issuer in this Indenture are covenants of the Issuer and are not covenants of
the Owner Trustee. The Owner Trustee is, and any successor Owner Trustee under
the Trust Agreement will be, entering into this Indenture solely as Owner
Trustee under the Trust Agreement and not in its respective individual capacity,
and in no case whatsoever shall the Owner Trustee or any such successor Owner
Trustee be personally liable on, or for any loss in respect of, any of the
statements, representations, warranties or obligations of the Issuer hereunder,
as to all of which the parties hereto agree to look solely to the property of
the Issuer.
Section 3.11. SERVICER'S OBLIGATIONS. The Issuer shall cause
the Servicer to comply with the Sale and Servicing Agreement.
Section 3.12. RESTRICTED PAYMENTS. The Issuer 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 Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer 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 Issuer may make, or cause to be made, (x)
distributions to the Servicer, the Indenture Trustee, the Owner Trustee, the
Noteholders and the holders of the Trust Certificates as contemplated by, and to
the extent funds are available for such purpose under, the Sale and Servicing
Agreement or the Trust Agreement and (y) payments to the Indenture Trustee
pursuant to SECTION 1(a)(ii) of the Administration Agreement. The Issuer will
not, directly or indirectly, make or cause to be made payments to or
distributions from the Distribution Account except in accordance with this
Indenture and the Basic Documents.
Section 3.13. TREATMENT OF NOTES AS DEBT FOR ALL PURPOSES. The
Issuer shall, and shall cause the Administrator to, treat the Notes as
indebtedness for all purposes.
Section 3.14. NOTICE OF EVENTS OF DEFAULT. The Issuer shall
give the Indenture Trustee and the Majority Noteholders prompt written notice of
each Event of Default hereunder, each default on the part of the Servicer or the
Loan Originator of its obligations under the Sale and Servicing Agreement and
each default on the part of the Loan Originator of its obligations under the
Loan Purchase Agreement.
Section 3.15. FURTHER INSTRUMENTS AND ACTS. Upon request of
the Indenture Trustee, the Issuer 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.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall cease to be of further effect with respect to the Notes (except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) SECTIONS 3.03,
3.04, 3.05, 3.08 and 3.10 hereof, (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under SECTION 6.07 hereof and the obligations of the Indenture Trustee under
SECTION 4.02 hereof) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them), and the Indenture Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments satisfactory to it, and prepared
and delivered to it by the Issuer, acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, when all of the following have
occurred:
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or
stolen and that have been replaced or paid as provided
in SECTION 2.04 hereof and (ii) Notes for the payment
of which money has theretofore been deposited in trust
or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such
trust, as provided in SECTION 3.03 hereof) shall have
been delivered to the Indenture Trustee for
cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
a. shall have become due and payable, or
b. are to be called for redemption within one year
under 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 Issuer,
c. and the Issuer, in the case of clause a. or b.
above, has irrevocably deposited or caused
irrevocably to be deposited with the Indenture
Trustee cash or direct obligations of or
obligations guaranteed by the United States of
America (which will mature prior to the date
such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture
Trustee for
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cancellation when due to the applicable Maturity
Date or the Redemption Date (if Notes shall have
been called for redemption pursuant to SECTION
10.01 hereof), as the case may be; and
(B) the latest of (a) 18 months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
Trust Fees and Expenses and (c) the date on which the Issuer has paid or caused
to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel, each meeting the applicable
requirements of SECTION 11.01 hereof and, subject to SECTION 11.02 hereof, each
stating that all conditions precedent herein provided for, relating to the
satisfaction and discharge of this Indenture with respect to the Notes, have
been complied with.
Section 4.02. APPLICATION OF TRUST MONEY. All moneys 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 Noteholders for the payment or
redemption of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and/or interest; but
such moneys need not be segregated from other funds except to the extent
required herein or in the Sale and Servicing Agreement or required by law.
Section 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to SECTION 3.03 hereof and thereupon such Paying Agent shall
be released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01. EVENTS OF DEFAULT. "Event of Default," wherever
used herein, means 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) notwithstanding any insufficiency of funds in the
Distribution Account for payment thereof on the related Payment Date, default in
the payment of any interest on any Note when the same becomes due and payable,
and continuance of such default for a period of five (5) days; or
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(b) notwithstanding any insufficiency of funds in the
Distribution Account for payment thereof on the related Payment Date, default in
the payment of any installment of the Optimal Principal Payment Amount of any
Note (i) on any Payment Date or (ii) on the Maturity Date, or, to the extent
that there are funds available in the Distribution Account therefor, default in
the payment of any other installment of the principal of any Note when the same
becomes due and payable; or
(c) the occurrence of a Servicing Default; or
(d) default in the observance or performance of any covenant
or agreement of the Issuer made in any Basic Document to which it is a party
(other than a covenant or agreement, a default in the observance or performance
of which is elsewhere in this SECTION 5.01 specifically dealt with), or any
representation or warranty of the Issuer made in any Basic Document to which it
is a party or in any certificate or other writing delivered pursuant thereto or
in connection therewith proving to have been incorrect in any material respect
as of the time when the same shall have been made, and such default shall
continue or not be cured, or the circumstance or condition in respect of which
such misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been given,
by registered or certified mail, to the Issuer by the Indenture Trustee, or to
the Issuer, the Depositor and the Indenture Trustee by Noteholders evidencing at
least 25% Percentage Interests of the Outstanding Notes, a written notice
specifying such default or incorrect representation or warranty and requiring it
to be remedied and stating that such notice is a notice of Default hereunder; or
(e) default in the observance or performance of any covenant
or agreement of the Depositor made in any Basic Document to which it is a party
or any representation or warranty of the Depositor made in any Basic Document to
which it is a party, proving to have been incorrect in any material respect as
of the time when the same shall have been made, and such default shall continue
or not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given, by
registered or certified mail, to the Issuer and the Depositor by the Indenture
Trustee, or to the Issuer, the Depositor and the Indenture Trustee by
Noteholders evidencing at least 25% Percentage Interests of the Outstanding
Notes, a written notice specifying such Default or incorrect representation or
warranty and requiring it to be remedied and stating that such notice is a
notice of Default hereunder; or
(f) the filing of a decree or order for relief by a court
having jurisdiction over the Issuer or the Depositor or all or substantially all
of the Collateral in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
appointing of a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Issuer or the Depositor or for all or substantially
all of the Collateral, or the ordering of the winding-up or liquidation of the
affairs of the Issuer or the Depositor, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
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(g) the commencement by the Issuer or the Depositor of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the Issuer or
the Depositor to the entry of an order for relief in an involuntary case under
any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Issuer or the Depositor or for any substantial part
of the Collateral, or the making by the Issuer or the Depositor of any general
assignment for the benefit of creditors, or the failure by the Issuer or the
Depositor generally to pay its respective debts as such debts become due, or the
taking of any action by the Issuer or the Depositor in furtherance of any of the
foregoing; or
(h) on any day after the Closing Date, the Unfunded Transfer
Obligation is equal to or less than two percent of the Pool Principal Balance.
The Issuer shall deliver to the Indenture Trustee, within five
days after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clauses (d) or (e) above, the status of
such event and what action the Issuer or the Depositor, as applicable, is taking
or proposes to take with respect thereto.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee, at the direction or upon the prior
written consent of the Majority Noteholders, may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the moneys due has
been obtained by the Indenture Trustee as hereinafter in this ARTICLE V
provided, the Majority Noteholders, by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
(a) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
1. all payments of principal of and/or interest on all 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
2. all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel;
and
(b) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in
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SECTION 5.12 hereof. No such rescission shall affect any subsequent default or
impair any right consequent thereto.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY INDENTURE TRUSTEE. (a) The Issuer covenants that if (i) default
is made in the payment of any interest on any Note when the same becomes due and
payable, and such default continues for a period of five days, or (ii) default
is made in the payment of the principal of or any installment of the principal
of any Note when the same becomes due and payable, the Issuer will, upon demand
of the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on such Notes for principal
and/or interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest at the rate borne by the Notes and in addition thereto
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such
amounts upon such demand, the Indenture Trustee shall at the direction of the
Majority Noteholders, subject to SECTION 5.06(C) institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Issuer or other
obligor upon such Notes and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Notes, wherever situated, the
moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee shall at the direction of the Majority Noteholders, as more
particularly provided in SECTION 5.04 hereof, subject to SECTION 5.06(C) hereof,
proceed to protect and enforce its rights and the rights of the Noteholders by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
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 to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any 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 pursuant to the provisions of this SECTION 5.03, shall be
entitled and empowered by intervention in such Proceedings or otherwise:
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(i) to file and prove a claim or claims for the whole amount
of principal and/or interest owing and unpaid in respect of the Notes
and to 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 reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee, and its agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Noteholders allowed in any judicial
proceedings relative to the Issuer, its creditors and its property; and
any trustee, receiver, liquidator, custodian or other similar official
in any such Proceeding is hereby authorized by each of such Noteholders
to make payments to the Indenture Trustee and, in the event that the
Indenture Trustee shall consent to the making of payments directly to
such Noteholders, to pay to the Indenture Trustee such amounts as shall
be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred and all advances made by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys and
counsel, shall be for the ratable benefit of the Noteholders.
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(g) In any Proceedings brought by the Indenture Trustee (and
also any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the Noteholders, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
Section 5.04. REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be
continuing, the Indenture Trustee, at the direction of the Majority Noteholders
shall, do one or more of the following (subject to SECTION 5.05 hereof):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee or the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, however, that the Indenture Trustee may not sell or
otherwise liquidate the Collateral following an Event of Default,
unless the Holders of 100% Percentage Interests of the Outstanding
Notes consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full
all amounts then due and unpaid upon such Notes for principal and/or
interest or (C) the Indenture Trustee determines that the Collateral
will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if
the Notes had not been declared due and payable, and the Indenture
Trustee obtains the consent of Holders of not less than 66-2/3%
Percentage Interests of the Outstanding Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C) of this
subsection (a)(iv), the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this ARTICLE V, it shall pay out the money or property in the
following order:
FIRST: in the following order of priority: (a) to the
Indenture Trustee, an amount equal to all unreimbursed Indenture
Trustee Fees and indemnities and any other amounts payable to the
Indenture Trustee pursuant to the Basic Documents and to the Indenture
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Trustee or Sale Agents, as applicable, all reasonable fees and expenses
incurred by them and their agents and representatives in connection
with the enforcement of the remedies provided for in this Article V,
(b) to the Custodian, an amount equal to all unpaid Custodian Fees and
indemnities and any other amounts payable to the Custodian pursuant to
the Basic Documents, (c) to the Servicer, but only if the Servicer is
not FFCA or any Affiliate thereof, an amount equal to (i) all
unreimbursed Servicing Compensation and (ii) all unreimbursed
Nonrecoverable Servicing Advances, and (d) to the Servicer, in trust
for the Owner Trustee, an amount equal to the Owner Trustee Fee and all
unpaid Owner Trustee Fees;
SECOND: to distribute on a Payment Date, the Hedge Funding
Requirement to the appropriate Hedging Counterparties; provided, that
only cash on or in respect of fixed rate Loans (including cash
Securitization Proceeds received therefrom) shall be distributed for
such purpose and; provided, further, that amounts distributed pursuant
to clause FIRST above shall be deemed paid from Loans bearing a fixed
Loan Interest Rate, pro rata based on their aggregate Principal
Balances relative to the Pool Principal Balance on such Payment Date;
THIRD: to the Noteholders pro rata, all amounts in respect of
interest due and owing under the Notes;
FOURTH: to the Noteholders pro rata, all amounts in respect of
unpaid principal of the Notes;
FIFTH: to the Servicer if the Servicer is the Loan Originator
or an Affiliate thereof, an amount equal to any unreimbursed Servicing
Compensation; and
SIXTH: to the Owner Trustee, for any amounts to be distributed
pro rata to the holders of the Trust Certificates pursuant to the Trust
Agreement.
The Indenture Trustee may fix a record date and payment date
for any payment to be made to the Noteholders pursuant to this SECTION 5.04. At
least 15 days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment date
and the amount to be paid.
Section 5.05. OPTIONAL PRESERVATION OF THE COLLATERAL. If the
Notes have been declared to be due and payable under SECTION 5.02 hereof
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Collateral. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral. In determining whether to maintain possession of the
Collateral, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
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Section 5.06. LIMITATION OF SUITS. No Noteholder shall have
any right to institute any Proceeding, 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 Noteholder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Noteholders evidencing not less than 25% Percentage
Interests of the Outstanding Notes have made written request to the
Indenture Trustee to institute such Proceeding in respect of such Event
of Default in its own name as Indenture Trustee hereunder;
(c) such Noteholder or Noteholders have offered to the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(d) the Indenture Trustee for 30 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceeding; and
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 30-day period by the
Majority Noteholders.
It is understood and intended that no one or more Noteholders
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 Noteholders or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Noteholders,
neither of which evidences Percentage Interests of the Outstanding Notes greater
than 50%, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture and shall have no obligation or liability to any such group of
Noteholders for such action or inaction.
Section 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND/OR INTEREST. Notwithstanding any other provisions in this
Indenture, any Noteholder shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the applicable Maturity Date thereof expressed in such
Note or in this Indenture (or, in the case of redemption, on or after the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Noteholder.
