SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 30, 1997
BLC Financial Services, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8185
(State or Other Jurisdiction of Incorporation) (Commission File No.)
75-1430436
(IRS Employer I.D. Number)
919 Third Avenue, 17th Floor, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
(212) 751-5626
Registrant's Telephone Number, including Area Code
(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
Item 5. Other Event
On December 19, 1997, Business Loan Center, Inc. ("BLC"), a wholly-owned
subsidiary of the registrant, entered into the Pooling and Servicing Agreement
dated as of December 1, 1997 (the "Pooling Agreement") between BLC, as Seller
and Marine Midland Bank, as Trustee (the "Trustee"), which Pooling Agreement
established a trust (the "Trust").
Pursuant to the Pooling Agreement and the Certificate Purchase Agreement
entered into between BLC, Business Loan Center Financial Corp., a wholly-owned,
special purpose corporation (the "Subsidiary") and Banc One Capital Corporation
(the "Initial Purchaser"), BLC (through the Trust) issued and sold to the
Initial Purchaser $18,078,507.20 in an aggregate principal amount of Business
Loan Center SBA Loan-Backed Adjustable Rate Certificates, Series 1997-1, Class A
Certificates (the "Class A Certificates"). BLC also issued and transferred to
the Subsidiary $1,787,984.23 in an aggregate principal amount of Business Loan
Center SBA Loan-Backed Adjustable Rate Certificates, Series 1997-1, Class B
Certificates (the "Class B Certificates"). The Class A Certificates, together
with Class B Certificates, represent the entire undivided ownership interest in
certain unguaranteed interests in a pool of SBA loans partially guaranteed by
the U.S. Small Business Administration.
In connection with the transactions described above, BLC received
proceeds, net of placement agency fees and expenses, of approximately
$1,310,000. The Pooling and Servicing Agreement and the Certificate Purchase
Agreement, attached hereto as exhibits, are incorporated herein by reference.
The registrant will provide to the Commission, upon request, any other documents
entered into in connection with the above described transaction and referenced
in the Pooling Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(A) Financial Statements of the business acquired. Not applicable.
(B) Pro Forma Financial Information. It is impractical to provide the
required pro forma information at this time. Such information will
be filed via amendment within 60 days from the date hereof.
(C) Exhibits
(1) The Pooling and Servicing Agreement dated as of December 1,
1997 between Marine Midland Bank, as Trustee, and Business
Loan Center, Inc., as Seller and Servicer.
(2) Certificate Purchase Agreement between Banc One Capital
Corporation, as the Initial Purchaser, and BLC and the
Subsidiary.
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 duly authorized.
BLC Financial Services, Inc.
(Registrant)
Dated: December 30, 1997
<PAGE>
By: /s/ Robert F. Tannenhauser
--------------------------
Robert F. Tannenhauser
President
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1997
between
Marine Midland Bank
(Trustee)
and
BUSINESS LOAN CENTER, INC.
(Seller and Servicer)
Business Loan Center SBA Loan-Backed
Adjustable Rate Certificates, Series 1997-1,
Class A and Class B
<PAGE>
TABLE OF CONTENTS
Section Page
- - ------- ----
ARTICLE I
DEFINITIONS
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Sale and Conveyance of Trust Fund............................II-1
Section 2.02 Possession of SBA Files......................................II-1
Section 2.03 Books and Records............................................II-1
Section 2.04 Delivery of SBA Loan Documents...............................II-2
Section 2.05 Acceptance by Trustee of the Trust Fund;.....................II-4
Section 2.06 [Intentionally Omitted]......................................II-5
Section 2.07 Authentication of Certificates...............................II-5
Section 2.08 Fees and Expenses of the Trustee.............................II-6
Section 2.09 Optional Purchase of Defaulted SBA Loans.........II-Error!
Bookmark not defined.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Seller...............................III-1
Section 3.02 Individual SBA Loans........................................III-3
Section 3.03 Purchase and Substitution of Defective......................III-8
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.............................................IV-1
Section 4.02 Registration of Transfer and Exchange of Certificates........IV-1
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates............IV-7
Section 4.04 Persons Deemed Owners........................................IV-8
ARTICLE V
ADMINISTRATION AND SERVICING OF SBA LOANS
Section 5.01 Duties of the Servicer........................................V-1
Section 5.02 Liquidation of SBA Loans......................................V-4
Section 5.03 Establishment of Principal and................................V-5
(i)
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Section 5.04 Permitted Withdrawals From the................................V-6
Section 5.05 [Intentionally Omitted].......................................V-8
Section 5.06 Transfer of Accounts..........................................V-8
Section 5.07 Maintenance of Hazard Insurance...............................V-8
Section 5.08 [Intentionally Omitted].......................................V-8
Section 5.09 Fidelity Bond.................................................V-8
Section 5.10 Title, Management and Disposition.............................V-9
Section 5.11 [Intentionally Omitted.].....................................V-10
Section 5.12 Collection of Certain SBA Loan Payments......................V-10
Section 5.13 Access to Certain Documentation and..........................V-10
Section 5.14 Superior Liens...............................................V-10
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Certificate Account;........................VI-1
Section 6.02 Establishment of Spread Account;.............................VI-2
Section 6.03 Establishment of Expense Account;............................VI-3
Section 6.04 [Intentionally Omitted]......................................VI-3
Section 6.05 [Intentionally Omitted]......................................VI-5
Section 6.06 Investment of Accounts.......................................VI-6
Section 6.07 Distributions................................................VI-7
Section 6.08 [Intentionally Omitted]......................................VI-8
Section 6.09 Statements...................................................VI-8
Section 6.10 Advances by the Servicer....................................VI-11
Section 6.11 Compensating Interest.......................................VI-12
Section 6.12 Reports of Foreclosure and Abandonment......................VI-12
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 [Omitted]...................................................VII-1
Section 7.02 Satisfaction of Mortgages and Collateral....................VII-1
Section 7.03 Servicing Compensation......................................VII-2
Section 7.04 Annual Statement as to Compliance...........................VII-2
Section 7.05 Annual Independent Public...................................VII-3
Section 7.06 SBA's, and Trustee's Right to Examine.......................VII-3
Section 7.07 Reports to the Trustee; Principal and.......................VII-3
Section 7.08 Premium Protection Fee......................................VII-3
(ii)
<PAGE>
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.......................................VIII-1
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims..........................IX-1
Section 9.02 Merger or Consolidation of the Servicer......................IX-2
Section 9.03 Limitation on Liability of the...............................IX-2
Section 9.04 Servicer Not to Resign.......................................IX-2
ARTICLE X
DEFAULT
Section 10.01 Events of Default............................................X-1
Section 10.02 Trustee to Act; Appointment of...............................X-2
Section 10.03 Waiver of Defaults...........................................X-4
Section 10.04.Control by Majority Certificateholders.......................X-4
ARTICLE XI
TERMINATION
Section 11.01 Termination.................................................XI-5
Section 11.02 Accounting Upon Termination of..............................XI-6
ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee..........................................XII-1
Section 12.02 Certain Matters Affecting the Trustee......................XII-2
Section 12.03 Trustee Not Liable for Certificates........................XII-3
Section 12.04 Trustee May Own Certificates...............................XII-4
Section 12.05 Servicer To Pay Trustee's Fees.............................XII-4
Section 12.06 Eligibility Requirements for Trustee.......................XII-4
Section 12.07 Resignation and Removal of the Trustee.....................XII-5
Section 12.08 Successor Trustee..........................................XII-6
Section 12.09 Merger or Consolidation of Trustee.........................XII-6
Section 12.10 Appointment of Co-Trustee or Separate......................XII-7
Section 12.11 Authenticating Agent.......................................XII-8
Section 12.12 Tax Returns and Reports....................................XII-9
(iii)
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Section 12.13 Protection of Trust Fund..................................XII-9
Section 12.14 Representations and Warranties...........................XII-10
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Acts of Certificateholders...............................XIII-1
Section 13.02 Amendment................................................XIII-1
Section 13.03 Recordation of Agreement.................................XIII-2
Section 13.04 Duration of Agreement....................................XIII-2
Section 13.05 Governing Law............................................XIII-2
Section 13.06 Notices..................................................XIII-2
Section 13.07 Severability of Provisions...............................XIII-3
Section 13.08 No Partnership...........................................XIII-3
Section 13.09 Counterparts.............................................XIII-3
Section 13.10 Successors and Assigns...................................XIII-3
Section 13.11 Headings.................................................XIII-3
Section 13.12 Paying Agent.............................................XIII-3
Section 13.13 Notification to Rating Agencies..........................XIII-4
Section 13.14 Third Party Rights.......................................XIII-4
(iv)
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EXHIBIT INDEX
EXHIBIT A Contents of SBA File
EXHIBIT B-1 Form of Class A Certificate
EXHIBIT B-2 Form of Class B Certificate
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D [Omitted]
EXHIBIT E [Omitted]
EXHIBIT E(1) Wiring Instructions Form
EXHIBIT F-1 Initial Certification
EXHIBIT F-2 Final Certification
EXHIBIT G [Omitted]
EXHIBIT H SBA Loan Schedule
EXHIBIT I Request for Release of Documents
EXHIBIT J Form of Liquidation Report
EXHIBIT K Form of Delinquency Report
EXHIBIT L Servicer's Monthly Computer Tape Format
EXHIBIT M Multi-Party Agreement
EXHIBIT N Spread Account Agreement
EXHIBIT O-1 Form of Transferee Letter
EXHIBIT O-2 Form of Rule 144A Certification
(v)
<PAGE>
Agreement dated as of December 1, 1997 between Marine Midland Bank,
as trustee (the "Trustee"), and Business Loan Center, Inc., as Seller (the
"Seller") and as Servicer (the "Servicer"):
PRELIMINARY STATEMENT
The Seller, in the ordinary course of its business, originates and
acquires SBA ss. 7(a) Loans (the "SBA ss. 7(a) Loans") to small businesses in
compliance with the provisions of the Small Business Act and the rules and
regulations thereunder, which SBA ss. 7(a) Loans are evidenced by the SBA Notes
in favor of the Seller.
Pursuant to and in accordance with the provisions of the Small
Business Act and the Loan Guaranty Agreement, a portion of each SBA ss. 7(a)
Loan has been guaranteed by the Small Business Administration (the "SBA") (such
portion, the "Guaranteed Interest").
The Guaranteed Interests in the SBA ss.7(a) Loans have previously
been sold to certain Registered Holders pursuant to SBA Form 1086 Agreements. In
accordance with such agreements, the parties hereto acknowledge that the SBA is
the party in interest with respect to the Guaranteed Interest. The Servicer
continues to service the Guaranteed Interests.
Pursuant to and in accordance with policies of the SBA, the Servicer
is required to retain a portion of the interest received on the Guaranteed
Interest of each SBA ss. 7(a) Loan sold to the Trust Fund (such portion, the
"Premium Protection Fee").
To facilitate the sale of (i) the entire portion of each SBA ss.
7(a) Loan not guaranteed by the SBA and sold to Registered Holders or
constituting part of the Premium Protection Fee and (ii) the Excess Spread
(collectively, the "Unguaranteed Interest"), and the servicing of the SBA Loans
by the Servicer, the Seller and the Servicer are entering into this Agreement
with the Trustee. The Seller is transferring the SBA Loans to the Trustee for
the benefit of the SBA and the Certificateholders under this Agreement, pursuant
to which Certificates are being issued, denominated on the face thereof as
Business Loan Center SBA Loan-Backed Adjustable Rate Certificates, Series
1997-1, Class A and Class B, representing in the aggregate a 100% undivided
beneficial ownership interest in the right to receive the principal portion of
the Unguaranteed Interests of the SBA Loans together with interest thereon at
the then applicable Class A or Class B Remittance Rate, as the case may be. The
Unguaranteed Interest of the SBA Loans have an aggregate outstanding principal
balance of $16,366,491.43 as of December 1, 1997 (the "Cut-Off Date"), after
application of payments received by the Servicer on or before such date.
The parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings. This Agreement
relates to a Trust Fund evidenced by Business Loan Center SBA Loan-Backed
Adjustable Rate Certificates, Series 1997-1, Class A and Class B. Unless
otherwise provided, all calculations of interest pursuant to this Agreement
including, but not limited to, the Class A and Class B Interest Distribution
Amounts, are based on a 360-day year and twelve 30-day months.
ACCOUNT: The Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account established by the Trustee for the benefit of the
Certificateholders; the Expense Account established by the Trustee for the
benefit of the Trustee; and the Spread Account held by the Spread Account
Custodian pursuant to the Spread Account Agreement. The Trustee's obligation to
establish and maintain the Certificate Account is not delegable.
ACCOUNT NUMBER: The number assigned to each SBA Loan by the Seller,
as set forth in Exhibit H hereto.
ADDITION NOTICE: With respect to the transfer of Subsequent SBA
Loans to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be
given not later than three Business Days prior to the related Subsequent
Transfer Date, of the Seller's designation of Subsequent SBA Loans to be sold to
the Trust Fund and the aggregate Principal Balance of such Subsequent SBA Loans.
ADDITIONAL FEE: With respect to each Additional Fee SBA Loan, the
fee payable to the SBA by the Seller equal to 40 basis points or 50 basis points
per annum, as the case may be, on the outstanding balance of the Guaranteed
Interest of such Additional Fee SBA Loan.
ADDITIONAL FEE SBA LOAN: An SBA ss. 7(a) Loan sold in the secondary
market on or after September 1, 1993 (unless the related SBA ss. 7(a) Loan was
approved by the SBA on or after October 12, 1995), for which the related
Additional Fee is 40 basis points per annum, or an SBA ss. 7(a) Loan approved by
the SBA on or after October 12, 1995 (regardless of whether it was sold in the
secondary market), for which the related Additional Fee is 50 basis points per
annum.
ADJUSTED CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread,
the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra Interest and the
Annual Expense Escrow Amount allocable to such interest (plus, for the
Remittance Dates occurring in January, February and March 1998, any amounts
transferred from the Pre-Funding Account and the Capitalized Interest Account
for such
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Remittance Date to be applied as a payment of interest on the Certificates) and
(B) a fraction, the numerator of which is the amounts set forth in clauses (i)
and (ii) of the definition of Class A Interest Distribution Amount with respect
to such Remittance Date, and the denominator of which is the sum of the amounts
set forth in clauses (i) and (ii) of the definition of Class A Interest
Distribution Amount and the amounts set forth in clauses (i) and (ii) of the
definition of Class B Interest Distribution Amount, each with respect to such
Remittance Date.
ADJUSTED CLASS B INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread,
the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra Interest and the
Annual Expense Escrow Amount allocable to such interest (plus, for the
Remittance Dates occurring in January, February and March 1998, any amounts
transferred from the Pre-Funding Account and the Capitalized Interest Account
for such Remittance Date to be applied as a payment of interest on the
Certificates) and (B) a fraction, the numerator of which is the amounts set
forth in clauses (i) and (ii) of the definition of Class B Interest Distribution
Amount with respect to such Remittance Date, and the denominator of which is the
sum of the amounts set forth in clauses (i) and (ii) of the definition of Class
A Interest Distribution Amount and the amounts set forth in clauses (i) and (ii)
of the definition of Class B Interest Distribution Amount, each with respect to
such Remittance Date.
ADJUSTED SBA LOAN REMITTANCE RATE: With respect to any SBA Loan, an
amount per annum equal to the sum of (i) the then applicable weighted average
Class A and Class B Remittance Rates and (ii) 0.05% per annum, relating to the
Annual Expense Escrow Amount.
ADJUSTMENT DATE: For the Interest Accrual Periods commencing in
February, March and April, the Adjustment Date shall be the first Business Day
of the preceding January. For the Interest Accrual Periods commencing in May,
June and July, the Adjustment Date shall be the first Business Day of the
preceding April. For the Interest Accrual Periods commencing in August,
September and October, the Adjustment Date shall be the first Business Day of
the preceding July. For the Interest Accrual Periods commencing in November,
December and January, the Adjustment Date shall be the first Business Day of the
preceding October.
AGGREGATE CLASS A CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class A Aggregate Certificate Principal Balance less
the sum of all amounts previously distributed to the Class A Certificateholders
in respect of principal.
AGGREGATE CLASS B CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Aggregate Class B Certificate Principal Balance less
the sum of all amounts previously distributed to the Class B Certificateholders
in respect of principal.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
I-2
<PAGE>
ANNUAL EXPENSE ESCROW AMOUNT: $7,500 per annum plus out-of-pocket
expenses (estimated to be approximately $300 per annum).
ASSIGNMENT OF MORTGAGE: With respect to those SBA Loans secured by a
Mortgaged Property, an assignment of the Mortgage, notice of transfer or
equivalent instrument sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the transfer of the
related SBA Loan to the Trustee subject to the Multi-Party Agreement.
AUTHENTICATING AGENT: Initially, Marine Midland Bank and thereafter,
any successor appointed pursuant to Section 12.11.
AVAILABLE FUNDS: With respect to each Remittance Date, the sum of
(i) all amounts received from any source by the Servicer or any Subservicer
during the preceding calendar month (including Excess Spread) with respect to
principal and interest on the SBA Loans (net of the amount payable to the
Registered Holders, the Premium Protection Fee, the FTA's Fee, the Additional
Fee, and the Servicing Fee), (ii) advances by the Servicer, (iii) amounts to be
transferred from the Pre-Funding Account and Capitalized Interest Account with
respect to the January, February and March 1998 Remittance Dates and (iv)
amounts in the Spread Account.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the States of New York or Delaware are
authorized or obligated by law or executive order to be closed.
CAPITALIZED INTEREST REQUIREMENT: With respect to the Remittance
Dates in January, February and March 1998, the excess, if any, of (i) 30 days'
interest (or, with respect to the Remittance Date in January 1998, the actual
number of days from the Closing Date to but not including such Remittance Date)
calculated at the weighted average Class A and Class B Remittance Rates on the
excess of (a) the Aggregate Class A and Class B Certificate Principal Balances
for such Remittance Date over (b) the aggregate Principal Balances of the SBA
Loans for such Remittance Date over (ii) any Pre-Funding Earnings to be
transferred to the Certificate Account on such Remittance Date pursuant to
Section 6.04(d).
CERTIFICATE: Any Class A or Class B Certificate executed by the
Servicer and authenticated by the Trustee or the Authenticating Agent
substantially in the form annexed hereto as Exhibits B-1 and B-2.
CERTIFICATE ACCOUNT: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Class A or
Class B Certificate is registered in the Certificate Register, except that,
solely for the purposes of
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<PAGE>
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Servicer, any Subservicer
or any affiliate of any of them, shall be deemed not to be outstanding and the
undivided Percentage Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Certificates necessary to
effect any such consent, waiver, request or demand has been obtained.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, Marine Midland Bank, and
thereafter, any successor appointed pursuant to Section 4.02.
CLASS A CARRY-FORWARD AMOUNT: The amount, if any, by which (i) the
Class A Principal Distribution Amount with respect to any preceding Remittance
Date exceeded (ii) the amount of the actual principal distribution to the Class
A Certificates on such Remittance Date.
CLASS A CERTIFICATE: A Certificate denominated as a Class A
Certificate.
CLASS A CERTIFICATEHOLDER: A holder of a Class A Certificate.
CLASS A CERTIFICATE PRINCIPAL BALANCE: $18,078,507.20.
CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the sum of (i) the interest accrued for the related Interest
Accrual Period at the then applicable Class A Remittance Rate on the Aggregate
Class A Certificate Principal Balance outstanding immediately prior to such
Remittance Date and (ii) the amount of the shortfall, if any, of the interest
that the Class A Certificates were entitled to receive on a preceding Remittance
Date but did not receive plus interest thereon at the then applicable Class A
Remittance Rate compounded monthly; provided, however, that on each Remittance
Date the Class A Interest Distribution Amount will be increased or decreased, as
the case may be, to equal the Adjusted Class A Interest Distribution Amount for
such Remittance Date.
CLASS A PERCENTAGE: With respect to each Remittance Date, 91%,
representing the beneficial ownership interest of the Class A Certificates in
the Trust Fund.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the Class A Percentage multiplied by the sum of, without
duplication, (i) the Unguaranteed Percentage of all payments and other
recoveries of principal of an SBA Loan (net of amounts reimbursable to the
Servicer pursuant to this Agreement) received by the Servicer or any Subservicer
in the related Due Period, excluding amounts received relating to SBA Loans
which have been delinquent 24 months or have been determined to be
uncollectible, in whole or in part, by the Servicer to the extent that the Class
A Certificateholders have previously received the Class A Percentage of the
Principal Balance of such SBA Loans; (ii) the principal portion of any
Unguaranteed Interest actually purchased by the Seller or the Servicer and
actually received by the Trustee as of the related Determination Date; (iii) any
Substitution Adjustments deposited
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in the Principal and Interest Account and transferred to the Certificate Account
as of the related Determination Date; (iv) the Unguaranteed Percentage of all
losses on SBA Loans which were finally liquidated during the applicable Due
Period; and (v) the Unguaranteed Percentage of the then outstanding principal
balance of any SBA Loan which, as of the first day of the related Due Period,
has been delinquent 24 months or has been determined to be uncollectible, in
whole or in part, by the Servicer and (vi) the amount, if any, released from the
Pre-Funding Account on the January, February and March 1998 Remittance Dates.
CLASS A REMITTANCE RATE: During the initial Interest Accrual Period
6.60% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date minus 1.90% per annum.
CLASS B CARRY-FORWARD AMOUNT: The amount, if any, by which (i) the
Class B Principal Distribution Amount with respect to any preceding Remittance
Date exceeded (ii) the amount of the actual principal distribution to the Class
B Certificates on such Remittance Date.
CLASS B CERTIFICATE: A Certificate denominated as a Class B
Certificate.
CLASS B CERTIFICATEHOLDER: A holder of a Class B Certificate.
CLASS B CERTIFICATE PRINCIPAL BALANCE: $1,787,984.23.
CLASS B INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the sum of (i) the interest accrued for the related Interest
Accrual Period at the then applicable Class B Remittance Rate on the Aggregate
Class B Certificate Principal Balance outstanding immediately prior to such
Remittance Date and (ii) the amount of the shortfall, if any, of the interest
that the Class B Certificates were entitled to receive on a preceding Remittance
Date but did not receive plus interest thereon at the then applicable Class B
Remittance Rate compounded monthly; provided, however, that on each Remittance
Date the Class B Interest Distribution Amount will be increased or decreased, as
the case may be, to equal the Adjusted Class B Interest Distribution Amount for
such Remittance Date.
CLASS B PERCENTAGE: With respect to each Remittance Date, 9%,
representing the beneficial ownership interest of the Class B Certificates in
the Trust Fund.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the Class B Percentage multiplied by the sum of, without
duplication, (i) the Unguaranteed Percentage of all payments and other
recoveries of principal of an SBA Loan (net of amounts reimbursable to the
Servicer pursuant to this Agreement) received by the Servicer or any Subservicer
in the related Due Period, excluding amounts received relating to SBA Loans
which have been delinquent 24 months or have been determined to be
uncollectible, in whole or in part, by the Servicer to the extent that the Class
B Certificateholders have previously received the Class B Percentage of the
Principal Balance of such SBA Loans; (ii) the principal portion of any
Unguaranteed Interest actually purchased by the Seller or the Servicer and
actually received
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by the Trustee as of the related Determination Date; (iii) any Substitution
Adjustments deposited in the Principal and Interest Account and transferred to
the Certificate Account as of the related Determination Date; (iv) the
Unguaranteed Percentage of all losses on SBA Loans which were finally liquidated
during the applicable Due Period; and (v) the Unguaranteed Percentage of the
then outstanding principal balance of any SBA Loan which, as of the first day of
the related Due Period, has been delinquent 24 months or has been determined to
be uncollectible, in whole or in part, by the Servicer, and (vi) the amount, if
any, released from the Pre-Funding Account on the January, February and March
1998 Remittance Dates.
CLASS B REMITTANCE RATE: During the initial Interest Accrual Period
7.00% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date minus 1.50% per annum.
CLOSING DATE: December 19, 1997
CODE: The Internal Revenue Code of 1986, as amended, or any
successor legislation thereto.
COLLATERAL: All items of property (including a Mortgaged Property),
whether real or personal, tangible or intangible, or otherwise, pledged by an
Obligor or others to a Seller (including guarantees on behalf of the Obligor) to
secure payment under an SBA Loan.
COMMERCIAL PROPERTY: Real property (other than agricultural property
or Residential Property) that generally is used by the Obligor in the conduct of
its business.
COMPENSATING INTEREST: As defined in Section 6.11.
CONFIDENTIAL PLACEMENT MEMORANDUM: The Confidential Private
Placement Memorandum dated December 19, 1997 prepared by the Seller in
connection with the offer and sale of the Class A Certificates.
CURTAILMENT: With respect to an SBA Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of five
times the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the SBA Loan in full, nor is intended to cure a delinquency.
CUT-OFF DATE: December 1, 1997.
DEFINITIVE CERTIFICATES: Certificates of any Class issued in
definitive, full registered, certificated form without interest coupons in
minimum denominations of $100,000 and integral multiples of $1,000 in excess of
such minimum amount.
DEFAULTED SBA LOAN: Any SBA Loan as to which the Obligor has failed
to make payment in full of three or more consecutive Monthly Payments.
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DELETED SBA LOAN: An SBA Loan replaced by a Qualified Substitute SBA
Loan.
DESIGNATED DEPOSITORY INSTITUTION: With respect to the Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated A or better
by the Rating Agency or A1 by the Rating Agency, and which is either (i) a
federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for the Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the third
Business Day prior to the 15th day of such month.
DUE DATE: The day of the month on which the Monthly Payment is due
from the Obligor on an SBA Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation thereto.
EVENT OF DEFAULT: As described in Section 10.01.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received
on an SBA Loan in excess of the Monthly Payment due on the Due Date relating to
such Due Period which does not constitute either a Curtailment or a Principal
Prepayment or a payment with respect to an overdue amount. Excess Payments are
payments of principal for purposes of this Agreement.
EXCESS PROCEEDS: As of any Remittance Date, with respect to any
Liquidated SBA Loan, the excess, if any, of (a) the Unguaranteed Percentage of
the total Net Liquidation Proceeds, over (b) the Principal Balance of such SBA
Loan as of the date such SBA Loan became a Liquidated SBA Loan plus 30 days
interest thereon at the then applicable Adjusted SBA Loan Remittance Rate;
provided, however, that such excess shall be reduced by the amount by which
interest accrued on the advance, if any, made by the Servicer at the related SBA
Loan Interest Rate(s) exceeds interest accrued on such advance at the then
applicable weighted average Class A and Class B Remittance Rates.
EXCESS SPREAD: With respect to any Remittance Date, the amount, if
any, by which (i) the interest collected by the Servicer or any Subservicer on
the principal portion of the
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Guaranteed Interest of each SBA ss.7(a) Loan exceeds (ii) the sum of (a) the
interest payable to the Registered Holder, (b) the FTA's Fee, (c) the Premium
Protection Fee, (d) with respect to the Additional Fee SBA Loans, the Additional
Fee and (e) the Servicing Fee.
EXPENSE ACCOUNT: The expense account established and maintained by
the Trustee in accordance with Section 6.03 hereof.
EXTRA INTEREST: With respect to each SBA Loan, for each Remittance
Date the product of (i) the principal portion of the Unguaranteed Interest of
such SBA Loan for such Remittance Date and (ii) one-twelfth of the applicable
Extra Interest Percentage.
EXTRA INTEREST PERCENTAGE: With respect to each SBA Loan, the excess
of (i) the SBA Loan Interest Rate that would be in effect for such SBA Loan as
of the Cut-Off Date without giving effect to any applicable lifetime floors or
caps over (ii) the sum of the rates used in determining the Servicing Fee and
the Annual Expense Escrow Amount and 6.65% per annum (i.e., the initial weighted
average Class A and Class B Remittance Rates without giving effect to any
applicable lifetime floors or caps on the SBA Loans).
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FORECLOSED PROPERTY: As described in Section 5.10.
FORECLOSED PROPERTY DISPOSITION: The final sale of a Foreclosed
Property acquired in foreclosure or by deed in lieu of foreclosure. The proceeds
of any Foreclosed Property Disposition constitute part of the definition of
Liquidation Proceeds.
FTA: Colson Services Corp., in its capacity as the Fiscal and
Transfer Agent of the SBA under the Multi-Party Agreement, or any successor
thereto appointed by the SBA.
FTA'S FEE: With respect to the Guaranteed Interest of each SBA ss.
7(a) Loan sold into the secondary market, the monthly fee payable to the FTA in
accordance with Form 1086 and the SBA Rules and Regulations.
FUNDING PERIOD: The period commencing on the Closing Date and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $100,000, (ii) the date on which an Event of
Default occurs or (iii) the March 1998 Determination Date.
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GUARANTEED INTEREST: As to any SBA ss. 7(a) Loan, the right to
receive the guaranteed portion of the principal balance thereof together with
interest thereon at a per annum rate in effect from time to time in accordance
with the terms of the related SBA Form 1086. Certificateholders have no right or
interest in the Guaranteed Interest.
INDIVIDUAL CERTIFICATE: Any Certificate registered in the name of a
holder.
INITIAL DEPOSIT: A deposit of $490,994.75 required to be made by the
Spread Account Depositor into the Spread Account on the Closing Date, such
deposit being equal to 3.00% of the Original Pool Principal Balance.
INITIAL SBA LOANS: The SBA Loans listed on Exhibit H hereto and
delivered to the Trustee on the Closing Date.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person satisfying the
definition of "Accredited Investor" within the meaning of Rule 501(a)(1), (2) or
(3) of Regulation D under the Securities Act.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering an SBA Loan, Collateral or Foreclosed Property,
including but not limited to title, hazard, life, health and/or accident
insurance policies.
INTEREST ACCRUAL PERIOD: With respect to each Remittance Date, the
period commencing on the 15th day of the month preceding such Remittance Date
and ending on the 14th day of the month of such Remittance Date. However, for
the Remittance Date occurring in January 1998, the period commencing on the
Closing Date and ending on January 14, 1998.
LIQUIDATED SBA LOAN: Any defaulted SBA Loan or Foreclosed Property
as to which the Servicer has determined that all amounts which it reasonably and
in good faith expects to recover have been recovered from or on account of such
SBA Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds
of any Foreclosed Property Disposition, revenues received with respect to the
conservation and disposition of a Foreclosed Property, and any other amounts
received in connection with the liquidation of defaulted SBA Loans, whether
through trustee's sale, foreclosure sale or otherwise.
LOAN GUARANTY AGREEMENT: The Loan Guaranty Agreement (Deferred
Participation) (SBA Form 750) dated March 27, 1997 between the SBA and Business
Loan Center, Inc., as such agreement may be amended from time to time.
LOAN-TO-VALUE RATIO OR LTV: With respect to any SBA Loan, (a) the
outstanding principal amount of such SBA Loan as of the Cut-off Date, divided by
(b) the excess of (i) the total net collateral value (as determined by the
Seller in accordance with its underwriting criteria) of the primary and
secondary Collateral securing such loan at the time of
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origination over (ii) the principal balance of any Prior Lien as of the date of
origination of the related SBA Loan.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A and
Class B Certificates evidencing an Aggregate Class A Certificate Principal
Balance and Aggregate Class B Certificate Principal Balance in excess of 50% of
the Aggregate Class A Certificate Principal Balance and Aggregate Class B
Certificate Principal Balance.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section
6.10 hereof.
MONTHLY PAYMENT: The monthly payment of principal and/or interest
required to be made by an Obligor on the related SBA Loan, as adjusted pursuant
to the terms of the related SBA Note.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
lien on a Mortgaged Property.
MORTGAGED PROPERTY: The underlying real property, if any, securing
an SBA Loan, consisting of a Commercial Property or Residential Property and any
improvements thereon.
MULTI-PARTY AGREEMENT: That certain Multi-Party Agreement dated as
of December 1, 1997 among the Seller, the Trustee, the SBA and the FTA,
substantially in the form of Exhibit M hereto, as amended from time to time by
the parties thereto.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Obligor pursuant to
applicable law.
