EXECUTION VERSION
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SECOND AMENDED AND RESTATED SALE AND SERVICING AGREEMENT
dated as of October 16, 2003
by and among
ABFS GREENMONT, INC.,
as Depositor,
HOMEAMERICAN CREDIT, INC., d/b/a UPLAND MORTGAGE, and
AMERICAN BUSINESS MORTGAGE SERVICES, INC.,
as Originators and Subservicers,
ABFS MORTGAGE LOAN WAREHOUSE TRUST 2000-2,
as Trust,
AMERICAN BUSINESS CREDIT, INC.,
as an Originator and Servicer,
AMERICAN BUSINESS FINANCIAL SERVICES, INC.,
as Sponsor,
JPMORGAN CHASE BANK,
as Indenture Trustee
and
JPMORGAN CHASE BANK,
as Collateral Agent
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
Section 1.01 Certain Defined Terms...........................................2
Section 1.02 Provisions of General Application...............................2
Section 1.03 Business Day Certificate........................................2
ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans................................3
Section 2.02 Ownership and Possession of Custodial Loan Files................4
Section 2.03 Books and Records; Intention of the Parties.....................4
Section 2.04 Reserved........................................................5
Section 2.05 Possession of Custodial Loan Files; Access to
Servicer's Loan Files......................................6
Section 2.06 Delivery of Mortgage Loan Documents.............................6
Section 2.07 Acceptance of the Trust Estate; Certification
by the Collateral Agent; Certain
Substitutions and Repurchases..............................9
Section 2.08 Possession of Custodial Loan Files.............................11
Section 2.09 Future Defects.................................................13
Section 2.10 Release for Servicing..........................................13
Section 2.11 Limitation on Release..........................................13
Section 2.12 Release for Sale...............................................14
Section 2.13 Release for Payment............................................14
Section 2.14 Examination of Custodial Loan Files............................14
Section 2.15 Assignment of Agreement........................................14
Section 2.16 Termination of Transfer Period.................................15
Section 2.17 Correction of Errors...........................................15
Section 2.18 Copies of Mortgage Documents; Periodic Statements..............15
Section 2.19 Cost of Delivery and Recordation of Documents..................16
Section 2.20 Margin Option..................................................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties as to the
Originators and the Sponsor...............................16
Section 3.02 Representations and Warranties of the Servicer
and the Subservicers......................................20
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Section 3.03 Representations, Warranties and Covenants of
the Depositor.............................................22
Section 3.04 Representations, Warranties and Covenants of
the Indenture Trustee.....................................24
Section 3.05 Representations, Warranties and Covenants of
the Trust.................................................24
ARTICLE IV
THE MORTGAGE LOANS; REMEDIES; ADDITIONAL RECOURSE
Section 4.01 Representations and Warranties Relating to the
Mortgage Loans............................................28
Section 4.02 Purchase and Substitution......................................49
Section 4.03 Additional Recourse............................................52
ARTICLE V
THE ORIGINATORS, THE DEPOSITOR and the sponsor
Section 5.01 Covenants of the Originators, the Depositor and the Sponsor....53
Section 5.02 Merger or Consolidation........................................53
Section 5.03 Costs..........................................................54
Section 5.04 Indemnification................................................54
Section 5.05 Financial Statements...........................................55
ARTICLE VI
CONDITIONS OF CLOSING
Section 6.01 Conditions Precedent to Transfer Dates.........................58
Section 6.02 Conditions Precedent to Initial Transfer Date..................60
Section 6.03 Termination of Note Purchaser's Obligations....................62
ARTICLE VII
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 7.01 The Servicer; Term.............................................62
Section 7.02 Collection of Certain Mortgage Loan Payments;
Collection Account........................................63
Section 7.03 Reserved.......................................................64
Section 7.04 Hazard Insurance Policies; Property Protection Expenses........64
Section 7.05 Assumption and Modification Agreements.........................65
Section 7.06 Realization Upon Defaulted Mortgage Loans......................66
Section 7.07 Indenture Trustee to Cooperate.................................67
Section 7.08 Servicing Compensation; Payment of Certain
Expenses by Servicer......................................67
Section 7.09 Annual Statement as to Compliance..............................68
Section 7.10 Annual Independent Public Accountants'
Servicing Report..........................................68
Section 7.11 Access to Certain Documentation................................68
Section 7.12 Maintenance of Fidelity Bond...................................68
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Section 7.13 Compensating Interest..........................................68
Section 7.14 Reports to the Indenture Trustee; Collection
Account Statements........................................69
Section 7.15 Reserved.......................................................69
Section 7.16 Reports to Be Provided by the Servicer.........................69
Section 7.17 Adjustment of Servicing Compensation in
Respect of Prepaid Mortgage Loans.........................71
Section 7.18 Periodic Advances..............................................71
Section 7.19 Indemnification; Third Party Claims............................71
Section 7.20 Maintenance of Corporate Existence and
Licenses; Merger or Consolidation of the
Servicer..................................................72
Section 7.21 Assignment of Agreement by Servicer; Servicer
Not to Resign.............................................73
Section 7.22 The Subservicers...............................................73
ARTICLE VIII
NOTE AND ACCOUNT ADMINISTRATION
Section 8.01 Calculation of Note Principal Balances.........................74
Section 8.02 Daily Report...................................................74
Section 8.03 Establishment of Accounts......................................75
Section 8.04 Deposits to Accounts...........................................75
Section 8.05 Investment of Accounts.........................................76
Section 8.06 Disbursements from Collection Account..........................76
Section 8.07 Account Provisions.............................................78
Section 8.08 Reserved.......................................................80
Section 8.09 Modification of Underwriting Guidelines........................80
Section 8.10 Valuation of Mortgage Loans and Excess
Interest Securities Value.................................80
Section 8.11 Collection of Money............................................80
Section 8.12 Application of Principal and Interest..........................80
ARTICLE IX
SERVICER DEFAULT
Section 9.01 Servicer Events of Default.....................................81
Section 9.02 Successor Servicer to Act; Appointment of Successor............83
Section 9.03 Waiver of Defaults.............................................85
Section 9.04 Reserved.......................................................85
Section 9.05 Indenture Trustee to Act Solely with
Consent of the Note Purchaser.............................85
ARTICLE X
TERMINATION
Section 10.01 Termination....................................................85
Section 10.02 Additional Termination Requirements............................86
Section 10.03 Accounting Upon Termination of Servicer........................87
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ARTICLE XI
THE COLLATERAL AGENT
Section 11.01 Duties of the Collateral Agent.................................87
Section 11.02 Certain Matters Affecting the Collateral Agent.................88
Section 11.03 Collateral Agent Not Liable for Secured
Notes or Mortgage Loans...................................90
Section 11.04 Collateral Agent May Own Secured Notes.........................90
Section 11.05 Collateral Agent's Fees and Expenses; Indemnity................90
Section 11.06 Eligibility Requirements for Collateral Agent..................91
Section 11.07 Resignation and Removal of the Collateral Agent................91
Section 11.08 Successor Collateral Agent.....................................92
Section 11.09 Merger or Consolidation of Collateral Agent....................92
Section 11.10 Insurance of Collateral Agent; Custodial Delivery
Failure; Indemnity by Collateral Agent....................92
Section 11.11 Representations and Warranties of the
Collateral Agent..........................................93
Section 11.12 Transmission of Custodial Loan Files...........................93
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Limitation on Liability........................................94
Section 12.02 Acts of Noteholders............................................95
Section 12.03 Amendment......................................................95
Section 12.04 Recordation of Agreement.......................................96
Section 12.05 Duration of Agreement..........................................96
Section 12.06 Notices........................................................96
Section 12.07 Severability of Provisions.....................................97
Section 12.08 No Partnership.................................................97
Section 12.09 Counterparts...................................................97
Section 12.10 Successors and Assigns.........................................97
Section 12.11 Headings.......................................................97
Section 12.12 Reserved.......................................................97
Section 12.13 Third Party Beneficiary........................................97
Section 12.14 Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial......................................97
Section 12.15 Reserved.......................................................98
Section 12.16 Power of Attorney..............................................98
Section 12.17 Non-Petition Agreement.........................................98
Section 12.18 Due Diligence Fees, Due Diligence..............................99
Section 12.19 No Recourse to Owner Trustee..................................100
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ARTICLE XIII
PASS-THROUGH TRANSFER
Section 13.01 Dispositions..................................................101
EXHIBITS AND APPENDICES
EXHIBIT A Format of Mortgage Loan Schedule
EXHIBIT B Form of Trust Receipt
EXHIBIT C Certificate of Lost or Destroyed Trust Receipt
EXHIBIT D Request for Release of Documents
EXHIBIT E Mortgage File
EXHIBIT F Form of Master Bailee Letter
EXHIBIT G Form of Originator Certification
EXHIBIT H Reserved
EXHIBIT I Form of Disbursement Order
EXHIBIT J Form of Assignment
EXHIBIT K Review Procedures
EXHIBIT L Notice of Issue
EXHIBIT M Form of Lost Note Affidavit
EXHIBIT N Form of Disposition Direction
EXHIBIT O Form of Officer's Certificate as to compliance or noncompliance
with certain Amortization Events
EXHIBIT P Form of Initial Mortgage Loan Schedule
APPENDIX I Definitions
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SECOND AMENDED AND RESTATED SALE AND SERVICING AGREEMENT, dated as of
October 16, 2003 (this "Agreement"), by and among ABFS GREENMONT, INC., a
Delaware corporation, as depositor (the "Depositor"), AMERICAN BUSINESS CREDIT,
INC., a Pennsylvania corporation ("ABC"), as an originator and as servicer (in
its capacity as servicer hereunder, the "Servicer"), HOMEAMERICAN CREDIT, INC.
d/b/a UPLAND MORTGAGE, a Pennsylvania corporation ("Upland"), as an originator
and a subservicer, and AMERICAN BUSINESS MORTGAGE SERVICES, INC., a New Jersey
corporation ("ABMS"), as an originator and a subservicer (ABMS, together with
ABC and Upland in their capacities as originators hereunder, the "Originators"
and, together with Upland in their capacities as subservicers hereunder, the
"Subservicers"), ABFS MORTGAGE LOAN WAREHOUSE TRUST 2000-2, a Delaware statutory
trust (the "Trust"), AMERICAN BUSINESS FINANCIAL SERVICES, INC., a Pennsylvania
corporation ("ABFS"), as sponsor (the "Sponsor"), JPMORGAN CHASE BANK, a New
York banking corporation, as indenture trustee (the "Indenture Trustee") and
JPMORGAN CHASE BANK, a New York banking corporation, as collateral agent (the
"Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Originators desire to sell to the Depositor and the
Depositor desires to sell to the Trust, and the Trust desires to purchase from
the Depositor, on a servicing released basis, certain Mortgage Loans;
WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of a Second
Amended and Restated Indenture, dated as of October 16, 2003, between the Trust
and the Indenture Trustee, and issue the ABFS Mortgage Loan Warehouse Trust
2000-2, Secured Notes (the "Secured Notes");
WHEREAS, the Servicer has agreed to service, and the Subservicers have
agreed to sub-service, the Mortgage Loans, which constitute the principal assets
of the Trust; and
WHEREAS, the Collateral Agent will hold, on behalf of the Indenture
Trustee, the Mortgage Loans and certain other assets pledged to the Indenture
Trustee pursuant to the Indenture;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Depositor, the Originators, the
Subservicers, the Servicer, the Collateral Agent and the Indenture Trustee
hereby agree as follows:
ARTICLE I
Definitions
Section 1.01. Certain Defined Terms. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in Appendix I
attached hereto.
Section 1.02. Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined herein and in Appendix I hereto include the
plural as well as the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest with respect to the Secured Notes
provided for herein shall be made on the basis of a 360-day year and the actual
number of days elapsed in the related Accrual Period. All calculations of
interest with respect to any Mortgage Loan provided for herein shall be made in
accordance with the terms of the related Mortgage Note and Mortgage or, if such
documents do not specify the basis upon which interest accrues thereon, on the
basis of a 360-day year consisting of twelve 30-day months, to the extent
permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Servicer; provided, however, that, for
purposes of calculating payments on the Secured Notes, prepayments with respect
to any Mortgage Loan are deemed to be received on the date they are applied in
accordance with Accepted Servicing Practices consistent with the terms of the
related Mortgage Note and Mortgage to reduce the outstanding Principal Balance
of such Mortgage Loan on which interest accrues.
Section 1.03. Business Day Certificate. On the date hereof and
thereafter, within fifteen (15) days prior to the end of each calendar year
while this Agreement remains in effect (with respect to the succeeding calendar
years), (i) the Servicer shall provide to the Indenture Trustee, the Collateral
Agent and the Note Purchaser a certificate of a Responsible Officer specifying
the days on which banking institutions in the Commonwealth of Pennsylvania are
authorized or obligated by law, executive order or governmental decree to be
closed, (ii) the Indenture Trustee shall provide to the Servicer, the Collateral
Agent and the Note Purchaser a certificate of a Responsible Officer specifying
the days on which banking institutions in the State of New York are authorized
or obligated by law, executive order or governmental decree to be closed and
(iii) the Servicer shall cause the Owner Trustee to provide to the Indenture
Trustee, the Collateral Agent and the Note Purchaser a certificate of a
Responsible Officer specifying the days on which banking institutions in the
State of Delaware are authorized or obligated by law, executive order or
governmental decree to be closed.
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ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Conveyance of the Mortgage Loans. (a) On the terms and
conditions of this Agreement, on each Transfer Date, (i) each Originator agrees
to offer for sale and to sell Mortgage Loans to the Depositor and deliver the
related Mortgage Loan Documents to or at the direction of the Depositor and (ii)
the Depositor agrees to offer for sale and to sell the Mortgage Loans to the
Trust and deliver the related Mortgage Loan Documents to or at the direction of
the Trust. To the extent the Trust has or is able to obtain sufficient funds
under the Indenture and the Secured Notes for the purchase thereof, the Trust
agrees to purchase such Mortgage Loans offered for sale by the Depositor.
(b) During the Transfer Period, on each Transfer Date, subject to the
conditions precedent set forth in Section 6.01 (and Section 6.02 with respect to
the initial Transfer Date) and in accordance with the procedures set forth in
this Agreement, (i) the related Originator will sell and assign to the Depositor
and (ii) the Depositor will sell and assign to the Trust without recourse all of
its respective right, title and interest in and to the Mortgage Loans listed on
the Mortgage Loan Schedule attached to the related Assignment, including all
interest, principal, prepayment fees and other amounts received by the related
Originator, the Depositor or the Servicer on or with respect to such Mortgage
Loans on or after the related Cut-off Date, together with servicing rights and
all right, title and interest in and to the proceeds of any related Mortgage
Insurance Policies and all proceeds of the foregoing, upon payment by the Trust
of the applicable Sales Price and by the Depositor of the applicable Sales Price
of such Mortgage Loans. In the event that the applicable Sales Price of any
Mortgage Loans is deemed to be less than the fair market value of such Mortgage
Loans, the difference shall be deemed to be a capital contribution made by the
Depositor to the Trust. The consideration received by the Originators hereunder
will be allocated among them in proportion to the outstanding principal balance
of the Mortgage Loans sold by each.
(c) The foregoing sales, transfers, assignments, set overs and
conveyances do not, and are not intended to, result in a creation or an
assumption by the Trust of any of the obligations of the Depositor, any
Originator or any other Person in connection with the Mortgage Loans or under
any agreement or instrument relating thereto except as specifically set forth
herein.
(d) As of each Transfer Date, the Trust acknowledges the conveyance to
it of the Mortgage Loans and other property comprising the Trust Estate,
including all rights, title and interest of the Depositor in and to the Mortgage
Loans, receipt of which is hereby acknowledged by the Trust. Concurrently with
such delivery, as of each Transfer Date, pursuant to the Indenture the Trust
pledges the Mortgage Loans and all the other property comprising the Trust
Estate to the Indenture Trustee, as collateral agent and secured party on behalf
and for the benefit of the Noteholders.
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Section 2.02. Ownership and Possession of Custodial Loan Files. With
respect to each Mortgage Loan, as of the related Transfer Date, the ownership of
the related Mortgage Note, the related Mortgage and the contents of the related
Mortgage Loan Documents shall be vested in the Trust for the benefit of the
Noteholders, although possession of the Servicer's Loan File on behalf of and
for the benefit of the Noteholders shall remain with the Servicer, and the
Collateral Agent shall take possession of the Custodial Loan Files as
contemplated in Section 2.05.
Section 2.03. Books and Records; Intention of the Parties. (a) As of
each Transfer Date, the sale of each of the Mortgage Loans conveyed on such
Transfer Date shall be reflected on the balance sheets and other financial
statements of the Originators and the Depositor as a sale of assets under GAAP
by (i) the Originators to the Depositor and (ii) the Depositor to the Trust.
Each of the Servicer and the Collateral Agent shall be responsible for
maintaining, and shall maintain, a complete set of books and records for each
Mortgage Loan which shall be clearly marked to reflect the ownership of each
Mortgage Loan, as of the related Transfer Date, by the Trust and for the benefit
of the Noteholders. The Originators, the Depositor and the Servicer shall take
no action inconsistent with the Trust's ownership of the Trust Estate and each
shall indicate or shall cause to be indicated in its records and records held on
its behalf that ownership of each Mortgage Loan and the other assets in the
Trust Estate are held by the Collateral Agent, on behalf of the Indenture
Trustee, for the benefit of the Noteholders. In addition, the Originators, the
Depositor and the Servicer shall respond to any inquiries from third parties
with respect to ownership of a Mortgage Loan or any other asset in the Trust
Estate by stating that it is not the owner of such asset and that the Trust is
the owner of such Mortgage Loan or other asset in the Trust Estate, which is
held by the Collateral Agent, on behalf of the Indenture Trustee, for the
benefit of the Noteholders.
(b) It is the intention of the parties hereto that, other than for
federal, state and local income or franchise tax purposes and accounting
purposes, the transfers and assignments of the Mortgage Loans and other property
comprising the Trust Estate on each Transfer Date shall constitute a sale of the
Mortgage Loans from (i) the Originators to the Depositor and (ii) the Depositor
to the Trust; and such Mortgage Loans shall not thereafter be property of the
Originators or the Depositor. It is, further, not intended that such conveyances
be deemed a pledge of the Mortgage Loans or such other property to secure a debt
or other obligation by (i) the Originators to the Depositor or (ii) the
Depositor to the Trust. The parties hereto shall treat the Secured Notes as
indebtedness for federal, state and local income and franchise tax purposes.
(c) In the event that the Mortgage Loans or any of such other property
are held to be property of the Originators or the Depositor, or if for any
reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans or any of such other property, then it is intended that: (i) this
Agreement shall also be deemed to be a security agreement within the meaning of
the Uniform Commercial Code; (ii) the conveyance provided for in this Article II
shall be deemed to be a grant (x) by the Originators to the Depositor and (y) by
the Depositor to the Trust of a fully perfected first priority security interest
in all of the related Originator's, or the Depositor's, right, title and
interest in and to the Mortgage Loans, all Mortgage Insurance Policies and
Insurance Proceeds, all related servicing rights, general intangibles, accounts
(including any interest of the Depositor or the Originators in escrow accounts)
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and such other property related to the Mortgage Loans, any interest of the
Depositor or the Originator in escrow accounts and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Collection Account,
whether in the form of cash, instruments, securities or other property and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property; (iii) the possession by the
Collateral Agent, on behalf of the Indenture Trustee, of the Mortgage Notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to the Uniform
Commercial Code; and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from financial intermediaries, bailees or agents, as applicable, of the
Indenture Trustee for the purpose of perfecting such security interest under
applicable law.
(d) On or before the initial Transfer Date, each Originator shall, at
its expense, cause to be filed UCC-1 Financing Statements naming such Originator
as "debtor" and the Depositor as "secured party" and describing the Mortgage
Loans and other property being sold by the Originator to the Depositor with the
office of the Secretary of the State in which the Originator is organized and
such other jurisdictions as shall be necessary to perfect a security interest in
the Trust Estate. On or before the initial Transfer Date, the Depositor shall,
at its sole expense, cause to be filed UCC-1 Financing Statements naming the
Depositor as "debtor" and the Trust as "secured party" and describing the
Mortgage Loans and other property being sold by the Depositor to the Trust with
the office of the Secretary of State of the state in which the Depositor is
organized and any other jurisdictions as shall be necessary to perfect a
security interest in the Mortgage Loans and other property.
(e) The Servicer agrees that, from time to time, at its expense, it
shall cause the Originators to (and the Depositor on behalf of itself also
agrees that it shall), promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Servicer, the Indenture Trustee or the Collateral Agent may reasonably
request, in order to perfect, protect or more fully evidence the transfer of
ownership of the Mortgage Loans and other assets in the Trust Estate or to
enable the Collateral Agent, on behalf of the Indenture Trustee, to exercise or
enforce any of its rights hereunder. Without limiting the generality of the
foregoing, the Servicer, the Originators and the Depositor will, upon the
request of the Servicer, the Indenture Trustee or the Collateral Agent execute
and file (or cause to be executed and filed) such real estate filings, financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate.
(f) The Originators and the Depositor hereby grant to the Servicer, the
Indenture Trustee and the Collateral Agent powers of attorney to execute all
documents on its behalf under this Agreement as may be necessary or desirable to
effectuate the foregoing.
Section 2.04. Reserved.
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Section 2.05. Possession of Custodial Loan Files; Access to Servicer's
Loan Files. (a) Pursuant to Section 2.06 hereof, the related Originator will
deliver or cause to be delivered the Custodial Loan File related to each
Mortgage Loan to the Collateral Agent, on behalf of the Indenture Trustee.
(b) The Collateral Agent will be the custodian, on behalf of the
Indenture Trustee, to hold the Custodial Loan Files in trust for the benefit of
all present and future Noteholders. In the event the Collateral Agent resigns or
is removed, the Indenture Trustee shall either (x) hold the Custodial Loan
Files, or (y) appoint a successor Collateral Agent as set forth in Section 11.08
hereof to hold the Custodial Loan Files.
(c) The Collateral Agent shall afford the Depositor, the Originators,
the Trust, the Note Purchaser and the Servicer reasonable access to all records
and documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
request and during normal business hours at the offices of the Collateral Agent.
Section 2.06. Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Originators shall,
no less than one (1) Business Day prior to the related Transfer Date, deliver to
the Collateral Agent, on behalf of the Indenture Trustee (as Collateral Agent
and secured party on behalf of and for the benefit of the Noteholders), a
Mortgage Loan Schedule and each of the following documents or instruments with
respect to each Mortgage Loan:
(i) the original Mortgage Note and related power of attorney, if any,
endorsed without recourse from the Originators in blank; including all
intervening endorsements showing a complete chain of endorsement;
(ii) the related original Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable recording office;
(iii) if the original Mortgage does not show the related Originator as
the mortgagor thereon, the recorded mortgage assignment, or copy thereof
certified by the applicable recording office, showing a complete chain of
assignment from the originator of the related Mortgage Loan to the related
Originator (which assignment may, at such Originator's option, be combined
with the assignment referred to in subpart (iv) hereof, in which case it
must be in recordable form, but need not have been previously recorded);
(iv) a mortgage assignment in recordable form of each Mortgage endorsed
from the related Originator to "JPMorgan Chase Bank, as collateral agent
for the holder of the related mortgage note from time to time";
(v) originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a Mortgage
or Mortgage Note have been modified or such Mortgage or Mortgage Note has
been assumed;
(vi) an original title insurance policy (or (A) a copy of the title
insurance policy, or (B) a binder thereof or copy of such binder together
with a certificate from the related Originator that the original Mortgage
has been delivered to the title insurance company that issued such binder
for recordation); and
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(vii) if the Mortgage Loan Schedule indicates that such Mortgage Loan
is secured by a Business Purpose Property, an original surety agreement.
In instances where the original recorded Mortgage and a completed
assignment thereof in recordable form cannot be delivered by the related
Originator to the Collateral Agent, on behalf of the Indenture Trustee on or
prior to such Business Day prior to the related Transfer Date due to a delay in
connection with recording, the related Originator may:
1) in lieu of delivering such original recorded Mortgage,
deliver to the Collateral Agent, on behalf of the Indenture Trustee, a
copy thereof; provided, that the related Originator certifies that the
original Mortgage has been delivered to a title insurance company for
recordation after receipt of its policy of title insurance or binder
therefor; and
2) in lieu of delivering the completed assignment in recordable
form, deliver to the Collateral Agent, on behalf of the Indenture
Trustee, the assignment in recordable form, otherwise complete except
for recording information.
The Collateral Agent, on behalf of the Indenture Trustee,
shall promptly upon receipt thereof, with respect to each Mortgage Note
described in Section 2.06(a)(i) hereof and each assignment described in Section
2.06(a)(iv) hereof, if requested by the Note Purchaser, fill in the name of the
Collateral Agent.
(b) Reserved.
(c) Notwithstanding anything contrary in Section 2.06(a), all documents
sent out for correction will be returned to the Collateral Agent within ten (10)
calendar days.
(d) As promptly as practicable, but in any event within thirty (30)
days from the request of the Note Purchaser, the related Originator shall
promptly submit for recording in the appropriate public office for real property
records, each assignment referred to in Section 2.06(a)(iv); provided, however,
that, for administrative convenience and facilitation of servicing and to reduce
costs, Assignments of Mortgage shall not be required to be submitted for
recording with respect to any Mortgage Loan if the Collateral Agent, the
Indenture Trustee and the Note Purchaser has received an Opinion of Counsel,
satisfactory in form and substance to each of them, to the effect that the
recordation of such Assignments of Mortgage in any specific jurisdiction is not
necessary to protect the Indenture Trustee's interest in the related Mortgage.
The Collateral Agent, while serving as such, on behalf of the Indenture Trustee,
shall retain a copy, after receipt thereof, of each assignment submitted for
recording. In the event that any such assignment is lost or returned unrecorded
because of a defect therein, such Originator shall promptly prepare a substitute
assignment or cure such defect, as the case may be, and thereafter such
Originator shall submit each such assignment for recording. The costs relating
to the delivery and recordation of the documents in connection with the Mortgage
Loans as specified in this Article II shall be borne by the related Originator.
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(e) The related Originator shall, within five (5) Business Days after
the receipt thereof, deliver, or cause to be delivered, to the Collateral Agent,
on behalf of the Indenture Trustee: (i) the original recorded Mortgage and
related power of attorney, if any, in those instances where a copy thereof
certified by the related Originator was delivered to the Collateral Agent, on
behalf of the Indenture Trustee; (ii) if applicable, the original recorded
assignment of Mortgage from the related Originator to the Collateral Agent,
which, together with any intervening assignments of Mortgage, evidences a
complete chain of assignment from the originator of the Mortgage Loan to the
Collateral Agent, in those instances where copies of such assignments certified
by the applicable recording office were delivered to the Collateral Agent, on
behalf of the Indenture Trustee; and (iii) the title insurance policy or title
opinion required in Section 2.06(a)(vi) in those instances where a copy thereof
certified by the related Originator was delivered to the Collateral Agent, on
behalf of the Indenture Trustee.
Notwithstanding anything to the contrary contained in this Section
2.06, in those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or Assignment of Mortgage after
it has been recorded or such original has been lost, the related Originator
shall be deemed to have satisfied its obligations hereunder upon delivery to the
Collateral Agent, on behalf of the Indenture Trustee, of a copy of such
Mortgage, power of attorney, if any, assignment or Assignment of Mortgage
certified by the public recording office to be a true copy of the recorded
original thereof.
From time to time the related Originator may forward, or cause to be
forwarded, to the Collateral Agent, on behalf of the Indenture Trustee,
additional original documents evidencing any assumption or modification of a
Mortgage Loan.
(f) All original documents relating to the Mortgage Loans that are not
delivered to the Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.06(a) hereof are, and shall be, held by the Servicer or
the related Originator, as the case may be, in trust for the benefit of the
Indenture Trustee, on behalf of the Noteholders. In the event that any such
original document is required pursuant to the terms of this Section 2.06 to be a
part of a Custodial Loan File, such document shall be delivered promptly to the
Collateral Agent, on behalf of the Indenture Trustee. From and after the sale of
the Mortgage Loans to the Trust pursuant hereto, to the extent that the related
Originator retains legal title of record to any Mortgage Loans prior to the
vesting of legal title in the Trust, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as the
pledgee of the Trust under the Indenture. In acting as custodian of any original
document which is part of the Custodial Loan Files, the Servicer agrees further
that it does not and will not have or assert any beneficial ownership interest
in the related Mortgage Loans or the Servicer's Loan Files. Promptly upon the
Servicer's receipt of any such original document, the Servicer, on behalf of the
Trust, shall xxxx conspicuously each such original document, and its master data
processing records with a legend evidencing that the Trust has purchased the
related Mortgage Loan and all right and title thereto and interest therein, and
pledged such Mortgage Loan and all right and title thereto and interest therein
to the Indenture Trustee, on behalf of the Noteholders.
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Section 2.07. Acceptance of the Trust Estate; Certification by the
Collateral Agent; Certain Substitutions and Repurchases. (a) With respect to
each Transfer Date, no later than 8:30 a.m., New York, New York time, one (1)
Business Day prior to such Transfer Date, the Servicer, on behalf of the
Originator, shall provide the Collateral Agent and the Note Purchaser with an
Assignment executed by the related Originator(s) and an Assignment executed by
the Depositor, and a related Mortgage Loan Schedule (such information contained
on the Mortgage Loan Schedule shall be delivered to the Collateral Agent and the
Note Purchaser in computer-readable form acceptable to the Collateral Agent and
the Note Purchaser, such format, in the case of the Collateral Agent, to be in
substantially the form of Exhibit A or in such other format as the Trust and the
Collateral Agent may from time to time mutually agree) with respect to the
Mortgage Loans to be delivered to the Collateral Agent on such Transfer Date.
If the Collateral Agent has received such Assignments and Mortgage Loan
Schedule by the time set forth above, the Collateral Agent will deliver, no
later than 2:00 p.m., New York, New York time, one (1) Business Day prior to
such Transfer Date via facsimile or by electronic transmission, to the Indenture
Trustee, with a copy to the Note Purchaser, the Servicer and the Trust, an
Exceptions Report with respect to the Mortgage Loans.
The Collateral Agent will accept such additional document deliveries as
may be made by the Depositor after its production of the Exceptions Report until
8:30 a.m., New York, New York time on such Transfer Date, and will deliver, no
later than 11:00 a.m., New York, New York time, on such Transfer Date, via
facsimile or by electronic transmission, to the Indenture Trustee, with a copy
to the Note Purchaser, the Servicer and the Trust, the final Exceptions Report,
which shall supercede the Exceptions Report referenced in the above paragraph.
On such Transfer Date, the Collateral Agent will deliver, via facsimile
or by electronic transmission, no later than 4:00 p.m., New York, New York time,
to the Indenture Trustee, with a copy to the Note Purchaser, the Servicer and
the Trust, an Exceptions Report and a Trust Receipt with respect to such
Mortgage Loans. Any provision of this Agreement to the contrary notwithstanding,
however, a Trust Receipt will only be delivered within one (1) Business Day if
all related Custodial Loan Files have been delivered to the Collateral Agent no
later than 8:30 a.m. on the Business Day prior to such date and no more than 100
Custodial Loan Files, with respect to the Mortgage Loans have been delivered on
any single day in connection with such Transfer Date.
(b) To the extent an Exceptions Report is not waived by the Note
Purchaser as provided for in Section 6.01 hereof, the purchase will not take
place on such Transfer Date. If the Note Purchaser elects in its sole discretion
to waive the Exceptions Report as a condition precedent to sale, with respect to
any Mortgage Loans which are set forth as exceptions in the Exceptions Report,
the related Originator shall cure such exceptions by delivering such missing
documents to the Collateral Agent or otherwise curing the defect no later than 5
Business Days following the receipt of the first Exceptions Report listing such
exception with respect to such Mortgage Loan. The related Originator may cure
the defect by repurchasing such Defective Mortgage Loan at the Repurchase Price
thereof with respect to such Mortgage Loan by depositing such Repurchase Price
in the Collection Account. In lieu of such a repurchase, the Depositor and
related Originator may comply with the substitution provisions of Section 4.02.