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the
Indenture Trustee 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 adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer,
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the Indenture Trustee 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 and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or
remedy herein conferred upon or reserved to the Indenture Trustee 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 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or
omission of the Indenture Trustee or any Noteholder to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such right
or remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
Section 5.11. CONTROL BY NOTEHOLDERS. The Majority Noteholders
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to the
Notes or exercising any trust or power conferred on the Indenture Trustee;
provided, however, that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) subject to the express terms of SECTION 5.04(a)(iv)
hereof, any direction to the Indenture Trustee to sell or liquidate the
Collateral shall be by Holders of Notes representing Percentage
Interests of the Outstanding Notes of not less than 100%;
(c) if the conditions set forth in SECTION 5.05 hereof have
been satisfied and the Indenture Trustee elects to retain the
Collateral pursuant to such Section, then any direction to the
Indenture Trustee by Holders of Notes representing Percentage Interests
of the Outstanding Notes of less than 100% to sell or liquidate the
Collateral shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
In connection with any sale of the Collateral in accordance
with paragraph (c) above, the Majority Noteholders may, in their sole discretion
appoint agents to effect the sale of the Collateral (such agents, "Sale
Agents"), which Sale Agents may be Affiliates of any
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Noteholder. The Sale Agents shall be entitled to reasonable compensation in
connection with such activities from the proceeds of such sale.
Notwithstanding the rights of the Noteholders set forth in
this SECTION 5.11, subject to SECTION 6.01 hereof, the Indenture Trustee need
not take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
Section 5.12. WAIVER OF PAST DEFAULTS. The Majority
Noteholders may waive any past Default or Event of Default and its consequences,
except a Default (a) in the payment of principal of or interest on any of the
Notes or (b) in respect of a covenant or provision hereof that cannot be
modified or amended without the consent of each Noteholder. In the case of any
such waiver, the Issuer, the Indenture Trustee and Noteholders shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Noteholder by such Noteholder's 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 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate Percentage Interests of the
Outstanding Notes of more than 10% or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer
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 law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (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.
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Section 5.15. ACTION ON NOTES. The Indenture Trustee's right
to seek and recover judgment on the Notes or 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 or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the
Collateral or upon any of the assets of the Issuer. Any money or property
collected by the Indenture Trustee shall be applied in accordance with SECTION
5.04(B) hereof.
Section 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN
OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to
do so and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Loan Originator and the Servicer, as applicable, of each
of their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the Sale
and Servicing Agreement to the extent and in the manner directed by the
Indenture Trustee, including the transmission of notices of default on the part
of the Loan Originator or the Servicer thereunder and the institution of legal
or administrative actions or proceedings to compel or secure performance by the
Loan Originator or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Majority
Noteholders shall, subject to SECTION 5.06(c) exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Loan Originator or the
Servicer under or in connection with the Sale and Servicing Agreement, including
the right or power to take any action to compel or secure performance or
observance by the Loan Originator or the Servicer, as the case may be, of each
of their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension, or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
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 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 such person's own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the Indenture Trustee shall undertake to perform such
duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may 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; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture to
the extent specifically set forth herein.
(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 paragraph (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 SECTION 5.11 hereof.
(d) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
SECTION 6.01.
(e) The Indenture Trustee shall not be liable for interest on
any money received by it and held in a Trust Account except as may be provided
in the Sale and Servicing Agreement or as the Indenture Trustee may agree in
writing with the Issuer.
(f) Money held in trust by the Indenture Trustee shall be
segregated from other funds except to the extent permitted by law or the terms
of this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur 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 to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it; provided, however, that the Indenture Trustee
shall not refuse or fail to perform any of its duties hereunder solely as a
result of nonpayment of its normal fees and expenses and provided, further, that
nothing in this SECTION 6.01(g) shall be construed to limit the exercise by the
Indenture Trustee of any right or remedy permitted under this Indenture or
otherwise in the event of the Issuer's failure to pay the Indenture Trustee's
fees and expenses pursuant to SECTION 6.07 hereof. In determining that such
repayment or indemnity is not reasonably assured to it, the Indenture Trustee
must consider not only the likelihood of
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repayment or indemnity by or on behalf of the Issuer but also the likelihood of
repayment or indemnity from amounts payable to it from the Collateral pursuant
to SECTION 6.07 hereof.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this SECTION 6.01.
(i) The Indenture Trustee shall not be required to take notice
or be deemed to have notice or knowledge of any Event of Default (other than an
Event of Default pursuant to SECTION 5.01(a) or (b) hereof) unless a Responsible
Officer of the Indenture Trustee shall have received written notice thereof or
otherwise shall have actual knowledge thereof. In the absence of receipt of
notice or such knowledge, the Indenture Trustee may conclusively assume that
there is no Event of Default.
Section 6.02. RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may rely on 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 the
document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for (i) any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided, however, that such action
or omission by the Indenture Trustee does not constitute willful misconduct,
negligence or bad faith; or (ii) any action or inaction on the part of the
Custodian.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
Section 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with SECTION 6.11 hereof.
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Section 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, shall not be accountable
for the Issuer's use of the proceeds from the Notes, or responsible for any
statement of the Issuer in the Indenture or in any document issued in connection
with the sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
Section 6.05. NOTICES OF DEFAULT. If a Default occurs and is
continuing and if it is actually known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder notice of the
Default within 90 days after it occurs.
Section 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The
Indenture Trustee shall deliver to each Noteholder such information in the
Indenture Trustee's possession and as may be reasonably required to enable such
Noteholder to prepare its federal and state income tax returns.
Section 6.07. COMPENSATION AND INDEMNITY. As compensation for
its services hereunder, the Indenture Trustee shall be entitled to receive, on
each Payment Date, the Indenture Trustee's Fee pursuant to SECTION 8.02(c)
hereof (which compensation shall not be limited by any law on compensation of a
trustee of an express trust) and shall be entitled to reimbursement by the
Servicer for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer agrees to cause the Servicer to indemnify
the Indenture Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer and the Servicer promptly of any claim for which it may
seek indemnity. Failure by the Indenture Trustee so to notify the Issuer and the
Servicer shall not relieve the Issuer of its obligations hereunder. The Issuer
shall or shall cause the Servicer to defend any such claim; provided, however,
that if the defendants with respect to any such claim include the Issuer and/or
the Servicer and the Indenture Trustee, and the Indenture Trustee shall have
reasonably concluded that there may be legal defenses available to it which are
different from or in addition to those defenses available to the Issuer or the
Servicer, as the case may be, the Indenture Trustee shall have the right, at the
expense of the Servicer, to select separate counsel to assert such legal
defenses and to otherwise defend itself against such claim. Neither the Issuer
nor the Servicer need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee
pursuant to this SECTION 6.07 shall survive the discharge of this Indenture and
the termination or resignation of the Indenture Trustee. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in SECTION
5.01(f), or (g) hereof with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
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Section 6.08. REPLACEMENT OF INDENTURE TRUSTEE. No resignation
or removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this SECTION 6.08. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Majority Noteholders may
remove the Indenture Trustee by so notifying the Indenture Trustee and may
appoint a successor Indenture Trustee; provided, that all of the reasonable
costs and expenses incurred by the Indenture Trustee in connection with such
removal shall be reimbursed to it prior to the effectiveness of such removal.
The Issuer shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with SECTION
6.11 hereof;
(b) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(c) a receiver or other public officer takes charge of
the Indenture Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within
60 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Majority Noteholders may petition any court
of competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with SECTION 6.11
hereof, any Noteholder may petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this SECTION 6.08, the Issuer's and the Administrator's obligations
under SECTION 6.07 hereof shall continue for the benefit of the retiring
Indenture Trustee.
Section 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or
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transferee corporation without any further act shall be the successor Indenture
Trustee; provided, however, that such corporation or banking association shall
otherwise be qualified and eligible under SECTION 6.11 hereof. The Indenture
Trustee shall provide the Majority Noteholders prior written notice of any such
transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE
INDENTURE TRUSTEE. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Collateral may at the time be located, the
Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Collateral, or any part hereof,
and, subject to the other provisions of this SECTION 6.10, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under SECTION 6.11 hereof
and no notice to Noteholders of the appointment of any co-trustee or separate
trustee shall be required under SECTION 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Collateral or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
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(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this ARTICLE VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, jointly with
the Indenture Trustee, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Indenture
Trustee. Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
Section 6.11. ELIGIBILITY. The Indenture Trustee shall (i)
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition or (ii) otherwise be acceptable
in writing to the Majority Noteholders.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 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.
Section 7.02. PRESERVATION OF INFORMATION. The Indenture
Trustee shall preserve, in as current a form as is reasonably practicable, the
names and addresses of the Noteholders contained in the most recent list
furnished to the Indenture Trustee as provided in SECTION 7.01 hereof and the
names and addresses of Noteholders received by the Indenture Trustee in its
capacity as Note Registrar. The Indenture Trustee may destroy any list furnished
to it as provided in such SECTION 7.01 upon receipt of a new list so furnished.
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Section 7.03. 144A INFORMATION. The Indenture Trustee, to the
extent it has any such information in its possession, shall provide to any
Noteholder and any prospective transferee designated by any such Noteholder
information regarding the Notes and the Loans and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) under the Securities Act for transfer of any such Note without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A under the Securities Act. Each Noteholder
desiring to effect such a transfer shall, and does hereby agree to, indemnify
the Issuer, the Owner Trustee, the Indenture Trustee and the Depositor against
any liability that may result from its gross negligence or willful misconduct in
the event that the transfer is not so exempt or is not made in accordance with
federal and state securities laws.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY.
GENERAL. 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 intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Collateral,
the Indenture Trustee may 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 any right to proceed
thereafter as provided in ARTICLE V hereof.
Section 8.02. TRUST ACCOUNTS; DISTRIBUTIONS. (a) On or prior
to the Closing Date, the Issuer shall cause the Servicer to establish and
maintain, in the name of the Indenture Trustee for the benefit of the
Noteholders, or on behalf of the Owner Trustee for the benefit of the
Securityholders, the Trust Accounts as provided in the Sale and Servicing
Agreement. The Indenture Trustee shall deposit amounts into each of the Trust
Accounts in accordance with the terms hereof, the Sale and Servicing Agreement
and the Payment Statements.
(b) COLLECTION ACCOUNT. With respect to the Collection
Account, the Indenture Trustee shall make such withdrawals and distributions
(except as may be otherwise provided in the Collection Account Letter Agreement)
as specified in SECTION 5.01(c)(2) of the Sale and Servicing Agreement in
accordance with the terms thereof.
(c) DISTRIBUTION ACCOUNT. With respect to the Distribution
Account, the Indenture Trustee shall make (i) such deposits as specified in
SECTIONS 5.01(c)(2)(a), 5.01(c)(2)(b), 5.05(e), 5.05(f) and 5.05(g) of the Sale
and Servicing Agreement and (ii) such withdrawals and distributions as specified
in SECTION 5.01(c)(3) of the Sale and Servicing Agreement in accordance with the
terms thereof.
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(d) TRANSFER OBLIGATION ACCOUNT. With respect to the Transfer
Obligation Account, the Indenture Trustee shall make (i) such deposits as
specified in SECTION 5.01(c)(3)(vi) of the Sale and Servicing Agreement and (ii)
such withdrawals and distributions as specified in SECTIONS 5.05(d), 5.05(e),
5.05(f), 5.05(g), 5.05(h), 5.05(i) and 5.05(j) of the Sale and Servicing
Agreement in accordance with the terms thereof.
(e) ADVANCE ACCOUNT. With respect to the Advance Account, the
Servicer shall make such withdrawals specified in SECTION 2.06 of the Sale and
Servicing Agreement and Section 2.1(c) of the Loan Purchase Agreement.
Section 8.03. GENERAL PROVISIONS REGARDING TRUST ACCOUNTS. (a)
So long as no Default or Event of Default shall have occurred and be continuing,
all or a portion of the funds in the Collection Account and Transfer Obligation
Account shall be invested in Permitted Investments and reinvested by the
Servicer and the Indenture Trustee, as applicable, at the direction of the
Servicer in accordance with the provisions of SECTION 5.03(b) of the Sale and
Servicing Agreement. All income or other gain from investments of moneys
deposited in the Collection Account and Transfer Obligation Account shall be
deposited by the Indenture Trustee into the Collection Account or Transfer
Obligation Account, as the case may be, immediately upon receipt thereof by the
Indenture Trustee. The Loan Originator will not direct the Indenture Trustee to
make any investment of any funds or to sell any investment held in the
Collection Account or Transfer Obligation Account unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of
Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to SECTION 6.01(c) hereof, the Indenture Trustee
shall not in any way be held liable by reason of any insufficiency in the
Collection Account or Transfer Obligation Account resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Indenture Trustee's failure to make payments on such Permitted Investments
issued by the Indenture Trustee, in its commercial capacity as principal obligor
and not as trustee, in accordance with their terms.