1933 ACT: The Securities Act of 1933, as amended.
OBLIGOR: The obligor on an SBA Note.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee signed
by the Chairman of the Board, the President, an Executive Vice President, a Vice
President, an Assistant Vice President, the Treasurer, the Secretary, or one of
the Assistant Secretaries of a Seller or the Servicer as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Seller or Servicer, reasonably acceptable to the
Trustee and experienced in matters relating thereto.
ORIGINAL POOL PRINCIPAL BALANCE: $16,363,652.29.
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ORIGINAL PRE-FUNDED AMOUNT: $3,502,839.14 representing the amount
deposited in the Pre-Funding Account on the Closing Date.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer
Date occurring in January 1998, the difference between (i) three-months'
interest on the aggregate Principal Balances of the Subsequent SBA Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
weighted average Class A and Class B Remittance Rates, and (ii) three-months'
interest on the aggregate Principal Balances of the Subsequent SBA Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
With respect to each Subsequent Transfer Date occurring in February
1998, the difference between (i) two-months' interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A and Class B
Remittance Rates, and (ii) two-months' interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in March
1998, the difference between (i) one-month's interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A and Class B
Remittance Rates, and (ii) one-month's interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
PAYING AGENT: Initially, Marine Midland Bank, and thereafter, any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 13.12 hereof and is authorized by the Trustee to make payments on the
Certificates on behalf of the Trustee.
PERCENTAGE INTEREST: With respect to a Class A or Class B
Certificate, the portion of the Trust Fund evidenced by such Class A or Class B
Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Class A or Class B Certificate and the
denominator of which is the Original Class A Certificate Principal Balance or
Original Class B Certificate Principal Balance, as the case may be. The
Certificates are issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $100,000 and integral multiples of $1,000 in excess
thereof, except for one Certificate of each Class which may be issued in a
different denomination to equal the remainder of the Original Class A
Certificate Principal Balance or Original Class B Certificate Principal Balance,
as the case may be.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall
include the following:
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(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States, FHA debentures, Federal Home Loan Bank consolidated senior
debt obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated Duff 1+ or better by the Rating Agency;
(iii) deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of at least $3,000,000
which deposits are held only up to the limits insured by the BIF or SAIF
administered by the FDIC, provided that the unsecured long-term debt
obligations of such bank or savings and loan association have been rated
AAA or better by the Rating Agency;
(iv) commercial paper (having original maturities of not more than
365 days) rated Duff 1+ or better by the Rating Agency;
(v) debt obligations rated AAA by the Rating Agency (other than any
such obligations that do not have a fixed par value and/or whose terms do
not promise a fixed dollar amount at maturity or call date);
(vi) investments in money market funds rated AAA or better by the
Rating Agency the assets of which are invested solely in instruments
described in clauses (i)-(v) above;
(vii) guaranteed investment contracts or surety bonds providing for
the investment of funds in an account or insuring a minimum rate of return
on investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial strength
or claims paying ability are rated "AAA" by the Rating Agency; and
(b) provide that the Trustee may exercise all of the rights of
the Seller under such contract or surety bond without the necessity
of the taking of any action by the Seller;
(viii) A repurchase agreement that satisfies the following criteria:
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(a) Must be between the Trustee and a dealer bank or
securities firm described in 1. or 2. below:
1. Primary dealers on the Federal Reserve reporting
dealer list which are rated AA" or better by the
Rating Agency, or
2. Banks rated "AA" or better by the Rating Agency.
(b) The written repurchase agreement must include the
following:
1. Securities which are acceptable for the transfer
are:
A. Direct U.S. government securities, or
B. Securities of Federal Agencies backed by the
full faith and credit of the U.S. government
(and FNMA & FHLMC)
2. the term of the repurchase agreement may be up
to 60 days
3. the collateral must be delivered to the Trustee or
third party custodian acting as agent for the
Trustee by appropriate book entries and
confirmation statements must have been delivered
before or simultaneous with payment (perfection by
possession of certificated securities)
4. Valuation of collateral
The securities must be valued weekly,
marked-to-market at current market price
plus accrued interest. The value of the
collateral must be equal to at least 104% of
the amount of cash transferred by the
Trustee or custodian for the Trustee to the
dealer bank or security firm under the
repurchase agreement plus accrued interest.
If the value of securities held as
collateral slips below 104% of the value of
the cash transferred by the Trustee plus
accrued interest, then additional cash
and/or acceptable securities must be
transferred. If, however, the securities
used as collateral are FNMA or FHLMC, then
the value of collateral must equal at least
105%; and
(ix) any other investment acceptable to the Rating Agency, written
confirmation of which shall be furnished to the Trustee prior to any such
investment. Provided that if
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such Permitted Instrument is not so rated by the Rating Agency, there must
be an equivalent rating by a Substitute Rating Agency.
PERSON: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL PRINCIPAL BALANCE: The aggregate Principal Balances as of any
date of determination.
PRE-FUNDED AMOUNT: With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in
accordance with Section 6.04 hereof and maintained by the Trustee.
PRE-FUNDING EARNINGS: With respect to the Remittance Date in January
1998, the actual investment earnings earned during the period from the Closing
Date through the Business Day immediately preceding the Determination Date in
January 1998 (inclusive) on the Pre-Funded Amount. With respect to the
Remittance Dates in February and March 1998, the actual investment earnings
earned during the period from the Determination Date in January and February
1998, respectively, through the Business Day immediately preceding the
Determination Date in February and March 1998, respectively (inclusive), on the
Pre-Funded Amount.
PREMIUM PROTECTION FEE: As to any SBA Loan and any date of
determination, an amount equal to 0.60% per annum of the then outstanding
principal balance of the related Guaranteed Interest.
PRIME RATE: With respect to any date of determination, the lowest
prime lending rate published in the Money Rate Section of The Wall Street
Journal.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
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PRINCIPAL BALANCE: With respect to any SBA Loan or related
Foreclosed Property, at any date of determination, (i) the Unguaranteed
Percentage of the principal balance of the SBA Loan outstanding as of the
Cut-Off Date (or applicable Subsequent Cut-Off Date with respect to Subsequent
SBA Loans) after application of principal payments received on or before such
date, minus (ii) the sum of (a) the Unguaranteed Percentage of the principal
portion of the Monthly Payments received during each Due Period ending prior to
the most recent Remittance Date, which were distributed pursuant to Section 6.07
on any previous Remittance Date, and (b) the Unguaranteed Percentage of all
Principal Prepayments, Curtailments, Excess Payments, Insurance Proceeds,
Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net income
from a Foreclosed Property to the extent applied by the Servicer as recoveries
of principal in accordance with the provisions hereof, which were distributed
pursuant to Section 6.07 on any previous Remittance Date. The Principal Balance
of any Liquidated SBA Loan or any SBA Loan that has been paid off will equal $0.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on
an SBA Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy an SBA Loan
in full.
PRIOR LIEN: With respect to any SBA Loan secured by a lien on a
Mortgaged Property which is not a first priority lien, each mortgage loan
relating to the corresponding Mortgaged Property having a prior priority lien.
QUALIFIED INSTITUTIONAL BUYER: As used herein, has the meaning
ascribed to such term in Rule 144A under the Securities Act.
QUALIFIED SUBSTITUTE SBA LOAN: An SBA loan or SBA loans substituted
for a Deleted SBA Loan pursuant to Section 2.05 or 3.03 hereof, which (i) has or
have an SBA Loan interest rate or rates of not less than (and not more than two
percentage points more than) the SBA Loan Interest Rate for the Deleted SBA
Loan, (ii) relates or relate to the same type of Collateral as the Deleted SBA
Loan, (iii) matures or mature no later than (and not more than one year earlier
than) the Deleted SBA Loan, (iv) has or have a Loan-to-Value Ratio or
Loan-to-Value Ratios at the time of such substitution no higher than the Loan-to
Value Ratio of the Deleted SBA Loan at such time, (v) has or have a principal
balance or principal balances relating to an unguaranteed interest or
unguaranteed interests (after application of all payments received on or prior
to the date of substitution) equal to or less than the Principal Balance of the
Unguaranteed Interest or Unguaranteed Interests as of such date of the Deleted
SBA Loan, (vi) has or have the same Unguaranteed Percentage at the time of
substitution as the Deleted SBA Loan; (vii) was or were originated under the
same program type as the Deleted SBA Loan; and (viii) complies or comply as the
date of substitution with each representation and warranty set forth in Section
3.02.
RATING AGENCY: Duff & Phelps Credit Rating Co. or any successor
thereto.
RATING AGENCY CONDITION: With respect to any specified action, that
the Rating Agency shall have notified the Servicer and the Trustee, orally or in
writing, that such
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action will not result in a reduction or withdrawal of the rating assigned by
the Rating Agency to either Class of Certificates.
RECORD DATE: With respect to any Remittance Date, the close of
business on the last day of the month immediately preceding the month of the
related Remittance Date and with respect to the Special Remittance Date,
February 28, 1998.
REGISTERED HOLDER: With respect to any SBA ss. 7(a) Loan, the Person
identified as such in the applicable SBA Form 1086, and any permitted assignees
thereof.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Servicer and/or the Seller with respect to (i) the Monthly
Advances and Servicing Advances reimbursable pursuant to Section 5.04(b), (ii)
any advances reimbursable pursuant to Section 9.01 and not previously reimbursed
pursuant to Section 6.03(c)(i), and (iii) any other amounts reimbursable to the
Servicer or the Seller pursuant to this Agreement.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any SBA Loan secured by
a Mortgaged Property, proceeds received by the Servicer in connection with (a) a
taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (b) any release of part of the Mortgaged Property from
the lien of the related Mortgage, whether by partial condemnation, sale or
otherwise, which are not released to the Obligor in accordance with applicable
law, the SBA or the Registered Holder in accordance with the SBA Rules and
Regulations, the Servicer's customary SBA loan servicing procedures and this
Agreement.
REMITTANCE DATE: The 15th day of any month or if such 15th day is
not a Business Day, the first Business Day immediately following, commencing in
January 1998.
RESIDENTIAL PROPERTY: Any one or more of the following, (i) single
family dwelling unit not attached in any way to another unit, (ii) row house,
(iii) two-family house, (iv) low-rise condominium, (v) planned unit development,
(vi) three- or four-family house, (vii) high-rise condominium, (viii) mixed use
building or (ix) manufactured home (as defined in the FNMA/FHLMC
Seller-Servicers' Guide) to the extent that it constitutes real property in the
state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division, including any Vice President,
Assistant Vice President any Assistant Secretary, any trust officer or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and 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 Seller, the President, any Vice President, Assistant
Vice President, Treasurer or any Secretary or Assistant Secretary.
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RULE 144A CERTIFICATION: A letter substantially in the form attached
hereto as Exhibit O-2.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SBA: The United States Small Business Administration, an agency of
the United States Government.
SBA FILE: As described in Exhibit A.
SBA Form 1086: The Secondary Participation Guaranty Agreement on SBA
Form 1086, pursuant to which investors purchased the Guaranteed Interest.
SBA LOAN: An individual loan which is transferred to the Trust Fund
pursuant to this Agreement, together with the rights and obligations of a holder
thereof and payments thereon and proceeds therefrom, the SBA Loans originally
subject to this Agreement being identified on the SBA Loan Schedule. Any loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust Fund by the Seller (as
indicated by the SBA Loan Schedule), in fact was not transferred and assigned to
the Trust Fund for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in Section 3.02(h) hereof with respect
to the loan, shall nevertheless be considered an "SBA Loan" for all purposes of
this Agreement. For the purposes of this Agreement, references to SBA Loans are
equivalent to references to SBA ss. 7(a) Loans.
SBA LOAN INTEREST RATE: With respect to any date of determination,
the then applicable annual rate of interest borne by an SBA Loan, pursuant to
its terms, which, as of the Cut-Off Date, is shown on the SBA Loan Schedule.
SBA LOAN SCHEDULE: The schedule of Initial SBA Loans listed on
Exhibit H attached hereto and delivered to the Trustee on the Closing Date, such
schedule identifying each Initial SBA Loan by address of the related premises,
and the name of the Obligor and setting forth as to each Initial SBA Loan the
following information: (i) the Principal Balance as of the close of business on
the Cut-Off Date, (ii) the Account Number, (iii) the original principal amount
of the SBA Loan, (iv) the Initial SBA Loan date and original number of months to
maturity, (v) the SBA Loan Interest Rate as of the Cut-Off Date and guaranteed
rate payable to the Registered Holder and the FTA, (vi) when the first Monthly
Payment was due, (vii) the Monthly Payment as of the Cut-Off Date, (viii) the
remaining number of months to maturity as of the Cut-Off Date, (ix) the
Unguaranteed Percentage, (x) the SBA loan number, (xi) the margin which is added
to the Prime Rate to determine the SBA Loan Interest Rate or, in the case of
fixed rate SBA Loans, the note rate, and (xii) the lifetime minimum and maximum
SBA Loan Interest Rates, if applicable.
SBA NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of an Obligor under an SBA Loan.
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SBA RULES AND REGULATIONS: The Small Business Act, as amended,
codified at 15 U.S.C. 631 et. seq., all rules and regulations promulgated from
time to time thereunder, the Loan Guaranty Agreement and SBA Standard Operating
Procedures and official notices as from time to time are in effect.
SBA ss. 7(a) LOAN: An SBA Loan originated pursuant to Section 7(a)
of the SBA Rules and Regulations. For purposes of this Agreement, references to
SBA ss. 7(a) Loans are equivalent to references to SBA Loans.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) IN CERTIFICATED FORM (A) PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE
ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (B)
TO AN "INSTITUTIONAL ACCREDITED INVESTOR" (WITHIN THE MEANING OF RULE
501(a)(1)-(3) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE
SKY LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION, (2) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES
ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (3) PURSUANT
TO A VALID REGISTRATION STATEMENT."
SELLER: Business Loan Center, Inc., a Delaware corporation, and its
respective successors and assigns as Seller hereunder.
SERIES: 1997-1.
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SERVICER: Business Loan Center, Inc., a Delaware corporation, and
its successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.09.
SERVICING ADVANCES: All reasonable and customary "out-of-pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property or other Collateral, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Foreclosed Property, (iv) compliance with the
obligations under clause (iv) of Section 5.01(a) and Sections 5.02 and 5.07,
which Servicing Advances are reimbursable to the Servicer to the extent provided
in Section 5.04(b) and (v) in connection with the liquidation of an SBA Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement thereon up to a maximum rate per annum equal to the related SBA
Loan Interest Rate, except that any amount of such interest accrued at a rate in
excess of the weighted average Class A and Class B Remittance Rates with respect
to the Remittance Date on or prior to which the Unguaranteed Percentage of the
Net Liquidation Proceeds will be distributed shall be reimbursable only from
Excess Proceeds.
SERVICING FEE: As to each SBA Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly from the amounts
received in respect of interest on the Guaranteed Interest and the Unguaranteed
Interest of such SBA Loan, shall accrue at the rate of 0.40% per annum and shall
be computed on the basis of the same principal amount and for the period
respecting which any related interest payment on an SBA Loan is computed. The
Servicing Fee is payable solely from the interest portion of related (i) Monthly
Payments, (ii) Liquidation Proceeds or (iii) Released Mortgaged Property
Proceeds collected by the Servicer, or as otherwise provided in Section 5.04.
The Servicing Fee includes any servicing fees owed or payable to any
Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the SBA Loans whose name
appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
SPECIAL REMITTANCE DATE: The March 1998 Remittance Date.
SPECIFIED SPREAD ACCOUNT REQUIREMENT: The maximum amount of Spread
Balance required to be on deposit at any time in the Spread Account which, with
respect to any Remittance Date, shall be equal to the sum of (i) the then
outstanding Principal Balance with respect to all SBA Loans 180 days or more
delinquent and (ii) the greater of (a) 6.00% of the then outstanding Pool
Principal Balance or (b) 3.00% of the Original Pool Principal Balance; provided,
however, that for purposes of clauses (i) and (ii)(a), there shall be excluded
the Principal Balance of SBA Loans which have been delinquent 24 months or have
been determined to be uncollectible, in whole or in part, by the Servicer, to
the extent that the Certificateholders have previously received the Principal
Balance of such SBA Loans.
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SPREAD ACCOUNT: The Spread Account established in accordance with
the terms of the Spread Account Agreement and maintained by the Spread Account
Custodian for distribution in accordance with the provisions of Section 6.02
hereof.
SPREAD ACCOUNT AGREEMENT: The Agreement dated as of December 19,
1997 by and among the Spread Account Depositor and the Spread Account Custodian,
substantially in the form attached hereto as Exhibit N, as amended from time to
time by the parties thereto.
SPREAD ACCOUNT CUSTODIAN: Marine Midland Bank, in its capacity as
Spread Account Custodian under the Spread Account Agreement, or any successor
thereto.
SPREAD ACCOUNT DEPOSITOR: Business Loan Center Financial Corp., a
Delaware corporation, a wholly owned subsidiary of Business Loan Center, Inc.
SPREAD ACCOUNT EXCESS: As defined in Section 6.02(b)(iii).
SPREAD BALANCE: As of any date of determination, the sum of the
aggregate amount then on deposit in the Spread Account.
SUBSEQUENT CUT-OFF DATE: The beginning of business on the first day
of the month on which the related Subsequent SBA Loans are transferred and
assigned to the Trust Fund pursuant to the related Subsequent Transfer
Agreement.
SUBSEQUENT SBA LOANS: The SBA Loans sold to the Trust Fund pursuant
to Section 2.09, which shall be listed on the Schedule of SBA Loans attached to
the related Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee and the Seller,
by which Subsequent SBA Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each
Subsequent Transfer Agreement.
SUBSERVICER: Any person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain SBA Loans
as provided in Section 5.01(b), a copy of which shall be delivered, along with
any modifications thereto, to the Trustee and the SBA.
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SUBSTITUTE RATING AGENCY: Moody's Investors Service, Inc. and/or
Standard & Poor's Rating Services, a division of the McGraw-Hill Companies.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution
occurs pursuant to Sections 2.05 or 3.03, the amount (if any) by which the
aggregate unguaranteed portions of the principal balances (after application of
principal payments received on or before the date of substitution) of any
Qualified Substitute SBA Loans as of the date of substitution are less than the
aggregate of the Principal Balance of the related Deleted SBA Loans.
TAX RETURN: The federal income tax return to be filed on behalf of
the Trust Fund together with any and all other information reports or returns
that may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TERMINATION PRICE: The price defined in Section 11.01 hereof.
TRANSFEREE LETTER: A letter substantially in the form attached
hereto as Exhibit O-1.
TRUST FUND: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) the Unguaranteed Interest of such SBA Loans as from time to
time are subject to this Agreement, together with the SBA Files relating thereto
and all proceeds thereof, (ii) the Unguaranteed Interest of such assets
(including any Permitted Instruments) as from time to time are identified as
Foreclosed Property or are deposited in or constitute the Certificate Account,
(iii) the Trustee's rights under all insurance policies with respect to the SBA
Loans required to be maintained pursuant to this Agreement and the Unguaranteed
Interest of any Insurance Proceeds, (iv) the Unguaranteed Interest of any
Liquidation Proceeds and (v) the Unguaranteed Interest of any Released Mortgaged
Property Proceeds, including all earnings thereon and proceeds thereof. Amounts
deposited in the Principal and Interest Account, Pre-Funding Account,
Capitalized Interest Account and the Spread Account shall not constitute part of
the Trust Fund.
TRUSTEE: Marine Midland Bank, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S DOCUMENT FILE: The documents delivered pursuant to Section
2.04.
UNGUARANTEED INTEREST: The sum of (i) that portion of an SBA Loan
not guaranteed by the SBA pursuant to the SBA Rules and Regulations and sold to
Registered Holders or constituting part of the Premium Protection Fee or
Servicing Fee, and (ii) the Excess Spread.
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UNGUARANTEED PERCENTAGE: With respect to any SBA ss. 7(a) Loan, the
quotient, expressed as a percentage, the numerator of which shall be the
principal portion of the Unguaranteed Interest of such SBA ss. 7(a) Loan as of
the Cut-Off Date (or, in the case of a Subsequent SBA Loan, as of the Subsequent
Cut-Off Date) and the denominator of which shall be the sum of the principal
portion of the Unguaranteed Interest and the principal portion of the Guaranteed
Interest of such SBA ss. 7(a) Loan as of the Cut-Off Date (or, in the case of a
Subsequent SBA Loan, as of the Subsequent Cut-Off Date).
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ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01. Sale and Conveyance of Trust Fund.
(a) The Seller hereby sells, transfers, assigns, sets over and
conveys to the Trustee without recourse and for the benefit of the SBA and the
Certificateholders, as its interests may appear, subject to the terms of this
Agreement and the Multi-Party Agreement, all of the right, title and interest of
the Seller in and to the Unguaranteed Interests of the Initial SBA Loans, and
all other assets included or to be included in the Trust Fund.
(b) The rights of the Certificateholders to receive payments with
respect to the SBA Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. The Servicing Fee shall not constitute part of the Trust Fund
and Certificateholders shall have no interest in, and are not entitled to
receive any portion of, the Servicing Fee.
Section 2.02. Possession of SBA Files.
(a) Upon the issuance of the Certificates, the ownership of each SBA
Note, the Mortgage and the contents of the related SBA File relating to the
Initial SBA Loans is, and upon each Subsequent Transfer Date the ownership of
each Mortgage Note, the Mortgage and the contents of the related Mortgage File
relating to the applicable Subsequent SBA Loans will be, vested in the Trustee
for the benefit of the SBA and the Certificateholders, as their interests may
appear.
(b) Pursuant to Section 2.04, with respect to the Initial SBA Loans,
the Seller has delivered or caused to be delivered, and, on each Subsequent
Transfer Date, the Seller will deliver or cause to be delivered, each SBA Note
relating to an SBA ss. 7(a) Loan to the FTA.
Section 2.03. Books and Records.
The sale of the Unguaranteed Interest of each SBA Loan shall be
reflected on the Seller's balance sheets and other financial statements as a
sale of assets by the Seller and the Seller shall respond to any third-party
inquiry that such transfer is so reflected as a sale. The Seller shall be
responsible for maintaining, and shall maintain, a complete set of books and
records for each SBA Loan which shall be clearly marked to reflect the ownership
of the Unguaranteed Interest in each SBA Loan by the Trustee for the benefit of
the SBA and the Certificateholders, as its interests may appear.
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Section 2.04. Delivery of SBA Loan Documents.
The Seller, (i) contemporaneously with the delivery of this
Agreement, has delivered or caused to be delivered to the Trustee or, with
respect to the SBA Notes relating to the SBA ss. 7(a) Loans being delivered
pursuant to (a) below, to the FTA, each of the following documents for each
Initial SBA Loan and (ii) on each Subsequent Transfer Date, will deliver or
cause to be delivered to the Trustee or to the FTA, each of the following
documents listed in (a) - (e) below for each Subsequent SBA Loan originated by
the Seller:
(a) The original SBA Note, endorsed by means of an allonge as
follows: "Pay to the order of Marine Midland Bank, and its successors and
assigns, as trustee under that certain Pooling and Servicing Agreement dated as
of December 1, 1997, for the benefit of the United States Small Business
Administration and holders of Business Loan Center SBA Loan-Backed Certificates,
Series 1997-1, Class A and Class B, as their respective interests may appear,
without recourse" and signed, by facsimile or manual signature, in the name of
the Seller by a Responsible Officer, with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to the Seller, if
the Seller was not the originator;
(b) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) the original Mortgage, with evidence of recording thereon, (ii) a
copy of the Mortgage certified as a true copy by a Responsible Officer of the
Seller where the original has been transmitted for recording until such time as
the original is returned by the public recording officer or duly licensed title
or escrow officer or (iii) a copy of the Mortgage certified by the public
recording officer in those instances where the original recorded Mortgage has
been lost;
(c) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) the original Assignment of Mortgage from the Seller endorsed as
follows: "Marine Midland Bank, ("Assignee") its successors and assigns, as
trustee under the Pooling and Servicing Agreement dated as of December 1, 1997
subject to the Multi-Party Agreement dated as of December 1, 1997" with evidence
of recording thereon (provided, however, that where permitted under the laws of
the jurisdiction wherein the Mortgaged Property is located, the Assignment of
Mortgage may be effected by one or more blanket assignments for SBA Loans
secured by Mortgaged Properties located in the same county), or (ii) a copy of
such Assignment of Mortgage certified as a true copy by a Responsible Officer of
the Seller where the original has been transmitted for recording (provided,
however, that where the original Assignment of Mortgage is not being delivered
to the Trustee, each such Responsible Officer may complete one or more blanket
certificates attaching copies of one or more Assignments of Mortgage relating to
the Mortgages originated by the Seller);
(d) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) originals of all intervening assignments, if any, showing a complete
chain of title from the originator to the Seller, including warehousing
assignments, with evidence of recording thereon if such assignments were
recorded, (ii) copies of any assignments certified as true copies by a
Responsible Officer of the Seller where the originals have been submitted for
recording until such time as the originals are returned by the public recording
officer, or (iii) copies of any
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assignments certified by the public recording officer in any instances where the
original recorded assignments have been lost;
(e) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) originals of all title insurance policies relating to the Mortgaged
Properties to the extent the Seller obtained such policies or (ii) copies of any
title insurance policies or other evidence of lien position, including but not
limited to PIRT policies, limited liability reports and lot book reports, to the
extent the Seller obtains such policies or other evidence of lien position,
certified as true by the Seller;
(f) For all SBA Loans, blanket assignment of all Collateral securing
the SBA Loan, including without limitation, all rights under applicable
guarantees and insurance policies;
(g) For all SBA Loans, irrevocable power of attorney of the Seller
to the Trustee to execute, deliver, file or record and otherwise deal with the
Collateral for the SBA Loans in accordance with the Agreement. The power of
attorney will be delegable by the Trustee to the Servicer and any successor
servicer and will permit the Trustee or its delegate to prepare, execute and
file or record UCC financing statements and notices to insurers; and
(h) For all SBA Loans, blanket UCC-1 financing statements
identifying by type all Collateral for the SBA Loans in the SBA Loan Pool and
naming the Trustee as secured party and the Seller as the debtor. The UCC-1
financing statements will be filed promptly following the Closing Date in New
York and Delaware and will be in the nature of protective notice filings rather
than true financing statements.
The Seller shall, within ten Business Days after the receipt
thereof, and in any event, within one year of the Closing Date (or with respect
to the Subsequent SBA Loans, within one year of the related Subsequent Transfer
Date), deliver or cause to be delivered to the Trustee: (i) the original
recorded Mortgage in those instances where a copy thereof certified by the
Seller was delivered to the Trustee; (ii) the original recorded Assignment of
Mortgage from the Seller to the Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of title from the originator
to the Trustee in those instances where copies thereof certified by the Seller
were delivered to the Trustee; and (iii) any intervening assignments of Mortgage
in those instances where copies thereof certified by the Seller were delivered
to the Trustee. Notwithstanding anything to the contrary contained in this
Section 2.04, in those instances where the public recording office retains the
original Mortgage, Assignment of Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, Assignment of Mortgage or assignments of Mortgage certified by
the public recording office to be a true copy of the recorded original thereof.
All SBA Loan documents held by the Trustee or the FTA, as the case may be, as to
each SBA Loan are referred to herein as the "Trustee's Document File."
Although it is the intent of the parties to this Agreement that the
conveyance of the Seller's right, title and interest in and to the Unguaranteed
Interests of the SBA Loans and
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other assets in the Trust Fund pursuant to this Agreement shall constitute a
purchase and sale and not a loan, in the event that such conveyance is deemed to
be a loan, it is the intent of the parties to this Agreement that the Seller
shall be deemed to have granted, and hereby does grant, to the Trustee a first
priority perfected security interest in all of the Seller's right, title and
interest in, to and under the Unguaranteed Interests of the SBA Loans and other
assets in the Trust Fund, and that this Agreement shall constitute a security
agreement under applicable law.
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
Section 2.05. Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.
(a) The SBA shall cause the FTA to execute and deliver on the
Closing Date (or, with respect to the Subsequent SBA Loans, on the related
Subsequent Transfer Date), for each SBA ss. 7(a) Loan, an acknowledgment of
receipt of the SBA Note by the FTA in the form attached as Exhibit 1 to the
Multi-Party Agreement, and declares that the FTA will hold such documents and
any amendments, replacements or supplements thereto, as agent for the benefit of
the SBA and the Certificateholders. The Trustee agrees, for the benefit of the
SBA and the Certificateholders, to review each Trustee's Document File within 90
days after the Closing Date or Subsequent Closing Date, as the case may be (or,
with respect to any Subsequent SBA Loan or Qualified Substitute SBA Loan, within
45 days after the assignment thereof), and to deliver to the Certificateholders,
the Seller, the SBA and the Servicer a certification in the form attached hereto
as Exhibit F-1. Within 360 days after the Closing Date (or, with respect to any
Qualified Substitute SBA Loan, within 360 days after the assignment thereof),
the Trustee shall deliver to the Servicer, the Seller, the SBA, the Rating
Agency and any Certificateholder who requests a copy from the Trustee a final
certification in the form attached hereto as Exhibit F-2 evidencing the
completeness of the Trustee's Document Files.
(b) If the Trustee or the SBA, as the case may be, during the
process of reviewing the Trustee's Document Files finds any document
constituting a part of a Trustee's Document File which is not properly executed,
has not been received, is unrelated to an SBA Loan identified in the SBA Loan
Schedule, or does not conform in a material respect to the requirements of
Section 2.04 or the description thereof as set forth in the SBA Loan Schedule,
the Trustee or the SBA, as the case may be, shall promptly so notify the
Servicer and the Seller. In performing any such review, the Trustee or the SBA,
as the case may be, may conclusively rely on the Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's and the SBA's review of the SBA Files is limited
solely to confirming that the documents listed in Section 2.04 have been
executed and received and relate to the SBA Loans identified in the SBA Loan
Schedule. The Seller agrees to use reasonable efforts to remedy a material
defect in a document constituting part of an SBA File of which it is so notified
by the Trustee or the SBA, as the case may be. If, however, within 60 days after
the Trustee's or the SBA's notice to it respecting such material defect the
Seller has not remedied the defect and such defect materially and adversely
affects the value of the related SBA Loan, the Seller will (i) substitute in
lieu of such SBA Loan a Qualified Substitute SBA Loan in
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the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase the Unguaranteed Interest of such SBA Loan at a purchase price equal to
the Principal Balance of such Unguaranteed Interest as of the date of purchase,
plus 30 days' interest on such Principal Balance, computed at the Adjusted SBA
Loan Remittance Rate as of the next succeeding Determination Date, plus any
accrued unpaid Servicing Fees, Monthly Advances and Servicing Advances
reimbursable to the Servicer, which purchase price shall be deposited in the
Principal and Interest Account on the next succeeding Determination Date.
(c) Upon receipt by the Trustee and the SBA of a certification of a
Servicing Officer of the Servicer of such purchase and the deposit of the
amounts described above in the Principal and Interest Account (which
certification shall be in the form of Exhibit I hereto), the Trustee and the SBA
shall release to the Servicer for release to the Seller the related Trustee's
Document File and the Trustee and the SBA shall execute, without recourse, and
deliver such instruments of transfer necessary to transfer such SBA Loan to the
Seller. All costs of any such transfer shall be borne by the Servicer.
(d) If in connection with taking any action the Servicer requires
any item constituting part of the Trustee's Document File, or the release from
the lien of the related SBA Loan of all or part of any Mortgaged Property or
other Collateral, the Servicer shall deliver to the Trustee and the SBA a
certificate to such effect in the form attached as Exhibit I hereto. Upon
receipt of such certification, the Trustee or the SBA, as the case may be, shall
deliver to the Servicer the requested documentation and the Trustee shall
execute, without recourse, and deliver such instruments of transfer necessary to
release all or the requested part of the Mortgaged Property or other Collateral
from the lien of the related SBA Loan.