The related Originator shall provide the Servicer, the Indenture Trustee, the
Collateral Agent, the Trust and the Note Purchaser with a certification of a
Responsible Officer on or prior to such repurchase or substitution indicating
that the related Originator intends to repurchase or substitute such Mortgage
Loan.
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(c) With respect to the substitution by the related Originator of a
Qualified Substitute Mortgage Loan pursuant to Section 4.02 hereof, the Servicer
shall provide the Collateral Agent with an updated Mortgage Loan Schedule (such
information contained on the Mortgage Loan Schedule shall be delivered to the
Collateral Agent in computer-readable form) with respect to such Qualified
Substitute Mortgage Loans to be pledged to the Indenture Trustee. The Collateral
Agent shall, no later than 2:00 p.m., New York, New York time, on the next
Business Day after the Collateral Agent's receipt of the Custodial Loan File
with respect thereto, deliver, via facsimile or by electronic transmission, to
the Indenture Trustee, with a copy to the Note Purchaser, the Servicer and the
Trust, an Exceptions Report with respect to each such Mortgage Loan.
(d) Each Exceptions Report shall list all Exceptions using such codes
as are customarily used by the Collateral Agent and in form and substance agreed
to by the Collateral Agent and the Note Purchaser. The delivery of each
Exceptions Report to the Indenture Trustee and the Note Purchaser shall be the
Collateral Agent's representation that, other than the Exceptions listed
therein: (A) all Mortgage Loan Documents have been reviewed by the Collateral
Agent in accordance with the review procedures set forth in Exhibit K (the
"Review Procedures") and appear on their face to be regular and to relate to
such Mortgage Loan, and (B) based upon a review of the Mortgage Note, items (i),
(ii) (as to the Borrower's name only), (iii) and (xxii) with respect to such
Mortgage Loan, as set forth in the Mortgage Loan Schedule delivered by the
related Originator to the Collateral Agent are the same as shown in the Mortgage
Note.
(e) In giving each of the Trust Receipts and Exceptions Reports,
neither the Indenture Trustee nor the Collateral Agent shall be under any duty
or obligation (i) to inspect, review or examine any such documents, instruments,
securities or other papers to determine that they or the signatures thereto are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face or (ii) to determine whether any Custodial Loan File should
include a flood insurance policy, any rider, addenda, surety or guaranty
agreement (except for the certification of surety agreements with respect to a
Mortgage Loan secured by a Business Purpose Property as described herein), power
of attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement. For the avoidance of doubt, the
Collateral Agent's review shall not include whether Assignments of Mortgage are
in recordable form.
(f) A new Trust Receipt shall be issued in connection with each
delivery of Mortgage Loans to the Collateral Agent under this Agreement, and a
cumulative Exceptions Report and cumulative Mortgage Loan Schedule shall be
attached to such Trust Receipt. Upon the issuance of a new Trust Receipt, the
prior Trust Receipt shall be deemed canceled.
(g) In connection with each Trust Receipt delivered hereunder by the
Collateral Agent, the Collateral Agent shall make no representations as to, and
shall not be responsible to verify, (A) the validity, legality, enforceability,
due authorization, recordability, sufficiency, or genuineness of any of the
documents contained in each Custodial Loan File or (B) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan. Subject to
the preceding sentence, the Originator hereby gives the Collateral Agent notice
that from and after each Transfer Date, the Indenture Trustee shall have a
security interest in each Mortgage Loan identified on a Trust Receipt until such
time as the Collateral Agent receives written notice from the Indenture Trustee
that the Indenture Trustee no longer has a security interest in such Mortgage
Loan.
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(h) Notwithstanding and in addition to the foregoing, in the event that
the Collateral Agent identifies a change to the Exceptions listed on the prior
Exceptions Report, the Collateral Agent shall perform any Review Procedures
required with respect thereto and deliver an updated Exceptions Report
reflecting such change to the Servicer, the Indenture Trustee and the Note
Purchaser, via facsimile or by electronic transmission, no later than 2:00 p.m.,
New York, New York time, on the next succeeding Business Day. Each Exceptions
Report so delivered by the Collateral Agent to the Note Purchaser shall
supersede and cancel the Exceptions Report previously delivered by the
Collateral Agent to the Note Purchaser hereunder.
(i) Each delivery of Custodial Loan Files to the Collateral Agent
pursuant to this Section 2.07 shall be deemed received by the Collateral Agent
on the Business Day immediately following such delivery.
(j) Under no circumstances shall the Collateral Agent be obligated to
verify the authenticity of any signature (whether original or facsimile) on any
of the documents received or examined by it in connection with this Agreement or
the authority or capacity of any Person to execute or issue any such document,
nor shall the Collateral Agent be responsible for the value, form, substance,
validity, recordability, perfection, priority, effectiveness or enforceability
of any of such documents.
(k) The Note Purchaser hereby notifies the Collateral Agent that the
Indenture Trustee shall be the Note Purchaser's designee for purposes of
accepting delivery of all Trust Receipts issued pursuant to Section 2.07(f). The
Collateral Agent acknowledges that the Note Purchaser shall be entitled to
change this designation at any time by notice to the Collateral Agent delivered
in accordance herewith.
Section 2.08. Possession of Custodial Loan Files. (a) With respect to
the Mortgage Note, the Mortgage and the Assignment of Mortgage and other
documents constituting each Custodial Loan File that is delivered to the
Collateral Agent or that otherwise comes into the possession of the Collateral
Agent, the Collateral Agent is the custodian for and the bailee of the Indenture
Trustee, as collateral agent and secured party on behalf and for the benefit of
the Noteholders, exclusively; provided that the Note Purchaser may transfer its
interest in any Trust Receipt to one other party, as provided in the Trust
Receipt, by special endorsement, which other party may only transfer such Trust
Receipt by a second endorsement in favor of the Note Purchaser or an affiliate
of the Note Purchaser. Each Person so endorsing a Trust Receipt shall promptly
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notify the Collateral Agent, in writing, of such endorsement and of the
substance thereof. The Collateral Agent shall hold all Mortgage Loan Documents
received by it constituting the Custodial Loan File for the exclusive use and
benefit of the Indenture Trustee, as collateral agent and secured party on
behalf and for the benefit of the Note Purchaser, and shall make disposition
thereof only in accordance with this Agreement and the instructions furnished by
the Note Purchaser or by the Indenture Trustee on behalf of the Note Purchaser.
The Collateral Agent shall electronically segregate and maintain continuous
custody of all Mortgage Loan Documents constituting the Custodial Loan File in
secure and fire resistant facilities in accordance with customary standards for
such custody. The Collateral Agent makes no representations as to, and shall not
be responsible to verify, the legality, enforceability, sufficiency, due
authorization or recordability of any document in any Custodial Loan File.
(b) Upon surrender of any Trust Receipt by or on behalf of the Note
Purchaser to the Collateral Agent and delivery of a Request for Release
substantially in the form of Exhibit D, the Note Purchaser shall issue
instructions regarding the Mortgage Loans designated in the applicable Trust
Receipt, including instructions to release the related Mortgage Loans as the
Trust may designate. In conjunction therewith, the Collateral Agent shall cancel
the related Trust Receipt.
(c) If a Trust Receipt is lost, destroyed or otherwise unavailable for
surrender to the Collateral Agent, the Note Purchaser shall present to the
Collateral Agent documentation in the form attached as Exhibit C. Upon receipt
by the Collateral Agent of such documentation, the Note Purchaser shall have the
right to issue, or cause to be issued by the Indenture Trustee, instructions
pursuant to Section 2.08(b) regarding the Mortgage Loans covered by a Trust
Receipt without surrender of the related document.
(d) The Collateral Agent shall cause to be kept at its corporate trust
office a register (the "Custodial Register") in which, subject to such
reasonable regulations as it may prescribe, the Collateral Agent shall reflect
the ongoing status of Mortgage Loans subject to Trust Receipts as herein
provided. The Collateral Agent shall amend the Custodial Register and each
related Mortgage Loan Schedule on a daily basis to reflect the Mortgage Loans
then subject to a Trust Receipt and provide such amended Mortgage Loan Schedules
to the Note Purchaser, the Trust, the Servicer and the Indenture Trustee in
accordance with Section 2.18(b). Absent manifest error, the Collateral Agent's
Custodial Register and the related Mortgage Loan Schedules, as amended, shall
control. The Custodial Register shall be deemed to contain proprietary
information, and only the Note Purchaser, the Trust, the Collateral Agent, the
Indenture Trustee and the Servicer or their respective designees shall have
access to such information. Each of the Note Purchaser, the Trust, the Indenture
Trustee and the Servicer shall give prompt written notice to Collateral Agent
identifying any such designee. In the event that (i) the Servicer, the
Collateral Agent, the Indenture Trustee or the Trust shall be served by a third
party with any type of levy, attachment, writ or court order with respect to any
Custodial Loan File, or any Mortgage Loan Document contained therein, or (ii) a
third party shall institute any court proceeding by which any Custodial Loan
File or any Mortgage Loan Document included therein shall be required to be
delivered otherwise than in accordance with the provisions of this Agreement,
the party receiving such service shall promptly deliver or cause to be delivered
to the other parties to this Agreement copies of all court papers, orders,
documents and other materials concerning such proceedings. The Collateral Agent
shall, to the extent permitted by law, continue to hold and maintain all of the
Mortgage Loan Documents that are the subject of such proceedings pending a
final, non-appealable order of a court of competent jurisdiction permitting or
directing such disposition thereof. Upon final determination of such court, the
Collateral Agent shall dispose of such Custodial Loan File or any Mortgage Loan
Document included therein as directed by such court, and the Collateral Agent's
expenses in so doing shall constitute expenses it is entitled to be reimbursed
by the Servicer in accordance with its separate agreement with the Servicer as
contemplated by Section 11.05(a).
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Section 2.09. Future Defects. During the term of this Agreement, if the
Collateral Agent discovers any defect set forth in Section 2.07(a) or 2.07(c)
with respect to the items certified pursuant to Section 2.06 with respect to any
Custodial Loan File, the Collateral Agent shall give written specification of
such defect to the Trust, the Servicer, the Note Purchaser and the Indenture
Trustee.
Section 2.10. Release for Servicing. From time to time and as
appropriate for the foreclosure or servicing of any of the Mortgage Loans, but
so long as a Servicer Event of Default shall not have occurred, the Collateral
Agent is hereby authorized, upon written receipt from the Servicer of a Request
for Release in the form annexed hereto as Exhibit D, in duplicate, to release to
the Servicer the related Custodial Loan File to the Servicer. All Custodial Loan
Files so released to the Servicer shall be held by the Servicer in trust for the
benefit of the Note Purchaser and the Indenture Trustee, as collateral agent and
secured party on behalf and for the benefit of the Note Purchaser, in accordance
with this Agreement. The Servicer shall return to the Collateral Agent the
Custodial Loan File upon the earliest of (x) when the Servicer's need therefor
in connection with such foreclosure or servicing no longer exists, (y) the
occurrence of a Servicer Event of Default, together with endorsements in blank
duly executed by the Trust, and (z) within ten (10) days following the date of
release, unless the Mortgage Loan shall have been liquidated or released to an
attorney in connection with a foreclosure proceeding, in which case, upon
receipt of an additional Request for Release, in duplicate, certifying such
liquidation from the Servicer to the Collateral Agent in the form annexed hereto
as Exhibit D, and the Collateral Agent shall countersign and release one copy to
the Servicer as acknowledgment.
Section 2.11. Limitation on Release. Notwithstanding the provisions of
Section 2.10, the Collateral Agent shall at no time release to the Servicer, and
the Servicer shall not be entitled under Section 2.10 to the release of, active
Custodial Loan Files (including those requested) representing Mortgage Loans
with an aggregate Principal Balance of more than $10,000,000 (excluding those
Mortgage Loans that have been paid in full, liquidated, in foreclosure or in
bankruptcy). Any additional Custodial Loan Files requested to be released by the
Servicer may be released for the reasons provided in Section 2.10 only upon
written authorization of the Note Purchaser, which authorization shall not be
unreasonably withheld or delayed. The limitations of this Section 2.11 shall not
apply to the release of Custodial Loan Files to the Servicer under Section 2.12.
Prior to releasing any Custodial Loan File to the Servicer pursuant to
this Section, the Collateral Agent shall complete the endorsement in blank of
the related Mortgage Note, as follows: "JPMorgan Chase Bank, as custodian or
trustee under the applicable custody or trust agreement, without recourse."
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Section 2.12. Release for Sale. From time to time and as appropriate
for the Disposition of any of the Mortgage Loans, but only so long as no Event
of Default or Amortization Event shall have occurred, the Collateral Agent is
hereby authorized, upon written receipt from the Note Purchaser of a Request for
Release, in duplicate, to release to the applicable Disposition Participant the
related Custodial Loan File. The Note Purchaser shall provide to the Collateral
Agent a completed Request for Release with respect to the related Mortgage
Loans. The Custodial Loan Files relating to the Mortgage Loans included in a
Request for Release shall be sent for delivery by the Collateral Agent to the
applicable Disposition Participant specified by the Note Purchaser to the
Collateral Agent in writing. Such Custodial Loan Files shall be sent in the
original form and specific order received from the Note Purchaser, via overnight
courier at such Originator's expense in accordance with the Delivery
Instructions and under cover of a fully completed Bailee Letter. The Collateral
Agent shall not deliver any Custodial Loan File to any potential Disposition
Participant unless such Disposition Participant was identified by the Note
Purchaser. The Collateral Agent shall deliver such documents accompanied by a
Bailee Letter to the Disposition Participant and follow up to ensure that such
Disposition Participant has executed the Bailee Letter and returned the same to
the Collateral Agent. Any Payoff Amount sent by a Disposition Participant on
account of Mortgage Loans shall be sent to the Note Purchaser or its designee.
Section 2.13. Release for Payment.
(a) Upon the repurchase of any Mortgage Loan pursuant hereto or to the
Indenture, or upon the payment in full of any Mortgage Loan, and upon receipt by
the Collateral Agent of the Servicer's Request for Release, in duplicate (which
certification shall include a statement to the effect that all amounts received
in connection with such payment or repurchase have been credited to the
Collection Account as provided herein), the Collateral Agent shall promptly
release the related Custodial Loan File to the Servicer, and amend both the
Custodial Register and the related Mortgage Loan Schedule accordingly.
(b) Any request for release of any Custodial Loan Files to any third
party purchaser shall be sent in the form of a Request For Release which is
signed by the Note Purchaser. Promptly upon receipt by the Note Purchaser of the
full amount set forth in such transmittal letter as the "Payoff Amount," the
Note Purchaser shall notify the Collateral Agent thereof in writing. Any Payoff
Amount sent by a third-party purchaser of Mortgage Loans shall be sent to the
Note Purchaser or its designee.
Section 2.14. Examination of Custodial Loan Files. Upon reasonable
prior notice to the Collateral Agent of at least five (5) Business Days, the
Note Purchaser, the Trust, Indenture Trustee or the Servicer, and their
respective designated agents, accountants, attorneys and auditors, will be
permitted during normal business hours to examine the Custodial Loan Files,
documents, records and other papers in the possession of or under the control of
the Collateral Agent relating to any or all of the Mortgage Loans, provided that
the Collateral Agent shall not be responsible for any expenses incurred by the
requesting party in conducting such examination.
Section 2.15. Assignment of Agreement. The Originators and the
Depositor hereby acknowledge and agree that the Trust may assign its interest
under this Agreement to the Indenture Trustee, for the benefit of the
Noteholders, as may be required to effect the purposes of the Indenture, without
further notice to, or consent of, the Originators or the Depositor, and the
Indenture Trustee shall succeed to such of the rights and obligations of the
Trust hereunder as shall be so assigned. The Trust shall, pursuant to the
Indenture, assign all of its right, title and interest in and to the Mortgage
Loans and its right to exercise the remedies created by Sections 2.07 and 4.02
for breaches of the representations, warranties, agreements and covenants of the
Originators contained in Sections 2.05, 2.06, 3.01 and 4.01, assign such right,
title and interest to the Indenture Trustee, for the benefit of the Noteholders.
The Originators and the Depositor agree that, upon such assignment to the
Indenture Trustee, such representations, warranties, agreements and covenants
will run to and be for the benefit of the Indenture Trustee and the Indenture
Trustee may enforce, without joinder of the Trust, the repurchase obligations of
the Originators set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.
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Section 2.16. Termination of Transfer Period. The Transfer Period will
end on the earlier of the last day of the Commitment Term or the occurrence of
an Amortization Event; provided, that, upon the occurrence of an Event of
Default or Default, the Note Purchaser may, in its sole discretion, terminate
the Transfer Period; and provided, further, that if the precipitating Default is
cured before it becomes an Event of Default and no other Default or Event of
Default then exists, the Transfer Period shall be reinstated.
Section 2.17. Correction of Errors. The Trust, the Depositor, the
Originators and the Servicer shall cooperate to reconcile any errors in
calculating the Sales Price from and after each Transfer Date. In the event that
an error in the Sales Price is discovered by any such party, including, without
limitation, any error due to miscalculations of Market Value where insufficient
information has been provided with respect to a Mortgage Loan to make an
accurate determination of Market Value as of any applicable Transfer Date, any
miscalculations of Principal Balance, accrued interest or aggregate unreimbursed
Servicing Advances attributable to the applicable Mortgage Loan, or any
prepayments not properly credited, such party shall give prompt notice to the
other parties hereto, and the party that shall have benefited from such error
shall promptly remit to the other, by wire transfer of immediately available
funds, the amount of such error with no interest thereon.
Section 2.18. Copies of Mortgage Documents; Periodic Statements. (a)
Upon the reasonable request of the Note Purchaser, the Trust, the Indenture
Trustee or the Servicer and at the cost and expense of the requesting party, the
Collateral Agent shall provide the requesting party with copies of the Mortgage
Notes, Mortgages, Assignment of Mortgages and other documents relating to one or
more of the Mortgage Loans.
(b) Upon the request of the Note Purchaser, the Trust, the Indenture
Trustee or the Servicer at any time, the Collateral Agent shall provide to the
requesting party a list of all the Mortgage Loans for which the Collateral Agent
holds a Custodial Loan File pursuant to this Agreement. Such list shall be
provided to the requesting party electronically in such format as the requesting
party and the Collateral Agent may mutually agree upon (consent to such format
not to be unreasonably withheld by either the Collateral Agent or the requesting
party) and, if the requesting party so specifies, in hard copy format as well.
In the latter case, such list may be in the form of a copy of the Mortgage Loan
Schedule (as amended and revised from time to time) with manual deletions to
specifically denote any Mortgage Loans paid off or repurchased since the date of
this Agreement.
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Section 2.19. Cost of Delivery and Recordation of Documents. The costs
relating to the delivery and recordation of the documents in connection with the
Mortgage Loans as specified in this Article II shall be borne by the
Originators.
Section 2.20. Margin Option. (a) At any time and from time to time, the
Note Purchaser shall have the right to determine whether the Mortgage Loan Base
supports the aggregate Note Principal Balance of the Secured Notes. If at any
time the Note Purchaser determines that the aggregate Note Principal Balance of
the Secured Notes exceeds the Mortgage Loan Base, then, in each such case, a
"Shortfall" shall exist.
(b) The Note Purchaser shall give written notice to the Trust,
Indenture Trustee and the Depositor of such determination and of the amount of
such Shortfall (each such notice, a "Margin Option") and, if notice is provided
by 5:00 p.m. (New York, New York time) the next succeeding Business Day (and
otherwise, the second succeeding Business Day) after receipt of such Margin
Option, (a) the Depositor has contributed to the Trust (i) to the extent held by
or reasonably available to the Depositor, Qualified Substitute Mortgage Loans
having an aggregate Market Value equal to at least the amount of such Shortfall,
and (ii) to the extent that sufficient Qualified Substitute Mortgage Loans are
not so held by, or reasonably available to, the Depositor, cash in an amount
equal to at least the difference between the amount of such Shortfall and the
aggregate Market Value of such Qualified Substitute Mortgage Loans as are
contributed by the Depositor to the Trust (the "Minimum Margin Contribution");
and (b) the Trust has pledged such Qualified Substitute Mortgage Loans, together
with all other assets related thereto, to the Indenture Trustee and has remitted
such cash to the Note Purchaser, for immediate application to the repayment of
the principal of the Secured Notes, then the Shortfall shall be deemed to have
been cured. If, within such period, the Shortfall has not been so cured, or if,
prior to expiration of such period, the Depositor has notified the Note
Purchaser that the Depositor does not intend to effect the Minimum Margin
Contribution, such occurrence shall constitute an Event of Default under the
Indenture; provided, however, that nothing contained herein shall either
obligate the Depositor to effect any Minimum Margin Contribution or impose any
liability to the Note Purchaser on the Depositor for any election by the
Depositor not to effect a Minimum Margin Contribution.
(c) Notwithstanding any other provision of this Agreement or any other
Basic Document to the contrary, if the Depositor effects all or any portion of a
Minimum Margin Contribution, the Trust shall immediately (x) pledge to the
Indenture Trustee on behalf of the Noteholders all Qualified Substitute Mortgage
Loans, together with all other assets related thereto, and (y) direct the
Indenture Trustee to remit to the Note Purchaser, all cash contributed to the
Trust by the Depositor in response to the precipitating Margin Option. All such
cash shall be immediately applied to repayment of the principal of the Secured
Notes pro rata in accordance with the Shortfall with respect to each Secured
Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Originators and
the Sponsor. Each of the Originators and the Sponsor hereby represents and
warrants to the Depositor, the Indenture Trustee, the Trust, the Collateral
Agent and the Noteholders, as of the date hereof and each Transfer Date, that:
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(a) The Originators and the Sponsor are corporations duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation, and have all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in each state
where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Originators and the Sponsor and to perform their obligations as the
Originators and the Sponsor hereunder, and in any event the Originators and the
Sponsor are in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage Loan; the
Originators and the Sponsor have the full power and authority, corporate and
otherwise, to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Originators and the Sponsor and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Originators and
the Sponsor; and all requisite corporate action has been taken by the
Originators and the Sponsor to make this Agreement valid and binding upon the
Originators and the Sponsor in accordance with its terms;
(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Originators or the Sponsor of, or compliance by the
Originators or the Sponsor with, this Agreement or the sale of the Mortgage
Loans pursuant to the terms of this Agreement or the consummation of the
transactions contemplated by this Agreement, or if required, such approval has
been obtained prior to the date hereof;
(c) The Sponsor and the Originators are operated, in each case, in a
manner intended to reduce the risk that the Depositor or the Trust would be
substantively consolidated in the bankruptcy estate of the Sponsor or the
Originators, such that the separate existence of the Depositor or the Trust, on
the one hand, and the Sponsor and the Originators, on the other hand, would be
disregarded in the event of a bankruptcy or insolvency of the Sponsor or the
Originators;
(d) The financial statements and books and records of the Sponsor and
the Originators reflect the separate existence of the Depositor or the Trust;
(e) Neither the Sponsor nor any of the Originators acts as an agent of
the Depositor or the Trust in any capacity except to the limited extent provided
in the Basic Documents, but instead presents itself to the public as a
corporation separate from the Depositor and the Trust;
(f) Neither the Sponsor nor the Originators are involved in the
day-to-day management of the Depositor or the Trust, except to the extent
provided in the Basic Documents;
(g) Neither the execution and delivery of this Agreement, nor the
acquisition or origination of the Mortgage Loans by the Originators or the
Sponsor or the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, has or will conflict
with or result in a breach of any of the terms, conditions or provisions of the
Originators' or the Sponsor's charter or by-laws or any legal restriction or any
agreement or instrument to which the Originators or the Sponsor is now a party
or by which it is bound or to which its property is subject, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Originators or the Sponsor or its property is subject, or impair the ability
of the Indenture Trustee (or the Servicer as the agent of the Indenture Trustee)
to realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
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(h) Neither this Agreement nor any statement, report or other document
prepared by the Originators or the Sponsor and furnished or to be furnished
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement or alleged untrue statement of any material
fact or omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading;
(i) Except for the civil subpoena, dated May 14, 2003, received by the
Sponsor from the Civil Division of the United States Attorney for the Eastern
District of Pennsylvania, there is no action, suit, proceeding or investigation
pending or, to the knowledge of the Originators or the Sponsor, threatened
before a court, administrative agency or government tribunal against the
Originators or the Sponsor which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Originators or the
Sponsor, or in any material impairment of the right or ability of the
Originators or the Sponsor to carry on its business substantially as now
conducted, or in any material liability on the part of the Originators or the
Sponsor, or which would draw into question the validity of this Agreement, the
Mortgage Loans, or of any action taken or to be taken in connection with the
obligations of the Originators or the Sponsor contemplated herein, or which
would impair materially the ability of the Originators or the Sponsor to perform
under the terms of this Agreement or that will prohibit its entering into this
Agreement or the consummation of any of the transactions contemplated hereby;
(j) None of the Originators or the Sponsor are in violation of or in
default with respect to, and the execution and delivery of this Agreement by the
Originators or the Sponsor and its performance of and compliance with the terms
hereof will not constitute a violation or default with respect to, any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which violation or default might have
consequences that would materially and adversely affect the condition (financial
or other) or operations of the Originators or the Sponsor or its properties or
might have consequences that would materially and adversely affect its
performance hereunder or under any subservicing agreement;
(k) Upon the receipt of each Servicer's Loan File by the Depositor (or
its assignee) under this Agreement, the Depositor (or its assignee) will have
good title to each related Mortgage Loan and such other items comprising the
corpus of the Trust Estate free and clear of any lien created by the related
Originators (other than liens which will be simultaneously released);
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(l) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Originators, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the
Originators pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;
(m) With respect to any Mortgage Loan purchased by an Originator, such
Originator acquired title to the Mortgage Loan in good faith, without notice of
any adverse claim;
(n) The Originators and the Sponsor do not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Originators and the Sponsor are solvent and the
sale of the Mortgage Loans by the Originators pursuant to the terms of this
Agreement will not cause the Originators nor the Sponsor to become insolvent.
The sale of the Mortgage Loans by the Originators pursuant to the terms of this
Agreement was not undertaken with the intent to hinder, delay or defraud any of
the Originators' or the Sponsor's creditors;
(o) The Mortgage Loans were not intentionally selected in a manner so
as to affect adversely the interests of the Depositor or of any transferee of
the Depositor (including the Trust and the Indenture Trustee);
(p) The Originators have determined that they will treat the
disposition of the Mortgage Loans pursuant to this Agreement as a sale for
accounting purposes;
(q) The Originators has not dealt with any broker or agent or anyone
else that may be entitled to any commission or compensation in connection with
the sale of the Mortgage Loans to the Depositor other than to the Depositor or
an affiliate thereof;
(r) The consideration received by the Originators upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans;
(s) The Originators and the Sponsor are not an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(t) Neither the Originators, the Sponsor, nor any of their respective
Subsidiaries is an "affiliate" or a "subsidiary company" of a "public-utility
company", or a "holding company", or an "affiliate" or a "subsidiary company" of
a "holding company", as such terms are defined in the PUHC Act. Further, none of
the transactions contemplated under the Basic Documents shall cause or
constitute a violation of any of the provisions, rules, regulations or orders,
of or under the PUHC Act and the PUHC Act does not in any manner impair the
legality, validity or enforceability of the Mortgage Loans or Mortgage Notes.
(u) With respect to each Plan, the Originators and the Sponsor and
their respective Subsidiaries have fulfilled their obligations in all material
respects, including obligations under the minimum funding standards of ERISA and
the Code and are in compliance in all material respects with the provisions of
ERISA and the Code. No event has occurred which could result in a liability of
the Originators, the Sponsor or their respective Subsidiaries to the PBGC or a
Plan (other than to make contributions in the ordinary course) would reasonably
be expected to have a Material Adverse Effect on the properties, liabilities,
condition (financial or otherwise), business or operations of the Originators,
the Sponsor or their respective Subsidiaries. There have not been any nor are
there now existing any events or conditions that would cause the Lien provided
under Section 4068 of ERISA to attach to any property of the Originators,
Sponsor or their respective Subsidiaries. Unfunded Liabilities as of the date
hereof do not exceed Twenty-five Thousand Dollars ($25,000). No "prohibited
transaction" has occurred with respect to any Plan.
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(v) The Originators and the Sponsor have filed (or caused to be filed)
all required federal, state and local income, excise, property and other tax
returns with respect to their and their respective Subsidiaries' operations, all
of such returns are true and correct and the Originators and the Sponsor have
paid or caused to be paid -- or is protesting by appropriate proceedings
diligently pursued and has established adequate reserves therefor -- all taxes
which are due and owing under applicable law or as shown on any assessment to
the extent such taxes have become due, including all applicable FICA payments
and withholding taxes. The amounts reserved as a liability for income taxes and
other taxes payable in the financial statements heretofore furnished to the
Indenture Trustee and Note Purchaser are sufficient for payment of all unpaid
federal, state and local income, excise, property and other taxes -- whether or
not disputed -- of the Originators, the Sponsor and their respective
Subsidiaries accrued for or applicable to the period and on the dates of such
financial statements and all prior years and periods, and for which the
Originators, the Sponsor and their respective Subsidiaries may be liable in
their own right or as transferee of the assets of other Person or as successor
to any other Person; and
(w) The balance sheet of the Originators and the Sponsor (and, to the
extent applicable, their Subsidiaries, on a consolidated basis) and the related
financial statements for the fiscal year ended on the Statement Date (the
"Statement Date Financial Statements") hereto furnished to the Collateral Agent,
fairly present the financial condition of the Originators and the Sponsor (and
their Subsidiaries) as at the Statement Date and the results of their operations
for the fiscal period ended on the Statement Date. The Statement Date Financial
Statements were prepared in accordance with GAAP. On the Statement Date, the
Originators and the Sponsor did not have known material liabilities - direct or
indirect, fixed or contingent, matured or unmatured - or liabilities for sales,
long-term leases or unusual forward or long-term commitments not disclosed by
the Statement Date Financial Statements or reserved against them.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and inure to the
benefit of the Indenture Trustee.
Section 3.02. Representations and Warranties of the Servicer and the
Subservicers. Each of the Servicer and the Subservicers hereby represents and
warrants to the Indenture Trustee, the Originators, the Depositor, the
Collateral Agent, the Trust, the Noteholders as of the date hereof and during
the term of this Agreement that:
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(a) Each of the Servicer and the Subservicers is duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation and has the power to own its assets and to transact the
business in which it is currently engaged. Each of the Servicer and the
Subservicers is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance of its
obligations hereunder requires such qualification and in which the failure so to
qualify could reasonably be expected to have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the Servicer
or the Subservicers or the performance of their respective obligations
hereunder;
(b) Each of the Servicer and the Subservicers has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement, and assuming the due authorization, execution and delivery hereof by
the other parties hereto constitutes, or will constitute, the legal, valid and
binding obligation of the Servicer and the Subservicers, enforceable in
accordance with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(c) Neither the Servicer nor any Subservicer is required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency which consent already has not been obtained in connection with the
execution, delivery, performance, validity or enforceability of this Agreement,
except such as have been obtained prior to the date hereof;
(d) The execution, delivery and performance of this Agreement by each
of the Servicer and the Subservicers will not violate any provision of any
existing law or regulation or any order or decree of any court or their
respective charter or bylaws, or constitute a breach of any mortgage, indenture,
contract or other Agreement to which such party is a party or by which it may be
bound;
(e) Except for the civil subpoena, dated May 14, 2003, received by the
Sponsor from the Civil Division of the United States Attorney for the Eastern
District of Pennsylvania, there is no action, suit, proceeding or investigation
pending or, to the knowledge of the Servicer or the Subservicer, threatened
against the Servicer or the Subservicers which, either in any one instance or in
the aggregate, is, in the Servicer's judgment, likely to result in any material
adverse change in the business, operations, financial condition, properties, or
assets of the Servicer or Subservicers, or in any material impairment of the
right or ability of any of them to carry on its business substantially as now
conducted, or in any material liability on the part of any of them, or which
would draw into question the validity of this Agreement, the Secured Notes, or
the Mortgage Loans or of any action taken or to be taken in connection with the
obligations of the Servicer or the Subservicers contemplated herein or therein,
or which would be likely to impair materially the ability of the Servicer or the
Subservicers to perform their respective obligations hereunder;
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(f) Neither this Agreement nor any statement, report, or other document
furnished by the Servicer or the Subservicers pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Secured Notes, contains any untrue
statement of fact provided by or on behalf of the Servicer or the Subservicers
or omits to state a fact necessary to make the statements provided by or on
behalf of the Servicer or the Subservicers contained herein or therein not
misleading;
(g) Neither the Servicer nor any Subservicer believes, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement; and
(h) None of the Servicer or the Subservicers is an "investment company"
or a company "controlled by an investment company," within the meaning of the
Investment Company Act of 1940, as amended.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive the delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and inure to the
benefit of the Indenture Trustee.