(c) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Collection Account (except as may be
otherwise provided in the Collection Account Letter Agreement) or Transfer
Obligation Account to the Indenture Trustee by 2:00 p.m. New York City time (or
such other time as may be agreed by the Issuer and Indenture Trustee) on any
Business Day or (ii) a Default or Event of Default shall have occurred and be
continuing with respect to the Notes but the Notes shall not have been declared
due and payable pursuant to SECTION 5.02 hereof or (iii) if such Notes shall
have been declared due and payable following an Event of Default, amounts
collected or receivable from the Collateral are being applied in accordance with
SECTION 5.05 hereof as if there had not been such a declaration, then the
Indenture Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Collection Account and Transfer Obligation Account in one or more
Permitted Investments.
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Section 8.04. SERVICER'S STATEMENTS. On each Payment Date, the
Indenture Trustee shall distribute the related Payment Statement to the extent
received from the Servicer and on each Determination Date the Indenture Trustee
shall distribute the related Servicer's Remittance Report to the extent received
from the Servicer to the Issuer and to the Initial Noteholder.
Section 8.05. RELEASE OF COLLATERAL. (a) Subject to the
payment of its reasonable fees and expenses pursuant to SECTION 6.07 hereof, the
Indenture Trustee may, and when required by the provisions of this Indenture
shall, execute instruments acceptable to it and prepared and delivered to it by
the Issuer to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, without recourse, representation or
warranty in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed by
the Indenture Trustee as provided in this ARTICLE VIII 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.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due to the Noteholders (and their Affiliates),
the Initial Noteholder, the Sales Agents, the Indenture Trustee, the Owner
Trustee and the Custodian under the Basic Documents have been paid, release any
remaining portion of the Collateral that secured the Notes from the lien of this
Indenture and release to the Issuer or any other Person entitled thereto any
funds then on deposit in the Trust Accounts. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this SUBSECTION (b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate and an
Opinion of Counsel meeting the applicable requirements of SECTION 11.01 hereof.
Section 8.06. OPINION OF COUNSEL. The Indenture Trustee shall
receive at least seven days' prior notice when requested by the Issuer to take
any action pursuant to SECTION 8.05(a) hereof, accompanied by copies of any
instruments involved, and the Indenture Trustee may also require, as a condition
to such action, an Opinion of Counsel, in form and substance 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 and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral. 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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
THE NOTEHOLDERS. Without the consent of any Noteholder but with prior notice to
the Majority Noteholders, the
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Issuer and the Indenture Trustee, when authorized by an Issuer Order, 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:
(i) 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;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided, however, that such action shall not adversely
affect the interests of the Noteholders; or
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI hereof.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS. The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with the consent of the Majority Noteholders, by Act of such
Noteholders delivered to the Issuer and the Indenture Trustee, 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 any Noteholder
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of each Noteholder affected thereby:
(a) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal balance thereof, the
interest rate thereon or the Termination Price with respect thereto, change the
provisions of this Indenture relating to the application of
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collections on, or the proceeds of the sale of, the Collateral to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
ARTICLE V hereof, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(b) reduce the Percentage Interest, 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 certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(c) modify or alter the provisions of the definition of the
term "Outstanding" or "Percentage Interest";
(d) reduce the Percentage Interest of the Outstanding Notes,
the consent of the Holders of which is required to direct the Indenture Trustee
to direct the Issuer to sell or liquidate the Collateral pursuant to SECTION
5.04 hereof;
(e) modify any provision of this SECTION 9.02 except to
increase any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or waived
without the consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of any
of the individual components of such calculation) or to adversely affect the
rights of the Noteholders to the benefit of any provisions for the mandatory
redemption of the Notes contained herein; or
(g) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or deprive
any Noteholder of the security provided by the lien of this Indenture.
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 each Noteholder, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
In connection with requesting the consent of the Noteholders
pursuant to this SECTION 9.02, the Indenture Trustee shall mail to the Holders
of the Notes to which such amendment or supplemental indenture relates a notice
prepared by the Issuer setting forth in general terms the substance of such
supplemental indenture. 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.
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<PAGE>
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this ARTICLE IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to receive,
and subject to SECTIONS 6.01 and 6.02 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,
liabilities or immunities under this Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 9.05. 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 Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. REDEMPTION.
The Majority Certificateholders may, at their option, effect
an early redemption of the Notes on any Payment Date on or after the Clean-up
Call Date. The Majority Certificateholders shall effect such early termination
in the manner specified in and subject to the provisions of SECTION 11.02 of the
Sale and Servicing Agreement.
The Servicer or the Issuer shall furnish the Indenture Trustee
with notice of any such redemption in order to facilitate the Indenture
Trustee's compliance with its obligation to notify the Noteholders of such
redemption in accordance with SECTION 10.02 hereof.
Section 10.02. FORM OF REDEMPTION NOTICE. Notice of redemption
under SECTION 10.01 hereof shall be by first-class mail, postage prepaid, or by
facsimile mailed or transmitted not later than 10 days prior to the applicable
Redemption Date to each Noteholder, as
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<PAGE>
of the close of business on the Record Date preceding the applicable Redemption
Date, at such Noteholder's address or facsimile number appearing in the Note
Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) that on the Redemption Date Noteholders shall receive the
Note Redemption Amount; and
(iii) the place where such Notes are to be surrendered for
payment of the Termination Price (which shall be the office or agency
of the Issuer to be maintained as provided in SECTION 3.02 hereof).
Notice of redemption of the Notes shall be given by the
Indenture Trustee in the name of the Issuer and at the expense of the Servicer.
Failure to give to any Noteholder notice of redemption, or any defect therein,
shall not impair or affect the validity of the redemption of any other Note.
Section 10.03. NOTES PAYABLE ON REDEMPTION DATE; PROVISION FOR
PAYMENT OF INDENTURE TRUSTEE. The Notes to be redeemed shall, following notice
of redemption as required by SECTION 10.02 hereof (in the case of redemption
pursuant to SECTION 10.01) hereof, on the Redemption Date become due and payable
at the Note Redemption Amount and (unless the Issuer shall default in the
payment of the Note Redemption Amount) no interest shall accrue thereon for any
period after the date to which accrued interest is calculated for purposes of
calculating the Note Redemption Amount. The Issuer may not redeem the Notes
unless (i) all outstanding obligations under the Notes have been paid in full
and (ii) the Indenture Trustee has been paid all amounts to which it is entitled
hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. Upon
any application or request by the Issuer to the Indenture Trustee to take any
action under any provision of this Indenture (except with respect to the
Servicer's servicing activity in the ordinary course of its business), the
Issuer shall furnish to the Indenture Trustee (i) 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 (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate
or opinion has read or has caused to be read such
covenant or condition and the definitions herein
relating thereto;
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<PAGE>
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the
statements or opinions contained in such certificate
or opinion are based;
(3) a statement that, in the opinion of each such
signatory, such signatory has made such examination
or investigation as is necessary to enable such
signatory to express an informed opinion as to
whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each
such signatory, 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 an Authorized Officer of the
Issuer 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 such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Loan Originator, the Issuer or the
Administrator, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Loan Originator, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer'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 Issuer 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 ARTICLE VI hereof.
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<PAGE>
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 agents 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 Issuer. 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 Issuer, 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 in any manner that the Indenture
Trustee deems sufficient.
(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 any Noteholder shall bind the Holder of every
Note issued upon the registration 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 Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE AND ISSUER
. Any request, demand, authorization, direction, notice, consent, waiver or Act
of Noteholders or other documents provided or permitted by this Indenture shall
be in writing and if such request, demand, authorization, direction, notice,
consent, waiver or act of Noteholders is to be made upon, given or furnished to
or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
made, given, furnished, filed or transmitted via facsimile to the
Issuer at: FFCA Franchise Loan Owner Trust 1998-1, c/o Wilmington
Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration,
telecopy number: (302) 651-8882, telephone number: (302) 651-1000, or
at any other address or facsimile number previously furnished in
writing to the Indenture Trustee by the Issuer or the Administrator.
The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee.
Section 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise
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<PAGE>
herein expressly provided) if in writing and mailed, first-class, postage
prepaid to each Noteholder affected by such event, at his address 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. In any case where
notice to Noteholders is given by mail, neither the failure to mail such notice
nor any defect in any notice so mailed to any particular Noteholder shall affect
the sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have duly been given.
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 a 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. 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 11.07. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, co-trustees and
agents.
Section 11.08. 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 11.09. BENEFITS OF INDENTURE. Nothing in this
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the Noteholders, and
any other party secured hereunder, and any other Person with an ownership
interest in any part of the Collateral, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 11.10. LEGAL HOLIDAYS. In any case where the date on
which any payment is due 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 date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
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<PAGE>
Section 11.11. GOVERNING LAW. THIS 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 SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.12. COUNTERPARTS. This Indenture 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 11.13. RECORDING OF INDENTURE. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee; provided, however, that the
expense of such Opinion of Counsel shall in no event be an expense of the
Indenture Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
Section 11.14. TRUST OBLIGATION. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or, except as expressly provided
for in ARTICLE VI hereof, 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 Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director, employee, agent or "control person" within the meaning
of the Act and the Securities Exchange Act of 1934, as amended, of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, 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 expressly have 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 of the Issuer 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 Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
Section 11.15. NO PETITION. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Depositor or the
Issuer, or join in any institution against the Depositor or the Issuer 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.
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<PAGE>
Section 11.16. INSPECTION. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee, during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may reasonably be
requested and at the expense of the Servicer. The Indenture Trustee shall and
shall cause its representatives to hold in confidence all such information
except to the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the extent
that the Indenture Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
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<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized and duly attested, all as of the day and year first
above written.
FFCA FRANCHISE LOAN OWNER
TRUST 1998-1
By: WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee
By: /s/ Ann E. Roberts
----------------------------------------
Name: Ann E. Roberts
Title: Senior Financial Services Officer
LASALLE NATIONAL BANK,
as Indenture Trustee
By: /s/ Michael B. Evans
----------------------------------------
Name: Michael B. Evans
Title: First Vice President
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<PAGE>
State of Delaware
County of New Castle
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared Ann E. Roberts, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity, but solely as Owner Trustee on behalf of FFCA FRANCHISE LOAN OWNER
TRUST 1998-1, a Delaware business trust, and that such person executed the same
as the act of said business trust for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 10th day of
August, 1998.
/s/ Deborah L. George
------------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
11-21-99
- ---------------------
Schedule A-1
<PAGE>
State of Illinois )
) ss.
County of Cook )
On the ____ day of August 1998, before me, Kimberly W. Bell, a notary
public in and for said State, personally appeared Michael B. Evans, known to me
to be a First Vice President of LaSalle National Bank, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Kimberly W. Bell
----------------------------------
Kimberly W. Bell
My Commission Expires: 12-1-01
[Notarial Seal]
Schedule A-2
<PAGE>
EXHIBIT A
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
MAXIMUM NOTE PRINCIPAL BALANCE SHOWN ON THE FACE HEREOF. ANY PURCHASER OF THIS
NOTE MAY ASCERTAIN THE OUTSTANDING PRINCIPAL AMOUNT HEREOF BY INQUIRY OF THE
INDENTURE TRUSTEE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
1933 ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF
THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.
THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE INDENTURE TRUSTEE HAS RECEIVED A
NOTE FROM THE TRANSFEREE TO THE EFFECT THAT EITHER (I) THE TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT PLAN OR ARRANGEMENT SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"), AND IS
NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (II) IF THE
TRANSFEREE IS A PLAN, OR IS ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A
PLAN, THE CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT LEAST ONE OF THE FOLLOWING
PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN SATISFIED: PROHIBITED
A-1
<PAGE>
TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO TRANSACTIONS EFFECTED BY
AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO TRANSACTIONS INVOLVING
INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING TO TRANSACTIONS
INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING TO TRANSACTIONS
INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE 84-14 (RELATING
TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET MANAGER"). EACH
TRANSFEREE OF A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR IS A PERSON ACTING
ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE DEEMED TO MAKE THE
REPRESENTATION SET FORTH UNDER (II) ABOVE.
A-2
<PAGE>
Maximum Note Principal Balance $_____________
Initial Percentage Interest ____%
No. ___
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
FRANCHISE LOAN BACKED NOTES SERIES 1998-1
FFCA FRANCHISE LOAN OWNER TRUST 1998-1, a Delaware business
trust (the Issuer"), for value received, hereby promises to pay to
____________________________, or registered assigns (the "Noteholder"), the
principal sum of __________________ ($____________) or so much thereof as may be
advanced and outstanding hereunder and to pay interest on such principal sum or
such part thereof as shall remain unpaid from time to time, at the rate and at
the times provided in the Sale and Servicing Agreement and the Indenture.
Principal of this Note is payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) the Percentage Interest of this Note by (ii)
the Principal Payment Amount with respect to such Payment Date.
The Outstanding Note Principal Balance of this Note bears
interest at the Note Interest Rate. On each Payment Date amounts in respect of
interest on this Note will be paid in an amount equal to the result obtained by
multiplying (i) the Percentage Interest of this Note by (ii) the aggregate
amount paid in respect of interest on the Notes with respect to such Payment
Date.
Capitalized terms used but not defined herein have the
meanings set forth in the Indenture (the "Indenture"), dated as of August 14,
1998 between the Issuer and LaSalle National Bank, as Indenture Trustee (the
"Indenture Trustee"). as supplemented by the Indenture Supplement, dated as of
August 14, 1998, between the Issuer and the Indenture Trustee (the
"Supplement").
