EXHIBIT 10.4
ACAS TRANSFER AGREEMENT
BETWEEN
AMERICAN CAPITAL STRATEGIES, LTD., AS ORIGINATOR
AND
ACAS BUSINESS LOAN LLC, 2000-1, AS TRUST DEPOSITOR
DATED AS OF DECEMBER 20, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................................1
Section 1.01. DEFINITIONS.............................................................................1
Section 1.02. USAGE OF TERMS..........................................................................1
Section 1.03. REFERENCES..............................................................................2
Section 1.04. CALCULATIONS............................................................................2
Section 1.05. ACCOUNTING TERMS........................................................................2
ARTICLE II TRANSFER OF LOAN ASSETS...............................................................................2
Section 2.01. TRANSFER OF LOAN ASSETS.................................................................2
Section 2.02. CONDITIONS TO TRANSFER OF LOAN ASSETS TO THE TRUST DEPOSITOR............................4
Section 2.03. ACCEPTANCE BY THE TRUST DEPOSITOR.......................................................6
Section 2.04. CONVEYANCE OF SUBSTITUTE LOANS..........................................................6
Section 2.05. DELIVERY OF INSTRUMENTS.................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................7
Section 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE ORIGINATOR.................................8
Section 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH LOAN AND AS TO CERTAIN LOANS IN THE
AGGREGATE.............................................................................11
Section 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL LOANS IN THE AGGREGATE............11
Section 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE LOAN FILES................................12
Section 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS OF INITIAL LOANS...............12
Section 3.06. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST DEPOSITOR...........................12
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS..........................................14
Section 4.01. CUSTODY OF LOANS.......................................................................14
Section 4.02. FILING.................................................................................14
Section 4.03. NAME CHANGE OR RELOCATION..............................................................14
Section 4.04. CHIEF EXECUTIVE OFFICE.................................................................15
Section 4.05. COSTS AND EXPENSES.....................................................................15
Section 4.06. SALE TREATMENT.........................................................................15
Section 4.07. SEPARATENESS FROM TRUST DEPOSITOR......................................................15
ARTICLE V COVENANTS OF THE ORIGINATOR...........................................................................15
Section 5.01. CORPORATE EXISTENCE....................................................................15
Section 5.02. LOANS NOT TO BE EVIDENCED BY PROMISSORY NOTES..........................................16
Section 5.03. SECURITY INTERESTS.....................................................................16
Section 5.04. COMPLIANCE WITH LAW....................................................................16
Section 5.05. LIABILITY OF ORIGINATOR; INDEMNITIES...................................................16
Section 5.06. LIMITATION ON LIABILITY OF ORIGINATOR AND OTHERS.......................................17
ARTICLE VI REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION...................................................17
Section 6.01. REPURCHASES OF, OR SUBSTITUTION FOR, LOANS FOR BREACH OF REPRESENTATIONS
AND WARRANTIES........................................................................17
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PAGE
Section 6.02. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED LOANS.......................................18
ARTICLE VII ORIGINATOR INDEMNITIES..............................................................................18
Section 7.01. ORIGINATOR'S INDEMNIFICATION...........................................................18
Section 7.02. LIABILITIES TO OBLIGORS................................................................19
Section 7.03. TAX INDEMNIFICATION....................................................................19
Section 7.04. ADJUSTMENTS............................................................................20
Section 7.05. OPERATION OF INDEMNITIES...............................................................20
ARTICLE VIII MISCELLANEOUS......................................................................................20
Section 8.01. AMENDMENT..............................................................................20
Section 8.02. GOVERNING LAW..........................................................................21
Section 8.03. NOTICES................................................................................22
Section 8.04. SEVERABILITY OF PROVISIONS.............................................................23
Section 8.05. THIRD PARTY BENEFICIARIES..............................................................23
Section 8.06. COUNTERPARTS...........................................................................24
Section 8.07. HEADINGS...............................................................................24
Section 8.08. NO BANKRUPTCY PETITION; DISCLAIMER.....................................................24
Section 8.09. JURISDICTION...........................................................................24
Section 8.10. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST......................................24
Section 8.11. MERGER OR CONSOLIDATION OF ORIGINATOR..................................................25
Section 8.12. ASSIGNMENT OR DELEGATION BY THE ORIGINATOR.............................................25
EXHIBITS
Exhibit A Form of Assignment
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This ACAS TRANSFER AGREEMENT, dated as of December 20, 2000, is between
AMERICAN CAPITAL STRATEGIES, LTD. (together with its successors and assigns,
"ACAS", and in its capacity as originator, together with its successor and
assigns, the "Originator") and ACAS BUSINESS LOAN LLC, 2000-1 (together with its
successor and assigns, the "Trust Depositor") (the "Agreement").
WHEREAS, in the regular course of its business, the Originator
originates and purchases Loans (as defined in the Transfer and Servicing
Agreement);
WHEREAS, the Trust Depositor desires to acquire the Initial Loans from
the Originator and may acquire from time to time thereafter certain Substitute
Loans (such Initial Loans and Substitute Loans, together with certain related
property as more fully described in the Transfer and Servicing Agreement, being
the Loan Assets as defined herein);
WHEREAS, it is a condition to the Trust Depositor's acquisition of the
Initial Loans from the Originator that the Originator make certain
representations and warranties regarding the Loan Assets for the benefit of the
Trust Depositor;
WHEREAS, the Trust Depositor is willing to purchase and accept
assignment of the Loan Assets from the Originator pursuant to the terms hereof;
and
WHEREAS, on the Closing Date, the Trust Depositor will sell, convey and
assign all its right, title and interest in the Loan Assets to ACAS Business
Loan Trust 2000-1, a Delaware business trust (the "Trust") pursuant to a
Transfer and Servicing Agreement, dated as of the date hereof (the "Transfer and
Servicing Agreement") among ACAS, as the originator, the servicer and the swap
guarantor, the Trust Depositor, as the trust depositor, the Trust, as the issuer
and Xxxxx Fargo Bank Minnesota, National Association, as the indenture trustee
and the backup servicer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
Whenever capitalized terms are used but not defined in this Agreement,
such terms shall have the meanings attributed to such terms in the Transfer and
Servicing Agreement, unless the context otherwise requires.
SECTION 1.02. USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural
and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means "including
without limitation."
SECTION 1.03. REFERENCES.
All section references, unless otherwise indicated, shall be to
Sections in this Agreement.
SECTION 1.04. CALCULATIONS.
Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360-day year and twelve
30-day months and will be carried out to at least three decimal places.
SECTION 1.05. ACCOUNTING TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States.
ARTICLE II
TRANSFER OF LOAN ASSETS
SECTION 2.01. TRANSFER OF LOAN ASSETS.
(a) The Originator shall sell, assign and convey assets to the Trust
Depositor pursuant to the terms and provisions hereof.
(b) Subject to and upon the terms and conditions set forth herein, the
Originator hereby sells, transfers, assigns, sets over and otherwise conveys to
the Trust Depositor, for a purchase price of $84,174,044.88 in cash, all the
right, title and interest of the Originator in and to (items (i) - (vi) below,
being collectively referred to herein as the "Loan Assets"):
(i) the Initial Loans, and all monies received in payment of
such Loans on and after the Initial Cutoff Date, any Prepayment
Amounts, any Prepayment Premiums, any payments in respect of a casualty
or early termination, and any Recoveries received with respect thereto,
but excluding any Excluded Amounts;
(ii) the Collateral related to such Loans (to the extent the
Originator, other than solely in its capacity as collateral agent under
any loan agreement with an Obligor, has been granted a lien thereon),
including the related security interest granted by the Obligor under
such Loans and all proceeds from any sale or other disposition of such
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Collateral (but subject to the exclusion and release herein of Excluded
Amounts);
(iii) the Loan Files;
(iv) payments under the Swap Agreements received from the Swap
Counterparties;
(v) all payments made or to be made in the future with respect
to such Loans or the Obligor thereunder under any guarantee or similar
credit enhancement with respect to such Loans;
(vi) all Insurance Proceeds with respect to each such Loan;
and
(vii) all income from and proceeds of the foregoing.
In addition to the Loan Assets, the Originator hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust Depositor the remittances,
deposits and payments to be made by the Originator pursuant to the Transfer and
Servicing Agreement into the Trust Accounts from time to time, amounts in the
Trust Accounts from time to time (and any investments of such amounts) and all
proceeds and products of the foregoing, which together with the Loan Assets will
constitute the corpus of the Trust and are referred to as the "Trust Assets".
(c) The Originator and the Trust Depositor acknowledge that the
representations and warranties of the Originator in Section 3.01, 3.02, 3.03,
3.04 and 3.05 will run to and be for the benefit of the Trust and the Trustees
and the Trust and the Trustees may enforce directly without joinder of the Trust
Depositor, the repurchase obligations of the Originator (as set forth under
Article VI of this Agreement) with respect to breaches of such representations
and warranties as set forth herein and in Section 6.01.
(d) The sale, transfer, assignment, set-over and conveyance of the
Trust Assets by the Originator to the Trust Depositor pursuant to this Agreement
does not constitute and is not intended to result in a creation or an assumption
by the Trust Depositor of any obligation of the Originator in connection with
the Loan Assets, or any agreement or instrument relating thereto, including,
without limitation, any obligation to any Obligor, if any, not financed by the
Originator, or (1) any taxes, fees, or other charges imposed by any Governmental
Authority and (2) any insurance premiums that remain owing with respect to any
Loan at the time such Loan is sold hereunder. Without limiting the foregoing,
the Trust Depositor does not assume any obligation to purchase any additional
notes or loans under agreements governing the Loan Assets.
(e) The Originator and Trust Depositor intend and agree that (i) the
transfer of the Loan Assets and Trust Assets from the Originator to the Trust
Depositor and the transfer of the Loan Assets and the Trust Assets from the
Trust Depositor to the Trust are intended to be a sale, conveyance and transfer
of ownership of the Loan Assets and Trust Assets, as the case may be, rather
than the mere granting of a security interest to secure a borrowing and (ii)
such Loan Assets and Trust Assets shall not be part of the Originator's or the
Trust Depositor's estate in the
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event of a filing of a bankruptcy petition or other action by or against such
Person under any Insolvency Law. In the event, however, that notwithstanding
such intent and agreement, such transfers are deemed to be of a mere security
interest to secure indebtedness, the Originator shall be deemed to have granted
the Trust Depositor and the Trust Depositor shall be deemed to have granted the
Trust, as the case may be, a perfected first priority security interest in such
Loan Assets or Trust Assets respectively and this Agreement shall constitute a
security agreement under applicable law, securing the repayment of the purchase
price paid hereunder and the obligations and/or interests represented by the
Securities, in the order and priorities, and subject to the other terms and
conditions of, this Agreement, the Transfer and Servicing Agreement, the
Indenture and the Trust Agreement, together with such other obligations or
interests as may arise hereunder and thereunder in favor of the parties hereto
and thereto.
If any such transfer of the Loan Assets is deemed to be the mere
granting of a security interest to secure a borrowing, the Trust Depositor may,
to secure the Trust Depositor's own borrowing under this Agreement (to the
extent that the transfer of the Loan Assets thereunder is deemed to be a mere
granting of a security interest to secure a borrowing) repledge and reassign (1)
all or a portion of the Loan Assets pledged to the Trust Depositor by the
Originator and with respect to which the Trust Depositor has not released its
security interest at the time of such pledge and assignment, and (2) all
proceeds thereof. Such repledge and reassignment may be made by the Trust
Depositor with or without a repledge and reassignment by the Trust Depositor of
its rights under any agreement with the Originator, and without further notice
to or acknowledgement from the Originator. The Originator waives, to the extent
permitted by applicable law, all claims, causes of action and remedies, whether
legal or equitable (including any right of setoff), against the Trust Depositor
or any assignee of the Trust Depositor relating to such action by the Trust
Depositor in connection with the transactions contemplated by this Agreement.
SECTION 2.02. CONDITIONS TO TRANSFER OF LOAN ASSETS TO THE TRUST
DEPOSITOR.
On or before the Closing Date, the Originator shall deliver or cause to
be delivered to the Trust Depositor, the Owner Trustee and the Indenture Trustee
each of the documents, certificates and other items as follows:
(i) A certificate of an officer of the Originator
substantially in the form of Exhibit C to the Transfer and Servicing
Agreement;
(ii) Opinions of counsel for the Originator substantially in
the form of Exhibits D and E to the Transfer and Servicing Agreement
(and including as an addressee thereof each Rating Agency) that relate
to the transfer of the Trust Assets from the Originator to the Trust
Depositor;
(iii) Copies of resolutions of the Board of Directors of the
Originator or of the Executive Committee of the Board of Directors of
the Originator approving the execution, delivery and performance of
this Agreement and the transactions contemplated hereunder, certified
in each case by the Secretary or an Assistant Secretary of the
Originator;
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(iv) Officially certified recent evidence of due incorporation
and good standing of the Originator under the laws of the state of
Delaware;
(v) The initial List of Loans, certified by the Chairman of
the Board, Chief Executive Officer, President or any Vice President of
the Originator, together with an Assignment substantially in the form
of Exhibit A (along with the delivery of any instruments as required
under Section 2.05 below);
(vi) A letter from Ernst & Young, or another nationally
recognized accounting firm, addressed to the Originator and the Trust
Depositor, stating that such firm has reviewed a sample of the Initial
Loans and performed specific procedures for such sample with respect to
certain contract terms and that identifies those Initial Loans that do
not conform;
(vii) Copies of resolutions of the Board of Directors of the
Servicer or of the Executive Committee of the Board of Directors of the
Servicer approving the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is
a party, as applicable, and the transactions contemplated hereunder and
thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Servicer;
(viii) Evidence of proper filing with appropriate offices in
the UCC Filing Locations in the states of Delaware, Maryland and
Minnesota UCC financing statements executed by the Originator, as
debtor, naming the Trust Depositor as secured party and identifying the
Loan Assets as collateral;
(ix) An Officer's Certificate listing the Servicer's Servicing
Officers;
(x) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Loans after the Initial Cutoff
Date to the date two days preceding the Closing Date, together with an
Officer's Certificate from the Servicer to the effect that such amount
is correct;
(xi) A fully executed Trust Agreement;
(xii) A fully executed Administration Agreement;
(xiii) An opinion of Xxxxxx & Xxxxxx to the effect that for
federal income tax purposes, the Class A Notes and the Class B Notes
will be characterized as debt and the Trust will not be characterized
as an association or publicly traded partnership) taxable as a
corporation; and
(xiv) An opinion of Xxxxxx & Xxxxxx to the effect that for
Maryland tax purposes, the Trust will be classified as a partnership
and will not be subject to the Maryland Corporation Income Tax or the
Maryland Corporation Business Tax.
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SECTION 2.03. ACCEPTANCE BY THE TRUST DEPOSITOR.
On the Closing Date, if the conditions set forth in Section 2.02 have
been satisfied, the Originator shall deliver, on behalf of the Trust Depositor,
to the Trust the Trust Assets and such delivery to and acceptance by the Trust
shall be deemed to be delivery to and acceptance by the Trust Depositor.
SECTION 2.04. CONVEYANCE OF SUBSTITUTE LOANS.
(a) Subject to Sections 2.01(d) and (e) and the satisfaction of the
conditions set forth in paragraph (c) of this Section 2.04, the Originator may
at its option (but shall not be obligated to) sell, transfer, assign, set over
and otherwise convey to the Trust Depositor (by delivery of an executed
Subsequent Purchase Agreement substantially in the form attached as Exhibit J to
the Transfer and Servicing Agreement), without recourse other than as expressly
provided herein and therein (and the Trust Depositor shall be required to
purchase through payment by exchange of one or more related Loans released by
the Trust to the Trust Depositor on the Subsequent Transfer Date), all the
right, title and interest of the Originator in and to (the property in clauses
(i)-(vi) below, upon such transfer, becoming part of the "Loan Assets"):
(i) the Substitute Loans identified in the related Addition
Notice, and all monies received in payment of such Substitute Loans on
and after the related Subsequent Cutoff Dates, any Prepayment Amounts,
any Prepayment Premiums, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Excluded Amounts;
(ii) the Collateral related to such Loans (to the extent the
Originator, other than solely in its capacity as collateral agent under
any loan agreement with an Obligor, has been granted a lien thereon),
including the related security interest granted by the Obligor under
such Loans and all proceeds from any sale or other disposition of such
Collateral (but subject to the exclusion and release herein of Excluded
Amounts);
(iii) the Loan Files;
(iv) payments under the Swap Agreements received from the Swap
Counterparties;
(v) all payments made or to be made in the future with respect
to such Loans or the Obligor thereunder under any guarantee or similar
credit enhancement with respect to such Loans;
(vi) all Insurance Proceeds with respect to each such Loan;
and
(vii) all income from and proceeds of the foregoing.
(b) Subject to Sections 2.01(d) and (e) of this Agreement and the
conditions set forth
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in Section 2.04(c) of this Agreement, the Originator shall sell, transfer,
assign, set over and otherwise convey to the Trust Depositor, without recourse
other than as expressly provided in this Agreement, (i) all the right, title and
interest of the Originator in and to the Substitute Loans purchased pursuant to
Section 2.04(a) of this Agreement and (ii) all other rights and property
interests consisting of Loan Assets related to such Substitute Loans (the
property in clauses (i)-(ii) above, upon such transfer, becoming part of the
"Trust Assets").
SECTION 2.05. DELIVERY OF INSTRUMENTS.
The Originator shall deliver, on behalf of the Trust Depositor,
possession of all "instruments" (within the meaning of Article 9 of the UCC),
including notes evidencing the Loans, not constituting part of "chattel paper"
(within the meaning of such Article 9) that evidence any Loan to the Owner
Trustee on behalf of the Trust Depositor on the Closing Date (or, if applicable,
on the relevant Subsequent Transfer Date), in each case endorsed in blank
without recourse. The Originator shall also identify on the List of Loans
(including any deemed amendment thereof associated with any Substitute Loans),
whether by attached schedule or marking or other effective identifying
designation, all Loans that are or are evidenced by such instruments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Originator makes, and upon execution of each Subsequent Purchase
Agreement is deemed to make, the following representations and warranties, on
which the Trust Depositor will rely in conveying the Loan Assets on the Closing
Date (and on any Subsequent Transfer Date) to the Trust, and on which the Trust,
the Noteholders and Certificateholder will rely. The Trust Depositor
acknowledges that such representations and warranties are being made by the
Originator for the benefit of the Trust.
Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Loan Assets to the Trust. The repurchase obligation or substitution obligation
of the Originator set forth in Section 6.01 constitutes the sole remedy
available for a breach of a representation or warranty of the Originator set
forth in Sections 3.01, 3.02, 3.03, 3.04 or 3.05 of this Agreement.
Notwithstanding the foregoing, the Originator shall not be deemed to be remaking
any of the representations set forth in Section 3.03 or 3.05 on a Subsequent
Transfer Date with respect to the Substitute Loans, as such representations
relate solely to the composition of the Initial Loans conveyed on the Closing
Date, PROVIDED, that any inaccurate representation as to concentrations
contained in any Addition Notice shall be subject to the same remedies hereunder
as if such representation were made under Section 3.05 on the Closing Date with
respect to an Initial Loan.
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SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE ORIGINATOR.
By its execution of this Agreement and each Subsequent Purchase
Agreement, the Originator represents and warrants that:
(a) ORGANIZATION AND GOOD STANDING. The Originator is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite corporate power to own or
lease its assets and to transact the business in which it is currently engaged.
The Originator is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or otherwise) of the
Originator. The Originator is properly licensed in each jurisdiction to the
extent required by the laws of such jurisdiction in order to originate, and (if
the Originator is to be the Servicer) service the Loans in accordance with the
terms of the Transfer and Servicing Agreement.
(b) AUTHORIZATION; VALID SALE; BINDING OBLIGATION. The Originator has
the power and authority to make, execute, deliver and perform this Agreement and
the other Transaction Documents to which the Originator is a party and all of
the transactions contemplated under this Agreement and the other Transaction
Documents to which the Originator is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Originator is a
party. This Agreement and each Subsequent Purchase Agreement, if any, shall
effect a valid sale, transfer and assignment of the Trust Assets from the
Originator to the Trust Depositor, enforceable against the Originator in
accordance with their terms, except as enforcement of such terms may be limited
by applicable Insolvency Laws and general principles of equity, whether
considered in a suit at law or in equity. This Agreement and the other
Transaction Documents to which the Originator is a party constitute the legal,
valid and binding obligation of the Originator enforceable in accordance with
their terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Originator is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the Originator is a party.
(d) NO VIOLATIONS. The Originator's execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Originator is
a party will not violate any provision of any existing law or regulation or any
order or decree of any court or the Certificate of Incorporation or Bylaws of
the Originator, or constitute (with or without notice or lapse of time or both)
a material breach of any mortgage, indenture, contract or other agreement to
which the Originator is a party or by which the Originator or any of the
Originator's properties may be bound.
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(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or, to the
knowledge of the Originator, threatened, against the Originator or any of its
respective properties or with respect to this Agreement or any other Transaction
Document to which the Originator is a party that, if adversely determined, would
in the opinion of the Originator, be expected to have a material adverse effect
on the business, properties, assets or condition (financial or other) of the
Originator or the transactions contemplated by this Agreement or any other
Transaction Document to which the Originator is a party.
(f) PLACE OF BUSINESS; NO CHANGES; NO TRADE NAMES. The Originator's
chief executive office (within the meaning of Article 9 of the UCC) is as set
forth in Section 8.03 below. The Originator has not changed its name as set
forth herein, whether by amendment of its Certificate of Incorporation, by
reorganization or otherwise, within the five years preceding the Closing Date,
and has not changed the location of its chief executive office, within the four
months preceding the Closing Date (or Subsequent Transfer Date, as applicable,
except in accordance with the requirements of Section 4.03). The legal name of
the Originator is as set forth in this Agreement and, within the five (5) years
preceding the Closing Date, the Originator has not used, and currently does not
use, any trade names, fictitious names, assumed names, or "doing business as"
names.
(g) NO BULK SALES. The execution, delivery and performance of this
Agreement by the Originator does not require compliance with any "bulk sales"
laws by the Originator.
(h) SOLVENCY. The Originator on each date of and, after giving effect
to the transfer of the Loans and any Substitute Loans, as the case may be, to
the Trust Depositor, is Solvent.
(i) USE OF PROCEEDS. No proceeds of the sale of any Initial Loan or
Substitute Loan hereunder received by the Originator will be used by the
Originator to purchase or carry any "margin stock" as such term is defined in
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
(j) SELECTION PROCEDURES. No selection procedures determined by the
Originator to be materially adverse to the interests of the Trust Depositor were
utilized by the Originator in selecting the Loans to be sold, assigned,
transferred, set-over and otherwise conveyed hereunder.
(k) NOT AN INVESTMENT COMPANY. The Originator is exempt from
registration as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(l) TAXES. To the best of the Originator's knowledge, (i) the
Originator has filed all tax returns required to be filed in the normal course
of its business and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from the Originator or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings, (ii) no tax lien has been filed with respect
thereto, and (iii) no claim is being asserted with respect to any such tax, fee
or other charge.
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(m) SALE TREATMENT. The Originator has treated the transfer of Loan
Assets to the Trust Depositor for all purposes (other than sale treatment for
financial accounting purposes) as a sale and purchase on all of its relevant
books, records, financial statements and other applicable documents, except to
the extent applicable tax laws require otherwise.
(n) MARKING OF FILES. The Originator will have, at its own expense,
prior to the close of business on the Closing Date, (i) indicated in its
Computer Records that ownership of the Loans transferred by it, on behalf of the
Trust Depositor, to the Trust and identified on the List of Loans have been sold
to the Trust Depositor and (ii) cause to be affixed to the original of each
promissory note and a copy of each loan agreement the following legend
(including any instrument constituting part of chattel paper):
This Loan Agreement/Note is subject to a security interest granted
to First Union Trust Company National Association, as Owner Trustee
for the ACAS Business Loan Trust 2000-1. UCC-1 Financing Statements
covering this Loan Agreement/Note have been filed with the
Secretary of State of the States of Maryland, Delaware and
Minnesota. Such lien will be released only in connection with
appropriate filings in such offices. Consequently, potential
purchasers of this Loan Agreement/Note must refer to such filings
to determine whether such lien has been released.
(o) NO LIENS. The Originator owns each Loan Asset to be sold by it
hereunder free and clear of any Liens except as provided herein, and upon the
sale, transfer or assignment hereunder, the Trust Depositor shall (i) become the
owner of each Loan Asset then existing or thereafter arising, free and clear of
any Lien except as provided herein or (ii) acquire a first priority perfected
security interest in such Loan Asset. No effective financing statement or other
instrument similar in effect covering any Loan Asset or the Collections with
respect thereto shall at any time be on file in any recording office except such
as may be filed in favor of the Trust Depositor relating to this Agreement or
otherwise as provided under the Transfer and Servicing Agreement.
(p) VALUE GIVEN. The cash payments received by the Originator in
respect of the purchase price of each Loan sold hereunder constitutes reasonably
equivalent value in consideration for the transfer to the Trust Depositor of
such Loan under this Agreement, such transfer was not made for or on account of
an antecedent debt owed by the Originator to the Trust Depositor, and such
transfer was not and is not voidable or subject to avoidance under any
Insolvency Law.
(q) SECURITY INTEREST. The Originator has granted a security interest
(as defined in the UCC) to the Trust Depositor in the Loan Assets, which is
enforceable in accordance with applicable law upon execution and delivery of
this Agreement. Upon the filing of UCC-1 financing statements naming the Trust
Depositor as secured party and the Originator as debtor, the Trust Depositor
shall have a first priority perfected security interest in the Loan Assets
(except for any Permitted Liens). All filings (including, without limitation,
such UCC filings) as
10
are necessary in any jurisdiction to perfect the interest of the Trust Depositor
in the Loan Assets have been made.
(r) SECURITY INTEREST IN COLLATERAL. The Collateral securing the Loans
is located in the states listed on Schedule 1 to the Transfer and Servicing
Agreement. The Originator has a perfected security interest in the Collateral
(to the extent that the Originator, other than solely in its capacity as
collateral agent under any agreement with an Obligor, has been granted a lien
thereon) and, upon the sale, transfer and assignment of the Loan Assets
hereunder, the Trust Depositor will have a perfected security interest in the
Originator's interest in the Collateral.
(s) MORTGAGES. If a Loan is secured by real property and the
Originator, other than solely in its capacity as collateral agent under any loan
agreement with an Obligor, is the mortgagee, the mortgage has been assigned to
the Trust Depositor.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH LOAN AND AS
TO CERTAIN LOANS IN THE AGGREGATE.
The Originator represents and warrants (x) with respect to subsections
(a)-(c) below, as to each Loan as of the execution and delivery of this
Agreement and as of the Closing Date, and as of each Subsequent Transfer Date
with respect to each Substitute Loan, and (y) with respect to subsections
(c)-(d) below, as to the Loan Pool in the aggregate as of the Closing Date, and
as of each Subsequent Transfer Date with respect to Substitute Loans (after
giving effect to the addition of such Substitute Loans to the Loan Pool), that:
(a) LIST OF LOANS. The information set forth in the List of Loans (as
the same may be amended or deemed amended in respect of a conveyance of
Substitute Loans on a Subsequent Transfer Date) is true, complete and correct as
of the applicable Cutoff Date.
(b) ELIGIBLE LOAN. Such Loan satisfies the criteria for the definition
of Eligible Loan set forth in the Transfer and Servicing Agreement as of the
date of its conveyance hereunder.
(c) NO FRAUD. Each Loan was originated without any fraud or material
misrepresentation by the Originator or, to the best of the Originator's
knowledge, on the part of the Obligor or the Vendor.
(d) LOANS SECURED BY REAL PROPERTY. Less than 40% of the Aggregate
Balance of the Loan Pool consists of Loans principally secured by real property.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
LOANS IN THE AGGREGATE.
The Originator represents and warrants, as of the Closing Date, that
its representations and warranties in Section 3.03 of the Transfer and Servicing
Agreement are correct.
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SECTION 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE LOAN FILES.
The Originator represents and warrants as of the Closing Date with
respect to the Initial Loans (or as of the Subsequent Transfer Date, with
respect to Substitute Loans), that its representations and warranties in Section
3.04 of the Transfer and Servicing Agreement are correct.
SECTION 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS
OF INITIAL LOANS.
The Originator represents and warrants as of the Closing Date, as to
the composition of the Initial Loans in the Loan Pool as of the Initial Cutoff
Date, that its representations and warranties in Section 3.05 of the Transfer
and Servicing Agreement are correct.
SECTION 3.06. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR.
By its execution of this Agreement and each Subsequent Purchase
Agreement, the Trust Depositor represents and warrants to the Originator that:
(a) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware and has the power to own its assets and to transact the
business in which it is currently engaged. The Trust Depositor is duly qualified
to do business as a foreign entity and is in good standing in each jurisdiction
in which the character of the business transacted by it or properties owned or
leased by it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Trust Depositor or the Trust.
(b) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust Depositor
has the power and authority to make, execute, deliver and perform this Agreement
and the other Transaction Documents to which it is a party and consummate all of
the transactions contemplated under this Agreement and the other Transaction
Documents to which it is a party, and to create the Trust and cause it to make,
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust to be created. The Transfer and Servicing Agreement and the
related Subsequent Transfer Agreement, if any, shall effect a valid sale,
transfer and assignment of the Trust Assets, enforceable against the Trust
Depositor and creditors of and purchasers from the Trust Depositor. This
Agreement and the other Transaction Documents to which the Trust Depositor is a
party constitute the legal, valid and binding obligation of the Trust Depositor
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies.
(c) NO CONSENT REQUIRED. The Trust Depositor is not required to obtain
the consent
12
of any other party or any consent, license, approval or authorization from, or
registration or declaration with, any Governmental Authority in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated hereby
and thereby, will not violate any Requirement of Law applicable to the Trust
Depositor, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Trust Depositor is a party or by which the Trust
Depositor or any of the Trust Depositor's properties may be bound, or result in
the creation or imposition of any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind upon any of its properties
pursuant to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.
(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Trust Depositor threatened, against the Trust Depositor or any
of its properties or with respect to this Agreement, the other Transaction
Documents to which it is a party or the Securities (1) if adversely determined,
would in the reasonable judgment of the Trust Depositor have a material adverse
effect on the business, properties, assets or condition (financial or other) of
the Trust Depositor or the Trust or the transactions contemplated by this
Agreement or the other Transaction Documents to which the Trust Depositor is a
party or (2) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Certificate or Notes.
(f) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" laws by the Trust
Depositor.