Section 3.03. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Originators, the Trust, the Collateral Agent, the
Noteholders and the Servicer that as of the date of this Agreement or as of such
date specifically provided herein:
(a) The Depositor is a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation;
(b) The Depositor is duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(c) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by this Agreement;
(d) The Depositor is not involved in the day-to-day management of the
Sponsor and/or any of the Originators, maintains separate corporate records and
books of account from the Sponsor and the Originators, has a separate business
office from the Sponsor and the Originators and otherwise observes corporate
formalities;
(e) The Depositor maintains its assets separately from the assets of
the Sponsor and the Originators (including through the maintenance of a separate
bank account), the Depositor's funds and assets, and records relating thereto,
have not been and are not commingled with those of the Sponsor and the
Originators and the separate creditors of the Depositor will be entitled to be
satisfied out of the Depositor's assets prior to any value in the Depositor
becoming available to the holders of the Depositor's common stock or the
Sponsor's and/or any of the Originators' creditors;
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(f) All business correspondence of the Depositor and other
communications are conducted in the Depositor's own name and on its own
stationery;
(g) The Depositor is operated in a manner intended to reduce the risk
that it would be substantively consolidated in the bankruptcy estate of the
Sponsor and/or any Originator, such that the separate existence of the Depositor
would be disregarded in the event of a bankruptcy or insolvency of the Sponsor
and/or any Originator;
(h) The Trust is operated in a manner intended to reduce the risk that
the Trust would be substantively consolidated in the bankruptcy estate of the
Depositor, such that the separate existence of the Trust, on the one hand, and
the Depositor, on the other hand, would be disregarded in the event of a
bankruptcy or insolvency of the Depositor;
(i) The financial statements and books and records of the Depositor
reflect the separate existence of the Trust;
(j) The Depositor does not act as an agent of the Trust in any
capacity, except to the extent provided in the Basic Documents, but instead
presents itself to the public as a corporation separate from the Trust;
(k) The Depositor is not involved in the day-to-day management of the
Trust, except to the extent provided in the Basic Documents;
(l) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Depositor, enforceable against the Depositor in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(m) No consent, approval, license, permit, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
date hereof;
(n) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any indenture, deed of trust, contract or other
agreement or instrument to which the Depositor or any of its subsidiaries is a
party or by which it or any of its subsidiaries is bound; (ii) results or will
result in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Depositor of any court or governmental authority having
jurisdiction over the Depositor or its subsidiaries; or (iii) results in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;
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(o) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which would materially and adversely affect the
performance by the Depositor of its obligations under this Agreement, or the
validity or enforceability of this Agreement; and
(p) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that may materially and adversely affect its performance
hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03 shall survive delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and shall inure
to the benefit of the Indenture Trustee.
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represent, warrant and covenant
to the Trust, the Servicer, the Originators, the Sponsor and the Depositor that
as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Indenture Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) The Indenture Trustee has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Indenture Trustee, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Indenture Trustee, enforceable against such party in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be.
Section 3.05. Representations, Warranties and Covenants of the Trust.
The Trust hereby represents, warrants and covenants to the Indenture Trustee
that as of the date of this Agreement or as of such date specifically provided
herein:
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(a) The Trust is a statutory trust duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all power and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is
now conducted. The Trust is duly qualified to do business in, and is in good
standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified.
(b) The Trust has full power and authority to execute and deliver this
Agreement and to perform its obligations under the Basic Documents to which it
is a party. The Basic Documents to which the Trust is a party have been duly
authorized by all necessary action and do not require any additional approval by
anyone that has not already been obtained. The Basic Documents to which the
Trust is a party have been duly executed and delivered by the Trust and
constitute its valid and legally binding obligations, enforceable against it in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity and equitable remedies, regardless of whether enforcement
is considered in a proceeding in equity or at law.
(c) The Secured Notes have been duly authorized, and when the Secured
Notes are issued and delivered pursuant to the indenture, the Secured Notes will
have been duly executed, issued and delivered and will be entitled to the
benefits provided by the Indenture, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting the rights of creditors generally, and to general principles of equity
(regardless of whether the entitlement to such benefits is considered in a
proceeding in equity or at law), and will in all material respects be in the
form contemplated by the Indenture.
(d) Neither the execution and delivery nor the performance by the Trust
of the Basic Documents to which it is a party will conflict with the governing
instruments of the Trust or conflict with, result in a breach, violation or
acceleration of, or constitute a default or require any consent under any
instrument or agreement to which the Trust is a party or by which the Trust or
its properties may be bound, or any law, order, or regulation applicable to the
Trust of any governmental authority having jurisdiction over the Trust or its
properties, and do not and will not result in or require the creation of any
lien (other than pursuant to the Indenture) with respect to any of the Trust's
properties.
(e) Neither the execution and delivery nor the performance by the Trust
of the Basic Documents to which it is a party requires any authorization,
approval, consent, license, exemption (other than any self-executing exemption),
filing, registration, or any other action except those which have been obtained
and are in full force and effect or where the failure to comply with the
requirement would not adversely affect the delivery, execution or performance by
the Trust of the Basic Documents.
(f) Neither the Trust nor any of its Affiliates is in default under any
mortgage, borrowing agreement or other instrument or agreement pertaining to
indebtedness for borrowed money to which it is a party or by which its
properties are bound, which default is likely to result in a Material Adverse
Effect. No Event of Default has occurred and is continuing under any of the
Basic Documents.
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(g) The Trust holds good and indefeasible title to, and is the sole
owner of, all right, title and interest in and to the Trust Estate (including
any and all Mortgage Loans and the related other assets given as security for
any of the Trust's obligations hereunder), free and clear of all liens,
participations and rights of others (except for the lien created by the
Indenture), and on each date this representation is made, the Indenture Trustee
has a first priority lien with respect to the Trust Estate and no further action
in the nature of delivery of possession or filing, including any filing of any
document is required to establish and perfect the lien with respect to the Trust
Estate in favor of the Indenture Trustee against all third parties in any
jurisdiction.
(h) The Trust office is located at c/o Wachovia Trust Company, National
Association, One Xxxxxx Square, 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000
Attn: Corporate Trust Administration. The Custodial Loan Files concerning the
Mortgage Loans are held in the offices of the Collateral Agent in the State of
Texas.
(i) The Trust's federal taxpayer identification number is 00-0000000.
(j) There are no delinquent federal, state, city, county, or other
taxes relating to the Trust.
(k) There are no actions, suits, investigations or other proceedings
pending or, to the best knowledge of the Trust after due inquiry, threatened
against or affecting the Trust by or before any court, arbitrator, or
governmental authority (i) asserting the invalidity of or any of the Basic
Documents, (ii) seeking to prevent the consummation of any of the transactions
contemplated by or any of the Basic Documents, or (iii) which is reasonably
likely to materially and adversely affect the validity, enforceability,
collectability or value of the Secured Notes. There are no preliminary or
permanent injunctions or orders by any court or other governmental authority
pending adversely affecting any of the Basic Documents or any of the
transactions contemplated thereby.
(l) The Trust is not, nor is it controlled by, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(m) The Trust does not have any outstanding debt obligation for money
borrowed, any other (i.e., debt arising for reasons other than money borrowed)
material debt obligations other than the Secured Notes.
(n) The transactions contemplated by the Basic Documents are in the
ordinary course of business of the Trust. The Trust will engage in each
acquisition of Mortgage Loans under this Agreement as a principal and not as an
agent.
(o) The Trust is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder. The Trust will not be rendered insolvent by the execution and
delivery of any of the Basic Documents or the performance of its obligations
hereunder. No petition of bankruptcy (or similar insolvency proceeding) has been
filed by or against the Trust.
(p) In incurring any obligation or making any "transfer" (as defined in
Section 101 of the Bankruptcy Code) of property or any interest therein pursuant
to the Basic Documents (whether in connection with the issue of a Secured Note
or otherwise), the Trust does not intend to hinder, delay or defraud any Person
to which the Trust is or will become, on or after the date on which such
obligation is incurred or such transfer is made, indebted.
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(q) With respect to any obligation incurred by the Trust or any
"transfer" (as defined in Section 101 of the Bankruptcy Code) of property or any
interest therein made by the Trust pursuant to the Basic Documents, (i) the
Trust has received "reasonably equivalent value" within the meaning of Section
548(a)(1)(B)(i) of the Bankruptcy Code for such obligation or transfer, (ii) the
Trust is not and will not become "insolvent" within the meaning of Section
101(32) of the Bankruptcy Code at the time of or as a result of incurring such
obligation or making such transfer, (iii) the Trust is not engaged in, and is
not about to engage in, any business or transaction for which the any property
remaining with the Trust constitutes "unreasonably small capital" within the
meaning of Section 548(a)(1)(B)(ii)(II) of the Bankruptcy Code, and (iv) the
Trust does not intend to incur, and does not believe that it will incur, "debts"
within the meaning of Section 101(12) of the Bankruptcy Code that would be
beyond the Trust's ability to pay as such debts matured.
(r) With respect to any "transfer" (as defined in Section 101 of the
Bankruptcy Code) of property or any interest therein made by the Trust pursuant
to such transfer is intended as a "contemporaneous exchange for new value" given
to the Trust within the meaning of Section 547(c)(1) of the Bankruptcy Code.
(s) The Trust is a limited purpose entity whose primary activities are
restricted in the Trust Agreement and the Basic Documents.
(t) From the date the date of its formation through the date hereof,
the Trust has not been and is not involved in the day-to-day management of the
Sponsor, any of the Originators and/or the Depositor, has maintained and
continues to maintain separate corporate records and books of account from the
Sponsor, the Originators and the Depositor, has a separate business office from
the Sponsor, the Originators and the Depositor and otherwise has and continues
to observe corporate formalities.
(u) From the date the date of its formation through the date hereof,
the Trust has maintained and continues to maintain its assets separately from
the assets of the Sponsor, the Originators and the Depositor (including through
the maintenance of a separate bank account), the Trust's funds and assets, and
records relating thereto, have not been and are not commingled with those of the
Sponsor, the Originators or the Depositor and the separate creditors of the
Trust will be entitled to be satisfied out of the Trust's assets prior to any
value in the Trust becoming available to the holders of the Trust Certificates
or the Sponsor's, any of the Originators' and/or the Trust's creditors.
(v) From the date the date of its formation through the date hereof,
all business correspondence of the Trust and other communications have been and
are conducted in the Trust's own name and on its own stationery.
(w) From the date the date of its formation through the date hereof,
the Trust has been and continues to operate in a manner intended to reduce the
risk that it would be substantively consolidated in the bankruptcy estate of the
Sponsor, any Originator and/or the Trust, such that the separate existence of
the Trust would be disregarded in the event of a bankruptcy or insolvency of the
Sponsor, any Originator and/or the Depositor.
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ARTICLE IV
THE MORTGAGE LOANS; REMEDIES; ADDITIONAL RECOURSE
Section 4.01. Representations and Warranties Relating to the Mortgage
Loans. (a) Each Originator represents and warrants to the Indenture Trustee, the
Collateral Agent, the Trust and the Noteholders that, as of the related Transfer
Date, immediately prior to the sale and transfer of the related Mortgage Loan by
such Originator to the Depositor:
(i) Such Mortgage Loan contains no (i) provisions pursuant to which any
monthly payment due thereunder is (A) paid or partially paid with funds
deposited in any separate account established by the related Originator,
the related Mortgagor, or anyone on behalf of such Mortgagor, or (B) paid
by any source other than such Mortgagor, or (ii) any other provision, of
like effect, that may constitute a "buydown" provision; such Mortgage Loan
is not a graduated payment mortgage loan, and does not have a shared
appreciation or other contingent interest feature;
(ii) The information set forth in each Mortgage Loan Schedule is
complete, true and correct;
(iii) The information to be provided by the Originators to the
Depositor in connection with a Mortgage Loanwill be true and correct in all
material respects at the date or dates respecting which such information is
furnished;
(iv) The Mortgage securing such Mortgage Loan is a valid, existing and
enforceable first or second lien (as indicated on the Mortgage Loan
Schedule with respect thereto) on and in the Mortgaged Property, including
all improvements thereon, subject only to (i) the lien of current real
property taxes and assessments not yet due, (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, all such exceptions appearing
of record being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's policy of title insurance
delivered to the originator of such Mortgage Loan, and specifically
reflected in the appraisal made in connection with the origination of such
Mortgage Loan, (iii) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage, and (iv) if such Mortgage Loan is
a second-lien loan, the prior lien of another lender. Any other Mortgage
Loan Document ("Other Mortgage Loan Document") establishes and creates a
valid, existing and enforceable first or second lien and first or second
priority security interest on the property described therein, and the
Originators have full right to xxxxx x xxxx on and in such Other Mortgage
Loan Document to the Note Purchaser. The lien of Other Mortgage Loan
Documents affects only property incidental to the related Mortgaged
Property, and there is no pledged account or other material security
securing the related Mortgagor's obligations other than the Mortgaged
Property. The related Mortgaged Property was not, as of the date of
origination of such Mortgage Loan, subject to a mortgage, deed of trust,
deed to secure debt or other security instrument creating a lien
subordinate to the lien of the related Mortgage;
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(v) Immediately prior to the transfer and assignment by the related
Originator to the Depositor, the related Originator had good title to, and
was the sole owner of each Mortgage Loan, free of any interest of any other
Person, and the related Originator has transferred all right, title and
interest in each Mortgage Loan to the Depositor;
(vi) Except as otherwise indicated on the Mortgage Loan Schedule, all
monthly payments due on such Mortgage Loan prior to the applicable Cut-Off
Date have been made. The related Originator has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a Person
other than the Mortgagor thereunder, directly or indirectly, for the
payment of any amount required to be paid in respect of such Mortgage Loan.
As of the applicable Cut-Off Date, no payment due under such Mortgage Loan
is delinquent for 30 or more days. No payment under such Mortgage Loan has
been 30 days delinquent more than once during the twelve months immediately
preceding the applicable Cut-Off Date, and no payment under such Mortgage
Loan has ever been 30 or more days delinquent;
(vii) To the best knowledge of the related Originator, there is no
mechanics' lien or claim for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting the
premises subject to any Mortgage which is or may be a lien prior to, or
equal or coordinate with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in (xxix) below;
(viii) At the origination of such Mortgage Loan, all outstanding taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents previously due and owing with
respect to the related Mortgaged Property had been paid, or an escrow of
funds had been established in an amount sufficient to pay for every such
item that remained unpaid and that had been assessed but was not yet due
and payable. As of the applicable Cut-Off Date, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents that previously became due and owing
with respect to such Mortgaged Property have been paid, or an escrow of
funds had been established in an amount sufficient to pay for every such
item that remained unpaid and that had been assessed but was not yet due
and payable;
(ix) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay the
unpaid principal of and interest on the Mortgage Note, are each not subject
to any right of rescission (or any such rescission right has expired in
accordance with applicable law), set-off, counterclaim, or defense,
including the defense of usury, nor will the operation of any of the terms
of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim, or defense, including the defense of usury, and no such right
of rescission, set-off, counterclaim, or defense has been asserted with
respect thereto; and the Mortgagor was not a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(x) The related Mortgage and Mortgage Note, and any Other Mortgage Loan
Document contain the entire agreement of the parties and all obligations of
the Originator or the Trust under the related Mortgage Loan. No terms of
the related Mortgage Note, Mortgage or Other Mortgage Loan Document, if
any, have been impaired, waived, altered or modified in any respect, except
by written instruments, recorded in the applicable public recording office
if necessary to maintain the lien priority of the Mortgage, that have been
delivered to the Collateral Agent. The substance of any such waiver,
alteration or modification has been approved by the title insurer, to the
extent required by the related policy, and has been disclosed to the Note
Purchaser in writing. No Mortgagor has been released, in whole or in part,
except in connection with an assumption or partial release agreement
approved by the title insurer, to the extent required by the policy, and
which assumption agreement has been delivered to the Collateral Agent and
the terms of which have been disclosed to the Note Purchaser in writing;
(xi) To the best knowledge of the related Originator, the Mortgaged
Property is in good repair and is free of material damage and there is no
pending or threatened proceeding for the total or partial condemnation of
the Mortgaged Property;
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(xii) The related Originator has not received a notice of default of
any first mortgage loan secured by the Mortgaged Property which has not
been cured by a party other than the related Originator;
(xiii) Each Mortgage Note and Mortgage are in substantially the forms
previously provided to the Depositor and the Indenture Trustee by the
related Originator;
(xiv) The Mortgage Loan was not originated in a program in which the
amount of documentation in the underwriting process was limited in
comparison to the related Originator's normal documentation requirements,
which, for the avoidance of doubt, means limited documentation programs
which may otherwise be permitted under the Underwriting Guidelines;
(xv) The Mortgage Loans were not selected by the related Originator for
sale hereunder or inclusion in the Trust Estate on any basis adverse to the
Trust Estate relative to the portfolio of similar mortgage loans of such
Originator;
(xvi) None of the Mortgage Loans constitutes a lien on leasehold
interests;
(xvii) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. To the
best of the related Originator's knowledge, there is no homestead or other
exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Mortgaged Property at a
trustee's sale or the right to foreclose the related Mortgage. The Mortgage
contains customary and enforceable provisions for the acceleration of the
payment of the Principal Balance of such Mortgage Loan in the event all or
any part of the related Mortgaged Property is sold or otherwise transferred
without the prior written consent of the holder thereof;
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(xviii) The proceeds of such Mortgage Loan have been fully disbursed,
including reserves set aside by the related Originator, there is no
requirement for, and the related Originator shall not make any future
advances thereunder. Any future advances made prior to the applicable
Cut-Off Date have been consolidated with the principal balance secured by
the Mortgage, and such principal balance, as consolidated, bears a single
interest rate and single repayment term reflected on the applicable
Mortgage Loan Schedule. The Principal Balance as of the applicable Cut-Off
Date does not exceed the original principal amount of such Mortgage Loan.
Except with respect to no more than $150,000 of escrow funds in the
aggregate with respect to all Mortgage Loans, any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees, and expenses incurred in making, or recording such Mortgage
Loan have been paid;
(xix) All Mortgage Loans were originated in compliance with the related
Originator's Underwriting Guidelines;
(xx) The terms of the Mortgage and the Mortgage Note have not been
impaired, waived, altered, or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interest of
the Indenture Trustee, and which has been delivered to the Collateral
Agent, on behalf of the Indenture Trustee. The substance of any such
alteration or modification is or as to Mortgage Loans will be reflected on
the applicable Mortgage Loan Schedule and, to the extent necessary, has
been or will be approved by (i) the insurer under the applicable mortgage
title insurance policy, and (ii) the insurer under any other insurance
policy required hereunder for such Mortgage Loan where such insurance
policy requires approval and the failure to procure approval would impair
coverage under such policy;
(xxi) No instrument of release, waiver, alteration, or modification has
been executed in connection with such Mortgage Loan, and no Mortgagor has
been released, in whole or in part, except in connection with an assumption
agreement which has been approved by the insurer under any insurance policy
required hereunder for such Mortgage Loan where such policy requires
approval and the failure to procure approval would impair coverage under
such policy, and which is part of the Servicer's Loan File and has been
delivered to the Collateral Agent, on behalf of the Indenture Trustee, and
the terms of which are reflected in the applicable Mortgage Loan Schedule;
(xxii) There is no default, breach, violation, or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event of
acceleration, and the related Originator has not waived any such default,
breach, violation or event of acceleration. All taxes, governmental
assessments (including assessments payable in future installments),
insurance premiums, water, sewer, and municipal charges, leaseholder
payments, or ground rents which previously became due and owing in respect
of or affecting the related Mortgaged Property have been paid. The related
Originator has not advanced funds, or induced, solicited, or knowingly
received any advance of funds by a party other than the Mortgagor, directly
or indirectly, for the payment of any amount required by the Mortgage or
the Mortgage Note;
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(xxiii) Principal payments on such Mortgage Loan commenced no more than
two (2) months after the proceeds of such Mortgage Loan were disbursed. If
such Mortgage Loan is an adjustable rate loan, on each interest adjustment
date under such Mortgage Loan, the mortgage interest rate will be adjusted
to equal the index plus the gross margin, rounded to the nearest (or next
highest, as applicable) 0.125%, subject to the periodic rate cap, the
maximum rate and the minimum rate set forth in the Mortgage Loan Schedule.
The related Mortgage Note is payable on the day of each month indicated on
the Mortgage Loan Schedule with respect to such Mortgage Loan in
self-amortizing monthly installments of principal and interest, with
interest payable in arrears, and requires a monthly payment that is
sufficient to fully amortize the outstanding principal balance of such
Mortgage Loan over its remaining term and to pay interest at the applicable
interest rate. If such Mortgage Loan is an adjustable rate loan, the
related Mortgage Note provides that the monthly payments will be changed on
each adjustment date indicated on such Mortgage Loan Schedule to an amount
that will amortize the unpaid principal balance of such Mortgage Loan over
its remaining term at the mortgage interest rate established on such
adjustment date. If such Mortgage Loan is a fixed-rate loan and provides
for the payment of a balloon payment, such Mortgage Loan is fully
amortizing over a period of not more than 30 years and has a term to
maturity of not less than 10 years and not more than 30 years. The related
Mortgage Note does not permit negative amortization. If such Mortgage Loan
is an adjustable rate loan, the related Mortgage Note does not permit the
related Mortgagor to convert such Mortgage Loan to a fixed-rate loan;
(xxiv) All of the improvements which were included for the purposes of
determining the Appraised Value of the Mortgaged Property were completed at
the time that such Mortgage Loan was originated and lie wholly within the
boundaries and building restriction lines of such Mortgaged Property.
Except for de minimis encroachments, no improvements on adjoining
properties encroach upon the Mortgaged Property. To the best of the related
Originator's knowledge, no improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation. All inspections, licenses, and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property
(including all such improvements which were included for the purpose of
determining such Appraised Value) and, with respect to the use and
occupancy of the same, including but not limited to certificates of
occupancy and fire underwriters certificates, have been made or obtained
from the appropriate authorities and the Mortgaged Property is lawfully
occupied under applicable law;
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(xxv) To the best of the related Originator's knowledge, there does not
exist any circumstances or conditions with respect to the Mortgage, the
Mortgaged Property, the Mortgagor, or the Mortgagor's credit standing that
can be reasonably expected to cause such Mortgage Loan to become delinquent
or adversely affect the value or marketability of such Mortgage Loan, other
than any such circumstances or conditions permitted under the related
Originator's Underwriting Guidelines;
(xxvi) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (i) in compliance with
any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located and (ii) (A) organized under the
laws of such state, (B) qualified to do business in such state, (C) federal
savings and loan associations or national banks having principal offices in
such state, (D) not doing business in such state, or (E) not required to
qualify to do business in such state;
(xxvii) The Mortgage Note and the Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally and except that
the equitable remedy of specific performance and other equitable remedies
are subject to the discretion of the courts. All parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage Note and
the Mortgage and convey the estate therein purported to be conveyed, and
the Mortgage Note and the Mortgage have been duly and properly executed by
such parties or pursuant to a valid power-of-attorney that has been
recorded with the Mortgage;
(xxviii) The transfer of the Mortgage Note and the Mortgage as and in
the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Depositor all right, title, and interest of the related
Originator thereto as note holder and mortgagee or (ii) to grant to the
Depositor the security interest referred to in Section 2.03(c) hereof and
thereafter (x) to transfer the right, title and interest of the Depositor
to the Trust and (y) to pledge the interest of the Trust to the Indenture
Trustee for the benefit of the Noteholders. The Mortgage has been duly
assigned and the Mortgage Note has been duly endorsed. The Assignment of
Mortgage delivered to the Collateral Agent, on behalf of the Indenture
Trustee, pursuant to Section 2.06(a)(iv) is in recordable form and is
acceptable for recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Collateral Agent, on
behalf of the Indenture Trustee, of the endorsed Mortgage Note, and such
Assignment of Mortgage, and the delivery of such Assignment of Mortgage for
recording to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the
Mortgaged Property is located are sufficient to permit the Indenture
Trustee to avail itself of all protection available under applicable law
against the claims of any present or future creditors of the Depositor and
the related Originator, and are sufficient to prevent any other sale,
transfer, assignment, pledge, or hypothecation of the Mortgage Note and
Mortgage by the Depositor or the related Originator from being enforceable;
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(xxix) Any and all requirements of any federal, state, or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, predatory and abusive
lending laws, equal credit opportunity, fair housing, or disclosure laws
applicable to such Mortgage Loan have been complied with, and the Mortgage
Loan is covered by an ALTA mortgage title insurance policy or such other
generally used and acceptable form of policy, issued by and the valid and
binding obligation of a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the related
Originator, and its successors and assigns, as to the first or second
priority lien, as applicable, of the Mortgage in the original principal
amount of such Mortgage Loan. The assignment to the Indenture Trustee of
the related Originator's interest in such mortgage title insurance policy
does not require the consent of or notification to the insurer. Such
mortgage title insurance policy is in full force and effect and will be in
full force and effect and inure to the benefit of the Indenture Trustee
upon the consummation of the transactions contemplated by this Agreement.
No claims have been made under such mortgage title insurance policy and
neither the related Originator nor any prior holder of the Mortgage has
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy;
(xxx) All improvements upon the Mortgaged Property are insured against
loss by fire, hazards of extended coverage, and such other hazards as are
customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Section 7.04 hereof.
If the Mortgaged Property at origination was located in an area identified
on a flood hazard boundary map or flood insurance rate map issued by the
Federal Emergency Management Agency as having special flood hazards (and
such flood insurance has been made available), such Mortgaged Property was
covered by flood insurance at origination. Each individual insurance policy
is the valid and binding obligation of the insurer, is in full force and
effect, and will be in full force and effect and inure to the benefit of
the Indenture Trustee upon the consummation of the transactions
contemplated by this Agreement, and contain a standard mortgage clause
naming the originator of such Mortgage Loan, and its successors and
assigns, as mortgagee and loss payee. All premiums thereon have been paid.
The Mortgage obligates the Mortgagor to maintain all such insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance
at the Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor, and neither the related Originator or any prior holder of
the Mortgage has acted or failed to act so as to impair the coverage of any
such insurance policy or the validity, binding effect, and enforceability
thereof;
(xxxi) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the trustee or the
Noteholders to the Indenture Trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(xxxii) The Mortgaged Property consists of one or more parcels of real
property separately assessed for tax purposes. To the extent there is
erected thereon a detached or an attached one-family residence or a
detached two-to four-family dwelling, or an individual condominium unit in
a low-rise condominium, or an individual unit in a planned unit
development, or a commercial property, manufactured dwelling, or a
mixed-use or multiple purpose property, such residence, dwelling or unit is
not (i) a unit in a cooperative apartment, (ii) a property constituting
part of a syndication, (iii) a time share unit, (iv) a property held in
trust, (v) a mobile home, (vi) a log-constructed home, or (vii) a
recreational vehicle;
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(xxxiii) There exist no material deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the related
Originator expects not to be cured, and no escrow deposits or payments of
other charges or payments due the related Originator have been capitalized
under the Mortgage or the Mortgage Note;
(xxxiv) Such Mortgage Loan was not originated at a below market
interest rate. Such Mortgage Loan does not have a shared appreciation
feature, or other contingent interest feature;
(xxxv) The origination and collection practices used by the related
Originator or the Servicer with respect to such Mortgage Loan have been in
all respects legal, proper, prudent, and customary in the mortgage
origination and servicing business;
(xxxvi) The Mortgagor has, to the extent required by applicable law,
executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to
the making of fixed-rate mortgage loans. The Servicer shall maintain or
cause to be maintained such statement in the Servicer's Loan File. If such
Mortgage Loan is an adjustable rate loan, the related Mortgagor has
executed a statement to the effect that such Mortgagor has received all
disclosure materials required by applicable law with respect to the making
of adjustable rate mortgage loans, and the Servicer will ensure that such
statement is and will remain in the related Custodial Loan File;
(xxxvii) If such Mortgage Loan is a refinancing Mortgage Loan, the
related Mortgagor has received all disclosure and rescission materials
required by applicable law with respect to the making of a refinancing
Mortgage Loan, and evidence of such receipt is and will remain in the
related Custodial Loan File;
(xxxviii)All amounts received by the related Originator with respect to
such Mortgage Loan after the applicable Cut-Off Date and required to be
deposited in the Payment Account have been so deposited in the Collection
Account and are, as of the related Transfer Date, in the Collection
Account;
(xxxix) The Servicer's Loan File with respect to such Mortgage Loan
contains an appraisal of the related Mortgaged Property made and signed,
prior to the approval of the application for such Mortgage Loan, by a
qualified appraiser (i) who, at the time of such appraisal, met the minimum
qualifications of Xxxxxx Xxx or Xxxxxxx Mac and the requirements of the
related Originator's appraisal policy and (ii) who satisfied (and which
appraisal was conducted in accordance with) all of the applicable
requirements of the Uniform Standards of Professional Appraisal Practice in
effect at the time of such appraisal and procedures. Such appraiser had no
interest, direct or indirect, in such Mortgaged Property or in any loan
made on the security thereof, and such appraiser's compensation was not
affected by the approval or disapproval of such Mortgage Loan;
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(xl) The related Originator has no knowledge with respect to the
Mortgaged Property of any no governmental or regulatory action or third
party claim made, instituted or threatened in writing relating to a
violation of any applicable federal, state or local environmental law,
statute, ordinance, regulation, order, decree or standard;
(xli) With respect to second lien Mortgage Loans:
1) the related Originator has no knowledge that the Mortgagor has
received notice from the holder of the prior mortgage that such prior
mortgage is in default,
2) no consent from the holder of the prior mortgage is needed for
the creation of the second lien Mortgage or, if required, has been
obtained and is in the related Servicer's Loan File,
3) if the prior mortgage has a negative amortization feature, the
CLTV was determined using the maximum loan amount of such prior
mortgage, and
4) the related first mortgage loan encumbering the related
Mortgaged Property does not have a mandatory future advance provision;
(xlii) Each of the Mortgage Loans is (A) subject to a Take-out
Commitment (which can be in the form of a forward sale) and saleable on a
whole loan basis pursuant to terms and conditions customary in the
secondary market for residential mortgage loans or (B) is securitizable
upon substantially the same terms and conditions as the mortgage loans
included in the ABFS Mortgage Loan Trust 2003-1;
(xliii) To the best of the related Originator's knowledge no error,
omission, misrepresentation, negligence, fraud or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any person,
including without limitation the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage
Loan or in the application of any insurance in relation to such Mortgage
Loan;
(xliv) Each Mortgaged Property is in compliance with all environmental
laws, ordinances, rules, regulations and orders of federal, state or
governmental authorities relating thereto. No hazardous material has been
or is incorporated in, stored on or under (other than properly stored
materials, used for reasonable residential purposes), released from,
treated on, transported to or from, or disposed of on or from, any
Mortgaged Property such that, under applicable law (A) any such hazardous
material would be required to be eliminated before the Mortgaged Property
could be altered, renovated, demolished or transferred, or (B) the owner of
the Mortgaged Property, or the holder of a security interest therein, could
be subjected to liability for the removal of such hazardous material or the
elimination of the hazard created thereby. Neither the related Originator
nor any Mortgagor has received notification from any federal, state or
other governmental authority relating to any hazardous materials on or
affecting the Mortgaged Property or to any potential or known liability
under any environmental law arising from the ownership or operation of the
Mortgaged Property. For the purposes of this subsection, the term
"hazardous materials" shall include, without limitation, gasoline,
petroleum products, explosives, radioactive materials, polychlorinated
biphenyls or related or similar materials, asbestos or any material
containing asbestos, lead, lead-based paint and any other substance or
material as may be defined as a hazardous or toxic substance by any
federal, state or local environmental law, ordinance, rule, regulation or
order, including, without limitation, CERCLA, the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and any regulations promulgated pursuant thereto;
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(xlv) With respect to any Mortgage Loan secured by a Business Purpose
Property, the related Mortgage Note contains an acceleration clause,
accelerating the maturity date under the Mortgage Note to the date the
individual guarantying such loan, if any, becomes subject to any
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally;
(xlvi) The related Originator further represents and warrants to the
Indenture Trustee and the Noteholders that as of the Cut-Off Date all
representations and warranties set forth in clauses (i) through (xlv) above
will be correct in all material respects as to each Mortgage Loan, and the
following representation will be correct: as of the applicable Cut-Off
Date, no payment due under such Mortgage Loan is delinquent for 30 or more
days. No payment under such Mortgage Loan has been 30 days delinquent more
than once during the twelve months immediately preceding the applicable
Cut-Off Date, and no payment under such Mortgage Loan has ever been 30 or
more days delinquent;
(xlvii) No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgaged Property or (ii) facilitating
the trade-in or exchange of a Mortgaged Property;
(xlviii) The Mortgage Note is not and has not been secured by any
collateral except the lien or the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreements;
(xlix) Reserved;
(l) Reserved;
(li) Reserved;
(lii) Reserved;
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(liii) The Mortgage Loan is a "qualified mortgage loan" within the
meaning of Section 860G(a)(3) of the Code;
(liv) No Mortgage Loan (a) is subject to Section 226.32 of Regulation Z
or any similar state law (relating to high interest rate credit/lending
transactions), or (b) contains any term or condition, or involve any loan
origination practice, that has been defined as "predatory," "covered" or
"threshold" under applicable federal, state or local law, or which has been
expressly categorized as an "unfair" or "deceptive" term, condition, or
practice in any applicable federal, state or local law (or the regulations
promulgated thereunder) dealing with "predatory" or "high cost" mortgage
lending (or a similarly classified loan using different terminology under a
law, regulation or ordinance imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees);
(lv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the Mortgagee thereunder;
(lvi) With respect to each adjustable rate Mortgage Loans, all Mortgage
Interest Rate adjustments have been made in strict compliance with state
and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state and local law has been properly paid
and credited;
(lvii) The Mortgagor is one or more natural persons and/or trustees for
an Illinois land trust or a trustee under a "living trust" and such "living
trust" is in compliance with Xxxxxx Mae guidelines for such trusts. Either
the Mortgagor is a natural person or the related co-borrower or guarantor
is a natural person. No Mortgagor is an Affiliate of the Originators, the
Sponsor, the Depositor or the Servicer;
(lviii) The Mortgage Loans in the aggregate satisfy the Portfolio
Composition Criteria; and
(lix) Each and every Mortgage Loan is an Eligible Mortgage Loan.