On the Remittance Date in March of each year, the Trustee shall
deliver to the Seller, the SBA and the Servicer a certification detailing all
transactions with respect to the SBA Loans for which the Trustee holds a
Trustee's Document File pursuant to this Agreement during the prior calendar
year. Such certification shall list all Trustee's Document Files which were
released by or returned to the Trustee or the FTA during the prior calendar
year, the date of such release or return and the reason for such release or
return.
Section 2.06. [Intentionally Omitted]
Section 2.07. Authentication of Certificates.
The Trustee acknowledges the assignment to it of the Unguaranteed
Interests in the SBA Loans and the delivery to the Trustee and the FTA of the
Trustee's Document Files and, concurrently with such delivery, has authenticated
or caused to be authenticated and delivered to or upon the order of the Seller,
in exchange for the Unguaranteed Interests in the SBA Loans, the Trustee's
Document Files and the other assets included in the definition of Trust Fund,
Certificates duly authenticated by the Trustee in authorized denominations.
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Section 2.08. Fees and Expenses of the Trustee.
The fees and expenses of the Trustee including (i) the annual fees
of the Trustee, payable quarterly in advance, and subject to rebate to the
Servicer as additional servicing compensation hereunder for any fraction of a
calendar quarter in which this Agreement terminates, (ii) any other fees and
expenses to which the Trustee is entitled, and (iii) reimbursements to the
Servicer for any advances made by the Servicer to the Expense Account pursuant
to Section 6.03 hereof, shall be paid from the Expense Account in the manner set
forth in Section 6.03 hereof; provided, however, that the Seller shall be liable
for any expenses of the Trust Fund incurred prior to the Closing Date. The
Servicer and the Trustee hereby covenant with the Certificateholders that every
material contract or other material agreement entered into by the Trustee, or
the Servicer, acting as attorney-in-fact for the Trustee, on behalf of the Trust
Fund shall expressly state therein that no Certificateholder shall be personally
liable in connection with such contract or agreement.
Section 2.09. Sale and Conveyance of the Subsequent SBA Loans.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Seller of all or a portion of the balance of funds
in the Pre-Funding Account, the Seller shall on any Subsequent Transfer Date
sell, transfer, assign, set over and otherwise convey without recourse, to the
Trustee all right, title and interest of the Seller in and to the Unguaranteed
Interest of each Subsequent SBA Loan listed on the SBA Loan Schedule delivered
by the Seller on such Subsequent Transfer Date, all its right, title and
interest in and to principal collected and interest accruing on the Unguaranteed
Interest of each such Subsequent SBA Loan on and after the related Subsequent
Cut-Off Date and all its right, title and interest in the Unguaranteed Interest
in all insurance policies; provided, that the Seller reserves and retains all of
its right, title and interest in and to principal (including Principal
Prepayments) collected and interest accruing on each such Subsequent SBA Loan
prior to the related Subsequent Cut-Off Date. The transfer by the Seller of the
Unguaranteed Interest of the Subsequent SBA Loans set forth on the SBA Loan
Schedule to the Trustee shall be absolute and shall be intended by all parties
hereto to be treated as a sale by the Seller.
The amount released from the Pre-Funding Account shall be
one-hundred percent (100%) of the aggregate Principal Balances as of the related
Subsequent Cut-Off Date of the Subsequent SBA Loans so transferred on the
related Subsequent Transfer Date.
(b) The Seller shall transfer to the Trustee the Unguaranteed
Interest of the Subsequent SBA Loans and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee with a timely
Addition Notice and shall have provided any information reasonably
requested by it with respect to the Subsequent SBA Loans;
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(ii) the Seller shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee)
that shall include SBA Loan Schedules, listing the Subsequent SBA
Loans and any other exhibits listed thereon;
(iii) the Seller shall have deposited in the Principal and
Interest Account all collections in respect of the Subsequent SBA
Loans received on or after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the Seller,
the Servicer or the Spread Account Depositor was insolvent nor will
any of them have been made insolvent by such transfer nor is any of
them aware of any pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Trust Fund or the Holders of the Certificates;
(vi) the Funding Period shall not have terminated;
(vii) the Seller shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related
Subsequent Transfer Agreement;
(viii) the Seller shall have delivered to the Rating Agency
and the Trustee, Opinions of Counsel with respect to the transfer of
the Subsequent SBA Loans substantially in the form of the Opinions
of Counsel delivered to the Trustee on the Closing Date (bankruptcy,
corporate and tax opinions); and
(ix) the FTA shall have delivered, pursuant to Section 2.05(a)
hereof, an acknowledgment of receipt of the SBA Loan by the FTA
relating to such SBA Loan in the form attached as Exhibit 1 to the
Multi-Party Agreement.
(c) The obligation of the Trust Fund to purchase the Unguaranteed
Interest of a Subsequent SBA Loan on any Subsequent Transfer Date is subject to
the requirement, as evidenced by a certificate from a Responsible Officer of the
Seller, that such Subsequent SBA Loan conforms in all material respects to the
representations and warranties concerning the individual Initial SBA Loans set
forth in Sections 3.01 and 3.02 (except that any reference therein to the
Cut-Off Date shall be deemed a reference to the applicable Subsequent Cut-Off
Date) and that the inclusion of all Subsequent SBA Loans being transferred to
the Trust Fund on such Subsequent Transfer Date will not change, in any material
respect, the characteristics of the Initial SBA Loans, in the aggregate, set
forth in Sections 3.1 and 3.2 or in the Confidential Placement Memorandum dated
December 19, 1997 under the headings "Summary of Terms -- The SBA Loan Pool" and
"The SBA Loan Pool." Further, each Subsequent SBA Loan must be an SBA ss.7(a)
Loan. Additionally, following each Subsequent Transfer Date, the weighted
average number of months since origination of all the SBA ss.7(a) Loans
(including the SBA
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ss.7(a) Loans being purchased on such Subsequent Transfer Date) shall be no less
than approximately four months.
(d) In connection with the transfer and assignment of the Subsequent
SBA Loans, the Seller agrees to satisfy the conditions set forth in Sections
2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the
Remittance Dates in January, February and March 1998 and the Special Remittance
Date, the Seller shall determine, and the Trustee shall cooperate with the
Seller in determining (i) the amount and correct dispositions of the Capitalized
Interest Requirements, Overfunded Interest Amounts, and Pre-Funding Earnings and
(ii) any other necessary matters in connection with the administration of the
Pre-Funding Account and of the Capitalized Interest Account. If any amounts are
incorrectly released to the Seller from the Capitalized Interest Account, the
Seller shall immediately repay such amounts to the Trustee.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Seller.
The Seller hereby represents and warrants to the Trustee and the
Certificateholders that as of the Closing Date:
(a) The Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation and
has all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the Seller and perform its obligations hereunder; the Seller
has corporate power and authority to execute and deliver this Agreement and to
perform in accordance herewith and therewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; this Agreement evidences the
valid, binding and enforceable obligation of the Seller; and all requisite
action has been taken by the Seller to make this Agreement valid, binding and
enforceable upon the Seller in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity, none of
which will affect the ownership of the SBA Loans by the Trustee, as trustee.
(b) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc., under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by the
Seller of the documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
documents on the part of the Seller and the performance by the Seller of its
obligations under this Agreement and such of the other documents to which it is
a party;
(c) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of the
articles of incorporation or bylaws of the Seller or result in the breach of any
term or provision of, or conflict with or constitute a default under or result
in the acceleration of any obligation under, any material agreement,
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indenture or loan or credit agreement or other material instrument to which the
Seller or its property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Seller or its property is
subject;
(d) Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby and thereby contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading;
(e) The Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(f) There is no action, order, suit, proceeding or investigation
pending or, to the best of the Seller's knowledge, threatened against the Seller
which, either in any one instance or in the aggregate, may (i) except as
described in the Confidential Placement Memorandum, result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Seller or in any material impairment of the right or ability of
the Seller to carry on its business substantially as now conducted, or in any
material liability on the part of the Seller or of any action taken or to be
taken in connection with the obligations of the Seller contemplated herein, or
which would be likely to impair materially the ability of the Seller to perform
under the terms of this Agreement or (ii) which would draw into question the
validity of this Agreement or the SBA Loans;
(g) The Trust Fund will not constitute an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(h) The Seller is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Seller or its properties or might have consequences that would materially
and adversely affect its performance hereunder;
(i) The statements contained in the Confidential Placement
Memorandum which describe the Seller or the SBA Loans or matters or activities
for which the Seller is responsible in accordance with the Confidential
Placement Memorandum, this Agreement and all documents referred to therein or
herein or delivered in connection therewith or herewith, or which are
attributable to the Seller therein or herein are true and correct in all
material respects, and the Confidential Placement Memorandum does not contain
any untrue statement of a material fact with respect to the Seller or the SBA
Loans and does not omit to state a material fact necessary to make the
statements contained therein with respect to the Seller or the SBA Loans not
misleading. The Seller is not aware that the Confidential Placement Memorandum
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained therein not misleading. There is
no fact peculiar to the Seller or the SBA Loans and known to the Seller that
materially adversely affects or in the future may (so far as the Seller can now
reasonably foresee) materially adversely affect the Seller or the SBA
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Loans or the ownership interests therein represented by the Certificates that
has not been set forth in the Confidential Placement Memorandum;
(j) No Certificateholder is subject to state licensing
requirements solely by virtue of holding the Certificates;
(k) The transfer, assignment and conveyance of the SBA Notes and the
Mortgages by the Seller pursuant to this Agreement are not, or with respect to
the Subsequent SBA Loans, will not be, subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction and do not
violate the SBA Rules and Regulations;
(l) The origination and collection practices used by the Seller with
respect to each SBA Note and Mortgage have been, and the origination and
collection practices to be used by the Seller with respect to each Subsequent
SBA Loan and Mortgage relating to each Subsequent SBA Loan will have been in all
material respects legal, proper, prudent and customary in the SBA loan
origination and servicing business;
(m) Each Initial SBA Loan was and each Subsequent SBA Loan will be,
selected from among the existing SBA loans in the Seller's portfolio at the date
hereof, or in the case of the Subsequent SBA Loans, at the related Subsequent
Cut-Off Date, in a manner not designed to adversely affect the
Certificateholders;
(n) The Seller received fair consideration and reasonably equivalent
value or, in the case of Subsequent SBA Loans, will have received fair
consideration and reasonably equivalent value, in exchange for the sale of the
Unguaranteed Interest of the SBA Loans evidenced by the Certificates;
(o) Neither the Seller nor any of its affiliates sold, or in the
case of the Subsequent SBA Loans will have sold, any interest in any SBA Loan
evidenced by the Certificates with any intent to hinder, delay or defraud any of
their respective creditors;
(p) The Seller is solvent, and the Seller will not be rendered
insolvent as a result of the transfer of the SBA Loans to the Trust Fund or the
sale of the Certificates, the Seller is paying its debts and after giving effect
to the transactions contemplated herein, the Seller will have adequate capital
to conduct its business; and
(q) The chief executive office and legal name of the Seller is as
set forth on the respective UCC-1 financing statement filed on behalf of the
Seller pursuant to Section 2.04(h), such office is the place where the Seller is
"located" for the purposes of Section 9-103(3)(d) of the Uniform Commercial Code
as in effect in the State of New York, and neither the location of such office
nor the legal name of the Seller has changed in the past four months. The Seller
has no trade names, fictitious names, or "doing business as" names, except for
"Business Loan Center."
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(r) The Seller will treat the transfer of the SBA Loans as a sale
for federal income tax and accounting purposes.
(s) To the best of Seller's knowledge, all tax returns have been
filed on a timely basis.
Section 3.02. Individual SBA Loans.
The Seller hereby represents and warrants to the Trustee, and the
Certificateholders, with respect to each Initial SBA Loan originated or acquired
by the Seller, as of the Closing Date, and with respect to each Subsequent SBA
Loan originated by the Seller, as of the related Subsequent Transfer Date:
(a) The information with respect to each SBA Loan set forth in the
SBA Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in
Section 2.04 (including all material documents related thereto) has been or will
be delivered to the Trustee or the FTA, on behalf of the Trustee, on the Closing
Date or as otherwise provided in Section 2.04;
(c) Each Mortgaged Property is improved by a Commercial Property or
a Residential Property and does not constitute other than real property under
state law;
(d) Except with respect to no more than 1% of the SBA Loans, each
SBA Loan has been originated by the Seller or its predecessors and is being
serviced by the Servicer;
(e) Each SBA Loan is an SBA ss. 7(a) Loan and is secured by one or
more items of Collateral;
(f) Except for approximately 2.0% which adjust monthly, each SBA
Note will, with respect to principal payments, adjust quarterly and provide for
a schedule of Monthly Payments which are, if timely paid, sufficient to fully
amortize the principal balance of such SBA Note on its maturity date;
(g) With respect to those SBA Loans secured by a Mortgaged Property,
each Mortgage is a valid and subsisting lien of record on the Mortgaged Property
subject only to any applicable Prior Liens on such Mortgaged Property and
subject in all cases to such exceptions that are generally acceptable to banking
institutions in connection with their regular commercial lending activities, and
such other exceptions to which similar properties are commonly subject and which
do not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(h) Immediately prior to the transfer and assignment herein
contemplated, the Seller held good and indefeasible title to, and was the sole
owner of, the Unguaranteed Interest of each SBA Loan conveyed by the Seller
subject to no liens, charges, mortgages, encumbrances or
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rights of others except as set forth in Section 3.02(g) or other liens which
will be released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the Trustee
will hold good and indefeasible title, to, and be the sole owner of, each SBA
Loan subject to no liens, charges, mortgages, encumbrances or rights of others
except (i) as set forth in Section 3.02(g), (ii) the interests of the SBA or
(iii) other liens which will be released simultaneously with such transfer and
assignment;
(i) As of the Cut-Off Date (or, with respect to any Subsequent SBA
Loan, as of the related Subsequent Cut-Off Date), no SBA Loan is 30 or more days
delinquent in payment;
(j) To the best of the Seller's knowledge, there is no delinquent
tax or assessment lien on any Mortgaged Property, and each Mortgaged Property is
free of material damage and is in good repair;
(k) The SBA Loan is not subject to any right of rescission,
subordination, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the SBA Note or any related
Mortgage, or the exercise of any right thereunder, render either the SBA Note or
any related Mortgage unenforceable in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(l) Each SBA Loan at the time it was made complied and, as of the
Closing Date, complies in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws and, if applicable, the SBA Rules and
Regulations;
(m) Each SBA Loan originated by the Seller was originated in
accordance with the underwriting criteria set forth in the Confidential
Placement Memorandum.
(n) Pursuant to the SBA Rules and Regulations, the Seller requires
that the improvements upon each Mortgaged Property are covered by a valid and
existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Section 5.07;
(o) Pursuant to the SBA Rules and Regulations, the Seller requires
that if a Mortgaged Property is in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, a flood
insurance policy is in effect with respect to such Mortgaged Property with a
generally acceptable carrier in an amount representing coverage described in
Section 5.07;
(p) Each SBA Note, any related Mortgage and any other agreement
pursuant to which Collateral is pledged to a Seller is the legal, valid and
binding obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
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<PAGE>
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), none of
which will prevent the ultimate realization of the security provided by the
Collateral or other agreement, and all parties to each SBA Loan had full legal
capacity to execute all SBA Loan documents and convey the estate therein
purported to be conveyed;
(q) The Servicer has caused and will cause to be performed any and
all acts reasonably required to be performed to preserve the rights and remedies
of the Trustee in any insurance policies applicable to the SBA 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 Trustee or Seller,
respectively;
(r) Each original Mortgage was recorded, and all subsequent
assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of the Seller (or, subject to Section 2.04 hereof, are in
the process of being recorded);
(s) Each SBA Loan conforms, and all such SBA Loans in the aggregate
conform, to the description thereof set forth in the Confidential Placement
Memorandum;
(t) The terms of the SBA Note and the related Mortgage or other
security agreement pursuant to which Collateral was pledged have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the SBA and
the Certificateholders and which has been delivered to the Trustee;
(u) To the best of the Seller's knowledge there are no material
defaults in complying with the terms of any applicable Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;
(v) To the best of the Seller's knowledge there is no proceeding
pending or threatened for the total or partial condemnation of any Mortgaged
Property, nor is such a proceeding currently occurring, and such property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the SBA Loan or the use for which the premises were
intended;
(w) Each Mortgaged Property which is the primary collateral for the
related SBA Loan was, at the time of origination of such SBA Loan, and to the
best of the Seller's knowledge, is, as of the Cut-off Date, free of
contamination from toxic substances or hazardous wastes or is subject to ongoing
environmental rehabilitation approved by the SBA;
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(x) The proceeds of the SBA Loan have been fully disbursed, and
there is no obligation on the part of the Seller to make future advances
thereunder and the Guaranteed Portion of the SBA Loan has been sold in the
Secondary Market pursuant to SBA Form 1086. Any and all requirements as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing or recording the SBA Loans were
paid;
(y) There is no obligation on the part of the Seller or any other
party (except for any guarantor of an SBA Loan) to make Monthly Payments in
addition to those made by the Obligor;
(z) No statement, report or other document signed by the Seller
constituting a part of the SBA File contains any untrue statement of fact
provided by the Seller or omits to state a fact necessary to make the statements
contained therein provided by the Seller not misleading;
(aa) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Obligor;
(bb) No SBA Loan has a shared appreciation feature, or other
contingent interest feature;
(cc) With respect to each SBA Loan secured by a Mortgaged Property
and that is not a first mortgage loan, either (i) no consent for the SBA Loan is
required by the holder of any related Prior Lien or (ii) such consent has been
obtained;
(dd) Each SBA Loan was originated to a business located in the
State identified in the SBA Loan Schedule;
(ee) All parties which have had any interest in the SBA Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
any Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(ff) Any related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would
materially interfere
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with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(gg) There is no default, breach, violation or event of acceleration
existing under the SBA Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and neither the Servicer
nor the Seller have waived any default, breach, violation or event of
acceleration;
(hh) All parties to the SBA Note and any related Mortgage or other
document pursuant to which Collateral was pledged had legal capacity to execute
the SBA Note and any such Mortgage or other document and each SBA Note and
Mortgage or other document have been duly and properly executed by such parties;
(ii) The SBA Loan was not selected for inclusion under this
Agreement from the Seller's portfolio of comparable SBA loans on any basis which
would have a material adverse affect on a Certificateholder;
(jj) All amounts received on and after the Cut-Off Date or, with
respect to the Subsequent SBA Loans, received on and after the related
Subsequent Cut-Off Date, with respect to the SBA Loans have been, to the extent
required by this Agreement, deposited into the Principal and Interest Account
and are, as of the Closing Date, or, with respect to the Subsequent SBA Loans,
as of the related Subsequent Transfer Date, in the Principal and Interest
Account;
(kk) With respect to those SBA Loans secured by Collateral other
than a Mortgaged Property, the related Note, security agreements, if any, and
UCC-1 filed with respect to such Collateral creates a valid and subsisting lien
of record on such Collateral subject only to any Prior Liens, if any, on such
Collateral and subject in all cases to such exceptions that are generally
acceptable to lending institutions in connection with their regular commercial
lending activities, and such other exceptions to which similar Collateral is
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Note, security agreement and UCC-1; and
(ll) Each SBA Loan is secured by one or more items of Collateral and
at the time the related SBA Loan was originated, the aggregate value of all
Collateral securing such SBA Loan was at least equal to the original principal
amount of the related SBA Loan and all Prior Liens securing the related
Collateral.
(mm) To the best of Seller's knowledge, there are no governmental
proceedings or investigations pending or threatened which would adversely affect
payment on the SBA Loans.
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Section 3.03 Purchase and Substitution of Defective SBA Loans.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates
to the Certificateholders. Upon discovery by the Servicer, any Subservicer or
the Trustee of a breach of any of such representations and warranties which
materially and adversely affects the value of the SBA Loans or the interest of
the Certificateholders or the SBA therein or which materially and adversely
affects the interests of the Certificateholders and the SBA in the related SBA
Loan in the case of a representation and warranty relating to a particular SBA
Loan (notwithstanding that such representation and warranty was made to the
Seller's best knowledge), the party discovering such breach shall give prompt
written notice to the others. Within 60 days of the earlier of its discovery or
its receipt of notice of any breach of a representation or warranty, the Seller
shall (a) promptly cure such breach in all material respects, (b) purchase the
Unguaranteed Interest of such SBA Loan by depositing in the Principal and
Interest Account, on the next succeeding Determination Date, an amount and in
the manner specified in Section 2.05(b), or (c) if within two years of the
Closing Date, remove such SBA Loan from the Trust Fund (in which case it shall
become a Deleted SBA Loan) and substitute one or more Qualified Substitute SBA
Loans. Any such substitution shall be accompanied by payment by the Seller of
the Substitution Adjustment, if any.
As to any Deleted SBA Loan for which the Seller substitutes a
Qualified Substitute SBA Loan or Loans, the Servicer shall effect such
substitution by delivering to the Trustee and the FTA a certification in the
form attached hereto as Exhibit I, executed by a Servicing Officer, and shall
also deliver to the Trustee and the FTA, as applicable, the documents
constituting the Trustee's Document File for such Qualified Substitute SBA Loan
or Loans.
The Servicer shall deposit in the Principal and Interest Account the
Unguaranteed Percentage of all payments of principal received in connection with
such Qualified Substitute SBA Loan or Loans after the date of such substitution
together with all interest (net of the portion thereof required to be paid to
the related Registered Holder, the FTA's Fee, the Premium Protection Fee and the
Servicing Fee with respect to each SBA Loan and the Additional Fee with respect
to each Additional Fee SBA Loan). Monthly Payments received with respect to
Qualified Substitute SBA Loans on or before the date of substitution will be
retained by the Seller. The Trust Fund will own all payments received with
respect to the Unguaranteed Interest on the Deleted SBA Loan on or before the
date of substitution, and the Seller shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted SBA Loan. The Servicer
shall give written notice to the Trustee that such substitution has taken place
and shall amend the SBA Loan Schedule to reflect the removal of such Deleted SBA
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute SBA Loan or Loans. Upon such substitution, such Qualified Substitute
SBA Loan or Loans shall be subject to the terms of this Agreement in all
respects, including Sections 2.04 and 2.05, and the Seller shall be deemed to
have made with respect to such Qualified Substitute SBA Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Seller will remit
to the Servicer, and the Servicer will deposit into the Principal and Interest
Account an amount equal to the Substitution Adjustment.
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In addition to the cure, purchase and substitution obligation in
Section 2.05 and this Section 3.03, the Seller shall indemnify and hold harmless
the Trust Fund, the Trustee and the Certificateholders against any loss,
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 the
Seller's representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Seller set forth in Sections
2.05 and 3.03 to cure, purchase or substitute for a defective SBA Loan and to
indemnify the Certificateholders and the Trustee as provided in Sections 2.05
and 3.03 constitute the sole remedies of the Trustee and the Certificateholders
respecting a breach of the foregoing representations and warranties.
Any cause of action against the Servicer or the Seller relating to
or arising out of the breach of any representations and warranties made in
Sections 2.05, 3.01 or 3.02 shall accrue as to any SBA Loan upon (i) discovery
of such breach by any party and notice thereof to the Seller and or notice
thereof by the Seller to the Trustee, (ii) failure by the Seller to cure such
breach or purchase or substitute such SBA Loan as specified above, and (iii)
demand upon the Seller by the Trustee for all amounts payable hereunder in
respect of such SBA Loan.
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ARTICLE IV
THE CERTIFICATES
Section 4.01. Certificates.
The Class A and Class B Certificates shall be substantially in the
forms annexed hereto as Exhibits B-1 and B-2 and shall, upon original issue, be
executed and delivered by the Servicer to the Trustee for authentication and
redelivery to or upon the order of the Seller, upon receipt by the Trustee and
the FTA of the documents specified in Section 2.04. All Certificates shall be
executed on behalf of the Servicer by its President, its Treasurer, one of its
Executive Vice Presidents, one of its Vice Presidents or one of its Assistant
Vice Presidents, in the denominations specified in the definition of Percentage
Interest, and shall be authenticated on behalf of the Trustee by one of its
Responsible Officers. Certificates bearing the signatures of individuals who
were at the time of the execution or authentication of the Certificates the
proper officers of the Servicer or a Responsible Officer of the Trustee, as the
case may be, shall bind the Servicer or the Trustee, as the case may be,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
Section 4.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office of the
Certificate Registrar, in New York, New York, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, it shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder, as well
as the Series and the number in the Series. Marine Midland Bank is initially
appointed Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided.
(b) Each Class of Certificates shall be issued in minimum
denominations of $100,000 original principal amount and integral multiples of
$1,000 in excess thereof, except that one Class A Certificate and one Class B
Certificate may be in a different denomination so that the sum of the
denominations of all outstanding Class A Certificates and Class B Certificates
shall equal the Original Class A Certificate Principal Balance and the Original
Class B Certificate Principal Balance, respectively. On the Closing Date, the
Trustee will execute and authenticate Individual Certificates all in an
aggregate principal amount that shall equal the Original Class A Certificate
Principal Balance and the Original Class B Certificate Principal Balance.
(c) [Intentionally Omitted.]
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(d) [Intentionally Omitted.]
(e) [Intentionally Omitted.]
(f) [Intentionally Omitted.]
(g) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Certificate
Registrar and, upon satisfaction of the conditions set forth below, the Servicer
shall execute in the name of the designated transferee or transferees, a new
Certificate of the same Percentage Interest and dated the date of authentication
by the Trustee. The Certificate Registrar shall notify the Servicer and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations of a like Class and
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall be accompanied by wiring
instructions, if applicable, in the form of Exhibit E(1).
(h) No service charge shall be made for any transfer or exchange of
Certificates, but prior to transfer the Certificate Registrar may require
payment by the transferor of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
All Certificates surrendered for transfer and exchange shall be
marked canceled by the Authenticating Agent and retained for one year and
destroyed thereafter.
(i) By acceptance of an Individual Certificate, whether upon
original issuance or subsequent transfer, each holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth in
the Securities Legend and agrees that it will transfer such a Certificate only
as provided herein. In addition to the provisions of Section 4.02(n) the
following restrictions shall apply with respect to the transfer and registration
of transfer of an Individual Certificate to a transferee that takes delivery in
the form of an Individual Certificate:
(i) The Certificate Registrar shall register the transfer of
an Individual Certificate if the requested transfer is being made to
a transferee who has provided the Certificate Registrar with a Rule
144A Certification.
(ii) The Certificate Registrar shall register the transfer of
any Individual Certificate (other than the initial delivery of the
Class B Certificates to the Spread Account Depositor) if (x) the
transferor has advised the Certificate Registrar in writing that the
Certificate is being transferred to an Institutional Accredited
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Investor; and (y) prior to the transfer the transferee furnishes to
the Certificate Registrar a Transferee Letter, provided that, if
based upon an Opinion of Counsel to the effect that the delivery of
(x) and (y) above are not sufficient to confirm that the proposed
transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and other applicable laws, the Certificate Registrar
may as a condition of the registration of any such transfer require
the transferor to furnish other certifications, legal opinions or
other information prior to registering the transfer of an Individual
Certificate.
(j) [Intentionally Omitted.]
(k) [Intentionally Omitted.]
(l) [Intentionally Omitted.]
(m) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in the Global Certificate.
(n) Subject to the restrictions on transfer and exchange set forth
in this Section 4.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination or any integral multiple of $1,000 in
excess thereof) by surrendering such Certificate at the Corporate Trust Office,
or at the office of any transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Certificate
Registrar in the case of transfer and a written request for exchange in the case
of exchange. The holder of a beneficial interest in a Global Certificate may,
subject to the rules and procedures of the Depository, cause the Depository (or
its nominee) to notify the Certificate Registrar in writing of a request for
transfer or exchange of such beneficial interest for an Individual Certificate
or Certificates. Following a proper request for transfer or exchange, the
Certificate Registrar shall, within five Business Days of such request made at
such Corporate Trust Office, cause the Trustee to authenticate and the
Certificate Registrar to deliver at such Corporate Trust Office, to the
transferee (in the case of transfer) or holder (in the case of exchange) or send
by first class mail at the risk of the transferee (in the case of transfer) or
holder (in the case of exchange) to such address as the transferee or holder, as
applicable, may request, an Individual Certificate or Certificates, as the case
may require, for a like aggregate Percentage Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.
(o) No transfer of any Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is made in accordance with said Act and
laws. In the event of any such transfer, unless such transfer is made in
reliance upon Rule 144A under the Securities Act and except for the initial
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issuance of the Class B Certificates to the Spread Account Depositor, (i) the
Trustee may require a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Trustee
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from said Act and laws or is being
made pursuant to said Act and laws, which Opinion of Counsel shall not be an
expense of the Trustee, the Seller, the Servicer or the Trust Fund and (ii) the
Trustee shall require the transferee to execute a Transferee Letter certifying
to the Seller and the Trustee the facts surrounding such transfer, which
Transferee Letter shall not be an expense of the Trustee, the Seller, the
Servicer or the Trust Fund. The holder of a Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Seller and
the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws. None of
the Seller, the Servicer, the Trustee or the Trust Fund intends or is obligated
to register or qualify any Certificate under the Securities Act or any state
securities laws.
(p) No Class B Certificate may be acquired directly or indirectly,
for or on behalf of: (i) an employee benefit plan or other retirement
arrangement subject to ERISA, and/or Section 4975 of the Code, or (ii) any
entity, the assets of which would be deemed plan assets under the Department of
Labor regulations set forth at 29 C.F.R. ss.2510.3-101, other than an "insurance
company general account" within the meaning of Section V(e) of Prohibited
Transaction Class Exemption 95-60 (collectively, a "Plan"). No transfer of a
Class B Certificate representing an Individual Certificate shall be made unless
the Trustee shall have received a certification from the transferee of such
Individual Certificate, acceptable to and in form and substance satisfactory to
the Trustee and the Seller, to the effect that such transferee is either: (i)
not acquiring a Class B Certificate, directly or indirectly, for or on behalf of
a Plan, or (ii) is acquiring such Class B Certificate, directly or indirectly,
for or on behalf of an "insurance company general account" within the meaning of
Section V(e) of Prohibited Transaction Class Exemption 95-60. Notwithstanding
anything else to the contrary herein, in the event any purported transfer of any
Class B Certificate representing an Individual Certificate is made without
delivery of the certification referred to above, such certification shall be
deemed to have been made by the Transferee by its acceptance of such Individual
Certificate. In addition, any purported transfer of a Class B Certificate
representing an Individual Certificate directly or indirectly to or on behalf of
a Plan other than an "insurance company general account" within the meaning of
Section V(e) of Prohibited Transaction Class Exemption 95-60 shall be void and
of no effect. The acquisition of a Class B Certificate representing an interest
in a Global Certificate shall be deemed a representation by the acquirer that it
is either: (i) not acquiring a Class B Certificate, directly or indirectly, for
or on behalf of a Plan, or (ii) is acquiring such Class B Certificate directly
or indirectly, for or on behalf of an "insurance company general account" within
the meaning of Section V(e) of Prohibited Transaction Class Exemption 95-60.
(q) Notwithstanding any other provision of this Agreement to the
contrary, on the Closing Date, the Trustee shall authenticate in the name of,
and deliver to, the Spread Account Depositor, the Class B Certificate in the
form of a single Individual Certificate in an aggregate principal amount equal
to the Original Class B Principal Balance. The Class B Certificate may not be
sold, pledged, transferred, assigned or otherwise conveyed, in whole or in
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part, without the prior written approval of the SBA, a copy of which approval
shall be furnished to the Trustee. A legend to such effect shall be placed on
the Class B Certificate.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity as may be required by each of them to save each of
them harmless, then, in the absence of notice to the Servicer, the Trustee and
the Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Servicer shall execute and deliver, and the Trustee shall
authenticate, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest, but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section 4.03, the Servicer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the Trust Fund, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Seller, the Trustee, the Paying Agent and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.07 and for all other purposes whatsoever, and
the Seller, the Servicer, the Trustee and the Certificate Registrar shall not be
affected by notice to the contrary.