By its acceptance of this Note, each Noteholder covenants and
agrees, until the earlier of (a) the termination of the Revolving Period and (b)
the Maturity Date, on each Transfer Date and Collateral Value Excess Date to
advance amounts in respect of Additional Principal Balance hereunder to the
Issuer, subject to and in accordance with the terms of the Indenture, the Sale
and Servicing Agreement and the Note Purchase Agreement.
In the event of an advance of Additional Note Principal
Balance by the Noteholders as provided in SECTION 2.01(c) of the Sale and
Servicing Agreement, each Noteholder shall, and is hereby authorized to, record
on the schedule attached to its Note the date and amount of any Additional Note
Principal Balance advanced by it, and each repayment thereof; provided that
failure to make any such recordation on such schedule or any error in such
schedule shall not adversely affect any Noteholder's rights with respect to its
Additional Note Principal Balance and its right to receive interest payments in
respect of the Additional Note Principal Balance held by such Noteholder.
Absent manifest error, the Note Principal Balance of each Note
as set forth in the notations made by the related Noteholder on such Note shall
be binding upon the Indenture
A-3
<PAGE>
Trustee and the Issuer; provided that failure by a Noteholder to make such
recordation on its Note or any error in such notation shall not adversely affect
any Noteholder's rights with respect to its Note Principal Balance and its right
to receive principal and interest payments in respect thereof.
The Majority Certificateholders may, at their option, effect
an early redemption of the Notes at par plus accrued and unpaid interest on the
Notes on any Payment Date on or after the Clean-up Call Date. The Majority
Certificateholders shall effect such early termination by providing notice
thereof to the Indenture Trustee and Owner Trustee and by purchasing all of the
Loans at a purchase price, payable in cash, equal to than the Termination Price.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
The statements in the legend set forth above are an integral
part of the terms of this Note and by acceptance hereof each Holder of this Note
agrees to be subject to and bound by the terms and provisions set forth in such
legend.
Unless the Certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Note shall not entitle the Noteholder hereof to any benefit
under the Indenture, the Supplement or the Sale and Servicing Agreement and/or
be valid for any purpose.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK AND WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAW PROVISIONS THEREOF.
A-4
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: August __, 1998
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By: ____________________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: August __, 1998
LASALLE NATIONAL BANK,
not in its individual capacity but solely as
Indenture Trustee
By: ____________________________________________
Authorized Signatory
A-5
<PAGE>
[Reverse of Note]
This Note is one of a duly authorized Series of Notes of the
Issuer, designated as its Loan Backed Notes Series 1998-1 (herein called the
"Notes"), all issued under the Indenture and the Supplement. Reference is hereby
made to the Indenture, the Supplement and all indentures supplemental thereto,
and the Sale and Servicing Agreement for a statement of the respective rights
and obligations thereunder of the Issuer, the Indenture Trustee and the Holders
of the Notes. To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the Supplement or the Sale
and Servicing Agreement, the provisions of the Indenture, the Supplement or the
Sale and Servicing Agreement, as applicable, shall control and supersede such
contradictory or inconsistent provision herein. The Notes are subject to all
terms of the Indenture, the Supplement and the Sale and Servicing Agreement.
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
Issuer with respect to this Note shall be applied in accordance with the
Indenture, the Supplement and the Sale and Servicing Agreement.
The entire unpaid principal amount of this Note shall be due
and payable on the earlier of the Maturity Date and the Termination Date, if
any, pursuant to SECTION 11.01 of the Sale and Servicing Agreement.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee, at the direction or upon
the prior written consent of the Majority Noteholders, has 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
Holders of the Notes entitled thereto.
The Collateral secures this Note and all other Notes equally
and ratably without prejudice, priority or distinction between any Note and any
other Note. The Notes are non-recourse obligations of the Issuer and are limited
in right of payment to amounts available from the Collateral, provided in the
Indenture. The Issuer shall not otherwise be liable for payments on the Notes,
and none of the owners, agents, officers, directors, employees, or successors or
assigns of the Issuer shall be personally liable for any amounts payable, or
performance due, under the Notes or the Indenture.
Any installment of interest or principal on this Note shall be
paid on the applicable Payment Date to the Person in whose name this Note (or
one or more Predecessor Notes) is registered in the Note Register as of the
close of business on the related Record Date by wire transfer in immediately
available funds to the account specified in writing by the related Noteholder.
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
A-6
<PAGE>
in exchange hereof or in lieu hereof, whether or not noted hereon. Any increase
in the principal amount of this Note (or any one or more Predecessor Notes)
effected by payments to the Issuer of Additional Note Principal Balances shall
be binding upon the Issuer and shall inure to the benefit of 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.
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 Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in the form
attached hereto 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 Securities Transfer
Agent's Medallion Program ("STAMP"), 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
Issuer may require the Noteholder 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.
Each Noteholder, by acceptance of a Note or 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 Issuer, 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 Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director employee or "control person" within the meaning of the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended, of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, 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, by acceptance of a Note or a beneficial
interest in a Note, covenants and agrees by accepting the benefits of the
Indenture that such Noteholder will not at any time institute against the
Issuer, or join in any institution against the Issuer 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 or the Basic Documents.
The Issuer 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 Issuer secured by the Collateral. Each Noteholder, by acceptance of a Note,
agrees to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness of the Issuer.
A-7
<PAGE>
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer 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 Issuer, 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 Issuer and the rights of the Holders of the Notes under the
Indenture at any time by the Issuer with the consent of the Majority
Noteholders. The Indenture also contains provisions permitting the Holders of
Notes representing specified Percentage Interests of the Outstanding Notes, on
behalf of all of the Noteholders, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver 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 Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of any Noteholder.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
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.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of the Issuer in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Holder of this Note by its acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the Holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however, that nothing contained herein shall be taken to prevent recourse to,
and enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
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 STAMP.
A-9
<PAGE>
Schedule to Note
dated as of August __, 1998
of FFCA FRANCHISE LOAN OWNER TRUST 1998-1
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Date of advance of Amount of advance of Note Principal
Additional Note Additional Note aggregate Note Balance of
Principal Balance Principal Balance Percentage Interest Principal Balance Note
- ------------------------------------------------------------------------------------------------------
100%
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
A-10
<PAGE>
EXHIBIT B-1
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: FFCA Franchise Loan Owner Trust 1998-1
FRANCHISE LOAN BACKED NOTES SERIES ______
Reference is hereby made to the Indenture dated as of August 14, 1998
(the "INDENTURE") between FFCA Franchise Loan Owner Trust 1998-1 (the "TRUST")
and LaSalle National Bank (the "INDENTURE TRUSTEE"). Capitalized terms used but
not defined herein shall have the meanings given to them in the Sale and
Servicing Agreement dated as of August 14, 1998 among the Trust, Franchise
Finance Corporation of America ("FFCA"), FFCA Warehouse Lending Corporation (the
"DEPOSITOR"), FFCA Acquisition Corporation and LaSalle National Bank, as
Indenture Trustee.
The undersigned (the "TRANSFEROR") has requested a transfer of
$_________ current principal balance Notes to [insert name of transferee].
In connection with such request, and in respect of such Notes, the
Transferor hereby certifies that such Notes are being transferred in accordance
with (i) the transfer restrictions set forth in the Indenture and the Notes and
(ii) Rule 144A under the Securities Act of 1933, as amended to a purchaser that
the Transferor reasonably believes is a "qualified institutional buyer" within
the meaning of Rule 144A purchasing for its own account or for the account of a
"qualified institutional buyer," which purchaser is aware that the sale to it is
being made in reliance upon Rule 144A, in a transaction meeting the requirements
of Rule 144A and in accordance with any applicable securities laws of any state
of the United States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Depositor.
____________________________________
[Name of Transferor]
By: ________________________________
Name:
Title:
Dated: ________________, _______
B-1-1
<PAGE>
EXHIBIT B-2
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
_____________________
[Date]
Dear Sirs:
In connection with our proposed purchase of $_________________ Note Principal
Balance Franchise Loan Backed Notes, Series _________ (the "OFFERED NOTES")
issued by FFCA Franchise Loan Owner Trust 1998-1 (the "TRUST"), we confirm that:
(1) We understand that the Offered Notes have not been, and will not be,
registered under the Securities Act of 1933, as amended (the "1933
ACT") or any state securities laws, and may not be sold except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Offered Notes we will do so only (a)
pursuant to a registration statement which has been declared effective
under the 1933 Act, (b) for so long as the Offered Notes are eligible
for resale pursuant to Rule 144A under the 1933 Act, to a Person we
reasonably believe is a "qualified institutional buyer" as defined in
Rule 144A that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the transfer
is being made in reliance on Rule 144A, (c) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2),
(3) or (7) of Rule 501 under the 1933 Act (an "INSTITUTIONAL ACCREDITED
INVESTOR") that is acquiring the Offered Notes for its own account, or
for the account of such an Institutional Accredited Investor, for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the 1933 Act, in each
case in compliance with the requirements of the Indenture dated as of
August 14, 1998 between FFCA Franchise Loan Owner Trust 1998-1 and
LaSalle National Bank, as Indenture Trustee, and applicable state
securities laws; and we further agree, in the capacities stated above,
to provide to any person purchasing any of the Offered Notes from us a
notice advising such purchaser that resales of the Offered Notes are
restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Offered Notes to an Institutional Accredited Investor, we will be
required to furnish to the Indenture Trustee and the Depositor a
certification from such transferee as provided in Section 2.12 of the
Indenture to confirm that the proposed sale is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act and applicable state securities laws. We
further understand that the Offered Notes purchased by us will bear a
legend to the foregoing effect.
(3) We are acquiring the Offered Notes for investment purposes and not with
a view to, or for offer or sale in connection with, any distribution in
violation of the 1933 Act.
B-2-1
<PAGE>
We have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment
in the Offered Notes, and we and any account for which we are acting
are each able to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Offered Notes purchased by us for our own account or for one or more
accounts (each of which is an Institutional Accredited Investor) as to
each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make
our investment decision.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Indenture.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
_______________________________
[Purchaser]
By: ___________________________
Name:
Title:
B-2-2
<PAGE>
EXHIBIT B-3
[FORM OF TRANSFER AFFIDAVIT]
STATE OF _____________ )
) ss.:
COUNTY OF ___________ )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the __________ of ________________________ (the
"INVESTOR"), a [corporation duly organized] and existing under the laws of
_____________ on behalf of which he makes this affidavit.
2. The Investor either (i) is not, and is not acquiring the Offered
Notes on behalf of or with the assets of, an employee benefit plan or other
retirement plan or arrangement subject to Title I of ERISA or Section 4975 of
the Code, or (b) is, or is acquiring the Offered Notes on behalf of or with the
assets of, an employee benefit plan or other retirement plan or arrangement
subject to Title I of ERISA of Section 4975 of the Code and the conditions for
exemptive relief under at least one of the following prohibited transaction
class exemptions have been satisfied: Prohibited Transaction Class Exemption
("PTCE") 96-23 (relating to transactions effected by an "in-house asset
manager"), PTCE 95-60 (relating to transactions involving insurance company
general accounts, PTCE 91-38 (relating to transactions involving bank collective
investment funds), PTCE 90-1 (relating to transactions involving insurance
company pooled separate accounts), and PTCE 84-14 (relating to transactions
effected by a "qualified professional asset manager").
3. The Investor hereby acknowledges that under the terms of the
Indenture (the "AGREEMENT") between FFCA Franchise Loan Owner Trust 1998-1 and
LaSalle National Bank, as indenture trustee, dated as of August 14, 1998, no
transfer of the Notes shall be permitted to be made to any person unless the
Depositor and Owner Trustee have received a certificate from such transferee in
the form hereof.
[FOR TRANSFERS IN RELIANCE UPON RULE 144A]
4. The Investor is a "qualified institutional buyer" (as such term is
defined under Rule 144A under the Securities Act of 1933, as amended (the "1933
ACT"), and is acquiring the Offered Notes for its own account or as a fiduciary
or agent for others (which others also are "qualified institutional buyers").
The Investor is familiar with Rule 144A under the 1933 Act, and is aware that
the transferor of the Offered Notes and other parties intend to rely on the
statements made herein and the exemption from the registration requirements of
the 1933 Act provided by Rule 144A.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this day of _____________, .
B-3-1
<PAGE>
_______________________________
[Investor]
By: ___________________________
Name:
Title:
ATTEST:
__________________________
B-3-2
<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ___________ )
Personally appeared before me the above-named _________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ___________ of the Investor, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ______ day of _______________,
199__.
____________________________________
NOTARY PUBLIC
My commission expires the
__________ day of ______________, __
B-3-3
<PAGE>
EXHIBIT C
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
1933 ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF
THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.
THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT EITHER (I) THE TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"),
AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (II) IF THE
TRANSFEREE IS A PLAN, OR IS ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A
PLAN, THE CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT LEAST ONE OF THE FOLLOWING
PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN SATISFIED: PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO TRANSACTIONS EFFECTED BY
AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO TRANSACTIONS INVOLVING
INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING TO TRANSACTIONS
INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING TO TRANSACTIONS
INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE 84-14 (RELATING
TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET MANAGER"). EACH
TRANSFEREE OF A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR IS A PERSON ACTING
ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE DEEMED TO MAKE THE
REPRESENTATION SET FORTH UNDER (II) ABOVE.