(b) The Depositor hereby represents and warrants to the Indenture
Trustee, the Collateral Agent, the Trust and the Noteholders that, as of the
related Transfer Date, immediately prior to the sale and transfer of such
Mortgage Loan by the Depositor to the Trust:
(i) Such Mortgage Loan contains no (i) provisions pursuant to which any
monthly payment due thereunder is (A) paid or partially paid with funds
deposited in any separate account established by the related Originator,
the related Mortgagor, or anyone on behalf of such Mortgagor, or (B) paid
by any source other than such Mortgagor, or (ii) any other provision, of
like effect, that may constitute a "buydown" provision. Such Mortgage Loan
is not a graduated payment mortgage loan, and does not have a shared
appreciation or other contingent interest feature;
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(ii) The information set forth in each Mortgage Loan Schedule is
complete, true and correct;
(iii) The information to be provided by the Depositor to the Trust in
connection with a Mortgage Loan will be true and correct in all material
respects at the date or dates respecting which such information is
furnished;
(iv) The Mortgage securing such Mortgage Loan is a valid, existing and
enforceable first or second lien (as indicated on the Mortgage Loan
Schedule with respect thereto) on and in the Mortgaged Property, including
all improvements thereon, subject only to (i) the lien of current real
property taxes and assessments not yet due, (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, all such exceptions appearing
of record being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's policy of title insurance
delivered to the originator of such Mortgage Loan, and specifically
reflected in the appraisal made in connection with the origination of such
Mortgage Loan, (iii) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage, and (iv) if such Mortgage Loan is
a second-lien loan, the prior lien of another lender. Any Other Mortgage
Loan Document establishes and creates a valid, existing and enforceable
first or second lien and first or second priority security interest on the
property described therein, and the Originators have full right to xxxxx x
xxxx on and in such Other Mortgage Loan Document to the Note Purchaser. The
lien of Other Mortgage Loan Documents affects only property incidental to
the related Mortgaged Property, and there is no pledged account or other
material security securing the related Mortgagor's obligations other than
the Mortgaged Property. The related Mortgaged Property was not, as of the
date of origination of such Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the related Mortgage;
(v) Immediately prior to the transfer and assignment by the Depositor
to the Trust, the Depositor had good title to, and was the sole owner of
each Mortgage Loan, free of any interest of any other Person, and the
Depositor has transferred all right, title and interest in each Mortgage
Loan to the Trust;
(vi) Except as otherwise indicated on the Mortgage Loan Schedule, all
monthly payments due on such Mortgage Loan prior to the applicable Cut-Off
Date have been made. The related Originator has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a Person
other than the Mortgagor thereunder, directly or indirectly, for the
payment of any amount required to be paid in respect of such Mortgage Loan.
As of the applicable Cut-Off Date, no payment due under such Mortgage Loan
is delinquent for 30 or more days. No payment under such Mortgage Loan has
been 30 days delinquent more than once during the twelve months immediately
preceding the applicable Cut-Off Date, and no payment under such Mortgage
Loan has ever been 30 or more days delinquent;
(vii) To the best of the Depositor's knowledge, there is no mechanics'
lien or claim for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the premises subject
to any Mortgage which is or may be a lien prior to, or equal or coordinate
with, the lien of such Mortgage, except those which are insured against by
the title insurance policy referred to in (xxix) below;
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(viii) At the origination of such Mortgage Loan, all outstanding taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents previously due and owing with
respect to the related Mortgaged Property had been paid, or an escrow of
funds had been established in an amount sufficient to pay for every such
item that remained unpaid and that had been assessed but was not yet due
and payable. As of the applicable Cut-Off Date, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents that previously became due and owing
with respect to such Mortgaged Property have been paid, or an escrow of
funds had been established in an amount sufficient to pay for every such
item that remained unpaid and that had been assessed but was not yet due
and payable;
(ix) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay the
unpaid principal of and interest on the Mortgage Note, are each not subject
to any right of rescission (or any such rescission right has expired in
accordance with applicable law), set-off, counterclaim, or defense,
including the defense of usury, nor will the operation of any of the terms
of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim, or defense, including the defense of usury, and no such right
of rescission, set-off, counterclaim, or defense has been asserted with
respect thereto; and the Mortgagor was not a debtor in any state or federal
bankruptcy insolvency proceeding at the time the Mortgage Loan was
originated;
(x) The related Mortgage and Mortgage Note, and any Other Mortgage Loan
Document contain the entire agreement of the parties and all obligations of
the Originator or the Trust under the related Mortgage Loan. No terms of
the related Mortgage Note, Mortgage or Other Mortgage Loan Document, if
any, have been impaired, waived, altered or modified in any respect, except
by written instruments, recorded in the applicable public recording office
if necessary to maintain the lien priority of the Mortgage, that have been
delivered to the Collateral Agent. The substance of any such waiver,
alteration or modification has been approved by the title insurer, to the
extent required by the related policy, and has been disclosed to the Note
Purchaser in writing. No Mortgagor has been released, in whole or in part,
except in connection with an assumption or partial release agreement
approved by the title insurer, to the extent required by the policy, and
which assumption agreement has been delivered to the Collateral Agent and
the terms of which have been disclosed to the Note Purchaser in writing.
(xi) To the best knowledge of the Depositor, the Mortgaged Property is
free of material damage and is in good repair, and there is no pending or
threatened proceeding for the total or partial condemnation of the
Mortgaged Property;
(xii) The Depositor has not received a notice of default of any first
mortgage loan secured by the Mortgaged Property which has not been cured by
a party other than the related Originator;
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(xiii) Each Mortgage Note and Mortgage are in substantially the forms
previously provided to the Depositor and the Indenture Trustee by the
related Originator;
(xiv) The Mortgage Loan was not originated in a program in which the
amount of documentation in the underwriting process was limited in
comparison to the related Originator's normal documentation requirements,
which, for the avoidance of doubt, means limited documentation programs
which may otherwise be permitted under the Underwriting Guidelines;
(xv) The Mortgage Loans were not selected by the Depositor for sale
hereunder or inclusion in the Trust Estate on any basis adverse to the
Trust Estate relative to the portfolio of similar mortgage loans of the
Depositor;
(xvi) None of the Mortgage Loans constitutes a lien on leasehold
interests;
(xvii) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. To the
best of the Depositor's knowledge, there is no homestead or other exemption
available to the related Mortgagor which would materially interfere with
the right to sell the related Mortgaged Property at a trustee's sale or the
right to foreclose the related Mortgage. The Mortgage contains customary
and enforceable provisions for the acceleration of the payment of the
Principal Balance of such Mortgage Loan in the event all or any part of the
related Mortgaged Property is sold or otherwise transferred without the
prior written consent of the holder thereof;
(xviii) The proceeds of such Mortgage Loan have been fully disbursed,
including reserves set aside by the related Originator, there is no
requirement for, and the Depositor shall not make any future advances
thereunder. Any future advances made prior to the applicable Cut-Off Date
have been consolidated with the principal balance secured by the Mortgage,
and such principal balance, as consolidated, bears a single interest rate
and single repayment term reflected on the applicable Mortgage Loan
Schedule. The Principal Balance as of the applicable Cut-Off Date does not
exceed the original principal amount of such Mortgage Loan. Except with
respect to no more than $150,000 of escrow funds in the aggregate with
respect to all Mortgage Loans, any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees, and expenses
incurred in making, or recording such Mortgage Loan have been paid;
-41-
(xix) All Mortgage Loans were originated in compliance with the related
Originator's Underwriting Guidelines;
(xx) The terms of the Mortgage and the Mortgage Note have not been
impaired, waived, altered, or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interest of
the Indenture Trustee, and which has been delivered to the Collateral
Agent, on behalf of the Indenture Trustee. The substance of any such
alteration or modification is or as to Mortgage Loans will be reflected on
the applicable Mortgage Loan Schedule and, to the extent necessary, has
been or will be approved by (i) the insurer under the applicable mortgage
title insurance policy, and (ii) the insurer under any other insurance
policy required hereunder for such Mortgage Loan where such insurance
policy requires approval and the failure to procure approval would impair
coverage under such policy;
(xxi) No instrument of release, waiver, alteration, or modification has
been executed in connection with such Mortgage Loan, and no Mortgagor has
been released, in whole or in part, except in connection with an assumption
agreement which has been approved by the insurer under any insurance policy
required hereunder for such Mortgage Loan where such policy requires
approval and the failure to procure approval would impair coverage under
such policy, and which is part of the Servicer's Loan File and has been
delivered to the Collateral Agent, on behalf of the Indenture Trustee, and
the terms of which are reflected in the applicable Mortgage Loan Schedule;
(xxii) There is no default, breach, violation, or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event of
acceleration, and neither the Depositor has not waived any such default,
breach, violation or event of acceleration. All taxes, governmental
assessments (including assessments payable in future installments),
insurance premiums, water, sewer, and municipal charges, leaseholder
payments, or ground rents which previously became due and owing in respect
of or affecting the related Mortgaged Property have been paid. The
Depositor has not advanced funds, or induced, solicited, or knowingly
received any advance of funds by a party other than the Mortgagor, directly
or indirectly, for the payment of any amount required by the Mortgage or
the Mortgage Note;
(xxiii) Principal payments on such Mortgage Loan commenced no more than
two (2) months after the proceeds of such Mortgage Loan were disbursed. If
such Mortgage Loan is an adjustable rate loan, on each interest adjustment
date under such Mortgage Loan, the mortgage interest rate will be adjusted
to equal the index plus the gross margin, rounded to the nearest (or next
highest, as applicable) 0.125%, subject to the periodic rate cap, the
maximum rate and the minimum rate set forth in the Mortgage Loan Schedule.
The related Mortgage Note is payable on the day of each month indicated on
the Mortgage Loan Schedule with respect to such Mortgage Loan in
self-amortizing monthly installments of principal and interest, with
interest payable in arrears, and requires a monthly payment that is
sufficient to fully amortize the outstanding principal balance of such
Mortgage Loan over its remaining term and to pay interest at the applicable
interest rate. If such Mortgage Loan is an adjustable rate loan, the
-42-
related Mortgage Note provides that the monthly payments will be changed on
each adjustment date indicated on such Mortgage Loan Schedule to an amount
that will amortize the unpaid principal balance of such Mortgage Loan over
its remaining term at the mortgage interest rate established on such
adjustment date. If such Mortgage Loan is a fixed-rate loan and provides
for the payment of a balloon payment, such Mortgage Loan is fully
amortizing over a period of not more than 30 years and has a term to
maturity of not less than 10 years and not more than 30 years. The related
Mortgage Note does not permit negative amortization. If such Mortgage Loan
is an adjustable rate loan, the related Mortgage Note does not permit the
related Mortgagor to convert such Mortgage Loan to a fixed-rate loan;
(xxiv) All of the improvements which were included for the purposes of
determining the Appraised Value of the Mortgaged Property were completed at
the time that such Mortgage Loan was originated and lie wholly within the
boundaries and building restriction lines of such Mortgaged Property.
Except for de minimis encroachments, no improvements on adjoining
properties encroach upon the Mortgaged Property. To the best of the
Depositor's knowledge, no improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation. All inspections, licenses, and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property
(including all such improvements which were included for the purpose of
determining such Appraised Value) and, with respect to the use and
occupancy of the same, including but not limited to certificates of
occupancy and fire underwriters certificates, have been made or obtained
from the appropriate authorities and the Mortgaged Property is lawfully
occupied under applicable law;
(xxv) To the best of the Depositor's knowledge, there does not exist
any circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor, or the Mortgagor's credit standing that can be
reasonably expected to cause such Mortgage Loan to become delinquent or
adversely affect the value or marketability of such Mortgage Loan, other
than any such circumstances or conditions permitted under the related
Originator's Underwriting Guidelines;
(xxvi) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (i) in compliance with
any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located and (ii) (A) organized under the
laws of such state, (B) qualified to do business in such state, (C) federal
savings and loan associations or national banks having principal offices in
such state, (D) not doing business in such state, or (E) not required to
qualify to do business in such state;
(xxvii) The Mortgage Note and the Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally and except that
the equitable remedy of specific performance and other equitable remedies
are subject to the discretion of the courts. All parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage Note and
the Mortgage and convey the estate therein purported to be conveyed, and
the Mortgage Note and the Mortgage have been duly and properly executed by
such parties or pursuant to a valid power-of-attorney that has been
recorded with the Mortgage;
-43-
(xxviii) The transfer of the Mortgage Note and the Mortgage as and in
the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Depositor all right, title, and interest of the related
Originator thereto as note holder and mortgagee or (ii) to grant to the
Depositor the security interest referred to in Section 2.03(c) hereof and
thereafter (x) to transfer the right, title and interest of the Depositor
to the Trust and (y) to pledge the interest of the Trust to the Indenture
Trustee for the benefit of the Noteholders. The Mortgage has been duly
assigned and the Mortgage Note has been duly endorsed. The Assignment of
Mortgage delivered to the Collateral Agent, on behalf of the Indenture
Trustee, pursuant to Section 2.06(a)(iv) is in recordable form and is
acceptable for recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Collateral Agent, on
behalf of the Indenture Trustee, of the endorsed Mortgage Note, and such
Assignment of Mortgage, and the delivery of such Assignment of Mortgage for
recording to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the
Mortgaged Property is located are sufficient to permit the Indenture
Trustee to avail itself of all protection available under applicable law
against the claims of any present or future creditors of the Depositor, and
are sufficient to prevent any other sale, transfer, assignment, pledge, or
hypothecation of the Mortgage Note and Mortgage by the Depositor from being
enforceable;
(xxix) Any and all requirements of any federal, state, or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, predatory and abusive
lending laws, equal credit opportunity, fair housing or disclosure laws
applicable to such Mortgage Loan have been complied with, and the Mortgage
Loan is covered by an ALTA mortgage title insurance policy or such other
generally used and acceptable form of policy, issued by and the valid and
binding obligation of a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the related
Originator, and its successors and assigns, as to the first or second
priority lien, as applicable, of the Mortgage in the original principal
amount of such Mortgage Loan. The assignment to the Indenture Trustee of
the related Originator's interest in such mortgage title insurance policy
does not require the consent of or notification to the insurer. Such
mortgage title insurance policy is in full force and effect and will be in
full force and effect and inure to the benefit of the Indenture Trustee
upon the consummation of the transactions contemplated by this Agreement.
No claims have been made under such mortgage title insurance policy and
neither the Depositor nor any prior holder of the Mortgage has done, by act
or omission, anything which would impair the coverage of such mortgage
title insurance policy;
-44-
(xxx) All improvements upon the Mortgaged Property are insured against
loss by fire, hazards of extended coverage, and such other hazards as are
customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Section 7.04 hereof.
If the Mortgaged Property at origination was located in an area identified
on a flood hazard boundary map or flood insurance rate map issued by the
Federal Emergency Management Agency as having special flood hazards (and
such flood insurance has been made available), such Mortgaged Property was
covered by flood insurance at origination. Each individual insurance policy
is the valid and binding obligation of the insurer, is in full force and
effect, and will be in full force and effect and inure to the benefit of
the Indenture Trustee upon the consummation of the transactions
contemplated by this Agreement, and contain a standard mortgage clause
naming the originator of such Mortgage Loan, and its successors and
assigns, as mortgagee and loss payee. All premiums thereon have been paid.
The Mortgage obligates the Mortgagor to maintain all such insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance
at the Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor, and neither the Depositor or any prior holder of the
Mortgage has acted or failed to act so as to impair the coverage of any
such insurance policy or the validity, binding effect, and enforceability
thereof;
(xxxi) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the trustee or the
Noteholders to the Indenture Trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(xxxii) The Mortgaged Property consists of one or more parcels of real
property separately assessed for tax purposes. To the extent there is
erected thereon a detached or an attached one-family residence or a
detached two- to four-family dwelling, or an individual condominium unit in
a low-rise condominium, or an individual unit in a planned unit
development, or a commercial property, a manufactured dwelling, or a
mixed-use or multiple purpose property, such residence, dwelling or unit is
not (i) a unit in a cooperative apartment, (ii) a property constituting
part of a syndication, (iii) a time share unit, (iv) a property held in
trust, (v) a mobile home, (vi) a log-constructed home, or (vii) a
recreational vehicle;
(xxxiii) There exist no material deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the
Depositor expects not to be cured, and no escrow deposits or payments of
other charges or payments due the Depositor have been capitalized under the
Mortgage or the Mortgage Note;
(xxxiv) Such Mortgage Loan was not originated at a below market
interest rate. Such Mortgage Loan does not have a shared appreciation
feature, or other contingent interest feature;
(xxxv) The origination and collection practices used by the Depositor,
the related Originator or the Servicer with respect to such Mortgage Loan
have been in all respects legal, proper, prudent, and customary in the
mortgage origination and servicing business;
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(xxxvi) The Mortgagor has, to the extent required by applicable law,
executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to
the making of fixed-rate mortgage loans. The Servicer shall maintain or
cause to be maintained such statement in the Servicer's Loan File. If such
Mortgage Loan is an adjustable rate loan, the related Mortgagor has
executed a statement to the effect that such Mortgagor has received all
disclosure materials required by applicable law with respect to the making
of adjustable rate mortgage loans, and the Servicer will ensure that such
statement is and will remain in the related Custodial Loan File;
(xxxvii) If such Mortgage Loan is a refinancing Mortgage Loan, the
related Mortgagor has received all disclosure and rescission materials
required by applicable law with respect to the making of a refinancing
Mortgage Loan, and evidence of such receipt is and will remain in the
related Custodial Loan File;
(xxxviii)All amounts received by the Depositor with respect to such
Mortgage Loan after the applicable Cut-Off Date and required to be
deposited in the Payment Account have been so deposited in the Collection
Account and are, as of the related Transfer Date, in the Collection
Account;
(xxxix) The Servicer's Loan File with respect to such Mortgage Loan
contains an appraisal of the related Mortgaged Property made and signed,
prior to the approval of the application for such Mortgage Loan, by a
qualified appraiser (i) who, at the time of such appraisal, met the minimum
qualifications of Xxxxxx Xxx or Xxxxxxx Mac and the requirements of the
related Originator's appraisal policy and (ii) who satisfied (and which
appraisal was conducted in accordance with) all of the applicable
requirements of the Uniform Standards of Professional Appraisal Practice in
effect at the time of such appraisal and procedures. Such appraiser had no
interest, direct or indirect, in such Mortgaged Property or in any loan
made on the security thereof, and such appraiser's compensation was not
affected by the approval or disapproval of such Mortgage Loan;
(xl) The Depositor has no knowledge with respect to the Mortgaged
Property of any governmental or regulatory action or third party claim
made, instituted or threatened in writing relating to a violation of any
applicable federal, state or local environmental law, statute, ordinance,
regulation, order, decree or standard;
(xli) With respect to second lien Mortgage Loans:
1) the Depositor has no knowledge that the Mortgagor has received
notice from the holder of the prior mortgage that such prior mortgage
is in default,
2) no consent from the holder of the prior mortgage is needed for
the creation of the second lien Mortgage or, if required, has been
obtained and is in the related Servicer's Loan File,
3) if the prior mortgage has a negative amortization feature, the
CLTV was determined using the maximum loan amount of such prior
mortgage, and
4) the related first mortgage loan encumbering the related
Mortgaged Property does not have a mandatory future advance provision;
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(xlii) Each of the Mortgage Loans is (A) subject to a Take-out
Commitment (which can be in the form of a forward sale) and saleable on a
whole loan basis pursuant to terms and conditions customary in the
secondary market for residential mortgage loans or (B) is securitizable
upon substantially the same terms and conditions as the mortgage loans
included in the ABFS Mortgage Loan Trust 2003-1;
(xliii) To the best of the Depositor's knowledge, no error, omission,
misrepresentation, negligence, fraud or similar occurrence with respect to
a Mortgage Loan has taken place on the part of any person, including
without limitation the Mortgagor, any appraiser, any builder or developer,
or any other party involved in the origination of the Mortgage Loan or in
the application of any insurance in relation to such Mortgage Loan;
(xliv) Each Mortgaged Property is in compliance with all environmental
laws, ordinances, rules, regulations and orders of federal, state or
governmental authorities relating thereto. No hazardous material has been
or is incorporated in, stored on or under (other than properly stored
materials, used for reasonable residential purposes), released from,
treated on, transported to or from, or disposed of on or from, any
Mortgaged Property such that, under applicable law (A) any such hazardous
material would be required to be eliminated before the Mortgaged Property
could be altered, renovated, demolished or transferred, or (B) the owner of
the Mortgaged Property, or the holder of a security interest therein, could
be subjected to liability for the removal of such hazardous material or the
elimination of the hazard created thereby. Neither the Depositor nor any
Mortgagor has received notification from any federal, state or other
governmental authority relating to any hazardous materials on or affecting
the Mortgaged Property or to any potential or known liability under any
environmental law arising from the ownership or operation of the Mortgaged
Property. For the purposes of this subsection, the term "hazardous
materials" shall include, without limitation, gasoline, petroleum products,
explosives, radioactive materials, polychlorinated biphenyls or related or
similar materials, asbestos or any material containing asbestos, lead,
lead-based paint and any other substance or material as may be defined as a
hazardous or toxic substance by any federal, state or local environmental
law, ordinance, rule, regulation or order, including, without limitation,
CERCLA, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act and any regulations
promulgated pursuant thereto;
(xlv) With respect to any Mortgage Loan secured by a Business Purpose
Property, the related Mortgage Note contains an acceleration clause,
accelerating the maturity date under the Mortgage Note to the date the
individual guarantying such loan, if any, becomes subject to any
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally;
(xlvi) The Depositor further represents and warrants to the Indenture
Trustee and the Noteholders that as of the Cut-Off Date all representations
and warranties set forth in clauses (i) through (xlv) above will be correct
in all material respects as to each Mortgage Loan, and the following
representation will be correct: as of the applicable Cut-Off Date, no
payment due under such Mortgage Loan is delinquent for 30 or more days. No
payment under such Mortgage Loan has been 30 days delinquent more than once
during the twelve months immediately preceding the applicable Cut-Off Date,
and no payment under such Mortgage Loan has ever been 30 or more days
delinquent;
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(xlvii) No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgaged Property or (ii) facilitating
the trade-in or exchange of a Mortgaged Property;
(xlviii) The Mortgage Note is not and has not been secured by any
collateral except the lien or the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreements;
(xlix) Reserved;
(l) Reserved;
(li) Reserved;
(lii) Reserved;
(liii) The Mortgage Loan is a "qualified mortgage loan" within the
meaning of Section 860G(a)(3) of the Code;
(liv) No Mortgage Loan (a) is subject to Section 226.32 of Regulation Z
or any similar state law (relating to high interest rate credit/lending
transactions), or (b) contains any term or condition, or involve any loan
origination practice, that has been defined as "predatory," "covered" or
"threshold" under applicable federal, state or local law, or which has been
expressly categorized as an "unfair" or "deceptive" term, condition, or
practice in any applicable federal, state or local law (or the regulations
promulgated thereunder) dealing with "predatory" or "high cost" mortgage
lending (or a similarly classified loan using different terminology under a
law, regulation or ordinance imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees);
(lv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the Mortgagee thereunder;
(lvi) With respect to each adjustable rate Mortgage Loans, all Mortgage
Interest Rate adjustments have been made in strict compliance with state
and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state and local law has been properly paid
and credited;
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(lvii) The Mortgagor is one or more natural persons and/or trustees for
an Illinois land trust or a trustee under a "living trust" and such "living
trust" is in compliance with Xxxxxx Mae guidelines for such trusts. Either
the Mortgagor is a natural person or the related co-borrower or guarantor
is a natural person. No Mortgagor is an Affiliate of the Originators, the
Sponsor, the Depositor or the Servicer;
(lviii) The Mortgage Loans in the aggregate satisfy the Portfolio
Composition Criteria; and
(lix) Each and every Mortgage Loan is an Eligible Mortgage Loan.
Section 4.02. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Section 4.01 herein
shall survive the purchase by the Depositor of the Mortgage Loans, the transfer
thereof by the Depositor to the Trust, the pledge thereof by the Trust to the
Indenture Trustee, for the benefit of the Noteholders, and the delivery of the
Secured Notes to the Noteholders, and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement.
(b) Upon discovery by the Originators, the Depositor, the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, or a Noteholder of a
breach of any of the representations and warranties in Section 3.01, 3.02 or
4.01 hereof which materially and adversely affects the value of the Mortgage
Loans or the interest of the Noteholders, or which materially and adversely
affects the interests of the Noteholders in the related Mortgage Loan in the
case of a representation and warranty relating to a particular Mortgage Loan
(with respect to those representations and warranties which are made to the best
of the Originators', the Depositor's or the Sponsor's knowledge, if it is
discovered by the Originator's, the Depositor, the Sponsor or the Note Purchaser
that the substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interest of the Note Purchaser, notwithstanding the Originators',
the Depositor's or the Sponsor's lack of knowledge with respect to the substance
of such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation and warranty), the party discovering such breach
or failure shall promptly (and in any event within five (5) days of the
discovery) give written notice thereof to the others. Within five (5) days of
the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty made in Section 4.01(a), the Originators shall be
jointly and severally obligated to (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(c) remove such Mortgage Loan from the Trust Estate (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner specified in Section 2.07 and this Section 4.02.
Within five (5) days of the earlier of its discovery or its receipt of notice of
any breach of the Portfolio Composition Criteria, the Originators shall be
obligated to (a) purchase Mortgage Loans on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(b) remove Mortgage Loans from the Trust Estate (in which case they shall become
Deleted Mortgage Loans) and substitute one or more Qualified Substitute Mortgage
Loans in the manner specified in Section 2.07 and this Section 4.02, in each
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case such that the Mortgage Loans in the aggregate satisfy the Portfolio
Composition Criteria; provided that to the extent that the breach arises solely
from a breach of the Portfolio Composition Criteria related to Delinquent
Mortgage Loans, the aggregate Repurchase Price paid on account of such breach
when added to the payments made by the Sponsor pursuant to Section 4.03 of the
Sale and Servicing Agreement, shall not exceed the Additional Recourse Cap.
Within five (5) days of the earlier of its discovery or its receipt of notice of
any breach of a representation or warranty made in Section 4.01(b), the
Depositor shall be obligated to (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(c) remove such Mortgage Loan from the Trust Estate (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner specified in Section 2.07 and this Section 4.02.
Within five (5) days of the earlier of its discovery or its receipt of notice of
any breach of the Portfolio Composition Criteria, the Depositor shall be
obligated to (a) purchase Mortgage Loans on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(b) remove Mortgage Loans from the Trust Estate (in which case they shall become
Deleted Mortgage Loans) and substitute one or more Qualified Substitute Mortgage
Loans in the manner specified in Section 2.07 and this Section 4.02, in each
case such that the Mortgage Loans in the aggregate satisfy the Portfolio
Composition Criteria; provided that to the extent that the breach arises solely
from a breach of the Portfolio Composition Criteria related to Delinquent
Mortgage Loans, the aggregate Repurchase Price paid on account of such breach
when added to the payments made by the Sponsor pursuant to Section 4.03 of the
Sale and Servicing Agreement, shall not exceed the Additional Recourse Cap. If
the Originator and the Depositor fails to purchase or substitute for any
Defective Mortgage Loans (whether pursuant to this Section 4.02 or under Section
2.07(b)), the Sponsor shall purchase such Mortgage Loans on the next Business
Day. The Collateral Agent shall give prompt written notice to the Indenture
Trustee, who shall deliver such notice to the Note Purchaser of any repurchase
or substitution made pursuant to this Section 4.02 or Section 2.07(b).
(c) Reserved.
(d) As to any Deleted Mortgage Loan for which an Originator (or the
Depositor, as the case may be) substitutes a Qualified Substitute Mortgage Loan
or Mortgage Loans, such Originator (or the Depositor, as the case may be) may,
by delivering to the Indenture Trustee a certification, in the form attached
hereto as Exhibit G, executed by a Responsible Officer, and delivering to the
Collateral Agent the related Custodial Loan File for such Qualified Substitute
Mortgage Loan or Mortgage Loans.