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ARTICLE V
ADMINISTRATION AND SERVICING OF SBA LOANS
Section 5.01. Duties of the Servicer.
(a) The Servicer covenants and agrees that it shall act as agent
(and the Servicer is hereby appointed to act as agent) on behalf of the Trust
Fund and that, in such capacity, it shall: (i) prepare and file, or cause to be
prepared and filed, in a timely manner, any Tax Return required to be filed by
the Trust Fund; (ii) prepare and forward, or cause to be prepared and forwarded,
to the Trustee, the Certificateholders and to the Internal Revenue Service and
any other relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with any
provision of federal, state or local income tax laws; (iii) to the extent that
the affairs of the Trust Fund are within its control, conduct such affairs at
all times that any Certificates are outstanding so as to maintain the status of
the Trust Fund as a grantor trust under any applicable federal, state and local
laws; (iv) pay the amount of any and all federal, state, and local taxes,
imposed on the Trust Fund when and as the same shall be due and payable (but
such obligation shall not prevent the Servicer or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Servicer from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (v) ensure that any such returns or reports
filed on behalf of the Trust Fund are properly executed by the appropriate
person; and (vi) represent the Trust Fund in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of the
Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any item of the Trust Fund
and otherwise act on behalf of the Trust Fund in relation to any tax matter
involving the Trust Fund. The Servicer shall indemnify the Trustee and the Trust
Fund for any liability it may incur in connection with this Section 5.01(a),
which indemnification shall survive the termination of the Trust Fund; provided,
however, that the Servicer shall not indemnify the Trustee for the Trustee's
negligence or willful misconduct.
(b) The Servicer, as independent contract servicer, shall service
and administer the SBA Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement and the Multi-Party Agreement and the SBA Rules
and Regulations. The Servicer may enter into Subservicing Agreements for any
servicing and administration of SBA ss. 7(a) Loans with any entity approved with
prior written consent by the SBA. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement and the
Multi-Party Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related SBA ss.
7(a) Loans or enter into a Subservicing Agreement with a successor subservicer
which qualifies hereunder.
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(c) 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
Trustee, the SBA and the Certificateholders for the servicing and administering
of the SBA Loans in accordance with the provisions of this Agreement and the
Multi-Party Agreement and the SBA Rules and Regulations, 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 SBA Loans. For purposes of this Agreement,
the Servicer shall be deemed to have received payments on SBA Loans when any
Subservicer has received such payments. 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.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the SBA Loans involving a Subservicer in
its capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone, and the Trustee, the SBA and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof and the Multi-Party Agreement,
thereupon assume all of the rights and obligations of the Servicer under each
Subservicing Agreement that the Servicer may have entered into, unless the
Trustee is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms. The Trustee, its designee or the successor servicer
for the Trustee 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. The Servicer at
its expense and without right of reimbursement therefor, shall, upon request of
the Trustee, deliver to the assuming party all documents and records relating to
each Subservicing Agreement and the SBA 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.
(f) So long as it is consistent with the terms of this Agreement and
the Multi-Party Agreement, the SBA Agreement (as defined in the Multi-Party
Agreement) and the SBA Rules and Regulations, the Servicer may waive, modify or
vary any term of any SBA Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Obligor
if in the Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the SBA and the
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Certificateholders, provided, however, that (unless (x) the Obligor is in
default with respect to the SBA Loan, or such default is, in the judgment of the
Servicer, imminent and (y) the Servicer determines that any modification would
not be considered a new loan for federal income tax purposes) the Servicer may
not permit any modification with respect to any SBA Loan that would change the
SBA Loan Interest Rate, defer (subject to Section 5.12), or forgive the payment
of any principal or interest (unless in connection with the liquidation of the
related SBA Loan), or extend the final maturity date on such SBA Loan without
the consent of the SBA, if such consent is then required by the SBA Rules and
Regulations. The Servicer may exercise all unilateral servicing actions
permitted by participating lenders in accordance with the SBA Rules and
Regulations. No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall for the purposes of distributions to Certificateholders
be added to the amount owing under the related SBA Loan. Without limiting the
generality of the foregoing, so long as it is consistent with the SBA Rules and
Regulations, the Servicer shall continue, and is hereby authorized and empowered
to execute and deliver on behalf of the Trustee, the SBA and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the SBA Loans and with respect to any Mortgaged Properties or other
Collateral. If reasonably required by the Servicer, each Certificateholder
and/or the Trustee shall furnish the Servicer, within 5 Business Days of receipt
of the Servicer's request, with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement. Any such request to the Trustee
shall be accompanied by a certification in the form of Exhibit I attached hereto
signed by a Servicing Officer.
The Servicer, in servicing and administering the SBA Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
Foreclosed Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering SBA Loans for
its own account, in accordance with the SBA Rules and Regulations and giving due
consideration to the Certificateholders' and the SBA's reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation
of, or notice of the removal of, the Servicer from its rights and obligations
under this Agreement, and with respect to resignation pursuant to Section 9.04,
after receipt of the Opinion of Counsel required pursuant to Section 9.04
addressed to the SBA and the Trustee, the Trustee or its designee shall assume
all of the rights and obligations of the Servicer, subject to Section 10.02
hereof and the Multi-Party Agreement. The Servicer shall, upon request of the
Trustee but at the expense of the Servicer, deliver to the Trustee all documents
and records (including computer tapes and diskettes) relating to the SBA Loans
and an accounting of amounts collected and held by the Servicer and otherwise
use its best efforts to effect the orderly and efficient transfer of servicing
rights and obligations to the assuming party.
(h) For so long as any of the Certificates are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) of the Securities
Act, (1) the Servicer will provide or cause to be provided to any holder of such
Certificates and any prospective purchaser thereof designated by such a holder,
upon the request of such holder or prospective purchaser, the
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information required to be provided to such holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Servicer shall update such
information from time to time in order to prevent such information from becoming
false and misleading and will take such other actions as are necessary to ensure
that the safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A.
Section 5.02. Liquidation of SBA Loans.
In the event that any payment due under any SBA Loan and not
postponed pursuant to Section 5.01 is not paid when the same becomes due and
payable, or in the event the Obligor fails to perform any other covenant or
obligation under the SBA Loan, the Servicer shall take such action in accordance
with the applicable SBA Rules and Regulations as it shall deem to be in the best
interests of the Certificateholders and the SBA. With respect to any such SBA
ss. 7(a) Loan for which the SBA has expressed to the Servicer the SBA's desire
to assume servicing of such SBA Loan consistent with the SBA Rules and
Regulations, the Trustee shall, upon written direction of the Servicer, deliver
to the SBA or its designee all or any portion of the Trustee's Document File
relating to such SBA ss. 7(a) Loan and the Trustee shall execute such documents,
including but not limited to an endorsement of the related SBA Note and an
assignment of the related Mortgage, as the Servicer shall request. Expenses
incurred in connection with any such action shall be the responsibility of the
Servicer and shall not be chargeable to the Principal and Interest Account or
the Certificate Account. Subject to the SBA Rules and Regulations and with the
prior written consent of the SBA (if required by the SBA Rules and Regulations),
the Servicer shall foreclose upon or otherwise comparably effect the ownership
in the name of the SBA of Mortgaged Properties or other Collateral relating to
defaulted SBA ss. 7(a) Loans for which the related SBA ss. 7(a) Loan is still
outstanding, as to which no satisfactory arrangements can be made for collection
of delinquent payments in accordance with the provisions of Section 5.10. In
connection with such foreclosure or other conversion, the Servicer shall
exercise collection and foreclosure procedures with the same degree of care and
skill in its exercise or use as it would exercise or use under the circumstances
in the conduct of its own affairs. The Unguaranteed Percentage of any amounts
advanced in connection with such foreclosure or other action shall constitute
"Servicing Advances." The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes on Mortgaged Properties
in determining whether to foreclose upon or otherwise comparably convert the
ownership of such Mortgaged Property, and will not foreclose on a Mortgaged
Property where it has cause to believe such substances exist unless it has
received a Phase I environmental report and such report reveals no environmental
problems, or such Mortgaged Property is subject to an environmental
rehabilitation for which the Seller is not responsible.
After an SBA Loan has become a Liquidated SBA Loan, the Servicer
shall promptly prepare and forward to the Trustee and the SBA and upon request,
any Certificateholder, a Liquidation Report, in the form attached hereto as
Exhibit J, detailing the Liquidation Proceeds received from the Liquidated SBA
Loan, expenses incurred with respect thereto, and any loss incurred in
connection therewith.
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Section 5.03. Establishment of Principal and
Interest Accounts; Deposits in
Principal and Interest Accounts.
(a) The Servicer shall cause to be established and maintained one or
more Principal and Interest Accounts, in one or more Designated Depository
Institutions, in the form of time deposit or demand accounts, which may be
interest-bearing or such accounts may be trust accounts wherein the moneys
therein are invested in Permitted Instruments, titled "Business Loan Center,
Inc., in trust for the registered holders of Business Loan Center, SBA
Loan-Backed Adjustable Rate Certificates, Series 1997-1, Class A and Class B."
Such Principal and Interest Accounts shall be insured by the BIF or SAIF
administered by the FDIC to the maximum extent provided by law. The creation of
any Principal and Interest Account shall be evidenced by a letter agreement in
the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Trustee,
the SBA and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without
duplication (within two Business Days of receipt thereof) in the Principal and
Interest Account and retain therein:
(i) the Unguaranteed Percentage of all payments received
after the Cut-Off Date on account of principal on the SBA Loans,
including the Unguaranteed Percentage of all Excess Payments,
Principal Prepayments and Curtailments collected after the Cut-Off
Date;
(ii) all payments received after the Cut-Off Date on
account of interest on the SBA Loans (net of the portion thereof
required to be paid to the related Registered Holders, the Premium
Protection Fee, the FTA's Fee and the Servicing Fee with respect to
each SBA Loan, the Additional Fee with respect to each Additional
Fee SBA Loan, and other servicing compensation payable to the
Servicer as permitted herein);
(iii) the Unguaranteed Percentage of all Net Liquidation
Proceeds;
(iv) the Unguaranteed Percentage of all Insurance
Proceeds (other than amounts to be applied to restoration or repair
of any related Mortgaged Property, or to be released to the Obligor
in accordance with customary servicing procedures);
(v) the Unguaranteed Percentage of all Released
Mortgaged Property Proceeds;
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(vi) any amounts paid in connection with the repurchase
of the Unguaranteed Interest of any SBA Loan and the amount of any
Substitution Adjustment received pursuant to Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the
Principal and Interest Account pursuant to Section 5.10; and
(viii) the amount of any losses incurred in connection
with investments in Permitted Instruments.
(c) The foregoing requirements for deposit in the Principal and
Interest Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments with respect to the
Guaranteed Interest, the Premium Protection Fee, the FTA's Fee and the Servicing
Fee (to the extent received and permitted by Section 7.03), with respect to each
SBA Loan and the Additional Fee with respect to each Additional Fee SBA Loan,
together with the difference between any Liquidation Proceeds and the related
Net Liquidation Proceeds, need not be deposited by the Servicer in the Principal
and Interest Account.
(d) Any interest earnings on funds held in the Principal and
Interest Account paid by a Designated Depository Institution shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following its monthly remittance to
the Trustee pursuant to Section 5.04(a). Any reference herein to amounts on
deposit in the Principal and Interest Account shall refer to amounts net of such
investment earnings.
Section 5.04. Permitted Withdrawals From the
Principal and Interest Account
The Servicer shall withdraw funds from the Principal and Interest
Account for the following purposes:
(a) to effect the remittance to the Trustee on each Determination
Date for deposit in the Certificate Account, the portion of the Available Funds
for the related Remittance Date that is net of Compensating Interest, Monthly
Advances and amounts then on deposit in the Spread Account;
(b) to reimburse itself for any accrued unpaid Servicing Fees and
Premium Protection Fees, unreimbursed Monthly Advances and for unreimbursed
Servicing Advances to the extent deposited in the Principal and Interest Account
(and not netted from Monthly Payments received). The Servicer's right to
reimbursement for unpaid Servicing Fees and, except as provided in the following
sentence, Servicing Advances and Monthly Advances shall be limited to
Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds
and such other amounts as may be collected by the Servicer from the Obligor or
otherwise relating to the SBA Loan in respect of which such unreimbursed amounts
are owed. The Servicer's right to reimbursement for Servicing Advances and
Monthly Advances in excess of
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such amounts shall be limited to any late collections of interest received on
the SBA Loans generally, including Liquidation Proceeds, Released Mortgaged
Property Proceeds, Insurance Proceeds and any other amounts;
(c) to withdraw any amount received from an Obligor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay
to itself, as permitted by Section 5.03(d), interest paid in respect of
Permitted Instruments or by a Designated Depository Institution on funds
deposited in the Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and Interest
Account that were not required to be deposited therein or were deposited therein
in error;
(f) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds; and
(g) to clear and terminate the Principal and Interest Account upon
the termination of this Agreement.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained with a Designated Depository
Institution as an interest-bearing account meeting the requirements set forth in
Section 5.03(a), or the funds held therein may be invested by the Servicer (to
the extent practicable) in Permitted Instruments, as directed in writing by the
Servicer. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "Business Loan Center,
Inc. in trust for the registered holders of Business Loan Center SBA Loan-Backed
Adjustable Rate Certificates, Series 1997-1." All interest or other earnings
from funds on deposit in the Principal and Interest Account (or any Permitted
Instruments thereof) shall be the exclusive property of the Servicer, and may be
withdrawn from the Principal and Interest Account pursuant to clause (d) above.
The amount of any losses incurred in connection with the investment of funds in
the Principal and Interest Account in Permitted Instruments shall be deposited
in the Principal and Interest Account by the Servicer from its own funds
immediately as realized without reimbursement therefor.
Section 5.05. [Intentionally Omitted]
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Section 5.06. Transfer of Accounts.
The Servicer may, upon written notice to the Trustee and the SBA,
transfer any Principal and Interest Account to a different Designated Depository
Institution.
Section 5.07. Maintenance of Hazard Insurance.
The Servicer shall comply with the SBA Rules and Regulations
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of an SBA Loan, to the best of the Servicer's knowledge after
reasonable investigation, the related Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
consistent with the SBA Rules and Regulations, the Servicer will require the
related Obligor to purchase a flood insurance policy with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the full insurable value of the Mortgaged Property, or (ii) the maximum
amount of insurance available under the National Flood Insurance Act of 1968, as
amended. The Servicer shall also maintain, to the extent such insurance is
available and required by the SBA Rules and Regulations, on Foreclosed Property
constituting real property, fire and hazard insurance in the amounts described
above and liability insurance. Any amounts collected by the Servicer under any
such policies (other than amounts to be applied to the restoration or repair of
the Mortgaged Property, or to be released to the Obligor in accordance with the
SBA Rules and Regulations) shall be deposited in the Principal and Interest
Account, subject to withdrawal pursuant to Section 5.04. It is understood and
agreed that no earthquake or other additional insurance need be required by the
Servicer of any Obligor or maintained on Foreclosed Property, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All policies required
hereunder shall be endorsed with standard mortgagee clauses with losses payable
to the Servicer or its affiliates.
Section 5.08. [Intentionally Omitted]
Section 5.09. Fidelity Bond
The Servicer shall maintain with a responsible company, and at its
own expense, a blanket fidelity bond and an errors and omissions insurance
policy, in a minimum amount equal to $500,000, and a maximum deductible of
$25,000, if commercially available, with coverage on all employees acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the SBA Loans ("Servicer Employees"). The fidelity bond shall insure
the Trustee, its officers and employees against losses resulting from forgery,
theft, embezzlement or fraud by such Servicer Employees. The errors and
omissions policy shall insure against losses resulting from the errors,
omissions and negligent acts of such Servicer Employees. No provision of this
Section 5.09 requiring such fidelity bond and errors and omissions insurance
shall relieve the Servicer from its duties as set forth in this Agreement. Upon
the request of the Trustee,
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the SBA or any Certificateholder, the Servicer shall cause to be delivered to
the Trustee, the SBA or such Certificateholder a certified true copy of such
fidelity bond and insurance policy. The current issuer of such fidelity bond is
Aetna Casualty and Surety and the current issuer of such insurance policy is
Lloyd's of London.
Section 5.10. Title, Management and Disposition
of Foreclosed Property
In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (a "Foreclosed Property"), the
deed or certificate of sale may be taken in the name of the Trustee on behalf of
the Trust for the benefit of the Certificates and the SBA, as their interests
may appear.
Unless the servicing of a Foreclosed Property relating to an SBA ss.
7(a) Loan is assumed by the SBA pursuant to the SBA Rules and Regulations, the
Servicer, subject to Sections 5.01 and 5.02 hereof, shall manage, conserve,
protect and operate each Foreclosed Property for the SBA and the
Certificateholders solely for the purpose of its prudent and prompt disposition
and sale. The Servicer shall, either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the Foreclosed Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the Foreclosed Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interest of the SBA and the
Certificateholders.
The Servicer shall cause to be deposited in the Principal and
Interest Account, no later than five Business Days after the receipt thereof,
the Unguaranteed Percentage of all revenues received with respect to the
conservation and disposition of the related Foreclosed Property net of Servicing
Advances.
The disposition of Foreclosed Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer,
with SBA concurrence (if required by the SBA Rules and Regulations), deems to be
in the best interest of the SBA and the Certificateholders. The Unguaranteed
Percentage of the proceeds of sale of the Foreclosed Property shall promptly,
but in no event later than two Business Days after receipt, be deposited in the
Principal and Interest Account as received from time to time and, as soon as
practicable thereafter, the expenses of such sale shall be paid. The Servicer
shall, subject to Section 5.04, reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees and unreimbursed Monthly Advances, and
the Servicer shall deposit in the Principal and Interest Account the
Unguaranteed Percentage of the net cash proceeds of such sale to be distributed
to the Certificateholders in accordance with Section 6.07 hereof.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on an SBA Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer and the
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Trustee shall have received an Opinion of Counsel also addressed to the SBA to
the effect that such longer retention will not cause the Trust Fund to be
subject to Federal income tax.
Section 5.11. [Intentionally Omitted.]
Section 5.12. Collection of Certain SBA
Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the SBA Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, comply with the
terms and provisions of any applicable hazard insurance policy. Consistent with
the foregoing and the SBA Rules and Regulations, the Servicer may in its
discretion waive or permit to be waived any fee or charge (other than the
Servicing Fee, without the written consent of the SBA) which the Servicer would
be entitled to retain hereunder as servicing compensation and extend the due
date for payments due on an SBA Note for a period (with respect to each payment
as to which the due date is extended) not greater than 180 days after the
initially scheduled due date for such payment provided that the Servicer
determines such extension would not be considered a new mortgage loan for
federal income tax purposes. In the event the Servicer shall consent to the
deferment of the due dates for payments due on an SBA Note, the Servicer shall
nonetheless make payment of any required Monthly Advance with respect to the
payments so extended to the same extent as if such installment were due, owing
and delinquent and had not been deferred, and shall be entitled to reimbursement
therefor in accordance with Section 5.04(b) hereof.
Section 5.13. Access to Certain Documentation and
Information Regarding the SBA Loans.
The Servicer shall provide to the Trustee and the SBA access to the
documentation regarding the SBA Loans required by applicable local, state and
federal regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
Section 5.14. Superior Liens.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by a Prior Lien, or
has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the SBA and the Trust Fund, whatever actions are necessary to protect
the interests of the Certificateholders and the SBA, and/or to preserve the
security of the related SBA Loan. The Servicer shall immediately notify the
Trustee, the Rating Agency and the SBA of any such action or circumstances. The
Servicer will advance the necessary funds to cure the default or reinstate the
superior lien, if such advance is in the best interests of the
Certificateholders and the SBA. The Servicer shall thereafter take such action
as is necessary to recover the amount so advanced.
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ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Establishment of Certificate Account;
Deposits in Certificate Account; Permitted
Withdrawals from Certificate Account.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself in its trust department a trust account, which shall not be
interest-bearing, titled "Certificate Account, Marine Midland Bank, as trustee
for the registered holders of Business Loan Center SBA Loan-Backed Adjustable
Rate Certificates, Series 1997-1, Class A and Class B" (the "Certificate
Account"). The Trustee shall, promptly upon receipt, deposit in the Certificate
Account and retain therein:
(i) the Available Funds (net of the amount of Monthly
Advances and Compensating Interest deposited pursuant to subclause
(ii) below and amounts then on deposit in the Spread Account)
remitted by the Servicer;
(ii) the Compensating Interest and the portion of the
Monthly Advance remitted to the Trustee by the Servicer;
(iii) amounts transferred from the Spread Account
pursuant to Section 6.02(b)(i);
(iv) amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses on investments
of amounts in the Certificate Account; and
(v) amounts transferred from the Pre-Funding Account and
the Capitalized Interest Account on the Special Remittance Date
pursuant to Sections 6.04(c) and (d) respectively.
(b) Amounts on deposit in the Certificate Account shall be withdrawn on
each Remittance Date by the Trustee, or the Paying Agent, on its behalf, to
effect the distribution described in Section 6.07(b) and thereafter by the
following parties in no particular order of priority:
(i) by the Trustee, to invest amounts on deposit in the
Certificate Account in Permitted Instruments pursuant to Section
6.06;
(ii) by the Trustee, to pay on a monthly basis to the
Servicer as additional servicing compensation interest paid and
earnings realized on Permitted Instruments;
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(iii) by the Trustee, to withdraw any amount not
required to be deposited in the Certificate Account or deposited
therein in error; and
(iv) by the Trustee, to clear and terminate the
Certificate Account upon the termination of this Agreement in
accordance with the terms of Section 11.01 hereof.
Section 6.02. Establishment of Spread Account; Deposits in
Spread Account; Permitted Withdrawals from
Spread Account.
(a) No later than the Closing Date, the Trustee will establish with
the Spread Account Custodian an Account in accordance with the terms of the
Spread Account Agreement (the "Spread Account"). The Spread Account shall be the
property of the Spread Account Depositor, subject to the terms hereof and of the
Spread Account Agreement, and the funds held therein may be invested in
Permitted Instruments. The Spread Account shall not constitute part of the Trust
Fund. The Trustee or the Spread Account Custodian, as the case may be, shall,
promptly upon receipt, deposit into the Spread Account or, in the case of the
Trustee, transfer to the Spread Account Custodian for deposit in the Spread
Account:
(i) on the Closing Date, the Initial Deposit made by the
Spread Account Depositor;
(ii) on each Remittance Date, that portion of the
Available Funds, if any, required to be deposited into the Spread
Account pursuant to Section 6.07(b)(vii) until the Spread Balance
equals the then applicable Specified Spread Account Requirement; and
(iii) amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses on investments
of amounts in the Spread Account.
(b) Amounts on deposit in the Spread Account shall be withdrawn by
the Spread Account Custodian and transferred to the Trustee for distribution in
the manner set forth in subclause (c) below on each Remittance Date in the
following order of priority:
(i) to deposit in the Certificate Account an amount by
which (a) the sum of the Class A and Class B Interest Distribution
Amounts, the Class A and Class B Principal Distribution Amounts and
the Class A and Class B Carry Forward Amounts exceeds (b) the
Available Funds for such Remittance Date (but excluding from such
definition of Available Funds, amounts in the Spread Account);
(ii) to deposit in the Certificate Account the amount,
if any, required to make the full distribution to the Expense
Account pursuant to Section 6.07(b)(v); and
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(iii) to the extent that the amount then on deposit in
the Spread Account after giving effect to all required transfers
from the Spread Account to the Certificate Account on such
Remittance Date then exceeds the Specified Spread Account
Requirement as of such Remittance Date (such excess, a "Spread
Account Excess"), an amount equal to such Spread Account Excess
shall be distributed by the Spread Account Custodian to the Spread
Account Depositor;
and also, in no particular order of priority:
(iv) to invest amounts on deposit in the Spread Account
in Permitted Instruments pursuant to Section 6.06;
(v) to withdraw any amount not required to be deposited
in the Spread Account or deposited therein in error; and
(vi) to clear and terminate the Spread Account upon the
termination of this Agreement in accordance with the terms of
Section 11.01.
(c) Any amounts which are required to be withdrawn from the Spread
Account pursuant to paragraph (b) above shall be withdrawn from the Spread
Account in the following order of priority: (i) first, from any uninvested funds
therein, and (ii) second, from the proceeds of the liquidation of any
investments therein pursuant to Section 6.06(b).
Section 6.03. Establishment of Expense Account; Deposits
in Expense Account; Permitted Withdrawals from
Expense Account
(a) No later than the Closing Date, the Trustee will establish with
itself an account for the benefit of the Trustee to pay its fees and expenses
related to the Trust Fund (the "Expense Account"). The Expense Account shall not
constitute part of the Trust Fund and is for the benefit of the Trustee and, on
a subordinate basis, for the benefit of the Servicer as described in (b)(ii) and
(c) below. The Trustee shall deposit into the Expense Account:
(i) on each Remittance Date from the amounts on deposit
in the Certificate Account an amount equal to one-twelfth of the
Annual Expense Escrow Amount; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.06(e) in connection with losses on
investments of amounts in the Expense Account.
If, at any time the amount then on deposit in the Expense Account shall be
insufficient to pay in full the fees and expenses of the Trustee then due, the
Trustee shall make demand on the Servicer to advance the amount of such
insufficiency, and the Servicer shall promptly advance such amount. Thereafter,
the Servicer shall be entitled to reimbursement from the Expense Account
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for the amount of any such advance from any excess funds available pursuant to
subclause (c)(ii) below. Without limiting the obligation of the Servicer to
advance such insufficiency, in the event the Servicer does not advance the full
amount of such insufficiency by the Business Day immediately preceding the
Determination Date, the amount of such insufficiency shall be deposited into the
Expense Account for payment to the Trustee pursuant to Section 6.07(b)(v), to
the extent of available funds in the Certificate Account.
(b) The Trustee may invest amounts on deposit in the Expense Account
in Permitted Instruments pursuant to Section 6.06 hereof, and the Trustee shall
withdraw amounts on deposit in the Expense Account to:
(i) pay the Trustee's fees and expenses as described in
Section 2.08 hereof;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw any amounts not required to be deposited
in the Expense Account or deposited therein in error; and
(iv) clear and terminate the Expense Account upon the
termination of this Agreement in accordance with the terms of
Section 11.01.
(c) On the twelfth Remittance Date following the Closing Date, and
on each twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the Expense Account, the
Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Seller, for
reimbursable advances made pursuant to Section 9.01;
(ii) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in the Expense Account after
payments made pursuant to subclauses (b)(i), (b)(ii), (b)(iii),
(c)(i) and (c)(ii), above.
Section 6.04 Establishment of Pre-Funding Account; Deposits in
Pre-Funding Account; Permitted Withdrawals from
Pre-Funding Account.
(a) No later than the Closing Date, the Spread Account
Depositor shall establish and maintain with the Trustee in its trust department
a trust account, which shall not be interest-bearing, titled "Business Loan
Center SBA Pre-Funding Account 1997-1" (the "Pre-
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Funding Account"). The Pre-Funding Account shall not constitute part of the
Trust Fund. The Seller shall be deemed the owner of the Pre-Funding Account for
Federal income tax purposes. The Trustee shall, promptly upon receipt, deposit
into the Pre-Funding Account and retain therein the Original Pre-Funded Amount
from the proceeds of the sale of the Certificates.
(b) On each Subsequent Transfer Date, the Seller shall
instruct the Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Principal Balances of the Subsequent SBA Loans as of the
related Subsequent Cut-Off Date sold to the Trust Fund on such Subsequent
Transfer Date and pay such amount to or upon the order of the Seller with
respect to such transfer.
(c) If at the end of the Funding Period amounts still remain
in the Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw
from the Pre-Funding Account on the immediately following Remittance Date and
deposit such amounts in the Certificate Account. However, if at the close of
business on the March 1998 Determination Date, amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the Special Remittance Date and deposit in the
Certificate Account any Pre-Funded Amount then remaining in the Pre-Funding
Account.
(d) On the Remittance Dates occurring in January, February,
and March 1998, the Trustee shall transfer from the Pre-Funding Account to the
Certificate Account, the Pre-Funding Earnings, if any, applicable to each such
Remittance Date.
Section 6.05. Establishment of Capitalized Interest Account;
Deposits in Capitalized Interest Account; Permitted Withdrawals from
Capitalized Interest Account.
(a) No later than the Closing Date, the Seller shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest bearing, titled "Business Loan Center SBA Capitalized
Interest Account 1997-1" (the "Capitalized Interest Account"). The Capitalized
Interest Account shall not constitute part of the Trust Fund. The Seller shall
be deemed the owner of the Capitalized Interest Account for Federal income tax
purposes. The Trustee shall, promptly upon receipt, deposit into the Capitalized
Interest Account $23,065.00. If prior to the end of the Funding Period the funds
on deposit in the Pre-Funding Account are invested in a guaranteed investment
contract, repurchase agreement or other arrangement acceptable to the Rating
Agency, that constitutes a Permitted Instrument, the Trustee shall, within one
Business Day of its receipt of notification of satisfaction of the Rating Agency
Condition, withdraw from the Capitalized Interest Account and pay to the Seller
the amount set forth in such notification.
(b) On each Subsequent Transfer Date the Seller may instruct
the Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Seller the Overfunded Interest Amount for such
Subsequent Transfer Date, as calculated by the Seller pursuant to Section
2.09(e) hereof.
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(c) On the Remittance Dates occurring in January, February and
March 1998 the Trustee shall transfer from the Capitalized Interest Account to
the Certificate Account, the Capitalized Interest Requirement, if any, for such
Remittance Dates.
(d) On the Special Remittance Date, the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account the Capitalized
Interest Requirement, if any, for such Special Remittance Date. Any amounts
remaining in the Capitalized Interest Account after taking into account such
transfer shall be paid on such Special Remittance Date to the Seller, and the
Capitalized Interest Account shall be closed.
Section 6.06. Investment of Accounts.
(a) So long as no default or Event of Default shall have occurred
and be continuing, and consistent with any requirements of the Code, all or a
portion of any Account which is not by the terms of this Agreement to be held
uninvested held by the Trustee or the Spread Account Custodian shall be invested
and reinvested by the Trustee or the Spread Account Custodian, as directed in
writing by the Servicer, in one or more Permitted Instruments in the name of the
Trustee or the Spread Account Custodian, as the case may be, bearing interest or
sold at a discount. No such investment in the Certificate Account, the
Pre-Funding Account, the Capitalized Interest Account, the Expense Account and
the Spread Account shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Expense Account
shall mature later than the Business Day immediately preceding the date such
funds will be needed to pay fees or premiums; provided, however, the Trustee or
any affiliate thereof, may be the obligor on any investment which otherwise
qualifies as a Permitted Instrument and any investment on which the Trustee is
the obligor may mature on such Remittance Date or date when needed, as the case
may be.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee or the Spread Account Custodian and sufficient uninvested funds
are not available to make such disbursement, the Trustee or the Spread Account
Custodian, as the case may be, shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. Neither the Trustee
nor the Spread Account Custodian shall be liable for any investment loss or
other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, neither the Trustee nor the
Spread Account Custodian shall in any way be held liable by reason of any
insufficiency in any Account held by the Trustee or the Spread Account Custodian
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee and the Spread Account Custodian shall invest and
reinvest funds in the Accounts held by the Trustee or the Spread Account
Custodian, to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct in writing, but only in one or more Permitted
Instruments.
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(e) All income or other gain from investments in any Account held by
the Trustee or the Spread Account Custodian shall be deposited in such Account,
as the case may be, immediately on receipt, and the Trustee or the Spread
Account Custodian shall notify the Servicer of any loss resulting from such
investments. The Servicer shall remit the amount of any such loss from its own
funds, without reimbursement therefor, to the Trustee or the Spread Account
Custodian, as the case may be, for deposit in the Account from which the related
funds were withdrawn for investment by the next Determination Date following
receipt by the Servicer of such notice.
Section 6.07. Distributions.
(a) The rights of the Certificateholders to receive distributions
from the proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement.