(g) SOLVENCY. The Trust Depositor, at the time of and after giving
effect to each conveyance of Trust Assets under the Transfer and Servicing
Agreement, is Solvent on and as of the date thereof.
(h) TAXES. The Trust Depositor has filed or caused to be filed all tax
returns that, to its knowledge, are required to be filed and has put all taxes
shown to be due and payable on such returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any amount
of tax due, the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the books of the
Trust Depositor); no tax lien has been filed and, to the Trust Depositor's
knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.
(i) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole place of
business (within the meaning of Article 9 of the UCC) is as set forth in Section
8.03 below. The Trust Depositor has not changed its name, whether by amendment
of its certificate of organization, by
13
reorganization or otherwise, and has not changed the location of its place of
business, within the four months preceding the Closing Date.
(j) NOT AN INVESTMENT COMPANY. The Trust Depositor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (or the Trust Depositor is exempt from all provisions of such Act).
(k) SALE TREATMENT. The Trust Depositor has treated the transfer of
Loan Assets to the Trust Depositor for all purposes (including financial
accounting purposes) as a sale and purchase on all of its relevant books,
records, financial statements and other applicable documents, except to the
extent applicable tax laws require otherwise.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Loans, and as of the
applicable Subsequent Transfer Date in the case of the Substitute Loans, but
shall survive the sale, transfer and assignment of the Loans to the Trust.
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. CUSTODY OF LOANS.
The contents of each Loan File shall be held in the custody of the
Custodian under the Custodian Agreement for the benefit of, and as agent for,
the Indenture Trustee.
SECTION 4.02. FILING.
On or prior to the Closing Date, the Originator shall cause the UCC
financing statement(s) referred to in Section 2.02(viii) hereof to be filed.
SECTION 4.03. NAME CHANGE OR RELOCATION.
(a) During the term of this Agreement, the Originator shall not change
its name, identity or structure or relocate its chief executive office without
first giving at least thirty (30) days' prior written notice to the Trust.
(b) If any change in the Originator's name, identity or structure or
other action would make any financing or continuation statement or notice of
ownership interest or lien relating to any Loan Asset seriously misleading
within the meaning of applicable provisions of the UCC or any title statute, the
Originator, no later than five days after the effective date of such change,
shall file such amendments as may be required to preserve and protect the Trust
Depositor's and the Trust's interests in the Trust Assets and the proceeds
thereof. In addition, the Originator shall not change the place of its chief
executive office (within the meaning of Article 9 of the UCC) unless it has
first taken such action as is advisable or necessary to preserve and protect the
14
Trust Depositor's and the Trust's interest in the Trust Assets.
SECTION 4.04. CHIEF EXECUTIVE OFFICE.
During the term of this Agreement, and subject to the other terms and
provisions herein relating to changes in location, the Originator will maintain
its chief executive office in one of the States of the United States.
SECTION 4.05. COSTS AND EXPENSES.
The Originator hereby confirms that the Servicer will pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trustees' and
Trust's right, title and interest in and to the Loan Assets (including, without
limitation, the security interest in the Collateral related thereto and the
security interests provided for in the Indenture).
SECTION 4.06. SALE TREATMENT.
The Originator shall treat the transfer of Trust Assets made hereunder
for all purposes (including financial accounting purposes) as a sale and
purchase on all of its relevant books, records, financial statements and other
applicable documents. Notwithstanding the preceding sentence, for federal income
tax purposes the transfer of Trust Assets by the Originator hereunder shall not
be treated as a sale and purchase for federal income tax purposes so long as the
Trust is disregarded as a separate entity pursuant to Treasury Regulations
Section 301.7701-3(b)(1)(ii).
SECTION 4.07. SEPARATENESS FROM TRUST DEPOSITOR.
The Originator agrees to take or refrain from taking or engaging in
with respect to the Trust Depositor, as applicable, each of the actions or
activities specified in the "substantive consolidation" opinion of Xxxxxxx and
Xxxxxx (including any certificates of the Originator attached thereto) delivered
on the Closing Date, upon which the conclusions therein are based.
ARTICLE V
COVENANTS OF THE ORIGINATOR
SECTION 5.01. CORPORATE EXISTENCE.
During the term of this Agreement, the Originator will keep in full
force and effect its existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the other Transaction Documents and each other instrument or
agreement necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated
15
hereby. In addition, all transactions and dealings between the Originator and
the Trust Depositor and the Trust will be conducted on an arm's-length basis.
SECTION 5.02. LOANS NOT TO BE EVIDENCED BY PROMISSORY NOTES.
The Originator will take no action to cause any Loan not originally
evidenced by an instrument as described in Section 2.05 hereof, to be evidenced
by an instrument (as defined in the UCC), except in connection with the
enforcement or collection of such Loan.
SECTION 5.03. SECURITY INTERESTS.
The Originator will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any Loan
in the Loan Pool or related Collateral, whether now existing or hereafter
transferred to the Trust Depositor, or any interest therein. The Originator will
immediately notify the Trust Depositor of the existence of any Lien on any Loan
in the Loan Pool or related Collateral; and the Originator shall defend the
right, title and interest of the Trust Depositor in, to and under the Loans in
the Loan Pool and the related Collateral, against all claims of third parties;
PROVIDED, HOWEVER, that nothing in this Section 5.03 shall prevent or be deemed
to prohibit the Originator from suffering to exist Permitted Liens upon any of
the Loans in the Loan Pool or any related Collateral.
SECTION 5.04. COMPLIANCE WITH LAW.
The Originator hereby agrees to comply in all material respects with
all Requirements of Law applicable to the Originator.
SECTION 5.05. LIABILITY OF ORIGINATOR; INDEMNITIES.
The Originator shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Originator under this
Agreement.
The Originator shall indemnify, defend and hold harmless the Trust
Depositor from and against any taxes that may at any time be asserted against
any such Person with respect to the transactions contemplated herein and in the
other Transaction Documents, including any sales, gross receipts, general
corporation, tangible personal property, Maryland personal property replacement
privilege or license taxes (but, in the case of the Trust Depositor, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Loans to the Trust or the issuance and original sale of the Securities, or
asserted with respect to ownership of the Loans, or federal or other income
taxes arising out of distributions on the Certificate or the Notes) and costs
and expenses in defending against the same.
The Originator shall indemnify, defend and hold harmless the Trust
Depositor from and against any loss, liability or expense incurred by reason of
the Originator's willful misfeasance, bad faith or gross negligence (other than
errors in judgment) in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement.
16
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Originator shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Originator, without interest.
SECTION 5.06. LIMITATION ON LIABILITY OF ORIGINATOR AND OTHERS.
The Originator and any director or officer or employee or agent of the
Originator may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Originator and any director or officer or employee or agent of
the Originator shall be reimbursed by the Trust Depositor for any liability or
expense incurred by reason of the Trust Depositor's willful misfeasance, bad
faith or negligence (except errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Originator shall not be under
any obligation to appear in, prosecute or defend any legal action that shall not
be incidental to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability.
ARTICLE VI
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION
SECTION 6.01. REPURCHASES OF, OR SUBSTITUTION FOR, LOANS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES.
Upon a discovery by the Servicer, the Trust Depositor or the Trustees
of a breach of a representation or warranty of the Originator as set forth in
Section 3.01, Section 3.02, Section 3.03, Section 3.04, and Section 3.05 or as
made or deemed made in any Addition Notice or any Subsequent Purchase Agreement
relating to Substitute Loans that materially adversely affects the Trust's
interest in such Loan (without regard to the benefits of the Reserve Fund) (an
"Ineligible Loan"), or of an inaccuracy with respect to the representations as
to concentrations of the Initial Loans made under Section 3.05, the party
discovering the breach shall give prompt written notice to the other parties
(and the Servicer shall, pursuant to Section 11.01 of the Transfer and Servicing
Agreement, with respect to an inaccuracy concerning concentrations, select one
or more Loans, without employing adverse selection, to be the related Excess
Loan for purposes of this Section), PROVIDED, that the Trustees shall have no
duty or obligation to inquire or to investigate the breach by the Originator of
any of such representations or warranties. The Originator shall repurchase each
such Ineligible Loan or Excess Loan, at a repurchase price equal to the Transfer
Deposit Amount, not later than the next succeeding Determination Date following
the date the Originator becomes aware of, or receives written notice from any
Trustee, the Servicer or the Trust Depositor of, any such breach or inaccuracy
and which breach or inaccuracy has not otherwise been cured; PROVIDED, HOWEVER,
that if the Originator is able to effect a substitution for any such Ineligible
Loan or Excess Loan in compliance with Section
17
2.04, the Originator may, in lieu of repurchasing such Loan, effect a
substitution for such affected Loan with a Substitute Loan not later than the
date a repurchase of such affected Loan would be required hereunder, and,
PROVIDED FURTHER THAT, with respect to a breach of representation or warranty
relating to the Loans in the aggregate and not to any particular Loan the
Originator may select Loans (without adverse selection) to repurchase (or
substitute for) such that had such Loans not been included as part of the Trust
Assets (and, in the case of a substitution, had such Substitute Loan been
included as part of the Trust Assets instead of the selected Loan) there would
have been no breach of such representation or warranty. Notwithstanding any
other provision of this Agreement, the obligation of the Originator described in
this Section 6.01 shall not (a) terminate or be deemed released by any party
hereto upon a Servicer Transfer pursuant to Article VIII of the Transfer and
Servicing Agreement or (b) include any obligation to make payment on account of
a breach of a Loan by an Obligor subsequent to the date on which such Loan was
transferred to the Trust. The repurchase obligation described in this Section
6.01 is in no way to be satisfied with monies in the Reserve Fund.
SECTION 6.02. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED LOANS.
Upon receipt by the Indenture Trustee for deposit in the Collection
Account of the amounts described in Section 6.01 or Section 6.03 (or upon the
Subsequent Transfer Date related to a Substitute Loan described in Section
6.01), and upon receipt of a certificate of a Servicing Officer in the form
attached as Exhibit F to the Transfer and Servicing Agreement, the Indenture
Trustee is required under the Transfer and Servicing Agreement to assign to the
Trust Depositor and the Trust Depositor shall assign to the Originator all of
the Trust's (or Trust Depositor's, as applicable) right, title and interest in
the repurchased or substituted Loan and related Trust Assets without recourse,
representation or warranty. Such reassigned Loan shall no longer thereafter be
included in any calculations of Outstanding Loan Balances required to be made
hereunder or otherwise be deemed a part of the Trust.
ARTICLE VII
ORIGINATOR INDEMNITIES
SECTION 7.01. ORIGINATOR'S INDEMNIFICATION.
The Originator will defend and indemnify the Trust Depositor, the
Trust, the Trustees, any agents of the Trustees and the Certificateholder and
Noteholders (any of which, an "Indemnified Party") against any and all costs,
expenses, losses, damages, claims and liabilities, joint or several, including
reasonable fees and expenses of counsel and expenses of litigation
(collectively, "Costs") arising out of or resulting from (i) this Agreement or
the use, ownership or operation of any Collateral by the Originator or the
Servicer or any Affiliate of either, (ii) any representation or warranty or
covenant made by the Originator in this Agreement being untrue or incorrect
(subject to the limitations described in the preamble to Article III of this
Agreement), and (iii) any untrue statement or alleged untrue statement of a
material fact contained in the Private Placement Memorandum or in any amendment
thereto or the omission or alleged
18
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement was made in conformity with information furnished to
the Trust Depositor by the Originator specifically for use therein; PROVIDED,
HOWEVER, that the Originator shall not be required to so indemnify any such
Indemnified Party for such Costs to the extent that such Cost shall be due to or
arise from the willful misfeasance, bad faith or negligence of such Indemnified
Party, or the failure of such Indemnified Party to comply with any express
undertaking, agreement or covenant made by such Indemnified Party in a
Transaction Document to which it is a party or the breach subsequent to the
Closing Date by an Obligor under a Loan. Notwithstanding any other provision of
this Agreement, the obligation of the Originator under this Section 7.01 shall
not terminate upon a Servicer Transfer pursuant to Article VIII of the Transfer
and Servicing Agreement and shall survive any termination of that agreement or
this Agreement.
SECTION 7.02. LIABILITIES TO OBLIGORS.
No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Trustees, the Trust, the Noteholders or the
Certificateholder under or as a result of this Agreement and the transactions
contemplated hereby.
SECTION 7.03. TAX INDEMNIFICATION.
(a) The Originator agrees to pay, and to indemnify, defend and hold
harmless the Trust Depositor, the Trust, the Trustees, the Noteholders or the
Certificateholder from, any taxes that may at any time be asserted with respect
to, and as of the date of, the transfer of the Loans to the Trust Depositor and
the transfer by the Trust Depositor of the Loans to the Trust and the further
pledge by the Trust to the Indenture Trustee, including, without limitation, any
sales, gross receipts, general corporation, personal property, privilege or
license taxes (but not including any federal, state or other taxes arising out
of the creation of the Trust and the issuance of the Notes and Certificates) and
costs, expenses and reasonable counsel fees in defending against the same,
whether arising by reason of the acts to be performed by the Originator or the
Servicer under this Agreement or imposed against the Trust, a Noteholder, a
Certificateholder or otherwise. Notwithstanding any other provision of this
Agreement, the obligation of the Originator under this Section 7.03 shall not
terminate upon a Servicer Transfer pursuant to Article VIII of the Transfer and
Servicing Agreement and shall survive any termination of this Agreement.
(b) The Originator agrees to pay and to indemnify, defend and hold
harmless the Trust and the Trustees, on an after-tax basis (as hereinafter
defined), from any state or local personal property taxes, gross rent taxes,
leasehold taxes or similar taxes that may at any time be asserted with respect
to the ownership of the Loans (including security interests therein) and the
receipt of rentals therefrom by the Trust, and costs, expenses and reasonable
counsel fees in defending against the same, excluding, however, taxes based upon
or measured by gross or net income or receipts (other than taxes imposed
specifically with respect to rentals). As used in this Section, the term
"after-tax basis" shall mean, with respect to any payment to be received by an
indemnified person, that the amount to be paid by the Originator shall be equal
to the sum of (i)
19
the amount to be received without regard to this sentence, plus (ii) any
additional amount that may be required so that after reduction by all taxes
imposed under any federal, state and local law, and taking into account any
current credits or deductions arising therefrom, resulting either from the
receipt of the payments described in both clauses (i) and (ii) hereof, such sum
shall be equal to the amount described in clause (i) above.
SECTION 7.04. ADJUSTMENTS.
The Originator agrees that, with respect to each Loan that provides for
a Prepayment Amount less than the amount calculated in accordance with the
definition thereof, the Originator shall indemnify the Trust Depositor or the
Trust as assignee thereof in an amount at least equal to the excess of the
"Prepayment Amount" as calculated in accordance with the definition thereof over
the amount otherwise payable upon prepayment of such Loan.
The Originator hereby further agrees that if any real property
collateral securing any Loan described in Section 3.02(d) hereof becomes the
subject of any claims, proceedings, liens or encumbrances with respect to any
material violation or claimed material violation of any federal or state
environmental laws or regulations, such Loan shall for all purposes hereunder
be, at and following the time of discovery by the Originator, the Trust
Depositor, the Servicer or any Trustee of such fact, deemed an Ineligible Loan
subject to the same remedial and recourse provisions hereunder as other Loans
determined to be Ineligible Loans hereunder.
SECTION 7.05. OPERATION OF INDEMNITIES.
Indemnification under this Article VII shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Originator has made any indemnity payments to the Trust Depositor or the
Trustees pursuant to this Article VII and the Trust Depositor or the Trustees
thereafter collects any of such amounts from others, the Trust Depositor or the
Trustees will repay such amounts collected to the Originator, except that any
payments received by the Trust Depositor or the Trustees from an insurance
provider as a result of the events under which the Originator's indemnity
payments arose shall be repaid prior to any repayment of the Originator's
indemnity payment.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENT.
(a) This Agreement may be amended by the Originator and the Trust
Depositor, without the consent of any Securityholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement that are inconsistent
with the provisions herein, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement, PROVIDED, HOWEVER, that any such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests
20
of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originator and the Trust Depositor, with the consent of the Servicer, the
Indenture Trustee and the Owner Trustee on behalf of the Trust, and the consent
of the Required Holders, 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 of the Notes or the
Certificateholder; PROVIDED, HOWEVER, that no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of or
change the method of calculating Collections of payments on the Loans (including
by way of amendment of related definitions), or (ii) change in any manner
(including through amendment of related definitions), the Holders that are
required to consent to any such amendment, without the consent of the Holders of
all Notes and Certificates of the relevant affected Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Originator shall cause the Indenture Trustee to furnish written notification of
the substance of such amendment or consent, together with a copy thereof, to
each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Originator shall cause the Owner Trustee and the Indenture Trustee, as the case
may be, to furnish written notification of the substance of such amendment or
consent to each Certificateholder and Noteholder, respectively. It shall not be
necessary for the consent of Noteholders and Certificateholder pursuant to
Section 8.01(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization by Noteholders and Certificateholder of the execution thereof
shall be subject to such reasonable requirements as the Owner Trustee or the
Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. Such Trustee may, but shall not be
obligated to, consent to any such amendment that affects such Trustee's own
rights, duties or immunities under this Agreement or otherwise.
SECTION 8.02. GOVERNING LAW.
(a) 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 the Agreement shall be determined in accordance with such laws.
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. Each party hereto (i) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the
21
foregoing waiver and (ii) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 8.02(b).
SECTION 8.03. NOTICES.
All notices, demands, certificates, requests and communications
hereunder ("notices") shall be in writing and shall be effective (a) upon
receipt when sent through the U.S. mails, registered or certified mail, return
receipt requested, postage prepaid, with such receipt to be effective the date
of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Originator:
American Capital Strategies, Ltd.
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Compliance Officer
Fax No.: (000) 000-0000
(ii) If to the Trust Depositor:
ACAS Business Loan LLC, 2000-1
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Compliance Officer
Fax No.: (000) 000-0000
(iii) If to S&P:
Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance: Asset Backed Services
22
(iv) If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Fax No.: (000) 000-0000
(v) If to Fitch:
Fitch, Inc.
00 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: ABS Monitoring
Fax No.: (000) 000-0000. 27
(vi) If to the Placement Agent:
First Union Securities, Inc.
Xxx Xxxxx Xxxxx Xxxxxx, XX-0
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Asset Securitization Division
Fax No.: (000) 000-0000
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 8.04. SEVERABILITY OF PROVISIONS.
If one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, 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 provisions of this
Agreement or of the Notes or Certificates or the rights of the Holders thereof.
SECTION 8.05. THIRD PARTY BENEFICIARIES.
Except as otherwise specifically provided herein, the parties hereto
hereby manifest their intent that no third party, other than each Trustee, shall
be deemed a third party beneficiary
23
of this Agreement, and specifically that the Obligors are not third party
beneficiaries of this Agreement.
SECTION 8.06. COUNTERPARTS.
This Agreement may be executed by facsimile signature and in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
SECTION 8.07. HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 8.08. NO BANKRUPTCY PETITION; DISCLAIMER.
(a) Each of the Originator and the Trust Depositor covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all amounts owing in respect of all outstanding Securities, it will not
institute against the Trust Depositor (in the case of the Originator), or the
Trust, or join any other Person in instituting against the Trust Depositor or
the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 8.08 will survive
the termination of this Agreement.
(b) The provisions of this Section 8.08 shall be for the third party
benefit of those entitled to rely thereon, including the Holders of the Notes,
and shall survive the termination of this Agreement.
SECTION 8.09. JURISDICTION.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the United States for the Southern District of New
York, and by execution and delivery of this Agreement, each party hereto
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each such party irrevocably waives any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.
SECTION 8.10. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST.
The Originator shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
24
(c) Except in its capacity as Servicer as provided in the Transfer and
Servicing Agreement, lend any money to the Trust.
SECTION 8.11. MERGER OR CONSOLIDATION OF ORIGINATOR.
(a) The Originator will keep in full force and effect its existence,
rights and franchise as a Delaware corporation, and the Originator will obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and of any of the Loans and to
perform its duties under this Agreement.
(b) Any person into which the Originator may be merged or consolidated,
or any corporation resulting from such merger or consolidation to which the
Originator is a party, or any person succeeding by acquisition or transfer to
substantially all of the assets and to the business of the Originator shall be
the successor to the Originator hereunder, without execution or filing of any
paper or any further act on the part of any of the parties hereto,
notwithstanding anything herein to the contrary.
(c) Upon the merger or consolidation of the Originator or transfer of
substantially all of its assets and its business as described in this Section
8.11, the Originator shall provide the Rating Agencies notice of such merger or
consolidation within thirty (30) days after completion of the same.
SECTION 8.12. ASSIGNMENT OR DELEGATION BY THE ORIGINATOR.
Except as specifically authorized hereunder, the Originator may not
convey and assign or delegate any of its rights or obligations hereunder absent
the prior written consent of the Trust Depositor and the Trustees, and any
attempt to do so without such consent shall be void.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
AMERICAN CAPITAL STRATEGIES, LTD.,
as Originator
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
ACAS BUSINESS LOAN LLC, 2000-1,
as Trust Depositor
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
EXHIBIT A
FORM OF ASSIGNMENT
In accordance with the ACAS Transfer Agreement (the "ACAS Transfer
Agreement") dated as of December 20, 2000 made by and between the undersigned,
American Capital Strategies, Ltd., as Originator, and the ACAS Business Loan
LLC, 0000-0 (xxx "Xxxxx Xxxxxxxxx"), as assignee thereunder, the undersigned
does hereby sell, transfer, convey and assign, set over and otherwise convey to
the Trust, on behalf of the Trust Depositor, (i) all the right, title and
interest of the Originator in and to the Initial Loans listed on the initial
List of Loans delivered on the Closing Date (including, without limitation, all
rights to receive Collections with respect thereto on or after the Initial
Cutoff Date, but excluding any rights to receive payments that were collected
pursuant thereto prior to the Initial Cutoff Date), and (ii) all other Loan
Assets relating to the foregoing.
Capitalized terms used herein have the meaning given such terms in the
ACAS Transfer Agreement.
This Assignment is made pursuant to and in reliance upon the
representation and warranties on the part of the undersigned contained in
Article III of the ACAS Transfer Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this ____ day of December __, 2000.
AMERICAN CAPITAL STRATEGIES, LTD.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
A-1
================================================================================
TRANSFER AND SERVICING AGREEMENT
AMONG
ACAS BUSINESS LOAN TRUST 2000-1,
AS ISSUER,
ACAS BUSINESS LOAN LLC, 2000-1,
AS TRUST DEPOSITOR,
AMERICAN CAPITAL STRATEGIES, LTD.,
AS SERVICER, ORIGINATOR AND SWAP GUARANTOR,
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE
AND
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
AS BACKUP SERVICER
DATED AS OF DECEMBER 20, 2000
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...........................................................................................1
Section 1.01 Definitions..............................................................................1
Section 1.02 Usage of Terms..........................................................................27
Section 1.03 Section References......................................................................27
Section 1.04 Calculations............................................................................27
Section 1.05 Accounting Terms........................................................................27
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF LOAN ASSETS.....................................................27
Section 2.01 Creation and Funding of Trust; Transfer of Loan Assets..................................27
Section 2.02 Conditions to Transfer of Trust Assets to Trust.........................................30
Section 2.03 Acceptance by Owner Trustee.............................................................31
Section 2.04 Conveyance of Substitute Loans..........................................................32
Section 2.05 Release of Released Amounts.............................................................34
Section 2.06 Delivery of Instruments.................................................................35
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................................................35
Section 3.01 Representations and Warranties Regarding the Originator.................................35
Section 3.02 Representations and Warranties Regarding Each Loan and as to Certain Loans in the
Aggregate.............................................................................38
Section 3.03 Representations and Warranties Regarding the Initial Loans in the Aggregate.............39
Section 3.04 Representations and Warranties Regarding the Loan Files.................................39
Section 3.05 Representations and Warranties Regarding Concentrations of Initial Loans................39
Section 3.06 Representations and Warranties Regarding the Trust Depositor............................40
Section 3.07 Representations and Warranties Regarding the Servicer...................................42
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.........................................44
Section 4.01 Custody of Loans........................................................................44
Section 4.02 Filing..................................................................................44
Section 4.03 Name Change or Relocation...............................................................44
Section 4.04 Chief Executive Office..................................................................45
Section 4.05 Costs and Expenses......................................................................45
Section 4.06 Sale Treatment..........................................................................45
Section 4.07 Separateness from Trust Depositor.......................................................45
ARTICLE V SERVICING OF LOANS.....................................................................................45
Section 5.01 Appointment and Acceptance; Responsibility for Loan Administration......................45
Section 5.02 General Duties..........................................................................46
Section 5.03 [RESERVED]..............................................................................46
Section 5.04 Disposition upon Termination of Loan....................................................46
Section 5.05 Subservicers............................................................................47
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PAGE
Section 5.06 Further Assurance.......................................................................47
Section 5.07 Notice to Obligors......................................................................47
Section 5.08 Collection Efforts; Modification of Loans...............................................47
Section 5.09 Prepaid Loan............................................................................48
Section 5.10 Acceleration............................................................................48
Section 5.11 Taxes...................................................................................48
Section 5.12 Insurance Premiums......................................................................48
Section 5.13 Remittances.............................................................................49
Section 5.14 Servicer Advances.......................................................................49
Section 5.15 Realization upon Defaulted Loan.........................................................49
Section 5.16 Maintenance of Insurance Policies.......................................................49
Section 5.17 Other Servicer Covenants................................................................50
Section 5.18 Servicing Compensation..................................................................51
Section 5.19 Payment of Certain Expenses by Servicer.................................................51
Section 5.20 Records.................................................................................51
Section 5.21 Inspection..............................................................................51
Section 5.22 The Backup Servicer.....................................................................52
Section 5.23 Representations and Warranties of the Backup Servicer...................................54
Section 5.24 Covenants of the Backup Servicer........................................................55
ARTICLE VI COVENANTS OF THE TRUST DEPOSITOR....................................................................56
Section 6.01 Legal Existence.........................................................................56
Section 6.02 Loans Not to Be Evidenced by Promissory Notes...........................................56
Section 6.03 Security Interests......................................................................56
Section 6.04 Delivery of Collections.................................................................56
Section 6.05 Regulatory Filings......................................................................56
Section 6.06 Compliance with Law.....................................................................57
Section 6.07 Activities..............................................................................57
Section 6.08 Indebtedness............................................................................57
Section 6.09 Guarantees..............................................................................57
Section 6.10 Investments.............................................................................57
Section 6.11 Merger; Sales...........................................................................58
Section 6.12 Distributions...........................................................................58
Section 6.13 Other Agreements........................................................................58
Section 6.14 Separate Legal Existence................................................................58
Section 6.15 Location; Records.......................................................................59
Section 6.16 Liability of Trust Depositor; Indemnities...............................................59
Section 6.17 Bankruptcy Limitations..................................................................61
Section 6.18 Limitation on Liability of Trust Depositor and Others...................................61
Section 6.19 Chief Executive Office..................................................................61
ARTICLE VII ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND...............................................61
Section 7.01 Trust Accounts; Collections.............................................................61
Section 7.02 Reserve Fund Deposit....................................................................62
Section 7.03 Trust Account Procedures................................................................62
Section 7.04 Securityholder Distributions............................................................63
ii
PAGE
Section 7.05 Allocations and Distributions...........................................................63
Section 7.06 Determination of LIBOR..................................................................66
ARTICLE VIII SERVICER DEFAULT; SERVICE TRANSFER................................................................67
Section 8.01 Servicer Default........................................................................67
Section 8.02 Servicer Transfer.......................................................................68
Section 8.03 Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act..............69
Section 8.04 Notification to Securityholders.........................................................70
Section 8.05 Effect of Transfer......................................................................70
Section 8.06 Database File...........................................................................71
Section 8.07 Successor Servicer Indemnification......................................................71
Section 8.08 Responsibilities of the Successor Servicer..............................................71
Section 8.09 Rating Agency Condition for Servicer Transfer...........................................72
ARTICLE IX REPORTS 72
Section 9.01 Monthly Reports.........................................................................72
Section 9.02 Officer's Certificate...................................................................72
Section 9.03 Other Data..............................................................................72
Section 9.04 Annual Report of Accountants............................................................73
Section 9.05 Annual Statement of Compliance from Servicer............................................74
Section 9.06 Annual Summary Statement................................................................74
ARTICLE X TERMINATION 74
Section 10.01 Sale of Trust Assets....................................................................74
ARTICLE XI REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION..................................................75
Section 11.01 Repurchases of, or Substitution for, Loans for Breach of Representations and
Warranties............................................................................75
Section 11.02 Reassignment of Repurchased or Substituted Loans........................................75
ARTICLE XII ORIGINATOR INDEMNITIES.............................................................................76
Section 12.01 Originator's Indemnification............................................................76
Section 12.02 Liabilities to Obligors.................................................................76
Section 12.03 Tax Indemnification.....................................................................76
Section 12.04 Adjustments.............................................................................77
Section 12.05 Operation of Indemnities................................................................78
ARTICLE XIII MISCELLANEOUS.....................................................................................78
Section 13.01 Amendment...............................................................................78
Section 13.02 Protection of Title to Trust............................................................79
Section 13.03 Governing Law...........................................................................80
Section 13.04 Notices.................................................................................81
Section 13.05 Severability of Provisions..............................................................83
Section 13.06 Third Party Beneficiaries...............................................................83
Section 13.07 Counterparts............................................................................84
Section 13.08 Headings................................................................................84
iii
PAGE
Section 13.09 No Bankruptcy Petition; Disclaimer......................................................84
Section 13.10 Jurisdiction............................................................................85
Section 13.11 Tax Characterization....................................................................85
Section 13.12 Prohibited Transactions with Respect to the Trust.......................................85
Section 13.13 Merger or Consolidation of Originator or Servicer.......................................86
Section 13.14 Assignment or Delegation by the Originator..............................................86
Section 13.15 Limitation of Liability of Owner Trustee................................................86
ARTICLE XIV SWAP GUARANTY........................................................................................87
Section 14.01 Unconditional Undertaking...............................................................87
Section 14.02 Obligations Absolute....................................................................87
Section 14.03 Pari Passu Treatment of Obligations of Swap Guarantor...................................88
Section 14.04 Waiver..................................................................................88
Section 14.05 Subrogation.............................................................................88
EXHIBITS AND SCHEDULES
EXHIBIT A Form of Assignment A-1
EXHIBIT B Form of Closing Certificate of Trust Depositor B-1
EXHIBIT C Form of Closing Certificate of Servicer/Originator C-1
EXHIBIT D Form of Opinion of Counsel for Trust Depositor Regarding D-1
General Corporate Matters (Including Perfection Opinion)
EXHIBIT E Form of Opinion of Counsel for Trust Depositor Regarding the E-1
"True Sale" Nature of the Transaction and Regarding
Non-Consolidation
EXHIBIT F Form of Certificate Regarding Repurchased Loans F-1
EXHIBIT G List of Loans G-1
EXHIBIT H Form of Monthly Report to Noteholders and Certificateholder H-1
EXHIBIT I Form of Subsequent Transfer Agreement I-1
EXHIBIT J Form of Subsequent Purchase Agreement J-1
EXHIBIT K Credit and Collection Policy K-1
EXHIBIT L List of Subordinated and Unsecured Loans L-1
SCHEDULE 1 List of States Where Obligors are Located
iv
This TRANSFER AND SERVICING AGREEMENT, dated as of December 20, 2000,
is among ACAS BUSINESS LOAN TRUST 2000-1 (together with its successors and
assigns, the "TRUST"), ACAS BUSINESS LOAN LLC, 2000-1, (together with its
successor and assigns, the "TRUST DEPOSITOR"), XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, together with its successors and assigns, the "INDENTURE
TRUSTEE"), XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, together with its
successors and assigns, the "BACKUP SERVICER"), AMERICAN CAPITAL STRATEGIES,
LTD. (together with its successors and assigns, "ACAS", in its capacity as
Servicer, together with its successor and assigns, the "SERVICER", in its
capacity as Originator, together with its successor and assigns, the
"ORIGINATOR" and in its capacity as Swap Guarantor, together with its successors
and assigns, the "Swap Guarantor").