(e) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Mortgage
Loans after the date of such substitution. Such amounts will be applied to pay
down the Secured Note which relates to such Deleted Mortgage Loans. Monthly
Payments received with respect to Qualified Substitute Mortgage Loan or Mortgage
Loans on or before the date of substitution will be retained by the related
Originator (or the Depositor, as the case may be). The Trust will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the related Originator (or the Depositor, as the case may be)
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. The Servicer shall give written notice to
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the Indenture Trustee, the Collateral Agent and the Note Purchaser that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Mortgage Loans. Upon such substitution, such Qualified Substitute Mortgage Loan
or Mortgage Loans shall be subject to the terms of this Agreement in all
respects.
(f) It is understood and agreed that the obligations of the
Originators, the Depositor and the Sponsor set forth herein to, cure, purchase
or substitute for a Defective Mortgage Loan, or to indemnify as described in
subsection (g) below, constitute the sole remedies of the Indenture Trustee, the
Collateral Agent and the Noteholders respecting a breach of the representations
and warranties of the Originators and the Depositor made in Section 4.01.
(g) The Originators hereby indemnify the Indenture Trustee, the
Depositor, the Trust, the Owner Trustee, the Collateral Agent and the
Noteholders and their successors, assigns, agents and servants (collectively,
the "Originator Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever (collectively, "Expenses") which
may at any time be imposed on, incurred by, or asserted against any Originator
Indemnified Party in any way relating to or arising out of (i) any breach of any
representation, warranty or covenant of the Originator, the Servicer or their
Affiliates, in any Basic Document, including, without limitation, the
origination or prior servicing of the Mortgage Loans by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the
Originator, the Servicer or their Affiliates, and (ii) any untrue statement by
the Originator, the Servicer or its Affiliates of any material fact or any such
Person's failure to state a material fact necessary to make such statements not
misleading with respect to any such Person's statements contained in any Basic
Document, including, without limitation, any Officer's Certificate, statement,
report or other document or information prepared by any such Person and
furnished or to be furnished by it pursuant to or in connection with the
transactions contemplated thereby and not corrected prior to completion of the
relevant transaction, including, without limitation, such written information as
may have been and may be furnished in connection with any due diligence
investigation with respect to the Mortgage Loans or any such Person's business,
operations or financial condition, including reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim. The Depositor hereby indemnifies the
Indenture Trustee, the Trust, the Owner Trustee, the Collateral Agent and the
Noteholders and their successors, assigns, agents and servants (collectively,
the "Depositor Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever (collectively, "Expenses") which
may at any time be imposed on, incurred by, or asserted against any Depositor
Indemnified Party in any way relating to or arising out of a breach by the
Depositor of the representations or warranties herein. If the Originators or the
Depositor fail to perform in their obligations to indemnify the related
indemnified parties, then the Sponsor will do so. The indemnities contained
herein shall survive the resignation or termination of the Indenture Trustee,
Owner Trustee or the termination of this Agreement.
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(h) Each of the Originators shall be jointly and severally responsible
for any repurchase, cure or substitution obligation of each Originator under
this Agreement and the Indenture.
Section 4.03. Additional Recourse.
(a) In addition to (and not by limitation) the obligations of the
Sponsor set forth in Section 4.01 and Section 4.02 hereof, the Sponsor agrees
that it will pay to the Indenture Trustee (for application in accordance with
the terms of this Agreement), any unpaid amounts which may become due and owing
under the Indenture, but remain unpaid on the 10th Business Day after the
relevant amount became due, (i) on the day on which the Sponsor is given notice
of the circumstances, if notice is given at or before 11:00 a.m. (New York Time)
on a Business Day, or (ii) on the Business Day following the day such notice is
given, if it is given after that time on a Business Day or on a day that is not
a Business Day; provided that the aggregate amount the Sponsor shall be
obligated to pay pursuant to this Section 4.06 shall not exceed 10% of the
aggregate Note Principal Balance (the "Additional Recourse Cap"). The Sponsor
further agrees to pay any and all reasonable expenses (including, without
limitation, all fees and disbursements of counsel) which may be paid or incurred
by the Indenture Trustee in enforcing, or obtaining advice of counsel in respect
to or collecting against, the Sponsor. The Sponsor agrees that whenever, at any
time, or from time to time, it shall make any payment to the Indenture Trustee
on account of its liability under this Section 4.06, it will notify the
Indenture Trustee in writing that such payment is made under this Agreement for
such purpose.
(b) The Sponsor waives any and all notice of the creation, renewal,
extension or accrual of the recourse and notice of or proof of reliance by the
Indenture Trustee upon this Sale and Servicing Agreement or acceptance of this
Agreement, the recourse, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Agreement; and all dealings between the Originators, the Depositor,
the Servicer and the Sponsor, on the one hand, and the Indenture Trustee, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Agreement. The Sponsor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Sponsor with respect to the recourse set forth in this section. The
Sponsor understands and agrees that this recourse shall be construed as a
continuing, absolute and unconditional payment obligation without regard to (a)
the validity, regularity or enforceability of this Agreement or any other Basic
Document, the recourse or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Indenture Trustee, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Originators, the Depositor, the Servicer or the Sponsor against
the Indenture Trustee, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Originators, the Depositor, the Servicer and the
Sponsor) which constitutes, or might be construed to constitute, an equitable or
legal discharge of the Sponsor for the recourse contained in this Agreement, in
bankruptcy or in any other instance.
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ARTICLE V
THE ORIGINATORS, THE DEPOSITOR and the sponsor
Section 5.01. Covenants of the Originators, the Depositor and the
Sponsor. (a) Each of the Originators, the Depositor and the Sponsor covenant to
the Indenture Trustee, the Trust, the Collateral Agent, the Servicer and the
Noteholders as follows:
(i) The Originators, the Depositor and the Sponsor shall cooperate with
such parties and the firm of independent certified public accountants
retained with respect to the issuance of the Secured Notes in making
available all information and taking all steps reasonably necessary or
reasonably required by the Note Purchaser to permit the accountants'
letters required hereunder to be delivered within the times set for
delivery herein;
(ii) The Originators, the Depositor and the Sponsor agree to satisfy or
cause to be satisfied on or prior to the related Transfer Date, all of the
conditions set forth in Section 6.01 hereof that are within the
Originators', the Depositor's, and the Sponsor's (or their agents')
control; and
(iii) The Originators, the Depositor and the Sponsor hereby agree to do
all acts, transactions, and things and to execute and deliver all
agreements, documents, instruments, and papers by and on behalf of the
Originators, the Depositor or the Sponsor as the Owner Trustee or the Note
Purchaser or their counsel may reasonably request in order to (A)
consummate the transfer of the Mortgage Loans to the Depositor and from the
Depositor to the Trust and the subsequent transfer thereof to the Indenture
Trustee, and the issuance and sale of the Secured Notes and (B) consummate
a Disposition of some or all of the Mortgage Loans.
(b) The Depositor covenants to the Noteholders that it shall not, for
so long as an Event of Default or an Amortization Event exists or would result
under the Indenture, pay any dividend to the holders of its common stock.
(c) The Originators, the Depositor and the Sponsor shall not incur any
additional debt except as is permitted under the Credit Agreement.
Section 5.02. Merger or Consolidation. Each of the Originators, the
Depositor and the Sponsor will keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement. Any Person into which any of the
Originators' or the Depositor or the Sponsor may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Originators, the Depositor or the Sponsor shall be a party, or any Person
succeeding to the business of the Originators, the Depositor or the Sponsor,
shall be approved by the Note Purchaser, which approval shall not be
unreasonably withheld. In all events such person shall be the successor of the
Originators, the Depositor or the Sponsor without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Originators, the Depositor and the
Sponsor shall send notice of any such merger or consolidation to the Indenture
Trustee and the Note Purchaser.
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Section 5.03. Costs. In connection with the transactions contemplated
under this Agreement, the Trust Agreement, the Indenture and all amendments
thereto, the Originators, Depositor and the Sponsor shall promptly pay: (a) the
fees and disbursements of the Depositor's and the Originators' counsel; (b) any
of the fees of the Indenture Trustee and the fees and disbursements of the
Indenture Trustee's counsel; (c) any of the fees of the Owner Trustee and the
fees and disbursements of the Owner Trustee's counsel; (d) the fees and
disbursements for accountants for the Originators; and (e) all of the reasonable
initial expenses of the Note Purchaser including, without limitation, legal fees
and expenses, accountant fees and expenses and expenses in connection with due
diligence conducted on the Servicer's Loan Files. For the avoidance of doubt,
the parties hereto acknowledge that it is the intention of the parties that the
Note Purchaser shall not pay any of the Indenture Trustee's or Owner Trustee's
fees and expenses in connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture and all amendments thereto. All
other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such expenses.
Section 5.04. Indemnification. (a) The Originators, the Depositor and
the Sponsor, jointly and severally, agree to indemnify and to hold the Note
Purchaser 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 Note Purchaser may sustain in any way related to the
failure of any of the Originators, the Depositor or the Sponsor to perform any
of their duties in compliance with the terms of this Agreement. The Originators,
the Depositor or the Sponsor shall immediately notify the Note Purchaser if a
claim is made by a third party with respect to this Agreement, and the
Originators, the Depositor or the Sponsor shall assume the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Note Purchaser in respect of such claim.
(b) Promptly after receipt by an indemnified party under this Section
5.04 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 5.04, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 5.04 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
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however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one separate counsel.
Section 5.05. Financial Statements. The Originators, the Depositor and
the Sponsor will deliver to the Indenture Trustee and the Note Purchaser:
(a) As soon as available and in any event within forty-five (45) days
after the end of each month, statements of income of the Sponsor and its
Subsidiaries (including the Trust) on a consolidating basis for the month just
ended, and the related balance sheet as at the end of such month, all in
reasonable detail subject to year-end adjustments. Except for the month
immediately following the Sponsor's fiscal year end in which case the statements
of income and related balance sheet shall be delivered upon the completion of
the report and opinion required by Section 5.05(c)(1) below.
(b) As soon as available and in any event within sixty (60) days after
the close of each of the first three (3) fiscal quarters in each of its fiscal
years, statements of income and changes in its stockholders' equity and cash
flows of the Sponsor and its respective Subsidiaries on a consolidating and
consolidated basis for the period from the beginning of such fiscal year to the
end of such fiscal quarter, and the related balance sheet as at the end of such
fiscal quarter, all in reasonable detail, with all notes and certified by its
chief financial officer that, to the best of his or her knowledge, such
financial statements were prepared in accordance with GAAP and present fairly
the financial condition and the results of operations and cash flows for the
period covered, subject, however, to year-end audit adjustments and the omission
of footnotes.
(c) As soon as available and in any event within ninety (90) days after
the close of each of its fiscal years, statements of income, changes in its
stockholder's equity and cash flows of the Sponsor and its Subsidiaries on a
consolidating and consolidated basis as at the end of such year (setting forth
in comparative form the corresponding figures for the preceding fiscal year),
all in reasonable detail, prepared in accordance with GAAP and with all notes,
and accompanied by:
(i) a report and opinion of and independent certified public
accountants of recognized standing selected by the Sponsor and acceptable
to the Indenture Trustee, stating that such accountants have conducted
audits of such financial statements in accordance with generally accepted
auditing standards and that, in their opinion, such financial statements
present fairly, in all material respects, the financial position of the
Sponsor and its Subsidiaries as of the date thereof and the results of its
operations and cash flows for the periods covered thereby in conformity
with GAAP;
(ii) copies of any management letter from such accounting firm and the
Sponsor's and its Subsidiaries' response(s) to it;
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(iii) a report and opinion of an firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants,
stating that such firm has examined selected documents and records relating
to the servicing of Mortgage Loans, in accordance with the Mortgage Bankers
Association of America's Uniform Single Attestation Program for Mortgage
Bankers, or any successor uniform program, and that, on the basis of such
examination, such servicing has been conducted in compliance with the
minimum servicing standards identified therein, except for such significant
exceptions or errors in records that, in the opinion of such firm,
generally accepted auditing standards requires it to report -- the Servicer
will use commercially reasonable efforts to obtain such a report and
opinion in respect of each subservicer (if any) for the Servicer, and will
furnish those obtained to the Indenture Trustee; and
(iv) a certificate signed by the chief financial officer of the Sponsor
and its Subsidiaries stating that said financial statements fairly present
its financial condition and results of operations and those of its
Subsidiaries as at the end of, and for, such year.
(d) Together with each of the monthly, quarterly and annual financial
statements required by this Section 5.05, a certificate in the form of Exhibit O
of the Sponsor's chief financial officer (i) setting forth in reasonable detail
all calculations necessary to show that the Originators, the Depositor and the
Sponsor are in compliance with the applicable requirements of clauses (iii),
(iv), (v), and (ix) of the definition of Amortization Event or, if the
Originators, the Depositor or the Sponsor is not in compliance, showing the
extent of noncompliance and specifying the period of noncompliance and what
actions the Originators, the Depositor or the Sponsor proposes to take with
respect thereto and (ii) stating that the terms of this Agreement have been
reviewed by such officer or under his or her supervision, and that he or she has
made or caused to be made under his or her supervision, a review in reasonable
detail of the transactions and the condition of the Originators, the Depositor
or the Sponsor during the accounting period covered by such financial statements
and that such review does not disclose the existence during or at the end of
such accounting period -- and that such chief financial officer does not have
knowledge of the existence as of the date of the Officer's Certificate -- of any
Event of Default or Default or, if any Event of Default or Default existed or
exists, specifying the nature and period of its existence and what action the
Sponsor has taken, is taking and proposes to take with respect to it. Each such
Officer's Certificate shall show, in reasonable detail, the computations
supporting compliance (or showing noncompliance) with clauses (iii), (iv), (v),
and (ix) of the definition of Amortization Event.
The Trust, the Sponsor, the Originators, the Depositor and their
respective Subsidiaries also agree to provide to the Indenture Trustee such
other information related to such annual reports as the Agent may from time to
time reasonably request.
(e) The Trust, the Sponsor, the Originators, the Depositor and their
respective Subsidiaries will promptly furnish to the Indenture Trustee from time
to time information and certificates regarding the business and affairs of the
Originators, the Depositor, the Sponsor and the Trust, including the following
and such other information as the Indenture Trustee may from time to time
reasonably request (each report or certificate required must be signed by an
Authorized Company Representative and the Indenture Trustee will have no
responsibility to verify or track any of the items referenced or conclusions
stated in such reports or to verify the authority of its signer):
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(i) Monthly, a hedging coverage report showing, in reasonable detail
and in form and substance acceptable to and approved by the Sponsor and the
Indenture Trustee, the Sponsor's hedging coverage of all Mortgage Loans.
(ii) Monthly, a report summarizing notices received by the Originators,
the Depositor or the Sponsor requesting or demanding that the Originators
repurchase (or pay indemnity or other compensation in respect of) Mortgage
Loans previously sold or otherwise disposed of by the Originator to any
investor or other Person pursuant to any express or implied repurchase or
indemnity obligation (whether absolute or contingent and whether or not the
Originator is contesting or intends to contest the request or demand).
(iii) Quarterly, a report listing, and stating the current values of,
the Sponsor's residual interests in the Sponsor's Mortgage Loan pools that
have been securitized, with such values to be determined by a method, and
such report to be in form and content, agreed to by the Sponsor's and the
Indenture Trustee and Note Purchaser.
(iv) Quarterly, a delinquent Mortgage Loan report categorized by age of
delinquency for 30, 60, 90 or more days.
(v) Quarterly, mortgage loan production reports reflecting the
Sponsor's quarterly mortgage loan production and acquisition volumes, as
well as its mortgage loan pipeline.
(vi) Such other reports by the Originators, the Depositor and the
Sponsor in respect of the Collateral, in such detail and at such times as
the Indenture Trustee in its reasonable discretion or at the reasonable
direction of the Note Purchaser may request at any time or from time to
time.
(vii) As soon as available and in any event within five (5) Business
Days of the date distributed, copies of all definitive prospectuses
relating to (i) any security offerings by the Originators, the Depositor,
the Sponsor or any of their respective Subsidiaries (including
single-purpose finance Subsidiaries) or (ii) any securities to be based on,
backed by or created from any Collateral and to be offered by the
Originators, the Depositor, the Sponsor or any of their respective
Subsidiaries.
(viii) As soon as available and in any event within five (5) days after
filing, copies of (i) all press releases issued by the Originators, the
Depositor, the Sponsor or any of their respective Subsidiaries, (ii) all
regular or periodic financial reports, and copies of all extraordinary or
non-routine filings, if any, that shall be filed with the U.S. Securities
and Exchange Commission or any successor agency by or on behalf of the
Originators, Depositor, Sponsor or any of their respective Subsidiaries
(including single-purpose finance Subsidiaries) and (iii) all such filings
relating to any securities that are or are to be based on, backed by or
created from any Collateral and which filings are made by or in respect of
the Originators, the Depositor, the Sponsor or any of their respective
Subsidiaries.
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ARTICLE VI
CONDITIONS OF CLOSING
Section 6.01. Conditions Precedent to Transfer Dates. (a) Three (3)
Business Days prior to each Transfer Date, the Trust shall give a Notice of
Issue to the Note Purchaser, the Indenture Trustee and the Collateral Agent of
such upcoming Transfer Date and provide an estimate of the number of Mortgage
Loans and aggregate Principal Balance of such Mortgage Loans to be transferred
on such Transfer Date. One (1) Business Day prior to each Transfer Date, the
Trust shall provide the Note Purchaser, the Indenture Trustee and the Collateral
Agent a final Mortgage Loan Schedule with respect to the Mortgage Loans to be
transferred on such Transfer Date. On each Transfer Date, the Depositor shall
convey to the Trust the Mortgage Loans and the other property and rights related
thereto described in the related Assignment, and the Trust, only upon the
satisfaction of each of the conditions set forth below on or prior to such
Transfer Date, shall deposit or cause to be deposited cash in the amount of the
Sale Amount received from the Note Purchaser in the General Operating Account in
respect thereof, and the Servicer shall, promptly after such deposit, direct the
Indenture Trustee to withdraw the amount deposited in respect of applicable Sale
Amount from the General Operating Account, and distribute such amount to or at
the direction of the Depositor.
(b) The obligations of the Trust to purchase the Mortgage Loans and the
Note Purchaser to purchase the Secured Notes will be subject to the satisfaction
on each Transfer Date of the following conditions:
(i) the related Originator(s), the Depositor and the Servicer, as
applicable, shall have delivered to the Trust and the Note Purchaser duly
executed Assignments, which shall have attached thereto a Mortgage Loan
Schedule setting forth the appropriate information with respect to all
Mortgage Loans conveyed on such Transfer Date and the Depositor shall have
delivered to the Note Purchaser a computer readable transmission of such
Mortgage Loan Schedule;
(ii) the Depositor and the Servicer, as applicable, shall have
deposited in the Collection Account all collections received with respect
to each of the Mortgage Loans on and after the applicable Cut-off Date;
(iii) as of such Transfer Date, none of any Originator, the Sponsor nor
the Depositor shall (A) be insolvent, (B) be made insolvent by its
respective sale of Mortgage Loans or (C) have reason to believe that its
insolvency is imminent;
(iv) the Transfer Period shall be in effect and shall not have ended;
(v) the Trust shall have delivered the Custodial Loan File to the
Collateral Agent in accordance herewith, the Note Purchaser shall have
received a Trust Receipt via facsimile, with the original to follow the
next day via federal express, along with the attached copy of the
Exceptions Report reflecting such delivery and no material exceptions (in
the sole judgment of the Note Purchaser) shall be listed on the Exceptions
Report;
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(vi) each of the representations and warranties made by the Originators
and the Depositor contained in Sections 3.01 and 4.01 shall be true and
correct in all material respects as of the related Transfer Date with the
same effect as if then made, and the Originators and the Depositor shall
have performed all obligations to be performed by it under the Basic
Documents on or prior to such Transfer Date;
(vii) each related Originator and the Depositor shall, at its own
expense, within one Business Day following the Transfer Date, indicate in
its computer files that the Mortgage Loans identified in the related
Assignment have been sold to the Trust pursuant to this Agreement and such
Assignment;
(viii) the Depositor shall have taken any action requested by the
Indenture Trustee, the Trust or the Noteholders required to maintain the
ownership interest of the Trust in the Mortgage Loan and the Trust Estate;
(ix) the Trust shall have provided the Note Purchaser no later than
three (3) Business Days prior to such date a Notice of Issue pursuant to
Section 6.01(a), with a copy to the Indenture Trustee;
(x) after giving effect to the Sale Amount associated therewith, the
Note Principal Balance will not exceed the Maximum Note Balance;
(xi) all conditions precedent to the issuance of the Sale Amount
pursuant to the Indenture shall have been fulfilled as of such Transfer
Date;
(xii) the Mortgage Loans to be purchased with the proceeds of the Sale
Amount shall not, when aggregated with all other Sold Mortgage Loans, cause
any of the Portfolio Composition Criteria to be exceeded;
(xiii) the Servicer shall have delivered to the Note Purchaser the
report described in Section 7.16(b) hereof;
(xiv) the Originators shall have caused the Servicer to deposit in the
Collection Account all collections of (x) principal in respect of the
related Mortgage Loans received after the related Cut-Off Date and (y)
interest due on the Mortgage Loans after the related Cut-Off Date;
(xv) the Originators shall have delivered the Mortgage File to the
Collateral Agent, on behalf of the Indenture Trustee;
(xvi) no Event of Default or Amortization Event shall have occurred and
be continuing;
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(xvii) the Originators shall have delivered to the Indenture Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and that each complies with the
terms hereof, including each of the representations and warranties made
with respect thereto in Sections 3.01 and 4.01;
(xviii) a Collateral Deficiency Event shall not have occurred and be
continuing on such Transfer Date, nor shall a Collateral Deficiency Event
occur as a result of such transfer; and
(xix) in connection with the transfer, assignment and pledge of the
Mortgage Loans, the Originators and the Depositor shall satisfy the
document delivery requirements set forth in Section 2.06.
Section 6.02. Conditions Precedent to Initial Transfer Date. The
obligations of the Trust to purchase the initial Mortgage Loans and the Note
Purchaser to purchase the initial Secured Note will be subject to the
satisfaction on the initial Transfer Date of the following conditions:
(a) Each of the obligations of the Originators, the Sponsor and the
Depositor required to be performed by it on or prior to the date hereof and the
related Transfer Date pursuant to the terms of this Agreement shall have been
duly performed and complied with and all of the representations and warranties
of the Depositor, the Sponsor and the Originators under this Agreement shall be
true and correct as of the date hereof and the related Transfer Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement, and the Note Purchaser shall have
received a certificate to the effect of the foregoing signed by an authorized
officer of each of the Depositor, the Sponsor and the Originators.
(b) All fees and expenses set forth in Section 5.03 shall have been
paid by the Originators, the Sponsor and/or the Depositor.
(c) The Mortgage Loans will be acceptable to the Note Purchaser, in its
sole reasonable discretion.
(d) The Note Purchaser shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the Note
Purchaser and its counsel:
(i) the Mortgage Loan Schedule and with respect to the initial Transfer
Date the Mortgage Loan Schedule attached hereto as Exhibit P;
(ii) this Agreement, the Indenture, the Trust Agreement, the Purchase
Agreement, and the Note Purchase Agreement, and all documents required
thereunder, duly executed and delivered by each of the parties thereto;
(iii) officer's certificates of an officer of each of the Originators,
the Depositor and the Sponsor, dated as of the date hereof, and attached
thereto resolutions of the board of directors and a copy of the charter and
by-laws;
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(iv) an opinion of the counsel for the Originators, the Depositor and
the Sponsor as to various corporate matters in a form acceptable to the
Note Purchaser and its counsel (it being agreed that the opinion shall
expressly provide that the Indenture Trustee shall be entitled to rely on
the opinion);
(v) an opinion of the counsel for the Originators, the Sponsor and the
Depositor stating that the Secured Notes will be treated as indebtedness
and that the Trust will not be taxable as a corporation, a publicly traded
partnership or a taxable mortgage pool, in a form acceptable to the Note
Purchaser and its counsel (it being agreed that the opinion shall expressly
provide that the Indenture Trustee shall be entitled to rely on the
opinion);
(vi) opinions of counsel for the Originators, the Sponsor and the
Depositor relating to certain bankruptcy, true sale and non-consolidation
matters, in forms acceptable to the Note Purchaser and its counsel (it
being agreed that such opinions shall expressly provide that the Indenture
Trustee shall be entitled to rely on such opinions);
(vii) an opinion of counsel for the Indenture Trustee in form and
substance acceptable to the Note Purchaser and its counsel (it being agreed
that the opinion shall expressly provide that the Originators, the Sponsor
and the Depositor shall be entitled to rely on the opinion;
(viii) an opinion of counsel for the Owner Trustee in form and
substance acceptable to the Note Purchaser and its counsel (it being agreed
that the opinion shall expressly provide that the Originators, the
Depositor and the Indenture Trustee shall be entitled to rely on the
opinion);
(ix) an opinion or opinions of counsel for the Servicer, in form and
substance acceptable to the Note Purchaser and its counsel (it being agreed
that the opinion shall expressly provide that the Originators, the
Depositor and the Indenture Trustee shall be entitled to rely on the
opinion); and
(x) an opinion of Xxxxxxx Xxxxxx, counsel to the Servicer and the
Originator, in form and substance acceptable to the Note Purchaser and its
counsel.
(e) All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident hereto shall be satisfactory in form
and substance to the Note Purchaser and its counsel.
(f) The Originators and the Depositor shall have furnished the Note
Purchaser with such other certificates of its officers or others and such other
documents or opinions as the Note Purchaser or its counsel may reasonably
request.
(g) The Servicer shall have delivered to the Note Purchaser the report,
dated April 30, 2003, of independent accountants described in Section 7.10.
(h) The Sponsor shall have delivered evidence, in form and substance
satisfactory to Note Purchaser, that the Sponsor or an Affiliate of the Sponsor
has a commitment for warehouse financing of mortgage loans from a lender other
than the Note Purchaser in an amount of at least $200,000,000 for a term of not
less than 364 days.
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Section 6.03. Termination of Note Purchaser's Obligations. The Note
Purchaser may terminate its obligations under the Basic Documents by notice to
the Originators, the Sponsor and the Depositor at any time before delivery of
and payment of the purchase price for the Secured Notes if: (a) any of the
conditions set forth in Section 6.01 are not satisfied when and as provided
therein; (b) there shall have been the entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Depositor, the Sponsor or any Originator, or
for the winding up or liquidation of the affairs of the Depositor, the Sponsor
or any Originator; (c) there shall have been the consent by the Depositor, the
Sponsor or any Originator to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Depositor, the Sponsor
or any Originator or of or relating to substantially all of the property of the
Depositor, the Sponsor or any Originator; (d) the Depositor, the Sponsor or any
Originator shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency,
bankruptcy or reorganization statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations or cease its normal
business operations; (e) the failure on the part of the Originator, the Sponsor
or Depositor to observe or perform in any material respect any material
covenants or agreements of the Originator, the Sponsor or Depositor under this
Agreement which failure continues a period of 10 days after written notice; (f)
any representation or warranty made by the Originator, the Sponsor or Depositor
pursuant hereto proves to have been incorrect in any material respect when made,
and, if such representation nor warranty is correctable, which continues to be
incorrect in any material respect for a period of 10 days after written notice;
(g) any purchase and assumption agreement with respect to the Depositor, the
Sponsor or any Originator or the assets and properties of the Depositor, the
Sponsor or any Originator shall have been entered into; or (h) an Amortization
Event or Event of Default shall have occurred. The termination of the Note
Purchaser's obligations hereunder shall not terminate the Note Purchaser's
rights hereunder or its right to exercise any remedy available to it at law or
in equity.
ARTICLE VII
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 7.01. The Servicer; Term. (a) The Servicer shall service and
administer the Mortgage Loans in accordance with the Accepted Servicing
Practices and shall have full power and authority to do any and all things not
inconsistent therewith in connection with such servicing and administration
which it may deem necessary or desirable subject to the limitations set forth in
this Agreement. The Indenture Trustee shall furnish the Servicer with any powers
of attorney and other documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties hereunder. Without limiting
the generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered by the Indenture Trustee, to execute and deliver, on
behalf of itself, the Noteholders and the Indenture Trustee or any of them, any
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and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof. The Servicer
shall notify the Indenture Trustee of any such waiver, release, discharge,
modification, indulgence or other such matter by delivering to the Indenture
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 7.01 together with the original copy of any written agreement
or other document executed in connection therewith, all of which written
agreements or documents shall, for all purposes, be considered a part of the
related Custodial Loan File to the same extent as all other documents and
instruments constituting a part thereof. Notwithstanding anything in this
Agreement to the contrary, the Servicer shall not permit any modification with
respect to any Mortgage Loan unless (i) the modifications do not decrease the
Mortgage Interest Rate, reduce or increase the principal balance, decrease the
lien priority, increase the current LTV above the lesser of the current LTV or
the original LTV, or change the final maturity date on or of such Mortgage Loan
and (ii) the Note Purchaser consents to such modifications in writing.
(b) The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Indenture Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
(c) The Servicer's, and each Subservicer's, term hereunder shall be for
a period beginning on the Closing Date and ending 12 months thereafter; provided
that such term shall end on the date on which this Agreement is terminated; and
provided, further, that the Servicer, and each Subservicer, may be removed prior
to the expiration of such term as described in Article IX hereof. The Servicer,
each Subservicer and the other parties hereto acknowledge that the Mortgage
Loans have been sold to the Trust on a servicing-released basis, and that
neither the Servicer nor either Subservicer has any ownership interest in the
right to service the Mortgage Loans. Any renewal of the Servicer or the
Subservicers shall be at the sole discretion of the Note Purchaser.
Section 7.02. Collection of Certain Mortgage Loan Payments; Collection
Account. (a) The Servicer shall make its reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow Accepted Servicing Practices. Consistent with the foregoing, the Servicer
may in its discretion waive any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loans.
(b) Pursuant to Section 8.03, the Indenture Trustee shall establish and
maintain, in the name of the Indenture Trustee, the Collection Account, in trust
for the benefit of the Noteholders. The Collection Account shall be established
and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account, in
immediately available funds, any amounts representing Monthly Payments on the
Mortgage Loans due or to be applied as of a date after the related Cut-Off Date,
and thereafter, no later than the first Business Day following receipt thereof
(except as otherwise permitted herein), the following payments and collections
received or made by it (other than in respect of principal collected and
interest due on the Mortgage Loans on or before the related Cut-Off Date):
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(i) payments of interest on the Mortgage Loans;
(ii) payments of principal of the Mortgage Loans, including any
prepayment penalties or premiums;
(iii) the Repurchase Price of Mortgage Loans repurchased pursuant to
Section 2.07 or 4.02;
(iv) the Substitution Adjustment received in connection with Mortgage
Loans for which Qualified Substitute Mortgage Loans are received pursuant
to Section 2.07 and 4.02;
(v) all Liquidation Proceeds; and
(vi) all Insurance Proceeds (including, for this purpose, any amounts
required to be deposited by the Servicer pursuant to Section 7.04 hereof).
It is understood that the Servicer need not deposit amounts
representing fees, late payment charges or extension or other administrative
charges payable by Mortgagors, or amounts received by the Servicer for the
account of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items.
(d) For any Mortgage Loan that has a first Due Date that occurs later
than the last day of the Due Period following the Due Period in which the
Mortgage Loan was sold to the Trust, on the first Business Day prior to the
related Payment Date, the Servicer will deposit into the Collection Account 30
days' interest at the related Mortgage Interest Rate, net of the Servicing Fee,
for each month after the month in which the transfer occurs until, but not
including, the month in which such first Due Date occurs.
Section 7.03. Reserved.
Section 7.04. Hazard Insurance Policies; Property Protection Expenses.