(b) On each Remittance Date the Trustee shall withdraw from the
Certificate Account the sum of (A) that portion of the Available Funds received
from the Servicer pursuant to Section 6.01(a)(i), (ii) and (iv) and (B) the
amounts deposited therein pursuant to Section 6.02(b)(i), and make distributions
thereof in the following order of priority:
(i) First, to the Class A Certificates in an amount up
to the Class A Interest Distribution Amount;
(ii) Second, to the Class B Certificates in an amount up
to the Class B Interest Distribution Amount;
(iii) Third, to the Class A Certificates in an amount up
to the sum of (a) the Class A Principal Distribution Amount and (b)
the Class A Carry Forward Amount;
(iv) Fourth, to the Class B Certificates, in an amount
up to the sum of (a) the Class B Principal Distribution Amount and
(b) the Class B Carry Forward Amount;
(v) Fifth, to the Expense Account in an amount up to
one-twelfth of the Annual Expense Escrow Amount plus any amount
required to be paid to the Trustee pursuant to Section 6.03(a)
resulting from insufficiencies in the Expense Account;
(vi) Sixth, to the Servicer in an amount up to the
Reimbursable Amounts;
(vii) Seventh, to the Spread Account, any remaining
Available Funds unless and until the amount therein equals the
Specified Spread Account Requirement; and
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(viii) Eighth, to the Spread Account Depositor, any
amounts in excess of the Specified Spread Account Requirement.
Additionally, on the Special Remittance Date, the Trustee shall
withdraw from the Certificate Account the amount, if any, deposited therein
pursuant to Section 6.01(a)(v) and make distributions thereof as follows: from
amounts transferred from the Pre-Funding Account, distributions of principal to
the Class A and Class B Certificates pro rata based upon the Class A and Class B
Percentages.
(c) All distributions made to the Certificateholders of a particular
Class will be made on a pro rata basis among the Certificateholders of record of
the applicable Class on the next preceding Record Date based on the Percentage
Interest represented by their respective Certificates, and shall be made by
check or, upon request by a Certificateholder, by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, and, in the case of wire
transfers, at the expense of such Certificateholder unless such
Certificateholder shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Section 6.08. [Intentionally Omitted]
Section 6.09. Statements.
Each month, not later than 12:00 noon New York time on the
Determination Date, the Servicer shall deliver to the Trustee, by telecopy, for
distribution to the Certificateholders, the receipt and legibility of which
shall be confirmed telephonically, with hard copy thereof and the Servicer's
Monthly Computer Tape in the form attached hereto as Exhibit L (both in hard
copy and in computer tape form) to be delivered on the Business Day following
the Determination Date, a certificate signed by a Servicing Officer (a
"Servicer's Certificate") stating the date (day, month and year), the Series
number of the Certificates, the date of this Agreement, and, as of the close of
business on the Record Date for such month:
(i) Available Funds for the related Remittance Date, in
the aggregate and by component;
(ii) The Aggregate Class A Certificate Principal
Balance, the Aggregate Class B Certificate Principal Balance and the
Pool Principal Balance as reported in the prior Servicer's
Certificate pursuant to subclause (xii) below, or, in the case of
the first Determination Date, the Original Class A and Class B
Certificate Principal Balance and the Original Pool Principal
Balance;
(iii) The number and Principal Balances of all SBA Loans
which were the subject of Principal Prepayments during the Due
Period and the number and Principal Balances of all Defaulted SBA
Loans purchased by the Servicer during the Due Period;
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(iv) The product of the Unguaranteed Percentage
multiplied by all Curtailments which were received during the Due
Period;
(v) The product of the Unguaranteed Percentage
multiplied by all Excess Payments and the product of the
Unguaranteed Percentage multiplied by all Monthly Payments in
respect of principal received during the Due Period;
(vi) The aggregate amount of interest received on each
SBA Loan net of the FTA's Fee, the Premium Protection Fee, the
Additional Fee and the portion thereof payable to the Registered
Holders;
(vii) The amount of the Monthly Advances to be made on
the Determination Date and the Compensating Interest payment to be
made on the Determination Date;
(viii) The delinquency and foreclosure information set
forth in the form attached hereto as Exhibit K;
(ix) The product of the Unguaranteed Percentage
multiplied by the amount of any losses realized on a Liquidated SBA
Loan;
(x) The Class A and Class B Interest Distribution
Amounts and Principal Distribution Amounts for the Remittance Date
with the components thereof stated separately;
(xi) The amount, if any, to be transferred from the
Spread Account to the Certificate Account pursuant to Section
6.02(b)(i);
(xii) The Aggregate Class A Certificate Principal
Balance, Aggregate Class B Certificate Principal Balance and the
Pool Principal Balance after giving effect to the distribution to be
made on the Remittance Date;
(xiii) The Excess Spread and the Specified Spread
Account Requirement with respect to such Remittance Date;
(xiv) The weighted average maturity and weighted average
SBA Loan Interest Rate;
(xv) The Servicing Fees and amounts to be deposited to
the Expense Account;
(xvi) The amount of all payments and reimbursements to
the Servicer pursuant to Section 5.04 (b), (c), (d)(ii), (e) and
(f);
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(xvii) The Class A and Class B Remittance Rates with
respect to such Remittance Date; and
(xviii) During the Funding Period, the aggregate
Principal Balance of the Subsequent SBA Loans purchased during the
prior Due Period and the amount on deposit in the Pre-Funding
Account as of the end of such Due Period; and
(xix) Such other information as the Certificateholders
or the Rating Agency may reasonably require.
The Trustee shall forward such report to the Certificateholders and
the Rating Agency on the Remittance Date, together with a separate report
indicating the amount of funds deposited in the Certificate Account pursuant to
Section 6.01(a)(iv); and the amounts which are reimbursable to the Servicer or
the Seller pursuant to Sections 6.03(c)(i), 6.03(c)(ii) and 6.07(b)(vi) (all
reports prepared by the Trustee of such withdrawals and deposits will be based
in whole or in part upon the information provided to the Trustee by the
Servicer).
To the extent that there are inconsistencies between the telecopy of
the Servicer's Certificate and the hard copy thereof, the Trustee shall be
entitled to rely upon the telecopy. In the case of information furnished
pursuant to subclauses (ii), (iii), (iv), (v), (x) and (xii), above, the amounts
shall be expressed in a separate section of the report as a dollar amount for
each Class per $1,000 original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee shall,
based upon information received from the Servicer, forward to the
Certificateholders and the Rating Agency a report setting forth the amount of
principal and interest, if any, being paid to each Class of Certificates on the
Special Remittance Date.
(a) Within a reasonable period of time after the end of each
calendar year, the Servicer shall furnish to the Trustee for distribution to
each Person who at any time during the calendar year was a Certificateholder
such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (vi), (x), and
(xiv), above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
(b) Upon reasonable advance notice in writing, the Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and access to information and documentation
regarding the SBA Loans sufficient to permit such Certificateholder to comply
with applicable regulations of the Office of Thrift Supervision or other
regulatory authorities with respect to investment in the Certificates.
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(c) The Servicer shall furnish to each Certificateholder, during the
term of this Agreement, such periodic, special, or other reports or information,
whether or not provided for herein, as shall be necessary, reasonable, or
appropriate with respect to the Certificateholder or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
by and in accordance with such applicable instructions and directions as the
Certificateholder may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder for the Servicer's actual
expenses incurred in providing such reports if such reports are not producible
in the ordinary course of the Servicer's business. The Rating Agency shall
receive copies of any such reports or information furnished to the
Certificateholders.
Section 6.10. Advances by the Servicer.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the Certificate Account an
amount (as indicated in the Servicer's Certificate prepared pursuant to Section
6.09), to be distributed on the related Remittance Date pursuant to Section
6.07, equal to the amount by which (i) 30 days' interest at a rate equal to the
then applicable Adjusted SBA Loan Remittance Rate on the aggregate Class A and
Class B Principal Balances immediately prior to the related Remittance Date
(plus or minus the difference, if any, between (A) the sum of the Class A and
Class B Interest Distribution Amounts and (B) the sum of the Adjusted Class A
and Adjusted Class B Interest Distribution Amounts for the related Remittance
Date) exceeds (ii) the amount received by the Servicer as of the related Record
Date in respect of interest on the SBA Loans minus the interest payable to the
Registered Holders (plus, for the Remittance Dates in January, February and
March 1998, the sum of (i) all funds to be transferred to the Certificate
Account from the Capitalized Interest Account for such Remittance Date pursuant
to Section 6.05(c) and (ii) the Pre-Funding Earnings for the applicable
Remittance Date), the Premium Protection Fee, the Additional Fee, the Servicing
Fee, and the FTA's Fee, such excess being defined herein as the "Monthly
Advance." The Servicer may reimburse itself for Monthly Advances made pursuant
to Section 5.04. Notwithstanding the foregoing, the Servicer shall not be
required to make a Monthly Advance with respect to an SBA Loan if it determines,
in good faith, that such advance would be nonrecoverable from amounts received
in respect of the SBA Loans.
Section 6.11. Compensating Interest.
The Certificateholders shall be entitled to a full month's interest
on the principal portion of the Unguaranteed Interest of each SBA Loan at the
then applicable Class A or Class B Remittance Rate, as the case may be. Not
later than the close of business on each Determination Date, with respect to
each SBA Loan for which a Principal Prepayment or Curtailment was received
during the related Due Period, the Servicer shall remit to the Trustee for
deposit in the Certificate Account from amounts otherwise payable to it as
servicing compensation, an amount (such amount required to be delivered to the
Trustee is referred to herein as "Compensating Interest") (as indicated in the
Servicer's Certificate prepared pursuant to Section 6.09) equal to the
difference between (a) 30 days' interest at the Adjusted SBA Loan Remittance
Rate on the Principal Balance of each such SBA Loan as of the beginning of the
Due Period applicable to the
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Remittance Date on which such amount will be distributed, and (b) the amount of
interest actually received on each such SBA Loan for such Due Period net of the
portion thereof payable to the Registered Holder, the Premium Protection Fee,
the FTA's Fee, the Servicing Fee and the Excess Spread and, with respect to each
Additional Fee SBA Loan, the Additional Fee.
Section 6.12. Reports of Foreclosure and Abandonment of
Mortgaged Property
Each year the Servicer shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code.
Promptly after filing each such report with the Internal Revenue Service, the
Servicer shall provide the Trustee with an Officer's Certificate certifying that
such report has been filed.
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ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 [Intentionally Omitted]
Section 7.02 Satisfaction of Mortgages and Collateral and
Release of SBA Files
The Servicer shall maintain the Fidelity Bond as provided for in
Section 5.09 insuring the Servicer against any loss it may sustain with respect
to any SBA Loan not satisfied in accordance with the procedures set forth
herein.
Upon the payment in full of any SBA Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the FTA and
the Trustee by a certification in the form of Exhibit I attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Principal and Interest Account pursuant to Section 5.03 have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Trustee's Document File. Upon receipt of such certification and
request, the FTA and the Trustee shall release, within 3 Business Days, the
related Trustee's Document File to the Servicer. Expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be payable
only from and to the extent of servicing compensation and shall not be
chargeable to the Principal and Interest Account or the Certificate Account.
From time to time and as appropriate for the servicing or
foreclosure of any SBA Loan, the FTA and the Trustee shall, upon request of the
Servicer and delivery to the FTA and the Trustee of a certification in the form
of Exhibit I attached hereto signed by a Servicing Officer, release the related
Trustee's Document File to the Servicer within 3 Business Days, and the Trustee
shall execute such documents as shall be necessary to the prosecution of any
such proceedings. The Servicer shall return the Trustee's Document File to the
FTA and the Trustee when the need therefor by the Servicer no longer exists,
unless the SBA Loan has been liquidated and the Unguaranteed Percentage of the
Liquidation Proceeds relating to the SBA Loan have been deposited in the
Principal and Interest Account and remitted to the Trustee for deposit in the
Certificate Account or the SBA File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property or other Collateral either judicially or
non-judicially, and the Servicer has delivered to the FTA and the Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to whom such SBA File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such SBA Loan was liquidated, the servicing receipt shall be
released by the Trustee to the Servicer.
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The Trustee shall execute and deliver to the Servicer any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or other
Collateral or to any legal action brought to obtain judgment against any Obligor
on the SBA Note or Mortgage or other agreement securing Collateral or to obtain
a deficiency judgment, or to enforce any other remedies or rights provided by
the SBA Note or Mortgage or other agreement securing Collateral or otherwise
available at law or in equity. Together with such documents or pleadings, the
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
requesting that such pleadings or documents be executed by the Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage or other agreement securing
Collateral, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale. The Trustee shall, upon receipt of a written
request from a Servicing Officer, execute any document provided to the Trustee
by the Servicer or take any other action requested in such request, that is, in
the opinion of the Servicer as evidenced by such request, required by any state
or other jurisdiction to discharge the lien of a Mortgage or other agreement
securing Collateral upon the satisfaction thereof and the Trustee will sign and
post, but will not guarantee receipt of, any such documents to the Servicer, or
such other party as the Servicer may direct, within five Business Days of the
Trustee's receipt of such certificate or documents. Such certificate or
documents shall establish to the Trustee's satisfaction that the related SBA
Loan has been paid in full by or on behalf of the Obligor and that such payment
has been deposited in the Principal and Interest Account.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Principal and Interest Account or to retain from
interest payments on the SBA Loans the Servicer's Servicing Fee and the Premium
Protection Fee in accordance with Section 5.04(b). Additional servicing
compensation in the form of assumption and other administrative fees, interest
paid on funds on deposit in the Principal and Interest Account, interest paid
and earnings realized on Permitted Instruments, amounts remitted pursuant to
Section 6.03(c)(iii) and late payment charges shall be retained by or remitted
to the Servicer to the extent not required to be remitted to the Trustee for
deposit in the Certificate Account. 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.
Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Trustee, the SBA and the Rating
Agency on or before September 30 of each year beginning September 30, 1998, an
Officer's Certificate stating that (i) the Servicer has fully complied with the
provisions of Articles V and VII, (ii) a review of the activities of the
Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officer's supervision, and (iii) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such
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obligation, specifying each such default known to such officers and the nature
and status thereof and the action being taken by the Servicer to cure such
default.
Section 7.05 Annual Independent Public Accountants' Servicing
Report
On or before September 30 of each year relating to the fiscal year
ending on the preceding June 30th (commencing with the fiscal year ending June
30, 1998), the Servicer, at its expense, shall cause (i) Richard A. Eisner &
Company, LLP or (ii) a firm of nationally recognized independent public
accountants reasonably acceptable to the Trustee to furnish a letter or letters
to the Trustee and the Rating Agency to the effect that such firm has with
respect to the Servicer's overall servicing operations examined such operations
in accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 7.06 SBA's, and Trustee's Right to Examine Servicer
Records and Audit Operations
The SBA and the Trustee shall have the right upon reasonable prior
notice, during normal business hours and as often as reasonably required, to
examine and audit any and all of the books, records or other information of the
Servicer, 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. No amounts payable in respect
of the foregoing shall be paid from the Trust Fund.
Section 7.07 Reports to the Trustee; Principal and Interest
Account Statements.
Not later than 20 days after each Record Date, the Servicer shall
forward to the Trustee and the SBA a statement, certified by a Servicing
Officer, setting forth the status of the Principal and Interest 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 Principal and
Interest Account for each category of deposit specified in Section 5.03, the
aggregate of withdrawals from the Principal and Interest Account for each
category of withdrawal specified in Section 5.04, the aggregate amount of
permitted withdrawals not made in the related Due Period, and the amount of any
Monthly Advances or payments of Compensating Interest, in each case, for the
related Due Period.
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Section 7.08 Premium Protection Fee.
Pursuant to and in accordance with the policies of the SBA and SBA
Form 1086, the Servicer shall retain the Premium Protection Fee for each SBA ss.
7(a) Loan. The Premium Protection Fee shall not constitute part of the Trust
Fund and Certificateholders shall have no interest in, and are not entitled to
receive any portion of, the Premium Protection Fee. If the Servicer is replaced
as servicer pursuant to any provision of this Agreement, it shall no longer be
entitled to the Premium Protection Fee but, instead, the successor servicer
shall be entitled thereto.
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ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer understands that, in connection with the transfer of
the Certificates, Certificateholders may request that the Servicer make
available to prospective Certificateholders the annual audited financial
statements of the Servicer for one or more of the most recently completed five
fiscal years, which request shall not be unreasonably denied.
The Servicer also agrees to make available on a reasonable basis to
any prospective Certificateholder a knowledgeable financial or accounting
officer for the purpose of answering reasonable questions respecting recent
developments affecting the Servicer or the financial statements of the Servicer
and to permit any prospective Certificateholder to inspect the Servicer's
servicing facilities during normal business hours for the purpose of satisfying
such prospective Certificateholder that the Servicer has the ability to service
the SBA Loans in accordance with this Agreement.
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ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
(a) The Servicer agrees to indemnify and hold the Trustee, the SBA,
and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the SBA, and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the SBA Loans in compliance with the terms of
this Agreement. The Servicer shall immediately notify the Trustee, the SBA and
each Certificateholder if a claim is made by any party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the Trustee, the
SBA, and/or a Certificateholder in respect of such claim. The Trustee may
reimburse the Servicer from the Expense Account pursuant to Section 6.03(c)(i)
for all amounts advanced by it pursuant to the preceding sentence except when
the claim relates directly to the failure of the Servicer to service and
administer the SBA Loans in compliance with the terms of this Agreement.
(b) The Seller agrees to indemnify and hold the Trustee, the SBA and
each Certificateholder harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the SBA, and any Certificateholder
may sustain in any way related to the failure of the Servicer, if it is an
affiliate thereof, or the failure of the Seller to perform its respective duties
in compliance with the terms of this Agreement and in the best interests of the
SBA and the Certificateholders. The Seller shall immediately notify the Trustee,
the SBA, and each Certificateholder if a claim is made by a third party with
respect to this Agreement, and the Seller shall assume (with the consent of the
Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Seller, the Trustee, the SBA and/or a Certificateholder in respect of such
claim. The Trustee may reimburse the Seller from the Expense Account pursuant to
Section 6.03(c)(i) for all amounts advanced by them pursuant to the preceding
sentence except when the claim relates directly to the Seller's indemnification
pursuant to Section 2.05 and Section 3.03 or to the failure of the Servicer, if
it is an affiliate of a Seller, to perform its obligations to service and
administer the Mortgages in compliance with the terms of this Agreement, or the
failure of the Seller to perform its duties in compliance with the terms of this
Agreement and in the best interests of the SBA and the Certificateholders.
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Section 9.02 Merger or Consolidation of the Servicer.
The Servicer will keep in full effect its existence, rights and
franchises as a limited liability company, and will obtain and preserve its
qualification to do business as a foreign limited liability company, in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the SBA Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an established mortgage loan servicing institution that has a
net worth of at least $15,000,000 and shall be an approved SBA guaranteed lender
in good standing, operating pursuant to an effective Loan Guaranty Agreement,
and shall be the successor of the Servicer, 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 or consolidation to the Trustee, the Rating Agency and the
SBA.
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 herein, 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 SBA Loans in accordance with this Agreement.
Section 9.04 Servicer Not to Resign.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the SBA, the Trustee and the Majority Certificateholders, or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law or administrative determination and such incapacity cannot
be cured by the Servicer. Any such determination permitting the resignation of
the Servicer shall be evidenced by a written Opinion of Counsel (who may be
counsel for the Servicer) to such effect delivered to the Trustee, the SBA and
to each Certificateholder, which Opinion of Counsel shall be in form and
substance acceptable to the Trustee. No such resignation shall become effective
until a successor has assumed the Servicer's responsibilities and obligations
hereunder in accordance with Section 10.02.
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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) (A) the failure by the Servicer to make any required
Servicing Advance, to the extent such failure materially and
adversely affects the interests of the Certificateholders; (B) the
failure by the Servicer to make any required Monthly Advance; (C)
the failure by the Servicer to remit any Compensating Interest; or
(D) any failure by the Servicer to remit to Certificateholders, or
to the Trustee for the benefit of the Certificateholders, any
payment required to be made under the terms of this Agreement which
continues unremedied after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee or to the Servicer and the
Trustee by any Certificateholder; or
(ii) failure by the Servicer or the Seller duly to
observe or perform, in any material respect, any other covenants,
obligations or agreements of the Servicer or the Seller as set forth
in this Agreement, which failure continues unremedied for a period
of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer or the Seller, as the case may be, by the Trustee or to the
Servicer, or the Seller, as the case may be, and the Trustee by any
Certificateholder; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such
decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating
to all or substantially all of the Servicer's property; or
(v) the Servicer shall admit in writing its inability to
pay its debts as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations.
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(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, and in the case of clause (i) above
(except for clause (i)(B)), if such Event of Default shall not have been
remedied within 30 days after the Servicer has received notice of such Event of
Default, (x) with respect solely to clause (i)(B) above, if such Monthly Advance
is not made earlier than 4:00 p.m. New York time on the Determination Date, the
Trustee shall give immediate telephonic notice of such failure to a Servicing
Officer of the Servicer and, unless such failure is cured, either by receipt of
payment or receipt of evidence (e.g., a wire reference number communicated by
the sending bank) that such funds have been sent, by 12:00 Noon New York time on
the second Business Day thereafter, the Trustee shall immediately assume,
pursuant to Section 10.02 hereof, the duties of a successor Servicer; and (y) in
the case of clauses (i)(A), (i)(C), (i)(D), (iii), (iv) and (v), the Majority
Certificateholders, by notice in writing to the Servicer (except with respect to
(iii), (iv) and (v) for which no notice is required) may, in addition to
whatever rights such Certificateholders may have at law or equity including
damages, injunctive relief and specific performance, in each case immediately
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the SBA Loans and the proceeds thereof, as Servicer. Upon such
receipt by the Servicer of a second written notice from the Majority
Certificateholders stating that they or it intend to terminate the Servicer as a
result of such Event of Default, all authority and power of the Servicer under
this Agreement, whether with respect to the SBA Loans or otherwise, shall,
subject to Section 10.02 and the Multi-Party Agreement, pass to and be vested in
the Trustee and the Trustee 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 SBA Loans and related documents. The Servicer agrees to
cooperate with the Trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee for administration by it of all amounts which shall at
the time be credited by the Servicer to each Principal and Interest Account or
thereafter received with respect to the SBA Loans. The Trustee shall provide
notice to the SBA of any Event of Default hereunder.
Section 10.02 Trustee to Act; Appointment of Successor
On and after the time of the Servicer's immediate termination, or
the Servicer's receipt of notice if required by Section 10.01, or at any time if
the Trustee receives the resignation of the Servicer evidenced by an Opinion of
Counsel pursuant to Section 9.04 or the Servicer is removed as Servicer pursuant
to this Article X, the Trustee shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that the Trustee shall
not be liable for any actions of any Servicer prior to it, and that the Trustee
shall not be obligated to make advances or payments pursuant to Sections 6.03,
6.10, 6.11, 5.10 or 5.14 but only to the extent the Trustee determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee. As compensation therefor,
the Trustee shall be entitled to all funds relating to the SBA Loans which the
Servicer
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would have been entitled to receive from the Servicing Fee, the Premium
Protection Fee and from the Principal and Interest Account pursuant to Section
5.04, 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 Sections 7.01 and 7.03.
Notwithstanding the above, the Trustee shall, if it is unable to so
act or if the SBA so requests in writing to the Trustee, appoint, or petition a
court of competent jurisdiction to appoint, any established servicing
institution acceptable to the SBA and satisfying the Rating Agency Condition
that has a net worth of not less than $15,000,000, and which is an approved SBA
guaranteed lender in good standing, operating pursuant to an effective Loan
Guaranty Agreement, as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly to the
Trustee or, at the direction of the Trustee, to the successor servicer. The
compensation of any successor servicer (including, without limitation, the
Trustee) so appointed shall be the aggregate Servicing Fees and other servicing
compensation in the form of assumption fees, late payment charges or otherwise.
The successor servicer also shall be entitled to the Premium Protection Fee
pursuant to Section 7.08. In the event the Trustee is required to solicit bids
as provided herein, the Trustee shall solicit, by public announcement, bids from
banks and mortgage servicing institutions meeting the qualifications set forth
above. Such public announcement shall specify that the successor servicer shall
be entitled to the full amount of the aggregate Servicing Fees as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after any
such public announcement, the Trustee shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Trustee shall
deduct from any sum received by the Trustee from the successor to the Servicer
in respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Monthly Advances. After such deductions, the remainder of
such sum shall be paid by the Trustee as a servicing fee to the SBA at the time
of such sale, transfer and assignment to the Servicer's successor. The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. The Servicer agrees to
cooperate with the Trustee and any successor servicer in effecting the
termination of the Servicer's servicing responsibilities and rights hereunder
and shall promptly provide the Trustee or such successor servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Trustee or such successor servicer, as applicable, all amounts which then
have been or should have been deposited in the Principal and Interest Account or
Spread Account by the Servicer or which are thereafter received with respect to
the SBA Loans. Neither the Trustee nor any other successor servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until written notice of such proposed
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appointment shall have been provided by the Trustee to each Certificateholder
and the SBA and the Trustee and the SBA shall have consented thereto. The
Trustee shall not resign as servicer until a successor servicer reasonably
acceptable to the SBA has been appointed.
Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on SBA Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 7.03 or otherwise as
provided in this Agreement. The Servicer, the Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 10.03 Waiver of Defaults.
The SBA or the Majority Certificateholders may, on behalf of all
Certificateholders, and subject to the consent of the SBA, which consent may not
be unreasonably withheld, and satisfaction of the Rating Agency Condition, waive
any events permitting removal of the Servicer pursuant to this Article X;
provided, however, that the Majority Certificateholders or the SBA may not waive
a default in making a required distribution on a Certificate without the consent
of the holder of such Certificate. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived.
Section 10.04 Control by Majority Certificateholders and Others.
The SBA or the Majority Certificateholders with the consent of the
SBA may direct the time, method and place of conducting any proceeding relating
to the Trust Fund or the Certificates or for any remedy available to the Trustee
with respect to the Certificates or exercising any trust or power conferred on
the Trustee with respect to the Certificates or the Trust Fund provided that:
(i) such direction shall not be in conflict with any
rule of law or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction;
provided, however, that the Trustee, as the case may be, need not
take any action which it determines might involve it in liability or
may be unjustly prejudicial to the Holders not so directing.
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X-5
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ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon notice to the Trustee of the
earlier of the following events: (a) the final payment or other liquidation of
the last SBA Loan or the disposition of all property acquired upon foreclosure
or deed in lieu of foreclosure of any SBA Loan and the remittance of all funds
due thereunder, or (b) mutual consent of the Servicer and all Certificateholders
in writing; provided, however, that in no event shall the Trust established by
this Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of Joseph P. Kennedy, late Ambassador of the United
States to the Court of St. James, alive as of the date hereof.
The Servicer may, at its option, terminate this Agreement on any
date on which the Pool Principal Balance is less than 10% of the sum of (i) the
Original Pool Principal Balance and (ii) the Original Pre-Funded Amount by
purchasing, on the next succeeding Remittance Date, all of the Unguaranteed
Interests in the SBA Loans and Foreclosed Properties at a price equal to the sum
of (i) 100% of the then outstanding Aggregate Class A and Class B Certificate
Principal Balances, and (ii) 30 days' interest thereon at the then applicable
Class A and Class B Remittance Rates, as the case may be (the "Termination
Price"). Notwithstanding the prior sentence, if at the time the Servicer
determines to exercise such option the unsecured long-term debt obligations of
the Servicer are not rated at least BBB by the Rating Agency, if the Rating
Agency is still rating the Certificates, the Servicer shall give the Rating
Agency prior written notice of the Servicer's determination to exercise such
option and shall not exercise such option, without the consent of the Rating
Agency, prior to furnishing the Rating Agency with an Opinion of Counsel, in
form and substance reasonably satisfactory to the Rating Agency, that the
exercise of such option would not be deemed a fraudulent conveyance by the
Servicer.
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and that the Certificateholders shall surrender
their Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to
Certificateholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Certificates will be made upon presentation and surrender
of Certificates at the office of the Trustee therein designated, (ii) the amount
of any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Servicer shall give such notice to the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to Certificateholders. Any obligation of the Servicer to pay
amounts due to the Trustee shall survive the termination of this Agreement.
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In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the national
edition of The Wall Street Journal notice that such money remains unclaimed. If
within six months after the second notice all of the Certificates shall not have
been surrendered for cancellation, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Seller shall be entitled to all unclaimed
funds and other assets which remain subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Seller for payment.
Section 11.02 Accounting Upon Termination of Servicer
Upon termination of the Servicer under Article X hereof, the
Servicer shall:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all SBA Files and related documents and statements
held by it hereunder and a SBA Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the SBA 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 SBA 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.
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ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer or the Seller hereunder. If any such instrument is
found not to conform to the requirements of this Agreement in a material manner,
the Trustee shall take action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of
judgment made in good faith by officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the
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Certificateholders, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement;
(d) In the absence of actual knowledge of an Event of Default, the
Trustee shall not be required to take notice or be deemed to have notice or
knowledge of any default or Event of Default unless the Trustee shall be
specifically notified in writing by the Servicer or any of the
Certificateholders. In the absence of actual knowledge or receipt of such
notice, the Trustee may conclusively assume that there is no default or Event of
Default; and
(e) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 12.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may request and rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party
or parties;
(ii) The Trustee may consult with counsel and any opinion of
counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to
institute, conduct or defend by litigation hereunder or in relation
hereto at the request, order or direction of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured), to
exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
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(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested
in writing to do so by Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% provided, however, that if
the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms
of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability as a condition to taking any such
action. The reasonable expense of every such examination shall be
paid by the Servicer or, if paid by the Trustee, shall be repaid by
the Servicer upon demand from the Servicer's own funds;
(vi) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby or
the powers granted hereunder; and
(viii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
Section 12.03 Trustee Not Liable for Certificates
or SBA Loans.
The recitals contained herein and in the Certificates (other than
the certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any SBA Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the SBA Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
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Section 12.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee, and may otherwise deal with the parties hereto.
Section 12.05 Servicer To Pay Trustee's Fees
and Expenses.
The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Servicer will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith, provided that the Trustee shall have no
lien on the Trust Fund for the payment of its fees and expenses. To the extent
that actual fees and expenses of the Trustee exceed the amount available for
payment thereof on deposit in the Expense Account as of the date such fees and
expenses are due and payable, the Servicer shall reimburse the Trustee for such
shortfall out of its own funds without reimbursement therefor, except as
provided in Section 6.03. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability or expense (i) incurred in connection with any legal
action relating to this Agreement or the Certificates, other than 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, and (ii) resulting from any error
in any tax or information return prepared by the Servicer. The obligations of
the Servicer under this Section 12.05 shall survive payment of the Certificates,
and shall extend to any co-trustee appointed pursuant to this Article XII.
Section 12.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) a national banking
association or banking corporation or trust company organized and doing business
under the laws of any state or the United States of America, (ii) authorized
under such laws to exercise corporate trust powers, (iii) having a combined
capital and surplus of at least $30,000,000, (iv) having unsecured and
unguaranteed long-term debt obligations rated at least Baa2 by Moody's Investors
Service, Inc., BBB by the Rating Agency (provided the Rating Agency is rating
the unsecured and unguaranteed long-term debt obligations of the Trustee) or
such other rating as is acceptable to the SBA, (v) is subject to supervision or
examination by federal or state authority, (vi) is an approved SBA guaranteed
lender in good standing, operating pursuant to an effective Loan Guaranty
Agreement, and (vii) is reasonably acceptable to the SBA. If such banking
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the
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aforesaid supervising or examining authority, then for the purposes of this
Section its combined capital and surplus shall be deemed to be as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall (a) give prompt notice to the SBA and each
Certificateholder that it has so ceased to be eligible to be the Trustee and (b)
resign, upon the request of the SBA or the Majority Certificateholders, in the
manner and with the effect specified in Section 12.07.