C-1
================================================================================
INDENTURE SUPPLEMENT
between
FFCA FRANCHISE LOAN OWNER TRUST 1998-1,
as Issuer
and
LASALLE NATIONAL BANK,
as Indenture Trustee
SERIES 1998-1 INDENTURE SUPPLEMENT
Dated as of August 14, 1998
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
FRANCHISE LOAN BACKED NOTES SERIES 1998-1
================================================================================
<PAGE>
This Series 1998-1 Indenture Supplement (this "INDENTURE
SUPPLEMENT") is entered into effective August 14, 1998, between FFCA FRANCHISE
LOAN OWNER TRUST 1998-1, a Delaware business trust, as Issuer (the "Issuer"),
and LASALLE NATIONAL BANK, as Indenture Trustee (the "INDENTURE TRUSTEE") which
supplements and amends that certain Indenture (the "INDENTURE") dated as of
August 14, 1998 between the Issuer and the Indenture Trustee.
PRELIMINARY STATEMENT
The Issuer was created by a trust agreement dated as of August
14, 1998 (the "TRUST Agreement"), among FFCA Loan Warehouse Corporation, as
Depositor, Franchise Finance Corporation of America, as the Company and as
Paying Agent, and Wilmington Trust Company, as Owner Trustee. The Issuer has
duly authorized the execution and delivery of this Indenture Supplement to
provide for the issuance of its Franchise Loan Backed Notes, Series 1998-1 (the
"NOTES"). The Notes are issuable as provided in this Indenture Supplement and in
the Indenture.
Section 2.01 of the Indenture provides, among other things,
that the Issuer may enter into an Indenture Supplement for the purposes of
authorizing a Series of Notes and to specify certain terms of such Series of
Notes. This Indenture Supplement is an Indenture Supplement as described in the
Indenture. All terms used in this Indenture Supplement which are defined in the
Indenture, either directly or by reference therein, have the meanings assigned
to them therein, except to the extent that such terms are defined in this
Indenture Supplement or unless the context clearly requires.
Section 1. CERTAIN DEFINED TERMS. Section 2.01 of the
Indenture provides that the meaning of certain defined terms used in the
Indenture shall, when applied to a particular Series, be as defined in the
Indenture Supplement with respect to such Series. Accordingly, the following
definitions shall apply with respect to the Notes:
(a) SERIES DESIGNATION. The Notes shall be designated as the
Issuer's Franchise Loan Backed Notes, Series 1998-1.
(b) CLOSING DATE. The Closing Date with respect to the Notes
shall be August 14, 1998.
(c) MATURITY DATE. The Maturity Date with respect to the Notes
shall be August 31, 1999 (the "Initial Maturity Date"); provided that, if the
first Extension Date shall occur prior to the Initial Maturity Date, the
Maturity Date shall be automatically extended to October 31, 1999.
(d) MAXIMUM NOTE PRINCIPAL BALANCE. The Maximum Note Principal
Balance with respect to the Notes shall be $600,000,000.
-1-
<PAGE>
Section 2. TERMINATION OF THE REVOLVING PERIOD. The Revolving
Period shall terminate on such date as provided in Section 2.07 of the Sale and
Servicing Agreement.
Section 3. RATIFICATION OF THE INDENTURE. As supplemented and
amended by this Indenture Supplement, the Indenture is in all respects ratified
and confirmed and the Indenture as so supplemented and amended by this Indenture
Supplement shall be read, taken and construed as one and the same document.
Section 4. SUPPLEMENT TO GOVERN. Notwithstanding anything to
the contrary in this Supplement, to the extent that the terms of this Supplement
conflict with the terms of the Indenture, the terms of this Supplement shall
govern.
Section 5. ALL REQUISITE ACTION TAKEN. All things necessary to
make this Indenture Supplement a valid agreement of the Issuer and the Indenture
Trustee in accordance with its terms have been done.
Section 6. GOVERNING LAW. THIS INDENTURE SUPPLEMENT 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 SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 7. COUNTERPARTS. This Supplement 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.
-2-
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture Supplement to be duly executed by their respective
officers, thereunto duly authorized and duly attested, all as of the day and
year first above written.
FFCA FRANCHISE LOAN OWNER
TRUST 1998-1
By: Wilmington Trust Company
---------------------------------
not in its individual capacity but
solely as Owner Trustee
By: /s/ Ann E. Roberts
---------------------------------
Name: Ann E. Roberts
Title: Senior Financial Services Officer
LASALLE NATIONAL BANK,
as Indenture Trustee
By: /s/ Michael B. Evans
----------------------------------
Name: Michael B. Evans
Title: First Vice President
<PAGE>
STATE OF DELAWARE
COUNTY OF NEW CASTLE
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared Ann E. Roberts, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity, but solely as Owner Trustee on behalf of FFCA FRANCHISE LOAN OWNER
TRUST 1998-1, a Delaware business trust, and that such person executed the same
as the act of said business trust for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 10th day of
August, 1998.
/s/ Deborah L. George
----------------------------------------------
Notary Public in and for the State of New York
My commission expires:
11-21-99
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<PAGE>
STATE OF ILLINOIS
COUNTY OF COOK
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared Michael Evans, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of LASALLE NATIONAL
BANK, a national banking association, and that such person executed the same as
the act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 11th day of
August, 1998.
/s/ Carissa Jean Pogue
----------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
10-9-2000
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================================================================================
NOTE PURCHASE AGREEMENT
FFCA FRANCHISE LOAN OWNER TRUST 1998-1
FRANCHISE LOAN BACKED NOTES SERIES 1998-1
among
FFCA FRANCHISE LOAN OWNER TRUST 1998-1,
as Issuer,
FFCA ACQUISITION CORPORATION,
and
FFCA LOAN WAREHOUSE CORPORATION,
as Depositor
and
MORGAN STANLEY SECURITIZATION FUNDING INC.
as Purchaser
dated as of August 14, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms...........................................1
Section 1.02. Other Definitional Provisions...................................2
ARTICLE II
COMMITMENT, COMMITMENT FEE; CLOSING AND FUTURE SERIES OF NOTES
Section 2.01. Commitment......................................................3
Section 2.02. Commitment Fee..................................................3
Section 2.03. Closing.........................................................3
Section 2.04. Commitment to Purchase Future Series............................4
ARTICLE III
TRANSFER DATES AND COLLATERAL VALUE EXCESS DATES
Section 3.01. Transfer Dates and Collateral Value Excess Dates................4
ARTICLE IV
CONDITIONS PRECEDENT TO EFFECTIVENESS OF COMMITMENT
Section 4.01. Closing Subject to Conditions Precedent.........................6
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ISSUER, FFCA ACQUISITION CORP. AND THE
DEPOSITOR
Section 5.01. Issuer..........................................................8
Section 5.02. Securities Act.................................................10
Section 5.03. No Fee.........................................................10
Section 5.04. Information....................................................10
Section 5.05. The Purchased Note.............................................10
Section 5.06. Use of Proceeds................................................10
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Section 5.07. FFCA Acquisition Corp. and the Depositor.......................11
Section 5.08. Taxes, etc.....................................................11
Section 5.09. Financial Condition............................................11
ARTICLE VI
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PURCHASER
Section 6.01. Organization...................................................11
Section 6.02. Authority, etc.................................................11
Section 6.03. Securities Act.................................................12
Section 6.04. Investment Company Act.........................................12
Section 6.05. Conflicts With Law.............................................12
Section 6.06. Conflicts With Agreements, etc.................................12
ARTICLE VII
COVENANTS OF THE ISSUER, FFCA ACQUISITION CORP. AND THE DEPOSITOR
Section 7.01. Information from the Issuer....................................12
Section 7.02. Access to Information..........................................13
Section 7.03. Ownership and Security Interests; Further Assurances...........13
Section 7.04. Covenants......................................................13
Section 7.05. Amendments.....................................................14
Section 7.06. With Respect to the Exempt Status of the Purchased Note........14
Section 7.07. Option to Purchase Future Series...............................14
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.01. Legal Conditions to Closing....................................14
Section 8.02. Expenses.......................................................15
Section 8.03. Mutual Obligations.............................................15
Section 8.04. Restrictions on Transfer.......................................15
Section 8.05. Confidentiality................................................15
Section 8.06. Determination of LIBOR.........................................15
Section 8.07. Opinions.......................................................15
ARTICLE IX
INDEMNIFICATION
Section 9.01. Indemnification of Purchaser...................................16
Section 9.02. Procedure and Defense..........................................16
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ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments....................................................17
Section 10.02. Notices.......................................................17
Section 10.03. No Waiver; Remedies...........................................17
Section 10.04. Binding Effect; Assignability.................................17
Section 10.05. Provision of Documents and Information........................18
Section 10.06. Governing Law; Jurisdiction...................................18
Section 10.07. No Proceedings................................................18
Section 10.08. Execution in Counterparts.....................................18
Section 10.09. Reserved......................................................19
Section 10.10. Survival......................................................19
Section 10.11. Tax Characterization..........................................19
Schedule I - Purchaser Account Information...................................I-1
Schedule II - Information for Notices........................................I-1
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<PAGE>
NOTE PURCHASE AGREEMENT ("NOTE PURCHASE AGREEMENT") dated as
of August 14, 1998, among FFCA Loan Trust 1998-1 (the "ISSUER"), FFCA
Acquisition Corporation ("FFCA ACQUISITION CORP."), FFCA Loan Warehouse
Corporation (the "DEPOSITOR"), and Morgan Stanley Securitization Funding Inc.
("MSSFI," and in its capacity as Purchaser hereunder, the "PURCHASER").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. Capitalized terms used
herein without definition shall have the meanings set forth in the Indenture and
the Sale and Servicing Agreement (as defined below), as applicable.
Additionally, the following terms shall have the following meanings:
"CLOSING" shall have the meaning set forth in Section 2.03.
"CLOSING DATE" shall have the meaning set forth in Section
2.03.
"COMMITMENT" means the commitment of the Purchaser to Purchase
Additional Note Principal Balances pursuant to Section 2.01.
"COMMITMENT AMOUNT" means an amount equal to $300,000,000.
"COMMITMENT FEE" means $150,000.
"CONFIDENTIAL INFORMATION" means the Basic Documents, the
Purchased Note, all marketing information, financial information, terms sheets
and other information concerning the transactions contemplated thereby, prepared
by the Purchaser and its Affiliates.
"DEFAULT" shall have the meaning provided in Section 3.01.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934.
"GOVERNMENTAL ACTIONS" means any and all consents, approvals,
permits, orders, authorizations, waivers, exceptions, variances, exemptions or
licenses of, or registrations, declarations or filings with, any Governmental
Authority required under any Governmental Rules.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and having jurisdiction over the applicable Person.
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"GOVERNMENTAL RULES" means any and all laws, statutes, codes,
rules, regulations, ordinances, orders, writs, decrees and injunctions, of any
Governmental Authority and any and all legally binding conditions, standards,
prohibitions, requirements and judgments of any Governmental Authority.
"INCREASE" means the increase of the Note Principal Balance
through the purchase by the Purchaser of Additional Note Principal Balances sold
pursuant to the terms hereof.
"INDEMNIFIED PARTY" means the Purchaser and any of its
officers, directors, employees, agents, representatives, assignees and
Affiliates and any Person who controls the Purchaser or its Affiliates within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act.
"INDENTURE" means the Indenture dated as of August 14, 1998
between the Issuer, as Issuer and LaSalle National Bank, as Indenture Trustee.
"INVESTMENT COMPANY ACT" shall have the meaning provided in
Section 5.01(i).
"LIEN" means, with respect to any asset, (a) any mortgage,
lien, pledge, charge, security interest, hypothecation, option or encumbrance of
any kind in respect of such asset or (b) the interest of a vendor or lessor
under any conditional sale agreement, financing lease or other title retention
agreement relating to such asset.
"PURCHASED NOTE" means the Series 1998-1 Note issued by the
Issuer pursuant to the 1998-1 Indenture Supplement.
"PURCHASER" means the Purchaser and its permitted successors
and assigns.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement dated as of August 14, 1998 among FFCA Franchise Loan Owner Trust
1998-1, as Issuer, FFCA Acquisition Corp., as Loan Originator FFCA, as Servicer
and LaSalle National Bank, as Indenture Trustee, as the same may be amended,
modified or supplemented from time to time.
"THIRD PARTY CLAIM" has the meaning specified in Section 9.02
hereof.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Note Purchase Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
Section 1.01, and accounting terms partially defined in Section 1.01 to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained herein shall
control.
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<PAGE>
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Note Purchase Agreement shall refer to this
Note Purchase Agreement as a whole and not to any particular provision of this
Note Purchase Agreement; and Section, subsection, Schedule and Exhibit
references contained in this Note Purchase Agreement are references to Sections,
subsections, and Exhibits in or to this Note Purchase Agreement unless otherwise
specified.
ARTICLE II
COMMITMENT, COMMITMENT FEE; CLOSING AND FUTURE SERIES OF NOTES
SECTION 2.01. COMMITMENT.