(a) The Servicer shall cause to be maintained for each Mortgage Loan a hazard
insurance policy with extended coverage which contains a standard mortgagee's
clause with an appropriate endorsement in an amount equal to the lesser of (x)
the maximum insurable value of the related Mortgaged Property or (y) the sum of
the Principal Balance of such Mortgage Loan plus the outstanding balance of any
mortgage loan senior to such Mortgage Loan, but in no event shall such amount be
less than is necessary to prevent the Mortgagor from becoming a coinsurer
thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the sum of the Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the related Originator, its successors and assigns, as
mortgagee.
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(b) If the Servicer shall obtain and maintain a blanket policy issued
by an insurer acceptable to the Note Purchaser insuring against hazard losses on
all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in Section 7.04(a), it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 7.04(a), and there shall have been a
loss which would have been covered by such policy, deposit in the Collection
Account the amount not otherwise payable under the blanket policy because of
such deductible clause.
(c) If the Mortgaged Property or REO Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the sum of the Principal Balance of the related Mortgage Loan and the principal
balance of the related first lien, if any, (ii) the maximum insurable value of
the related Mortgaged Property, and (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).
Section 7.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of the related
Mortgage Loan and require that the Principal Balance thereof be paid in full on
or prior to such conveyance by the Mortgagor under any "due-on-sale" clause
applicable thereto. If such "due-on-sale" clause, by its terms, is not operable
or the Servicer is prevented, as provided in the last paragraph of this Section
7.05, from enforcing any such clause, the Servicer is authorized, subject to the
consent of the Note Purchaser, to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and the Mortgagor remains liable thereon or, if the Servicer in
its reasonable judgment finds it appropriate, is released from liability
thereon. The Servicer shall notify the Indenture Trustee and the Collateral
Agent that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee, the Collateral Agent and the Note Purchaser
an Officer's Certificate certifying that such agreement is in compliance with
this Section 7.05 together with the original copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Servicer's Loan File to
the same extent as all other documents and instruments constituting a part
thereof. In connection with any such agreement, the then current Mortgage
Interest Rate thereon shall not be increased or decreased. Any fee collected by
the Servicer for entering into any such agreement will be retained by the
Servicer as additional servicing compensation. At its sole election, the
Servicer may purchase from the Trust any Mortgage Loan that has been assumed in
accordance with this Section 7.05 within one month after the date of such
assumption at a price equal to the greater of (i) the fair market value of such
Mortgage Loan (as determined by the Servicer in its good faith judgment) and
(ii) the Repurchase Price. Such amount, if any, shall be deposited into the
Collection Account in the Due Period in which such repurchase is made.
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Notwithstanding the foregoing paragraph of this Section 7.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan, or transfer of any Mortgaged Property without
the assumption thereof, by operation of law or any assumption or transfer which
the Servicer reasonably believes it may be restricted by law from preventing for
any reason whatsoever.
Section 7.06. Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall, in a manner consistent with Accepted Servicing Practices,
foreclose upon or otherwise comparably convert to ownership Mortgaged Properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 7.02(a). Prior to conducting any sale in a
foreclosure proceeding or accepting a deed-in-lieu of foreclosure with respect
to any Mortgaged Property, the Servicer shall cause an environmental review to
be performed, in accordance with Accepted Servicing Practices on the Mortgaged
Property by a company such as Equifax, Inc. or Toxicheck. If such review reveals
that the Mortgaged Property has on it, under it or is near hazardous or toxic
material or waste or reveals any other environmental problem, the Servicer shall
not foreclose or accept a deed-in-lieu of foreclosure, without the prior written
consent of the Note Purchaser. In connection with such foreclosure or other
conversion, the Servicer shall follow such practices (including, in the case of
any default on a related senior mortgage loan, the advancing of funds to correct
such default) and procedures which are consistent with Accepted Servicing
Practices as it shall deem necessary or advisable and as shall be normal and
usual in its general first and second mortgage loan servicing activities.
Notwithstanding the foregoing, the Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless,
in the reasonable judgment of the Servicer, such expenses will be recoverable
from Liquidation Proceeds.
(b) In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, or to its nominee, on behalf of
Noteholders.
(c) Any Insurance Proceeds or Liquidation Proceeds received with
respect to a Mortgage Loan or REO Property (other than received in connection
with a purchase by the Certificateholders of all the Mortgage Loans and REO
Properties in the Trust Estate pursuant to Section 10.01 of the Indenture) will
be applied in the following order of priority, in each case to the extent of
Available Funds: first, to pay the Servicer any accrued and unpaid Servicing
Fees relating to such Mortgage Loan; second, to reimburse the Servicer or any
Subservicer for any related unreimbursed Servicing Advances, and any related
unreimbursed Periodic Advances theretofore funded by the Servicer or any
Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Interest Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act) on the Principal
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Balance of such Mortgage Loan, to the date such Mortgage Loan is determined to
be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan, or to the Due
Date in the Due Period prior to the Payment Date on which such amounts are to be
paid if such determination has not yet been made, minus any unpaid Servicing
Fees with respect to such Mortgage Loan; fourth, to the extent of the Principal
Balance of the Mortgage Loan outstanding immediately prior to the receipt of
such proceeds, as a recovery of principal of the related Mortgage Loan; and
fifth, to any prepayment or late payment charges or penalty interest payable in
connection with the receipt of such proceeds and to all other fees and charges
due and payable with respect to such Mortgage Loan. The amount of any gross
Insurance Proceeds and Liquidation Proceeds received with respect to any
Mortgage Loan or REO Property minus the amount of any unreimbursed Servicing
Advances, unreimbursed Periodic Advances or unpaid Servicing Fees, in each case,
with respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
Section 7.07. Indenture Trustee to Cooperate. Upon the payment in full
of the Principal Balance of any Mortgage Loan, the Servicer will notify the
Indenture Trustee and the Collateral Agent by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 7.02 have been so deposited) of a
Responsible Officer. Upon any such payment in full, the Servicer is authorized
to execute, pursuant to the authorization contained in Section 7.01, an
instrument of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Servicer if required by applicable law and
be delivered to the Person entitled thereto, it being understood and agreed that
no expenses incurred in connection with such instrument of satisfaction shall be
reimbursed from the Collection Account. From time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, the Collateral Agent shall,
upon request of the Servicer and delivery to the Collateral Agent of a Request
for Release signed by a Responsible Officer, release the related Servicer's Loan
File to the Servicer and shall execute such documents as shall be necessary for
the prosecution of any such proceedings. Such Request for Release shall obligate
the Servicer to return the Custodial Loan File to the Collateral Agent when the
need therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Responsible
Officer similar to that hereinabove specified, the Request for Release shall be
released by the Collateral Agent to the Servicer.
Section 7.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Payment Date, the Servicer shall be entitled to receive, and
the Indenture Trustee shall distribute, out of collections on the Mortgage Loans
for the Due Period, as servicing compensation for such Due Period, the Servicing
Fee. Additional servicing compensation in the form of assumption fees, late
payment charges or extension and other administrative charges shall be retained
by the Servicer. The Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including payment of all fees
and expenses of the Subservicers, payment of the Indenture Trustee Fee and any
expenses or disbursements reasonably incurred or made by the Indenture Trustee
and payment of the Collateral Agent Fee and any expenses or disbursements
incurred or made by the Collateral Agent, as provided in Section 6.16 of the
Indenture and Section 11.05 hereof, and all other fees and expenses not
expressly stated hereunder to be payable by or from another source) and shall
not be entitled to reimbursement therefor except as specifically provided
herein.
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Section 7.09. Annual Statement as to Compliance. The Servicer will
deliver to the Indenture Trustee, the Collateral Agent, and each Noteholder, on
or before April 30 of each year, beginning April 30, 2004, an Officer's
Certificate of the Servicer stating that (a) a review of the activities of the
Servicer during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision and (b) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its material obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof.
Section 7.10. Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning April 30, 2004, the Servicer at
its expense shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants (who may also
render other services to the Servicer) to furnish a report to the Indenture
Trustee, the Collateral Agent and each Noteholder to the effect that such firm
has examined certain documents and records relating to the servicing of mortgage
loans under servicing agreements (including this Agreement) substantially
similar to this Agreement, and that such examination, which has been conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers (to the extent that the procedures in such audit guide are
applicable to the servicing obligations set forth in such agreements), has
disclosed no items of noncompliance with the provisions of this Agreement which,
in the opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report.
Section 7.11. Access to Certain Documentation. The Servicer shall
permit the designated agents or representatives of each Noteholder, the Note
Purchaser, the Collateral Agent and the Indenture Trustee (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Servicer
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such materials and to discuss matters
relating to the Mortgage Loans and the Servicer's performance under this
Agreement with any of the officers or employees of the Servicer having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer authorizes its accountants to discuss their respective
finances and affairs), all at such reasonable times, as often as may be
reasonably requested and without charge to such Noteholder, the Note Purchaser,
the Collateral Agent or the Indenture Trustee.
Section 7.12. Maintenance of Fidelity Bond. The Servicer shall during
the term of its service as Servicer maintain in force a fidelity bond and errors
and omissions insurance in respect of its officers, employees or agents in an
amount at least equal to $1,000,000. Such bond and insurance shall comply with
the requirements from time to time of the FNMA for Persons performing servicing
for mortgage loans purchased by such association and shall name the Note
Purchaser as an additional loss payee.
Section 7.13. Compensating Interest. Not later than the close of
business on the third Business Day prior to each Payment Date, the Servicer
shall remit to the Indenture Trustee (without right to reimbursement therefor)
for deposit into the Collection Account, an amount equal to, for each Mortgage
Loan, the lesser of (a) the Prepayment Interest Shortfall for such Mortgage Loan
for the related Payment Date resulting from Principal Prepayments during the
related Due Period and (b) its Servicing Fees with respect to such Mortgage Loan
received in the related Due Period (the "Compensating Interest").
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Section 7.14. Reports to the Indenture Trustee; Collection Account
Statements. Not later than fifteen (15) days after each Payment Date, the
Servicer shall provide to the Indenture Trustee, the Collateral Agent and the
Note Purchaser a statement, certified by a Responsible Officer, setting forth
the status of the Collection Account as of the close of business on the related
Payment Date, stating that all payments required by this Agreement to be made by
the Servicer on behalf of the Indenture Trustee have been made (or if any
required payment has not been made by the Servicer, specifying the nature and
status thereof) and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the Collection Account for each
category of deposit specified in Section 7.02 and each category of withdrawal
specified in Section 7.02 and the aggregate of deposits into the Collection
Account as specified in Section 8.01. Such statement shall also state the
aggregate unpaid principal balance of all the Mortgage Loans as of the close of
business on the last day of the month preceding the month in which such Payment
Date occurs. Copies of such statement shall be provided by the Indenture Trustee
to any Noteholder upon request.
Section 7.15. Reserved.
Section 7.16. Reports to Be Provided by the Servicer. (a) Four Business
Days prior to each Payment Date, the Servicer shall deliver to the Indenture
Trustee and the Note Purchaser a Monthly Report for such Payment Date, setting
forth the information required in the definition of "Monthly Report."
(b) On the date which is four Business Days prior to each Payment Date
and each Transfer Date, the Servicer shall deliver to the Indenture Trustee and
the Note Purchaser (as directed by the Note Purchaser) the following information
with respect to all Mortgage Loans as well as a break out as to consumer purpose
and business purpose Mortgage Loans, in each case, as of the close of business
on the last Business Day of the prior calendar month (except as otherwise
provided in clause (v) below):
(i) the total number of Mortgage Loans and the Aggregate Principal
Balances thereof, together with the number, Aggregate Principal Balances of
such Mortgage Loans and the percentage (based on the Aggregate Principal
Balances of the Mortgage Loans) of the Aggregate Principal Balances of such
Mortgage Loans to the Aggregate Principal Balance of all Mortgage Loans (A)
31-59 days Delinquent, (B) 60-89 days Delinquent and (C) 90 or more days
Delinquent;
(ii) the number, Aggregate Principal Balances of all Mortgage Loans and
percentage (based on the Aggregate Principal Balances of the Mortgage
Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans in foreclosure
proceedings and the number, Aggregate Principal Balances of all Mortgage
Loans and percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of any such Mortgage Loans also included in any of the
statistics described in the foregoing clause (i);
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(iii) the number, Aggregate Principal Balances of all Mortgage Loans
and percentage (based on the Aggregate Principal Balances of the Mortgage
Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
Aggregate Principal Balance of all Mortgage Loans relating to Mortgagors in
bankruptcy proceedings and the number, Aggregate Principal Balances of all
Mortgage Loans and percentage (based on the Aggregate Principal Balances of
the Mortgage Loans) of any such Mortgage Loans also included in any of the
statistics described in the foregoing clause (i);
(iv) the number, Aggregate Principal Balances of all Mortgage Loans and
percentage (based on the Aggregate Principal Balances of the Mortgage
Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
Aggregate Principal Balance of all Mortgage Loans relating to REO
Properties and the number, Aggregate Principal Balances of all Mortgage
Loans and percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of any such Mortgage Loans also included in any of the
statistics described in the foregoing clause (i);
(v) such loan level information as is generally included in the
offering documents for Securitizations entered into by the Servicer and the
Originators;
(vi) the book value of any REO Property;
(vii) the aggregate Principal Balance of all Mortgage Loans that have
ceased to be Eligible Mortgage Loans since the Initial Cut-Off Date (such
Principal Balance measured as of the day immediately preceding the date on
which each such Mortgage Loan ceased to be an Eligible Mortgage Loan),
provided that each such Mortgage Loan was Delinquent more than 30 days at
the time such Mortgage Loan ceased to be an Eligible Mortgage Loan, but
excluding any Mortgage Loans that have been released from the lien of the
Indenture due to the Disposition of such Mortgage Loans aggregating
$5,000,000 or more in unpaid Principal Balance;
(viii) the total number of Mortgage Loans and the aggregate Principal
Balance; of all the Mortgage Loans; and
(ix) any other information reasonably requested by the Note Purchaser.
(c) In connection with the transfer of the Secured Notes, the Indenture
Trustee on behalf of any Noteholder may request that the Servicer make available
to any prospective Noteholder annual audited financial statements of the
Servicer for one or more of the most recently completed five (5) fiscal years
for which such statements are publicly available together with the most recent
unaudited quarterly financial statements of the Servicer, which request shall
not be unreasonably denied or unreasonably delayed. Such annual audited
financial statements also shall be made available to the Note Purchaser upon
request.
(d) Upon reasonable advance notice, the Servicer also agrees to make
available on a reasonable basis to the Note Purchaser and any prospective
Noteholder a knowledgeable financial or accounting officer for the purpose of
answering reasonable questions respecting recent developments affecting the
Servicer or the financial statements of the Servicer and to permit the Note
Purchaser and any prospective Noteholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the Note
Purchaser and such prospective Noteholder that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
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Section 7.17. Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The Servicing Fee that the Servicer shall be entitled to
receive with respect to each Mortgage Loan and each Payment Date shall be offset
on such Payment Date by an amount equal to the Prepayment Interest Shortfall
with respect to such Mortgage Loan to the extent that it is the subject of
Principal Prepayments during the month preceding the month of such Payment Date.
The amount of any offset against the Servicing Fee with respect to any Payment
Date under this Section 7.17 shall be limited to the Servicing Fee otherwise
payable to the Servicer (without adjustment on account of Prepayment Interest
Shortfalls) with respect to such Mortgage Loan, and the rights of the
Noteholders to the offset of the aggregate Prepayment Interest Shortfalls
against the Servicing Fee shall not be cumulative.
Section 7.18. Periodic Advances. If, on any Determination Date, the
Servicer determines that any Monthly Payments due on the Due Date immediately
preceding such Determination Date have not been received as of the end of the
related Due Period, the Servicer shall determine the amount of any Periodic
Advance required to be made with respect to the related Payment Date. The
Servicer shall include in the amount to be deposited in the Collection Account
on such Determination Date an amount equal to the Periodic Advance, if any,
which deposit may be made in whole or in part from funds in the Collection
Account being held for future payment or withdrawal on or in connection with
Payment Dates in subsequent months. Any funds being held for future payment to
Noteholders and so used shall be replaced by the Servicer from its own funds by
deposit in the Collection Account on or before the Business Day preceding any
such future Determination Date to the extent that funds in the Collection
Account on such Determination Date shall be less than payments to Noteholders
required to be made on such date.
The Servicer shall designate on its records the specific Mortgage Loans
and related installments (or portions thereof) as to which such Periodic Advance
shall be deemed to have been made, such determination being conclusive for
purposes of withdrawals from the Collection Account pursuant to Section 7.02
hereof.
Section 7.19. Indemnification; Third Party Claims. (a) The Servicer
shall indemnify the Originator, the Owner Trustee, the Trust, the Depositor, the
Indenture Trustee and the Noteholders, their respective officers, directors,
employees, agents and "control persons," as such term is used under the Act and
under the Securities Exchange Act of 1934 as amended (each a "Servicer
Indemnified Party") and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of any of the Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement except to the extent such loss arises out of such
Servicer Indemnified Party's gross negligence or willful misconduct; provided,
however, that if the Servicer is not liable pursuant to the provisions of
Section 7.19(b) for its failure to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement, then the provisions of
this Section 7.19 shall have no force and effect with respect to such failure.
The obligations of the Servicer under this Section 7.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.
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(b) Neither the Servicer or any of its Affiliates, directors, officers,
employees or agents shall be under any liability to the Owner Trustee, the
Trust, the Indenture Trustee or the Noteholders for any action taken, or for
refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any of its Affiliates, directors, officers,
employees, agents against the remedies provided herein for the breach of any
warranties, representations or covenants made herein, or against any expense or
liability specifically required to be borne by such party without right of
reimbursement pursuant to the terms hereof, or against any expense or liability
which would otherwise be imposed by reason of misfeasance, bad faith or
negligence in the performance of the duties of the Servicer. The Servicer and
any of its Affiliates, directors, officers, employees, agents may rely in good
faith on any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder.
(c) With respect to a claim subject to indemnity hereunder made by any
Person against an Indemnified Party (a "Third Party Claim"), such Indemnified
Party shall notify the related indemnifying parties (each, an "Indemnifying
Party") in writing of the Third Party Claim within a reasonable time after
receipt by such Indemnified Party of written notice of the Third Party Claim
unless the Indemnifying Parties shall have previously obtained actual knowledge
thereof. Thereafter, the Indemnified Party shall deliver to the Indemnifying
Parties, within a reasonable time after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim. No failure to give such
notice or deliver such documents shall effect the rights to indemnity hereunder.
Each Indemnifying Party shall promptly notify the Indenture Trustee and the
Indemnified Party (if other than the Indenture Trustee) of any claim of which it
has been notified and shall promptly notify the Indenture Trustee and the
Indemnified Party (if applicable) of its intended course of action with respect
to any claim.
(d) If a Third Party Claim is made against an Indemnified Party, while
maintaining control over its own defense, the Indemnified Party shall cooperate
and consult fully with the Indemnifying Party in preparing such defense, and the
Indemnified Party may defend the same in such manner as it may deem appropriate,
including settling such claim or litigation after giving notice to the
Indemnifying Party of such terms; and the Indemnifying Party will promptly
reimburse the Indemnified Party upon written request.
Section 7.20. Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer. (a) The Servicer will keep in full effect its
existence, rights and franchises as a corporation, will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement and will
otherwise operate its business so as to cause the representations and warranties
under Section 3.02 to be true and correct at all times under this Agreement.
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(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an established mortgage loan servicing institution that
(i) is an approved servicer by at least two nationally recognized rating
agencies, (S&P, Xxxxx'x and/or Fitch) and (ii) is acceptable to the Majority
Noteholders, and in all events shall be the successor of the Servicer without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding. The
Servicer shall send notice of any such merger or consolidation to the Owner
Trustee, the Indenture Trustee, the Collateral Agent and the Note Purchaser.
Section 7.21. Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the Note
Purchaser or upon the determination that the Servicer's duties hereunder are no
longer permissible under applicable law and that such incapacity cannot be cured
by the Servicer without incurring, in the reasonable judgment of the Note
Purchaser, unreasonable expense. Any such determination that the Servicer's
duties hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be counsel for the Servicer) to such effect delivered to the Trust, the
Indenture Trustee, the Depositor and the Note Purchaser. No such resignation
shall become effective until the Indenture Trustee or a successor appointed in
accordance with the terms of this Agreement has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 9.02. The
Servicer shall provide the Note Purchaser with at least 60 days' prior written
notice of its intention to resign pursuant to this Section 7.21.
Section 7.22. The Subservicers. (a) The Servicer hereby appoints the
Subservicers as the Servicer's agents for the purpose of servicing, on the
Servicer's behalf, the respective Mortgage Loans as were originated by such
Subservicers and transferred by them, in their capacity as Originators
hereunder, to the Depositor. The Subservicers hereby accept such appointment.
The Subservicers shall service such Mortgage Loans in a manner consistent with
the Accepted Servicing Practices set forth in this Agreement, and receipt by the
Subservicers of any and all amounts which by the terms hereof are required to be
deposited in the Collection Account shall constitute receipt thereof by the
Servicer for all purposes hereof as of the date so received by the Subservicers.
Notwithstanding such designation of the Subservicers, the Servicer agrees that
it is, and it shall remain, fully obligated under the terms hereof as Servicer
with respect to all such Mortgage Loans, and nothing herein shall relieve or
release the Servicer from its obligations to the other parties hereto to service
such Mortgage Loans in the manner provided in this Agreement.
(b) The Subservicers shall be compensated for their services hereunder
by the Servicer out of its Servicing Fee. No party other than the Servicer shall
be responsible for payment of the subservicing fees.
(c) The Subservicers are subject to Section 7.01(b) hereof regarding
the servicing term and Article IX hereof regarding events of default. The
Subservicers may be removed in the same circumstances as the Servicer
thereunder.
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ARTICLE VIII
NOTE AND ACCOUNT ADMINISTRATION
Section 8.01. Calculation of Note Principal Balances. The Indenture
Trustee shall calculate the Note Principal Balance of each Secured Note for each
day. In the case of any Secured Note that is newly issued on such day pursuant
to an Issuance Order that states that such Issuance Order is "effective" on such
day, the Note Principal Balance for such Secured Note shall be the Sale Amount
set forth on the face of such Secured Note and such balance shall be reflected
on the Daily Report on the next Business Day. In the case of any Secured Note
that is not newly issued on such day, the Note Principal Balance for such
Secured Note on such day shall equal the Note Principal Balance of such Secured
Note at the close of business on the immediately preceding day.
Section 8.02. Daily Report. Not later than 5:00 p.m. New York, New York
time on each Business Day, the Indenture Trustee shall furnish to the Trust and
the Note Purchaser, by facsimile and e-mail, a report (the "Daily Report")
containing the following information:
1) the accrued and unpaid interest on such Secured Note
at the close of business on the day prior to such
Business Day;
2) LIBOR for such day, and for each day since the day
reflected in the most recent prior Daily Report;
3) the Margin being used by the Indenture Trustee to
calculate accrued interest on such day;
4) the Note Principal Balance of each Secured Note as
of the day prior to such Business Day;
5) any principal reduction in the Note Principal
Balance of each Secured Note after the close of
business on the date two Business Days before such
day and prior to the close of business on the
Business Day immediately preceding such day;
6) the amount of any payment of interest with respect
to each Secured Note on such day;
7) the total amount on deposit in each Account as of
the close of business on the Business Day
immediately preceding such day, which amount, in the
case of the Collection Account, shall be stated
separately, based solely on information supplied by
the Servicer to the Indenture Trustee, as (x)
"general collections" and "prepayments in full" or
(y) on the Business Day following any Determination
Date, as "interest collections," "general principal
collections," "prepayments in full" and "other
collections" (and, if no such information is
supplied with respect to any Determination Date,
such amounts shall be deemed to be principal
collections);
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8) any deposits to, or withdrawals from, each Account
prior to the close of business on the Business Day
immediately preceding such day;
9) based on information supplied to the Indenture
Trustee by the Servicer (or, if such information is
supplied by the Servicer to the Collateral Agent,
then by the Collateral Agent), with respect to each
Secured Note, the aggregate balance of all Mortgage
Loans, as of the relevant Transfer Date of each
Mortgage Loan, as reported on the Mortgage Loan
Schedule attached to the Trust Receipt and relating
to such Secured Note outstanding as the close of
business on the Business Day immediately preceding
such day, together with the balance of all Mortgage
Loans, as of the relevant Transfer Date of each
Mortgage Loan, added to, or deleted from, such
Mortgage Loan Schedule and relating to such Secured
Note as of the Transfer Date.
Section 8.03. Establishment of Accounts. (a) Concurrently with the
execution and delivery hereof, the Indenture Trustee, in cooperation with the
Servicer, shall establish at the corporate trust offices of JPMorgan Chase Bank
the following segregated accounts:
"ABFS Mortgage Loan Warehouse Trust 2000-2 Collection Account, JPMorgan
Chase Bank, as Indenture Trustee in trust for the Noteholders" (the "Collection
Account"); and
"ABFS Mortgage Loan Warehouse Trust 2000-2 General Operating Account,
JPMorgan Chase Bank, as Indenture Trustee on behalf of ABFS Mortgage Loan
Warehouse Trust 2000-2" (the "General Operating Account").
The parties hereto may, from time to time, establish one or more other
Accounts, and amend this Agreement to provide for the administration thereof.
All Accounts shall be maintained in the State of New York as segregated trust
accounts established with the corporate trust department of the Indenture
Trustee. Subject to the provisions of this Agreement, the Indenture Trustee
shall have sole dominion and control over, and be the sole signatory on, each of
the Accounts (other than the General Operating Account).
Section 8.04. Deposits to Accounts. (a) The Servicer shall deposit, or
cause to be deposited, to the Collection Account the amounts described in
Section 7.02.
(b) All Sale Amounts funded by the Noteholders shall be deposited to
the General Operating Account. The Trust may, from time to time, deposit, or
cause to be deposited, other moneys into the General Operating Account.
(c) The Servicer is hereby irrevocably authorized and empowered, as the
Trust's attorney-in-fact, to endorse any check or any other instrument or
security presented for deposit in any Account and requiring the endorsement of
the Trust.
(d) If at any time the Trust, or any Person on behalf of the Trust
(including the Servicer under the Agreement), receives any amounts required to
be deposited in any Account (other than the General Operating Account), all such
amounts shall be held by the Trust or such other Person as the agent of, and in
trust for, the Indenture Trustee and shall, forthwith upon receipt by the Trust
or such other Person, be turned over to the Indenture Trustee for deposit to the
applicable designated Account in the same form as received by the Trust or such
other Person (and, if received in the form of a check, instrument or security
requiring endorsement, duly endorsed on behalf of the Trust or such other Person
to the order of the Indenture Trustee).
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Section 8.05. Investment of Accounts. (a) So long as the Note Purchaser
shall not have notified the Indenture Trustee of the occurrence of an Event of
Default under the Indenture, the Indenture Trustee shall cause all or any
portion of the Accounts to be invested and reinvested, in the name of the
Indenture Trustee or its nominee, as the Indenture Trustee may be directed in
writing by the Trust (or by the Servicer on behalf of the Trust) and at the
expense and risk of the Trust, in one or more Permitted Investments bearing
interest or sold at a discount; provided that, if the Trust causes to be
delivered to the Note Purchaser an opinion of counsel, in form and substance
reasonably satisfactory to the Note Purchaser to the effect that permitting the
Servicer directly to instruct the Indenture Trustee with respect to the
investment of funds in the Trust Estate Accounts will not adversely affect the
perfection of the Indenture Trustee's Lien thereon, the Servicer may so instruct
the Indenture Trustee regarding the investment and reinvestment of funds held in
the Accounts in Permitted Investments. If the Note Purchaser shall have notified
the Indenture Trustee of the occurrence of an Event of Default under the
Indenture, however, the Note Purchaser may direct such investments, neither the
Trust nor the Servicer shall have any further right or power to direct such
investments, and the Indenture Trustee shall follow such directions as it may
receive from the Note Purchaser notwithstanding any directions the Indenture
Trustee may have received from the Trust or the Servicer.
(b) No investments shall be liquidated prior to their stated maturity
by the Trust.
(c) The Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in any Account resulting from any loss on any Permitted
Investment included therein.
Section 8.06. Disbursements from Collection Account. On each Payment
Date, the Indenture Trustee shall make the following disbursements by wire
transfer from amounts then on deposit in the Collection Account:
(a) To the extent that such fees and expenses have not been paid by the
Servicer pursuant to Section 7.08 of this Agreement, to the Indenture Trustee,
the Indenture Trustee Fee or any portion thereof outstanding and any
reimbursable amounts owed the Indenture Trustee under Section 6.16 of the
Indenture if any such amounts remain unpaid for 60 or more days and to the
Collateral Agent, the Collateral Agent Fee and any reimbursable amounts owed the
Collateral Agent under Section 11.05 of this Agreement if any such amounts
remain unpaid for 60 or more days, and provided, that, if, after any remittance
of funds pursuant to this Section 8.06(a), all or any portion of the amount so
paid is subsequently recovered, the Indenture Trustee shall cause the amount so
recovered to be deposited into the Collection Account.
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(b) Based solely on the information supplied by the Servicer, the
Indenture Trustee shall make the following withdrawals from available funds in
the Collection Account: (i) to withdraw any amount not required to be deposited
in the Collection Account or deposited therein in error; (ii) to distribute the
Servicer its Servicing Fee on an as-collected basis with respect to each
Mortgage Loan; and (iii) to clear and terminate the Collection Account in
connection with the termination of this Agreement.
(c) Interest. (i) (A) From the related Interest Amount Available with
respect to each Secured Note, to each Holder of such Secured Note, the related
Interest Payment Amount (plus any amounts equal to withheld amounts pursuant to
Section 3.03 of the Indenture), and (B) to the extent there are any interest
shortfalls on any Secured Notes, from the remaining Interest Amount Available
after making the distribution in clause (A), to the Holders of such Secured
Notes to distribute the Interest Payment Amounts for such Secured Notes
remaining unpaid, to be distributed pro rata based on the interest shortfall of
each such Secured Note;
(ii) from the remaining aggregate Interest Amount Available, to the
Note Purchaser such other amounts then due and owing to the Note Purchaser
under the Basic Documents as the Note Purchaser may have given written
notice of to the Indenture Trustee and the Servicer not later than noon
Eastern time on the Business Day prior to such Payment Date; and
(iii) from the remaining Interest Amount Available, to the Indenture
Trustee and the Collateral Agent for the payment of any fees and expenses
then due and unpaid to them hereunder.
(d) Principal. (i) The related Principal Amount Available shall be
released from the Collection Account and distributed to the Holders of a Secured
Note as a payment of principal; and
(ii) on any Business Day, whether or not such payments are due on a
Payment Date, in connection with such payments of principal as the Trust
may be required to make pursuant to Article X of the Indenture or as
provided in Section 2.19 or 4.02 of this Agreement, upon the Indenture
Trustee's receipt of a written order in substantially the form of Exhibit I
(a "Disbursement Order").
The Trust shall deliver, or cause to be delivered, such
Disbursement Orders as may be required to effect any payment of principal
described in the preceding clause (ii).
(e) From any remaining portion of the Interest Amount Available:
(i) first, to the Servicer, the amount of any Servicing Advances,
Periodic Advances or Compensating Interest not previously reimbursed to the
Servicer (as reported by the Servicer to the Indenture Trustee); and
(ii) second, to the Certificateholders, any remainder.
(f) Amounts which are to be paid out of collections generally pursuant
to clauses (a), (c)(i)(B), (c)(ii) and (c)(iii) above shall be allocated from
the groups of Related Mortgage Loans pro rata in relation to the unpaid
principal balances of the related Secured Notes immediately prior to such
distribution.
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(g) The Note Purchaser and the Trust may from time to time agree to
designate additional Payment Dates, as required, for example, in connection with
Dispositions. The Trust shall give the Indenture Trustee at least five Business
Days' notice of any such additional Payment Date, and shall deliver, or cause to
be delivered, a Disbursement Order relating thereto. Notwithstanding any other
provisions of this Section 8.06, proceeds of Dispositions shall be remitted in
accordance with the provisions of the relevant disposition agreement consented
to by the Note Purchaser.