Section 12.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the SBA, and to
all Certificateholders. Upon receiving such notice of resignation, the Servicer
shall with the consent of the SBA promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders by the Servicer. Unless a successor
trustee shall have been so appointed and have accepted appointment within 60
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee. If the resigning Trustee fails to petition an appropriate court, the
SBA may, after such 60 day period, petition any court of competent jurisdiction
for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 12.06 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Servicer
may remove the Trustee and appoint, subject to the approval of the SBA, a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders and the SBA by the
Servicer.
The Majority Certificateholders with the consent of the SBA, which
consent will not be unreasonably withheld, and upon satisfaction of the Rating
Agency Condition, or the SBA may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor Trustee so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08.
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Section 12.08 Successor Trustee.
Any successor trustee appointed as provided in Section 12.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all SBA
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Trustee shall send notice of any
such merger or consolidation to the Rating Agency.
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Section 12.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the SBA pursuant to the procedure set forth below, to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 12.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 12.06 hereunder. No notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. The Trustee shall notify the SBA prior to
the appointment of any co-trustee(s) or separate trustee(s) and the SBA shall
have ten Business Days from its receipt of such notice to notify the Trustee
whether it, in its reasonable judgment, disapproves of such co-trustee(s) or
separate trustee(s). If the SBA does not notify the Trustee within such time
frame, it will be deemed to have approved such co-trustee(s) or separate
trustee(s). If the SBA notifies the Trustee within such time frame that it, in
its reasonable judgment, disapproves of such co-trustee(s) or separate
trustee(s) (which notice shall be accompanied by the name(s) of the SBA's
alternative proposed co-trustee(s) or separate trustee(s)), such appointments
shall not be effective.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 12.10, all rights, powers, duties and obligations
conferred or imposed upon the trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of
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this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 12.11 Authenticating Agent.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, initially, Marine Midland Bank, with power to act on the
Trustee's behalf and subject to its direction in the authentication and delivery
of the Certificates in connection with transfers and exchanges under Section
4.02, as fully to all intents and purposes as though the Authenticating Agent
had been expressly authorized by that Section to authenticate and deliver
Certificates. For all purposes of this Agreement, the authentication and
delivery of Certificates by the Authenticating Agent pursuant to this Section
shall be deemed to be the authentication and delivery of Certificates by the
Trustee. Such Authenticating Agent shall at all times be a Person meeting the
requirements for the Trustee set forth in Section 12.06.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
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Section 12.12 Tax Returns and Reports.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of the Trust Fund and, upon request within five
(5) Business Days after its receipt thereof, shall (i) sign on behalf of the
Trust Fund any Tax Return that the Trustee is required to sign pursuant to
applicable federal, state or local tax laws, and (ii) cause such Tax Return to
have been returned to the Servicer for filing; provided, however, the Trustee
shall have no liability for any taxes required pursuant to any such Tax Return.
The Servicer shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to the
Trust Fund and the Certificates containing such information and at the times and
in the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. The Trustee shall
sign all tax information returns filed pursuant to this Section and any other
returns as may be required by the Code, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Servicer.
Section 12.13 Protection of Trust Fund.
(a) The Trustee will hold the Trust Fund and such other assets as
may from time to time be deposited with it hereunder in trust for the benefit of
the Holders and the SBA and at the request of the Seller or the SBA will from
time to time execute and deliver all such supplements and amendments hereto
pursuant to Section 13.02 hereof and all instruments of further assurance and
other instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion of the
Trust Fund or such other assets;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the SBA Loans; or
(iv) preserve and defend title to the Trust Fund and the
rights of the Trustee, and the ownership interests of the
Certificateholders represented thereby, in such Trust Fund against
the claims of all Persons and parties.
The Trustee shall send copies of any request received from the
Seller or the SBA to take any action pursuant to this Section 12.13 to the
Holders.
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(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.13 shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders, the SBA or the Seller in accordance
with the terms of this Agreement.
(c) The Trustee shall execute any instrument required pursuant to
this Section so long as such instrument does not conflict with this Agreement or
with the Trustee's fiduciary duties.
Section 12.14 Representations and Warranties and
Covenants of Trustee.
The Trustee hereby makes the following representations, warranties
and covenants on which the Seller, the Servicer, the SBA and the
Certificateholders shall rely:
(a) The Trustee is a banking corporation and trust company duly
organized, validly existing and in good standing under the laws of the State of
New York.
(b) The Trustee has full power, authority and legal right to
execute, deliver and perform this Agreement, and shall have taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement.
(c) The execution, delivery and performance by the Trustee of this
Agreement shall not (i) violate any provision of any law or any order, writ,
judgment or decree of any court, arbitrator or governmental authority applicable
to the Trustee or any of its assets, (ii) violate any provision of the corporate
charter or By-laws of the Trustee or (iii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any lien on any properties included in the
Trust Fund pursuant to the provisions of, any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation, default
or lien could reasonably be expected to materially and adversely affect the
Trustee's performance or ability to perform its duties under this Agreement or
the transactions contemplated in this Agreement.
(d) The execution, delivery and performance by the Trustee of this
Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with or the taking of any other
action in respect of any governmental authority or agency regulating the banking
and corporate trust activities of the Trustee.
(e) This Agreement has been duly executed and delivered by the
Trustee and constitutes the legal, valid and binding agreement of the Trustee,
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other
XII-10
<PAGE>
similar laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity. The Trustee hereby agrees and covenants that it will not at any time in
the future, deny that this Agreement constitutes the legal, valid and binding
agreement of the Trustee.
(f) The Trustee shall not take any action, or fail to take any
action, if such action or failure to take action will materially interfere with
the enforcement of any rights of the SBA or the Certificateholders under this
Agreement or the Certificates.
(g) The Trustee will comply at all times with the provisions of the
SBA Rules and Regulations in respect of its activities concerning the SBA Loans,
and will at all times hold an effective Loan Guaranty Agreement.
XII-11
<PAGE>
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Acts of Certificateholders.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 Amendment.
(a) This Agreement may be amended from time to time by the Seller,
the Servicer and the Trustee by written agreement, upon the prior written
consent of the SBA, without the notice to or consent of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions herein, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel delivered to the
Trustee, adversely affect the interests of any Certificateholder or any other
party and further provided that no such amendment shall reduce in any manner the
amount of, or delay the timing of, any amounts received on SBA Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the Seller,
the Servicer, the Trustee and the Majority Certificateholders, upon the prior
written consent of the SBA, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any amounts which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate or reduce the percentage of Holders
which are required to consent to any such amendment without the consent of the
Holders of 100% of the Certificates affected thereby and, provided further, that
no amendment affecting only one class of Certificates shall require the approval
of Holders of Certificates of the other Class.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
XIII-1
<PAGE>
Section 13.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the SBA Loans.
Section 13.04 Duration of Agreement.
This Agreement shall continue in existence and effect until
terminated as herein provided.
SECTION 13.05 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 13.06 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by overnight mail, certified mail or registered mail, postage prepaid,
to (i) in the case of the Servicer and the Seller, Business Loan Center, Inc.,
919 Third Avenue, 17th Floor, New York, New York 10022, Attn: Robert
Tannenhauser or such other addresses as may hereafter be furnished to the
Certificateholders in writing by the Seller and the Servicer, (ii) in the case
of the Trustee, Marine Midland Bank, 140 Broadway, New York, New York 10005,
12th Floor, Attention: Corporate Trust Department, (iii) in the case of the
Certificateholders, as set forth in the Certificate Register, (iv) in the case
of Duff & Phelps Credit Rating Co. to 55 East Monroe Street, Chicago, Illinois,
60603, to, and (v) in the case of the SBA, the United States Small Business
Administration, 409 Third Street, S.W., Washington, D.C. 20416, Attention:
Associate Administrator for Financial Assistance. Any such notices shall be
deemed to be effective with respect to any party hereto upon the receipt of such
notice by such party, except that notices to the Certificateholders shall be
effective upon mailing or personal delivery.
XIII-2
<PAGE>
Section 13.07 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 13.08 No Partnership.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 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 13.10 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Servicer, the Trustee and the Certificateholders and their
respective successors and assigns.
Section 13.11 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 13.12 Paying Agent.
The Trustee hereby appoints Marine Midland Bank as Paying Agent. The
Trustee may appoint one or more other Paying Agents or successor Paying Agents
meeting the eligibility requirements of a Trustee set forth in Section 12.06
(i), (ii), (iii), (iv), (v) and (vii) hereof.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.06, that such Paying Agent
will:
XIII-3
<PAGE>
(a) allocate all sums received for distribution to the Holders of
Certificates for which it is acting as Paying Agent on each Remittance Date
among such Holders in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time resign and
be discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days written notice to the Trustee. Any such Paying Agent
may be removed at any time by an instrument filed with such Paying Agent signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificateholders by mailing notice thereof
to their addresses appearing on the Certificate Register.
Section 13.13 Notification to Rating Agency.
The Trustee shall give prompt notice to the Rating Agency of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any change of the Trustee,
the Servicer or the Paying Agent, (3) any Event of Default or waiver of an Event
of Default, (4) that any superior lienholder has accelerated or intends to
accelerate the obligations secured by a Prior Lien, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agency a
copy of each of the Servicer's Certificates. Further, the Servicer shall give
prompt notice to the Rating Agency if the Servicer or any of its affiliates
acquire any Certificates.
Section 13.14 Third Party Rights
The Trustee, the FTA, the Spread Account Custodian and the Servicer
agree that the SBA shall be deemed a third-party beneficiary of this Agreement
entitled to all the rights and benefits set forth herein as fully as if it were
a party hereto.
XIII-4
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
BUSINESS LOAN CENTER, INC.,
as Seller and Servicer
By:___________________________
Name:
Title:
MARINE MIDLAND BANK,
as Trustee
By:___________________________
Name: Susan Barstock
Title: Assistant Vice President
XIII-5
<PAGE>
Acceptance of Marine Midland Bank
Marine Midland Bank hereby accepts its appointment under the within
instrument to serve as initial Authenticating Agent, Certificate Registrar and
Paying Agent. In connection therewith, Marine Midland Bank agrees to be bound by
all applicable provisions of such instrument.
MARINE MIDLAND BANK, as initial
Authenticating Agent, Certificate
Registrar and Paying Agent
By:______________________________
Name: Susan Barstock
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the ____ day of December, 1997 before me, a Notary Public in and
for said State, personally appeared ____________________ known to me to be an
officer of the Trustee, the trust company that executed the within instrument,
and also known to me to be the person who executed it on behalf of said banking
corporation, and acknowledged to me that such banking corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
My Commission expires_______
<PAGE>
STATE OF ___________)
: ss.:
COUNTY OF __________)
On the ____ day of December, 1997 before me, a Notary Public in and
for the State of New York, personally appeared ___________ known to me to be the
____________ of Business Loan Center, Inc., one of the entities that executed
the within instrument and also known to me to be the person who executed it on
behalf of said entity, and acknowledged to me that such entity executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
My Commission expires_______
<PAGE>
EXHIBIT A
CONTENTS OF SBA FILE
With respect to each SBA Loan, the SBA File shall include a copy of
any of the following items delivered to the Trustee or, with respect to 1 below
for the SBA ss. 7(a) Loans, the FTA:
1. The original SBA Note, endorsed by means of an allonge as
follows: "Pay to the order of Marine Midland Bank, and its
successors and assigns, as trustee under that certain
Pooling and Servicing Agreement dated as of December 1,
1997, for the benefit of the United States Small Business
Administration and holders of Business Loan Center SBA
Loan-Backed Adjustable Rate Certificates, Series 1997-1,
Class A and Class B, as their respective interests may
appear, without recourse" and signed, by facsimile or
manual signature, in the name of the Seller by a
Responsible Officer, with all prior and intervening
endorsements showing a complete chain of endorsement from
the originator to the Seller, if the Seller was not the
originator;
2. With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) the original Mortgage, with
evidence of recording thereon, (ii) a copy of the Mortgage
certified as a true copy by a Responsible Officer of the
Seller where the original has been transmitted for
recording until such time as the original is returned by
the public recording officer or duly licensed title or
escrow officer or (iii) a copy of the Mortgage certified by
the public recording officer in those instances where the
original recorded Mortgage has been lost;
3. With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) the original Assignment of
Mortgage from the Seller endorsed as follows: "Marine
Midland Bank, ("Assignee") its successors and assigns, as
trustee under the Pooling and Servicing Agreement dated as
December 1, 1997 subject to the Multi-Party Agreement dated
as of December 1, 1997" with evidence of recording thereon
(provided, however, that where permitted under the laws of
the jurisdiction wherein the Mortgaged Property is located,
the Assignment of Mortgage may be effected by one or more
blanket assignments for SBA Loans secured by Mortgaged
Properties located in the same county), or (ii) a copy of
such Assignment of Mortgage certified as a true copy by a
Responsible Officer of the Seller where the original has
been transmitted for recording (provided, however, that
where the original Assignment of Mortgage is not being
delivered to the Trustee, each such Responsible Officer may
complete one or more
A-1
<PAGE>
blanket certificates attaching copies of one or more
Assignments of Mortgage relating to the Mortgages originated
by the Seller);
4. With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) originals of all intervening
assignments, if any, showing a complete chain of title from
the originator to the Seller, including warehousing
assignments, with evidence of recording thereon if such
assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer of the
Seller where the originals have been submitted for
recording until such time as the originals are returned by
the public recording officer, or (iii) copies of any
assignments certified by the public recording office in any
instances where the original recorded assignments have been
lost;
5. With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) originals of all title insurance
policies relating to the Mortgaged Properties to the extent
the Seller obtained such policies or (ii) copies of any
title insurance policies or other evidence of lien
position, including but not limited to PIRT policies,
limited liability reports and lot book reports, to the
extent the Seller obtains such policies or other evidence
of lien position, certified as true by the Seller;
6. For all SBA Loans, blanket assignment of all Collateral
securing the SBA Loan, including without limitation, all
rights under applicable guarantees and insurance policies;
7. For all SBA Loans, irrevocable power of attorney of the
Seller to the Trustee to execute, deliver, file or record
and otherwise deal with the Collateral for the SBA Loans in
accordance with the Agreement. The power of attorney will
be delegable by the Trustee to the Servicer and any
successor servicer and will permit the Trustee or its
delegate to prepare, execute and file or record UCC
financing statements and notices to insurers; and
8. For all SBA Loans, blanket UCC-1 financing statements
identifying by type all Collateral for the SBA Loans in the
SBA Loan Pool and naming the Trustee and the SBA as Secured
Parties and the Seller as the Debtor. The UCC-1 financing
statements will be filed promptly following the Closing
Date in New York and Delaware and will be in the nature of
protective notice filings rather than a true financing
statement.
A-2
<PAGE>
EXHIBIT B-1
[FORM OF CLASS A CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR
BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
AND ONLY (1) IN CERTIFICATED FORM (A) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, OR (B) TO AN "INSTITUTIONAL ACCREDITED
INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1)-(3) OF REGULATION D UNDER
THE SECURITIES ACT PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE
TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B)
THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT
SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF ANY
STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (2) PURSUANT
TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS, OR (3) PURSUANT TO A VALID REGISTRATION
STATEMENT.
THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
B-1-1
<PAGE>
BUSINESS LOAN CENTER SBA LOAN-BACKED ADJUSTABLE RATE CERTIFICATES
Series 1997-1 Original Class A Certificate
Class A Principal Balance:
No. 1 $18,078,507.20
Original Dollar Amount as
of the Cut-Off Date
Represented by this
Certificate: 100%
$18,078,507.20
Remittance Rate: Percentage Interest of
Variable the Class A Certificates
Evidenced by this
Certificate: 100%
Date of Pooling and Servicer:
Servicing Agreement Business Loan Center, Inc.
and Cut-Off Date:
December 1, 1997
First Remittance Date: Latest Maturity Date: March 15, 2023
January 15, 1998
CUSIP No.: 123280 AA7
Closing Date: Trustee:
December 19, 1997 Marine Midland Bank
Business Loan Center, Inc. certifies that Banc One Capital
Corporation is the registered owner of a percentage interest (the "Percentage
Interest") in the Unguaranteed Interest in a pool of loans partially guaranteed
by the U.S. Small Business Administration (the "SBA Loans") and serviced by
Business Loan Center, Inc. (hereinafter called the "Servicer," in its capacity
as the Servicer, and the "Seller," in its capacity as the Seller, which terms
include any successor entity under the Agreement referred to below). The SBA
Loans were originated or purchased by the Seller. The SBA Loans will be serviced
pursuant to the terms and conditions of that certain Pooling and Servicing
Agreement dated as of December 1, 1997 (the "Agreement") between Marine Midland
Bank, as trustee (the "Trustee") and Business Loan Center, Inc., as Seller and
Servicer, certain of the pertinent provisions of which are set forth herein. To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the
B-1-2
<PAGE>
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound.
On each Remittance Date, commencing on January 15, 1998, the Trustee
or Paying Agent shall distribute to the Person in whose name this Certificate is
registered at the close of business on the last day of the month next preceding
the month of such distribution (the "Record Date"), an amount equal to the
product of the Percentage Interest of the Class A Certificates evidenced by this
Certificate and the amount required to be distributed to Holders of Class A
Certificates on such Remittance Date pursuant to Section 6.07 of the Agreement.
During the initial Interest Accrual Period, this Certificate will
bear interest at the rate of 6.60% per annum. During each subsequent Interest
Accrual Period, this Certificate will bear interest at a per annum rate equal to
the Prime Rate in effect on the preceding Adjustment Date minus 1.90% per annum,
subject to the limits described in the Agreement.
Distributions on this Certificate will be made by the Trustee or
Paying Agent by check mailed to the address of the Person entitled thereto as
such name and address shall appear on the Certificate Register or, upon written
request to the Trustee, by wire transfer of immediately available funds to the
account of the Person entitled thereto as shall appear on the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation thereon, at a bank or other entity having appropriate facilities
therefor, and, in the case of wire transfers, at the expense of such Person
unless such Person shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the
Certificate Registrar in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as Business Loan Center SBA Loan-Backed, Adjustable Rate
Certificates, Series 1997-1, Class A and Class B (herein called the
"Certificates") and representing undivided ownership in the right to receive the
principal portion of the Unguaranteed Interests of the SBA Loans together with
interest thereon at the then applicable Class A or Class B Remittance Rate, as
the case may be.
Neither the Certificates nor the SBA Loans represent an obligation
of, or an interest in, the Servicer and (except for the Excess Spread) are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Small
Business Administration, the Government National Mortgage Association or the
Veterans Administration or any other governmental agency. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
SBA Loans, all as more specifically set forth herein and in the Agreement. In
the event Servicer funds are advanced with respect to any SBA Loan, such advance
is reimbursable to the Servicer from late recoveries of interest on the SBA
Loans generally.
B-1-3
<PAGE>
As provided in the Agreement, deposits and withdrawals from the
Certificate Account, the Spread Account and the Expense Account may be made by
the Trustee from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Servicer of
advances made, or certain expenses incurred, by it, and investment in Permitted
Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Seller, the Servicer
and the Trustee without the consent of the Certificateholders and (b) by the
Seller, the Servicer and the Trustee with the consent of the Majority
Certificateholders. The Agreement permits the Majority Certificateholders to
waive, on behalf of all Certificateholders, any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
in a default in making any required distribution on a Certificate. Any such
consent or waiver by the Majority Certificateholders shall be conclusive and
binding on the holder of this Certificate and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Certificate Registrar in
New York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to, the Trustee, duly executed by the holder
hereof or such holder's attorney duly authorized in writing, and thereupon one
or more new Certificates in authorized denominations evidencing the same
aggregate undivided Percentage Interest will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
B-1-4
<PAGE>
The Servicer, the Seller, the Trustee and the Certificate Registrar,
and any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
Except for certain obligations of the Servicer to the Trustee, the
obligations created by the Agreement shall terminate upon notice to the Trustee
of the later of the following events: (i) the final payment or other liquidation
of the last SBA Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any SBA Loan and the remittance of
all funds due thereunder or (ii) mutual consent of the Servicer and all
Certificateholders in writing; provided, however, that in no event shall the
Trust Fund established by the Agreement terminate later than twenty-one years
after the death of the last surviving lineal descendant of Joseph P. Kennedy,
late Ambassador of the United States to the Court of St. James, alive as of the
date of the Agreement.
B-1-5
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be
duly executed.
Business Loan Center, Inc.
Servicer
By: ___________________________
Name:
Title:
Dated:_________________
This is one of the Certificates referred to in the within-mentioned Agreement.
Marine Midland Bank,
as Trustee
By:______________________
Authorized Signatory
or
Marine Midland Bank,
as Authenticating Agent
By:
Authorized Signatory
B-1-6
<PAGE>
EXHIBIT B-2
[FORM OF CLASS B CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR
BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
AND ONLY (1) IN CERTIFICATED FORM (A) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, OR (B) TO AN "INSTITUTIONAL ACCREDITED
INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1)-(3) OF REGULATION D UNDER
THE SECURITIES ACT PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE
TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B)
THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT
SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF ANY
STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (2) PURSUANT
TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS, OR (3) PURSUANT TO A VALID REGISTRATION
STATEMENT.
THIS CERTIFICATE MAY NOT BE ACQUIRED FOR OR ON BEHALF OF (1) AN EMPLOYEE BENEFIT
PLAN OR RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, OR (2) ANY ENTITY, THE ASSETS OF WHICH WOULD BE DEEMED
PLAN ASSETS UNDER THE DEPARTMENT OF LABOR REGULATIONS SET FORTH AT 29 C.F.R.
ss.2510.3-101, OTHER THAN AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE
MEANING OF SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.
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THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
THE RIGHTS OF THE HOLDERS OF THE CLASS B CERTIFICATES TO RECEIVE DISTRIBUTIONS
WITH RESPECT TO INTEREST AND PRINCIPAL WILL BE SUBORDINATED TO SUCH RIGHTS OF
THE HOLDERS OF THE CLASS A CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
[SO LONG AS THIS CLASS B CERTIFICATE IS REGISTERED IN THE NAME OF BUSINESS LOAN
CENTER FINANCIAL CORP., THIS CLASS B CERTIFICATE MAY NOT BE SOLD, PLEDGED,
TRANSFERRED, ASSIGNED OR OTHERWISE CONVEYED, IN WHOLE OR IN PART, WITHOUT THE
PRIOR WRITTEN APPROVAL OF THE UNITED STATES SMALL BUSINESS ADMINISTRATION.
B-2-2
<PAGE>
BUSINESS LOAN CENTER SBA LOAN-BACKED ADJUSTABLE RATE CERTIFICATES
Series 1997-1 Original Class B Certificate
Class B Principal Balance:
No. 1 $ 1,787,984.23
Original Dollar Amount as
of the Cut-Off Date
Represented by this
Certificate:
$ 1,787,984.23
Remittance Rate: Percentage Interest of
Variable the Class B Certificates
Evidenced by this
Certificate: 100%
Date of Pooling and Servicer:
Servicing Agreement Business Loan Center, Inc.
and Cut-Off Date:
December 1, 1997
First Remittance: Latest Maturity Date: March 15, 2023
Date:
January 15, 1998 CUSIP No.: 123280 AB 5
Closing Date: Trustee:
December 19, 1997 Marine Midland Bank
Business Loan Center, Inc. certifies that Business Loan Center
Financial Corp. is the registered owner of a percentage interest (the
"Percentage Interest") in the Unguaranteed Interest in a pool of loans partially
guaranteed by the U.S. Small Business Administration (the "SBA Loans") and
serviced by Business Loan Center, Inc. (hereinafter called the "Servicer," in
its capacity as the Servicer, and the "Seller," in its capacity as the Seller,
which terms include any successor entity under the Agreement referred to below).
The SBA Loans were originated or purchased by the Seller. The SBA Loans will be
serviced pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of December 1, 1997 (the "Agreement") between
Marine Midland Bank, as trustee (the "Trustee") and Business Loan Center, Inc.,
as Seller and Servicer, certain of the pertinent provisions of which are set
forth herein. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and
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<PAGE>
conditions of the Agreement, to which Agreement the holder of this Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
On each Remittance Date, commencing on January 15, 1998, the Trustee
or Paying Agent shall distribute to the Person in whose name this Certificate is
registered at the close of business on the last day of the month next preceding
the month of such distribution (the "Record Date"), an amount equal to the
product of the Percentage Interest of the Class B Certificates evidenced by this
Certificate and the amount required to be distributed to Holders of Class B
Certificates on such Remittance Date pursuant to Section 6.07 of the Agreement.
During the initial Interest Accrual Period, this Certificate will
bear interest at the rate of 7.0% per annum. During each subsequent Interest
Accrual Period, this Certificate will bear interest at a per annum rate equal to
the Prime Rate in effect on the preceding Adjustment Date minus 1.50%, subject
to the limits described in the Agreement.
Distributions on this Certificate will be made by the Trustee or
Paying Agent by check mailed to the address of the Person entitled thereto as
such name and address shall appear on the Certificate Register or, upon written
request to the Trustee, by wire transfer of immediately available funds to the
account of the Person entitled thereto as shall appear on the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation thereon, at a bank or other entity having appropriate facilities
therefor, and, in the case of wire transfers, at the expense of such Person
unless such Person shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Certificate Registrar in New
York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as Business Loan Center SBA Loan-Backed, Adjustable Rate
Certificates, Series 1997-1, Class A and Class B (herein called the
"Certificates") and representing undivided ownership in the right to receive the
principal portion of the Unguaranteed Interests of the SBA Loans together with
interest thereon at the then applicable Class A or Class B Remittance Rate, as
the case may be.
Neither the Certificates nor the SBA Loans represent an obligation
of, or an interest in, the Servicer and (except for the Excess Spread) are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Small
Business Administration, the Government National Mortgage Association or the
Veterans Administration or any other governmental agency. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
SBA Loans, all as more specifically set forth herein and in the Agreement. In
the event Servicer funds are advanced with respect to any SBA Loan, such advance
is reimbursable to the Servicer from late recoveries of interest on the SBA
Loans generally.
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<PAGE>
As provided in the Agreement, deposits and withdrawals from the
Certificate Account, the Spread Account and the Expense Account may be made by
the Trustee from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Servicer of
advances made, or certain expenses incurred, by it, and investment in Permitted
Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Seller, the Servicer
and the Trustee without the consent of the Certificateholders and (b) by the
Seller, the Servicer and the Trustee with the consent of the Majority
Certificateholders. The Agreement permits the Majority Certificateholders to
waive, on behalf of all Certificateholders, any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
in a default in making any required distribution on a Certificate. Any such
consent or waiver by the Majority Certificateholders shall be conclusive and
binding on the holder of this Certificate and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Certificate Registrar in
New York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to, the Trustee, duly executed by the holder
hereof or such holder's attorney duly authorized in writing, and thereupon one
or more new Certificates in authorized denominations evidencing the same
aggregate undivided Percentage Interest will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Servicer, the Seller, the Trustee and the Certificate Registrar,
and any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the
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<PAGE>
owner hereof for all purposes, and none of the foregoing shall be affected by
notice to the contrary.
Except for certain obligations of the Servicer to the Trustee, the
obligations created by the Agreement shall terminate upon notice to the Trustee
of the later of the following events: (i) the final payment or other liquidation
of the last SBA Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any SBA Loan and the remittance of
all funds due thereunder or (ii) mutual consent of the Servicer and all
Certificateholders in writing; provided, however, that in no event shall the
Trust Fund established by the Agreement terminate later than twenty-one years
after the death of the last surviving lineal descendant of Joseph P. Kennedy,
late Ambassador of the United States to the Court of St. James, alive as of the
date of the Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be
duly executed.
BUSINESS LOAN CENTER, INC.
Servicer
By: ___________________________
Name:
Title:
Dated:_________________
This is one of the Certificates referred to in the within-mentioned Agreement.
Marine Midland Bank,
as Trustee
By:______________________
Authorized Signatory
or
Marine Midland Bank,
as Authenticating Agent
By:
Authorized Signatory
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<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To: _______________________________
_______________________________
_______________________________ (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
December 1, 1997, Business Loan Center SBA Loan-Backed Adjustable Rate
Certificates, Series 1997-1 Class A and Class B (the "Agreement"), we hereby
authorize and request you to establish an account, as a Principal and Interest
Account pursuant to Section 5.03 of the Agreement, to be designated as
______________________________________ in trust for the registered holders of
Business Loan Center SBA Loan-Backed Adjustable Rate Certificates, Series
1997-1." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Servicer. You may refuse any deposit which would result in
violation of the requirement that the account be fully insured as described
below. This letter is submitted to you in duplicate.
Please execute and return one original to us.
BUSINESS LOAN CENTER, INC.
By: __________________________________
Name:
Title:
C-1
<PAGE>
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Federal
Deposit Insurance Corporation.
___________________
(Name of Depository)
By: _______________________________
Name: _____________________________
Title: ____________________________
C-2
<PAGE>
EXHIBIT D
[OMITTED]
D-1
<PAGE>
EXHIBIT E
[OMITTED]
E-1
<PAGE>
EXHIBIT E(1)
WIRING INSTRUCTIONS FORM
_______________, 19__
[Paying Agent]
[Trustee]
___________________________
___________________________
___________________________
Re: Business Loan Center SBA Loan-Backed Adjustable Rate
Certificates, Series 1997-1, [Class A] [Class B] Number
Dear Sir:
In connection with the sale of the above-captioned Certificate by
___________________________________ to _________________________________,
("Transferee") you, as Paying Agent, are instructed to make all remittances to
Transferee as Certificateholder as of ____________, 19__ by wire transfer. For
such wire transfer, the wiring instructions are as follows:
___________________________
___________________________
___________________________
________________________________
Transferee
Certificateholder's mailing address:
Name:
Address:
E(1)-1
<PAGE>
EXHIBIT F-1
FORM OF INITIAL CERTIFICATION
____________ , 199_
[Seller]
[Servicer]
[SBA]
Re: Pooling and Servicing Agreement
Business Loan Center SBA Loan-Backed
Adjustable Rate Certificates,
Series 1997-1, dated as of December 1, 1997
between Business Loan Center, Inc.
and Marine Midland Bank, as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement (the "Agreement"), the undersigned, as Trustee, hereby
certifies that, except as noted on the attachment hereto, if any (the "Loan
Exception Report"), it has received each of the documents required to be
delivered to it pursuant to Section 2.04 of the Agreement (not including the
original SBA Notes relating to the SBA ss. 7(a) Loans, which are to be delivered
to the FTA) with respect to each SBA Loan listed in the SBA Loan Schedule and
the documents contained therein appear to bear original signatures.
The Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement.
F-1-1
<PAGE>
The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any such documents or
any of the SBA Loans identified on the SBA Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such SBA Loan.
MARINE MIDLAND BANK, as Trustee
By:______________________________
Name:
Title:
F-1-2
<PAGE>
EXHIBIT F-2
FORM OF FINAL CERTIFICATION
[date]
[Servicer]
[Seller]
[SBA]
Re: Pooling and Servicing Agreement, Business Loan Center
SBA Loan-Backed Adjustable Rate Certificates,
Series 1997-1, dated as of December 1, 1997
between Business Loan Center, Inc.
and Marine Midland Bank, as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each SBA Loan listed in the SBA Loan
Schedule (other than any SBA Loan paid in full or listed on the attachment
hereto) it has reviewed the documents delivered to it pursuant to Section 2.04
of the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged, torn or otherwise physically altered and
relate to such SBA Loan and (iii) based on its examination, and only as to the
foregoing documents, the information set forth in the SBA Loan Schedule
respecting such SBA Loan is correct. The SBA has made no independent examination
of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The SBA makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Loans identified on the
SBA Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such SBA Loan.