WHEREAS, in the regular course of its business, the Originator
originates Loans (as defined herein);
WHEREAS, the Trust Depositor acquired the Initial Loans from the
Originator and may acquire from time to time thereafter certain Substitute Loans
(such Initial Loans and Substitute Loans, together with certain related property
as more fully described herein, being the Loan Assets as defined herein);
WHEREAS, it was a condition to the Trust Depositor's acquisition of the
Initial Loans from the Originator that the Originator make certain
representations and warranties regarding the Loan Assets for the benefit of the
Trust Depositor as well as the Trust;
WHEREAS, on the Closing Date the Trust Depositor will fund the Trust by
selling, conveying and assigning all its right, title and interest in such Loan
Assets and certain other assets to the Trust;
WHEREAS, the Trust is willing to purchase and accept assignment of the
Trust Assets from the Trust Depositor pursuant to the terms hereof; and
WHEREAS, the Servicer is willing to service the Loans for the benefit
and account of the Trust pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ACAS" has the meaning assigned such term in the preamble hereto.
"ACAS Transfer Agreement" means the ACAS Transfer Agreement, dated as
of the date hereof, between ACAS and the Trust Depositor.
"Addition Notice" means, with respect to any transfer of Substitute
Loans to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Loans from the Originator), a notice, which
shall be given at least 5 days prior to the related Subsequent Transfer Date,
identifying the Substitute Loans to be transferred, the Outstanding Principal
Balance of such Substitute Loans and the related Substitution Event (with
respect to an identified Loan or Loans then in the Loan Pool) to which such
Substitute Loan relates, with such notice to be signed both by the Trust
Depositor and the Originator.
"Additional Principal Amount" means, with respect to any Payment Date,
an amount equal to, but in no event less than zero, the excess of the Aggregate
Outstanding Principal Balance prior to any distribution on such day over the
Aggregate Outstanding Loan Balance as of the last Business Day of the related
Collection Period.
"Additional Servicing Fee" means an amount, in addition to the
Servicing Fee, necessary to induce a Successor Servicer to serve as Servicer
hereunder.
"Administration Agreement" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Trust, the Trust Depositor, the
Indenture Trustee and the Owner Trustee.
"Administrator" means American Capital Strategies, Ltd. or any
successor administrator under the Administration Agreement.
"Affiliate" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" (including the terms "controlling",
"controlled by" and "under common control with" when used with respect to any
specified Person means the possession, direct or indirect, of the power to vote
5% or more of the voting securities of such person or to direct or cause the
direction of the management and policies of such Person whether through the
ownership of voting securities, by contract or otherwise.
"Aggregate Outstanding Loan Balance" means, with respect to a Payment
Date, an amount equal to the aggregate remaining Outstanding Loan Balance of the
Loans as of the last day of the related Collection Period after giving effect to
Defaulted Loans, Prepaid Loans, Ineligible Loans and Excess Loans.
"Aggregate Outstanding Principal Balance" means, at any date of
determination, the sum of the Outstanding Principal Balances of each Class of
Notes outstanding on such date of determination.
2
"Agreement" means this Transfer and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Assignment" means each Assignment, substantially in the form of
Exhibit A relating to an assignment, transfer and conveyance of Loans and
related property by the Trust Depositor to the Trust.
"Available Amounts" means, as of any Payment Date, the sum of (i) all
amounts on deposit in the Collection Account as of the immediately preceding
Determination Date on account of Scheduled Payments due on or before, and
Prepayments received on or before, the last day of the Collection Period
immediately preceding such Payment Date (other than Excluded Amounts), (ii)
Recoveries on account of previously Defaulted Loans received as of the last day
of the immediately preceding Collection Period; (iii) Investment Earnings
credited to the Collection Account or the Reserve Fund as of the last day of the
immediately preceding Collection Period, (iv) any Prepayment Premiums and Late
Charges received on or before the last day of such Collection Period (provided
such late charges were included in the Loan's terms as of the applicable Cutoff
Date); (v) all amounts on deposit in the Reserve Fund, (vi) any amounts received
from guarantees of the Loans and (vii) proceeds of any of the foregoing.
"Backup Servicer" means the Person acting as Backup Servicer hereunder,
its successors in interest and any successor backup servicer hereunder.
"Backup Servicing Fee" has the meaning set forth in the fee letter,
dated as of the date hereof, among the Originator, the Trust Depositor, the
Trust and the Backup Servicer
"Business Day" means any day which is neither a Saturday or a Sunday,
nor another day on which banking institutions in the cities of Minneapolis,
Minnesota, Charlotte, North Carolina or New York, New York are authorized or
obligated by law, executive order, or governmental decree to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del Code 3801 et seq., as the same may be amended from time to time.
"Casualty Loss" means, with respect to any item of Collateral, the
loss, theft, damage beyond repair or governmental condemnation or seizure of
such item of Collateral.
"Certificate" means the $10.00 aggregate initial principal amount ACAS
Business Loan Trust 2000-1 representing a beneficial equity interest in the
Trust and issued pursuant to the Trust Agreement.
"Certificate Register" has the meaning specified in the Trust
Agreement.
"Certificateholder" means the registered holder of the Certificate.
"Class" means any of the group of Notes or the Certificate identified
herein as, as applicable, the Class A Notes, the Class B Notes, the Class C
Notes, or the Certificate.
3
"Class A Interest Amount" means, with respect to any Payment Date, an
amount equal to the product of (i) the Outstanding Principal Balance of the
Class A Notes as of the last day of the related Collection Period and (ii) the
applicable Class A Interest Rate for the related Interest Accrual Period.
"Class A Interest Rate" means the annual rate of interest payable with
respect to the Class A Notes, which shall be equal to 7.13625% for the first
Payment Date and thereafter shall be equal to LIBOR plus 0.45% per annum
(calculated on the basis of a year of 360 days and actual days elapsed in the
Interest Accrual Period).
"Class A Maturity Date" means July 20, 2011.
"Class A Noteholder" means the Person in whose name a Class A Note is
registered in the Note Register.
"Class A Notes" means the $69,200,000 aggregate initial principal
amount ACAS Business Loan Trust 2000-1, Class A Loan-Backed Notes, Series
2000-1, issued pursuant to the Indenture.
"Class B Accrued Payable" means, with respect to any Payment Date, the
sum of, for each preceding Payment Date, the excess, if any, of (i) the amount
that would have been calculated as the Class B Interest Amount on each such
preceding Payment Date if the calculation was made using clause (a) of the
definition of "Class B Interest Amount" only and clause (b) of the definition
was not used over (ii) the amount calculated as the Class B Interest Amount on
each such preceding Payment Date.
"Class B Interest Amount" means, with respect to any Payment Date, an
amount equal to the product of (i) the applicable Class B Interest Rate for the
related Interest Accrual Period and (ii) the lesser of (a) the Outstanding
Principal Balance of the Class B Notes as of the last day of the related
Collection Period and (b) the excess, if any, of (x) the Aggregate Outstanding
Loan Balance as of the last day of the related Collection Period over (y) the
Outstanding Principal Balance of the Class A Notes as of the last day of the
related Collection Period; PROVIDED, HOWEVER, that for purposes of this
definition in no event will the amount determined pursuant to clause (b) hereof
be less than zero.
"Class B Interest Rate" means the annual rate of interest payable with
respect to the Class B Notes, which shall be equal to 8.18625% for the first
Payment Date and thereafter shall be equal to LIBOR plus 1.50% per annum
(calculated on the basis of a year of 360 days and actual days elapsed in the
Interest Accrual Period).
"Class B Maturity Date" means July 20, 2011.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
4
"Class B Notes" means the $46,200,000 aggregate initial principal
amount ACAS Business Loan Trust 2000-1, Class B Loan-Backed Notes, Series
2000-1, issued pursuant to the Indenture.
"Class C Interest Amount" means, with respect to any Payment Date, an
amount equal to the amount received by the holder of the Class C Note pursuant
to Section 7.05(a) clause TWELFTH.
"Class C Maturity Date" means July 20, 2011.
"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Notes" means the $38,500,000 aggregate initial principal
amount ACAS Business Loan Trust 2000-1, Class C Loan-Backed Notes, Series
2000-1, issued pursuant to the Indenture.
"Closing Date" means December 20, 2000.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means the assets of each Obligor that have been pledged as
security for each Loan including but not limited to real and personal property,
accounts receivable, inventory, equipment and intellectual property rights.
"Collection Account" means the Trust Account so designated established
pursuant to Section 7.01.
"Collection Period" means (a) with respect to the first Payment Date,
the period from and including the Closing Date to but excluding the 10th day of
the calendar month in which such Payment Date occurs, and (b) with respect to
any subsequent Payment Date, the period from and including the 10th day of the
previous calendar month to but excluding the 10th day of the calendar month in
which such Payment Date occurs.
"Collections" means all payments received on or with respect to the
Loans in the Loan Pool or the related Collateral, including, without limitation,
Scheduled Payments, Prepayments, Prepayment Premiums, Recoveries and Late
Charges, all as related to amounts attributable to the Loans in the Loan Pool or
the related Collateral, but excluding any Excluded Amounts.
"Commission" means the United States Securities and Exchange
Commission.
"Computer Records" means the computer records generated by the Servicer
that provide information relating to the Loans and that were used by the
Originator in selecting the Loans conveyed to the Trust Depositor pursuant to
Section 2.01 (and any Substitute Loans conveyed to the Trust Depositor pursuant
to Section 2.04).
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"Contractual Obligation" means with respect to any Person, means any
provision of any securities issued by such Person or any indenture, mortgage,
deed of trust, contract, undertaking, agreement, instrument or other document to
which such Person is a party or by which it or any of its property is bound or
is subject.
"Corporate Trust Office" means, with respect to the Indenture Trustee
or Owner Trustee, as applicable, the office of the Indenture Trustee or Owner
Trustee at which at any particular time its corporate trust business shall be
principally administered, which offices at the date of the execution of this
Agreement are located at the addresses set forth in Section 13.04.
"CP Transaction" means the Loan Funding and Servicing Agreement, dated
as of March 31, 1999, among ACS Funding Trust I, the Servicer, the Investors
named therein, Variable Funding Capital Corporation, First Union Securities,
Inc. (f/k/a First Union Capital Markets Corp.), First Union National Bank and
Xxxxx Fargo Bank Minnesota, National Association (f/k/a Norwest Bank Minnesota,
National Association) and the transactions contemplated thereby.
"Credit and Collection Policy" means those credit, collection, customer
relation and service policies relating to the Loans and related Loan Files,
described in Exhibit K as the same may be amended or modified from time to time
in accordance with Section 5.17(g); and with respect to any Successor Servicer,
the collection procedures and policies of such person at the time such Person
becomes Successor Servicer.
"Custodian" means the Person designated as such under the Custodian
Agreement.
"Custodian Agreement" means the Custodian Agreement dated as of the
date hereof among the Custodian, the Servicer, the Trust Depositor, the Trust
and the Indenture Trustee.
"Custodian Fee" has the meaning set forth in the fee letter, dated as
of the date hereof, among the Originator, the Trust Depositor, the Trust and the
Custodian.
"Cutoff Date" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date, as applicable to the Loan or
Loans in question.
"Date of Processing" means, with respect to any transaction or
Collection, the date on which such transaction or Collection is first recorded
(and, in the case of a transaction or Collection related to a particular Loan,
identified as to such particular Loan) on the Originator's or Servicer's
computer master file of Loans (without regard to the effective date of such
recordation).
"Defaulted Loan" means a Loan in the Loan Pool with respect to which
there has occurred one or more of the following: (i) all or some portion of any
Scheduled Payment under the Loan is more than 120 days delinquent, (ii) an
Insolvency Event has occurred with respect to the related Obligor, (iii) the
related Obligor has suffered any material adverse change or (iv) the Servicer
has determined in its sole discretion, in accordance with its usual and
customary practices, that such Loan is not collectible.
6
"Definitive Notes" shall have the meaning specified in the Indenture.
"Delinquent " means, with respect to a Loan, that any payment or
portion thereof was not made at the time or in the amount required by the loan
terms and has not yet been received.
"Determination Date" means, with respect to any Payment Date, the third
Business Day prior to such Payment Date.
"Dollar" and "$" means lawful currency of the United States of America.
"Eligible Deposit Account" means either (a) a segregated account with a
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from Fitch and Xxxxx'x in one
of its short-term credit rating categories that signifies investment grade and
in the case of S&P, a commercial paper, short-term debt rating of "A-1+" and
long-term unsecured debt rating of "AA-".
"Eligible Investments" with respect to any Payment Date means
negotiable instruments or securities or other investments maturing on or before
such Payment Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) that,
as of any date of determination, mature by their terms on or prior to the
Payment Date immediately following such date of determination, and (c) that
evidence:
(i) direct obligations of, and obligations fully guaranteed as
to full and timely payment by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full
faith and credit of the United States of America);
(ii) demand deposits, time deposits or certificates of deposit
of depository institutions or trust companies incorporated under the
laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking or
depository institution authorities; PROVIDED, HOWEVER, that at the time
of the Trust's investment or contractual commitment to invest therein,
the commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from each
Rating Agency in the Highest Required Investment Category granted by
such Rating Agency, which, in the case of Fitch, shall be "F1+";
7
(iii) commercial paper, or other short term obligations,
having, at the time of the Trust's investment or contractual commitment
to invest therein, a rating in the Highest Required Investment Category
granted by each Rating Agency, which, in the case of Fitch, shall be
"AAA";
(iv) demand deposits, time deposits or certificates of deposit
that are fully insured by the FDIC and either have a rating on their
certificates of deposit or short-term deposits from Xxxxx'x and S&P of
"P-1" and "A-1+", respectively, and, if rated by Fitch, from Fitch of
"F1+/AAA";
(v) notes that are payable on demand or bankers' acceptances
issued by any depository institution or trust company referred to in
(ii) above;
(vi) investments in taxable money market funds or other
regulated investment companies having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category from Xxxxx'x, S&P and Fitch (if
rated by Fitch) or otherwise subject to satisfaction of the Rating
Agency Condition;
(vii) time deposits (having maturities of not more than 90
days) by an entity the commercial paper of which has, at the time of
the Trust's investment or contractual commitment to invest therein, a
rating of the Highest Required Investment Category granted by each
Rating Agency;
(viii) Eligible Repurchase Obligations with a rating
acceptable to the Rating Agencies, which, in the case of Fitch, shall
be "F1+" and in the case of S&P shall be "A-1+"; and
(ix) any negotiable instruments or securities or other
investments subject to satisfaction of the Rating Agency Condition.
The Indenture Trustee may purchase or sell to itself or an Affiliate,
as principal or agent, the Eligible Investments described above.
"Eligible Loan" means at any date of determination, each Loan with
respect to which each of the following is true:
(1) the Loan is valid and enforceable, except the enforcement may be
limited by insolvency, bankruptcy, moratorium, reorganization, or other similar
laws affecting enforceability of creditors' rights and the availability of
equitable remedies, and the Loan contains a clause that has the effect of
unconditionally obligating the Obligor to make periodic payments to the assignee
of the Loan, notwithstanding any rights the Obligor may have against the
assignor;
(2) the Loan is evidenced by a promissory note that has been duly
authorized and that
8
is in full force and effect and constitutes the legal, valid and binding
obligation of the Obligor of such Loan to pay the stated amount of the Loan and
interest thereon;
(3) the Loan was originated in accordance with the terms of the Credit
and Collection Policy and arose in the ordinary course of the Originator's
business from the loaning of money to the Obligor thereof;
(4) the Loan is not a Defaulted Loan and not Delinquent;
(5) the Obligor of such Loan has executed all appropriate documentation
required by the Originator;
(6) the Loan, together with the Loan File related thereto, is a
"general intangible", an "instrument", an "account", or "chattel paper" within
the meaning of the UCC of all jurisdictions that govern the perfection of the
security interest granted therein;
(7) all material consents, licenses, approvals or authorizations of, or
registrations or declarations with, any governmental authority required to be
obtained, effected or given in connection with the making of such Loan have been
duly obtained, effected or given and are in full force and effect;
(8) the Loan is denominated and payable only in United States dollars
in the United States;
(9) the Loan (other than the Loan with Auxi Health, Inc. as the
Obligor) bears some current interest, which is due and payable monthly or
quarterly;
(10) the Loan, together with the Loan File related thereto, does not
contravene in any material respect any applicable laws (including, without
limitation, laws, rules and regulations relating to usury, truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no party to the Loan
File related thereto is in material violation of any such applicable laws;
(11) the Loan, together with the related Loan File, is fully assignable
(except for limited restrictions relating to transfers to competitors with
regards to Loans to BIW Connector System, LLC, Cornell Companies, Inc. and The
New Piper Aircraft, Inc.), and if such Loan is secured by an interest in real
property, an assignment of mortgage has been delivered to the Indenture Trustee;
(12) the Loan was documented and closed in accordance with the Credit
and Collection Policy, including the relevant opinions and assignments, and
there is only one current original promissory note with respect to such Loan and
such promissory note has been delivered to the Indenture Trustee and is duly
endorsed;
(13) the Loan and all related Collateral are free of any Liens except
for Permitted Liens, and all filings and other actions required to perfect the
security interest of the Indenture
9
Trustee in the Originator's interest in the Collateral have been made or taken;
(14) the Loan has an original term to maturity of no more than 120
months, and is either fully amortizing in installments (which installments need
not be in identical amounts) over such term or the principal amount thereof is
due in a single installment at the end of such term;
(15) no right of rescission, set off, counterclaim, defense or other
material dispute has been asserted with respect to such Loan;
(16) any related Collateral with respect to such Loan is insured in
accordance with the Credit and Collection Policy;
(17) the Obligor with respect to such Loan is an Eligible Obligor;
(18) such Loan does not represent payment obligations relating to "put"
rights;
(19) the Loan is not a loan or extension of credit made by the
Originator or one of its subsidiaries to an Obligor for the purpose of making
any principal, interest (other than payment in kind interest) or other payment
on a loan to the same Obligor necessary in order to keep such loan from becoming
delinquent and this Loan is not being kept current by the Originator or one of
its Affiliates making any other loans to this Obligor;
(20) no provision of the Loan has been waived, altered or modified in
any way, except by instruments or documents contained in the files relating to
the Loan;
(21) with regard to the Loan relating to CL Holding, Inc. and Case
Logic, Inc. the Underlying Note evidencing the Loan has been issued in the name
of the Trust and received by the Custodian within fifteen (15) Business Days
after the Closing Date; and
(22) the Loan is an "eligible asset" as defined in Rule 3a-7 of the
Investment Company Act of 1940, as amended.
"Eligible Obligor" means on an day, any Obligor that satisfies each of
the following requirements at all times:
(1) such Obligor is not in the gaming, nuclear waste, bio-tech, oil and
gas or real estate industries;
(2) such Obligor is a legal operating entity, duly organized and
validly existing under the laws of its jurisdiction of organization;
(3) the business being financed by such Obligor has an operating
history of at least 60 months from the date of its incorporation or formation;
(4) such Obligor is not the subject of any insolvency event;
10
(5) such Obligor is not an affiliate of any other Obligor hereto (other
than as a result of being an affiliate of the Originator);
(6) no other Loan of such Obligor is delinquent for more than thirty
(30) days;
(7) such Obligor is not a Governmental Authority;
(8) such Obligor is in compliance with all material terms and
conditions of its Loan Documents;
(9) such Obligor's principal office and any related Collateral are
located in the United States; and
(10) such Obligor has an Eligible Risk Rating.
"Eligible Repurchase Obligations" means repurchase obligations with
respect to any security that is a direct obligation of, or fully guaranteed by,
the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clauses (c)(ii) and (c)(iv) of
the definition of Eligible Investments.
"Eligible Risk Rating" means on any date of determination, with respect
to a designated Obligor, a risk rating of "Grade 3" or "Grade 4."
"Event of Default" shall have the meaning specified in Section 5.01 of
the Indenture.
"Excess Loan", as of any date of determination, means each Loan
selected by the Servicer in accordance with Section 11.01 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.05, the removal of which pursuant to Section 11.01 and
the Originator's repurchase thereof or substitution of a Substitute Loan
therefor pursuant to Section 11.01, shall remedy such breach.
"Exchange Act" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.
"Excluded Amounts" means any collections with respect to repurchased
Loans.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Fee Event" shall have the meaning set forth in the Indenture.
"Fitch" means Fitch, Inc. or any successor thereto.
"Fixed Rate Loans" means Loans with a fixed interest rate.
11
"Floating Rate Loans" means Loans with a floating interest rate based
on the prime interest rate plus a spread.
"Governmental Authority" means with respect to any person, any nation
or government, any state or other political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such person.
"Grade 3" under the Originator's loan grading system, which ranks loans
based on its analysis of credit quality of the underlying assets, means that the
Obligor is performing as expected and the risk factors are neutral to favorable.
Loan risk is at an acceptable level that is similar to the risk at the time of
origination.
"Grade 4" under the Originator's loan grading system, which ranks loans
based on its analysis of credit quality of the underlying assets, means that the
Obligor is performing above expectations and the trends and risk factors are
generally favorable. Loans graded 4 involve the least amount of risk in the
Originator's portfolio.
"Highest Required Investment Category" means (i) with respect to
ratings assigned by Fitch (if such investment is rated by Fitch), F1+ for
short-term instruments and AAA for long-term instruments, (ii) with respect to
ratings assigned by Moody's, A2 or P-1 for one month instruments, A1 or P-1 for
three month instruments, Aa3 or P-1 for six month instruments and Aaa or P-1 for
instruments with a term in excess of six months and (iii) with respect to
ratings assigned by S&P, A-1+ for short-term instruments and AAA for long-term
instruments.
"Holder" means (i) with respect to a Certificate, the Person in whose
name such Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person at any date, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such person has not assumed or
otherwise become liable for the payment thereof.
"Indenture" means the Indenture, dated as of the date hereof, between
the Trust and the Indenture Trustee.
"Indenture Collateral" has the meaning given such term in the "granting
clause" of the Indenture.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its
12
successors in interest and any successor trustee under the Indenture.
"Indenture Trustee Fee" has the meaning set forth in the fee letter,
dated as of the date hereof, among the Originator, the Trust Depositor, the
Trust and the Indenture Trustee.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of each of the Trust, the Trust
Depositor or ACAS (ii) is not a director, officer or employee of any Affiliate
of any of the Trust, the Trust Depositor or ACAS (iii) is not a person related
to any officer or director of any of the Trust, the Trust Depositor or ACAS or
any of their respective Affiliates, (iv) is not a holder (directly or
indirectly) of more than 10% of any voting securities of any of the Trust, the
Trust Depositor or ACAS or any of their respective Affiliates, and (v) is not
connected with any of the Trust, the Trust Depositor or ACAS as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions; PROVIDED, HOWEVER, a Person that otherwise satisfies the
requirements clauses (i) through (v) but is a director, officer or manager of a
bankruptcy remote special purpose Affiliate of ACAS will be deemed to be
Independent for purposes hereof.
"Ineligible Loan" has the meaning specified in Section 11.01.
"Initial Aggregate Outstanding Loan Balance" means the Aggregate
Outstanding Loan Balance as of the Cut-Off Date of the Loans transferred to the
Trust as of the Closing Date.
"Initial Aggregate Outstanding Principal Balance" means, when used in
the context of a reference to an individual Class of Notes, the initial class
principal balance applicable to such Class as defined above, and otherwise
means, collectively, the sum of the Initial Class A Principal Balance, the
Initial Class B Principal Balance and the Initial Class C Principal Balance,
i.e., $153,900,000.
"Initial Class A Principal Balance" means $69,200,000.
"Initial Class B Principal Balance" means $46,200,000.
"Initial Class C Principal Balance" means $38,500,000.
"Initial Cutoff Date" means November 10, 2000.
"Initial Loans" means those Loans conveyed to the Trust on the Closing
Date.
"Insolvency Event" means, with respect to a specified Person, (a)
the filing of a decree or order for relief by a court having jurisdiction in
the premises in respect of such Person or any substantial part of its
property in an involuntary case under any applicable Insolvency Law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for
any substantial part of its property, or ordering the winding-up or
liquidation of such Person's affairs, and such decree or order shall remain
unstayed or undismissed and in effect for a period of 60 consecutive days; or
(b) the commencement by such person of a voluntary case under any applicable
Insolvency Law now or
13
hereafter in effect, or the consent by such person to the entry of an order
for relief in an involuntary case under such law, taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of this property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due, or the taking of action by such Person in furtherance of any of the
foregoing.
"Insolvency Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
"Insolvency Proceeds" has the meaning specified in Section 10.01.
"Insurance Policy" means, with respect to any Loan, an insurance policy
covering physical damage to or loss of the related Collateral.
"Insurance Proceeds" means, depending on the context, any amounts
payable or any payments made, to the Servicer under any Insurance Policy.
"Interest Accrual Period" means the period from and including the most
recent Payment Date to but excluding the following Payment Date, PROVIDED that
the initial Interest Accrual Period following the Closing Date shall be the
period from and including the Closing Date to but excluding the first Payment
Date following the Closing Date.
"Interest Collection Account" means a sub-account of the Collection
Account established pursuant to Section 7.01.
"Interest Collections" mean, with respect to any Collection Period, the
aggregate amount of (i) the payments received by the Servicer on the Loans
attributable to interest on such Loans including payments of capitalized
interest with respect to Payment-in-Kind Loans, (ii) all recoveries on Defaulted
Loans whether attributable to interest or principal, (iii) any Net Trust Swap
Receipts and (iv) the interest portion of all Prepayments.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Investment Earnings" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Collection Account and the
Reserve Fund, to be credited to the Collection Account on applicable Payment
Date pursuant to Section 7.03.
"Late Charges" means any late payment fees paid by Obligors in
accordance with the Servicer's customary policies.
"LIBOR" means as to any Payment Date, the arithmetic mean of the London
Interbank offered rate quotations for one month Eurodollar deposits, as
determined by the Indenture
14
Trustee on the related LIBOR Determination Date, in accordance with Section
7.06.
"LIBOR Determination Date" means the date that is a London Banking Day
immediately prior to the commencement of each related Interest Accrual Period.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"Liquidation Expenses" means, with respect to any Loan, the aggregate
amount of all out-of-pocket expenses reasonably incurred by the Servicer
(including amounts paid to any subservicer) and any reasonably allocated costs
of internal counsel, in each case in accordance with the Servicer's customary
procedures in connection with the foreclosure and disposition of any related
Collateral or the bankruptcy of an Obligor upon or after the expiration or
earlier termination or acceleration of such Loan and other out-of-pocket costs
related to the liquidation of any such Collateral, including the attempted
collection of any amount owing pursuant to such Loan if it is a Defaulted Loan,
but only to the extent gross recoveries with respect to such Loan provide funds
sufficient, after payment of all principal and accrued finance charges due with
respect to such Loan, to cover such expenses and costs.
"Liquidation Proceeds" means, with respect to a Defaulted Loan,
proceeds from the sale of the Collateral, proceeds of the related Insurance
Policy and any other recoveries with respect to such Defaulted Loan and the
related Collateral, net of Liquidation Expenses and amounts, if any, so received
that are required either to be refunded to the Obligor on such Loan or paid to a
third party other than the Loan.
"List of Loans" means the list identifying each Loan constituting part
of the Trust Assets, which list shall consist of the initial List of Loans
reflecting the Initial Loans transferred to the Trust on the Closing Date,
together with any Subsequent List of Loans amending the most current List of
Loans reflecting the Substitute Loans transferred to the Trust on the related
Subsequent Transfer Date (together with a deletion from such list of the related
Loan or Loans identified on the corresponding Addition Notice with respect to
which a Substitution Event has occurred), and which list in each case (a)
identifies by account number and Obligor name each Loan included in the Loan
Pool, and (b) sets forth as to each such Loan (i) the Outstanding Loan Balance
as of the applicable Cutoff Date, and (ii) the maturity date, and which list (as
in effect on the Closing Date) is attached to this Agreement as Exhibit G.
"Loan" means the payment obligations of each Obligor to the Originator
created under various loan agreements and evidenced by Underlying Notes,
transferred by the Originator to the Trust Depositor and by the Trust Depositor
to the Trust, and including both Initial Loans and Substitute Loans.
"Loan Assets" has the meaning assigned in Section 2.01 (and 2.04, as
applicable in the case of Substitute Loans).
15
"Loan Documents" means, with respect to any Loan, the related
promissory note and any related loan agreement, security agreement, mortgage,
assignment of Loans, all guarantees and continuation statements (including
amendments or modifications thereof) executed by the Obligor thereof or by
another person on the Obligor's behalf, and related promissory note and, for
each Loan secured by real property, an assignment of mortgage, and for all Loans
secured by a promissory note, an assignment in blank signed by an officer of the
Originator.
"Loan File" means, with respect to each Loan, the fully executed
original promissory note and any related loan agreement, security agreement,
mortgage, assignment of Loans, all guarantees, and UCC financing statements and
continuation statements (including amendments or modifications thereof) executed
by the Obligor thereof or by another Person on the Obligor's behalf in respect
of such Loan and related promissory note, including, without limitation, general
or limited guaranties and, for each Loan secured by real property an assignment
of mortgage, and for all Loans with a Note, an assignment (which may be by
allonge), in blank, signed by an officer of the Originator, and otherwise such
documents, if any, that the Servicer keeps on file in accordance with its
customary procedures and all other documents originally delivered to the
Originator or held by the Servicer with respect to any Loan; PROVIDED, THAT all
documents other than the promissory note along with any assignment (which may be
by allonge) constituting the Loan File may be copies of such documents.