(a) On each Transfer Date and Collateral Value Excess Date
during the Revolving Period, to the extent that the Outstanding Note Principal
Balance (after giving effect to the proposed Increase) is less than the
Committed Amount, and subject to the terms and conditions hereof and in
accordance with the other Basic Documents, the Purchaser agrees to fund such
Increases in the Purchased Note subject to the terms and conditions and in
reliance upon the covenants, representations and warranties set forth herein and
in the other Basic Documents
(b) On each Transfer Date and Collateral Value Excess Date
during the Revolving Period, to the extent that the Note Principal Balance is
equal to or greater than the Committed Amount, and subject to the terms and
conditions hereof and the other Basic Documents, the Purchaser may, in its sole
discretion, upon the request of the Issuer, fund Increases in the Purchased Note
subject to the terms and conditions and in reliance upon the representations,
warranties and covenants set forth herein and in the other Basic Documents;
PROVIDED, that in no event shall the Note Principal Balance (after giving effect
to such Increase) exceed the Maximum Note Principal Balance.
(c) The Commitment Amount may be irrevocably reduced in whole
or in part by the Issuer upon 5 Business Days prior written notice to the
Purchaser, with a copy to the Indenture Trustee.
SECTION 2.02. COMMITMENT FEE. On or prior to the initial
Transfer Date, FFCA Acquisition Corp. shall pay or cause to be paid to the
Purchaser the Commitment Fee. The Commitment Fee will be payable by wire
transfer in immediately available funds, to the account of the Purchaser in
accordance with the instructions set forth on Schedule I hereto.
SECTION 2.03. CLOSING.
The closing (the "CLOSING") of the execution of the Basic
Documents and Purchased Note shall take place at 10:00 a.m. at the offices of
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, on
August 14, 1998, or if the conditions to closing set forth in Article IV of this
Note Purchase Agreement shall not have been satisfied or waived by such date, as
soon as practicable after such conditions shall have been satisfied or
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<PAGE>
waived, or at such other time, date and place as the parties shall agree upon
(the date of the Closing being referred to herein as the "CLOSING DATE").
SECTION 2.04. COMMITMENT TO PURCHASE FUTURE SERIES.
For a period ending 365 days after the date hereof, the
Purchaser covenants and agrees to, at the request of the Issuer, purchase from
the Issuer the Notes of each Series hereafter issued on terms and conditions
substantially similar to those set forth herein with respect to the Purchased
Notes.
ARTICLE III
TRANSFER DATES AND COLLATERAL VALUE EXCESS DATES
SECTION 3.01. TRANSFER DATES AND COLLATERAL VALUE EXCESS
DATES.
(a) Subject to the conditions and terms set forth herein and
in Section 2.06(a) of the Sale and Servicing Agreement with respect to each
Transfer Date and Section 2.06(b) of the Sale and Servicing Agreement with
respect to each Collateral Value Excess Date, the Issuer may request, and the
Purchaser agrees to purchase Additional Note Principal Balances from the Issuer
from time to time in accordance with, and upon the satisfaction, as of the
applicable Transfer Date or Collateral Value Excess Date, as the case may be, of
each of the following additional conditions:
(i) With respect to each Transfer Date, each condition set
forth in Section 2.06(a) of the Sale and Servicing Agreement shall have been
satisfied and with respect to each Collateral Value Excess Date, each condition
set forth in Section 2.06(b) of the Sale and Servicing Agreement shall have been
satisfied;
(ii) Each of the representations and warranties of the Issuer,
FFCA Acquisition Corp. and the Depositor made in the Basic Documents shall be
true and correct as of such date (except to the extent they expressly relate to
an earlier or later time);
(iii) The Issuer, FFCA Acquisition Corp. and the Depositor
shall be in compliance with all of their respective covenants contained in the
Basic Documents and the Purchased Note;
(iv) No Event of Default under the Sale and Servicing
Agreement or the Indenture and no other event that would constitute an "event of
default" (however defined) under any other Basic Document or the Purchased Note
or that with the giving of notice or passage of time or both could become an
"event of default" (however defined) under any other Basic Document or the
Purchased Note (each, a "DEFAULT") shall have occurred or shall be occurring;
and
(v) With respect to each Transfer Date, the Purchaser shall
have received evidence reasonably satisfactory to it of the completion of all
recordings, registrations, and filings as may be necessary or, in the reasonable
opinion of the Purchaser, desirable to perfect or
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<PAGE>
evidence the assignments required to be effected on such Transfer Date
including, without limitation, the assignment of the Loans and the proceeds
thereof required to be assigned pursuant to the related LPA Assignment, S&SA
Assignment and the Indenture.
(vi) With respect to the first Transfer Date only, counsel to
the Servicer shall have delivered to the Purchaser favorable opinions, dated as
of such Transfer Date to the effect that (i) the Indenture Trustee has a first
priority perfected security interest in all cash held in the Distribution and
Transfer Obligation Accounts and (ii) the Indenture Trustee has a first priority
perfected security interest in all Permitted Investments held in the Transfer
Obligation Account, in each case satisfactory in form and substance to the
Purchaser and its counsel.
(vii) With respect to the first Transfer Date only, for all
Loans required or elected to be insured by the Environmental Policy and sold to
the Trust on such date, a copy of the executed Environmental Policy and
endorsements thereto, in form and substance satisfactory to the Initial
Noteholder and its counsel.
(b) The Purchaser, shall determine in its reasonable
discretion whether each of the above conditions have been met and its
determination shall be binding on the parties hereto.
(c) (i) The price paid by the Purchaser on each Transfer Date
for the related Additional Note Principal Balance shall be equal to 100% of such
Additional Note Principal Balance, and shall be remitted not later than 3:00
p.m. New York City time on the Transfer Date by wire transfer of immediately
available funds to the Advance Account.
(ii) The price paid by the Purchaser on each
Collateral Value Excess Date for the related Additional Note
Principal Balance shall be equal to 100% of the amount of Additional Note
Principal Balance requested by the Issuer, which amount shall not exceed the
Collateral Value Excess as of such Collateral Value Excess Date, and shall be
remitted not later than 3:00 p.m. New York City time on the Collateral Value
Excess Date by wire transfer of immediately available funds to the Advance
Account.
(d) The Purchaser shall record on the schedule attached to the
Purchased Note, the date and amount of any Additional Note Principal Balance
purchased by it; PROVIDED, that failure to make such recordation on such
schedule or any error in such schedule shall not adversely affect the
Purchaser's rights with respect to its Note Principal Balance and its right to
receive interest payments in respect of the Note Principal Balance actually
held. Absent manifest error, the Note Principal Balance of the Purchased Note as
set forth in the Purchaser's records shall be binding upon the parties hereto,
notwithstanding any notation or record made or kept by any other party hereto.
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<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT TO
EFFECTIVENESS OF COMMITMENT
SECTION 4.01 CLOSING SUBJECT TO CONDITIONS PRECEDENT. The
effectiveness of the Commitment hereunder is subject to the satisfaction at the
time of the Closing of the following conditions (any or all of which may be
waived by the Purchaser in its sole discretion):
(a) PERFORMANCE BY THE ISSUER, FFCA ACQUISITION CORP. AND THE
DEPOSITOR. All the terms, covenants, agreements and conditions of the Basic
Documents to be complied with and performed by the Issuer, FFCA Acquisition
Corp. and the Depositor on or before the Closing Date shall have been complied
with and performed in all material respects.
(b) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Issuer, FFCA Acquisition Corp. and the
Depositor made in the Basic Documents shall be true and correct in all material
respects as of the Closing Date (except to the extent they expressly relate to
an earlier or later time).
(c) OFFICER'S CERTIFICATE. The Purchaser shall have received
in form and substance reasonably satisfactory to the Purchaser an Officer's
Certificate from FFCA Acquisition Corp. and the Depositor and a certificate of
an Authorized Officer of the Issuer, dated the Closing Date, certifying to the
satisfaction of the conditions set forth in the preceding paragraphs (a) and
(b).
(d) OPINIONS OF COUNSEL TO THE ISSUER, FFCA ACQUISITION CORP.,
SERVICER AND DEPOSITOR. Counsel to the Issuer, FFCA Acquisition Corp., Servicer
and Depositor shall have delivered to the Purchaser favorable opinions, dated as
of the Closing Date and reasonably satisfactory in form and substance to the
Purchaser and its counsel.
(e) OPINIONS OF COUNSEL TO THE INDENTURE TRUSTEE. Counsel to
the Indenture Trustee shall have delivered to the Purchaser a favorable opinion,
dated as of the Closing Date and reasonably satisfactory in form and substance
to the Purchaser and its counsel.
(f) OPINIONS OF COUNSEL TO THE OWNER TRUSTEE. Delaware counsel
to the Owner Trustee of the Issuer shall have delivered to the Purchaser
favorable opinions regarding the formation, existence and standing of the Issuer
and of the Issuer's execution, authorization and delivery of each of the Basic
Documents to which it is a party and such other matters as the Purchaser may
reasonably request, dated as of the Closing Date and reasonably satisfactory in
form and substance to the Purchaser and its counsel.
(g) FILINGS AND RECORDATIONS. The Purchaser shall have
received evidence reasonably satisfactory to it of (i) the completion of all
recordings, registrations, and filings as may be necessary or, in the reasonable
opinion of the Purchaser, desirable to perfect or evidence the assignment by
FFCA Acquisition Corp. to the Depositor of FFCA Acquisition Corp.'s ownership
interest in the Trust Estate including, without limitation, the Loans and the
proceeds thereof, (ii) the completion of all recordings, registrations and
filings as may be necessary or, in
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<PAGE>
the reasonable opinion of the Purchaser, desirable to perfect or evidence the
assignment by the Depositor to the Issuer of the Depositor's ownership interest
in the Trust Estate including, without limitation, the Loans and the proceeds
thereof and (iii) the completion of all recordings, registrations, and filings
as may be necessary or, in the reasonable opinion of the Purchaser, desirable to
perfect or evidence the grant of a first priority perfected security interest in
the Issuer's ownership interest in the Trust Estate including, without
limitation, the Loans, in favor of the Indenture Trustee, subject to no Liens
prior to the Lien of the Indenture.
(h) DOCUMENTS. The Purchaser shall have received a duly
executed counterpart of each of the Basic Documents, the Purchased Note and each
and every document or certification delivered by any party in connection with
any of the Basic Documents or the Purchased Note, and each such document shall
be in full force and effect.
(i) ACTIONS OR PROCEEDINGS. No action, suit, proceeding or
investigation by or before any Governmental Authority shall have been instituted
to restrain or prohibit the consummation of, or to invalidate, any of the
transactions contemplated by the Basic Documents, the Purchased Note and the
documents related thereto in any material respect.
(j) APPROVALS AND CONSENTS. All Governmental Actions of all
Governmental Authorities required with respect to the transactions contemplated
by the Basic Documents, the Purchased Note and the documents related thereto
shall have been obtained or made.
(k) ACCOUNTS. The Purchaser shall have received evidence
reasonably satisfactory to it that each Trust Account has each been established
in accordance with the terms of the Sale and Servicing Agreement.
(l) FEES AND EXPENSES. The Commitment Fee and such other fees
and expenses payable by the Issuer, FFCA Acquisition Corp., and the Depositor
pursuant to Section 8.02(b) shall have been paid.
(m) OTHER DOCUMENTS. The Issuer, FFCA Acquisition Corp. and
the Depositor shall have furnished to the Purchaser such other opinions,
information, certificates and documents as the Purchaser may reasonably request.
(n) PROCEEDINGS IN CONTEMPLATION OF SALE OF PURCHASED NOTE.
All actions and proceedings undertaken by the Issuer, FFCA Acquisition Corp. and
the Depositor in connection with the issuance and sale of the Purchased Note as
herein contemplated shall be reasonably satisfactory in all respects to the
Purchaser and its counsel.
If any condition specified in this Section 4.01 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Purchaser by notice to FFCA Acquisition Corp. at any time at
or prior to the Closing Date, and the Purchaser shall incur no liability as a
result of such termination.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ISSUER, FFCA ACQUISITION CORP.
AND THE DEPOSITOR
The Issuer, FFCA Acquisition Corp. and the Depositor hereby
jointly and severally make the following representations and warranties to the
Purchaser, as of the Closing Date, and as of each Transfer Date and Collateral
Value Excess Date, and the Purchaser shall be deemed to have relied on such
representations and warranties in making (or committing to make) purchases of
Additional Note Principal Balances on each Transfer Date and Collateral Value
Excess Date:
SECTION 5.01. ISSUER.
(a) The Issuer has been duly organized and is validly existing
and in good standing as a business trust under the laws of the State of
Delaware, with requisite trust power and authority to own its properties and to
transact the business in which it is now engaged, and is duly qualified to do
business and is in good standing (or is exempt from such requirements) in each
State of the United States where the nature of its business requires it to be so
qualified and the failure to be so qualified and in good standing would have a
material adverse effect on the Issuer or any adverse effect on the interests of
the Purchaser.
(b) The issuance, sale, assignment and conveyance of the
Purchased Note, the performance of the Issuer's obligations under each Basic
Document to which it is a party and the consummation of the transactions therein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien (other than any Lien created by the Basic Documents),
charge or encumbrance upon any of the property or assets of the Issuer or any of
its Affiliates pursuant to the terms of, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it or any of its
Affiliates is bound or to which any of its property or assets is subject, nor
will such action result in any violation of the provisions of its organizational
documents or any Governmental Rule applicable to the Issuer, in each case which
could be expected to have a material adverse effect on the transactions
contemplated therein.