MARINE MIDLAND BANK
as Trustee
By: _________________________
Name: _______________________
Title: ______________________
F-2-1
<PAGE>
EXHIBIT G
[OMITTED]
G-1
<PAGE>
EXHIBIT H
SBA LOAN SCHEDULE
[NOT ATTACHED]
H-1
<PAGE>
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee]
[FTA]
Re: Pooling and Servicing Agreement,
Business Loan Center SBA Loan-Backed Adjustable
Rate Certificates, Series 1997-1,
dated as of December 1, 1997
In connection with the administration of the pool of SBA Loans held
by you, we request the release, and acknowledge receipt, of the (Trustee's SBA
File/[specify document]) for the SBA Loan described below, for the reason
indicated.
Obligor's Name, Address & Zip Code:
SBA Loan Number:
Reason for Requesting Documents (check one)
____ 1. SBA Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Principal and
Interest Account and remitted to the Trustee for deposit into
the Certificate Account pursuant to the Pooling and Servicing
Agreement.)
____ 2. SBA Loan Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Principal and Interest Account and remitted to
the Trustee for deposit into the Certificate Account pursuant
to the Pooling and Servicing Agreement.)
____ 3. SBA Loan in Foreclosure
_____4. SBA Loan Repurchased Pursuant to Section 11.01
of the Pooling and Servicing Agreement.
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<PAGE>
_____5. SBA Loan Repurchased or Substituted Pursuant to Article II or III of
the Pooling and Servicing Agreement (Servicer hereby certifies
that the repurchase price or Substitution Adjustment has been
credited to the Principal and Interest Account and/or remitted
to the Trustee for deposit into the Certificate Account
pursuant to the Pooling and Servicing Agreement.)
____ 6. Collateral Being Released Pursuant to Section 5.01(f) of the Pooling
and Servicing Agreement.
____ 7. SBA Loan Collateral being substituted or subordinated.
If box 1 or 2 above is checked, and if all or part of the Trustee's
SBA File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified SBA Loan.
If box 3, 4, 5, 6 or 7 above is checked, upon our return of all of
the above documents to you, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
BUSINESS LOAN CENTER, INC.,
as Servicer
By: ___________________________
Name: _________________________
Date: _________________________
Documents returned to Trustee:
_______________________________
Trustee
By: ___________________________
Date: _________________________
I-2
<PAGE>
EXHIBIT J
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Unguaranteed Percentage of Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Unguaranteed Percentage of
Total Proceeds $_______
2. Servicing Advances $________
Monthly Advances ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the SBA
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
J-1
<PAGE>
EXHIBIT K
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
RANGES # GROSS GROSS CERT. UNGTD
SERIES (IN DAYS) ACCT AMOUNT PCT AMOUNT PCT
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 TO 179 Days
180 to 719 Days
720 AND OVER
FORECLOSURE
REO PROPERTY
DELINQUENCY
OUTSTANDING
K-1
<PAGE>
EXHIBIT L
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section
6.09 shall contain the following information for each SBA Loan as of the related
Record Date:
1. Name of the Obligor, address of the Mortgaged Property, if
applicable, and Account Number.
2. The SBA Loan Interest Rate.
3. The Monthly Payment.
4. The dates on which the payments were received for the applicable
Due Period and the amount of such payments segregated into the
following categories; (a) total interest received (including
Servicing Fee, interest payable to holder of the Guaranteed
Interest, the Premium Protection Fee, FTA's Fee, Excess Spread,
Extra Interest and, if applicable, Additional Fee); (b) interest
payable to the holder of the Guaranteed Interest and FTA's Fee;
(c) principal and Excess Payments received; (d) Curtailments
received; and (e) Principal Prepayments received.
5. The SBA Loan principal balance.
6. The SBA Loan date and original term to maturity.
7. A "Delinquency Flag" noting that the SBA Loan is current or
delinquent. If delinquent, state the date on which the last
payment was received.
8. For any SBA Loan that is not either 24 months delinquent or
otherwise determined to be uncollectible, a "Foreclosure Flag"
noting that the SBA Loan is the subject of foreclosure
proceedings.
9. For any SBA Loan that is not either 24 months delinquent or
otherwise determined to be uncollectible, an "REO Flag" noting
that the Mortgaged Property is an REO Property.
10. A "Liquidated SBA Loan Flag" noting that the SBA Loan is a
Liquidated SBA Loan and the Net Liquidation Proceeds received in
connection therewith.
11. Any additional information reasonably requested by the Trustee.
L-1
<PAGE>
EXHIBIT M
MULTI-PARTY AGREEMENT
AMONG BUSINESS LOAN CENTER, INC., MARINE MIDLAND BANK,
COLSON SERVICES CORP. AND SBA
This Multi-Party Agreement is entered into as of December 1, 1997
(this "Agreement"), by and among Business Loan Center, Inc. (the "SBA Lender"),
Marine Midland Bank, as Trustee ("Trustee"), Colson Services Corp. ("FTA"), and
the United States Small Business Administration ("SBA").
SBA Lender has made and intends to continue to make loans to small
businesses under the Small Business Act, as amended ("SBA Lender Loans").
SBA guarantees a portion of each SBA Lender Loan in accordance with
13 C.F.R. Part 120 and a Small Business Administration Loan Guaranty Agreement
(SBA Form 750), dated March 27, 1997, between SBA and Business Loan Center, Inc.
("the SBA Agreement").
Because SBA guarantees a portion of each SBA Lender Loan, SBA has an
interest in the SBA Lender Loans, the underlying collateral, and the Loan
Documents.
SBA Lender has entered into certain Secondary Participation Guaranty
Agreements on SBA Form 1086 (each, a "Participation Agreement") with a purchaser
(each, a "Guaranteed Holder"), FTA and SBA. Under the Participation Agreements,
SBA Lender has sold the guaranteed portion (the "Guaranteed Interest") in
certain SBA Lender Loans (the "Loan Pool"). SBA has caused FTA to issue a
certificate to each Guaranteed Holder which entitles the Guaranteed Holder to
receive the payments and other recoveries of principal relating to the
Guaranteed Interest on the related SBA Lender Loans, together with interest on
the Guaranteed
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<PAGE>
Interest at a per annum rate in effect from time to time in accordance with the
Participation Agreement.
The SBA Lender and the Trustee have entered into a Pooling and
Servicing Agreement dated as of December 1, 1997 (the "Pooling and Servicing
Agreement") which establishes a trust (the "Trust"). Under the Pooling and
Servicing Agreement, SBA Lender will convey the Conveyed Interest to the Trust.
The Trust will issue certificates (the "Certificates") evidencing the right to
receive the Unguaranteed Interest in the SBA Lender Loans in the Loan Pool
together with interest.
13 C.F.R. Section 120.420 and the SBA Agreement require the SBA
Lender to obtain SBA's written consent before it sells the Unguaranteed
Interest.
The SBA Lender, the Trustee and SBA want to assure consistency
between the SBA Agreement and the Pooling and Servicing Agreement and clarify
the respective rights of the parties.
SBA Lender, Trustee, FTA and SBA agree as follows:
1. Definitions. In this Agreement, the following terms have
the following meanings:
a. "Conveyed Interest": the Unguaranteed Interest plus
the amount by which the interest collected by the Servicer on
the principal portion of the Guaranteed Interest of each SBA
Lender Loan in the Loan Pool exceeds the sum of (a) the
interest payable to the Registered Holder, (b) the fees
payable to SBA and FTA, (c) the Servicing Fee and (d) the
Premium Protection Fee.
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<PAGE>
b. "Event of Default": as defined in the Pooling and
Servicing Agreement.
c. "Loan Documents": all Notes, mortgages, deeds of
trust, security deeds, security agreements, instruments of
hypothecation, guarantees and other agreements and documents
that relate to the SBA Lender Loans.
d. "Notes": the notes evidencing the SBA Lender Loans in
the Loan Pool.
e. "Premium Protection Fee": 0.60% per annum of the then
outstanding principal balance of the Guaranteed Interest.
f. "SBA Lender Loan Debtor": any debtor obligated under
an SBA Lender Loan.
g. "SBA Rules and Regulations": the Small Business Act,
as amended, the SBA Agreement, all rules and regulations
promulgated from time to time under the Small Business Act,
and SBA Standard Operating Procedures and official Notices as
from time to time in effect.
h. "Servicer": the Servicer (as defined in the Pooling
and Servicing Agreement).
i. "Servicing Fee": 0.4% per annum of the then
outstanding principal balance of the entire SBA Lender Loan.
j. "Unguaranteed Interest": the portion of each SBA
Lender Loan in the Loan Pool not guaranteed by SBA.
M-3
<PAGE>
2. SBA's Guaranteed Interest. Each of the SBA Lender, Trustee (on
behalf of itself and the holders of the Certificates) and FTA acknowledge SBA's
interest in the Guaranteed Interest of all SBA Lender Loans, together with the
collateral securing the SBA Lender Loans and the Loan Documents and agree to
recognize and uphold such interest under SBA Rules and Regulations. SBA Lender
and Trustee will execute any release, assignment, endorsement or other document
that SBA may from time to time reasonably request with respect to the Guaranteed
Interest. Each of SBA Lender and Trustee will remit funds it receives in respect
of the Guaranteed Interest in the SBA Lender Loans to FTA, or SBA, as required.
If SBA purchases the Guaranteed Interest in any SBA Lender Loan, any recoveries
from the SBA Lender Loan Debtor or the collateral underlying the SBA Lender Loan
will be distributed pro rata to SBA as holder of the Guaranteed Interest and to
Trustee as holder of the Unguaranteed Interest.
3. Unguaranteed Interest. SBA acknowledges that it has no interest
in the Unguaranteed Interest, Servicing Fee or the Premium Protection Fee. SBA
further acknowledges that it has no interest in any collateral that secures any
SBA Lender Loan or any Loan Document, except to the extent the collateral
secures or a Loan Document relates to the Guaranteed Interest. The collateral
for an SBA Lender Loan secures the Guaranteed Interest and the Unguaranteed
Interest pari passu. If SBA receives any amount in respect of the Conveyed
Interest, SBA will remit the sum to Trustee for the credit of the SBA Lender,
provided that in no event will SBA have any obligation to pay any amount not
owed by SBA under SBA Rules and Regulations. If SBA receives any amount in
respect of the Servicing Fee or the Premium Protection Fee, SBA will remit the
sum to the SBA Lender, or if SBA Lender is not the Servicer, the Servicer,
provided that Trustee shall have given FTA 15 days prior written notice under
this Agreement of the change in Servicer. This Agreement constitutes a notice of
claims assignment for the full
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term of the Pooling and Servicing Agreement under the Federal Assignment of
Claims Act of 1940, as amended, 31 U.S.C. Section 3727, with respect to any
right to payment of any Unguaranteed Interest or the Servicing Fee or the
Premium Protection Fee.
4. SBA Consent to Pooling and Servicing Agreement.
(a) SBA consents to the SBA Lender's execution and performance
of the Pooling and Servicing Agreement and the transactions contemplated in it
including, but not limited to, the sales of the Class A Certificates.
(b) Notwithstanding anything to the contrary contained in the
Pooling and Servicing Agreement, a default by SBA Lender under another agreement
or a default by an entity other than the SBA Lender under another agreement may
not be an event of default under the Pooling and Servicing Agreement. Trustee
waives any rights it may have, including rights of set-off and banker's liens,
to any account of SBA Lender into which payments from SBA Lender Loan Debtors
are received and the Principal and Interest Account (as defined in the Pooling
and Servicing Agreement).
5. SBA Lender to Retain Ultimate Risk of Loss. As required by 13
C.F.R. Section 120.420(b)(2), SBA Lender must retain an economic risk in and
bear the ultimate risk of loss on the Unguaranteed Interest. SBA Lender will
establish the Spread Account under the Pooling and Servicing Agreement and cause
a wholly-owned subsidiary to be and remain the Spread Account Depositor (as
defined in the Pooling and Servicing Agreement) and cause a wholly-owned
subsidiary to retain the Class B Certificates in accordance with Section 11
hereof.
6. Premium Protection Fee. SBA Lender will retain the Premium
Protection Fee with respect to its SBA Lender Loans.
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7. Restriction on Use of SBA Lender Loans. SBA Lender will not use
the SBA Lender Loans or the collateral supporting the SBA Lender Loans for any
borrowing or other financing not related to financing of the guaranteed or
unguaranteed portions of SBA Lender Loans.
8. FTA To Hold Original SBA Lender Notes; Possession of Loan
Documents.
(a) SBA Lender will deliver all original Notes relating to the
Initial SBA Loans (as defined in the Pooling and Servicing Agreement) to FTA
prior to the issuance of the Certificates and SBA Lender will deliver all
original Notes relating to the Subsequent SBA Loans (as defined in the Pooling
and Servicing Agreement) to FTA prior to each Subsequent Transfer of the
Subsequent SBA Loans. Each Note will be endorsed by means of an allonge (an
endorsement of the Note constituting a separate piece of paper) as follows: "Pay
to the order of Marine Midland Bank, and its successors and assigns, as trustee
under the Pooling and Servicing Agreement dated as of December 1, 1997, for the
benefit of the United States Small Business Administration and the holders of
Business Loan Center SBA Loan-Backed Certificates, Series 1997-1, Class A and
Class B as their respective interests may appear, without recourse." Upon
receiving the Note, FTA will deliver to SBA Lender and the Trustee a receipt for
such Note in the form of Exhibit 1.
(b) The Notes are being delivered to FTA for the purposes of
protecting the SBA's and the Certificateholders' respective interests. SBA
appoints FTA as its fiscal and transfer agent and each of SBA and Trustee
appoint FTA as its agent to hold the Notes. FTA does not and will not during the
term of this Agreement have any interest in the SBA Lender Loans in the Loan
Pool or the related Loan Documents.
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(c) FTA will not release any Note to SBA Lender or any other person
except (i) upon receipt from an SBA Lender of a Request for Release of Note in
the form of Exhibit 3, along with a confirmation of release from Trustee, or
(ii) with SBA's prior written consent. Upon receipt of the required request and
confirmation or consent, FTA shall release, within 3 Business Days, the related
Note. The Servicer shall return the Notes to FTA in accordance with the
appropriate provisions of the Pooling and Servicing Agreement and when the Notes
are returned to FTA, FTA will issue a receipt in the form of Exhibit 1 hereto.
(d) Upon reasonable notice to FTA, SBA will have the right during
normal business hours to inspect the original Notes at FTA's office.
(e) SBA Lender will deliver to Trustee the Loan Documents and
assignments of Loan Documents in accordance with the Pooling and Servicing
Agreement. All instruments of assignment shall assign the applicable collateral
to "Marine Midland Bank ("Assignee") its successors and assigns, as trustee
under the Pooling and Servicing Agreement dated as of December 1, 1997, subject
to the Multi-Party Agreement dated as of December 1, 1997". All financing
statements will name the Trustee as secured party. Any power of attorney from
SBA Lender to Trustee must require the Trustee to deal with the collateral in
accordance with the terms of the Pooling and Servicing Agreement and this
Agreement.
(f) If the Servicer or the SBA must be the record owner or secured
party with respect to any Note or any collateral securing any Note for any
purpose including, without limitation, to liquidate (including by any judicial
means) or otherwise pursue remedies against any SBA Lender Loan Debtor or the
collateral, Trustee will assign such Note or collateral to the Servicer, or SBA,
as necessary.
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9. Servicing of SBA Lender Loans. SBA Lender will service the SBA
Lender Loans in the Loan Pool. The Servicer will remit funds to which the
Guaranteed Holders or SBA is entitled in accordance with the terms of the
Participation Agreements, and will remit funds which are required to be remitted
to Trustee in accordance with the terms of the Pooling and Servicing Agreement.
SBA Lender must proceed with all collection, enforcement of remedies and
liquidation actions against SBA Lender Loan Debtors in default in accordance
with SBA Rules and Regulations. SBA Lender must perform all servicing activities
in accordance with SBA Rules and Regulations, the Participation Agreements and,
to the extent there is no conflict, the Pooling and Servicing Agreement.
Property acquired through foreclosure or deed in lieu of foreclosure will be
titled in the name of Trustee for the benefit of the SBA and the holders of the
Certificates, as their interests may appear, subject to the terms of this
Agreement. The SBA Lender will continue to administer such property and will be
responsible for its disposition in accordance with the terms of the Pooling and
Servicing Agreement. The SBA Lender will distribute disposition proceeds to the
SBA, as party in interest with respect to the Guaranteed Interest, and to
Trustee in respect of the Unguaranteed Interest, pro rata. SBA may, at its
option, assume servicing of any SBA Lender Loan in accordance with SBA Rules and
Regulations. Prior to an Event of Default, Trustee will not take (i) any action
regarding the servicing of any SBA Lender Loan or (ii) any action with respect
to any SBA Lender Loan Debtor or any collateral securing any SBA Lender Loan.
Any actions required of SBA Lender under the Pooling and Servicing Agreement or
this Agreement may be performed by or through a subservicer approved by SBA
under an agreement approved by SBA, but any such subservicing arrangement will
not limit or reduce SBA Lender's obligations or liabilities as servicer under
the Pooling and Servicing Agreement or this Agreement.
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10. Default Under Pooling and Servicing Agreement. Trustee will give
SBA prompt written notice of an Event of Default and prompt written notice of
any termination of SBA Lender as Servicer under the Pooling and Servicing
Agreement. Upon an Event of Default and termination of SBA Lender as Servicer in
accordance with the terms of the Pooling and Servicing Agreement, Trustee may be
substituted as Servicer so long as Trustee is then an approved SBA participating
lender in good standing, operating under a current Small Business Administration
Loan Guaranty Agreement (Deferred Participation) (Form 750). If Trustee does not
meet that condition or is otherwise unable to act or if the SBA requests in
writing, Trustee will appoint another Servicer in accordance with the Pooling
and Servicing Agreement. Any successor Servicer must agree to be bound by the
terms of this Agreement and must execute an agreement in the form of Exhibit 2.
Any substitute Servicer will be entitled to receive the Servicing Fee and the
Premium Protection Fee.
11. Transferees. Other than the issuance of the Certificates,
Trustee will not sell, participate, pledge, hypothecate, enter into any
repurchase agreement with respect to, or otherwise transfer any of its interest
in any SBA Lender Loan or any Note without SBA's prior written consent. The
proposed transferee must be an approved SBA participating lender in good
standing, operating under a current Small Business Administration Loan Guaranty
Agreement (Deferred Participation) (Form 750) and must be acceptable to SBA.
Upon consenting to any proposed transfer, SBA will give FTA prompt written
notice. Any transferee must agree to be bound by the terms of this Agreement.
Upon initial issuance, the Class B Certificates will be registered in the name
of Business Loan Center Financial Corp., a wholly-owned subsidiary of the SBA
Lender. The SBA Lender agrees that Business Loan Center Financial Corp. may not
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sell, pledge, transfer, assign or otherwise convey, in whole or in part, the
Class B Certificates without the prior written consent of SBA.
12. SBA Lender Acknowledgment of Continuing Obligation; No
Assumption of Liabilities. No action taken by Trustee, SBA or the Servicer under
this Agreement, SBA Agreement, or the Pooling and Servicing Agreement will
release or relieve SBA Lender of any of its obligations to SBA or Trustee. None
of SBA, Trustee, FTA or the Servicer will incur any liability or obligation to
SBA Lender by reason of any reasonable or customary action taken in carrying out
the provisions of this Agreement. Neither the execution of this Agreement, nor
the taking of any action by Trustee, SBA, FTA or the Servicer under this
Agreement will be an assumption by Trustee, SBA, FTA or the Servicer of any
liabilities or obligations of SBA Lender. The provisions of this Section will
survive termination of this Agreement.
13. FTA's and SBA's Limited Liability and Expenses. (a) FTA may rely
upon any signature, notice, certificate, or other document reasonably believed
by it to be genuine and to have been signed by the party purporting to sign it.
SBA Lender will assume liability for and indemnify, protect, and hold harmless
FTA from any liabilities or losses arising out of this Agreement, except in the
case of FTA's gross negligence or willful misconduct. SBA Lender will reimburse
FTA for all expenses, taxes, and other charges that FTA incurs in administering
this Agreement. SBA Lender will pay FTA its standard fee for its services under
this Agreement. In performing its obligations under this Agreement, FTA will not
follow instructions from any party other than SBA or, pursuant to Section 8(c),
upon the request of the SBA Lender and concurring instructions of Trustee. The
SBA Lender will not hold FTA liable for any action taken in accordance with such
instructions.
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(b) SBA may rely on any signature, notice, certificate, request or
other document reasonably believed by it to be genuine and to have been signed
by the party purporting to sign it. SBA Lender will assume liability for and
indemnify, protect and hold harmless SBA from all liabilities or losses arising
out of this Agreement, except in the case of gross negligence or willful
misconduct. Upon request by SBA, SBA Lender will reimburse SBA for all expenses
and other charges that SBA incurs in connection with this Agreement.
(c) The provisions of this Section 13 shall survive any termination
of this Agreement.
14. Counterparts. This Agreement may be executed in any number of
counterparts each of which will be an original.
15. Inconsistencies. If any provision of this Agreement is
inconsistent with any provision in any other agreement, including but not
limited to the Pooling and Servicing Agreement, the provision of this Agreement
controls. The Pooling and Servicing Agreement and any agreements entered into in
connection with such agreement are amended to the extent necessary to give
effect to the prior sentence. The SBA Agreement is amended to provide that FTA
will hold the Notes that are transferred pursuant to the Pooling and Servicing
Agreement and that the Trustee may hold the Loan Documents as provided in this
Agreement.
16. Amendment and Term. This Agreement may not be terminated or
amended without the prior written consent of the parties. Neither the SBA
Agreement nor the Pooling and Servicing Agreement may be amended in any manner
that would impair the respective rights of the SBA or the Trustee under this
Agreement without the prior written consent of the party so affected.
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17. Governing Law. This Agreement will be interpreted and construed
in accordance with the laws of the State of New York, without reference to its
conflict of laws rules.
18. Successors and Assigns. This Agreement binds and benefits the
parties and their respective successors and assigns.
19. Section Headings. The section headings in this Agreement are for
convenience only, and are without substantive meaning or content.
20. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will be given no effect and
shall not invalidate any other provision of this Agreement.
21. Notices and Deliveries. Except as otherwise expressly provided
in this document, all notices or deliveries under this Agreement will be given
by actual delivery to the parties at the addresses below or to such other
addresses that any party may designate for itself by written notice to each of
the other parties. All notices will be effective upon receipt by the applicable
party.
If to the SBA Lender, at:
Business Loan Center, Inc.
919 Third Avenue
New York, New York 10022
Telecopy No.:
Attention:
If to the Trustee, at:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration
If to FTA, at:
Colson Services Corp.
150 Nassau Street
New York, New York 10038
Attn: President
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If to SBA, at:
U.S. Small Business Administration
409 3rd Street, S.W.
Washington, D.C. 20416
Attn: Associate Administrator for
Financial Assistance
In witness whereof the SBA Lender, the Trustee, FTA, and SBA have
executed this Agreement below.
BUSINESS LOAN CENTER, INC.
By:___________________
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MARINE MIDLAND BANK, as Trustee
By:_____________________
UNITED STATES SMALL BUSINESS
ADMINISTRATION
By:______________________
Jane Palsgrove Butler
COLSON SERVICES CORP.
By:________________
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EXHIBIT 1
ACKNOWLEDGMENT OF RECEIPT OF NOTE
___________, 199_
In accordance with Section 8 of the Multi-Party Agreement, dated as
of December 1, 1997, by and among Business Loan Center, Inc., Marine Midland
Bank, Colson Services Corp. ("Colson") and the United States Small Business
Administration ("SBA"), Colson, as agent for SBA, hereby acknowledges receipt of
the SBA guaranteed Note described below with respect to the following:
MAKER:
ORIGINAL PRINCIPAL AMOUNT:
DATE OF NOTE:
SBA LOAN NUMBER (GP NUMBER):
BUSINESS LOAN CENTER, INC. ACCOUNT NUMBER:
COLSON SERVICES CORP.,
AS AGENT FOR THE UNITED STATES
SMALL BUSINESS ADMINISTRATION
By:_______________________________
Its:______________________________
INSTRUCTIONS TO COLSON SERVICES CORP. One original executed copy of this receipt
should be made available for pick-up at the office of Colson or delivered to
Marine Midland Bank, as trustee, 140 Broadway, 12th Floor, New York, New York
10005, and a copy to Business Loan Center, Inc., 919 Third Avenue, New York, New
York 10022.
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EXHIBIT 2
The undersigned consent and agree to be bound as _____________ by
the terms of foregoing Multi-Party Agreement dated as of December 1, 1997 among
Business Loan Center, Inc., Marine Midland Bank, as Trustee, Colson Services
Corp. and SBA.
___________________________________
By:________________________________
Name:
Title:
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EXHIBIT 3
REQUEST FOR RELEASE OF NOTE
_____________, 199_
Colson Services Corp.
As Agent for the United States
Small Business Administration
150 Nassau Street
New York, NY 10038
In accordance with Section 8(c) of the Multi-Party Agreement dated as of
December 1, 1997 by and among Business Loan Center, Inc., Marine Midland Bank,
Colson Services Corp. ("Colson") and the United States Small Business
Administration ("SBA") and, subject to your receipt of concurrence from Marine
Midland Bank, as Trustee, Business Loan Center, Inc. hereby requests release of
the Note described below:
OBLIGOR'S NAME AND ADDRESS:
SBA LOAN NUMBER (GP NUMBER):
Reason for Requesting Note
(ONE OF THESE MUST BE CHECKED)
____1. SBA Loan Paid in Full
____2. SBA Loan Liquidated
____3. SBA Loan in Foreclosure
____4. SBA Loan repurchased pursuant to Section 11.01 of the Pooling and
Servicing Agreement, dated as of December 1, 1997, relating to Business
Loan Center SBA Loan-Backed Adjustable Rate Certificates, Series 1997-1
(The "Pooling and Servicing Agreement")
____5. SBA Loan repurchased or substituted pursuant to Article II or Article III
of the Pooling and Servicing Agreement
____6. Collateral being released pursuant to Section 5.01(f) of the Pooling and
Servicing Agreement
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____7. SBA Loan collateral being substituted or subordinated
BUSINESS LOAN CENTER, INC.
By: ________________________
Its: _______________________
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EXHIBIT N
SPREAD ACCOUNT AGREEMENT
This Spread Account Agreement is dated as of December 19, 1997 (the
"Agreement") among Business Loan Center Financial Corp., a Delaware corporation,
as Spread Account Depositor (the "Spread Account Depositor"), Marine Midland
Bank, as trustee (the "Trustee"), and Marine Midland Bank, in its capacity as
custodian hereunder (the "Spread Account Custodian"). All capitalized terms used
but not otherwise defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement referred to below.
WHEREAS, Business Loan Center, Inc. (the "Seller"), and Marine
Midland Bank, in its capacity as Trustee, have entered into a Pooling and
Servicing Agreement, dated as of December 1, 1997 (the "Pooling and Servicing
Agreement"), in connection with the establishment of a Trust (the "Trust") and
the issuance of Business Loan Center SBA Loan-Backed, Adjustable Rate
Certificates, Series 1997-1, representing an undivided beneficial ownership
interest in the Trust;
WHEREAS, the Spread Account Depositor wishes to establish the Spread
Account (the "Account") with the Spread Account Custodian, to be used in
accordance with the provisions of Section 6.02 of the Pooling and Servicing
Agreement; and
WHEREAS, the Spread Account Custodian herein agrees to maintain the
Account in accordance with the terms of this Agreement and the Pooling and
Servicing Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
Section 1. Definitions. In addition to those terms defined in the
Pooling and Servicing Agreement and otherwise herein, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
"Account Property" has the meaning set forth in Section 3
hereof.
"Account" has the meaning set forth in the second WHEREAS
clause hereof.
"Certificated Securities" has the meaning set forth in Section
8-102(4) of the UCC.
"Clearing Corporation" has the meaning set forth in Section
8-102(5) of the UCC.
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"Eligible Deposit Account" means either (a) a segregated
account with a Designated Depository Institution (as defined in the Pooling and
Servicing Agreement) or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the States (or any domestic branch of a foreign
bank), having corporate trust powers and acting as trustee for funds deposited
in such account.
"Delivery" when used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
instruments and are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Spread Account
Custodian, endorsed to, or registered in the name of, the Spread
Account Custodian or its nominee or endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Spread Account
Custodian; or
(ii) delivery thereof in registered form to the Spread Account
Custodian and
(A) the certificate is endorsed to the Spread Account
Custodian or in blank by effective endorsement; or
(B) the certificate is registered in the name of the
Spread Account Custodian, upon original issue or registration of
transfer by the issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the Spread
Account Custodian; or
(ii) the issuer has agreed that it will comply with
instructions originated by the Spread Account Custodian without
further consent by the registered owner;
(d) with respect to any security issued by the U.S. Treasury that is
a book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations:
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(i) a Federal Reserve Bank by book entry credits the
book-entry security to the securities account (as defined in 31 CFR
Part 357) of a participant (as defined in 31 CFR Part 357) which is
also a securities intermediary; and
(ii) the participant indicates by book entry that the
book-entry security has been credited to the Spread Account
Custodian's securities account;
(e) with respect to a security entitlement:
(i) the Spread Account Custodian becomes the entitlement
holder; or
(ii) the securities intermediary has agreed that it will
comply with entitlement orders originated by the Spread Account
Custodian without further consent by the entitlement holder;
(f) for the purpose of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Spread Account Custodian acquires possession
thereof;
(B) another person (other than a securities
intermediary) either acquires possession thereof on behalf of the
Spread Account Custodian or, having previously acquired possession
thereof, acknowledges that it holds for the Spread Account
Custodian; or
(C) a securities intermediary acting on behalf of the
Spread Account Custodian acquires possession of thereof, only if the
certificate is in registered form and has been specially endorsed to
the Spread Account Custodian by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Spread Account Custodian as
the registered owner, upon original issue or registration of
transfer; or
(B) another person (other than a securities
intermediary) either becomes the registered owner thereof on behalf
of the Spread Account Custodian or, having previously become the
registered owner, acknowledges that it holds for the Spread Account
Custodian;
(g) for purposes of this definition, except as otherwise indicated,
the following terms shall have the meaning assigned to each such term in the
UCC:
(i) "certificated security"
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(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Spread Account
Custodian shall make appropriate notations on its records, and shall cause same
to be made on the records of its nominees, indicating that securities are held
in trust pursuant to and as provided in this Agreement.
"Depositary" has the meaning set forth in 31 C.F.R. 306.118 or
similar federal regulations governing the transfer of securities
issued by the United States Treasury which are maintained in
book-entry form.
"Financial Intermediary" has the meaning set forth in Section
8-313(4) of the UCC.
"Instruments" has the meaning set forth in Section
9-105(l)(ii) of the UCC but excludes any "instruments" that are
"certificated securities" as defined in Section 8-102(l) (a) of the
UCC.
"Physical Property" has the meaning set forth in clause (i) of
the definition of "Delivery" in this Section 1.
"UCC" means the New York Uniform Commercial Code.
"Uncertificated Security" has the meaning set forth in Section
8-102(a)(18) of the UCC.
Section 2. Appointment of Spread Account Custodian. The Spread Account
Depositor and the Trustee hereby appoint Marine Midland Bank as their agent
under this Agreement to act on their behalf in accordance with the terms of this
Agreement with respect to their interests in the Account and all amounts and
investments deposited therein or credited thereto. Marine Midland Bank hereby
accepts and acknowledges its appointment as agent on behalf of the Spread
Account Depositor and the Trustee.
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Section 3. Pledge of Security Interest. The Spread Account Depositor
hereby assigns, sells, conveys and transfers to the Spread Account Custodian and
its successors and assigns, and grants thereto a security interest in, all of
its right, title and interest in and to all amounts payable to the Spread
Account pursuant to Section 6.02 of the Pooling and Servicing Agreement, the
Account, all amounts deposited therein or credited thereto, from time to time,
and all proceeds of the foregoing, including, without limitation, all other
amounts and investments held from time to time in the Account (whether in the
form of deposit accounts, Physical Property, book-entry securities,
Uncertificated Securities, or otherwise) in consideration of its right to
receive Excess Spread in accordance with Section 6.02 of the Pooling and
Servicing Agreement (all of the foregoing, collectively, the "Account
Property"), to have and to hold all the aforesaid property, rights and
privileges unto the Spread Account Custodian, its successors and assigns, in
trust for the benefit of the Trustee and the Certificateholders, subject to the
terms and provisions, set forth in this Agreement. The Spread Account Custodian
hereby acknowledges such transfer and, upon receipt, shall hold and distribute
the Account Property in accordance with the terms and provisions of this
Agreement.