"Loan Pool" as of any date means the Initial Loans and the Substitute
Loans (if any), other than any such Loans that (i) have been reconveyed by the
Trust to the Trust Depositor, and concurrently by the Trust Depositor to the
Originator, pursuant to Section 11.02 hereof, or (ii) have been paid (or
prepaid) in full.
"London Banking Day" means any day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
"Material Modification" means a termination or release (including
pursuant to prepayment), or an amendment, modification or waiver, or equivalent
similar undertaking or agreement, by the Servicer with respect to a Loan which
would not otherwise be permitted under the standards and criteria set forth in
Sections 5.08 and/or 5.09 hereof, as applicable.
"Maturity Date" means, as applicable, the Class A Maturity Date, Class
B Maturity Date or Class C Maturity Date.
"Monthly Report" has the meaning specified in Section 9.01.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor
thereto.
"Net Trust Swap Payment" means, with respect to each Payment Date, the
excess, if any, of (i) the monthly payment by the Trust to the Swap Counterparty
over (ii) the monthly payment by the Swap Counterparty to the Trust.
"Net Trust Swap Receipt" means, with respect to each Payment Date, the
excess, if any,
16
of (i) the monthly payment by the Swap Counterparty to the Trust over (ii) the
monthly payment by the Trust to the Swap Counterparty.
"Note" means any one of the notes of the Trust of any Class executed
and authenticated in accordance with the Indenture.
"Note Distribution Account" means the account established and
maintained as such pursuant to Section 7.01.
"Note Register" has the meaning given such term in Section 2.04 of the
Indenture.
"Obligor" means, with respect to any Loan, the Person or Persons
obligated to make payments with respect to such Loan, including any guarantor
thereof.
"Officer's Certificate" shall mean a certificate signed by any officer
of the Trust Depositor or the Servicer and delivered to the Owner Trustee or the
Indenture Trustee, as the case may be.
"One Month Index Maturity" has the meaning set forth in Section 7.06.
"Operating History" means with respect to any specified person, the
time since the date of such person's incorporation or formation that it has
continuously operated its business; PROVIDED, HOWEVER, the Operating History of
any person, newly formed as a result of a merger of two or more persons or as a
result of the acquisition of one or more persons by a newly formed person
("MERGED PARTIES") shall be based on the weighted average (by relative sales) of
the Operating Histories of the Merged Parties (excluding for such purposes,
entities that are created only for the purpose of being acquisition entities),
FOR EXAMPLE, if Corporation A with sales of $10 million has an Operating History
of four years and Corporation B with sales of $20 million has an Operating
History of eight years, merge to form NEWCO, the Operating History of NEWCO will
be 6.67 years.
"Opinion of Counsel" means a written opinion of counsel, who may be
outside counsel, or internal counsel (except with respect to federal securities
law (including the Trust Indenture Act) or tax law matters), for the Trust
Depositor or the Servicer and who shall be reasonably acceptable to the Owner
Trustee or the Indenture Trustee, as the case may be.
"Originator" means ACAS, in its capacity as Originator of a Loan under
this Agreement (including in respect of a Substitute Loan pursuant to a
Subsequent Purchase Agreement).
"Outstanding" has the meaning given such term in the Indenture.
"Outstanding Loan Balance" means, with respect to a Loan at any time,
the sum of the total remaining amounts of principal payable as of such time to
the Originator by the Obligor thereunder, exclusive of (a) interest payments and
(b) capitalized interest amounts, it being understood that any principal
previously covered by a Servicer Advance will be excluded from principal amounts
payable for purposes of this definition.
17
"Outstanding Principal Balance" means, with respect to a Class of Notes
as of any date of determination, the aggregate initial principal amount thereof
reduced by the aggregate amount of any distributions applied in reduction of
such principal amount.
"Owner Trustee" means the Person acting, not in its individual
capacity, but solely as Owner Trustee, under the Trust Agreement, its successors
in interest and any successor owner trustee under the Trust Agreement.
"Paying Agent" means as described in Section 3.03 of the Indenture and
Section 3.10 of the Trust Agreement.
"Payment Date" shall mean the twentieth day of each calendar month or,
if such twentieth day is not a Business Day, the next succeeding Business Day,
with the first such Payment Date hereunder occurring in January, 2001.
"Payment-in-kind Loans" shall mean Loans that provide for some or all
of current accrued interest to be capitalized and added to the outstanding
principal amount of the restated Loan.
"Permitted Liens" means (a) with respect to Loans in the Loan Pool:
(i) Liens for state, municipal and other local taxes if such
taxes shall not at the time be due and payable or if an entity shall
currently be contesting the validity thereof in good faith by
appropriate proceedings, (ii) Liens in favor of the Trust Depositor
created pursuant to the ACAS Transfer Agreement and transferred to the
Trust pursuant hereto, (iii) Liens in favor of the Trust created
pursuant to this Agreement, (iv) Liens in favor of the Indenture
Trustee created pursuant to the Indenture and/or this Agreement and (v)
Liens held by senior lenders with respect to the Loans listed on
EXHIBIT L;
and (b) with respect to the related Collateral:
(i) materialmen's, warehousemen's, mechanics' and other liens
arising by operation of law in the ordinary course of business for sums
not due or sums, that are being contested in good faith, (ii) Liens for
state, municipal and other local taxes if such taxes shall not at the
time be due and payable or if the Trust Depositor shall currently be
contesting the validity thereof in good faith by appropriate
proceedings, (iii) Liens in favor of the Trust Depositor created by the
Originator and transferred by the Trust Depositor to the Trust pursuant
to this Agreement, (iv) Liens in favor of the Trust created pursuant to
this Agreement and (v) Liens in favor of the Indenture Trustee created
pursuant to the Indenture and/or this Agreement; and (vi) Liens held by
senior lenders with respect to the Loans listed on EXHIBIT L.
"Person" means any individual, corporation, estate, partnership,
business trust, limited liability company, sole proprietorship, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or
18
political subdivision thereof or other entity.
"Placement Agency Agreement" means the Placement Agency Agreement,
dated December 18, 2000, among the Placement Agent, the Trust Depositor, the
Trust and ACAS.
"Placement Agent" means First Union Securities, Inc.
"Prepaid Loan" means any Loan that has terminated or been prepaid in
full prior to its scheduled expiration date, other than a Defaulted Loan.
"Prepayment" means any and all partial and full prepayments, including
any prepayment premiums, on a Loan (including, with respect to any Loan and any
Collection Period, any Scheduled Payment (or portion thereof)), that is due in a
subsequent Collection Period that the Servicer has received, and to the extent
permission therefor was necessary, expressly permitted the related Obligor to
make, in advance of its scheduled due date, Liquidation Proceeds and amounts
received in respect of Transfer Deposit Amounts.
"Prepayment Amount" has the meaning specified in Section 5.09.
"Prepayment Premiums" means any prepayment premiums paid by an Obligor
in connection with any Prepayment.
"Principal Collection Account" means a sub-account of the Collection
Account established pursuant to Section 7.01.
"Principal Collections" means, with respect to any Collection Period,
the sum of, without duplication: (i) the aggregate amount of payments received
by the Servicer on the Loans attributable to principal on such Loans; (ii) the
principal portion of any Loan repurchased by the Originator; (iii) the principal
portion of all Prepayments and (iv) all other amounts received with respect to
the Loans that are not Interest Collections.
"Private Placement Memorandum" has the meaning given such term in the
Placement Agency Agreement.
"Qualified Eligible Investments" means Eligible Investments acquired by
the Indenture Trustee in its name and in its capacity as Indenture Trustee at
the written direction of the Trust, which are held by the Indenture Trustee in
the Collection Account or the Reserve Fund and with respect to which (a) the
Indenture Trustee has noted its interest therein on its books and records, and
(b) the Indenture Trustee has purchased such investments at the written
direction of the Trust for value without notice of any adverse claim thereto
(and, if such investments are securities or other financial assets or interests
therein, within the meaning of Section 8-102 of the UCC as enacted in Minnesota,
without acting in collusion with a securities intermediary in violating such
securities intermediary's obligations to entitlement holders in such assets,
under Section 8-504 of such UCC, to maintain a sufficient quantity of such
assets in favor of such entitlement holders), and (c) either (i) such
investments are in the possession of the Indenture Trustee, or (ii) such
19
investments, (A) if certificated securities and in bearer form, have been
delivered to the Indenture Trustee, or in registered form, have been delivered
to the Indenture Trustee and either registered by the issuer in the name of the
Indenture Trustee or endorsed by effective endorsement to the Indenture Trustee
or in blank; (B) if uncertificated securities, the ownership of which has been
registered to the Indenture Trustee on the books of the issuer thereof (or
another person, other than a securities intermediary, either becomes the
registered owner of the uncertified security on behalf of the Indenture Trustee
or, having previously become the registered owner, acknowledges that it holds
for the Indenture Trustee); or (C) if securities entitlements (within the
meaning of Section 8-102 of the UCC as enacted in Minnesota) representing
interests in securities or other financial assets (or interests therein) held by
a securities intermediary (within the meaning of said Section 8-102), a
securities intermediary indicates by book entry that a security or other
financial asset has been credited to the Indenture Trustee's securities account
with such securities intermediary. Any such Qualified Eligible Investment may be
purchased by or through the Indenture Trustee or any of its Affiliates acting at
the written direction of the Trust.
"Qualified Institution" means (a) the corporate trust department of the
Indenture Trustee, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) (A) that has either (1)
a long-term unsecured debt rating acceptable to the Rating Agencies, which, in
the case of S&P, shall be "AA-" or (2) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating Agencies, which, in the
case of S&P, shall be "A-1+" (B) the parent corporation, if such parent
corporation guarantees the obligations of the depository institution, of which
has either (1) a long-term unsecured debt rating acceptable to the Rating
Agencies, which, in the case of S&P, shall be "AA-" or (2) a short-term
unsecured debt rating or certificate of deposit rating acceptable to the Rating
Agencies, which, in the case of S&P, shall be "A-1+" or (C) otherwise satisfies
the Rating Agency Condition, and (ii) whose deposits are insured by the FDIC and
satisfies the Rating Agency Condition.
"Rating Agency" means each of S&P, Xxxxx'x and Fitch, so long as such
Persons maintain a rating on the Class A Notes and the Class B Notes; and if any
of S&P, Xxxxx'x or Fitch no longer maintains a rating on the Class A Notes and
the Class B Notes, such other nationally recognized statistical rating
organization selected by the Trust Depositor.
"Rating Agency Condition" means, with respect to any action or series
of related actions or proposed transaction or series of related proposed
transactions, that each Rating Agency shall have notified the Trust Depositor
and the Owner Trustee and the Indenture Trustee in writing that such action or
series of related actions or the consummation of such proposed transaction or
series of related transactions will not result in a Ratings Effect.
"Ratings Effect" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
20
"Record Date" means, with respect to a Payment Date, (i) for Book-Entry
Notes, the calendar day immediately preceding a Payment Date and (ii) if
Definitive Notes are issued and for the Class C Notes, the last Business Day of
the preceding calendar month.
"Recoveries" means any and all recoveries on account of a Defaulted
Loan, including, without limitation, any and all cash proceeds realized from the
sale of collateral, Insurance Proceeds, amounts representing late fees unrelated
to Servicer Advances and penalties, net of reimbursable collection expenses and
Liquidation Expenses. Collection expenses and Liquidation Expenses are
reimbursable to the Servicer only to the extent recoveries on a Loan provide
funds sufficient after payment of all principal and interest due with respect to
such Loan, to cover related collection and Liquidation Expenses occurred by the
Servicer.
"Reference Banks" means leading banks selected by the Indenture Trustee
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market.
"Released Amounts" means, with respect to any payment or collection
received with respect to any Loan on any Business Day (whether such payment or
collection is received by the Servicer, the Owner Trustee or the Trust
Depositor), an amount equal to that portion of such payment or collection
constituting Excluded Amounts.
"Required Holders" means (i) prior to the payment in full of the Class
A Notes and the Class B Notes, the Class A Noteholders and Class B Noteholders
evidencing more than 66 2/3% of the aggregate Outstanding Principal Balance of
all Class A Notes and Class B Notes outstanding and (ii) from and after the
payment in full of the Class A Notes and the Class B Notes, Class C Noteholders
evidencing more than 66 2/3% of the aggregate Outstanding Principal Balance of
all Class C Notes outstanding.
"Required Reserve Amount" means, with respect to a Payment Date, an
amount equal to the sum of (i) the Outstanding Loan Balance of all Loans that
are 60 days or more delinquent and (ii) two (2) times the sum of the current
Class A Interest Amount and Class B Interest Amount.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"Reserve Fund" means the Reserve Fund established and maintained
pursuant to Section 7.01 hereof.
"Reserve Fund Initial Deposit" means the product of (a) the sum of the
Outstanding Principal Balance of the Class A Notes and Class B Notes as of the
Closing Date, (b) the weighted average interest rate of the Class A Interest
Rate and the Class B Interest Rate as of the Closing Date (weighted by the
Outstanding Principal Balance of each class of the Class A Notes
21
and Class B Notes) and (c) the quotient of 60 divided by 360.
"Responsible Officer" means, with respect to the Owner Trustee, any
officer in its Corporate Trust Administration Department (or any similar group
of a successor Owner Trustee) and with respect to the Indenture Trustee has the
meaning given to it in the Indenture.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"Scheduled Payment" means, with respect to any Loan, the monthly or
quarterly or semi-annual or annual rent or financing (whether interest,
principal or principal and interest) payment scheduled to be made by the related
Obligor under the terms of such Loan after the related Cutoff Date and any such
payment received after the related Cutoff Date; it being understood that
Scheduled Payments do not include any Excluded Amounts.
"Securities" means the Notes and the Certificate, or any of them.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securityholders" means the Holders of the Notes or the Certificate.
"Servicer" means initially ACAS, or its successor, until any Servicer
Transfer hereunder and thereafter means the Successor Servicer appointed
pursuant to Article VIII below with respect to the duties and obligations
required of the Servicer under this Agreement.
"Servicer Advance" means, with respect to any Payment Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Payment Date in respect of Scheduled Payments pursuant to Section 5.14.
"Servicer Default" shall have the meaning specified in Section 8.01.
"Servicing Fee" has the meaning specified in Section 5.18.
"Servicing Fee Percentage" means 1.00%.
"Servicer Transfer" has the meaning assigned in Section 8.02(a).
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Indenture Trustee by the Servicer, as the same may be amended from time to
time.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (b) such Person is able to realize upon its
Property and
22
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (c)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in business or a transaction, and is
not about to engage in a business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subsequent Cutoff Date" means the date specified as such for
Substitute Loans in the related Subsequent Transfer Agreement.
"Subsequent List of Loans" means a list, in the form of the initial
List of Loans delivered on the Closing Date, but listing each Substitute Loan
transferred to the Trust pursuant to the related Subsequent Transfer Agreement.
"Subsequent Purchase Agreement" means, with respect to any Substitute
Loans, the agreement between the Originator and the Trust Depositor pursuant to
which the Originator will transfer the Substitute Loans to the Trust Depositor,
the form of which is attached to hereto as Exhibit J.
"Subsequent Transfer Agreement" means the agreement described in
Section 2.04 hereof, the form of which is attached hereto as Exhibit I.
"Subsequent Transfer Date" means any date on which Substitute Loans are
transferred to the Trust.
"Substitute Loan" means a Loan that is (a) transferred to the Trust
under Section 2.04 with respect to which a related Substitution Event has
occurred with respect to a Loan or Loans then held in the Loan Pool and
identified in the related Addition Notice and (b) becomes part of the Loan Pool.
"Substitute Loan Qualification Conditions" means, with respect to any
Substitute Loan being transferred to the Trust pursuant to Section 2.04, the
accuracy of each of the following statements as of the related Cutoff Date for
such Loan:
(a) the aggregate Outstanding Loan Balance of such Substitute
Loan is not less than that of the Loan identified on the related
Addition Notice as the Loan to be released by the Trust to the Trust
Depositor and reconveyed to the Originator in exchange for such
Substitute Loan;
(b) the remaining maturity of the Substitute Loan is less than
or equal to the remaining maturity of the Loan identified on the
related Addition Notice as the Loan to be released by the Trust to the
Trust Depositor and reconveyed to the Originator in exchange for such
Substitute Loan;
(c) the current coupon on such Substitute Loan is not less
than the current coupon on the Loan identified on the related Addition
Notice as the Loan to be released
23
by the Trust to the Trust Depositor and reconveyed to the Originator in
exchange for such Substitute Loan;
(d) the total coupon (inclusive of any payment in kind
component) of the Substitute Loan is greater than or equal to the total
coupon on the Loan identified on the related Addition Notice as the
Loan to be released by the Trust to the Trust Depositor and reconveyed
to the Originator in exchange for such Substitute Loan;
(e) the Obligor of such Substitute Loan is not already an
Obligor of any Loan owned by the Trust;
(f) no adverse selection procedure shall have been employed in
the selection of such Substitute Loan from the Originator's portfolio;
(g) all actions or additional actions (if any) necessary to
perfect the security interest and assignment of such Substitute Loan
and related Collateral to the Trust Depositor, Trust, and Indenture
Trustee shall have been taken as of or prior to the Subsequent Transfer
Date;
(h) the maturity date for the last Scheduled Payment due under
such Substitute Loan is not later than June 30, 2009;
(i) the weighted average life of such Loan is less than or
equal to the Loan being replaced;
(j) for Prepaid Loans only, prior to such substitution the
Originator has received written confirmation from the Rating Agencies
(which shall respond to the Originator within five (5) Business Days
after receiving written confirmation from the Originator of its
intention to substitute a Loan) that the proposed substitution will not
result in a reduction or withdrawal of the rating on the Notes;
provided, however, that any failure by each of the Rating Agencies to
respond to the Originator shall be deemed to be non-approval by the
Rating Agencies and
(k) the Substitute Loan has a grade of at least equal to the
grade that the Loan being replaced had as of the date of its conveyance
to the Trust.
"Substitution Event" shall have occurred if a Loan then held in the
Trust and identified in the related Addition Notice is either (a) a Prepaid
Loan, (b) a Loan that becomes subject to a Material Modification, (c) a
Defaulted Loan, (d) an Excess Loan or (e) the subject of a breach of a
representation or warranty under this Agreement or other provision, which breach
or other provision, in the absence of a substitution of a Substitute Loan for
such Loan pursuant to Section 2.04, would require the payment of a Transfer
Deposit Amount to the Trust in respect of such Loan pursuant to Section 11.01;
PROVIDED, HOWEVER, that no Substitution Event shall be deemed to occur under
clause (b) or (c) to the extent Loans having initial aggregate Outstanding Loan
Balance of 10% or greater or three (3) Loans exceed 15% of the initial Aggregate
Outstanding Loan Balance or greater of the Initial Aggregate Outstanding Loan
Balance have
24
previously been substituted for under such clauses and PROVIDED FURTHER, that no
Substitution Event shall be deemed to occur under clauses (a), (d) or (e) to the
extent Loans having initial aggregate Outstanding Loan Balance of 20% or greater
of the Initial Aggregate Outstanding Loan Balance have previously been
substituted under such clauses.
"Successor Servicer" has the meaning given such term in Section
8.02(b).
"Swap" has the meaning set forth in the Indenture.
"Swap Breakage Costs" means for any Swap, any amount payable by the
Trust Depositor or the Trust for the early termination of that Swap or any
portion thereof.
"Swap Counterparty" has that meaning set forth in the Indenture.
"Swap Guarantor" means ACAS.
"Swap Guaranty Requirements" has the meaning given such term in Section
14.01.
"Tax Opinion" means, with respect to any action, an Opinion of Counsel
to the effect that, for federal income tax purposes, (i) following such action
the Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) following such action the Trust will
be disregarded as a separate entity from the Trust Depositor, and (iii) such
action will not affect the tax characterization as debt of the Class A Notes and
the Class B Notes of any outstanding Class issued by the Trust for which an
Opinion of Counsel has been provided that such Notes are debt.
"Telerate Page 3750" means the display page currently so designated on
the Dow Xxxxx Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices) and
"Reference Banks" means leading banks selected by the Indenture Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.
"Transaction Documents" means this Agreement, the Indenture, the Trust
Agreement, the Administration Agreement, the ACAS Transfer Agreement, any
Subsequent Transfer Agreement, any Subsequent Purchase Agreement and the
Placement Agreement.
"Transfer Date" means the Business Day immediately preceding each
Payment Date.
"Transfer Deposit Amount" means, with respect to each Ineligible Loan
or Excess Loan, on any date of determination, the sum of the Outstanding Loan
Balance of such Loan, together with accrued interest thereon through such date
of determination at the interest rate provided for thereunder, and any
outstanding Servicer Advances thereon that have not been waived by the Servicer
entitled thereto.
"Trust" means the trust created by the Trust Agreement and funded
pursuant to this Agreement, consisting of the Trust Assets.
25
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) including, without limitation, the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.
"Trust Accounts" means, collectively, the Collection Account, the
Reserve Fund and the Note Distribution Account, or any of them.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of the date hereof, between the Trust Depositor and the Owner Trustee.
"Trust Assets" has the meaning given to such term in Section 2.01(b)
hereof (and in Section 2.04(a) hereof in respect of Substitute Loans and related
assets transferred to the Trust pursuant to Subsequent Transfer Agreements).
"Trust Depositor" has the meaning assigned such term in the preamble
hereunder, or any successor entity thereto.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"Trustees" means the Owner Trustee and the Indenture Trustee, or any of
them individually as the context may require.
"UCC" means the Uniform Commercial Code as enacted in Maryland;
PROVIDED, HOWEVER, in the event that, by reason of mandatory provisions of law,
any and all of the attachment, perfection or priority of the Lien of the Trust
in and to the Trust Assets or the Lien of the Indenture Trustee in and to the
Indenture Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than the State of Maryland, the term UCC shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"UCC Filing Locations" means the States of Minnesota, Maryland and
Delaware.
"Uncollectible Advance" means with respect to any Determination Date
and any Loan, the amount, if any, advanced by the Servicer pursuant to Section
5.14 which the Servicer has as of such Determination Date determined in good
faith will not be ultimately recoverable by the Servicer.
"Underlying Note" means the promissory note of an Obligor evidencing a
Loan.
"United States" means the United States of America.
"Unreimbursed Servicer Advances" means, at any time, the amount of all
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of
26
such time pursuant to Sections 7.01 or 7.05 and which the Servicer has
determined in its sole discretion are Uncollectible Advances, and with respect
to which the Servicer has given a written certification to such effect to each
Trustee.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
SECTION 1.02 USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means "including
without limitation."
SECTION 1.03 SECTION REFERENCES.
All Section references, unless otherwise indicated, shall be to
Sections in this Agreement.
SECTION 1.04 CALCULATIONS.
Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360-day year and the
actual days elapsed in the relevant period and will be carried out to at least
three decimal places.
SECTION 1.05 ACCOUNTING TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States.
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF LOAN ASSETS
SECTION 2.01 CREATION AND FUNDING OF TRUST; TRANSFER OF LOAN ASSETS.
(a) The Trust shall be created pursuant to the terms and conditions of
the Trust Agreement, upon the execution and delivery of the Trust Agreement and
the filing by the Owner Trustee of an appropriately completed Certificate of
Trust (as defined in the Trust Agreement) under the Business Trust Statute. The
Trust Depositor, as settlor of the Trust, shall fund and convey assets to the
Trust pursuant to the terms and provisions hereof. The Trust shall be
administered pursuant to the provisions of this Agreement, the Administration
Agreement and the Trust Agreement for the benefit of the Noteholders and
Certificateholder. The Owner Trustee
27
is hereby specifically recognized by the parties hereto as empowered to conduct
business dealings on behalf of the Trust in accordance with the terms hereof and
of the Trust Agreement.
(b) Subject to and upon the terms and conditions set forth herein, the
Trust Depositor hereby sells, transfers, assigns, sets over and otherwise
conveys to the Trust, for a purchase price consisting of $84,174,044.88 in cash
(less placement expenses and certain other expenses associated with the initial
offer and sale of the Notes the proceeds of which represent the consideration
paid by the Trust herein) and the Certificate of the Trust in the original
certificate balance of $10.00, all the right, title and interest of the
Originator in and to (items (i) -(vi) below, being collectively referred to
herein as the "LOAN ASSETS"):
(i) the Initial Loans, and all monies due or to
become due in payment of such Loans on and after the Initial
Cutoff Date, any Prepayment Amounts, any Prepayment Premiums,
any payments in respect of a casualty or early termination,
and any Recoveries received with respect thereto, but
excluding any Excluded Amounts;
(ii) the Collateral related to such Loans (to the
extent the Originator, other than solely in its capacity as
collateral agent under any loan agreement with an Obligor, has
been granted a lien thereon), including the security interest
of the Trust Depositor in such Collateral and all proceeds
from any sale or other disposition of such Collateral (but
subject to the exclusion and release herein of Excluded
Amounts);
(iii) the Loan Files;
(iv) all payments made or to be made in the future
with respect to such Loans or the Obligor thereunder under any
guarantee or similar credit enhancement with respect to such
Loans;
(v) all Insurance Proceeds with respect to each such
Loan; and
(vi) all income from and proceeds of the foregoing.
In addition to the Loan Assets, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust the remittances, deposits
and payments made into the Trust Accounts from time to time, amounts in the
Trust Accounts from time to time (and any investments of such amounts) and all
proceeds and products of the foregoing, which together with the Loan Assets
constitute the corpus of the Trust and are referred to as the "TRUST ASSETS").
(c) The Originator and the Trust Depositor acknowledge that the
representations and warranties of the Originator in Sections 3.01, 3.02, 3.03,
3.04 and 3.05 will run to and be for the benefit of the Trust and the Trustees
and the Trust and the Trustees may enforce directly without joinder of Trust
Depositor, the repurchase obligations of the Originator with respect to breaches
of such representations and warranties as set forth herein and in Section 11.01.
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(d) The sale, transfer, assignment, set-over and conveyance of the
Trust Assets by the Trust Depositor to the Trust pursuant to this Agreement does
not constitute and is not intended to result in a creation or an assumption by
the Trust Depositor or the Trust of any obligation of the Originator in
connection with the Loan Assets, or any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligor, if any,
not financed by the Originator, or (1) any taxes, fees, or other charges imposed
by any Governmental Authority and (2) any insurance premiums that remain owing
with respect to any Loan at the time such Loan is sold hereunder.
(e) The Originator, Trust Depositor and Trust intend and agree that (i)
the transfer of the Loan Assets to the Trust Depositor and the transfer of the
Trust Assets to the Trust are intended to be a sale, conveyance and transfer of
ownership of the Loan Assets and Trust Assets, as the case may be, rather than
the mere granting of a security interest to secure a borrowing and (ii) such
Loan Assets and Trust Assets shall not be part of the Originator's or the Trust
Depositor's estate in the event of a filing of a bankruptcy petition or other
action by or against such Person under any Insolvency Law. In the event,
however, that notwithstanding such intent and agreement, such transfers are
deemed to be of a mere security interest to secure indebtedness, the Originator
shall be deemed to have granted the Trust Depositor and the Trust Depositor
shall be deemed to have granted the Trust, as the case may be, a perfected first
priority security interest in such Loan Assets or Trust Assets respectively and
this Agreement shall constitute a security agreement under applicable law,
securing the repayment of the purchase price paid hereunder and the obligations
and/or interests represented by the Securities, in the order and priorities, and
subject to the other terms and conditions of, this Agreement, the Indenture and
the Trust Agreement, together with such other obligations or interests as may
arise hereunder and thereunder in favor of the parties hereto and thereto.
If any such transfer of the Loan Assets is deemed to be the mere
granting of a security interest to secure a borrowing, the Trust Depositor may,
to secure the Trust Depositor's own borrowing under this Agreement (to the
extent that the transfer of the Loan Assets thereunder is deemed to be a mere
granting of a security interest to secure a borrowing) repledge and reassign (1)
all or a portion of the Loan Assets pledged to Trust Depositor by the Originator
and with respect to which the Trust Depositor has not released its security
interest at the time of such pledge and assignment, and (2) all proceeds
thereof. Such repledge and reassignment may be made by Trust Depositor with or
without a repledge and reassignment by Trust Depositor of its rights under any
agreement with the Originator, and without further notice to or acknowledgment
from the Originator. The Originator waives, to the extent permitted by
applicable law, all claims, causes of action and remedies, whether legal or
equitable (including any right of setoff), against Trust Depositor or any
assignee of Trust Depositor relating to such action by Trust Depositor in
connection with the transactions contemplated by this Agreement.
29
SECTION 2.02 CONDITIONS TO TRANSFER OF TRUST ASSETS TO TRUST.