(h) Notwithstanding the foregoing paragraphs of this Section 8.06,
should the Note Purchaser notify the Indenture Trustee that an Event of Default
under the Indenture has occurred and is continuing, then, from and after its
receipt of such notice (and without any right or obligation to investigate such
notice), the Indenture Trustee shall distribute, release and otherwise apply the
funds in the Collection Account pursuant to Section 5.07 of the Indenture.
(i) All distributions to be made by the Indenture Trustee hereunder
shall be made by wire transfer in immediately available funds with the transfer
initiated not later than noon New York, New York time, if the recipient has
provided wiring instructions to the Indenture Trustee, and otherwise shall be
paid by check addressed to the address of such recipient reflected in the
Indenture Trustee's records.
Section 8.07. Account Provisions. (a) Each of the Indenture Trustee and
the Servicer hereby confirms and agrees that each of the Accounts will be held
as a trust account as to which the Indenture Trustee shall be (i) the
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC to
the extent the Accounts are "securities-accounts" (within the meaning of Section
8-501(a) of the UCC or (ii) the "customer" (within the meaning of Section
4-104(1) of the UCC) to the extent the Accounts are "deposit accounts" (within
the meaning of Section 9-102(a)(8) of the UCC). Any investments held in any
Account will be registered in the name of "JPMorgan Chase Bank, as Indenture
Trustee in trust for the ABFS Mortgage Loan Warehouse Trust 2000-2 Noteholders."
(b) The Trust, the Servicer and the Indenture Trustee represent and
warrant that they have not entered into, and covenant that they shall not enter
into, any agreement with respect to the Accounts or any item of property
credited to or carried in the Accounts other than this Agreement.
(c) The Trust represents and agrees that it has not suffered or
permitted, and covenants that it shall not suffer or permit, any of its
creditors (other than the Note Purchaser) to obtain control over any Account or
any property credited thereto or carried therein.
(d) Except for the claims and interests of the Note Purchaser and of
the Trust in the Accounts (and, to the extent permitted under Section 8.06(a) or
8.06(c), the claims of the Indenture Trustee and the Collateral Agent), each of
the Indenture Trustee and the Servicer represents and warrants that it does not
know of any claim to, or interest in, the Accounts credited thereto or required
to be credited thereto.
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(e) The Trust, the Servicer and the Note Purchaser each intend and
agree that the Indenture Trustee, in its capacity as collateral agent and
secured party for the benefit and on behalf of the Note Purchaser, has obtained
"control" (within the meaning of Section 8-106(d) of the UCC) of all security
entitlements relating to the Accounts and to the financial assets credited
thereto or carried therein to the extent the Accounts are securities accounts.
(f) The Servicer shall cause (and, to the extent necessary, the
Indenture Trustee shall cooperate with the Servicer in causing) all items of
income, gain, expense and loss recognized in the Accounts to be reported by the
Indenture Trustee to the U.S. Internal Revenue Service, and to all state and
local taxing authorities, under the name and taxpayer identification number of
the Trust.
(g) The Parties agree as follows with respect to the Accounts and the
Permitted Investments, and the proceeds thereof, held from time to time in each
Account:
(i) any Account that is a "deposit account" (as defined in Section
9-105 of the UCC) shall be subject to the exclusive custody and "control"
(within the meaning of Section 9-104 of the UCC) of the Indenture Trustee,
and the Indenture Trustee shall have sole signature authority with respect
thereto;
(ii) any Permitted Investment that constitutes Physical Property (as
defined in the definition of Delivery) shall be delivered to the Indenture
Trustee in accordance with paragraph (a) of the definition of "Delivery"
and shall be held, pending maturity or disposition, solely by the Indenture
Trustee or a securities intermediary (as such term is defined in Section
8-102(a)(14) of the UCC) acting solely for the Indenture Trustee that has
agreed to treat such property as a financial asset;
(iii) any Permitted Investment that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered to the Indenture Trustee in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by
the Indenture Trustee, pending maturity or disposition, through continued
book-entry credit of such Permitted Investment as described in such
paragraph; and
(iv) any Permitted Investment that is an "uncertificated security"
(within the meaning of Section 8-102(a)(18) of the UCC) and that is not
governed by clause (iii) above shall be delivered to the Indenture Trustee
in accordance with paragraph (c) of the definition of "Delivery" and shall
be maintained by the Indenture Trustee, pending maturity or disposition,
through continued registration of the Indenture Trustee's (or its
nominee's) ownership of such security directly or through one or more
securities intermediaries acting solely for the Indenture Trustee as
described in such paragraph.
(h) In the event of any change of law regarding matters relating to the
perfection of security interests in any Account or the amounts or any Permitted
Investments held therein, the Servicer shall cause to be furnished to the
Indenture Trustee and each Noteholder, an opinion of counsel addressing such
matters and if necessary, the Servicer shall cooperate with the Indenture
Trustee in taking all actions necessary to comply with the change in law.
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Section 8.08. Reserved.
Section 8.09. Modification of Underwriting Guidelines. Each Originator
shall give the Note Purchaser prompt written notification of any modification or
change to its Underwriting Guidelines; provided that if, within 15 Business Days
after receipt of a copy thereof, the Note Purchaser informs such Originator that
it disapproves of one or more of such proposed modifications, "Underwriting
Guidelines" shall mean, for purposes of this Agreement and the other Basic
Documents, the Underwriting Guidelines previously in effect, modified only to
the extent of such modifications as (i) have not been disapproved by the Note
Purchaser pursuant to this Section 8.09, unless the Note Purchaser consents in
writing to any modification or change to such Underwriting Guidelines and (ii)
such other modifications which constitute non-substantive modifications and
corrections. Notwithstanding anything contained in this Agreement to the
contrary, any Mortgage Loan conveyed to the Trust pursuant to this Agreement
pursuant to underwriting guidelines that contain a modification or change to the
Underwriting Guidelines that has been disapproved by the Note Purchaser, or
which the Note Purchaser did not receive notice of (i.e., a Mortgage Loan that
could not have been originated in compliance with the "Underwriting Guidelines,"
as defined in this Section 8.09), shall be deemed a Defective Mortgage Loan and
be purchased or substituted for in accordance with Section 4.02(b) hereof.
Section 8.10. Valuation of Mortgage Loans and Excess Interest
Securities Value. (a) The "Market Value" of each Mortgage Loan will be
determined by the Note Purchaser or its designee in its sole judgment and its
sole good faith discretion. Such determination may be based in whole or in part
on agreed estimates of the projected proceeds from such Mortgage Loan's
Disposition in a whole loan sale or inclusion in a Securitization (inclusive of
the projected market value of any Excess Interest Securities to be issued in
connection with such Securitization).
(b) From time to time, the Note Purchaser may determine in its sole
good faith judgment the market value of the Excess Interest Securities, if any,
expected to be, or which could be, issued pursuant to a Securitization as of the
closing date of such Securitization. In making such determination the Note
Purchaser may rely exclusively on quotations provided by leading dealers in
instruments similar to such Excess Interest Securities or such other factors
deemed appropriate by the Note Purchaser.
Section 8.11. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Indenture Trustee by the Servicer or by any
Subservicer. The Indenture Trustee, or the Collateral Agent on behalf of the
Indenture Trustee, shall hold all such money and property received by it, as
part of the Trust Estate and shall apply it as provided in the Indenture and in
this Agreement.
Section 8.12. Application of Principal and Interest. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon, or
any Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage
Loan, such Net Liquidation Proceeds or partial payment shall be applied to
payment of the related Mortgage Note as provided therein, and if not so
provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.
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ARTICLE IX
SERVICER DEFAULT
Section 9.01. Servicer Events of Default. (a) The following events
shall each constitute a "Servicer Event of Default" hereunder:
(i) any failure by the Servicer to remit to the Indenture Trustee any
payment required to be made, including without limitation any principal,
interest or Servicing Advance, by the Servicer under the terms of this
Agreement or the Basic Documents;
(ii) any failure on the part of the Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the
part of the Servicer contained in this Agreement, or the failure of any
representation and warranty made pursuant to Section 3.02 hereof to be true
and correct which continues unremedied for a period of fifteen (15) days
after (x) actual knowledge thereof by the Servicer or (y) the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Indenture Trustee or to the Servicer
and the Indenture Trustee by any Noteholder or the Note Purchaser;
(iii) any failure by the Servicer to maintain any required licenses to
do business in any jurisdiction where the property is located, which
failure has a material adverse effect on the ability of the Servicer to
perform its functions under this Agreement or materially impairs the value
of the Mortgage Loans, and which continues to be unremedied for a period of
fifteen (15) days after the date on which the Servicer has actual knowledge
or written notice of such failure;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidation in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of thirty (30)
days;
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property;
(vi) the Servicer shall admit in writing its inability generally to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations
or cease its normal business operations;
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(vii) the Note Purchaser shall notify the Indenture Trustee of any
"event of default" under the Purchase Agreement;
(viii) the Servicer fails to be an Eligible Servicer;
(ix) the Sponsor shall fail to own, directly or indirectly (through its
subsidiaries) ownership of 100% of the outstanding common stock of the
Servicer;
(x) the Servicer fails to pay when due any principal or interest on any
other debt or in the payment when due of any contingent obligation if such
default continues beyond any period of grace provided under the papers
evidencing such obligation; or breach or default with respect to any other
material term of any other debt or of any promissory note, bond, loan
agreement, reimbursement agreement, mortgage, indenture or other agreement
relating thereto, if the effect of any such failure, default or breach
referred to in this Section 9.01(a)(x) is to cause, or to permit the holder
or holders of such obligation (or a trustee on behalf of such holder or
holders) to cause, debt of the Servicer or any of its Subsidiaries in the
aggregate amount of Ten Million Dollars ($10,000,000) or more to become or
be declared due before its stated maturity; and
(xi) any money judgment, writ or warrant of attachment, or similar
process involving in any case an amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000) shall be entered or filed against the Servicer,
or any of its Subsidiaries or any of its assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty (30)
days or in any event later than five (5) days before the date of any
proposed sale thereunder.
(b) So long as a Servicer Event of Default shall have occurred and not
have been remedied, the Indenture Trustee, upon receipt of written notice or
actual knowledge by a Responsible Officer of such failure, shall give immediate
telephonic and facsimile notice of such failure to a Responsible Officer of the
Servicer and to the Note Purchaser, and the Indenture Trustee shall, but only at
the direction of the Note Purchaser or the Majority Noteholders, terminate all
of the rights and obligations of the Servicer under this Agreement, except for
the Servicer's indemnification obligation under Section 7.19, and the Successor
Servicer shall immediately make such Periodic Advance or payment of Compensating
Interest and assume, pursuant to Section 9.02 hereof, the duties of a successor
Servicer. Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall, subject to Section 9.02, pass to and be vested in the
Successor Servicer, and the Successor Servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, at the expense of the Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate (and pay any related
costs and expenses) with the Successor Servicer in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Successor Servicer, or its designee, for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Collection Account or thereafter received with respect to the
Mortgage Loans. To the extent the predecessor Servicer fails to pay such
amounts, the Indenture Trustee shall be entitled to withdraw such amounts from
the Collection Account. The Indenture Trustee shall promptly notify the Note
Purchaser of the occurrence of a Servicer Event of Default.
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(c) Upon the occurrence of an (i) Event of Default under any of the
Basic Documents, (ii) a Servicer Event of Default under this Agreement, (iii) a
material adverse change in the business or financial conditions of the Servicer
(each, a "Term Event"), the Servicer's right to service the Mortgage Loans
pursuant to the terms of this Agreement shall remain in effect for an initial
period commencing on the date on which such Term Event occurred and shall
automatically terminate at 5:00 p.m., New York, New York time, on the last
Business Day of the calendar month in which such Term Event occurred (the
"Initial Term"). Thereafter, the Initial Term shall be extendible in the sole
discretion of the Note Purchaser by written notice (each, a "Servicer Extension
Notice") of the Noteholder for successive one-month terms (each such term ending
at 5:00 p.m., New York, New York time ("EST"), on the last business day of the
related month). Following a Term Event, the Servicer hereby agrees that the
Servicer shall be bound for the duration of the Initial Term and the term
covered by any such Servicer Extension Notice to act as the Servicer pursuant to
this Agreement and the Servicing Agreement. Following a Term Event, the Servicer
agrees that if, as of 3:00 p.m. (EST) on the last business day of any month, the
Servicer shall not have received a Servicer Extension Notice from the Note
Purchaser, the Servicer shall give written notice of such non-receipt to the
Note Purchaser by 4:00 p.m. (EST). Following a Term Event, the failure of the
Note Purchaser to deliver a Servicer Extension Notice by 5:00 p.m. (EST) shall
result in the automatic and immediate termination of the Servicer (the
"Termination Date"). Notwithstanding these time frames, the Servicer and the
Note Purchaser shall comply with all applicable laws in connection with such
transfer and the Servicer shall continue to service the Mortgage Loans until
completion of such transfer.
Section 9.02. Successor Servicer to Act; Appointment of Successor. (a)
On and after the time the Servicer receives a notice of termination pursuant to
Section 9.01, or the Indenture Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 7.21, or the Servicer is
removed as Servicer pursuant to this Article IX, except as otherwise provided in
Section 9.01, 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 arising on or after the date of succession;
provided, however, that the Successor Servicer shall not be liable for any
actions or the representations and warranties of any Servicer prior to it and
including, without limitation, the obligations of the Servicer set forth in
Sections 2.07 and 4.02 hereof. The Successor Servicer shall be obligated to pay
Compensating Interest pursuant to Section 7.13 in any event and to make advances
pursuant to Section 7.18 unless, and only to the extent the Successor Servicer
determines reasonably and in good faith that such advances would not be
recoverable pursuant to Section 7.18, such determination to be evidenced by a
certification of a Responsible Officer of the Successor Servicer delivered to
the Note Purchaser.
(b) The Majority Noteholders with the written consent of the Note
Purchaser shall appoint a Successor Servicer or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
that qualifies as an Eligible Servicer as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Notwithstanding anything in this
Agreement to the contrary, the original Servicer will continue to fulfill the
role of Servicer until such time as a Successor Servicer is appointed. The
Indenture Trustee shall not assume any servicing responsibilities at any time
whether or not the Servicer is able to continue in its role as Servicer until a
Successor Servicer is appointed.
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(c) The Successor Servicer shall be entitled to the same Servicing
Compensation (including the Servicing Fee as adjusted pursuant to the definition
thereof) and other funds pursuant to Section 7.08 hereof as the Servicer if the
Servicer had continued to act as servicer hereunder. In the event the Successor
Servicer is unable or unwilling to act as successor Servicer, the Successor
Servicer shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer shall be entitled to the full amount of the aggregate
Servicing Fees hereunder as servicing compensation, together with the other
Servicing Compensation. Within thirty (30) days after any such public
announcement, the Successor Servicer shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Successor
Servicer shall deduct from any sum received by the Successor Servicer from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder and the amount
of any unreimbursed Servicing Advances and Periodic Advances owed to the
Successor Servicer. After such deductions, the remainder of such sum shall be
paid by the Successor Servicer to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor.
(d) The Successor Servicer and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Successor Servicer and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Successor
Servicer or such successor Servicer, as applicable, at the Servicer's cost and
expense, (i) all documents and records reasonably requested by the Successor
Servicer and (ii) access to personnel knowledgeable in the servicing of the
Mortgage Loans to enable it to assume the Servicer's functions hereunder and
shall promptly also transfer to the Successor Servicer or such successor
servicer, as applicable, all amounts that then have been or should have been
deposited in the Collection Account by the Servicer or that are thereafter
received with respect to the Mortgage Loans. Any collections received by the
Servicer after such removal or resignation shall be endorsed by it to the
Indenture Trustee and remitted directly to the Indenture Trustee or, at the
direction of the Indenture Trustee, to the successor Servicer. Neither the
Indenture Trustee nor any Successor Servicer shall be held liable by reason of
any failure to make, or any delay in making, any payment hereunder or any
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it; (ii) restrictions imposed
by any regulatory authority having jurisdiction over the Servicer hereunder; or
(iii) other circumstances beyond the control of the Successor Servicer.
(e) Pending appointment of a Successor Servicer hereunder, the Servicer
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Servicer may make such arrangements for the
compensation of such Successor Servicer out of payments on Mortgage Loans as it
and such Successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer pursuant to
Section 7.08, together with other Servicing Compensation. The Servicer, and such
Successor Servicer shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
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Section 9.03. Waiver of Defaults. The Majority Noteholders may, on
behalf of all Noteholders, and subject to the consent of the Note Purchaser,
waive any events permitting removal of the Servicer as servicer pursuant to this
Article IX; provided, however, that the Majority Noteholders may not waive a
default in making a required payment on a Secured Note without the consent of
the Holder of such Secured Note. Upon any waiver of a past default, such default
shall cease to exist, and any Servicer Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived. Notice of any such
waiver shall be given by the Indenture Trustee to the Note Purchaser.
Section 9.04. Reserved.
Section 9.05. Indenture Trustee to Act Solely with Consent of the Note
Purchaser. The Indenture Trustee shall not, without the Note Purchaser's consent
or unless directed by the Note Purchaser:
(a) terminate the rights and obligations of the Servicer as servicer
pursuant to Section 9.01 hereof;
(b) agree to any amendment pursuant to Section 12.03 hereof; or
(c) undertake any litigation for the benefit of the Noteholders.
The Note Purchaser may, in writing and in its sole discretion renounce
all or any of its rights under this Section 9.05 or any requirement for the Note
Purchaser's consent for any period of time.
ARTICLE X
TERMINATION
Section 10.01. Termination. (a) Subject to Section 10.02, this
Agreement shall terminate upon notice to the Indenture Trustee of either: (i) on
or after the expiration of the Commitment Term, upon the disposition of all
funds with respect to the last Mortgage Loan and the remittance of all funds due
hereunder, the payment of all amounts due and payable to the Indenture Trustee
and the Note Purchaser and the payment in full of all amounts due under the
Secured Notes or (ii) mutual consent of the Owner Trustee, on behalf of the
Trust, at the direction of the Indenture Trustee, the Collateral Agent, the
Servicer, the Note Purchaser and all Noteholders in writing.
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(b) In addition, subject to Section 10.02, the Note Purchaser may, at
its sole option, put the Secured Notes to the Trust or terminate the Trust in
accordance with the terms of Section 10.01 of the Indenture.
(c) If on any Payment Date, the Servicer determines that there are no
outstanding Mortgage Loans and no other funds or assets in the Trust Estate
other than funds in the Collection Account, the Servicer shall send a final
payment notice promptly to each Noteholder in accordance with Section 10.01(d).
(d) Notice of any termination, specifying the Payment Date upon which
the Trust will terminate and the Noteholders shall surrender their Secured Notes
to the Indenture Trustee for final payment and cancellation, shall be given
promptly by the Servicer by letter to Noteholders mailed during the month of
such final payment before the Payment Date in such month, specifying (i) the
Payment Date upon which final payment of the Secured Notes will be made upon
presentation and surrender of Secured Notes at the office of the Indenture
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Secured Notes at the office of the Indenture Trustee therein specified. The
Servicer shall give such notice to the Indenture Trustee therein specified at
the time such notice is given to Noteholders.
(e) In the event that all of the Noteholders do not surrender their
Secured Notes for cancellation within six (6) months after the time specified in
the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Noteholders to surrender their Secured Notes for
cancellation and receive the final payment with respect thereto. If within six
(6) months after the second notice, all of the Secured Notes shall not have been
surrendered for cancellation, the Indenture Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Noteholders concerning surrender of their Secured Notes and the cost thereof
shall be paid out of the funds and other assets which remain subject hereto. If
within nine (9) months after the second notice all the Secured Notes shall not
have been surrendered for cancellation, the related Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto and
the Indenture Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Noteholders shall look only to the related
Certificateholders for payment. Such funds shall remain uninvested.
Section 10.02. Additional Termination Requirements. By their acceptance
of the Secured Notes, the Holders thereof hereby agree to appoint the Servicer
as their attorney in fact to: (i) adopt such a plan of complete liquidation (and
the Noteholders hereby appoint the Indenture Trustee as their attorney in fact
to sign such plan) as appropriate or upon the written request of the Note
Purchaser and (ii) to take such other action in connection therewith as may be
reasonably required to carry out such plan of complete liquidation all in
accordance with the terms hereof.
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Section 10.03. Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to the Successor Servicer the funds in any Account;
(b) deliver to the Successor Servicer all Custodial Loan Files and
Servicer's Loan Files and related documents and statements held by it hereunder
and a Mortgage Loan portfolio computer tape;
(c) deliver to the Successor Servicer, upon request, to the Noteholders
a full accounting of all funds, including a statement showing the Monthly
Payments collected by it and a statement of monies held in trust by it for the
payments or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to the Successor Servicer and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement including without limitation, "good-bye" letters, transfers of tax and
escrow and suspense accounts, and transfer of tax service contracts.
ARTICLE XI
THE COLLATERAL AGENT
Section 11.01. Duties of the Collateral Agent. (a) The Collateral Agent
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement.
(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be responsible
for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by any Person hereunder.
If any such instrument is found not to conform on its face to the requirements
of this Agreement, the Collateral Agent shall note it as such on the Exceptions
Report delivered pursuant to Section 2.07(a).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misconduct; provided,
however, that:
(i) the duties and obligations of the Collateral Agent shall be
determined solely by the express provisions of this Agreement, the
Collateral Agent shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against
the Collateral Agent and, in the absence of bad faith on the part of the
Collateral Agent, the Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Collateral
Agent and conforming to the requirements of this Agreement;
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(ii) the Collateral Agent shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or other officers
of the Collateral Agent, unless it shall be proved that the Collateral
Agent was grossly negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Indenture Trustee or with the consent
of the Indenture Trustee;
(iv) the Collateral Agent shall not be required to expend or risk its
own funds or otherwise incur financial liability for the performance of any
of its duties hereunder or the exercise of any of its rights or powers if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it and none of the provisions contained in this Agreement shall
in any event require the Collateral Agent to perform, or be responsible for
the manner of performance of, any of the obligations of the Servicer or the
Indenture Trustee under this Agreement;
(v) subject to the other provisions of this Agreement and without
limiting the generality of this Section 11.01, the Collateral Agent shall
have no duty (A) to see to any recording, filing, or depositing of this
Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any
re-recording, refiling or redepositing of any thereof, (B) to see to any
insurance, (C) to see to the payment or discharge of any tax, assessment,
or other governmental charge or any lien or encumbrance of any kind owing
with respect to, assessed or levied against, any part of the Trust, the
Trust Estate, the Noteholders or the Mortgage Loans, (D) to confirm or
verify the contents of any reports or certificates of any Person delivered
to the Collateral Agent pursuant to this Agreement believed by the
Collateral Agent to be genuine and to have been signed or presented by the
proper party or parties; and
(vi) the Collateral Agent shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default or
Amortization Event unless a Responsible Officer of the Collateral Agent
shall have received written notice or obtained actual knowledge thereof. In
the absence of receipt of such notice or actual knowledge, the Collateral
Agent may conclusively assume that there is no default or Event of Default
or Amortization Event.
Section 11.02. Certain Matters Affecting the Collateral Agent. Except
as otherwise provided in Section 11.01 hereof:
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(a) the Collateral Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Collateral Agent may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(c) the Collateral Agent shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute, conduct
or defend by litigation hereunder or in relation hereto at the request, order or
direction of any of the Noteholders, pursuant to the provisions of this
Agreement, unless such Noteholders, as applicable, shall have offered to the
Collateral Agent reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein by the Collateral Agent or
thereby; nothing contained herein shall, however, relieve the Collateral Agent
of the obligation, upon the occurrence of an Event of Default or an Amortization
Event (which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs;
(d) the Collateral Agent shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Collateral Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Note
Purchaser or Holders of Secured Notes evidencing Percentage Interests
aggregating not less than 25%; provided, however, that if the payment within a
reasonable time to the Collateral Agent of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Collateral Agent, not reasonably assured to the Collateral Agent
by the security afforded to it by the terms of this Agreement, the Collateral
Agent may require reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Collateral Agent,
shall be repaid by the Servicer upon demand from the Servicer's own funds;
(f) the right of the Collateral Agent to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its gross
negligence or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys;
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(h) the Collateral Agent shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the powers
granted hereunder; and
(i) anything in this Agreement to the contrary notwithstanding, in no
event shall the Collateral Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
Section 11.03. Collateral Agent Not Liable for Secured Notes or
Mortgage Loans. The recitals contained herein shall be taken as the statements
of the Trust and the Servicer, as the case may be, and the Collateral Agent
assumes no responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Secured Notes issued or intended to be issued under the
Indenture.
Section 11.04. Collateral Agent May Own Secured Notes. The Collateral
Agent in its individual or any other capacity may become the owner or pledgor of
Secured Notes with the same rights it would have if it were not Collateral
Agent, and may otherwise deal with the parties hereto.
Section 11.05. Collateral Agent's Fees and Expenses; Indemnity.
(a) On each Payment Date, pursuant to Section 7.08 of this Agreement,
the Servicer shall pay to the Collateral Agent (i) the Collateral Agent Fee and
(ii) payment of its reimbursable expenses incurred by the Collateral Agent in
the preceding month in accordance with any of the provisions of this Agreement
(including, but not limited to the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ). In
the event that such fees and expenses remain unpaid for 60 or more days, such
fees and expenses shall be disbursed to the Collateral Agent from amounts on
deposit in the Collection Account, pursuant to Section 8.06 of this Agreement.
(b) The Collateral Agent acknowledges that in consideration of the
performance of its duties hereunder it is entitled to receive the Collateral
Agent Fee and expenses from the Servicer pursuant to Section 7.08 of this
Agreement. The Depositor, the Indenture Trustee and the Note Purchaser shall not
pay any of the Collateral Agent fees and expenses in connection with this
transaction. The Collateral Agent shall not be entitled to compensation for any
expense, disbursement or advance as may arise from its gross negligence or bad
faith, and the Collateral Agent shall have no lien on the Trust Estate for the
payment of its fees and expenses.
(c) The Collateral Agent and any director, officer, employee or agent
of the Collateral Agent shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust Estate or the Collateral Agent through the Servicer's acts or
omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
of the Collateral Agent in the performance of its duties hereunder or by reason
of the Collateral Agent `s reckless disregard of obligations and duties
hereunder. The obligations of the Servicer under this Section 11.05 arising
prior to any resignation or termination of the Servicer hereunder shall survive
termination of the Servicer and payment of the Secured Notes.
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Section 11.06. Eligibility Requirements for Collateral Agent. The
Collateral Agent hereunder shall at all times be a banking entity (a) organized
and doing business under the laws of any state or the United States of America
subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Estate on behalf of the Indenture Trustee, for the benefit of
the Noteholders, (c) having a combined capital and surplus of at least
$50,000,000, (d) whose long-term deposits, if any, shall be rated at least BBB-
by S&P and Baa3 by Xxxxx'x (except as provided herein) or such lower long-term
deposit rating as may be approved in writing by the Note Purchaser, and (e)
reasonably acceptable to the Note Purchaser as evidenced in writing. If such
banking entity publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of determining an entity's combined capital and surplus for
clause (c) of this Section 11.06, the amount set forth in its most recent report
of condition so published shall be deemed to be its combined capital and
surplus. In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 11.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 11.07.
Section 11.07. Resignation and Removal of the Collateral Agent. (a) The
Collateral Agent may at any time resign and be discharged from the trusts hereby
created by giving thirty (30) days' written notice thereof to the Indenture
Trustee, the Servicer, and the Note Purchaser.
(b) If at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Indenture Trustee, the Servicer or the Note
Purchaser, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Indenture Trustee or the Servicer, with the consent of the Note Purchaser, or
the Note Purchaser may remove the Collateral Agent.
(c) If the Collateral Agent fails in any material respect to perform in
accordance with the terms of this Agreement, the Indenture Trustee, the Servicer
(with the consent of the Note Purchaser) or the Majority Noteholders or the Note
Purchaser may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the Collateral
Agent, the Indenture Trustee shall either (i) take possession of the Custodial
Loan Files and assume the duties of the Collateral Agent hereunder or (ii)
appoint a successor Collateral Agent pursuant to Section 11.08. If the Indenture
Trustee shall assume the duties of the Collateral Agent hereunder, it shall
notify the Trust, the Depositor, the Servicer and Note Purchaser in writing.
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Section 11.08. Successor Collateral Agent. Upon the resignation or
removal of the Collateral Agent, the Indenture Trustee may appoint a successor
Collateral Agent, with the written approval of the Note Purchaser; provided,
however, that the successor Collateral Agent so appointed shall in no event be
an Originator, the Depositor or the Servicer or any Person known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of an
Originator, the Depositor or the Servicer and shall be approved by the Note
Purchaser. Such collateral agent, as the case may be, shall assume the duties of
the Collateral Agent hereunder. Any successor Collateral Agent appointed as
provided in this Section 11.08 shall execute, acknowledge and deliver to the
Trust, the Depositor, the Note Purchaser, the Servicer, the Indenture Trustee
and to its predecessor Collateral Agent an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor
Collateral Agent shall become effective and such successor Collateral Agent,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as Collateral Agent herein. The
predecessor Collateral Agent shall deliver to the successor Collateral Agent all
Custodial Loan Files and related documents and statements held by it hereunder,
and the Servicer and the predecessor Collateral Agent shall execute and deliver
such instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Collateral Agent all
such rights, powers, duties and obligations. The cost of any such transfer to
the successor Collateral Agent shall be for the account of the Collateral Agent
in the event of the resignation of the Collateral Agent, and shall be for the
account of the Servicer in the event of the removal of the Collateral Agent. No
successor Collateral Agent shall accept appointment as provided in this Section
11.08 unless at the time of such acceptance such successor Collateral Agent
shall be eligible under the provisions of Section 11.06. Upon acceptance of
appointment by a successor Collateral Agent as provided in this Section 11.08,
the Servicer shall mail notice of the succession of such Collateral Agent
hereunder to all Noteholders at their addresses as shown in the Note Register.
If the Servicer fails to mail such notice within ten (10) days after acceptance
of appointment by the successor Collateral Agent, the successor Collateral Agent
shall cause such notice to be mailed at the expense of the Servicer.
Section 11.09. Merger or Consolidation of Collateral Agent. Any Person
into which the Collateral Agent may be merged or converted or with which it may
be consolidated or any corporation or national banking association resulting
from any merger, conversion or consolidation to which the Collateral Agent shall
be a party, or any corporation or national banking association succeeding to the
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder; provided, that such corporation or national banking association shall
be eligible under the provisions of Section 11.06, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 11.10. Insurance of Collateral Agent; Custodial Delivery
Failure; Indemnity by Collateral Agent. (a) At its own expense, the Collateral
Agent shall maintain at all times during the existence of this Agreement and
keep in full force and effect fidelity insurance, theft of documents insurance,
and errors and omissions insurance, which insurance shall cover forgery. All
such insurance shall be in amounts, with standard coverage and subject to
deductibles, all as is prudent and customary for insurance typically maintained
by banks that act as Collateral Agent. The minimum coverage under any such bond
and insurance policies shall be at least equal to the corresponding amounts
required by Xxxxxx Xxx in its Selling and Servicing Guides. Evidence of such
insurance may be inspected by the Note Purchaser or the Trust at the offices of
the Collateral Agent during business hours upon reasonable notice.