Section 4. Establishment of the Account. In consideration of its right to
receive Excess Spread in accordance with Section 6.02 of the Pooling and
Servicing Agreement, the Spread Account Depositor hereby establishes and shall
hereafter maintain with the Spread Account Custodian the Account as a separate
trust account to include the money and other property deposited and held therein
pursuant hereto. The Account shall be a segregated trust account maintained in
New York and initially established with the Spread Account Custodian and
maintained with the Spread Account Custodian in the Corporate Trust Department
of the Spread Account Custodian. The Spread Account Custodian acknowledges the
interest of the Trustee in the Account, as set forth herein and in Article VI of
the Pooling and Servicing Agreement. The Spread Account Custodian further
acknowledges and agrees that (i) any deposits to the Account shall be made
solely by the Servicer or the Trustee in accordance with Section 6.02(a) of the
Pooling and Servicing Agreement; (ii) any withdrawals from the Account shall be
made by the Spread Account Custodian solely upon instructions therefor given by
the Trustee as specifically set forth in Section 6.02(b) of the Pooling and
Servicing Agreement; and (iii) the Seller, the Servicer and the Spread Account
Depositor shall have no rights to receive any amounts in the Account other than
as specifically set forth herein and in Section 6.02(b) of the Pooling and
Servicing Agreement.
Section 5. Delivery of Account Property. With respect to the Account
Property, the Spread Account Depositor and the Spread Account Custodian agree
that:
(a) any Account Property that is held in deposit accounts
shall be held solely in an Eligible Deposit Account; and each such
deposit account shall be subject to the exclusive dominion and
control of the Spread Account Custodian, and the Spread Account
Custodian shall have sole signature authority with respect thereto;
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(b) any Account Property that is Physical Property shall be
delivered to the Spread Account Custodian in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Spread Account
Custodian or a securities intermediary (as such term is defined in
Section 8-102(a)(14) of the Relevant UCC);
(c) any Account Property that is a "certificated security"
under Article 8 of the Relevant UCC shall be delivered to the Spread
Account Custodian in accordance with paragraph (b) of the definition
of "Delivery" and shall be held, pending maturity or disposition,
solely by the Spread Account Custodian or a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the Relevant
UCC);
(d) any Account Property that is an "uncertificated security"
under Article 8 of the Relevant UCC shall be delivered to the Spread
Account Custodian in accordance with paragraph (c) of the definition
of "Delivery" and shall be maintained by the Spread Account
Custodian, pending maturity or disposition, through continued
registration on the books and records of the issuer thereof of the
ownership of such security by the Spread Account Custodian (or its
nominee) or a securities intermediary (as such term is defined in
Section 8-102(a)(14) of the Relevant UCC);
(e) any Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered to the Spread Account Custodian in
accordance with paragraph (d) of the definition of "Delivery" and
shall be maintained by the Spread Account Custodian, pending
maturity or disposition, through continued book-entry registration
of such Account Property in the name of the Spread Account Custodian
or a securities intermediary (as such term is defined in Section
8-102(a)(14) of the Relevant UCC);
(f) any Account Property held through a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the
Relevant UCC) shall be held in a securities account (as such term is
defined in Section 8-501(a) of the Relevant UCC) that is established
by such securities intermediary in the name of the Spread Account
Custodian for which the Spread Account Custodian is the sole
entitlement holder (as defined in Section 8-102(a)(7) of the
Relevant UCC).
Section 6. Investment. Amounts held in the Account shall be invested in
Permitted Instruments in accordance with the provisions of Section 6.06 of the
Pooling and Servicing Agreement. All such investments shall be made in the name
of the Spread Account Custodian or its nominee, and all income and gain realized
thereon shall be retained in the Account until withdrawals are permitted under
Section 6.02(b)(iii) of the Pooling and Servicing Agreement.
N-6
<PAGE>
Section 7. Statement of Account. On or before each Determination
Date, the Spread Account Custodian shall deliver to the Trustee, the Servicer
and the Spread Account Depositor an Officer's Certificate of the Spread Account
Custodian setting forth, as of such date, (i) the amount on deposit in the
Account, (ii) the activity in the Account for the preceding month and (iii) the
amount of any income or gain (or loss) on amounts held in the Account.
Section 8. Termination. This Agreement shall terminate upon the
termination of the Pooling and Servicing Agreement in accordance with its terms.
Upon termination of this Agreement, any amounts on deposit in the Account shall
be paid by the Spread Account Custodian to the Spread Account Depositor in
accordance with the terms of the Pooling and Servicing Agreement.
Section 9. Amendment. This Agreement may be amended by the Spread
Account Depositor and the Spread Account Custodian with the consent of the
Trustee. The parties hereto agree to make any changes to this Agreement required
by the Rating Agency in order to obtain an investment-grade rating.
Section 10. 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 11. 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 UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.
Section 12. Notices. All demands, notices and communications upon or
to the Spread Account Depositor, the Servicer, the Spread Account Custodian or
the Trustee under this Agreement shall be in writing, personally delivered or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Trustee, at the address
therefor set forth in Section 13.06 of the Pooling and Servicing Agreement; (b)
in the case of the Spread Account Custodian, c/o Marine Midland Bank at 140
Broadway, New York, New York 10005, 12th Floor, Attention: Corporate Trust
Department; and (c) in the case of the Spread Account Depositor, c/o Business
Loan Center, Inc., 919 Third Avenue, New York, New York 10022.
Section 13. Severability of Provisions. If any one or more of the
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such agreements, provisions or terms shall be
deemed severable from the remaining agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
N-7
<PAGE>
Section 14. Assignment; Benefit of Agreement. Notwithstanding
anything to the contrary contained herein, this Agreement may not be assigned by
the Spread Account Depositor Spread Account Custodian without the prior written
consent of the Trustee. Subject to the foregoing, this Agreement will inure to
the benefit of and be binding upon the parties hereto and the Trustee and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the Spread Account Depositor, the Trustee and
the Spread Account Custodian have caused this Spread Account Agreement to be
duly executed by their respective officers as of the day and year first above
written.
Marine Midland Bank,
as Trustee
By_____________________________
Authorized Officer
MARINE MIDLAND BANK,
as Spread Account Custodian
By_____________________________
Name:
Title:
BUSINESS LOAN CENTER FINANCIAL CORP.
as Spread Account Depositor
By_____________________________
Name:
Title:
N-8
<PAGE>
EXHIBIT O-1
FORM OF TRANSFEREE LETTER [NON-RULE 144A]
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Business Loan Center, Inc.,
as Servicer
919 Third Avenue
New York, New York 10022
Attention: Corporate Trust Administration
__________, 199_
Re: Business Loan Center SBA Loan-Backed Adjustable Rate
Certificates, Series 1997-1, Class __
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned Certificates, we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
institutional "Accredited Investor," as defined in the Pooling and Servicing
Agreement pursuant to which the Certificates were issued (the "Agreement"), and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Seller concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such Certificates
(but without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (f) below), (e) we have not offered
or sold any Certificates to, or solicited offers to buy any Certificates from,
any person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, (f) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory
O-1-1
<PAGE>
to the addressees of this Certificate that such sale, transfer or other
disposition may be made pursuant to an exemption from the Act, (2) the purchaser
or transferee of such Certificate has executed and delivered to you a
certificate to substantially the same effect as this certificate if required by
the Agreement, and (3) the purchaser or transferee has otherwise complied with
any conditions for transfer set forth in the Agreement and (g) with respect to a
Class B Certificate, the purchaser is not acquiring a Class B Certificate,
directly or indirectly, for or on behalf of: (i) an employee benefit plan or
other retirement arrangement subject to the Employee Retirement Income Security
Act of 1974, as amended, and/or Section 4975 of the Internal Revenue Code of
1986, as amended, or (ii) any entity, the assets of which would be deemed plan
assets under the Department of Labor regulations set forth at 29 C.F.R.
ss.2510.3-101.
Very truly yours,
_________________________
Print Name of Transferee
By: _____________________
Authorized Officer
O-1-2
<PAGE>
EXHIBIT O-2
FORM OF RULE 144A CERTIFICATION
Business Loan Center, Inc.,
as Servicer
919 Third Avenue
New York, New York 10022
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration
_________, 199_
Re: Business Loan Center SBA Loan-Backed Adjustable Rate
Certificates, Series 1997-1, Class __
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Seller concerning
the purchase of the Certificates and all matters relating thereto or any
additional information deemed necessary to our decision to purchase the
Certificates, (c) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would render the
disposition of the Certificates a violation of Section 5 of the Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(d) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Act and have completed the form of certification to that effect
attached hereto as Annex 1 and (e) with respect to a Class B Certificate, we are
not acquiring a Class B Certificate, directly or indirectly, for or on behalf
of: (i) an employee
O-2-1
<PAGE>
benefit plan or other retirement arrangement subject to the Employee Retirement
Income Security Act of 1974, as amended, and/or Section 4975 of the Internal
Revenue Code of 1986, as amended, or (ii) any entity, the assets of which would
be deemed plan assets under the Department of Labor regulations set forth at 29
C.F.R. ss.2510.3-101. We are aware that the sale to us is being made in reliance
on Rule 144A. We are acquiring the Certificates for our own account or for
resale pursuant to Rule 144A and further, understand that such Certificates may
be resold, pledged or transferred only (i) to a person reasonably believed to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Act.
O-2-2
<PAGE>
ANNEX 1 TO EXHIBIT O-2
[Date]
[Placement Agent]
[Address]
[Issuer]
[Address]
Re: Business Loan Center SBA Loan-Backed Adjustable Rate
Certificates, Series 1997-1, Class A and Class B
(the "Confidentially Offered Securities")
Ladies and Gentlemen:
In connection with our purchase of Confidentially Offered Securities, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:
1. It owns and/or invests on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to a
repurchase agreement and currency, interest rate and commodity swaps), as
described below:
Amount:(1) $_________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the
following entities:
(1) |_| an insurance company as defined in Section 2(13) of the
Act;* or
- - --------
(1) Must be calculated using only securities which the undersigned
beneficially held as of the date below.
O-2-3
<PAGE>
(2) |_| an investment company registered under the Investment
Company Act or any business development company as
defined in Section 2(a)(48) of the Investment Company
Act of 1940 or as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940; or
(3) |_| a Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958; or
(4) |_| a plan (i) established and maintained by a state, its
political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, the laws of which permit the purchase of
securities of this type, for the benefit of its
employees and (ii) the governing investment guidelines
of which permit the purchase of securities of this
type; or
(5) |_| a corporation (other than a U.S. bank, savings and loan
association or equivalent foreign institution),
partnership, Massachusetts or similar business trust,
or an organization described in Section 501(c)(3) of
the Internal Revenue Code; or
(6) |_| a U.S. bank, savings and loan association or equivalent
foreign institution, which has an audited net worth of
at least $25 million as demonstrated in its latest
annual financial statements as of a date not more than
16 months preceding the date of sale in the case of a
U.S. institution or 18 months in the case of a foreign
institution.; or
- - ----------
* A purchase by an insurance company for one or more of its separate
accounts, as defined by section 2(a)(37) of the Investment Company Act of
1940, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company.
O-2-4
<PAGE>
(7) |_| an investment adviser registered under the Investment
Advisers Act; or
b. |_| greater than $10 million, and the undersigned is a
broker-dealer registered with the SEC; or
c. |_| less than $10 million, and the undersigned is a broker-dealer
registered with the SEC and will only purchase Rule 144A
securities in riskless principal transactions (as defined in
Rule 144A); or
d. |_| less than $100 million, and the undersigned is an investment
company registered under the Investment Company Act of 1940,
which, together with one or more registered investment
companies having the same or an affiliated investment adviser,
owns at least $100 million of eligible securities; or
e. |_| less than $100 million, and the undersigned is an entity, all
the equity owners of which are qualified institutional buyers.
The undersigned further certifies that it is purchasing
Confidentially Offered Securities for its own account or for the account of
others that independently qualify as "Qualified Institutional Buyers" as defined
in Rule 144A. It is aware that the sale of the Confidentially Offered Securities
are being made in reliance on its continued compliance with Rule 144A. It is
aware that the transferor may rely on the exemption from the provisions of
Section 5 of the Act provided by Rule 144A. The undersigned understands that the
Confidentially Offered Securities may be resold, pledged or transferred only to
a person reasonably believed to be a Qualified Institutional Buyer that
purchases for its own account or for the account of a Qualified Institutional
Buyer to whom notice is given that the resale, pledge or transfer is being made
in reliance in Rule 144A.
The undersigned agrees that if at some time before the expiration of
the holding period described in Rule 144 it wishes to dispose of or exchange any
of the Confidentially Offered Securities, it will not transfer or exchange any
of the Confidentially Offered Securities to a Qualified Institutional Buyer
without first obtaining a letter in the form hereof from the transferee and
delivering such certificate to the addressees hereof.
O-2-5
<PAGE>
IN WITNESS WHEREOF, this document has been executed by the
undersigned who is duly authorized to do so on behalf of the undersigned
Qualified Institutional Buyer on the _____ day of ___________, 1997.
Name of Institution
Signature
Name
Title**
- - ----------
** Must be President, Chief Financial Officer, or other executive officer.
O-2-6
BUSINESS LOAN CENTER SBA LOAN-BACKED ADJUSTABLE RATE
CERTIFICATES, SERIES 1997-1
$18,078,507.20 CLASS A CERTIFICATES
PURCHASE AGREEMENT
December 19, 1997
Banc One Capital Corporation
150 East Gay Street
24th Floor
Columbus, Ohio 43215
Ladies and Gentlemen:
Section 1. Authorization of Certificates. Business Loan Center,
Inc., a Delaware corporation, (the "Company"), has duly authorized the sale of
$18,078,507.20 in aggregate principal amount of its Business Loan Center SBA
Loan-Backed Adjustable Rate Certificates, Series 1997-1, Class A (the "Class A
Certificates"). The Company also will issue $1,787,984.23 in aggregate principal
amount of its Business Loan Center SBA Loan-Backed Adjustable Rate Certificates,
Series 1997-1, Class B (the "Class B Certificates" and, along with the Class A
Certificates, the "Certificates"). The Class A Certificates and the Class B
Certificates will be transferred by the Company to Business Loan Center
Financial Corp. a wholly-owned, special purpose corporation (the "Subsidiary").
The Certificates will be issued pursuant to a Pooling and Servicing Agreement,
dated as of December 1, 1997 (the "Pooling and Servicing Agreement"), between
the Company and Marine Midland Bank, as trustee thereunder (together with its
successors and assigns, the "Trustee"). The Certificates represent the entire
beneficial ownership interest in a trust fund (the "Trust Fund") created by the
Company which consists primarily of the right to receive payments and certain
other amounts attributable to certain unguaranteed interests (the "Unguaranteed
Interests") in a pool of loans (the "SBA Loans") partially guaranteed by the
U.S. Small Business Administration (the "SBA") which will be sold and
transferred to the Trustee by the Company. Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the Pooling and Servicing
Agreement.
The Class A Certificates are to be offered and sold by means of a
Confidential Placement Memorandum (including any amendments or supplements
thereto, the "CPM") prepared by the Company and pursuant to a Placement Agency
Agreement, dated December 19, 1997 (the "Placement Agreement"), between the
Company and Rothschild Inc., as placement agent (the "Placement Agent"), in a
transaction exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act").
<PAGE>
During the initial Interest Accrual Period, the Class A Certificates
shall bear interest at a rate equal to 6.60% per annum and the Class B
Certificates shall bear interest at a rate equal to 7.00% per annum. For each
Interest Accrual Period thereafter, the Class A Certificates shall bear interest
at a per annum rate equal to the Prime Rate minus 1.90% and the Class B
Certificates shall bear interest at a per annum rate equal to the Prime rate
minus 1.50%, in each case subject to the adjustments described in the Pooling
and Servicing Agreement.
The Company and the Subsidiary hereby agree with you (the "Initial
Purchaser") as follows:
Section 2. Purchase of Class A Certificates. Subject to the terms
and conditions and in reliance upon the representations and warranties and
agreements set forth herein, (A) the Subsidiary agrees to sell all of the Class
A Certificates to the Initial Purchaser as hereinafter provided, and (B) the
Initial Purchaser agrees to purchase, on the Closing Date (as defined in Section
3 below) such Class A Certificates at a purchase price of $18,035,909.07. At the
time of the delivery of the Certificates to the Initial Purchaser, the Initial
Purchaser shall make such payment to the Subsidiary of such purchase price by
wire transfer in immediately available funds to such account as the Subsidiary
shall designate.
Section 3. Delivery. The Class A Certificates shall be delivered in
fully registered, certificated form in the minimum denominations set forth in
the CPM at the offices of Stroock & Stroock & Lavan LLP, New York, New York at
10:00 a.m. New York City time, on December 19, 1997, or such other place, time
or date as may be mutually agreed upon by the Initial Purchaser and the Company
(the "Closing Date"). Subject to the foregoing, the Class A Certificates will be
registered in such names and such denominations as the Initial Purchaser shall
specify in writing to the Company, the Subsidiary and the Trustee.
Section 4. Representations and Warranties of the Company and the
Subsidiary. The Company and the Subsidiary each represent and warrant to the
Initial Purchaser, as of the Closing Date, that:
(i) The CPM does not and will not, and any amendments thereof
or supplement thereof and any additional information and documents
concerning the Class A Certificates delivered by or on behalf of the
Company to prospective purchasers of the Class A Certificates
(collectively, such information and documents, the "Additional Offering
Documents"), each as of their respective dates, and any oral statements
made by the Company to any prospective purchaser of the Class A
Certificates did not or will not, each as of its issue date or date on
which such statement was made and as of the Closing Date, include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in light of the circumstances
under which they were made, not misleading.
(ii) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of Delaware, has all
corporate power and authority necessary to own or hold its properties and
conduct its business in which it is engaged as
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<PAGE>
described in the CPM and has all licenses necessary to carry on its
business as it is now being conducted and is licensed, qualified and in
good standing in each jurisdiction in which the conduct of its business
requires such licensing or qualification. The Subsidiary is a corporation,
duly organized, validly existing and in good standing under the laws of
Delaware.
(iii) The Placement Agreement and this Agreement have been duly
authorized, executed and delivered by the Company, this Agreement has been
duly authorized, executed and delivered by the Subsidiary and, assuming
due authorization, execution and delivery thereof by the Agent, constitute
valid and legally binding obligations of the Company and the Subsidiary,
as the case may be, enforceable against the Company and the Subsidiary, as
the case may be in accordance with their respective terms.
(iv) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Trustee, constitutes
a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.
(v) The Multi-Party Agreement has been duly authorized,
executed and delivered by the Company and, assuming due authorization,
execution and delivery thereof by the parties thereto, constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(vi) When executed by the Company and authenticated and
delivered by the Trustee in accordance with the Pooling and Servicing
Agreement and paid for by the purchasers thereof, the Certificates will
have been duly executed, authenticated, issued and delivered and will be
entitled to the benefits of the Pooling and Servicing Agreement.
(vii) Other than as set forth in or contemplated by the CPM,
there are no legal or governmental proceedings pending to which the
Company is a party or of which any property or assets of the Company are
the subject of which, if determined adversely to the Company, would
individually or in the aggregate have a material adverse effect on the
financial position or results of operations of the Company or on the
performance by the Company of its obligations hereunder or under the
Placement Agreement, the Pooling and Servicing Agreement or the
Multi-Party Agreement; and, to the best knowledge of the Company, no such
proceedings are threatened or contemplated by governmental authorities or
self-regulatory agencies or threatened by others.
(viii) The execution and delivery of the Certificates by the
Company, the execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement, the Multi-Party Agreement (as defined in
the Pooling and Servicing Agreement) and the Placement Agreement by the
Company and the consummation by the Company of the transactions
contemplated herein and in all documents relating to the
-3-
<PAGE>
Certificates will not result in any breach or violation of, or constitute
a default under, any material agreement or instrument to which the Company
is a party or to which any of its properties or assets are subject, except
for such of the foregoing as to which relevant waivers or amendments have
been obtained and are in full force and effect, nor will any such action
result in a violation of the Articles of Incorporation or By-Laws of the
Company or any law or any order, decree, rule or regulation of any court
or governmental agency having jurisdiction over the Company or its
properties.
(ix) The Trust created by the Pooling and Servicing Agreement is
not an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "1940 Act").
(x) Assuming the Initial Purchaser's representations are true
and accurate, it is not necessary in connection with the offer, sale and
delivery of the Class A Certificates in the manner contemplated by this
Agreement and the CPM to register the Class A Certificates under the
Securities Act.
(xi) The Class A Certificates satisfy the requirements set forth
in Rule 144A(d)(3) under the Securities Act.
(xii) At the time of execution and delivery of the Pooling and
Servicing Agreement, the Company owned the Unguaranteed Interest in each
of the SBA Loans free and clear of all liens, encumbrances, adverse claims
or security interests ("Liens") and the Company had the power and
authority to transfer the SBA Loans to the Trust and to transfer the Class
A Certificates to the Initial Purchaser.
(xiii) Upon the execution and delivery of the Pooling and
Servicing Agreement, payment by the Initial Purchaser for the Class A
Certificates and delivery to the Initial Purchaser of the Class A
Certificates, the Trust will own the SBA Loans and the Initial Purchaser
will acquire title to the Class A Certificates, in each case free of Liens
except such Liens as may be created or granted by the Initial Purchaser
and those listed in the Pooling and Servicing Agreement.
(xiv) No consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
issuance and sale of the Certificates or the execution, delivery and
performance by the Company of this Agreement, the Pooling and Servicing
Agreement, the Multi-Party Agreement or the Placement Agreement, except
such consents, approvals, authorizations, registrations or qualifications
as have been obtained or as may be required under state securities or blue
sky laws in connection with the sale and delivery of the Class A
Certificates in the manner contemplated herein.
(xv) The SBA Loans, individually and in the aggregate, have the
characteristics described in the CPM.
-4-
<PAGE>
(xvi) Each of the representations and warranties of the Company
set forth in the Pooling and Servicing Agreement is true and correct in
all material respects.
(xvii) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement,
the Placement Agreement, the Multi-Party Agreement, the Pooling and
Servicing Agreement and the Certificates have been or will be paid by the
Company prior to the Closing Date.
(xiii) No adverse selection procedures were used in selecting the
SBA Loans from among the loans that meet the representations and
warranties of the Company contained in the Pooling and Servicing Agreement
and that are included in the portfolio of the Company.
(xix) The Company is licensed, qualified and in good standing in
each state where an SBA Loan was originated to the extent required to
originate and acquire the SBA Loans and to perform its obligations as the
Company hereunder and under the Pooling and Servicing Agreement.
Section 5. Sale of Class A Certificates to the Initial Purchaser.
The sale of the Class A Certificates to the Initial Purchaser will be made
without registration of the Class A Certificates under the Securities Act, in
reliance upon the exemption therefrom provided by Section 4(2) of the Securities
Act.
(a) The Initial Purchaser hereby represents to the Company and
the Subsidiary that:
(i) (a) it is a "qualified institutional buyer" within the meaning
of Rule 144A or an institutional "Accredited Investor" (within the
meaning of Rule 501(a)(1)-(3) under the Securities Act), (b) it is
acquiring the Class A Certificates for its own account or for the
account of such a qualified institutional buyer or an institutional
Accredited Investor purchasing for investment and not for
distribution in violation of the Securities Act, (c) if such person
is such a qualified institutional buyer, is aware that the sale of
the Class A Certificates to it is being made in reliance on Rule
144A or (d) if such person is an institutional Accredited Investor,
will deliver a certificate in the form attached to the Pooling and
Servicing Agreement prior to receipt of Class A Certificates.
(ii) it understands that the Class A Certificates have not been and
will not be registered under the Securities Act, any state
securities or "Blue Sky" law, and may not be reoffered, resold,
pledged or otherwise transferred except (A)(i) to a person whom the
Initial Purchaser reasonably believes is a "qualified institutional
buyer" as defined in Rule 144A of the Securities Act that purchases
for its own account or the account of another qualified
institutional buyer to whom notice is given that the resale, pledge
or transfer is being made in reliance on Rule 144A, (ii) in
certificated form to an institutional Accredited Investor pursuant
to any
-5-
<PAGE>
other exemption from the registration requirements of the Securities
Act, subject to (a) the receipt by the Trustee of a letter in the
form attached to the Pooling and Servicing Agreement and (b) the
receipt by the Trustee of such other evidence acceptable to the
Trustee that such reoffer, resale, pledge or transfer is in
compliance with the Securities Act and other applicable laws, (iii)
pursuant to another exemption available under the Securities Act or
(iv) pursuant to a valid registration statement and (B) in
accordance with all applicable securities and "Blue Sky" laws of any
States of the United States or any other applicable jurisdictions.
(iii) it understands that the Class A Certificates will bear a
legend to the following effect, unless the Seller and the Trustee
determines otherwise in accordance with applicable law:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED FORM
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (WITHIN THE MEANING OF RULE
501(a)(1)-(3) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE POOLING AND
SERVICING AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
SECURITIES AND BLUE SKY LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER
APPLICABLE JURISDICTION, (3) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE
SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR
(4) PURSUANT TO A VALID REGISTRATION STATEMENT. "
(iv) If it is acquiring any Class A Certificates as a fiduciary or
agent for one or more investor accounts, it has sole investment
discretion with respect to each such
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account and that it has full power to make the acknowledgments,
representations and agreements contained herein on behalf of such
account.
(v) it is duly authorized and possesses the requisite corporate
power to enter into this Agreement.
(vi) There is no action, suit or proceeding pending against or, to
the knowledge of the Initial Purchaser, threatened against or
affecting, the Initial Purchaser before any court or arbitrator or
any government body, agency, or official which could materially
adversely affect the ability of the Initial Purchaser to perform its
obligations under this Agreement.
Section 6. Certain Agreements of the Company. The Company
covenants and agrees with the Initial Purchaser as follows:
(a) If, at any time prior to the 90th day following the Closing
Date, any event involving the Company shall occur as a result of which the
CPM (as then amended or supplemented) would include an 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, the Company promptly will notify the Initial
Purchaser and prepare and furnish to the Initial Purchaser an amendment or
supplement to the CPM that will correct such statement or omission.
(b) During the period referred to in Section 6(a), the Company will
furnish to the Initial Purchaser, without charge, copies of the CPM
(including all exhibits and documents incorporated by reference therein),
the Pooling and Servicing Agreement, and all amendments or supplements to
such documents, in each case as soon as reasonably available and in such
quantities as the Initial Purchaser may reasonably request.
(c) While any Class A Certificates remain outstanding, unless such
Class has been registered, the Company will make available, upon request,
to the Initial Purchaser, any holder and any prospective purchaser of such
Class A Certificates, the information concerning the Company specified in
Rule 144A(d)(4) under the Securities Act.
Section 7. Conditions of the Initial Purchaser's Obligations. The
obligations of the Initial Purchaser to purchase the Class A Certificates on the
Closing Date will be subject to the accuracy of the representations and
warranties of the Company and the Subsidiary herein, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Certificates shall have been duly authorized, executed,
authenticated, delivered and issued, and the Pooling and Servicing
Agreement, the Multi-Party Agreement, the Spread Account Agreement and the
Escrow Agreement dated December 19, 1997 among the Company, the Trustee,
Sterling National Bank and the Initial Purchaser shall have been duly
authorized, executed and delivered by the respective
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parties thereto and shall be in full force and effect, the SBA Loans shall
have been delivered to the Trustee pursuant to the Pooling and Servicing
Agreement and the Spread Account shall have been funded as required by the
Spread Account Agreement.
(b) The Initial Purchaser shall receive a certificate substantially
in the Form attached as Exhibit A, dated the Closing Date, of the
President, Chief Executive Officer, Chief Financial Officer or any
Executive or Senior Vice President of the Company to the effect that such
officer has carefully examined this Agreement, the Placement Agreement,
the CPM and the Pooling and Servicing Agreement and that, to the best of
such officer's knowledge (i) since the date information is given in the
CPM, there has not been any material adverse change in the condition,
financial or otherwise, or in the earnings, results of operations,
business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business, or the ability of the Company
to perform its obligations hereunder or under the Pooling and Servicing
Agreement or in the characteristics of the SBA Loans except as
contemplated by the CPM or as described in such certificates, (ii) the
representations and warranties of the Company set forth herein and in the
Placement Agreement are true and correct as of the Closing Date, as though
such representations and warranties had been made on and as of such date,
(iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder and under
the Pooling and Servicing Agreement, at or prior to the Closing Date, (iv)
the representations and warranties of the Company in the Pooling and
Servicing Agreement are true and correct, as of the Closing Date, as
though such representations and warranties had been made on and as of such
date, and (v) nothing has come to the attention of such officer that would
lead such officer to believe that the CPM, and any amendment thereof or
supplement thereto, as of its date and as of the Closing Date, or any
Additional Offering Document (as defined in the Placement Agreement)
contains an untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(c) The Class A Certificates shall have been rated no less than
"AAA" by Duff & Phelps Credit Rating Co. ("Duff & Phelps"); such rating
shall not have been rescinded and no public announcement shall have been
made by Duff & Phelps that the rating of the Class A Certificates has been
placed under review.
(d) The Initial Purchaser shall have received copies of all opinions
addressed to Duff & Phelps in connection with this transaction.
If any of the conditions specified in this Section 7 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above shall not be in all
material respects reasonably satisfactory in form and substance to the Initial
Purchaser, this Agreement and all of the Initial Purchaser's obligations
hereunder may be canceled by the Initial Purchaser at or prior to delivery of
and payment for the Certificates. Notice of such cancellation shall be given to
the Company in writing, or by telephone or telegraph confirmed in writing.
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Section 8. Intentionally Omitted.
Section 9. Severability Clause. Any part, provision, representation,
or warranty of this Agreement which is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 10. Notices. All communications hereunder will be in
writing and shall be deemed to have been duly given if personally delivered
at or mailed by overnight mail, certified mail or registered mail, postage
prepaid, and effective only upon receipt and if sent to the Initial
Purchaser, will be delivered to Banc One Capital Corporation, 150 East Gay
Street, 24th Floor, Columbus, Ohio 43215, Attention: Ms. Mary
Spahia-Carducci; or if sent to the Company or the Subsidiary, will be
delivered to Business Loan Center, Inc., 919 Third Avenue, 17th Floor, New
York, New York 10022, Attention: Mr. Robert Tannenhauser.
Section 11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company and its officers, the Subsidiary and of the Initial
Purchaser set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Initial Purchaser, the Company or any of the controlling persons referred to in
Section 7 of the Placement Agreement, and will survive delivery of and payment
for the Certificates.
Section 12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 7 of the
Placement Agreement and their respective successors and assigns, and, except as
specifically set forth herein, no other person will have any right or obligation
hereunder.
Section 13. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ITS CONFLICT OF LAW PROVISIONS.
Section 14. Counterparts, Etc. This Agreement supersedes all prior
or contemporaneous agreements and understandings relating to the subject matter
hereof other than the Placement Agreement between the Initial Purchaser and the
Company. In the event of any conflict between the terms of this Agreement and
the terms of the Placement Agreement, the terms of this Agreement shall govern.
Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated except by a writing signed by the party against whom enforcement of
such change, waiver, discharge or termination is sought. This Agreement may be
signed in any number of counterparts each of which shall be deemed an original,
which taken together shall constitute one and the same instrument.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the Initial Purchaser.
Very truly yours,
BUSINESS LOAN CENTER, INC.
By: ______________________________________
Name:
Title:
BUSINESS LOAN CENTER FINANCIAL CORP.
By: _____________________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BANC ONE CAPITAL CORPORATION
By: _______________________________
Name:
Title:
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