On or before the Closing Date, the Originator or the Trust Depositor,
as applicable, shall deliver or cause to be delivered to the Owner Trustee and
Indenture Trustee each of the documents, certificates and other items as
follows:
(i) A certificate of an officer of the Originator
substantially in the form of Exhibit C hereto;
(ii) Opinions of counsel for the Originator and the Trust
Depositor substantially in the form of Exhibits D and E hereto (and
including as an addressee thereof each Rating Agency);
(iii) Copies of resolutions of the Board of Directors of the
Originator or of the Executive Committee of the Board of Directors of
the Originator approving the execution, delivery and performance of
this Agreement and the transactions contemplated hereunder, certified
in each case by the Secretary or an Assistant Secretary of the
Originator;
(iv) Officially certified recent evidence of due incorporation
and good standing of the Originator under the laws of the state of
Delaware;
(v) The initial List of Loans, certified by the manager of the
Trust Depositor, together with an Assignment substantially in the form
of Exhibit A (along with the delivery of any instruments as required
under Section 2.06 below);
(vi) A certificate of an officer of the Trust Depositor
substantially in the form of Exhibit B hereto;
(vii) A letter from Ernst & Young, or another nationally
recognized accounting firm, addressed to the Originator and the Trust
Depositor, stating that such firm has reviewed a sample of the Initial
Loans and performed specific procedures for such sample with respect to
certain loan terms and that identifies those Initial Loans that do not
conform;
(viii) Copies of resolutions of the Board of Directors of the
Servicer or of the Executive Committee of the Board of Directors of the
Servicer and copies of resolutions of the members of the Trust
Depositor approving the execution, delivery and performance of this
Agreement and the other Transaction Documents to which any of them is a
party, as applicable, and the transactions contemplated hereunder and
thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Servicer and the Trust Depositor;
(ix) Officially certified, recent evidence of due organization
and good standing of the Trust Depositor under the laws of Delaware;
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(x) Evidence of proper filing with appropriate offices in the
UCC Filing Locations in the states of Delaware and Maryland of UCC
financing statements executed by the Originator, as debtor, naming the
Trust Depositor as secured party (and the Owner Trustee as assignee)
and identifying the Loan Assets as collateral; and evidence of proper
filing with appropriate officer in the UCC Filing Locations in the
states of Delaware and Maryland of UCC financing statements executed by
the Trust Depositor, as debtor, naming the Owner Trustee as secured
party (and the Indenture Trustee as assignee) and identifying the Trust
Assets as collateral; and evidence of proper filing with appropriate
officers in the UCC Filing Locations in the states of Delaware,
Maryland and Minnesota of UCC financing statements executed by the
Trust and naming the Indenture Trustee as secured party and identifying
the Indenture Collateral, as collateral;
(xi) An Officer's Certificate listing the Servicer's Servicing
Officers;
(xii) Evidence of deposit in the Collection Account of all
funds received with respect to the Initial Loans after the Initial
Cutoff Date to the date two days preceding the Closing Date, together
with an Officer's Certificate from the Servicer to the effect that such
amount is correct;
(xiii) Evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Trust;
(xiv) A fully executed Trust Agreement;
(xv) A fully executed Administration Agreement;
(xvi) A fully executed Indenture;
(xvii) A fully executed ACAS Transfer Agreement;
(xviii) An opinion of Xxxxxx & Xxxxxx to the effect that for
federal income tax purposes, the Class A Notes and Class B Notes will
be characterized as debt and the Trust will not be characterized as an
association (or publicly traded partnership) taxable as a corporation;
and
(xix) An opinion of Xxxxxx & Xxxxxx to the effect that for
Maryland tax purposes, the Trust will not be subject to the Maryland
Corporation Income Tax or the Maryland Corporation Business Tax.
SECTION 2.03 ACCEPTANCE BY OWNER TRUSTEE.
On the Closing Date, if the conditions set forth in Section 2.02 have
been satisfied, the Trust shall issue to, or upon the order of, the Trust
Depositor the Certificate representing ownership of a beneficial interest in
100% of the Trust and the Trust shall issue, and the Indenture Trustee shall
authenticate, to, or upon the order of, the Trust Depositor the Notes secured by
the Indenture Collateral. The Owner Trustee hereby acknowledges its acceptance,
on
31
behalf of the Trust, of the Trust Assets, and declares that it shall maintain
such right, title and interest in accordance with the terms of this Agreement
and the Trust Agreement upon the trust herein and therein set forth.
SECTION 2.04 CONVEYANCE OF SUBSTITUTE LOANS.
(a) Subject to Sections 2.01(d) and (e) above and the satisfaction of
the conditions set forth in paragraph (c) below, at the option of the Trust
Depositor, the Originator may at its option (but shall not be obligated to)
sell, transfer, assign, set over and otherwise convey to the Trust Depositor (by
delivery of an executed Subsequent Purchase Agreement substantially in the form
attached as Exhibit J hereto), without recourse other than as expressly provided
herein and therein (and the Trust Depositor shall be required to purchase
through payment by exchange of one or more related Loans released by the Trust
to the Trust Depositor on the Subsequent Transfer Date), all the right, title
and interest of the Originator in and to (the property in clauses (i)-(vi)
below, upon such transfer, becoming part of the "LOAN ASSETS"):
(i) the Substitute Loans identified in the related
Addition Notice, and all monies received in payment of such
Substitute Loans on and after the related Subsequent Cutoff
Dates, any Prepayment Amounts, any Prepayment Premiums, any
payments in respect of a casualty or early termination, and
any Recoveries received with respect thereto, but excluding
any Excluded Amounts;
(ii) the Collateral related to such Loans (to the
extent the Originator, other than solely in its capacity as
collateral agent under any loan agreement with an Obligor, has
been granted a lien thereon), including the security interest
of the Trust Depositor in such Collateral and all proceeds
from any sale or other disposition of such Collateral (but
subject to the exclusion and release herein of Excluded
Amounts);
(iii) the Loan Files;
(iv) all payments made or to be made in the future
with respect to such Loans or the Obligor thereunder under any
guarantee or similar credit enhancement with respect to such
Loans;
(v) all Insurance Proceeds with respect to each such
Loan; and
(vi) all income from and proceeds of the foregoing.
(b) Subject to Sections 2.01(d) and (e) above and the conditions set
forth in paragraph (c) below, the Trust Depositor shall sell, transfer, assign,
set over and otherwise convey to the Trust, without recourse other than as
expressly provided herein and therein, (i) all the right, title and interest of
the Trust Depositor in and to the Substitute Loans purchased pursuant to Section
2.04(a) above, and (ii) all other rights and property interests consisting of
Loan Assets related to such Substitute Loans (the property in clauses (i)-(ii)
above, upon such transfer, becoming part of the "TRUST ASSETS").
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(c) The Originator shall transfer to the Trust Depositor and the Trust
Depositor shall transfer to the Trust the Substitute Loans and the other
property and rights related thereto described in paragraphs (a), in the case of
the Originator, or (b), in the case of the Trust Depositor, above only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date (and the delivery of a related Addition Notice by the
Trust Depositor shall be deemed a representation and warranty by the Trust
Depositor and of the Originator, that such conditions have been or will be, as
of the related Subsequent Transfer Date, satisfied):
(i) the Trust Depositor shall have provided the Owner
Trustee and the Indenture Trustee with a timely Addition
Notice complying with the definition thereof contained herein,
which Notice shall in any event be no later than five days
prior to the date of addition;
(ii) there shall have occurred, with respect to each
such Substitute Loan, a corresponding Substitution Event with
respect to one or more Loans then in the Loan Pool;
(iii) the Substitute Loan(s) being conveyed to the
Trust, satisfy the Substitute Loan Qualification Conditions;
(iv) the Originator shall have delivered to the Trust
Depositor a duly executed written assignment in substantially
the form of Exhibit J hereto (the "SUBSEQUENT PURCHASE
AGREEMENT"), which shall include a Subsequent List of Loans
listing the Substitute Loans;
(v) the Trust Depositor shall have delivered to the
Owner Trustee a duly executed written assignment (including an
acceptance by the Owner Trustee) in substantially the form of
Exhibit I hereto (the "SUBSEQUENT TRANSFER AGREEMENT"), which
shall include a Subsequent List of Loans listing the
Substitute Loans;
(vi) the Trust Depositor shall have deposited or
caused to be deposited in the Collection Account all
Collections received with respect to the Substitute Loans on
or after the related Subsequent Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither
the Originator nor the Trust Depositor was insolvent nor will
either of them have been made insolvent by such transfer nor
is either of them aware of any pending insolvency;
(viii) no selection procedures believed by the
Originator or the Trust Depositor to be adverse to the
interests of the Noteholders or Certificateholder shall have
been utilized in selecting the Substitute Loans;
(ix) each of the representations and warranties made
by the Originator
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pursuant to Sections 3.02, 3.03(b)(i), (ii) and (iv), 3.04,
and 3.05 applicable to the Substitute Loans shall be true and
correct as of the related Subsequent Transfer Date; PROVIDED,
HOWEVER, that, (a) with respect to the representation and
warranty made by the Originator in Section 3.05(a), such
representation and warranty shall only apply to a Loan that is
being substituted for a Loan that is not an Eligible Loan and
(b) with respect to the representations and warranties made by
the Originator in Sections 3.03(b)(iv) and 3.05 shall be
determined as if such Substitute Loan were included in the
Loan Pool as of the Initial Cutoff Date;
(x) the Originator shall, at its own expense, on or
prior to the Subsequent Transfer Date, indicate in its
Computer Records that ownership of the Substitute Loans
identified on the Subsequent List of Loans in the Subsequent
Transfer Agreement has been sold to the Trust through the
Trust Depositor pursuant to this Agreement;
(xi) prior to such substitution the Originator has
received written confirmation from the Rating Agencies (which
shall respond to the Originator within five (5) Business Days
after receiving written notice from the Originator of its
intention to substitute a Loan) that the proposed substitution
will not result in a reduction or withdrawal of the rating on
the Notes; provided, however, that any failure by each of the
Rating Agencies to respond to the Originator shall be deemed
to be a non-approval by the Rating Agencies; and
(xii) the Substitute Loan has a grade of at least
equal to the grade that the Loan that is being replaced had as
of the date of its conveyance to the Trust.
SECTION 2.05 RELEASE OF RELEASED AMOUNTS.
(a) The Indenture Trustee hereby agrees to release to the Trust from
the Trust Assets, and the Trust hereby agrees to release to the Trust Depositor,
an amount equal to the Released Amounts immediately upon identification thereof
and upon receipt of an Officer's Certificate of the Servicer, which release
shall be automatic and shall require no further act by the Indenture Trustee or
the Trust, PROVIDED that the Indenture Trustee or Owner Trustee shall execute
and deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested by the Trust Depositor in
writing. Upon such release, such Released Amounts shall not constitute and shall
not be included in the Trust Assets.
(b) Immediately upon the release to the Trust Depositor by the
Indenture Trustee of the Released Amounts, the Trust Depositor hereby
irrevocably agrees to release to the Originator such Released Amounts, which
release shall be automatic and shall require no further act by the Trust
Depositor, PROVIDED that the Trust Depositor shall execute and deliver such
instruments of release and assignment, or otherwise confirming the foregoing
release of any Excluded Amounts, as may be reasonably requested by the
Originator.
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SECTION 2.06 DELIVERY OF INSTRUMENTS.
The Originator and the Trust Depositor shall deliver possession of all
"instruments" (within the meaning of Article 9 of the UCC) not constituting part
of "chattel paper" (within the meaning of such Article 9) that evidence any
Loan, including all Underlying Notes and the Loan Files to the Owner Trustee on
behalf of the Trust on the Closing Date (or, if applicable, on the relevant
Subsequent Transfer Date), in each case endorsed in blank without recourse.
Pursuant to Section 3.05 of the Indenture, the Trust is required to deliver such
instruments to the Indenture Trustee as pledgee under the Indenture.
Accordingly, the Trust hereby authorizes and directs the Originator and the
Trust Depositor to deliver possession of all such instruments and the Loan Files
to the Indenture Trustee on behalf of and for the account of the Trust, and
agrees that such delivery shall satisfy the condition set forth in the first
sentence of this Section 2.06. The Originator and the Trust Depositor shall also
identify on the List of Loans (including any deemed amendment thereof associated
with any Substitute Loans), whether by attached schedule or marking or other
effective identifying designation, all Loans that are or are evidenced by such
instruments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Originator makes, and upon execution of each Subsequent Purchase
Agreement is deemed to make, the following representations and warranties, on
which the Trust Depositor will rely in conveying the Loan Assets on the Closing
Date (and on any Subsequent Transfer Date) to the Trust, and on which the Trust,
the Noteholders and Certificateholder will rely. The Trust Depositor
acknowledges that such representations and warranties are being made by the
Originator for the benefit of the Trust.
Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Loan Assets to the Trust. The repurchase obligation or substitution obligation
of the Originator set forth in Section 11.01 constitutes the sole remedy
available for a breach of a representation or warranty of the Originator set
forth in Sections 3.01, 3.02, 3.03, 3.04 or 3.05 of this Agreement.
Notwithstanding the foregoing, the Originator shall not be deemed to be remaking
any of the representations set forth in Section 3.03 on a Subsequent Transfer
Date with respect to the Substitute Loans, as such representations relate solely
to the composition of the Initial Loans conveyed on the Closing Date.
SECTION 3.01 REPRESENTATIONS AND WARRANTIES REGARDING THE ORIGINATOR.
By its execution of this Agreement and each Subsequent Purchase
Agreement, the Originator represents and warrants that:
(a) ORGANIZATION AND GOOD STANDING. The Originator is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its
35
organization and has the requisite corporate power to own or lease its assets
and to transact the business in which it is currently engaged. The Originator is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or otherwise) of the Originator or
Trust Depositor. The Originator is properly licensed in each jurisdiction to the
extent required by the laws of such jurisdiction in order to originate, and (if
the Originator is to be the Servicer) service the Loans in accordance with the
terms of this Agreement.
(b) AUTHORIZATION; BINDING OBLIGATION. The Originator has the power and
authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the Originator is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Originator is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Originator is a
party. This Agreement and the other Transaction Documents to which the
Originator is a party constitute the legal, valid and binding obligation of the
Originator enforceable in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
(c) NO CONSENT REQUIRED. The Originator is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the Originator is a party.
(d) NO VIOLATIONS. The Originator's execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Originator is
a party will not violate any provision of any existing law or regulation or any
order or decree of any court or the Certificate of Incorporation or Bylaws of
the Originator, or constitute (with or without notice or lapse of time or both)
a material breach of any mortgage, indenture, contract or other agreement to
which the Originator is a party or by which the Originator or any of the
Originator's properties may be bound.
(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or, to the
knowledge of the Originator, threatened, against the Originator or any of its
respective properties or with respect to this Agreement or any other Transaction
Document to which the Originator is a party that, if adversely determined, would
in the reasonable opinion of the Originator be expected to have a material
adverse effect on the business, properties, assets or condition (financial or
other) of the Originator or the transactions contemplated by this Agreement or
any other Transaction Document to which the Originator is a party.
(f) PLACE OF BUSINESS; NO CHANGES; NO TRADE NAMES. The Originator's
chief
36
executive office (within the meaning of Article 9 of the UCC) is as set forth in
Section 13.04 below. The Originator has not changed its name as set forth
herein, whether by amendment of its Certificate of Incorporation, by
reorganization or otherwise, and has not changed the location of its chief
executive office, within the four months preceding the Closing Date (or
Subsequent Transfer Date, as applicable, except in accordance with the
requirements of Section 4.03). The legal name of the Originator is as set forth
in this Agreement and, within the five years preceding the Closing Date, the
Originator has not used, and currently does not use, any trade names, fictitious
names, assumed names, or "doing business as" names.
(g) NO BULK SALES. The execution, delivery and performance of this
Agreement by the Originator does not require compliance with any "bulk sales"
laws by the Originator.
(h) SOLVENCY. The Originator on each date of and, after giving effect
to the transfer of the Loans and any Substitute Loans, as the case may be, to
the Trust Depositor pursuant to the transfer agreement, dated as of the date
hereof, between the Originator and the Trust Depositor, is Solvent.
(i) USE OF PROCEEDS. No proceeds of the sale of any Initial Loan or
Substitute Loan hereunder received by the Originator will be used by the
Originator to purchase or carry any "margin stock" as such term is defined in
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
(j) NOT AN INVESTMENT COMPANY. The Originator is exempt from
registration as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(k) TAXES. To the best of the Originator's knowledge, (i) the
Originator has filed all tax returns required to be filed in the normal course
of its business and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from the Originator or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings, (ii) no tax lien has been filed with respect
thereto, and (iii) no claim is being asserted with respect to any such tax, fee
or other charge.
(l) SALE TREATMENT. The Originator has treated the transfer of Loan
Assets to the Trust Depositor for all purposes (other than sale treatment for
financial accounting purposes) as a sale and purchase on all of its relevant
books, records, financial statements and other applicable documents, except to
the extent applicable tax laws require otherwise.
(m) MARKING OF FILES. The Originator will have, at its own expense,
prior to the close of business on the Closing Date, (i) indicated in its
Computer Records that ownership of the Loans transferred by it to the Trust
Depositor and identified on the List of Loans have been sold to the Trust
Depositor and (ii) cause to be affixed to the original of each promissory note
and the copy of each Loan Agreement the following legend:
This Loan Agreement/Note is subject to a security interest granted
to the ACAS Business Loan Trust 2000-1. UCC-1 Financing Statements
covering this
37
Loan/Note have been filed with the Secretary of State of the States
of Maryland, Delaware and Minnesota. Such lien will be released
only in connection with appropriate filings in such offices.
Consequently, potential purchasers of this Loan Agreement/Note must
refer to such filings to determine whether such lien has been
released.
(n) SECURITY INTEREST. The Originator has granted a security interest
(as defined in the UCC) to the Trust Depositor in the Loan Assets that is
enforceable in accordance with applicable law upon execution and delivery of
this Agreement. Upon the filing of UCC-1 financing statements naming the Trust
Depositor as secured party and the Originator as debtor and the delivery of the
Underlying Notes to the Trust Depositor or its agent, the Trust Depositor shall
have a first priority perfected security interest in the Loan Assets (except for
any Permitted Liens). All filings (including, without limitation, such UCC
filings) as are necessary in any jurisdiction to perfect the interest of the
Trust Depositor in the Loan Assets have been made.
(o) SECURITY INTEREST IN COLLATERAL. The Collateral securing the Loans
is located in the states listed on Schedule 1 to this Agreement. The Trust
Depositor has a perfected security interest in the Originator's interest in the
Collateral (to the extent that the Originator, other than solely in its capacity
as collateral agent under any loan agreement with an Obligor, has been granted a
lien thereon) and, upon the sale, transfer and assignment of the Loan Assets
hereunder, the Trust will have a perfected security interest in such interest in
the Collateral.
(p) MORTGAGES. If a Loan is secured by real property and the
Originator, other than solely in its capacity as collateral agent under any loan
agreement with an Obligor, is the mortgagee, the mortgage has been assigned by
the Originator to the Trust Depositor and by the Trust Depositor to the Trust
and the assignment of the mortgage has been delivered to the Custodian.
(q) SELECTION PROCEDURES. No selection procedures determined by the
Originator to be materially adverse to the interests of the Trust Depositor were
utilized by the Originator in selecting the Loans to be sold, assigned,
transferred, set-over and otherwise conveyed hereunder.
SECTION 3.02 REPRESENTATIONS AND WARRANTIES REGARDING EACH LOAN AND AS
TO CERTAIN LOANS IN THE AGGREGATE.
The Originator represents and warrants (x) with respect to subsections
(a)-(b) below, as to each Loan as of the execution and delivery of this
Agreement and as of the Closing Date, and as of each Subsequent Transfer Date
with respect to each Substitute Loan, and (y) with respect to subsections
(c)-(d) below, as to the Loan Pool in the aggregate as of the Closing Date, and
as of each Subsequent Transfer Date with respect to Substitute Loans (after
giving effect to the addition of such Substitute Loans to the Loan Pool), that:
(a) LIST OF LOANS. The information set forth in the List of Loans (as
the same may be amended or deemed amended in respect of a conveyance of
Substitute Loans on a Subsequent Transfer Date) is true, complete and correct as
of the applicable Cutoff Date.
38
(b) ELIGIBLE LOAN. Such Loan satisfies the criteria for the definition
of Eligible Loan set forth in this Agreement as of the date of its conveyance
hereunder.
(c) NO FRAUD. Each Loan was originated without any fraud or material
misrepresentation by the Originator or, to the best of the Originator's
knowledge, on the part of the Obligor.
(d) LOANS SECURED BY REAL PROPERTY. Less than 40% of the Aggregate
Outstanding Loan Balance of the Loan Pool consists of Loans principally secured
by real property.
SECTION 3.03 REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL LOANS
IN THE AGGREGATE.
The Originator represents and warrants, as of the Closing Date, that:
(a) AMOUNTS. The Aggregate Outstanding Loan Balance of the Loans as of
the Initial Cutoff Date equals the sum of the principal balance of the Class A
Notes, the Class B Notes, the Class C Notes and the Certificate on the Closing
Date.
(b) CHARACTERISTICS. The Initial Loans have the following additional
characteristics: (i) no Loan has a remaining maturity of more than 105 months;
(ii) the final scheduled Payment Date on the Loan with the latest maturity is
not later than June 30, 2009; (iii) no Loan was originated after the Initial
Cutoff Date; (iv) not more than 24.8% of the Initial Loans (as measured by the
Aggregate Outstanding Loan Balance) provide for Scheduled Payments due on a
basis other than monthly.
SECTION 3.04 REPRESENTATIONS AND WARRANTIES REGARDING THE LOAN FILES.
The Originator represents and warrants as of the Closing Date with
respect to the Initial Loans (or as of the Subsequent Transfer Date, with
respect to Substitute Loans), that (i) immediately prior to such date (as
applicable), a collateral custodian under the CP Transaction had possession of
each original Underlying Note and a copy of the Loan and the related complete
Loan File, and there were no other custodial agreements relating to the same in
effect except for a custodial agreement between ACAS and ACS Funding Trust I;
(ii) each of such documents which is required to be signed by the Obligor has
been signed by the Obligor in the appropriate spaces; (iii) all blanks on any
form have been properly filled in and each form has otherwise been correctly
prepared; and (iv) the complete Loan File for each Loan is in the possession of
the Custodian.
SECTION 3.05 REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS OF
INITIAL LOANS.
The Originator represents and warrants as of the Closing Date, as to
the composition of the Initial Loans in the Loan Pool as of the Initial Cutoff
Date, that:
(a) the sum of the Outstanding Loan Balances of Obligors that
are in the same
39
industry (by SIC code) shall not exceed 5%;
(b) the sum of the Outstanding Loan Balances of the ten
largest Obligors shall not exceed 39.4%; and
(c) the sum of the Outstanding Loan Balances of Obligors that
have their principal executive offices in the same State of the United
States shall not exceed 16%.
SECTION 3.06 REPRESENTATIONS AND WARRANTIES REGARDING THE
TRUST DEPOSITOR.
By its execution of this Agreement and each Subsequent
Transfer Agreement, the Trust Depositor represents and warrants to the Trust,
the Indenture Trustee, the Noteholders and the Certificateholder that:
(a) CONFIRMATION OF THE ORIGINATOR'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties set forth in Section 3.01, Section 3.02,
Section 3.03, Section 3.04 and Section 3.05 of this Agreement and in the ACAS
Transfer Agreement are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware and has the power to own its assets and to transact the
business in which it is currently engaged. The Trust Depositor is duly qualified
to do business as a foreign entity and is in good standing in each jurisdiction
in which the character of the business transacted by it or properties owned or
leased by it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Trust Depositor or the Trust.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust Depositor
has the power and authority to make, execute, deliver and perform this Agreement
and the other Transaction Documents to which it is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which it is a party, and to create the Trust and cause it to make,
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust to be created. This Agreement and each Subsequent Transfer
Agreement, if any, shall effect a valid sale, transfer and assignment of the
Trust Assets from the Trust Depositor to the Trust, enforceable against the
Trust Depositor and creditors of and purchasers from the Trust Depositor. This
Agreement and the other Transaction Documents to which the Trust Depositor is a
party constitute the legal, valid and binding obligation of the Trust Depositor
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by applicable Insolvency Laws and general principles of equity,
whether considered in a suit at law or in equity.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery,
40
performance, validity or enforceability of this Agreement or the other
Transaction Documents to which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated hereby
and thereby, will not violate any Requirement of Law applicable to the Trust
Depositor, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Trust Depositor is a party or by which the Trust
Depositor or any of the Trust Depositor's properties may be bound, or result in
the creation or imposition of any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind upon any of its properties
pursuant to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.
(f) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Trust Depositor threatened, against the Trust Depositor or any
of its properties or with respect to this Agreement, the other Transaction
Documents to which it is a party or the Securities (1) that, if adversely
determined, would in the reasonable judgment of the Trust Depositor be expected
to have a material adverse effect on the business, properties, assets or
condition (financial or otherwise) of the Trust Depositor or the Trust or the
transactions contemplated by this Agreement or the other Transaction Documents
to which the Trust Depositor is a party or (2) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the
Certificate or Notes.
(g) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" laws by the Trust
Depositor.
(h) SOLVENCY. The Trust Depositor, at the time of and after giving
effect to each conveyance of Trust Assets hereunder, is Solvent on and as of the
date thereof.
(i) TAXES. The Trust Depositor has filed or caused to be filed all tax
returns which, to its knowledge, are required to be filed and has put all taxes
shown to be due and payable on such returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any amount
of tax due, the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the books of the
Trust Depositor); no tax lien has been filed and, to the Trust Depositor's
knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.
(j) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole place of
business (within the meaning of Article 9 of the UCC) is as set forth in Section
13.04 below. The Trust Depositor has not changed its name, whether by amendment
of its certificate of organization, by reorganization or otherwise, and has not
changed the location of its place of business, within the four months preceding
the Closing Date.
41
(k) NOT AN INVESTMENT COMPANY. The Trust Depositor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (or the Trust Depositor is exempt from all provisions of such act).
(l) SALE TREATMENT. The Trust Depositor has treated the transfer of
Loan Assets to the Trust Depositor for all purposes (including financial
accounting purposes) as a sale and purchase on all of its relevant books,
records, financial statements and other applicable documents, except to the
extent applicable tax laws require otherwise.
(m) SECURITY INTEREST. The Trust Depositor has granted a security
interest (as defined in the UCC) to the Trust in the Loan Assets that is
enforceable in accordance with applicable law upon execution and delivery of
this Agreement. Upon the filing of UCC-1 financing statements naming the Trust
as secured party and the Trust Depositor as debtor and the delivery of the
Underlying Note related to the Loan Assets duly endorsed to the Indenture
Trustee, the Indenture Trustee shall have a first priority perfected security
interest in the Loan Assets (except for Permitted Liens). All filings
(including, without limitation, such UCC filings) as are necessary in any
jurisdiction to perfect the interest of both the Indenture Trustee and the Trust
in the Loan Assets have been made. Such representations speak as of the
execution and delivery of this Agreement and as of the Closing Date in the case
of the Initial Loans, and as of the applicable Subsequent Transfer Date in the
case of the Substitute Loans, but shall survive the sale, transfer and
assignment of the Loans to the Trust.
(n) NO LIENS. The Trust Depositor owns each Loan Asset to be sold by it
hereunder free and clear of any Liens except as provided herein, and upon the
sale, transfer or assignment hereunder, the Trust shall (i) become the owner of
each Loan Asset then existing or thereafter arising, free and clear of any Lien
except as provided herein or (ii) acquire a first priority perfected security
interest in such Loan Asset. No effective financing statement or other
instrument similar in effect covering any Loan Asset or the Collections with
respect thereto shall at any time be on file in any recording office except such
as may be filed in favor of the Trust relating to this Agreement or otherwise as
provided under this Agreement.
(o) VALUE GIVEN. The cash payments received by the Trust Depositor in
respect of the purchase price of each Loan sold hereunder constitutes reasonably
equivalent value in consideration for the transfer to the Trust of such Loan
under this Agreement, such transfer was not made for or on account of an
antecedent debt owed by the Originator to the Trust Depositor, and such transfer
was not and is not voidable or subject to avoidance under any Insolvency Law.
SECTION 3.07 REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholder that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Servicer is
duly qualified to do business as a foreign corporation and
42
is in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or otherwise) of the
Servicer or the Trust. The Servicer is properly licensed in each jurisdiction to
the extent required by the laws of such jurisdiction to service the Loans in
accordance with the terms hereof.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power and
authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party.
This Agreement and the other Transaction Documents to which the Servicer is a
party constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by Insolvency Laws and general principles of equity, whether
considered in a suit at law or in equity.
(c) NO CONSENT REQUIRED. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any Governmental Authority in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement and the other Transaction Documents to which the Servicer is a
party.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party
by the Servicer will not violate any Requirements of Law applicable to the
Servicer, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Servicer is a party or by which the Servicer or
any of the Servicer's properties may be bound, or result in the creation of or
imposition of any security interest, lien, pledge, preference, equity or
encumbrance of any kind upon any of its properties pursuant to the terms of any
such mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement, or any other Transaction Document
to which the Servicer is a party that, if adversely determined, would in the
reasonable judgment of the Servicer be expected to have a material adverse
effect on the business, properties, assets or condition (financial or otherwise)
of the Servicer or the Trust or the transactions contemplated by this Agreement
or any other Transaction Document to which the Servicer is a party.
(f) REPORTS. All reports, certificates and other written information
furnished by the Servicer with respect to the Loans are correct in all material
respects.
43
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01 CUSTODY OF LOANS.
The contents of each Loan File shall be held in the custody of the
Custodian under the Custodian Agreement for the benefit of, and as agent for,
the Indenture Trustee.
SECTION 4.02 FILING.
On or prior to the Closing Date, the Originator, Trust Depositor and
Servicer shall cause the UCC financing statement(s) referred to in Section
2.02(x) hereof to be filed, and from time to time the Servicer shall take and
cause to be taken such actions and execute such documents as are necessary or
desirable or as the Owner Trustee or Indenture Trustee (acting at the direction
of the Required Holders) may reasonably request to perfect and protect the
Trust's first priority perfected security interest in the Trust Assets against
all other persons, including, without limitation, the filing of financing
statements, amendments thereto and continuation statements, the execution of
transfer instruments and the making of notations on or taking possession of all
records or documents of title.
SECTION 4.03 NAME CHANGE OR RELOCATION.
(a) During the term of this Agreement, none of the Originator, the
Servicer, the Trust Depositor or the Trust shall change its name, identity or
structure or relocate its chief executive office without first giving at least
30 days' prior written notice to the Owner Trustee and the Indenture Trustee.
(b) If any change in either the Servicer's, the Originator's or the
Trust Depositor's name, identity or structure or other action would make any
financing or continuation statement or notice of ownership interest or lien
relating to any Loan Asset seriously misleading within the meaning of applicable
provisions of the UCC or any title statute, the Servicer and/or the Originator,
no later than five days after the effective date of such change, shall file such
amendments as may be required to preserve and protect the Trust's interests in
the Trust Assets and the proceeds thereof. In addition, neither the Originator,
the Servicer nor the Trust Depositor shall change the place of its chief
executive office (within the meaning of Article 9 of the UCC) unless it has
first taken such action as is advisable or necessary to preserve and protect the
Trust's interest in the Trust Assets. Promptly after taking any of the foregoing
actions, the Servicer shall deliver to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel reasonably acceptable to the Owner Trustee and the
Indenture Trustee stating that, in the opinion of such counsel, all financing
statements or amendments necessary to preserve and protect the interests of the
Owner Trustee in the Trust Assets have been filed, and reciting the details of
such filing.
44
SECTION 4.04 CHIEF EXECUTIVE OFFICE.
During the term of this Agreement, and subject to the other terms and
provisions herein relating to changes in location, the Originator will maintain
its chief executive office in one of the States of the United States.
SECTION 4.05 COSTS AND EXPENSES.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Trustees' and Trust's right, title and interest in and to
the Loan Assets (including, without limitation, the security interest in the
Collateral related thereto and the security interests provided for in the
Indenture).
SECTION 4.06 SALE TREATMENT.