(c) No Governmental Action which has not been obtained is
required by or with respect to the Issuer in connection with the execution and
delivery of the Purchased Note. No Governmental Action which has not been
obtained is required by or with respect to the Issuer in connection with the
execution and delivery of any of the Basic Documents to which the Issuer is a
party or the consummation by the Issuer of the transactions contemplated
thereby.
(d) The Issuer possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
it, and has not received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding,
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would materially and adversely affect its condition, financial or otherwise, or
its earnings, business affairs or business prospects.
(e) Each of the Basic Documents to which the Issuer is a party
has been duly authorized, executed and delivered by the Issuer and is a valid
and legally binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, subject to enforcement to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general principles of equity.
(f) The execution, delivery and performance by the Issuer of
each of its obligations under each of the Basic Documents to which it is a party
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any agreement or instrument to which the Issuer
is a party or by which the Issuer is bound or to which any of the its properties
are subject or of any statute, order or regulation applicable to the Issuer of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over the Issuer or any of its properties, in each case which could
be expected to have a material adverse effect on any of the transactions
contemplated therein.
(g) The Issuer is not in violation of its organizational
documents or in default under any agreement, indenture or instrument the effect
of which violation or default would be material to the Purchaser. The Issuer is
not a party to, bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Issuer that materially and adversely affects,
or may in the future materially and adversely affect (i) the ability of the
Issuer to perform its obligations under any of the Basic Documents to which it
is a party or (ii) the business, operations, financial condition, properties,
assets or prospects of the Issuer.
(h) There are no actions or proceedings against, or
investigations of, the Issuer pending, or, to the knowledge of the Issuer
threatened, before any Governmental Authority, court, arbitrator, administrative
agency or other tribunal (i) asserting the invalidity of any of the Basic
Documents, or (ii) seeking to prevent the issuance of the Purchased Note or the
consummation of any of the transactions contemplated by the Basic Documents or
the Purchased Note, or (iii) that, if adversely determined, could materially and
adversely affect the business, operations, financial condition, properties,
assets or prospects of the Issuer or the validity or enforceability of, or the
performance by the Issuer of its respective obligations under, any of the Basic
Documents to which it is a party or (iv) seeking to affect adversely the income
tax attributes of the Purchased Note.
(i) The Issuer is not, and neither the issuance and sale of
the Purchased Note nor the activities of the Issuer pursuant to the Basic
Documents, shall render the Issuer an "investment company" or under the
"control" of an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT").
(j) It is not necessary to qualify the Indenture under the
Trust Indenture Act of 1939, as amended.
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(k) The Issuer is solvent and has adequate capital for its
respective business and undertakings.
(l) The chief executive offices of the Issuer are located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration, telecopy number: (302) 651-8882,
telephone number (302) 651-1000.
(m) There are no contracts, agreements or understandings
between the Issuer and any Person granting such Person the right to require the
filing at any time of a registration statement under the Act with respect to the
Purchased Note.
SECTION 5.02. SECURITIES ACT. Assuming the accuracy of the
representations and warranties of and compliance with the covenants of the
Purchaser, contained herein, the sale of the Purchased Note pursuant to this
Agreement and the sale of Additional Note Principal Balances are each exempt
from the registration and prospectus delivery requirements of the Act. In the
case of each offer or sale of the Purchased Note, no form of general
solicitation or general advertising was used by the Issuer, any Affiliates of
the Issuer or any person acting on its or their behalf, including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. Neither the Issuer, any Affiliates
of the Issuer nor any Person acting on its or their behalf has offered or sold,
nor will the Issuer or any Person acting on its behalf offer or sell directly or
indirectly, the Purchased Note or any other security in any manner that,
assuming the accuracy of the representations and warranties and the performance
of the covenants given by each Purchaser and compliance with the applicable
provisions of the Indenture with respect to each transfer of the Purchased Note,
would render the issuance and sale of any of the Purchased Note as contemplated
hereby a violation of Section 5 of the Act or the registration or qualification
requirements of any state securities laws, nor has any such Person authorized,
nor will it authorize, any Person to act in such manner.
SECTION 5.03. NO FEE. Neither the Issuer, FFCA Acquisition
Corp., the Depositor nor any of their Affiliates has paid or agreed to pay to
any Person any compensation for soliciting another to purchase the Purchased
Note.
SECTION 5.04. INFORMATION. The information provided pursuant
to Section 7.06(c) hereof will not, at the date thereof, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.05. THE PURCHASED NOTE. The Purchased Note has been
duly and validly authorized, and, when executed and authenticated in accordance
with the terms of the Indenture, and delivered to and paid for in accordance
with this Note Purchase Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Indenture.
SECTION 5.06. USE OF PROCEEDS. No proceeds of a purchase
hereunder will be used (i) for a purpose that violates or would be inconsistent
with Regulations G, T, U or X
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promulgated by the Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire any security in any transaction in violation of Section
13 or 14 of the Securities Exchange Act of 1934, as amended.
SECTION 5.07. FFCA ACQUISITION CORP. AND THE DEPOSITOR. FFCA
Acquisition Corp. and the Depositor hereby make to the Purchaser each of their
respective representations, warranties and covenants set forth in Sections 3.01,
3.02 and 3.03 of the Sale and Servicing Agreement as of the Closing Date, as of
each Transfer Date and as of each Collateral Value Excess Date (except to the
extent that any such representation, warranty or covenant is expressly made as
of another date).
SECTION 5.08. TAXES, ETC. Any taxes, fees and other charges of
Governmental Authorities applicable to the Issuer, FFCA Acquisition Corp. and
the Depositor, except for franchise or income taxes, in connection with the
execution, delivery and performance by the Issuer, FFCA Acquisition Corp. and
the Depositor of each Basic Document to which they are parties, the issuance of
the Purchased Note or otherwise applicable to the Issuer, FFCA Acquisition Corp.
or the Depositor in connection with the Trust Estate have been paid or will be
paid by the Issuer, FFCA Acquisition Corp. or the Depositor, as applicable, at
or prior to the Closing Date, Transfer Date or Collateral Value Excess Date, as
applicable, to the extent then due.
SECTION 5.09. FINANCIAL CONDITION. On the date hereof, on each
Transfer Date and on each Collateral Value Excess Date, neither the Issuer, FFCA
Acquisition Corp. nor the Depositor is insolvent or the subject of any voluntary
or involuntary bankruptcy proceeding.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE PURCHASER
The Purchaser hereby makes the following representations and
warranties, as to itself, to the Issuer, FFCA Acquisition Corp. and the
Depositor on which the same may rely in entering into this Note Purchase
Agreement.
SECTION 6.01. ORGANIZATION. The Purchaser has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization with power and authority to own its properties
and to transact the business in which it is now engaged.
SECTION 6.02. AUTHORITY, ETC.. The Purchaser has all requisite
power and authority to enter into and perform its obligations under this Note
Purchase Agreement and to consummate the transactions herein contemplated. The
execution and delivery by the Purchaser of this Note Purchase Agreement and the
consummation by the Purchaser of the transactions contemplated hereby have been
duly and validly authorized by all necessary organizational action on the part
of the Purchaser. This Note Purchase Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes a legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject as to
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enforcement to bankruptcy, reorganization, insolvency, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity. Neither the execution and delivery by the
Purchaser of this Note Purchase Agreement nor the consummation by the Purchaser
of any of the transactions contemplated hereby, nor the fulfillment by the
Purchaser of the terms hereof, will conflict with, or violate, result in a
breach of or constitute a default under any term or provision of the Purchaser's
organizational documents or any Governmental Rule applicable to the Purchaser.
SECTION 6.03. SECURITIES ACT. The Purchaser will acquire the
Purchased Note pursuant to this Note Purchase Agreement without a view to any
public distribution thereof, and will not offer to sell or otherwise dispose of
the Purchased Note (or any interest therein) in violation of any of the
registration requirements of the Act or any applicable state or other securities
laws, or by means of any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act). The Purchaser acknowledges
that it has no right to require the Issuer to register the Purchased Note under
the Act or any other securities law.
SECTION 6.04. INVESTMENT COMPANY ACT. The Purchaser is not
required to register as an "investment company" nor is the Purchaser controlled
by an "investment company" within the meaning of the Investment Company Act.
SECTION 6.05. CONFLICTS WITH LAW . The execution, delivery and
performance by the Purchaser of its obligations under this Note Purchase
Agreement will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any agreement or instrument to
which the Purchaser is a party or by which the Purchaser is bound or of any
statute, order or regulation applicable to the Purchaser of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over the Purchaser, in each case which could be expected to have a material
adverse effect on the transactions contemplated therein.
SECTION 6.06. CONFLICTS WITH AGREEMENTS, ETC. . The Purchaser
is not in violation of its organizational documents or in default under any
agreement, indenture or instrument the effect of which violation or default
would be materially adverse to the Purchaser in the performance of its
obligations or duties under any of the Basic Documents to which it is a party.
The Purchaser is not a party to, bound by or in breach or violation of any
indenture or other agreement or instrument, or subject to or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Purchaser that
materially and adversely affects, or may in the future materially and adversely
affect the ability of the Purchaser to perform its obligations under this Note
Purchase Agreement.
ARTICLE VII
COVENANTS OF THE ISSUER, FFCA ACQUISITION CORP. AND THE DEPOSITOR
SECTION 7.01. INFORMATION FROM THE ISSUER. So long as the
Purchased Note remains outstanding, the Issuer, FFCA Acquisition Corp. and the
Depositor shall each furnish to the Purchaser:
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(a) such information (including financial information),
documents, records or reports with respect to the Trust Estate, the Loans, the
Issuer, FFCA Acquisition Corp. or the Depositor as the Purchaser may from time
to time reasonably request;
(b) as soon as possible and in any event within five Business
Days after the occurrence thereof, notice of each Event of Default under the
Sale and Servicing Agreement and the Indenture, and each Default; and
(c) promptly and in any event within 30 days after the
occurrence thereof, written notice of a change in address of the chief executive
office of the Issuer, FFCA Acquisition Corp. or the Depositor.
SECTION 7.02. ACCESS TO INFORMATION. So long as the Purchased
Note remains outstanding, each of the Issuer, FFCA Acquisition Corp. and the
Depositor shall, at any time and from time to time during regular business
hours, or at such other times upon reasonable notice to the Issuer, FFCA
Acquisition Corp. or the Depositor, as applicable, permit the Purchaser, or its
agents or representatives to:
(a) examine all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Issuer,
FFCA Acquisition Corp. or the Depositor relating to the Loans as may be
requested, and
(b) visit the offices and property of the Issuer, FFCA
Acquisition Corp. and the Depositor for the purpose of examining such materials
described in clause (a) above.
Except as provided in Section 10.05, any information obtained
by the Purchaser pursuant to this Section 7.02 shall be held in confidence
unless and to the extent such information (i) has become available to the
public, (ii) is required or requested by any Governmental Authority or in any
court proceeding or (iii) is required by any Governmental Rule.
SECTION 7.03. OWNERSHIP AND SECURITY INTERESTS; FURTHER
ASSURANCES. FFCA Acquisition Corp. and the Depositor will take all action
necessary to maintain the Issuer's ownership interest in the Loans and the other
items sold pursuant to Article II of the Sale and Servicing Agreement. The
Issuer will take all action necessary to maintain the Indenture Trustee's
security interest in the Loans and the other items pledged to the Indenture
Trustee pursuant to the Indenture.
Each of the Issuer, FFCA Acquisition Corp. and the Depositor
agree to take any and all acts and to execute any and all further instruments
reasonably necessary or requested by the Purchaser to more fully effect the
purposes of this Note Purchase Agreement.
SECTION 7.04. COVENANTS. The Issuer, FFCA Acquisition Corp.
and the Depositor shall each duly observe and perform each of their respective
covenants set forth in each of the Basic Documents to which they are parties.
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SECTION 7.05. AMENDMENTS. Neither the Issuer, FFCA Acquisition
Corp. nor the Depositor shall make, or permit any Person to make, any amendment,
modification or change to, or provide any waiver under any Basic Document to
which the Issuer, FFCA Acquisition Corp. or the Depositor, as applicable, is a
party without the prior written consent of (x) the Purchaser to the extent that
such amendment, modification, change or waiver would materially and adversely
affect the interests, rights or powers of the Purchaser under any of the Basic
Documents.
SECTION 7.06. WITH RESPECT TO THE EXEMPT STATUS OF THE
PURCHASED NOTE.
(a) Neither the Issuer, FFCA Acquisition Corp. nor the
Depositor, nor any of their respective Affiliates, nor any Person acting on
their behalf will, directly or indirectly, make offers or sales of any security,
or solicit offers to buy any security, under circumstances that would require
the registration of the Purchased Note under the Securities Act.
(b) Neither the Issuer, FFCA Acquisition Corp. nor the
Depositor, nor any of their Affiliates, nor any Person acting on their behalf
will engage in any form of general solicitation or general advertising (within
the meaning of Regulation D promulgated under the Securities Act) in connection
with any offer or sale of the Purchased Note.