The Trust Depositor shall treat the transfer of Trust Assets made
hereunder for all purposes (including financial accounting purposes) as a sale
and purchase on all of its relevant books, records, financial statements and
other applicable documents. Notwithstanding the preceding sentence, for federal
income tax purposes the transfer of Trust Assets by the Trust Depositor
hereunder shall not be treated as a sale and purchase for federal income tax
purposes so long as the Trust is disregarded as a separate entity pursuant to
Treasury Regulations Section 301.7701-3(b)(1)(ii).
SECTION 4.07 SEPARATENESS FROM TRUST DEPOSITOR.
The Originator agrees to take or refrain from taking or engaging in
with respect to the Trust Depositor, as applicable, each of the actions or
activities specified in the "substantive consolidation" opinion of Xxxxxxx and
Xxxxxx (including any certificates of the Originator attached thereto) delivered
on the Closing Date, upon which the conclusions therein are based.
ARTICLE V
SERVICING OF LOANS
SECTION 5.01 APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY FOR LOAN
ADMINISTRATION.
ACAS is hereby appointed as Servicer (as contemplated in Article IV
hereof) pursuant to this Agreement. ACAS accepts the appointment and agrees to
act as the Servicer pursuant to this Agreement.
The Servicer will have the sole obligation to manage, administer,
service and make collections on the Loans and perform or cause to be performed
all contractual and customary undertakings of the holder of the Loans to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents
45
necessary or appropriate in the opinion of the Owner Trustee to enable the
Servicer to carry out its servicing and administrative duties hereunder. The
Servicer is hereby appointed the servicer hereunder until such time as any
Servicer Transfer may be effected under Article VIII.
SECTION 5.02 GENERAL DUTIES.
The Servicer will service, administer and enforce the Loans in the Loan
Pool on behalf of the Trust and will have full power and authority to do any and
all things in connection with such servicing and administration which it deems
necessary or desirable and as shall not contravene the provisions of this
Agreement. The Servicer will manage, service, administer, and make collections
on the Loans in the Loan Pool with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable loans
that it services for itself or others. The Servicer's duties will include
collection and posting of all payments, responding to inquiries of Obligors
regarding the Loans in the Loan Pool, investigating delinquencies, accounting
for collections, furnishing monthly and annual statements with respect to
collections and payments in accordance with Article IX hereof and with its
customary standards, policies and procedures, and using its best efforts to
maintain the perfected first priority security interest of the Indenture Trustee
in the Trust Assets. The Servicer will follow its customary standards, policies,
and procedures and will have full power and authority, acting alone (and
consistent with its customary standards, policies and procedures, in its own
name), to do any and all things in connection with such managing, servicing,
administration, and collection, including, without limitation, litigation that
it deems necessary or desirable.
If the Servicer commences a legal proceeding to enforce a Defaulted
Loan pursuant to Section 5.15 or commences or participates in a legal proceeding
(including a bankruptcy proceeding) relating to or involving a Loan in the Loan
Pool, the Trust will be deemed to have automatically assigned such Loan to the
Servicer immediately prior to commencement of any such legal proceeding, for
purposes of commencing or participating in any such proceeding as a party or
claimant, and the Servicer is authorized and empowered by the Trust, pursuant to
this Section 5.02, to execute and deliver, on behalf of itself and the Trust,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with any
such proceedings. If in any enforcement suit or legal proceeding it is held that
the Servicer may not enforce a Loan on the ground that it is not a real party in
interest or a holder entitled to enforce the Loan, then the Owner Trustee will,
at the Servicer's expense and direction, take steps on behalf of the Trust to
enforce the Loan, including bringing suit in the Trust's name.
SECTION 5.03 [RESERVED]
SECTION 5.04 DISPOSITION UPON TERMINATION OF LOAN.
Upon the termination of a Loan included in the Loan Pool as a result of
a default by the Obligor thereunder, and upon any such Loan becoming a Defaulted
Loan, the Servicer will use commercially reasonable efforts to dispose of any
related Collateral for a purchase price equal to the fair market value thereof
as reasonably determined by the Servicer.
46
SECTION 5.05 SUBSERVICERS.
The Servicer may enter into servicing agreements with one or more
subservicers (including any Affiliate of the Servicer) to perform all or a
portion of the servicing functions on behalf of the Servicer; PROVIDED that the
Servicer shall remain obligated and be liable to the Trust for servicing and
administering the Loans in the Loan Pool in accordance with the provisions of
this Agreement without diminution of such obligation and liability by virtue of
the appointment of such subservicer, to the same extent and under the same terms
and conditions as if the Servicer alone were servicing and administering such
Loans. The fees and expenses of the subservicer (if any) will be as agreed
between the Servicer and its subservicer and neither the Owner Trustee, the
Trust, the Indenture Trustee nor the Holders will have any responsibility
therefor. All actions of a subservicer taken pursuant to such a subservicer
agreement will be taken as an agent of the Servicer with the same force and
effect as though performed by the Servicer.
SECTION 5.06 FURTHER ASSURANCE.
The Owner Trustee and the Indenture Trustee will, at the written
request of the Servicer, furnish the Servicer, and the Servicer will furnish any
subservicer, with any powers of attorney and other documents necessary or
appropriate to enable the Servicer or a subservicer, as applicable, to carry out
its servicing and administrative duties under this Agreement, the forms of which
documents shall be prepared by the Servicer and submitted for execution to the
Owner Trustee or the Indenture Trustee, as the case may be. The Servicer shall
not, nor shall the Servicer permit any sub-servicer to, initiate any action in
the Indenture Trustee's name if such action were to require the Indenture
Trustee to become registered to do business in any state in which it was not
already registered and without both obtaining the Indenture Trustee's written
consent and indicating the Servicer's or such sub-servicer's representative
capacity.
SECTION 5.07 NOTICE TO OBLIGORS.
The Servicer will not be required to notify any Obligor that such
Obligor's Loan, or any security interest in such Loan or related Collateral, has
been sold, transferred, assigned, or conveyed pursuant to this Agreement;
PROVIDED that, in the event that the Servicer resigns or is replaced, then if
the place for payment pursuant to any Loan is changed, the Successor Servicer
must give each related Obligor prompt written notice of the appointment of the
Successor Servicer and the place to which such Obligor should make payments
pursuant to each such Loan.
SECTION 5.08 COLLECTION EFFORTS; MODIFICATION OF LOANS.
(a) The Servicer will make reasonable efforts to collect all payments
called for under the terms and provisions of the Loans in the Loan Pool as and
when the same become due, and will follow those collection procedures which it
follows with respect to all comparable loans that it services for itself or
others.
(b) The Servicer may, subject to Sections 5.09 and 5.10, at the request
of an Obligor and at the Servicer's option, waive, modify or otherwise vary any
other provision of a Loan in
47
accordance with its customary and usual credit and collection practices;
PROVIDED, that no such waiver, modification or variance shall be used to
circumvent the Required Reserve Amount and shall (except as provided in Sections
5.09, 5.10 and 5.15), have a material adverse effect on the Noteholders.
SECTION 5.09 PREPAID LOAN.
The Servicer may, at its option and in accordance with its customary
and usual credit and collection practices, agree to permit a Loan in the Loan
Pool that is not otherwise contractually prepayable by its terms to (a) prepay
in part or (b) become a Prepaid Loan; PROVIDED that if the Originator is acting
as the Servicer hereunder, the Servicer will not permit the early termination or
full prepayment of such a Loan unless (i) such early termination or full
prepayment would not result in the Trust receiving an amount (the "PREPAYMENT
AMOUNT") less than the sum of (A) the Outstanding Loan Balance on the date of
such prepayment plus any accrued and unpaid interest payments thereon and (B)
any Unreimbursed Servicer Advances thereon (unless effectively waived and
released by the Servicer) or (ii) if such early termination or full prepayment
would result in the Trust receiving a Prepayment Amount less than the amount set
forth in clause (i), the Originator shall have agreed to pay the Trust the
difference between the Prepayment Amount actually paid and the amount set forth
in clause (i) (such payment by the Originator also to be considered a
"PREPAYMENT AMOUNT").
SECTION 5.10 ACCELERATION.
The Servicer, at its option and consistent with its customary and usual
credit and collection practices, may accelerate (or elect not to accelerate) the
maturity of all or any Scheduled Payments under any Loan in the Loan Pool under
which a default under the terms thereof has occurred and is continuing (after
the lapse of any applicable grace period); PROVIDED that the Servicer shall
either accelerate the Scheduled Payments due under any Loan in the Loan Pool (or
take other action in accordance with the Originator's past practice, including
foreclosing on the related Collateral, to realize upon the value of such Loan
and the related Collateral) to the fullest extent permitted by the terms of such
Loan, promptly after such Loan becomes a Defaulted Loan.
SECTION 5.11 TAXES.
To the extent provided for in any Loan in the Loan Pool, the Servicer
will make reasonable efforts to collect (or cause to be collected) all payments
with respect to amounts due for taxes and assessments relating to such Loans and
remit such amounts to the appropriate Governmental Authority on or prior to the
date such payments are due.
SECTION 5.12 INSURANCE PREMIUMS.
To the extent provided for in any Loan in the Loan Pool, the Servicer
will make reasonable efforts to collect (or cause to be collected) all payments
with respect to amounts due for insurance premiums relating to such Loans or the
Collateral and remit such amounts to the appropriate insurer on or prior to the
date such payments are due.
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SECTION 5.13 REMITTANCES.
The Servicer will service all Collections in accordance with Section
7.01 hereof.
SECTION 5.14 SERVICER ADVANCES.
For each Collection Period, if the Servicer determines that any
Scheduled Payment (or portion thereof) that was due and payable pursuant to a
Loan in the Loan Pool during such Collection Period was not received prior to
the end of such Collection Period, the Servicer has the right to elect, but is
not obligated, to make a Servicer Advance in an amount up to the amount of such
delinquent Scheduled Payment (or portion thereof) if the Servicer reasonably
believes that the advance will be reimbursed by the related Obligor. The
Servicer will deposit any Servicer Advances into the Collection Account on or
prior to 11:00 a.m. (New York City time) on the related Transfer Date, in
immediately available funds. The Servicer will be entitled to be reimbursed for
Servicer Advances pursuant to Sections 7.05(a) and 7.05(b).
SECTION 5.15 REALIZATION UPON DEFAULTED LOAN.
The Servicer will use its reasonable best efforts consistent with its
customary and usual credit and collection practices and procedures in its
servicing of loans to repossess or otherwise comparably convert the ownership of
any Collateral relating to a Defaulted Loan and will retain a sales agent to
sell such Collateral consistent with its current practices. The Servicer will
follow such other practices and procedures as it deems necessary or advisable
and as are customary and usual in its servicing of loans and other actions by
the Servicer in order to realize upon such Collateral, which practices and
procedures may include reasonable efforts to enforce all obligations of Obligors
and foreclosing upon and selling such Collateral at public or private sale in
circumstances. Without limiting the generality of the foregoing, the Servicer
may sell any such Collateral to the Servicer or its Affiliates for a purchase
price equal to the then fair market value thereof. The Servicer will remit to
the Collection Account the Liquidation Proceeds received in connection with the
sale or disposition of Collateral relating to a Defaulted Loan in accordance
with Section 7.01.
SECTION 5.16 MAINTENANCE OF INSURANCE POLICIES.
The Servicer will use its reasonable best efforts to ensure that each
Obligor maintains an Insurance Policy with respect to the related Collateral in
an amount at least equal to the original Outstanding Loan Balance of the related
Loan in the Loan Pool; PROVIDED that the Servicer, in accordance with its
customary servicing procedures, may allow Obligors to self-insure.
Additionally, the Servicer will require that each Obligor maintain
property damage insurance and during the term of each Loan in the Loan Pool in
amounts and against risks customarily insured against. If an Obligor fails to
maintain property damage insurance, the Servicer may, but is under no obligation
to, purchase and maintain such insurance on behalf of, and at the expense of,
the Obligor in accordance with the Servicer's customary practices and policies.
In connection with its activities as Servicer of the Loans, the Servicer agrees
to present,
49
on behalf of itself, the Trust, the Indenture Trustee and the Holders, claims to
the insurer under each Insurance Policy and any such liability policy, and to
settle, adjust and compromise such claims, in each case, consistent with the
terms of each Loan and the Servicer's customary practice and policies.
SECTION 5.17 OTHER SERVICER COVENANTS.
The Servicer hereby covenants that:
(a) LOAN FILES. The Servicer will, at its own cost and
expense, maintain all Loan Files in its possession in accordance with
its customary procedures. Without limiting the generality of the
preceding sentence, the Servicer will not dispose of any documents
constituting the Loan Files in any manner that is inconsistent with the
performance of its obligations as the Servicer pursuant to this
Agreement and will not dispose of any Loan except as contemplated by
this Agreement.
(b) COMPLIANCE WITH LAW. The Servicer will comply, in all
material respects, with all laws and regulations of any Governmental
Authority applicable to the Servicer or the Loans in the Loan Pool;
PROVIDED that the Servicer may contest any such law or regulation in
any reasonable manner that will not materially and adversely affect the
value of (or the rights of the Trust on behalf of the Holders or the
Indenture Trustee on behalf of the Noteholders, with respect to) the
Trust Assets.
(c) OBLIGATIONS WITH RESPECT TO LOANS; MODIFICATIONS. The
Servicer will duly fulfill and comply with, in all material respects,
all obligations on the part of the Trust Depositor to be fulfilled or
complied with under or in connection with each Loan in the Loan Pool
and will do nothing to impair the rights of the Indenture Trustee and
the Holders in, to and under the Trust Assets. The Servicer will
perform such obligations under the Loans in the Loan Pool and will not
change or modify the Loans, except as otherwise permitted hereby.
(d) NO BANKRUPTCY PETITION. Prior to the date that is one year
and one day after the payment in full of all amounts owing in respect
of all outstanding Securities, the Servicer will not institute against
the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or
other similar proceedings under the laws of the United States or any
state of the United States. This Section 5.17(d) will survive the
termination of this Agreement.
(e) LOCATION OF LOAN FILES. The Loan Files shall remain at all
times in the possession of the Custodian unless the Servicer requests
that a Loan File be delivered to it in order to enforce the rights of
the Trust thereunder or for other purposes related to the servicing of
the Loans, to the extent provided in the Custodian Agreement.
(f) REGULATORY FILINGS. The Servicer, on behalf of the Trust
Depositor, shall make any filings, reports, notices, applications and
registrations with, and seek any
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consents or authorizations from, the Commission and any state
securities authority as may be necessary or that the Trust Depositor
deems advisable to comply with any federal or state securities or
reporting requirements laws.
(g) MODIFICATION OF CREDIT AND COLLECTION POLICY. The Servicer
shall not amend or modify its Credit and Collection Policy in a manner
that would have a material adverse effect on the Noteholders.
SECTION 5.18 SERVICING COMPENSATION.
As compensation for its servicing activities hereunder and
reimbursement for its expenses as set forth in Section 5.19, the Servicer shall
be entitled to receive a monthly servicing fee in respect of any Collection
Period (or portion thereof) prior to the termination of the Trust (with respect
to each Collection Period, the "SERVICING FEE") equal to one-twelfth of the
product of (A) the Servicing Fee Percentage and (B) the Aggregate Outstanding
Loan Balance of the Loans as of the first day of such Collection Period. The
Servicing Fee is payable out of Interest Collections.
SECTION 5.19 PAYMENT OF CERTAIN EXPENSES BY SERVICER.
The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, the Owner Trustee (including with
respect to an administrator acting on behalf of the Owner Trustee and the
Trust), the Indenture Trustee, taxes imposed on the Servicer, expenses incurred
in connection with payments and reports pursuant to this Agreement, and all
other fees and expenses not expressly stated under this Agreement for the
account of the Trust or the Trust Depositor. The Servicer will be required to
pay all reasonable fees and expenses (including, without limitation, legal fees
and expenses) owing to the Owner Trustee or the Indenture Trustee in connection
with the maintenance of the Trust Accounts. The Servicer shall be required to
pay such expenses for its own account and shall not be entitled to any payment
or reimbursement therefor other than the Servicing Fee, and the reimbursement
for Liquidation Expenses, to the extent funds are available therefor as provided
in the definition of Liquidation Expenses.
SECTION 5.20 RECORDS.
The Servicer shall, during the period it is Servicer hereunder,
maintain such books of account and other records as will enable the Owner
Trustee and the Indenture Trustee to determine the status of each Loan.
SECTION 5.21 INSPECTION.
(a) At all times during the term hereof, the Servicer shall afford the
Owner Trustee and the Indenture Trustee and their respective authorized agents
reasonable access during normal business hours to the Servicer's records
relating to the Loans and will cause its personnel to assist in any examination
of such records by the Owner Trustee or the Indenture Trustee, or such
authorized agents, and allow copies of the same to be made. The examination
referred to in this
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Section will be conducted in a manner that does not unreasonably interfere with
the Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Owner Trustee or the
Indenture Trustee may, using generally accepted audit procedures, verify the
status of each Loan and review the Computer Records and other records relating
thereto for conformity to Monthly Reports prepared pursuant to Article IX and
compliance with the standards represented to exist as to each Loan in this
Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Loans at its principal executive office for
inspection by Securityholders.
(c) The Servicer shall, if given reasonable notice by the Indenture
Trustee after the end of any Collection Period, provide the Indenture Trustee
with a copy of the Computer Record.
SECTION 5.22 THE BACKUP SERVICER.
(a) The Trust, the Indenture Trustee and the Trust Depositor hereby
appoint Xxxxx Fargo Bank Minnesota, National Association to act as Backup
Servicer in accordance with the terms of this Agreement. Xxxxx Fargo Bank
Minnesota, National Association hereby accepts such appointment and agrees to
perform the duties and responsibilities with respect thereto set forth herein.
(b) The Backup Servicer shall perform the following duties and
obligations:
(i) On or before the Closing Date, the Backup Servicer shall
accept from the Servicer delivery of the information required to be set
forth in the Monthly Reports in hard copy and in an agreed upon
electronic format.
(ii) Not later than 12:00 noon New York time two (2) Business
Days prior to each Determination Date, the Servicer shall provide to
the Backup Servicer and the Backup Servicer shall accept delivery of
tape in an agreed upon electronic format (the "TAPE") from the
Servicer, which shall include but not be limited to the following
information: (x) for each Loan, the name and number of the related
Obligor, the collection status, the Loan status, the date of each
Scheduled Payment and the Outstanding Loan Balance and (y) the
Aggregate Outstanding Loan Balance.
(iii) Prior to the related Payment Date, the Backup Servicer
shall review the Monthly Report to ensure that it is complete on its
face and that the following items in such Monthly Report have been
accurately calculated, if applicable, and reported: (A) the Aggregate
Outstanding Loan Balance, (B) the Backup Servicing Fee, (C) the Loans
that are 30 or more days Delinquent (other than Defaulted Loans), (D)
the Defaulted Loans, (E) the Portfolio Yield, (F) the Default Ratio for
the current Collection Period and the two immediately preceding
Collection Periods. The Backup Servicer shall notify the Indenture
Trustee, the Placement Agent and the Servicer of any disagreements with
the Monthly Report based on such review not later than the Business Day
preceding such Payment Date to such Persons.
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(iv) If the Servicer disagrees with the report provided under
paragraph (iii) above by the Backup Servicer or if the Servicer or any
subservicer has not reconciled such discrepancy, the Backup Servicer
agrees to confer with the Servicer to resolve such disagreement on or
prior to the next succeeding Determination Date and shall settle such
discrepancy with the Servicer if possible, and notify the Indenture
Trustee and the Placement Agent of the resolution thereof. The Servicer
hereby agrees to cooperate at its own expense, with the Backup Servicer
in reconciling any discrepancies herein. If within 20 days after the
delivery of the report provided under paragraph (iii) above by the
Backup Servicer, such discrepancy is not resolved, the Backup Servicer
shall promptly notify the Servicer, Indenture Trustee and the Placement
Agent of the continued existence of such discrepancy. Following receipt
of such notice by the Indenture Trustee and the Placement Agent, the
Servicer shall deliver to the Indenture Trustee and the Placement
Agent, and the Backup Servicer no later than the related Payment Date a
certificate describing the nature and amount of such discrepancies and
the actions the Servicer proposes to take with respect thereto.
With respect to the foregoing, the Backup Servicer, in the performance
of its duties and obligations hereunder, is entitled to rely conclusively, and
shall be fully protected in so relying, on the contents of each Tape, including,
but not limited to, the completeness and accuracy thereof, provided by the
Servicer.
(c) After the receipt of an effective termination notice by the
Servicer and the Backup Servicer in accordance with this Agreement, all
authority, power, rights and responsibilities of the Servicer, under this
Agreement, whether with respect to the Loans or otherwise shall pass to and be
vested in the Backup Servicer and the Backup Servicer shall be deemed the
Successor Servicer, subject to and in accordance with the provisions of SECTION
8.03, as long as the Backup Servicer is not prohibited by an applicable
provision of law from fulfilling the same, as evidenced by an Opinion of
Counsel.
(d) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup Servicer under this Agreement without further act on the part of any of
the parties to this Agreement.
(e) As compensation for its backup servicing activities hereunder, the
Backup Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer. The Backup Servicer's entitlement to receive the Backup Servicing Fee
(other than due and unpaid Backup Servicer Fees owed through such date) shall
cease on the earliest to occur of: (i) it becoming the Successor Servicer, (ii)
its removal as Backup Servicer, or (iii) the termination of this Agreement.
(f) The Backup Servicer may be removed with or without cause by the
Required Holders by notice given in writing to the Backup Servicer. In the event
of any such removal, a
53
replacement Backup Servicer may be appointed by Required Holders.
(g) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, attorneys and
custodians in performing any of its duties and obligations under this Agreement,
it being understood by the parties hereto that the Backup Servicer will be
responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations
for and on behalf of the Backup Servicer. Neither the Backup Servicer nor any of
its officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses that result from the gross
negligence or willful misconduct of it or them or the failure to perform
materially in accordance with this Agreement.
(h) LIMITATION ON LIABILITY. The Backup Servicer shall not be liable
for any obligation of the Servicer contained in this Agreement or for any errors
of the Servicer contained in any computer tape, certificate or other data or
document delivered to the Backup Servicer hereunder or on which the Backup
Servicer must rely in order to perform its obligations hereunder, and the
parties hereto each agree to look only to the Servicer to perform such
obligations. The Backup Servicer shall have no responsibility and shall not be
in default hereunder or incur any liability for any failure, error, malfunction
or any delay in carrying out any of its respective duties under this Agreement
if such failure or delay results from the Backup Servicer acting in accordance
with information prepared or supplied by a Person other than the Backup Servicer
or the failure of any such other Person to prepare or provide such information.
The Backup Servicer shall have no responsibility, shall not be in default and
shall incur no liability for (i) any act or failure to act of any third party,
including the Servicer (ii) any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party, (iii) the
invalidity or unenforceability of any Loan under applicable law, (iv) the breach
or inaccuracy of any representation or warranty made with respect to any Loan,
or (v) the acts or omissions of any successor Backup Servicer.
SECTION 5.23 REPRESENTATIONS AND WARRANTIES OF THE BACKUP SERVICER.
The Backup Servicer hereby represents and warrants as follows:
(a) It is a national banking association duly organized, validly
existing and in good standing under the federal laws of the United States with
all requisite power and authority to own its properties and to conduct its
business as presently conducted and to enter into and perform its obligations
pursuant to this Agreement.
(b) The Backup Servicer is duly qualified to do business as a national
banking association and is in good standing, and have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
its property and the conduct of its business
54
requires such qualification, licenses or approvals except where the failure to
so qualify or have such licenses or approvals has not had, and would not be
reasonably expected to have, a material adverse effect on the interests of the
Noteholders.
(c) It has the power and authority to execute and deliver this
Agreement and to carry out its terms. It has duly authorized the execution,
delivery and performance of this Agreement by all requisite action.
(d) The consummation of the transactions contemplated by, and the
fulfillment of the terms of, this Agreement by it will not (i) conflict with,
result in any breach of any of the terms or provisions of, or constitute a
default under, its articles of association or any Contractual Obligation by
which it or any of its property is bound, (ii) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
Contractual Obligation (other than the Agreement), or (iii) violate any
applicable law.
(e) No consent, approval, authorization, order, registration, filing,
qualification, license or permit (collectively, the "CONSENTS") of or with any
Governmental Authority having jurisdiction over it or any of its respective
properties is required to be obtained in order for it to enter into this
Agreement or perform its obligations hereunder.
(f) This Agreement constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) applicable Insolvency Laws and (ii) general principles of equity
(whether considered in a suit at law or in equity).
(g) There are no proceedings or investigations pending or, to the best
of its knowledge, threatened, against it before any Governmental Authority (i)
asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might (in its reasonable judgment) have
a material adverse effect on the interests of the Noteholders.
SECTION 5.24 COVENANTS OF THE BACKUP SERVICER.
The Backup Servicer hereby covenants that:
(a) The Backup Servicer will comply in all material respects with all
applicable laws.
(b) The Backup Servicer will preserve and maintain its existence,
rights, franchises and privileges as a national banking association in good
standing under the federal laws of the United States.
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ARTICLE VI
COVENANTS OF THE TRUST DEPOSITOR
SECTION 6.01 LEGAL EXISTENCE.
During the term of this Agreement, the Trust Depositor will keep in
full force and effect its existence, rights and franchises as a limited
liability company under the laws of the jurisdiction of its organization and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Transaction Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Trust Depositor and its Affiliates will be
conducted on an arm's-length basis.
SECTION 6.02 LOANS NOT TO BE EVIDENCED BY PROMISSORY NOTES.
The Trust Depositor will take no action to cause any Loan not
originally evidenced by an Underlying Note, to be evidenced by an instrument (as
defined in the UCC), except in connection with the enforcement or collection of
such Loan.
SECTION 6.03 SECURITY INTERESTS.
The Trust Depositor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
Loan in the Loan Pool or related Collateral, whether now existing or hereafter
transferred to the Trust, or any interest therein. The Trust Depositor will
immediately notify the Owner Trustee and the Indenture Trustee of the existence
of any Lien on any Loan in the Loan Pool or related Collateral; and the Trust
Depositor shall defend the right, title and interest of the Trust in, to and
under the Loans in the Loan Pool and the related Collateral, against all claims
of third parties; PROVIDED, HOWEVER, that nothing in this Section 6.03 shall
prevent or be deemed to prohibit the Trust Depositor from suffering to exist
Permitted Liens upon any of the Loans in the Loan Pool or any related
Collateral.
SECTION 6.04 DELIVERY OF COLLECTIONS.
The Trust Depositor agrees to pay to the Servicer promptly (but in no
event later than two Business Days after receipt) all Collections received by
the Trust Depositor in respect of the Loans, for application in accordance with
Section 7.01 hereof.
SECTION 6.05 REGULATORY FILINGS.
The Trust Depositor shall make any filings, reports, notices,
applications and registrations with, and seek any consents or authorizations
from, the Commission and any state securities authority on behalf of the Trust
as may be necessary or that the Trust Depositor deems advisable to comply with
any federal or state securities or reporting requirements laws.
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SECTION 6.06 COMPLIANCE WITH LAW.
The Trust Depositor hereby agrees to comply in all material respects
with all Requirements of Law applicable to the Trust Depositor.
SECTION 6.07 ACTIVITIES.
The Trust Depositor shall not engage in any business or activity of any
kind, or enter into any transaction or indenture, mortgage, instrument,
agreement, contract, lease or other undertaking, which is not directly related
to the transactions contemplated and authorized by this Agreement or the other
Transaction Documents; PROVIDED, HOWEVER, that the Trust Depositor may purchase
and sell (or grant Liens in respect of) assets similar to the Loan Assets to
other Persons in securitization or other non-recourse financing transactions
involving the Originator or any of its Affiliates on terms and conditions (with
respect to liabilities and restrictions on its activities, as well as
restrictions on its interactions with the Originator or its Affiliates, relevant
to the "bankruptcy remoteness" or "substantive consolidation" analysis relating
to the Trust Depositor) substantially similar to the terms and conditions
applicable to the Trust Depositor under the Transaction Documents so long as the
Securityholders are not materially adversely affected thereby and the Rating
Agency Condition is satisfied.
SECTION 6.08 INDEBTEDNESS.
The Trust Depositor shall not create, incur, assume or suffer to exist
any Indebtedness or other liability whatsoever, except (i) obligations incurred
under this Agreement, (ii) liabilities incident to the maintenance of its
corporate existence in good standing or (iii) liabilities necessarily incurred
to facilitate securitizations referred to in the proviso in Section 6.07.
SECTION 6.09 GUARANTEES.
The Trust Depositor shall not become or remain liable, directly or
contingently, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise except in connection with the transactions described in
Section 6.07.
SECTION 6.10 INVESTMENTS.
The Trust Depositor shall not make or suffer to exist any loans or
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or assets, or
otherwise) in, any Person except (i) for purchases of Loans from the Originator,
(ii) for investments in Eligible Investments in accordance with the terms of
this Agreement, (iii) as may be necessary to facilitate securitizations referred
to in the proviso in Section 6.07 or (iv) for acquisition of the Class C Notes
and the Certificate. Without limiting the generality of the foregoing, the Trust
Depositor shall not: (i) provide credit to any Securityholder for the purpose of
enabling such Securityholder to purchase any Securities or (ii) lend any money
to the Trust.
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SECTION 6.11 MERGER; SALES.
The Trust Depositor shall not enter into any transaction of merger or
consolidation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution) or acquire or be acquired by any Person, or convey, sell, lease or
otherwise dispose of all or substantially all of its property or business,
except as provided for in this Agreement.
SECTION 6.12 DISTRIBUTIONS.
The Trust Depositor shall not declare or pay, directly or indirectly,
any dividend or make any other distribution (whether in cash or other property)
with respect to the profits, assets or capital of the Trust Depositor or any
Person's interest therein, or purchase, redeem or otherwise acquire for value
any of its member interests now or hereafter outstanding, except that so long as
no Event of Default has occurred and is continuing and no Event of Default would
occur as a result thereof or after giving effect thereto and the Trust Depositor
would continue to be Solvent as a result thereof and after giving effect
thereto, the Trust Depositor may declare and pay distributions to its members.
SECTION 6.13 OTHER AGREEMENTS.
The Trust Depositor shall not become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except this Agreement and the other
Transaction Documents to which it is a party and any agreement relating to
another securitization transaction permitted by Section 6.07; nor shall it amend
or modify the provisions of its Certificate of Formation or issue any power of
attorney except to the Owner Trustee, the Indenture Trustee or the Servicer
except in accordance with the Transaction Documents.
SECTION 6.14 SEPARATE LEGAL EXISTENCE.
The Trust Depositor shall:
(i) Maintain its own deposit account or accounts, separate
from those of any Affiliate, with commercial banking institutions. The
funds of the Trust Depositor will not be diverted to any other Person
or for other than authorized uses of the Trust Depositor.
(ii) Ensure that, to the extent that it shares the same
officers or other employees as any of its members or Affiliates, the
salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees
(iii) Ensure that, to the extent that it jointly contracts
with any of its members or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in
so doing shall be allocated fairly among such entities, and
58
each such entity shall bear its fair share of such costs. To the extent
that the Trust Depositor contracts or does business with vendors or
service providers when the goods and services provided are partially
for the benefit of any other Person, the costs incurred in so doing
shall be fairly allocated to or among such entities for whose benefit
the goods and services are provided, and each such entity shall bear
its fair share of such costs. All material transactions between Trust
Depositor and any of its Affiliates shall be only on an arm's length
basis.
(iv) To the extent that the Trust Depositor and any of its
members or Affiliates have offices in the same location, there shall be
a fair and appropriate allocation of overhead costs among them, and
each such entity shall bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Formation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding
all regular and special members' and managers' meetings appropriate to
authorize all corporate action, keeping separate and accurate minutes
of its meetings, passing all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining accurate and
separate books, records and accounts, including, but not limited to,
payroll and intercompany transaction accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "substantive consolidation" opinion of
Xxxxxxx and Xxxxxx, delivered on the Closing Date, upon which the
conclusions expressed therein are based.
SECTION 6.15 LOCATION; RECORDS.
The Trust Depositor (y) shall not move outside the State of Maryland
the location of its chief executive office, without 30 days' prior written
notice to the Owner Trustee and the Indenture Trustee and (z) will promptly take
all actions required (including, but not limited to, all filings and other acts
necessary or advisable under the UCC of each relevant jurisdiction in order to
continue the first priority perfected security interest of the Indenture Trustee
in all Loans). The Trust Depositor will give the Owner Trustee and the Indenture
Trustee prompt notice of a change within the State of Maryland of the location
of its chief executive office.
SECTION 6.16 LIABILITY OF TRUST DEPOSITOR; INDEMNITIES.
The Trust Depositor shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Trust Depositor under
this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Servicer from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein and in the other Transaction
Documents, including any sales, gross receipts, general corporation, tangible
personal property, Maryland personal property replacement privilege or license
taxes (but, in the case of the Trust, not including any taxes asserted with
respect to, and as of the date
59
of, the sale of the Loans to the Trust or the issuance and original sale of the
Securities, or asserted with respect to ownership of the Loans, or federal or
other income taxes arising out of distributions on the Certificate or the Notes)
and costs and expenses in defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, and the Indenture Trustee, their officers, directors,
agents and employees, from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein and, in the case of
the Owner Trustee, in the Trust Agreement and, in the case of the Indenture
Trustee, in the Indenture and any other document or transaction contemplated in
connection herewith or therewith, except to the extent that such cost, expense,
loss, claim, damage or liability in the case of (i) the Owner Trustee, shall be
due to the willful misfeasance, bad faith or gross negligence of the Owner
Trustee, or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; PROVIDED, HOWEVER, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Certificate or a Noteholder in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the immediately preceding sentence for which the
Trust Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph. The obligations of the Trust Depositor under this paragraph
shall be evidenced by the Certificate described in the Trust Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee, their officers, directors, agents and
employees, from and against any loss, liability or expense incurred by reason of
the Trust Depositor's or Trust's violation of federal or state securities laws
in connection with the offering and sale of the Notes.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the Trust
Depositor shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Trust Depositor, without interest.
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SECTION 6.17 BANKRUPTCY LIMITATIONS.
The Trust Depositor shall not, without the affirmative vote of a
majority of the members of the Trust Depositor (which must include the
affirmative vote of at least two duly appointed Independent managers) (A)
dissolve or liquidate, in whole or in part, or institute proceedings to be
adjudicated bankrupt or insolvent, (B) consent to the institution of bankruptcy
or insolvency proceedings against it, (C) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, (D) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the corporation or a
substantial part of its property, (E) make a general assignment for the benefit
of creditors, (F) admit in writing its inability to pay its debts generally as
they become due, or (G) take any corporate action in furtherance of the actions
set forth in clauses (A) through (F) above; PROVIDED, HOWEVER, that no manager
may be required by any member of the Trust Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the Trust Depositor
so long as it is Solvent.
SECTION 6.18 LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS.
The Trust Depositor and any director or officer or employee or agent of
the Trust Depositor may rely in good faith on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Trust Depositor and any director or officer or employee
or agent of the Trust Depositor shall be reimbursed by the Indenture Trustee for
any liability or expense incurred by reason of the Indenture Trustee's willful
misfeasance, bad faith or gross negligence (except errors in judgment) in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. The Trust Depositor shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.
SECTION 6.19 CHIEF EXECUTIVE OFFICE.
During the term of this Agreement, the Trust Depositor will maintain
its chief executive office in one of the States of the United States.
ARTICLE VII
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND
SECTION 7.01 TRUST ACCOUNTS; COLLECTIONS.
(a) On or before the Closing Date, the Trust Depositor shall establish
the Collection Account (including two sub-accounts, the Interest Collection
Account and the Principal Collection Account), the Note Distribution Account and
the Reserve Fund, each with and in the name of the Indenture Trustee for the
benefit of the Noteholders and the Certificateholder. The Servicer and Indenture
Trustee are hereby required to ensure that each of the Trust Accounts is
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established and maintained as an Eligible Deposit Account with a Qualified
Institution. If any institution with which any of the accounts established
pursuant to this Section 7.01(a) are established ceases to be a Qualified
Institution, the Servicer, or if the Servicer fails to do so, the Indenture
Trustee (as the case may be) shall within 10 Business Days establish a
replacement account at a Qualified Institution after notice of such event. In
no event shall the Indenture Trustee be responsible for monitoring whether
such Eligible Institution shall remain a Qualified Institution.
(b) The Servicer shall deposit or cause to be deposited, without
deposit into any intervening account, into the Collection Account not later than
two Business Days following actual receipt of such remittance by the Servicer,
all Collections on deposit with the Servicer in the form of available funds, and
all Collections otherwise received by the Servicer. Collections constituting
Interest Collections shall be deposited in the Interest Collection Account, and
Collections constituting Principal Collections shall be deposited in the
Principal Collection Account.
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or
cause to be deposited, on the Closing Date and on each Subsequent Transfer Date
thereafter, in immediately available funds into the Collection Account, all
Collections received after the applicable Cutoff Date and through and including
the date two days preceding the Closing Date or Subsequent Transfer Date, as the
case may be, in respect of Loans being transferred to the Trust on such date.
Such Collections constituting Interest Collections shall be deposited in the
Interest Collection Account, and those constituting Principal Collections shall
be deposited in the Principal Collection Account.
(d) [Reserved].
(e) Notwithstanding Sections 7.01(b) and (c), if (i) the Servicer makes
a deposit into the Collection Account in respect of a Collection of a Loan in
the Loan Pool and such Collection was received by the Servicer in the form of a
check that is not honored for any reason, or (ii) the Servicer makes a mistake
with respect to the amount of any Collection and deposits an amount that is less
than or more than the actual amount of such Collection, the Servicer shall
appropriately adjust the amount subsequently deposited into the Collection
Account to reflect such dishonored check or mistake. Any Scheduled Payment in
respect of which a dishonored check is received shall be deemed not to have been
paid.
SECTION 7.02 RESERVE FUND DEPOSIT.
On the Closing Date, the Owner Trustee, on behalf of the Trust, shall
deposit the Reserve Fund Initial Deposit into the Reserve Fund from the net
proceeds of the Securities.
SECTION 7.03 TRUST ACCOUNT PROCEDURES.
If the Servicer so directs, in writing, the Indenture Trustee shall
accept such directions as directions of the Trust and shall invest the amounts
in the Trust Accounts in Qualified Eligible Investments of the type specified in
such written direction that mature or are withdrawable not
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later than one Business Day prior to the next succeeding Payment Date, except
for investments in section (vi) of the definition of Eligible Investments. Once
such funds are invested, the Indenture Trustee shall not change the investment
of such funds. Funds in the Trust Accounts not so invested must be insured to
the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Subject
to the restrictions herein, the Indenture Trustee may purchase a Qualified
Eligible Investment from itself or an Affiliate. Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Indenture Trustee or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner which
complies with this Section 7.03. All Investment Earnings on investments of funds
in the Trust Accounts shall be deposited in the Collection Account pursuant to
Section 7.01 and distributed on the next Payment Date pursuant to Section 7.05.
The Trust Depositor and the Trust agree and acknowledge that the Indenture
Trustee is to have "control" (within the meaning of Section 8-106 of the UCC as
enacted in Maryland) of collateral comprised of "Investment Property" (within
the meaning of Section 9-115 of the UCC as enacted in Maryland) for all purposes
of this Agreement. In the absence of timely written direction from the Servicer,
the Indenture Trustee shall invest amounts in the Trust Accounts in Qualified
Eligible Investments of the type specified in clause (vi) of the definition of
Eligible Investments herein.
SECTION 7.04 SECURITYHOLDER DISTRIBUTIONS.
(a) Each Noteholder and Certificateholder as of the related Record Date
shall be paid on the next succeeding Payment Date by check mailed to such
Noteholder or Certificateholder at the address for such Noteholder or
Certificateholder appearing on the Note Register or Certificate Register or by
wire transfer if such Noteholder or Certificateholder provides written
instructions to the Indenture Trustee, or Owner Trustee, respectively, at least
ten days prior to such Payment Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and Certificateholder required
hereunder. The Indenture Trustee hereby agrees that all amounts held by it for
payment hereunder will be held in trust for the benefit of the Noteholders and
Certificateholder.
SECTION 7.05 ALLOCATIONS AND DISTRIBUTIONS.
(a) On each Determination Date prior to the occurrence of an Event of
Default, the Servicer shall instruct the Indenture Trustee in writing to
withdraw, and on the related Payment Date the Indenture Trustee shall withdraw,
from the Interest Collection Account and the Reserve Fund all amounts to make
the following payments. The payments listed below will be made only to the
extent there are sufficient amounts available on the Payment Date. Payments will
be made, in the following order of priority:
FIRST, to the Swap Counterparties, any amounts, including Net Trust
Swap Receipts, owing to the Swap Counterparties under the Swaps (other than Swap
Breakage Costs);
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SECOND, to the Indenture Trustee, the Backup Servicer, the Custodian
and the Owner Trustee, any amounts owed to such parties under the transaction
documents for fees and expenses, other than for fees, expenses and other amounts
related to indemnification; PROVIDED, HOWEVER, that in no event shall the
amounts payable pursuant to this clause SECOND (i) to the Indenture Trustee, the
Backup Servicer and the Custodian, in the aggregate, exceed $5,000 for any 12
month period (excluding amounts paid as part of the Indenture Trustee Fee, the
Backup Servicer Fee and the Custodian Fee), (ii) to the Owner Trustee, exceed
$5,000 for any 12 month period (excluding amounts paid as part of the Owner
Trustee Fee) and (iii) if a successor servicer is being appointed, to the
Indenture Trustee for costs and expenses associated with that appointment,
exceed $100,000 in the aggregate;
THIRD, to the Servicer, reimbursement for the amount of any Servicer
Advances, relating to interest on the Loans, which were deposited in the
Interest Collection Account;
FOURTH, to the Servicer, its monthly Servicing Fee for the preceding
Collection Period, together with any amounts in respect of the Servicing Fee
that were due in respect of prior Collection Periods that remain unpaid;
FIFTH, to the holders of the Class A Notes, the Class A Interest Amount
for the related Interest Accrual Period and any related Class A Interest
Shortfall together with interest on such amount;
SIXTH, to the holders of the Class B Notes, the Class B Interest Amount
for the related Interest Accrual Period and any Class B Interest Shortfall
together with interest on such amount;
SEVENTH, to the holders of the Class A Notes and Class B Notes,
sequentially and in reduction of their respective Outstanding Principal Balance,
until reduced to zero, an amount equal to the Additional Principal Amount;
EIGHTH, to the Reserve Fund an amount, if any, which when so deposited,
causes the balance of the Reserve Fund to equal the Required Reserve Amount; and
NINTH, to the holders of the Class B Notes, the Class B Accrued
Payable, to the extent not previously paid;
TENTH, to the Swap Counterparties, any unpaid swap breakage costs;
ELEVENTH, pro rata based on the amount owed to such Person under this
clause ELEVENTH, to the Indenture Trustee, the Backup Servicer, the Custodian
and the Owner Trustee, to the extent not paid pursuant to clause SECOND due to
the limitations set forth therein, amounts owed to such parties for fees and
expenses and other amounts, including such amounts related to indemnification
and, to a Successor Servicer, any Additional Servicing Fee; and
TWELFTH, to the holder of the Class C Note, interest on the Class C
Note.
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(b) On each Determination Date after the occurrence of an Event of
Default, the Servicer shall instruct the Indenture Trustee in writing to
withdraw, and on the related Payment Date the Indenture Trustee will follow the
instructions to withdraw, from the Interest Collection Account and the Reserve
Fund amounts to make the following payments. The payments listed below will be
made only to the extent there are sufficient amounts available on such Payment
Date. Payments will be made, in the following order of priority:
FIRST, to the Swap Counterparties, any amounts, including Net Trust
Swap Receipts, owing to the Swap Counterparties under the Hedging Agreements
(other than Swap Breakage Costs);
SECOND, (A) following the occurrence of an Event of Default that is not
a Fee Event, to the Indenture Trustee, the Backup Servicer, the Custodian and
the Owner Trustee, any amounts owed to such parties under the transaction
documents for fees and expenses, other than for fees, expenses and other amounts
related to indemnification; PROVIDED, HOWEVER, that in no event shall the
amounts payable pursuant to this clause SECOND (i) to the Indenture Trustee, the
Backup Servicer and the Custodian, in the aggregate, exceed $5,000 for any 12
month period (excluding amounts paid as part of the Indenture Trustee Fee, the
Backup Servicer Fee and the Custodian Fee), (ii) to the Owner Trustee, exceed
$5,000 for any 12 month period (excluding amounts paid as part of the Owner
Trustee Fee) and (iii) if a successor servicer is being appointed, to the
Indenture Trustee for costs and expenses associated with that appointment,
exceed $100,000 in the aggregate and (B) after the occurrence of a Fee Event, to
the Indenture Trustee, the Backup Servicer, the Custodian and the Owner Trustee,
any amounts owed to such parties under the Transaction Documents for fees and
expenses, other than for fees, expenses and other amounts related to
indemnification;
THIRD, to the Servicer, reimbursement for the amount of any Servicer
Advances relating to interest on the Loans which were deposited in the Interest
Collection Account;
FOURTH, to the Servicer, its monthly Servicing Fee for the preceding
Collection Period together with any amounts in respect of the Servicing Fee that
were due in respect of prior Collection Periods that remain unpaid;
FIFTH, to the holders of the Class A Notes, the Class A Interest Amount
for the related Interest Accrual Period and any Class A Interest Shortfall
Amount together with interest on such amount;
SIXTH, to the holders of the Class B Notes, the Class B Interest Amount
for the related Interest Accrual Period and any Class B Interest Shortfall
Amount together with interest on such amount; and
SEVENTH, for deposit in the Principal Collection Account and to be
included as Principal Collections of such Payment Date.
(c) On each Determination Date, the Servicer shall instruct the
Indenture Trustee to
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withdraw, and on the Payment Date the Indenture Trustee will follow the
instructions to withdraw, from the Principal Collection Account the amounts
needed to make the following payments. The payments listed below will be made in
the following order of priority:
FIRST, to the Servicer, reimbursement for the amount of any Servicer
Advances relating to principal on the Loans which were deposited in the
Principal Collection Account;
SECOND, to the holders of the Class A Notes until the Outstanding
Principal Balance of the Class A Notes equals zero;
THIRD, to the holders of the Class B Notes, until the Outstanding
Principal Balance of the Class B Notes equals zero; and
FOURTH, to the holder of the Class B Notes, the Class B Accrued Payable
to the extent not previously paid;
FIFTH, to the Swap Counterparties any unpaid Swap Breakage Costs;
SIXTH, pro rata based on the amount owed to such Person under this
clause SIXTH, to the Indenture Trustee, the Backup Servicer, the Custodian and
the Owner Trustee, to the extent not paid pursuant to clause SECOND of Section
7.05(b) due to the limitations set forth therein, amounts owed to such parties
for fees and expenses and other amounts, including such amounts related to
indemnification and, to a Successor Servicer, any Additional Servicing Fee; and
SEVENTH, to the holder of the Class C Note.
(d) If on any Payment Date, the aggregate amounts on deposit in the
Collection Account and the Reserve Fund are greater than or equal to the sum of
(i) the Aggregate Outstanding Principal Balance, (ii) the interest accrued
thereon, (iii) any accrued and unpaid Servicing Fee, (iv) unreimbursed Servicer
Advances and (v) amounts owed to the Indenture Trustee, the Backup Servicer, the
Custodian and the Owner Trustee, the amounts on deposit in the Reserve Fund will
be deposited in the Collection Account and used to redeem the Notes in full. The
redemption price will be equal to the unpaid principal amount of the Notes plus
accrued and unpaid interest through the date of redemption.
SECTION 7.06 DETERMINATION OF LIBOR.
On each LIBOR Determination Date, the Indenture Trustee shall determine
LIBOR commencing on the second LIBOR Determination Date preceding each Payment
Date (the "ONE-MONTH INDEX MATURITY") on the basis of the British Bankers'
Association ("BBA") "INTEREST SETTLEMENT RATE" for one-month deposits in U.S.
dollars as found on Telerate Page 3750 as of 11:00 A.M. London time on such
LIBOR Determination Date. If on any LIBOR Determination Date the Indenture
Trustee is unable to determine LIBOR on the basis of the method set forth in the
preceding paragraph, LIBOR for such date will be determined on the basis of the
rates at which deposits in U.S. dollars, having the One-Month Index Maturity and
in a principal amount of not less than U.S. $1,000,000, are offered at
approximately 11:00 a.m., London time, on such
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LIBOR Determination Date to prime banks in the London interbank market by the
Reference Banks. The Indenture Trustee will request the principal London office
of each of such Reference Banks to provide a quotation of its rate. If at least
two such quotations are provided, the rate for that day will be the arithmetic
mean of the quotations. If fewer than two quotations are provided, the rate for
that day will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Indenture Trustee, at approximately 11:00 a.m., New
York City time, on such LIBOR Determination Date for loans in U.S. dollars to
leading European banks having the One-Month Index Maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000; provided that if the
banks selected as aforesaid are not quoting as mentioned in this sentence, LIBOR
in effect for the applicable Interest Accrual Period will be LIBOR in effect for
the previous Interest Accrual Period.
The establishment of LIBOR by the Indenture Trustee and the Indenture
Trustee's subsequent calculation of the rates of interest applicable to the
Notes in the absence of manifest error, will be final and binding.
ARTICLE VIII
SERVICER DEFAULT; SERVICE TRANSFER
SECTION 8.01 SERVICER DEFAULT.
"SERVICER DEFAULT" means the occurrence of any of the following:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Owner Trustee or
the Indenture Trustee pursuant to this Agreement on or before the date
occurring two Business Days after the date such payment, transfer,
deposit, or such instruction or notice or report is required to be made
or given, as the case may be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement that has a material adverse
effect on the Noteholders, which continues unremedied for a period of
30 days after the first to occur of (i) the date on which written
notice of such failure requiring the same to be remedied shall have
been given to the Servicer by the Indenture Trustee or to the Servicer
and the Indenture Trustee by the Noteholders or the Indenture Trustee
on behalf of such Noteholders of Notes aggregating not less than 25% of
the Outstanding Principal Balance of any Class adversely affected
thereby and (ii) the date on which the Servicer becomes aware thereof
and such failure continues to materially adversely affect such
Noteholders for such period; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been incorrect when made, which has
a material adverse effect on the Noteholders and which continues to be
incorrect in any material respect for a period of 30 days after the
first to occur of (i) the date on which written notice of such
incorrectness requiring the
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same to be remedied shall have been given to the Servicer and the Owner
Trustee by the Indenture Trustee, or to the Servicer, the Owner Trustee
and the Indenture Trustee by Noteholders or by the Indenture Trustee on
behalf of Noteholders of Notes aggregating not less than 25% of the
Outstanding Principal Balance of any Class adversely affected thereby
and (ii) the date on which the Servicer becomes aware thereof, and such
incorrectness continues to materially adversely affect such Holders for
such period; or
(d) an Insolvency Event shall occur with respect to the
Servicer; or
(e) the Servicer shall fail in any material respect to service
the Loans in accordance with the Credit and Collection Policy; or
(f) the Servicer alters or amends the Credit and Collection
Policy in a manner that has a material adverse effect on the
Noteholders; or
(g) the rendering against the Servicer of a final judgment,
decree or order for the payment of money in excess of U.S. $5,000,000
(individually or in the aggregate) and the continuance of such
judgment, decree or order unsatisfied and in effect for any period of
61 consecutive days without a stay of execution; or
(h) the failure of the Servicer to make any payment due with
respect to aggregate recourse debt or other obligations with an
aggregate principal amount exceeding U.S. $2,500,000 or the occurrence
of any event or condition that would permit acceleration of such
recourse debt or other obligations if such event or condition has not
been waived.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five Business Days or
referred to under clause (b) or (c) for a period of 60 days (in addition to any
period provided in clause (a), (b) or (c)) shall not constitute a Servicer
Default until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other events beyond the Servicer's control. Upon the occurrence of
any such event, the Servicer shall not be relieved from using its best efforts
to perform its obligations in a timely manner in accordance with the terms of
this Agreement and the Servicer shall provide the Owner Trustee, the Indenture
Trustee and the Trust Depositor prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Servicer shall immediately notify the Indenture Trustee in writing of any
Servicer Default.
SECTION 8.02 SERVICER TRANSFER.
(a) If a Servicer Default has occurred and is continuing, (x) the
Required Holders, or (y) the Indenture Trustee may, by written notice (a
"TERMINATION NOTICE") delivered to the parties hereto, terminate all (but not
less than all) of the Servicer's management, administrative, servicing,
custodial and collection functions.
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(b) Upon delivery of the notice required by Section 8.02(a) (or, if
later, on a date designated therein), and on the date that a successor Servicer
shall have been appointed pursuant to Section 8.03 (such appointment being
herein called a "SERVICER TRANSFER"), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Loans, the Loan Files or otherwise, shall pass to and be vested in such
successor (the "SUCCESSOR SERVICER") pursuant to and under this Section 8.02;
and, without limitation, the Successor Servicer is 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 to do any and all acts or
things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Loans. The Servicer shall
transfer to the Successor Servicer (i) all records held by the Servicer relating
to the Loans in such electronic form as the Successor Servicer may reasonably
request and (ii) any Loan Files in the Servicer's possession. In addition, the
Servicer shall permit access to its premises (including all computer records and
programs) to the Successor Servicer or its designee, and shall pay the
reasonable transition expenses of the Successor Servicer. Upon a Servicer
Transfer, the Successor Servicer shall also be entitled to receive the Servicing
Fee for performing the obligations of the Servicer.
SECTION 8.03 APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE; SUCCESSOR
SERVICER TO ACT.
Upon delivery of the notice required by Section 8.02(a) (or, if later,
on a date designated therein), the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or, if no such date is specified, until a date mutually
agreed by the Servicer and the Indenture Trustee. The Indenture Trustee shall as
promptly as possible after the giving of or receipt of a Termination Notice,
appoint a Successor Servicer (which shall be the Backup Servicer, in accordance
with Section 5.22(c)), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Indenture Trustee and Owner
Trustee. If within 60 days of delivery of a Termination Notice the Indenture
Trustee is unable to obtain any bids from eligible servicers and the Servicer
shall have yet to cure the Servicer Default, then the Indenture Trustee shall
offer the Trust Depositor, and the Trust Depositor shall offer the Originator,
the right to accept retransfer of all the Trust Assets, and such parties may
accept retransfer of such Trust Assets in consideration of the Trust Depositor's
delivery to the Collection Account on or prior to the next upcoming Payment Date
of a sum equal to the Aggregate Outstanding Principal Balance of all Securities
(other than the Certificates) then outstanding, together with accrued and unpaid
interest thereon through such date of deposit; PROVIDED that the Indenture
Trustee, if so directed by the Required Holders in writing, need not accept and
effect such reconveyance in the absence of evidence (which may include
valuations of an investment bank or similar entity) reasonably acceptable to
such Trustee or Required Holders that such retransfer would not constitute a
fraudulent conveyance of the Trust Depositor or the Originator.
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In the event that a Successor Servicer has not been appointed and has
not accepted its appointment at the time when the then Servicer has ceased to
act as Servicer, the Indenture Trustee, without further action, shall
automatically be appointed the Successor Servicer. Notwithstanding the
foregoing, if the Indenture Trustee is legally unable or prohibited from so
acting, it shall petition a court of competent jurisdiction to appoint any
established financial institution having a net worth of at least $50,000,000 and
whose regular business includes the servicing of loans similar to the Loans as
the Successor Servicer hereunder. On or after a Servicer Transfer, the Successor
Servicer 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, and
the terminated Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Servicer Transfer; PROVIDED, HOWEVER, that (i)
the Successor Servicer will not assume any obligations of the Servicer described
in Section 8.02 and (ii) the Successor Servicer shall not be liable for any acts
or omissions of the Servicer occurring prior to such Servicer Transfer or for
any breach by the Servicer of any of its representations and warranties
contained herein or in any related document or agreement. As compensation
therefor, the Successor Servicer shall be entitled to receive reasonable
compensation equal to the monthly Servicing Fee. Notwithstanding anything else
herein to the contrary, in no event shall the Indenture Trustee or the Backup
Servicer be liable for any Servicing Fee or for any differential in the amount
of the servicing fee paid hereunder and the amount necessary to induce any
Successor Servicer to act as Successor Servicer under this Agreement and the
transactions set forth or provided for herein. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. To the extent the terminated Servicer has made Servicer
Advances, it shall be entitled to reimbursement of the same notwithstanding its
termination hereunder, to the same extent as if it had continued to service the
Loans hereunder.
SECTION 8.04 NOTIFICATION TO SECURITYHOLDERS.
(a) Promptly following the occurrence of any Servicer Default, the
Servicer shall give written notice thereof to the Trustees, the Trust Depositor
and each Rating Agency at the addresses described in Section 13.04 hereof and to
the Noteholders and Certificateholder at their respective addresses appearing on
the Note Register and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Trust Depositor at the
addresses described in Section 13.04 hereof, and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
SECTION 8.05 EFFECT OF TRANSFER.
(a) After a Servicer Transfer, the terminated Servicer shall have no
further obligations with respect to the management, administration, servicing,
custody or collection of the Loans and the Successor Servicer appointed pursuant
to Section 8.03 shall have all of such
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obligations, except that the terminated Servicer will transmit or cause to be
transmitted directly to the Successor Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the Successor Servicer to collect them) received as payments
upon or otherwise in connection with the Loans.
(b) A Servicer Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Loans.
SECTION 8.06 DATABASE FILE.
Upon reasonable request by the Indenture Trustee or the Backup
Servicer, the Servicer will provide the Successor Servicer with a magnetic tape
containing the database file for each Loan (i) as of the Cutoff Date, (ii) the
Subsequent Cutoff Dates, (iii) thereafter, as of the last day of the preceding
Collection Period on the Determination Date prior to a Servicer Default and (iv)
on and as of the Business Day before the actual commencement of servicing
functions by the Successor Servicer following the occurrence of a Servicer
Default.
SECTION 8.07 SUCCESSOR SERVICER INDEMNIFICATION.
The original Servicer shall defend, indemnify and hold the Successor
Servicer and any officers, directors, employees or agents of the Successor
Servicer 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 Successor Servicer may sustain in connection with the
claims asserted at any time by third parties against the Successor Servicer
which result from (i) any willful or grossly negligent act taken or omission by
the Servicer or (ii) a breach of any representations of the Servicer in Section
3.07 hereof. The indemnification provided by this Section 8.07 shall survive the
termination of this Agreement and the removal or resignation of the Successor
Servicer.
SECTION 8.08 RESPONSIBILITIES OF THE SUCCESSOR SERVICER.
The Successor Servicer will not be responsible for delays attributable
to the Servicer's failure to deliver information, defects in the information
supplied by the Servicer or other circumstances beyond the control of the
Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Loan payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Loan information. The current Servicer shall be obligated to pay
the costs associated with the transfer of the servicing files and records to the
Successor Servicer.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder
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nor incur any liability for any failure, error, malfunction or any delay in
carrying out any of its duties under this Agreement if any such failure or delay
results from the Successor Servicer acting in accordance with information
prepared or supplied by a Person other than the Successor Servicer or the
failure of any such Person to prepare or provide such information. The Successor
Servicer shall have no responsibility, shall not be in default and shall incur
no liability (i) for any act or failure to act by any third party, including the
Servicer, the Trust Depositor or the Trustees or for any inaccuracy or omission
in a notice or communication received by the Successor Servicer from any third
party or (ii) which is due to or results from the invalidity, unenforceability
of any Loan with applicable law or the breach or the inaccuracy of any
representation or warranty made with respect to any Loan.
If the Indenture Trustee or any other Successor Servicer assumes the
role of Successor Servicer hereunder, such Successor Servicer shall be entitled
to the benefits of (and subject to the provisions of) Section 5.05 concerning
delegation of duties to subservicers.
SECTION 8.09 RATING AGENCY CONDITION FOR SERVICER TRANSFER.
Notwithstanding the foregoing provisions relating to a Servicer
Transfer, no Servicer Transfer shall be effective hereunder unless prior written
notice thereof shall have been given to the Rating Agencies, and the Rating
Agency Condition shall have been satisfied with respect thereto.
ARTICLE IX
REPORTS
SECTION 9.01 MONTHLY REPORTS.
With respect to each Payment Date and the related Collection Period,
the Servicer will provide to each Trustee, the Backup Servicer, each Rating
Agency and First Union Securities, Inc., on the related Determination Date, a
monthly statement (a "MONTHLY REPORT") substantially in the form of Exhibit H
hereto.
SECTION 9.02 OFFICER'S CERTIFICATE.
Each Monthly Report delivered pursuant to Section 9.01 shall be
accompanied by a certificate of a Servicing Officer certifying the accuracy of
the Monthly Report and that no Servicer Default or event that with notice or
lapse of time or both would become a Servicer Default has occurred, or if such
event has occurred and is continuing, specifying the event and its status.
SECTION 9.03 OTHER DATA.