(c) On or prior to any Transfer Date or Collateral Value
Excess Date, the Issuer, FFCA Acquisition Corp. and the Depositor will furnish
or cause to be furnished to the Purchaser and any subsequent purchaser therefrom
of Additional Note Principal Balance, if the Purchaser or such subsequent
purchaser so request, a letter from each Person furnishing a certificate or
opinion on the Closing Date as described in Section 4.01 hereof or on or before
any such Transfer Date or Collateral Value Excess Date in which such Person
shall state that such subsequent purchaser may rely upon such original
certificate or opinion as though delivered and addressed to such subsequent
purchaser and made on and as of the Closing Date or such Transfer Date or
Collateral Value Excess Date, as the case may be, except for such exceptions set
forth in such letter as are attributable to events occurring after the Closing
Date or such Transfer Date or Collateral Value Excess Date.
SECTION 7.07. OPTION TO PURCHASE FUTURE SERIES. In
consideration of the Commitment hereunder and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
Issuer, FFCA Acquisition Corp. and the Depositor each covenant and agree to, at
the request of the Purchaser, sell to the Purchaser the Notes of each Series
hereafter issued on terms and conditions substantially similar to those set
forth herein.
ARTICLE VIII
ADDITIONAL COVENANTS
SECTION 8.01. LEGAL CONDITIONS TO CLOSING. The parties hereto
will take all reasonable action necessary to obtain (and will cooperate with one
another in obtaining) any consent, authorization, permit, license, franchise,
order or approval of, or any exemption by, any
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Governmental Authority or any other Person, required to be obtained or made by
it in connection with any of the transactions contemplated by this Note Purchase
Agreement.
SECTION 8.02. EXPENSES.
(a) The Issuer, FFCA Acquisition Corp. and the Depositor
jointly and severally covenant that, whether or not the Closing takes place,
except as otherwise expressly provided herein, all costs and expenses incurred
in connection with this Note Purchase Agreement and the transactions
contemplated hereby shall be paid by the Issuer, FFCA Acquisition Corp. or the
Depositor.
(b) The Issuer, FFCA Acquisition Corp. and the Depositor
jointly and severally covenant to pay as and when billed by the Purchaser all of
the out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and in
the other Basic Documents including, without limitation, (i) all fees,
disbursements and expenses of counsel to the Purchaser in an amount not to
exceed $50,000, (ii) all fees and expenses of the Indenture Trustee and the
Owner Trustee and their counsel and (iii) all fees and expenses of the Custodian
and its counsel.
SECTION 8.03. MUTUAL OBLIGATIONS. On and after the Closing,
each party hereto will do, execute and perform all such other acts, deeds and
documents as the other party may from time to time reasonably require in order
to carry out the intent of this Note Purchase Agreement.
SECTION 8.04. RESTRICTIONS ON TRANSFER. The Purchaser agrees
that it will comply with the restrictions on transfer of the Purchased Note set
forth in the Indenture and resell the Purchased Note only in compliance with
such restrictions.
SECTION 8.05. CONFIDENTIALITY. Each of the Issuer, FFCA
Acquisition Corp. and the Depositor shall hold in confidence all Confidential
Information and shall not, at any time hereafter, use disclose or divulge any
such information, knowledge or data to any Person except:
(a) Information which at the time of disclosure is a part of the
public knowledge or literature and readily accessible;
(b) Information required to be disclosed by a Governmental
Authority; or
(c) Disclosure to a Person that has entered into a
confidentiality agreement, acceptable to the Purchaser.
SECTION 8.06. DETERMINATION OF LIBOR The Purchaser hereby
covenants to determine LIBOR in accordance with the definition thereof in the
Basic Documents.
SECTION 8.07. OPINIONS. When obtained by FFCA, FFCA shall cause
its counsel to deliver to the Purchaser, favorable opinions, dated as of the
date of such delivery to the effect that (i) the Issuer will not be treated as
an association (or publicly traded partnership) taxable as a corporation or as a
taxable mortgage pool, for federal income tax purposes, (ii) the Notes shall be
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treated as the issuance of debt instruments by FFCA or an Affiliate thereof for
federal income tax purposes, and (iii) the issuance of the Notes shall not cause
FFCA to fail to qualify as a real estate investment trust, as described in
Section 856 of the Code, in each case satisfactory in form and substance to the
Purchaser and its counsel.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. INDEMNIFICATION OF PURCHASER. Each of the
Issuer, FFCA Acquisition Corp. and the Depositor hereby agree to, jointly and
severally, indemnify and hold harmless each Indemnified Party against any and
all losses, claims, damages, liabilities, expenses or judgments (including
accounting fees and legal fees and other expenses incurred in connection with
this Note Purchase Agreement or any other Basic Document and any action, suit or
proceeding or any claim asserted) (collectively, "LOSSES"), as incurred (payable
promptly upon written request), for or on account of or arising from or in
connection with any breach of any representation, warranty or covenant of the
Issuer, FFCA Acquisition Corp. or the Depositor, as the case may be, in this
Note Purchase Agreement or any other Basic Document; provided, however, that
FFCA Acquisition Corp. shall not be so required to indemnify any such Person or
to otherwise be liable to any such Person hereunder for any losses in respect of
the performance of the Loans, the creditworthiness of the Borrowers under the
Loans, changes in the market value of the Loans or other, similar investment
risks associated with the Loans arising from a breach of any representation or
warranty set forth in Section 3.02 or 3.04 of the Sale and Servicing Agreement,
a remedy for the breach of which is provided in the Sale and Servicing
Agreement. The indemnities contained in this Section 9.01 will be in addition to
any liability which the Issuer, FFCA Acquisition Corp. or the Depositor may
otherwise have pursuant to this Note Purchase Agreement and any other Basic
Document.
SECTION 9.02. PROCEDURE AND DEFENSE. In case any action or
proceeding (including any governmental or regulatory investigation or
proceeding) shall be instituted involving any Indemnified Party in respect of
which indemnity may be sought pursuant to Section 9.01, such Indemnified Party
shall promptly notify the Issuer, FFCA Acquisition Corp. and the Depositor in
writing and, upon request of the Indemnified Party, the Issuer, FFCA Acquisition
Corp. and the Depositor shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party to
represent such Indemnified Party and any others the indemnifying party may
designate and shall pay the fees and disbursements of such counsel related to
such proceeding; provided that no failure to give such notice or deliver such
documents shall effect the rights to indemnity hereunder. In any such action or
proceeding, any Indemnified Party shall have the right to retain its own counsel
subject to the reasonable approval of the Issuer, FFCA Acquisition Corp. and the
Depositor. Expenses of counsel to any Indemnified Party shall be reimbursed by
the Issuer, FFCA Acquisition Corp. and the Depositor as they are incurred. The
Issuer, FFCA Acquisition Corp. and the Depositor shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such
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settlement or judgment. Neither the Issuer, FFCA Acquisition Corp. nor the
Depositor will, without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. AMENDMENTS. No amendment or waiver of any
provision of this Note Purchase Agreement shall in any event be effective unless
the same shall be in writing and signed by all of the parties hereto, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 10.02. NOTICES. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecopies) and mailed, telecopied (with a copy delivered by
overnight courier) or delivered, as to each party hereto, as set forth in
Schedule II hereto or as otherwise designated by such party in a written notice
to the other parties hereto. All such notices and communications shall, be
deemed effective upon receipt thereof, and, in the case of telecopies, when
receipt is confirmed by telephone.
SECTION 10.03. NO WAIVER; REMEDIES. No failure on the part of
any party hereto to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 10.04. BINDING EFFECT; ASSIGNABILITY.
(a) This Note Purchase Agreement shall be binding upon and
inure to the benefit of the Issuer, FFCA Acquisition Corp., the Depositor and
the Purchaser and their respective permitted successors and assigns (including
any subsequent holders of the Purchased Note); PROVIDED, HOWEVER, neither the
Issuer, FFCA Acquisition Corp. nor the Depositor shall have any right to assign
their respective rights hereunder or interest herein (by operation of law or
otherwise) without the prior written consent of the Purchaser.
(b) The Purchaser may, in the ordinary course of its business
and in accordance with applicable law including applicable securities laws, at
any time sell to one or more Persons (each, a "PARTICIPANT"), participating
interests in all or a portion of its rights and obligations under this Note
Purchase Agreement. Notwithstanding any such sale by the Purchaser of
participating interests to a Participant, the Purchaser's rights and obligations
under this Note Purchase Agreement shall remain unchanged, the Purchaser shall
remain solely responsible for the performance thereof, and the Issuer, FFCA
Acquisition Corp. and the
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Depositor shall continue to deal solely and directly with the Purchaser in
connection with the Purchaser's rights and obligations under this Note Purchase
Agreement. Each of the Issuer and FFCA Acquisition Corp. also agrees that each
Participant shall be entitled to the benefits of Article IX hereof; PROVIDED,
however, that all amounts payable by the Issuer, FFCA Acquisition Corp. or the
Depositor to the Participant shall be limited to the amounts which would have
been payable directly to the Purchaser with respect to such participating
interest had the Purchaser, rather than the participant, held such participating
interest.
(c) This Note Purchase Agreement shall create and constitute
the continuing obligation of the parties hereto in accordance with its terms,
and shall remain in full force and effect until such time as all amounts payable
with respect to the Purchased Note shall have been paid in full.
SECTION 10.05. PROVISION OF DOCUMENTS AND INFORMATION. Each of
the Issuer, FFCA Acquisition Corp. and the Depositor acknowledges and agrees
that the Purchaser is permitted to provide to any subsequent Purchaser,
permitted assignees and Participants, opinions, certificates, documents and
other information relating to the Issuer, FFCA Acquisition Corp., the Depositor
and the Loans delivered to the Purchaser pursuant to this Note Purchase
Agreement.
SECTION 10.06. GOVERNING LAW; JURISDICTION. THIS NOTE PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS. EACH
OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT HEREBY AGREES TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF
THE PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 10.07. NO PROCEEDINGS.
Until the date that is one year and one day after the last day
on which any amount is outstanding under this Note Purchase Agreement, FFCA
Acquisition Corp., the Depositor and the Purchaser hereby covenant and agree
that they will not institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States federal
or state bankruptcy or similar law.
SECTION 10.08. EXECUTION IN COUNTERPARTS. This Note Purchase
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement.
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SECTION 10.09. RESERVED.
SECTION 10.10. SURVIVAL. All representations, warranties,
covenants, guaranties and indemnifications contained in this Note Purchase
Agreement and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the sale, transfer or repayment
of the Purchased Note.
SECTION 10.11. TAX CHARACTERIZATION. Each party to this Note
Purchase Agreement (a) acknowledges and agrees that it is the intent of the
parties to this Note Purchase Agreement that for all purposes, including
federal, state and local income, single business and franchise tax purposes, the
Purchased Note will be treated as evidence of indebtedness secured by the Loans
and proceeds thereof and the trust created under the Indenture will not be
characterized as an association (or publicly traded partnership) taxable as a
corporation, (b) agrees to treat the Purchased Note for federal, state and local
income, single business and franchise tax purposes as indebtedness and (c)
agrees that the provisions of all Basic Documents shall be construed to further
these intentions of the parties.
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IN WITNESS WHEREOF, the parties have caused this Note Purchase
Agreement to be executed by their respective officers hereunto duly authorized,
as of the date first above written.
FFCA FRANCHISE LOAN OWNER TRUST
1998-1, as Issuer
By: WILMINGTON TRUST COMPANY,
----------------------------------
not in its individual capacity but
solely as Owner Trustee
By: /s/ Thomas P. Laskaris
----------------------------------
Name: Thomas P. Laskaris
Title: Vice President
FFCA ACQUISITION CORPORATION
By: /s/ Dennis L. Ruben
----------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President
MORGAN STANLEY SECURITIZATION FUNDING INC.,
as Purchaser
By: /s/ Stephen Rudner
----------------------------------
Name: Stephen Rudner
Title: Vice President
FFCA LOAN WAREHOUSE CORPORATION,
as Depositor
By: /s/ Dennis L. Ruben
----------------------------------
Name: Dennis L. Ruben
Title: Vice President
ACCEPTED AND AGREED
LASALLE NATIONAL BANK, as Indenture Trustee
By: /s/ Michael B. Evans
----------------------------------
Name: Michael B. Evans
Title: First Vice President
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SCHEDULE I
PURCHASER ACCOUNT INFORMATION
Citibank: ABA Routing number: 021000089.
For the Account of MSSFI: Account number: 40739088.
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SCHEDULE II
INFORMATION FOR NOTICES
1. if to the Issuer:
FFCA Franchise Loan Owner Trust 1998-1
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
telecopy number: (302) 651-8882
telephone number: (302) 651-1000
2. if to FFCA Acquisition Corp.:
FFCA Acquisition Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Attention: Dennis L. Ruben
telecopy number: (602) 585-2226
telephone number: (602) 585-4500
3. if to the Depositor:
FFCA Loan Warehouse Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Attention: Dennis L. Ruben
telecopy number: (602) 585-2226
telephone number: (602) 585-4500
II-1
<PAGE>
4. if to the Purchaser:
Morgan Stanley Securitization Funding Inc.
1585 Broadway
New York, New York 10036
Attention: Stephen Rudner
telecopy number: (212) 761-0260
telephone number: (212) 761-2144
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