In addition, the Servicer shall, upon the request of any Trustees, the
Backup Servicer, or any Rating Agency, furnish such Trustee or Rating Agency, as
the case may be, such underlying data used to generate a Monthly Report as may
be reasonably requested. The Servicer will also
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forward to the Indenture Trustee, the Owner Trustee, each Rating Agency and
First Union Securities, Inc. (a) within 60 days after each calendar quarter
(except the fourth calendar quarter), commencing with the quarter ending March
31, 2001, the unaudited quarterly financial statement of the Servicer and (b)
within 90 days after each fiscal year of the Servicer, commencing with the
fiscal year ending December 31, 2001, the unaudited annual financial statement
of the Servicer, together with the related report of the independent accountants
to the Servicer. On the Payment Date following the receipt of each such
financial statements and report, the Indenture Trustee will forward to each
Noteholder of record a copy of such financial statements and report.
SECTION 9.04 ANNUAL REPORT OF ACCOUNTANTS.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who
may also render other services to the Servicer or its Affiliates, to deliver to
the Indenture Trustee, the Owner Trustee, the Backup Servicer, and each Rating
Agency, on or before March 31, 2002 (90 days after the end of the Servicer's
fiscal year) of each year, beginning on March 31, 2002, a report addressed to
the Board of Directors of the Servicer, the Indenture Trustee and the Owner
Trustee indicating that (i) with respect to the twelve months ended the
immediately preceding December 31 to the effect that such Independent
Accountants have audited the financial statements of the Servicer, that as part
of that audit, nothing came to the attention of such Independent Accountant that
causes them to believe that the Servicer was not in compliance with any of the
terms, covenants, provisions or conditions of the relevant sections of the
Agreement, insofar as they relate to accounting matters, except for such
exceptions as such Independent Accountants shall believe to be immaterial and
such other exceptions as shall be set forth in such report, (ii) in connection
with Independent Accountant's audit of the Servicer, there were no exceptions or
errors in records related to loans serviced by the Servicer, except for such
exceptions as such Independent Accountants shall believe to be immaterial and
such other exceptions as shall be set forth in such report, and (iii) the
Independent Accountant has performed certain procedures as agreed by the
Servicer, the Indenture Trustee (subject to the provisions of this Section
9.04(a)) and the Owner Trustee, whereby the Independent Accountant will obtain
the Monthly Report for four months with respect to the twelve months ended the
immediately preceding December 31 and for each Monthly Report the Independent
Accountant will agree all amounts in the Monthly Report to the Servicer's
computer, accounting and other reports, which will include in such report any
amounts which were not in agreement. In the event such firm of Independent
Accountants requires the Indenture Trustee to agree to the procedures performed
by such firm of Independent Accountants, the Servicer shall direct the Indenture
Trustee in writing to so agree; it being understood and agreed that the
Indenture Trustee will deliver such letter of agreement in conclusive reliance
upon the direction of the Servicer, and the Indenture Trustee will not make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
(b) The Independent Accountant's report shall also indicate that the
firm is independent of the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
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SECTION 9.05 ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.
The Servicer will deliver to the Trustees, and each of the Rating
Agencies, within 90 days of the end of each fiscal year commencing with the year
ending December 31, 2001, an Officer's Certificate stating that (a) a review of
the activities of the Servicer during the prior calendar year and of its
performance under this Agreement was made under the supervision of the officer
signing such certificate and (b) to such officer's knowledge, based on such
review, the Servicer has fully performed or cause to be performed in all
material respects all its obligations under this Agreement and no Servicer
Default has occurred or is continuing, or, if there has been a Servicer Default,
specifying each such default known to such officer and the nature and status
thereof and the steps being taken or necessary to be taken to remedy such event.
A copy of such certificate may be obtained by any Securityholder by a request in
writing to the Indenture Trustee, with respect to any Noteholder, or the Owner
Trustee, with respect to any Certificateholder.
SECTION 9.06 ANNUAL SUMMARY STATEMENT.
Within 90 days of the end of each fiscal year, commencing December 31,
2001, the Servicer shall prepare and provide to each Trustee, and each Rating
Agency, a cumulative summary of the information required to be included in the
Monthly Reports for the Collection Periods ending during the immediately
preceding calendar year.
ARTICLE X
TERMINATION
SECTION 10.01 SALE OF TRUST ASSETS.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee in
writing to deposit the proceeds from such sale after all payments and reserves
therefrom have been made (the "INSOLVENCY PROCEEDS") in the Collection Account.
On the Payment Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Payment Date,
on the Payment Date immediately following such deposit), the Servicer shall
instruct the Indenture Trustee in writing to allocate and apply (after the
application on such Payment Date of Available Amounts and funds on deposit in
the Reserve Fund pursuant to Section 7.04) the Insolvency Proceeds as if (and in
the same order of priority as) the Insolvency Proceeds were Available Amounts
being allocated and distributed on such date pursuant to Section 7.04(c) and
(d).
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee
74
pursuant to this Agreement.
ARTICLE XI
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION
SECTION 11.01 REPURCHASES OF, OR SUBSTITUTION FOR, LOANS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES.
Upon a discovery by the Servicer, the Trust Depositor or the Trustees
of a breach of a representation or warranty of the Originator as set forth in
Section 3.01, Section 3.02, Section 3.03, Section 3.04, and Section 3.05 or as
made or deemed made in any Addition Notice or any Subsequent Purchase Agreement
relating to Substitute Loans that materially adversely affects the interest of
the Trust, the Trust Depositor or their successors or assigns in such Loan
(without regard to the benefits of the Reserve Fund) (an "INELIGIBLE LOAN"), or
of an inaccuracy with respect to the representations as to concentrations of the
Initial Loans made under Section 3.05, the party discovering the breach shall
give prompt written notice to the other parties (and the Servicer shall, with
respect to an inaccuracy concerning concentrations, select one or more Loans,
without employing adverse selection, to be the related Excess Loan for purposes
of this Section), PROVIDED, that the Trustees shall have no duty or obligation
to inquire or to investigate the breach by the Originator of any of such
representations or warranties. The Originator shall repurchase each such
Ineligible Loan or Excess Loan, at a repurchase price equal to the Transfer
Deposit Amount, not later than the next succeeding Determination Date following
the date the Originator becomes aware of, or receives written notice from any
Trustee, the Servicer or the Trust Depositor of, any such breach or inaccuracy
and which breach or inaccuracy has not otherwise been cured; PROVIDED, HOWEVER,
that if the Originator is able to effect a substitution for any such Ineligible
Loan or Excess Loan in compliance with Section 2.04, the Originator may, in lieu
of repurchasing such Loan, effect a substitution for such affected Loan with a
Substitute Loan not later than the date a repurchase of such affected Loan would
be required hereunder, and provided further that with respect to a breach of a
representation or warranty relating to the Loans in the aggregate and not to any
particular Loan, the Originator may select Loans (without adverse selection) to
repurchase (or substitute for) such that had such Loans not been included as
part of the Trust Assets (and, in the case of a substitution, had such
Substitute Loan been included as part of the Trust Assets instead of the
selected Loan) there would have been no breach of such representation or
warranty. Notwithstanding any other provision of this Agreement, the obligation
of the Originator described in this Section 11.01 shall not (a) terminate or be
deemed released by any party hereto upon a Servicer Transfer pursuant to Article
VIII or (b) include any obligation to make payment on account of a breach of a
Loan by an Obligor subsequent to the date on which such Loan was transferred to
the Trust. The repurchase obligation described in this Section 11.01 is in no
way to be satisfied with monies in the Reserve Fund.
SECTION 11.02 REASSIGNMENT OF REPURCHASED OR SUBSTITUTED LOANS.
Upon receipt by the Indenture Trustee for deposit in the Collection
Account of the amounts described in Section 11.01 or Section 11.03 (or upon the
Subsequent Transfer Date
75
related to a Substitute Loan described in Section 11.01), and upon receipt of an
Officer's Certificate of the Servicer in the form attached hereto as Exhibit F,
the Indenture Trustee shall assign to the Trust Depositor and the Trust
Depositor shall assign to the Originator all of the Trust's (or Trust
Depositor's, as applicable) right, title and interest in the repurchased or
substituted Loan and related Trust Assets without recourse, representation or
warranty. Such reassigned Loan shall no longer thereafter be included in any
calculations of Outstanding Loan Balances required to be made hereunder or
otherwise be deemed a part of the Trust.
ARTICLE XII
ORIGINATOR INDEMNITIES
SECTION 12.01 ORIGINATOR'S INDEMNIFICATION.
The Originator will defend and indemnify the Trust Depositor, the
Trust, the Trustees, any agents of the Trustees and the Certificateholder and
Noteholders (any of which, an "INDEMNIFIED PARTY") against any and all costs,
expenses, losses, damages, claims and liabilities, joint or several, including
reasonable fees and expenses of counsel and expenses of litigation
(collectively, "COSTS") arising out of or resulting from (i) this Agreement, the
Transaction Documents or any document or transaction contemplated in connection
herewith or therewith or the use, ownership or operation of any Collateral by
the Originator or the Servicer or any Affiliate of either, (ii) any
representation or warranty or covenant made by the Originator in this Agreement
being untrue or incorrect (subject to the limitations described in the preamble
to Article III of this Agreement), and (iii) any untrue statement or alleged
untrue statement of a material fact contained in the Private Placement
Memorandum or in any amendment thereto or the omission or alleged omission to
state therein a material fact necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement was made in conformity with information furnished to Trust Depositor
by the Originator specifically for use therein; PROVIDED, HOWEVER, that the
Originator shall not be required to so indemnify any such Indemnified Party for
such Costs to the extent that such Cost shall be due to or arise from the
willful misfeasance, bad faith or negligence of such Indemnified Party.
Notwithstanding any other provision of this Agreement, the obligation of the
Originator under this Section 12.01 shall not terminate upon a Servicer Transfer
pursuant to Article VIII of this Agreement and shall survive any termination of
that agreement or this Agreement and the earlier removal or resignation of the
Indenture Trustee.
SECTION 12.02 LIABILITIES TO OBLIGORS.
No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Trustees, the Trust, the Noteholders or the
Certificateholder under or as a result of this Agreement and the transactions
contemplated hereby.
SECTION 12.03 TAX INDEMNIFICATION.
(a) The Originator agrees to pay, and to indemnify, defend and hold
harmless the
76
Trust Depositor, the Trust, the Trustees, the Noteholders or the
Certificateholder from, any taxes that may at any time be asserted with respect
to, and as of the date of, the transfer of the Loans to the Trust Depositor and
the transfer by the Trust Depositor of the Loans to the Trust and the further
pledge by the Trust to the Indenture Trustee, including, without limitation, any
sales, gross receipts, general corporation, personal property, privilege or
license taxes (but not including any federal, state or other taxes arising out
of the creation of the Trust and the issuance of the Notes and Certificates) and
costs, expenses and reasonable counsel fees in defending against the same,
whether arising by reason of the acts to be performed by the Originator or the
Servicer under this Agreement or imposed against the Trust, a Noteholder, a
Certificateholder or otherwise. Notwithstanding any other provision of this
Agreement, the obligation of the Originator under this Section 12.03 shall not
terminate upon a Servicer Transfer pursuant to Article VIII of this Agreement
and shall survive any termination of this Agreement.
(b) The Originator agrees to pay and to indemnify, defend and hold
harmless the Trust and the Trustees, on an after-tax basis (as hereinafter
defined), from any state or local personal property taxes, gross rent taxes,
leasehold taxes or similar taxes that may at any time be asserted with respect
to the ownership of the Loans (including security interests therein) and the
receipt of rentals therefrom by the Trust, and costs, expenses and reasonable
counsel fees in defending against the same, excluding, however, taxes based upon
or measured by gross or net income or receipts (other than taxes imposed
specifically with respect to rentals). As used in this Section, the term
"after-tax basis" shall mean, with respect to any payment to be received by an
indemnified person, that the amount to be paid by the Originator shall be equal
to the sum of (i) the amount to be received without regard to this sentence,
plus (ii) any additional amount that may be required so that after reduction by
all taxes imposed under any federal, state and local law, and taking into
account any current credits or deductions arising therefrom, resulting either
from the receipt of the payments described in both clauses (i) and (ii) hereof,
such sum shall be equal to the amount described in clause (i) above.
SECTION 12.04 ADJUSTMENTS.
The Originator agrees that, with respect to each Loan that provides for
a prepayment amount less than the amount calculated in accordance with the
definition of "Prepayment Amount", the Originator shall indemnify the Trust
Depositor or the Trust as assignee thereof in an amount at least equal to the
excess of the Prepayment Amount as calculated in accordance with the definition
thereof over the amount otherwise payable upon prepayment of such Loan.
The Originator hereby further agrees that if any real property
collateral securing any Loan described in Section 3.02(d) hereof becomes the
subject of any claims, proceedings, liens or encumbrances with respect to any
material violation or claimed material violation of any federal or state
environmental laws or regulations, such Loan shall for all purposes hereunder
be, at and following the time of discovery by the Originator, the Trust
Depositor, the Servicer or any Trustee (it being understood and agreed that such
Trustee is under no duty of investigation) of such fact, deemed an Ineligible
Loan subject to the same remedial and recourse provisions hereunder as other
Loans determined to be Ineligible Loans hereunder.
77
SECTION 12.05 OPERATION OF INDEMNITIES.
Indemnification under this Article XII shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Originator has made any indemnity payments to the Trust Depositor or the
Trustees pursuant to this Article XII and the Trust Depositor or the Trustees
thereafter collects any of such amounts from others, the Trust Depositor or the
Trustees will repay such amounts collected to the Originator, except that any
payments received by the Trust Depositor or the Trustees from an insurance
provider as a result of the events under which the Originator's indemnity
payments arose shall be repaid prior to any repayment of the Originator's
indemnity payment.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01 AMENDMENT.
(a) This Agreement may be amended by the Originator, the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Trust, collectively, without the consent of any Securityholders, to cure
any ambiguity, to correct or supplement any provisions in this Agreement that
are inconsistent with the provisions herein, or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; PROVIDED, HOWEVER, (i) that
the consent of the Noteholders will be required unless the Trust obtains an
Opinion of Counsel stating that the amendment does not adversely affect in any
material respect the interests of any Holder of the Class A Notes or Class B
Notes and (ii) that the consent of the Swap Counterparty will be required unless
the Trust obtains an opinion of counsel stating that the amendment does not
adversely affect in any material respect the interests of the Swap Counterparty.
(b) This Agreement may also be amended from time to time by the
Originator, the Trust Depositor, the Servicer, the Indenture Trustee and the
Owner Trustee on behalf of the Trust, with the consent of the Required Holders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholder; PROVIDED,
HOWEVER, that no such amendment shall,
(1) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the method of calculating
distributions which are required to be made on any Note or the
Certificate or the principal amount of the Notes or the Certificate
without the consent of each Noteholder affected thereby; or
(2) change the manner in which the Reserve Fund is applied,
without the consent of each Noteholder affected thereby; or
(3) reduce the aforesaid percentage required to consent to any
amendment (including through amendment of related definitions) without
the consent of each
78
Noteholder affected thereby; or
(4) modify, amend or supplement the provisions of this
Agreement relating to the allocation of collections on the Loans
without the consent of each Noteholder affected thereby; or
(5) make any security issued by the Trust payable in money
other than U.S. dollars without the consent of each Noteholder affected
thereby;
PROVIDED, FURTHER, HOWEVER, that the consent of the Swap Counterparty
will be required unless the Trust obtains an opinion of counsel stating that the
amendment does not adversely affect in any material respect the interests of the
Swap Counterparty.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholder pursuant to Section 13.01(b) to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization by Noteholders and
Certificateholder of the execution thereof shall be subject to such reasonable
requirements as the Owner Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and
conclusively rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized and permitted by this Agreement. Such Trustee may, but
shall not be obligated to, enter into any such amendment that affects such
Trustee's own rights, duties, indemnities or immunities under this Agreement or
otherwise.
SECTION 13.02 PROTECTION OF TITLE TO TRUST.
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Trust, the Securityholders, the Indenture Trustee
and the Owner Trustee in the Loans and in the proceeds thereof. The Servicer
shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Originator, the Trust Depositor nor the Servicer shall
change its name, identity or corporate structure in any manner that would, could
or might make any financing
79
statement or continuation statement filed in accordance with Section 4.02(a)
seriously misleading within the meaning of Section 9-402(7) of the UCC, unless
it shall have given the Trust, the Owner Trustee and the Indenture Trustee at
least 30 days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Originator, the Trust Depositor and the Servicer shall give the
Trust, the Owner Trustee and the Indenture Trustee at least 30 days' prior
written notice of any relocation of the principal executive office of the
Originator, or the Trust Depositor or the Servicer if, as a result of such
relocation, the applicable provisions of the UCC would require filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement, and the Servicer shall promptly file or cause to be
filed any such amendment or new financing statement. The Servicer shall at all
times maintain each office from which it shall service Loans, and its principal
executive office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Loan accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Loan, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each Loan
and the amounts from time to time deposited in or credited to the Collection
Account including identifying amounts credited to the Interest Collection
Account and the Principal Collection Account in respect of each Loan.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Loans, the Servicer's master computer records (including any backup archives)
that shall refer to a Loan indicate clearly the interest of the Trust and the
Indenture Trustee in such Loan and that such Loan is owned by the Trust and has
been pledged to the Indenture Trustee. Indication of the Trust's ownership of
and the Indenture Trustee's interest in a Loan shall be deleted from or modified
on the Servicer's computer systems when, and only when, the related Loan shall
have been paid in full or repurchased or substituted for.
(f) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee and reciting
the details of each filing or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
SECTION 13.03 GOVERNING LAW.
(a) 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 the Agreement shall be determined in accordance with such laws, except
that the duties of the Owner Trustee shall be
80
governed by the laws of the State of Delaware.
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. Each party hereto (i) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (ii) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 13.03(b).
SECTION 13.04 NOTICES.
All notices, demands, certificates, requests and communications
hereunder ("notices") shall be in writing and shall be effective (a) upon
receipt when sent through the U.S. mails, registered or certified mail, return
receipt requested, postage prepaid, with such receipt to be effective the date
of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Servicer or Originator:
American Capital Strategies, Ltd.
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Compliance Officer
Fax No.: (000) 000-0000
(ii) If to the Trust Depositor:
ACAS Business Loan LLC, 2000-1
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Compliance Officer
Fax No.: (000) 000-0000
81
(iii) If to the Indenture Trustee:
Xxxxx Fargo Bank Minnesota, National Association
Sixth Street and Marquette Avenue
MAC N9311-161
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Services/Asset Backed
Administration
Fax No.: (000) 000-0000
(iv) If to the Owner Trustee:
First Union Trust Company, National Association
One Xxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Fax No.: (000) 000-0000
(v) If to the Trust:
ACAS Business Loan Trust 2000-1
c/o First Union Trust Company, National Association
One Xxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Fax No.: (000) 000-0000
(vi) If to S&P:
Standard & Poor's Ratings Service
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance: Asset Backed Services
Fax No.: (000) 000-0000
82
(vii) If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Fax No.: (000) 000-0000
(viii) If to Fitch:
Fitch, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: CDO Surveillance
Fax No.: (000) 000-0000
(ix) If to the Placement Agent:
First Union Securities, Inc.
Xxx Xxxxx Xxxxx Xxxxxx, XX-0
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Asset Securitization Division
Fax No.: (000) 000-0000
Each party hereto may, by notice given in accordance herewith to each
of the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 13.05 SEVERABILITY OF PROVISIONS.
If one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, 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 provisions of this
Agreement or of the Notes or Certificates or the rights of the Holders thereof.
SECTION 13.06 THIRD PARTY BENEFICIARIES.
Except as otherwise specifically provided herein, the parties hereto
hereby manifest their intent that no third party, other than the Swap
Counterparty with respect to the provisions of
83
Article XIV each Trustee, shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.
SECTION 13.07 COUNTERPARTS.
This Agreement may be executed by facsimile signature and in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
SECTION 13.08 HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 13.09 NO BANKRUPTCY PETITION; DISCLAIMER.
(a) Each of the Originator, the Indenture Trustee, the Servicer, the
Trust acting through the Owner Trustee and each Holder (by acceptance of the
applicable Securities) covenants and agrees that, prior to the date that is one
year and one day after the payment in full of all amounts owing in respect of
all outstanding Securities, it will not institute against the Trust Depositor,
or the Trust, or join any other Person in instituting against the Trust
Depositor or the Trust, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States PROVIDED, HOWEVER, that nothing
herein shall prohibit the Indenture Trustee from filing proofs of claim or
otherwise participating in any such proceedings instituted by any other Person.
This Section 13.09 will survive the termination of this Agreement.
(b) The Trust acknowledges and agrees that the Certificates represent a
beneficial interest in the Trust and Trust Assets only and the Securities do not
represent an interest in any assets (other than the Trust Assets) of the Trust
Depositor (including by virtue of any deficiency claim in respect of obligations
not paid or otherwise satisfied from the Trust Assets and proceeds thereof). In
furtherance of and not in derogation of the foregoing, to the extent that the
Trust Depositor enters into other securitization transactions as contemplated in
Section 6.07, the Trust acknowledges and agrees that it shall have no right,
title or interest in or to any assets (or interests therein), other than the
Trust Assets, conveyed or purported to be conveyed (whether by way of a sale,
capital contribution or by the granting of a Lien) by the Trust Depositor to any
Person other than the Trust (the "OTHER ASSETS").
To the extent that notwithstanding the agreements contained in this
Section, the Trust or any Securityholder, either (i) asserts an interest in or
claim to, or benefit from any Other Assets, whether asserted against or through
the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is
deemed to have any interest, claim or benefit in or from any Other Assets,
whether by operation of law, legal process, pursuant to applicable provisions of
Insolvency Laws or otherwise (including without limitation pursuant to Section
1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted
against or through the Trust Depositor or any other Person owned by the Trust
Depositor, then the Trust and each Securityholder by accepting
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a Note or Certificate further acknowledges and agrees that any such interest,
claim or benefit in or from the Other Assets is and shall be expressly
subordinated to the indefeasible payment in full of all obligations and
liabilities of the Trust Depositor that, under the terms of the documents
relating to the securitization of the Other Assets, are entitled to be paid
from, entitled to the benefits of, or otherwise secured by such Other Assets
(whether or not any such entitlement or security interest is legally perfected
or otherwise entitled to a priority of distribution under applicable law,
including Insolvency Laws, and whether asserted against the Trust Depositor or
any other Person owned by the Trust Depositor) including, without limitation,
the payment of post-petition interest on such other obligations and liabilities.
This subordination agreement shall be deemed a subordination agreement within
the meaning of Section 510(a) of the Bankruptcy Code. Each Securityholder is
deemed to have acknowledged and agreed that no adequate remedy at law exists for
a breach of this Section 13.09 and that the terms and provisions of this Section
13.09 may be enforced by an action for specific performance.
(c) The provisions of this Section 13.09 shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.
SECTION 13.10 JURISDICTION.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the United States for the Southern District of New
York, and by execution and delivery of this Agreement, each party hereto
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each such party irrevocably waives any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.
SECTION 13.11 TAX CHARACTERIZATION.
Notwithstanding the provisions of Section 2.01 and Section 2.04 hereof,
the Trust Depositor and Owner Trustee agree that pursuant to Treasury
Regulations Section 301.7701-3(b)(1)(ii), the Trust is to be disregarded as a
separate entity from the Trust Depositor for federal and State of Maryland
income tax purposes.
SECTION 13.12 PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST.
The Originator shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
(c) Except in its capacity as Servicer as provided in this Agreement,
lend any money to the Trust.
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SECTION 13.13 MERGER OR CONSOLIDATION OF ORIGINATOR OR SERVICER.
(a) Each of the Originator and the Servicer will keep in full force and
effect its existence, rights and franchise as a Delaware corporation, and each
of the Originator and the Servicer will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and of any of the Loans and to perform its
duties under this Agreement.
(b) Any person into which the Originator or the Servicer, as the case
may be, may be merged or consolidated, or any corporation resulting from such
merger or consolidation to which the Originator or the Servicer, as the case may
be, is a party, or any person succeeding by acquisition or transfer to
substantially all of the assets and the business of the Originator or the
Servicer, as the case may be, shall be the successor to the Originator or the
Servicer, as the case may be, hereunder, without execution or filing of any
paper or any further act on the part of any of the parties hereto,
notwithstanding anything herein to the contrary.
(c) Upon the merger or consolidation of the Originator or the Servicer,
as the case may be, as described in this Section 13.13, the Originator or the
Servicer, as the case may be, shall provide the Indenture Trustee and the Rating
Agencies notice of such merger, consolidation or transfer of substantially all
of the assets and business within thirty (30) days after completion of the same.
SECTION 13.14 ASSIGNMENT OR DELEGATION BY THE ORIGINATOR.
Except as specifically authorized hereunder, the Originator may not
convey and assign or delegate any of its rights or obligations hereunder absent
the prior written consent of the Trust Depositor and the Trustees, and any
attempt to do so without such consent shall be void.
SECTION 13.15 LIMITATION OF LIABILITY OF OWNER TRUSTEE.
First Union Trust Company, National Association acts on behalf of the
Trust solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Trust by reason of the transactions
contemplated by this Agreement or any other Transaction Document shall look only
to the Trust Estate under the Trust Agreement for payment or satisfaction
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, any other Transaction Document or the Notes, or
of any Loan or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Loan, or the perfection and priority of any security
interest created by any Loan in any Collateral or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Estate under the Trust Agreement or its ability to generate the payments to be
distributed to the Certificateholder under the Trust Agreement or the
Noteholders under the Indenture, including, without limitation, the existence,
condition and ownership of any Collateral; the existence and enforceability of
any insurance thereon; the existence and contents of any Loan on any computer or
other record thereof; the validity of the assignment of any Loan to the Trust or
of any intervening assignment;
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the completeness of any Loan; the performance or enforcement of any Loan; the
compliance by the Trust, the Trust Depositor or the Servicer with any covenant,
agreement or other obligation or any warranty or representation made under any
Transaction Document or in any related document or the accuracy of any such
warranty or representation; or any action of the Administrator, the Indenture
Trustee or the Servicer or any subservicer taken in the name of the Owner
Trustee or the Trust.
ARTICLE XIV
SWAP GUARANTY
SECTION 14.01 UNCONDITIONAL UNDERTAKING.
The Swap Guarantor hereby unconditionally and irrevocably guarantees to
the Swap Counterparty the punctual payment when due of any Swap Breakage Costs
due under the Swap and any other Transaction Document (the "SWAP GUARANTY
REQUIREMENTS"). In the event that the Trust shall fail to pay the Swap Guaranty
Requirements when the same shall be required to be paid under the Swap or any
such other document, then upon either actual knowledge of an officer of the Swap
Guarantor or demand of the Indenture Trustee or any Secured Party, the Swap
Guarantor shall make payment upon demand to the Swap Counterparty to allow such
Swap Guaranty Requirements to be satisfied.
SECTION 14.02 OBLIGATIONS ABSOLUTE.
The Swap Guarantor undertakes that, subject to the provisions of
SECTION 14.01, the Swap Guaranty Requirements will paid strictly in accordance
with the terms of this Agreement or any other Transaction Document, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Swap Counterparty with respect
thereto. A separate action or actions may be brought and prosecuted against the
Swap Guarantor to enforce the provisions of this ARTICLE XIV, irrespective of
whether any action is brought against the Trust or whether the Trust is joined
in any such action or actions. The liability of the Swap Guarantor under this
ARTICLE XIV shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any other
provision of this Agreement or any other Transaction Document as
against the Originator, the Trust Depositor the Servicer, the Backup
Servicer, the Custodian, the Indenture Trustee, the Owner Trustee or
the Trust;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Swap Guaranty Requirements, or
any other amendment or waiver of or any consent to departure from any
other provision of this Agreement or any Transaction Document;
(iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any guaranty, for
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all or any of the Swap Guaranty Requirements;
(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Swap Guaranty Requirements, or any manner
of sale or other disposition of any collateral for all or any of the
Swap Guaranty Requirements or any other assets of the Originator, the
Trust Depositor the Servicer, the Backup Servicer, the Custodian the
Indenture Trustee or the Owner Trustee;
(v) any change, restructuring or termination of the corporate
structure or existence of the Originator, the Trust Depositor the
Servicer, the Backup Servicer, the Custodian the Indenture Trustee or
the Owner Trustee; or
(vi) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Originator, the Trust
Depositor, the Servicer, the Backup Servicer, the Custodian the
Indenture Trustee or the Owner Trustee.
This ARTICLE XIV shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Swap Guaranty Requirements
is rescinded or must otherwise be returned by the Swap Counterparty upon the
insolvency, bankruptcy or reorganization of the Swap Guarantor or otherwise,
all as though payment had not been made.
SECTION 14.03 PARI PASSU TREATMENT OF OBLIGATIONS OF SWAP GUARANTOR.
The Swap Guaranty Requirements of the Swap Guarantor under this ARTICLE
XIV do rank and will rank PARI PASSU in priority of payment with all other
unsecured and unsubordinated obligations for borrowed money of the Swap
Guarantor.
SECTION 14.04 WAIVER.
The Swap Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Swap Guaranty
Requirements and this ARTICLE XIV and any requirement that the parties to this
Agreement protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against the
Trust or any other person or entity or any collateral.
SECTION 14.05 SUBROGATION.
Until payment in full in cash of all of the Swap Guaranty Requirements
and all amounts payable to the Class A and Class B Noteholders under this
Agreement and the other Transaction Documents have been paid in full (including,
without limitation, the Outstanding Principal Balance of the Class A Notes and
Class B Notes being reduced to zero and all interest thereon having been paid in
full), the Swap Guarantor hereby waives and releases all rights of subrogation
against the Trust and its property and all rights of indemnification,
contribution and reimbursement from the Trust and its property, in each case in
connection with this ARTICLE XIV and any payments made hereunder, and regardless
of whether such rights arise by operation of law, pursuant to contract or
otherwise.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ACAS BUSINESS LOAN TRUST 2000-1
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Owner Trustee on behalf of the Trust
By:
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Printed Name:
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Title:
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ACAS BUSINESS LOAN LLC, 2000-1, as Trust Depositor
By:
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Printed Name:
--------------------------------------
Title:
---------------------------------------------
AMERICAN CAPITAL STRATEGIES, LTD., as Servicer, as
Originator and as Swap Guarantor
By:
---------------------------------------------------
Printed Name:
--------------------------------------
Title:
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XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as
Indenture Trustee
By:
---------------------------------------------------
Printed Name:
--------------------------------------
Title:
---------------------------------------------
90
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as
Backup Servicer
By:
---------------------------------------------------
Printed Name:
--------------------------------------
Title:
---------------------------------------------
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