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(b) In the event that the Collateral Agent fails to produce a Mortgage
Note for which a Trust Receipt was issued, within five (5) Business Days after
required or requested by the Originator, the Servicer, the Trust or the
Indenture Trustee, and provided that (i) the Collateral Agent's most recent
Exceptions Report did not list such Mortgage Note as an Exception thereon; (ii)
such Mortgage Note was not previously released pursuant to a Request for Release
of Documents in the form Exhibit D and (iii) such Mortgage Note was held by the
Collateral Agent on behalf of the Indenture Trustee (a "Custodial Delivery
Failure"), then the Collateral Agent shall at its sole cost and expense, with
respect to any such missing Mortgage Note, promptly deliver to the Indenture
Trustee with a copy to the Note Purchaser, the Originator, the Servicer and the
Trust, a lost note affidavit.
Section 11.11. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to, and covenants with, the Trust,
the Servicer, the Indenture Trustee and the Note Purchaser that, on the date
hereof:
(a) The Collateral Agent is (i) a New York banking corporation duly
organized, validly existing and in good standing under the laws of New York and
(ii) duly qualified and in good standing and in possession of all requisite
authority, power, licenses, permits and franchises in order to execute, deliver
and comply with its obligations under the terms of this Agreement.
(b) The Collateral Agent has all requisite right, power and authority
to execute and deliver this Agreement and to perform all of its duties as the
Collateral Agent hereunder.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of the Collateral
Agent, and neither the execution and delivery of this Agreement by the
Collateral Agent in the manner contemplated herein nor the Collateral Agent's
performance of and compliance with the terms hereof will violate, contravene or
create a default under any charter document or bylaw of the Collateral Agent or
any material contract, agreement, or instrument to which the Collateral Agent or
by which any of its property may be bound.
(d) Neither the execution and delivery of this Agreement by the
Collateral Agent, nor its performance of and compliance with its obligations and
covenants hereunder, require the consent or approval of any governmental
authority or, if such consent or approval is required, it has been obtained.
(e) This Agreement, and the original Trust Receipts issued hereunder,
when executed and delivered by the Collateral Agent, will constitute valid,
legal and binding obligations of the Collateral Agent, enforceable against the
Collateral Agent in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable debtor relief laws and that
certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or at law.
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(f) The Collateral Agent does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement.
(g) There is no litigation pending or, to the best of the Collateral
Agent's knowledge after due inquiry, threatened which, if determined adversely
to the Collateral Agent, would adversely affect the execution, delivery or
enforceability of this Agreement or any of the material duties or obligations of
the Collateral Agent hereunder.
(h) The Collateral Agent is not an Affiliate of the Trust or the
Servicer.
(i) At all times the Collateral Agent shall be a corporation or
association organized and doing business under the laws of the United States of
America or of any State, shall be authorized under such laws to exercise
corporate trust powers, subject to supervision or examination by the United
States of America or any such State, and shall have (A) a short-term, unsecured
debt rated at least P-1 by Xxxxx'x (or such lower rating as may be acceptable to
the Trust and the Note Purchaser) and (y) a short-term deposit rating of at
least A-1 from S&P (or such lower rating as may be acceptable to the Trust and
the Note Purchaser).
(j) The Collateral Agent shall at all times have a combined capital and
surplus of at least $50,000,000 as set forth in its then most recent published
annual report of condition. The Collateral Agent shall provide copies of such
reports to the Trust and the Note Purchaser upon request.
Section 11.12. Transmission of Custodial Loan Files. Written
instructions as to the method of shipment and shipper(s) the Collateral Agent is
directed to use in connection with transmission of Custodial Loan Files in the
performance of the Collateral Agent's duties hereunder shall be delivered to the
Collateral Agent by the Person requesting shipment to the Collateral Agent prior
to any shipment of any Custodial Loan Files hereunder. The Servicer shall
arrange for the provision of such services at its sole cost and expense and
shall maintain such insurance against loss or damage to the Custodial Loan Files
as the Servicer deems appropriate. Any transmission of Custodial Loan Files by
the Collateral Agent under this Agreement shall be by personal delivery,
recognized courier delivery service, or registered or certified first class
mail, postage prepaid, return receipt requested, as designated by the Person
requesting shipment.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Liability. None of the Trust, the Owner
Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors, officers, employees or agents of such Persons
shall be under any liability to the Trust or the Noteholders for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Trust, the Owner Trustee, the Depositor, the
Servicer, the Collateral Agent, the Indenture Trustee or any such Person against
any breach of warranties or representations made herein by such party, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed upon such
party by reason of willful misfeasance, bad faith or gross negligence (or in the
case of the Servicer or Depositor negligence) in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Trust, the
Owner Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee and any director, officer, employee or agent of such Person may rely in
good faith on any document of any kind which, prima facie, is properly executed
and submitted by any appropriate Person respecting any matters arising
hereunder.
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Section 12.02. Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Noteholders if the Majority Noteholders agree to take such action or give such
consent or approval.
(b) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Secured Notes, be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
Section 12.03. Amendment. (a) This Agreement may be amended from time
to time at the expense of the Originators, the Sponsor or the Depositor by the
Owner Trustee, on behalf of the Trust, the Servicer, the Depositor, the
Collateral Agent and the Indenture Trustee by written agreement, upon the prior
written consent of the Note Purchaser, without notice to or consent of the
Noteholders to cure any ambiguity, to correct or supplement any provisions
herein, to comply with any changes in the Code, or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel, at the
expense of the Originators, the Sponsor or the Depositor, delivered to the
Indenture Trustee adversely affect in any material respect the interests of any
Noteholder; and provided, further, that no such amendment shall reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be paid on any Secured Note without the consent of
such Noteholder, or change the rights or obligations of any other party hereto
without the consent of such party.
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(b) This Agreement may be amended from time to time by the Owner
Trustee, on behalf of the Trust, the Servicer, the Depositor, the Collateral
Agent and the Indenture Trustee, with the consent of the Note Purchaser, the
Majority Noteholders and the Holder of the majority of the Percentage Interest
of the Trust Certificates, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment shall reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be paid on
any Secured Notes without the consent of the Holders of such Secured Notes or
reduce the percentage for the Holders of which are required to consent to any
such amendment without the consent of the Holders of 100% of such Secured Notes
affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section 12.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
(d) Prior to the execution of any amendment to this Agreement, the
Indenture Trustee shall be entitled to receive and rely upon an opinion of
counsel stating that the execution of such amendment is authorized and permitted
by this Agreement. The Indenture Trustee and the Collateral Agent may, but shall
not be obligated to, enter into any such amendment which affects the Indenture
Trustee or Collateral Agent's own rights, duties or immunities under this
Agreement.
Section 12.04. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Noteholders' expense on direction and at
the expense of Majority Noteholders requesting such recordation, but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Noteholders or is
necessary for the administration or servicing of the Mortgage Loans.
Section 12.05. Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 12.06. Notices. All demands, directions, instructions, notices
and communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered to (i) in the case of the Servicer, the
Subservicers or the Originators, addressed to such Person, c/o American Business
Financial Services, Inc., The Xxxxxxxxx Building, 000 Xxxx Xxxxxx Xxxx, 0xx
Xxxxx, Xxxxxxxxxxxx, XX 00000, Attention: General Counsel; (ii) in the case of
the Depositor, 0000 Xxxxxxxxxx Xxxx, 000 Xxxxxxxx Xxxx., Xxxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx Xxxxx, Executive Vice President; (iii) in the case of
the Trust, ABFS Mortgage Loan Warehouse Trust 2000-2, c/o the Owner Trustee at
its Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in
the case of the Indenture Trustee or the Collateral Agent, JPMorgan Chase Bank,
0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Institutional
Trust Services - ABFS Mortgage Loan Warehouse Trust 2000-2, telephone (212)
000-0000, telecopy (000) 000-0000; (v) in the case of the Note Purchaser,
JPMorgan Chase Bank, 000 Xxxx Xxxxxx, 00xx Xxxxx , Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx Xxxxxxxxx, telephone (000) 000-0000, telecopy (000) 000-0000;
and (vi) in the case of the Noteholders, as set forth in the Note Register. Any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice by such party, except that notices to the
Noteholders shall be effective upon mailing or personal delivery.
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Section 12.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 12.08. No Partnership. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the Servicer shall be rendered as an independent
contractor and not as agent for the Noteholders.
Section 12.09. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
Section 12.10. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Trust, the Servicer, the Depositor, the
Sponsor, the Indenture Trustee, the Collateral Agent and the Noteholders and
their respective successors and permitted assigns.
Section 12.11. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 12.12. Reserved.
Section 12.13. Third Party Beneficiary. The parties agree that each of
the Owner Trustee and the Note Purchaser is intended and shall have all rights
of a third-party beneficiary of this Agreement.
Section 12.14. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE TRUST, THE SERVICER, THE DEPOSITOR, THE SPONSOR, THE COLLATERAL
AGENT, EACH ORIGINATOR AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 12.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
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COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL
AGENT, EACH ORIGINATOR AND THE INDENTURE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION
BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 12.14
SHALL AFFECT THE RIGHT OF THE TRUST, THE DEPOSITOR, THE SPONSOR, THE SERVICER,
THE COLLATERAL AGENT, ANY ORIGINATOR OR THE INDENTURE TRUSTEE TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS TO
BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE TRUST, THE DEPOSITOR, THE SERVICER, THE SPONSOR, THE COLLATERAL
AGENT, EACH ORIGINATOR AND THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION
WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
Section 12.15. Reserved.
Section 12.16. Power of Attorney. Each of the Originators, the
Depositor, the Sponsor and each Holder hereby appoints the Note Purchaser as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of amending this Agreement, the Indenture or any document executed in
connection herewith or therewith to the extent necessary to protect the interest
of the Note Purchaser in the Trust Estate. The Note Purchaser shall not act
under such power of attorney unless and until an Event of Default or an
Amortization Event has occurred and is continuing.
Section 12.17. Non-Petition Agreement. Notwithstanding any prior
termination of any Basic Document, each Originator, the Servicer, each
Subservicer, the Depositor, the Collateral Agent, the Sponsor and the Indenture
Trustee each severally and not jointly covenants that it shall not, prior to the
date which is one year and one day after the payment in full of the all of the
Secured Notes, acquiesce, petition or otherwise, directly or indirectly, invoke
or cause the Trust or the Depositor to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against the Trust
or Depositor under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust or Depositor or any substantial part of
their respective property or ordering the winding up or liquidation of the
affairs of the Trust or the Depositor.
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Section 12.18. Due Diligence Fees, Due Diligence. The Originators each
acknowledge that the Note Purchaser has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and each Originator agrees that upon reasonable prior
notice (with no notice being required upon the occurrence of an Event of
Default) to such Originator, the Sponsor, the Note Purchaser, the Indenture
Trustee and Collateral Agent or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Loan Files and any and all documents, records, agreements, instruments
or information relating to such Mortgage Loans in the possession or under the
control of the Servicer and the Indenture Trustee. Each Originator also shall
make available to the Note Purchaser a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Loan Files and the
Mortgage Loans. Without limiting the generality of the foregoing, each
Originator acknowledges that the Note Purchaser may purchase Secured Notes based
solely upon the information provided by such Originator to the Note Purchaser in
the Mortgage Loan Schedule and the representations, warranties and covenants
contained herein, and that the Note Purchaser, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of
the Mortgage Loans securing such purchase, including, without limitation,
ordering new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Mortgage Loan. The Note Purchaser may underwrite such Mortgage Loans itself or
engage a mutually agreed upon third party underwriter to perform such
underwriting. Each Originator agrees to cooperate with the Note Purchaser and
any third party underwriter in connection with such underwriting, including, but
not limited to, providing the Note Purchaser and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession, or under the
control, of the Servicer. Each Originator further agrees that it Originator
shall reimburse the Note Purchaser for any and all reasonable out-of-pocket
costs and expenses incurred by the Note Purchaser in connection with the Note
Purchaser's activities pursuant to this Section 12.18 (the "Due Diligence
Fees"). In addition to the obligations set forth in this Section 12.18, the Note
Purchaser agrees (on behalf of itself and its officers and employees) to use
reasonable precaution to keep confidential, in accordance with its customary
procedures for handling confidential information and in accordance with safe and
sound practices, and not to disclose to any third party, any non-public
information supplied to it or otherwise obtained by it hereunder with respect to
each Originator or any of its Affiliates (including, but not limited to, the
Loan File); except for, (i) disclosure to Note Purchaser's employees, direct or
indirect Affiliates, attorneys or accountants, but only to the extent such
disclosure is necessary and any such party agrees to hold such information in
strict confidence, (ii) disclosure required by law, rule, regulation or order of
a court or other similar authority or any regulatory authority, (iii) disclosure
in connection with the enforcement of any provision of this Agreement or any of
the Basic Documents, (iv) disclosure to any third party source of financing to
the Note Purchaser, including without limitation, to any lender or other
counterparty of the Note Purchaser, or (v) the extent to which such information
is in the public domain other than due to a breach of this Section 12.18. Unless
specifically prohibited by applicable law or court order, the Note Purchaser
shall, prior to disclosure thereof, notify the related Originator of any request
for disclosure of any such non-public information. The Note Purchaser further
agrees not to use any such non-public information for any purpose unrelated to
this Agreement and that the Note Purchaser shall not disclose such non-public
information to any third party underwriter in connection with a potential
Disposition without obtaining a written agreement from such third party
underwriter to comply with the confidentiality provisions of this Section 12.18.
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Notwithstanding the foregoing or anything to the contrary contained
herein or in any other Basic Document, the parties hereto may disclose to any
and all Persons, without limitation of any kind, the federal income tax
treatment of the conveyance of the Mortgage Loans, any fact relevant to
understanding the federal tax treatment of the conveyance of the Mortgage Loans,
and all materials of any kind (including opinions or other tax analyses)
relating to such federal income tax treatment; provided that the Originators,
the Depositor and the Sponsor may not disclose the name of or identifying
information with respect to Note Purchaser or Collateral Agent or any pricing
terms or other nonpublic business or financial information (including any
sublimits and financial covenants) that is unrelated to the purported or claimed
federal income tax treatment of the conveyance of the Mortgage Loans and is not
relevant to understanding the purported or claimed federal income tax treatment
of the conveyance of the Mortgage Loans, without the prior written consent of
the Note Purchaser.
Section 12.19. No Recourse to Owner Trustee. (a) It is expressly
understood and agreed by the parties hereto that (i) this Agreement is executed
and delivered by Wachovia Trust Company, National Association (f/k/a First Union
Trust Company, National Association) not individually or personally, but solely
as Owner Trustee of ABFS Mortgage Loan Warehouse Trust 2000-2, in the exercise
of the powers and authority conferred and vested in it, (ii) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wachovia Trust Company, National Association (f/k/a First Union
Trust Company, National Association) but is made and intended for the purpose
for binding only the Trust, (iii) nothing herein contained shall be construed as
creating any liability on Wachovia Trust Company, National Association (f/k/a
First Union Trust Company, National Association), individually or personally, to
perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (iv) under no
circumstances shall Wachovia Trust Company, National Association (f/k/a First
Union Trust Company, National Association), be personally liable for the payment
of any indebtedness or expenses of the Trust or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other related documents.
(b) The recitals contained herein shall be taken as the statements of
the Depositor, and the Owner Trustee assumes no responsibility for the
correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any other Basic Document or of the
Trust Certificates (other than the signature and countersignature of the Owner
Trustee on the Trust Certificates and as specified in Section 7.03 of the Trust
Agreement) or the Secured Notes, or of any Mortgage Loans 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 Mortgage Loan,
or the perfection and priority of any security interest created by any Mortgage
Loan or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under the Trust Agreement or
the Noteholders under the Indenture, including, without limitation, the
existence, condition and ownership of any Mortgaged Property, the existence and
enforceability of any insurance thereon, the existence and contents of any
Mortgage Loan on any computer or other record thereof, the validity of the
assignment of any Mortgage Loan to the Trust or of any intervening assignment,
the completeness of any Mortgage Loan, the performance or enforcement of any
Mortgage Loan, the compliance by the Depositor or the Servicer with any warranty
or representation made under any Basic Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Indenture Trustee or the Servicer or any subservicer taken in the name of the
Owner Trustee.
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ARTICLE XIII
PASS-THROUGH TRANSFER
Section 13.01. Dispositions. (a) The Trust shall effect Dispositions at
the direction of the Majority Noteholders (in the form of Exhibit N attached) in
accordance with and at the time required in connection with redemptions effected
pursuant to Section 10.01 of the Indenture. The Trust, the Servicer, each
Originator and the Indenture Trustee agree to use commercially reasonable
efforts, in connection with a Disposition made in connection with the occurrence
of the Redemption Date, to permit the Depositor to act as "depositor" in such
Disposition; provided, nothing herein shall be construed to permit the Depositor
to repurchase any Mortgage Loans. In connection therewith, the Trust agrees to
assist the Majority Noteholders in such Dispositions and accordingly it shall,
at the request and direction of the Majority Noteholders:
(i) transfer, deliver and sell all or a portion of the Mortgage Loans,
as of the "cut-off dates" of the related Dispositions, to such Disposition
Participants as may be necessary to effect the Dispositions; provided, that
any such sale shall be for "fair market value," as determined by the Note
Purchaser in its good faith discretion and provided, further, that none of
the Originators, their Affiliates or agents may purchase the Mortgage
Loans;
(ii) deposit the cash Disposition Proceeds into the Collection Account
pursuant to Section 5.01; and
(iii) take such further actions as may be reasonably necessary to
effect such Dispositions.
(b) The Servicer hereby covenants that it will take such actions as may
be reasonably necessary to effect Dispositions as the Disposition Participants
may request and direct, including without limitation providing the Originator
such information as may be reasonably required to make representations and
warranties required hereunder.
(c) The Majority Noteholders may, in connection with any redemption
effected pursuant to Section 10.01 of the Indenture, cause the related
Disposition to occur as a Whole Loan Sale upon written notice to the Servicer of
their intent to cause the Trust to effect such a Whole Loan Sale at least 5
Business Days in advance thereof.
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(d) (i) In consideration of the consideration received from the
Depositor hereunder, each related Originator hereby agrees and covenants that in
connection with each Disposition it shall effect the following:
(A) make such representations and warranties concerning the
related Mortgage Loans as of the "cut-off date" of the related
Disposition to the Disposition Participants as may be necessary in the
reasonable opinion of any of the Disposition Participants, and any
purchaser of the servicing rights to effect such Disposition; provided,
that such Originator shall not be required to make any representation
or warranty beyond the scope of the representations and warranties
delineated herein; and provided, further, that, to the extent that the
Originator has at the time of the Disposition actual knowledge of any
facts or circumstances that would render any of such representations
and warranties materially false, the Originator may notify the
Disposition Participants of such facts or circumstances and, in such
event, shall have no obligation to make such materially false
representation and warranty;
(B) supply such information, opinions of counsel, letters from law
and/or accounting firms and other documentation and certificates
regarding the origination of the Mortgage Loans as any Disposition
Participant shall reasonably request to effect a Disposition and enter
into such indemnification agreements customary for such transaction
relating to or in connection with the Disposition as the Disposition
Participants may reasonably require;
(C) make itself available for and engage in good faith
consultation with the Disposition Participants concerning information
to be contained in any document, agreement, private placement
memorandum, or filing with the Securities and Exchange Commission
relating to such Originator or the Mortgage Loans in connection with a
Disposition and shall use reasonable efforts to compile any information
and prepare any reports and certificates, into a form, whether written
or electronic, suitable for inclusion in such documentation;
(D) to implement the foregoing and to otherwise effect a
Disposition, enter into, or arrange for its Affiliates to enter into
insurance and indemnity agreements, underwriting or placement
agreements, servicing agreements, purchase agreements and any other
documentation which may reasonably be required of or reasonably deemed
appropriate by the Disposition Participants in order to effect a
Disposition; and
(E) take such further actions as may be reasonably necessary to
effect the foregoing;
provided, that, notwithstanding anything in the foregoing to the contrary, the
Originators shall only be required to enter into documentation in connection
with Dispositions that is consistent with the prior public securitizations of
affiliates of the Originators, provided that, to the extent an Affiliate of the
Note Purchaser acts as "depositor" or performs a similar function in a
Securitization, additional indemnities and informational representations and
warranties are provided which are consistent with those in the Basic Documents
and may upon request of the Originators be set forth in a separate agreement
between an Affiliate of the Note Purchaser and the Originators.
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(ii) As long as no Event of Default shall have occurred and be
continuing under this Agreement, the Purchase Agreement or the Indenture,
the Servicer may continue to service the Mortgage Loans included in any
Disposition subject to any applicable "term-to-term" servicing provisions
in Section 9.01 and subject to any required amendments to the related
servicing provisions as may be necessary to effect the related Disposition
including but not limited to the obligation to make Servicing Advances,
Periodic Advances and payments of Compensating Interest on the Mortgage
Loans.
(e) Except as otherwise expressly set forth under this Section 13.01,
the parties' rights and obligations under this Section 13.01 shall continue
notwithstanding the occurrence of an Event of Default.
(f) For the avoidance of doubt, the Majority Noteholders are not agents
of the Originators or any of their Affiliates and, when directing the Trust to
effect such Dispositions, are acting in their sole discretion and not for or on
behalf of the Originators or any of its Affiliates.
The Disposition Participants (and the Majority Noteholders to the
extent directing the Disposition Participants) shall be independent contractors
to the Trust and shall have no fiduciary obligations to the Trust or any of its
Affiliates. In that connection, the Disposition Participants shall not be liable
for any error of judgment made in good faith and shall not be liable with
respect to any action they take or omits to take in good faith in the
performance of their duties.
Upon the Disposition of all Mortgage Loans owned by the Trust, the
Sponsor shall pay the Structure Fee as set forth in the Fee Letter.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Servicer, the Trust, the Indenture Trustee, the
Collateral Agent, the Originators, the Subservicers and the Depositor have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
ABFS GREENMONT, INC., as Depositor
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
AMERICAN BUSINESS FINANCIAL
SERVICES, INC., as the Sponsor
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
HOMEAMERICAN CREDIT, INC. D/B/A
UPLAND MORTGAGE, as an
Originator and a Subservicer
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
ABFS MORTGAGE LOAN WAREHOUSE
TRUST 2000-2
By: Wachovia Trust Company,
National Association (f/k/a First
Union Trust Company, National
Association), not in its
individual capacity but solely as
Owner
Trustee
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Trust Officer
[Signature Page to Second Amended and Restated Sale and Servicing Agreement]
AMERICAN BUSINESS CREDIT, INC., as
an Originator and the Servicer
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
AMERICAN BUSINESS MORTGAGE
SERVICES, INC., as an Originator
and a Subservicer
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
JPMORGAN CHASE BANK, not in its
individual capacity but solely
as Indenture Trustee
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Trust Officer
JPMORGAN CHASE BANK, not in its
individual capacity but solely
as Collateral Agent
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Trust Officer
[Signature Page to Second Amended and Restated Sale and Servicing Agreement]
EXECUTION VERSION
APPENDIX I
DEFINED TERMS
"Accepted Servicing Practices": The Servicer's normal mortgage
servicing practices including practices regarding reconciliation of bank
accounts, processing of mortgage payments, processing of disbursements for tax
and insurance payments, maintenance of mortgage loan records, performance of
collection efforts including disposition of delinquent loans, foreclosure
activities and disposition of real estate owned and performance of investor
accounting and reporting processes, which in general will conform to the
mortgage servicing practices of prudent mortgage lending institutions which
service, for their own account, mortgage loans of the same type as the Mortgage
Loans in the jurisdiction in which the related Mortgage Properties are located.
"Account": Either of the Collection Account or the General Operating
Account.
"Accountant": A Person engaged in the practice of accounting who
(except when the Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Trust or an Affiliate of the Trust.
"Accredited Investor": The meaning assigned to such term in Section
2.12(b)(i) of the Indenture.
"Accrual Period": With respect to the Secured Notes and any Payment
Date, the period from and including the prior Payment Date (or, in the case of
the first Payment Date with respect to a Secured Note, from and including the
related Transfer Date) to and including the day immediately preceding such
Payment Date.
"Act": With respect to any Noteholder, as defined in Section 11.03 of
the Indenture.
"Additional Recourse Cap": The meaning assigned to such term in Section
4.03 of the Sale and Servicing Agreement.
"Adjusted Tangible Net Worth": With respect to any Person at the end of
any fiscal quarter:
(a) the excess of that Person's total assets over total
liabilities on that day, each being determined in accordance with GAAP
consistent with the accounting principles applied in the preparation of
financial statements referred to in (herein called "GAAP Net Worth");
(b) minus advances to shareholders, officers or Affiliates,
aggregate investments in Subsidiaries and Affiliates included in
financial statements;
(c) minus goodwill and all other assets not supported by or
representative of a tangible asset other than mortgage loan servicing
rights and capitalized excess mortgage loan servicing fees (the values
of which rights and fees shall not be subtracted from GAAP Net Worth to
determine Adjusted Tangible Net Worth), which intangible assets would
be deemed by HUD to be unacceptable for the purpose of calculating
adjusted net worth in accordance with its requirements in effect as of
such day, as such requirements appear in the "Audit Guide for Audit of
Approved Non-supervised Mortgagees";
(d) plus loan loss reserves and that portion of Subordinated
Debt that is not due within one (1) year of that day;
(e) plus net unrealized holding losses, if any, (and minus net
unrealized holding gains, if any) for available-for-sale debt
securities and equity securities owned (including those classified as
current assets) that are required by FASB 115 to be reported as a net
amount in a separate component of shareholders' equity until realized.
"Administration Agreement": The Amended and Restated Administration
Agreement, dated as of October 16, 2003, as it may be amended from time to time,
between the Trust, the Administrator, and the Servicer, relating to
administrating and servicing of the Trust.
"Administrator": American Business Credit, Inc., a Pennsylvania
corporation.
"Affiliate": With respect to a specified Person, any other Person:
(a) that directly or indirectly through one or more
intermediaries Controls, is Controlled by or is under common Control
with the specified Person (in this definition only, the term "Control"
means having the power to set or direct management policies, directly
or indirectly);
(b) that is a director, trustee, partner, member or officer of
the specified Person or serves in a similar capacity in respect of the
specified Person;
(c) of which the specified Person is a director, trustee,
partner, member or officer or with respect to which the specified
Person serves in a similar capacity and over whom the specified Person,
either alone or together with one or more other Persons similarly
situated, has Control; or
(d) that, directly or indirectly through one or more
intermediaries, is the beneficial owner of five percent (5%) or more of
any class of equity securities -- which does not include any Structured
Securities -- of the specified Person.
"Aged Loan": A Mortgage Loan secured by a first lien that is pledged
under the Indenture more than 90 days but not more than 120 days from the
Transfer Date.
"Agent": Any Note Registrar, Collateral Agent, or Authenticating Agent.
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"Aggregate Principal Balance": With respect to any Mortgage Loans and
any date of determination, the aggregate of the Principal Balance of such
Mortgage Loans as of such date of determination.
"Amortization Event": Shall mean the occurrence of any of the
following:
(i) a Servicer Event of Default;
(ii) the Sponsor, together with its consolidated Subsidiaries,
shall fail to maintain a GAAP Net Worth of at least $25,000,000 up to
and including November 30, 2003 and $28,000,000 thereafter, and the
Sponsor, together with its consolidated Subsidiaries, fails to increase
such GAAP Net Worth by $2,000,000 each fiscal quarter thereafter
commencing with the quarter ending on December 31, 2003;
(iii) the Sponsor, together with its consolidated
Subsidiaries, shall fail to maintain a minimum Adjusted Tangible Net
Worth of $300,000,000;
(iv) the Sponsor, together with its consolidated Subsidiaries,
shall fail to maintain a ratio of Debt to Adjusted Tangible Net Worth
less than 4:1;
(v) the Sponsor, together with its consolidated Subsidiaries,
shall fail to maintain, at all times, cash or Cash Equivalents in an
amount of at least $25,000,000;
(vi) by October 14, 2003 or any time thereafter, the Sponsor
or any Affiliate thereof shall fail to enter into and or maintain an
additional (A) warehouse line of at least $200,000,000 for a 364-day
period from the Closing Date or (B) any event or circumstance shall
have occurred thereunder which would not, by the terms of the
applicable agreement, permit the Sponsor or such Affiliate to borrow or
draw money thereunder for any period during the 364-day period from the
Closing Date;
(vii) the aggregate cash flow from all securitization trusts
as to which the Sponsor or any Affiliate of the Sponsor is a party
shall fail to be greater than the average of the actual cash flow from
the immediately preceding four fiscal quarters;
(viii) any event of default or other event that has occurred
and is continuing for 90 days under any Securitization that the
Servicer or Sponsor fails to cure which interrupts cash flow from such
Securitization;
(ix) the Sponsor maintains Subordinated Debt at any time in
excess of $705,000,000;
(x) the Sponsor and its consolidated Subsidiaries on any day
own Repurchased Defaulted Mortgage Loans having an aggregate
outstanding Principal Balance of more than 1.5% of the sum of the
aggregate outstanding Principal Balance of the Sponsor's and its
consolidated Subsidiaries' aggregate portfolio of Serviced Loans;
-3-
(xi) the Sponsor, together with its consolidated Subsidiaries,
fail to maintain a Total Delinquency Rate at the end of each calendar
quarter of less than 12% of the Sponsor's and its consolidated
Subsidiaries' aggregate portfolio of Serviced Loans;
(xii) a breach of any of the representations, warranties or
covenants set forth in Article III of the Sale and Servicing Agreement;
(xiii) the occurrence of an Event of Default or a Default, if
the Note Purchaser so elects, provided that if any Default is cured
before it becomes an Event of Default, the Transfer Period shall be
reinstated, unless the last day of the Commitment Term has occurred or
an event described in clause (v) has occurred and has not been Deemed
Cured;
(xiv) the Sponsor fails to successfully complete its Form S-2
SEC filing related to its May 2003 $295 million public subordinated
debenture shelf registration on or prior to October 31, 2003;
(xv) the Sponsor or any of its Subsidiaries fails to pay when
due any principal or interest on any other debt or in the payment when
due of any contingent obligation if such default continues beyond any
period of grace provided under the papers evidencing such obligation;
or breach or default with respect to any other material term of any
other debt or of any promissory note, bond, loan agreement,
reimbursement agreement, mortgage, indenture or other agreement
relating thereto, if the effect of any such failure, default or breach
referred to in this clause (xv) is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or
holders) to cause, debt of the Sponsor or any of its Subsidiaries in
the aggregate amount of Ten Million Dollars ($10,000,000) or more to
become or be declared due before its stated maturity;
(xvi) any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of Two
Hundred Fifty Thousand Dollars ($250,000) shall be entered or filed
against the Sponsor or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than
five (5) days before the date of any proposed sale thereunder;
(xvii) any Plan maintained by the Sponsor or any of its
Subsidiaries shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed by an appropriate United States
district court to administer any such Plan, or the Pension Benefit
Guaranty Corporation (or any successor to it) shall institute
proceedings to terminate any such Plan or to appoint a trustee to
administer any such Plan if as of the date thereof the liability of the
Sponsor or its Subsidiaries (after giving effect to the tax
consequences thereof) to the Pension Benefit Guaranty Corporation (or
any successor to it) for unfunded guaranteed vested benefits under such
Plan exceeds the then-current value of assets accumulated in such Plan
by more than Twenty-Five Thousand Dollars ($25,000) (or in the case of
a termination involving the Sponsor or any of its Subsidiaries as a
"substantial employer", as defined in Section 4001(a)(2) of ERISA, the
withdrawing employer's proportionate share of such excess shall exceed
such amount);
-4-
(xviii) the Sponsor or any of its Subsidiaries as employer
under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount
exceeding Twenty-five Thousand Dollars ($25,000);
(xix) as of the end of each calendar quarter, commencing with
the quarter ending March 31, 2004, the Sponsor has failed to apply at
least 60% of the amount equal to the Sponsor's and its consolidated
Subsidiaries net cash flow from operations for such calendar quarter,
determined in accordance with GAAP to the Sponsor's and its
consolidated Subsidiaries' Subordinated Debt and any such failure
continues for 45 days after the end of such calendar quarter;
(xx) as of the end of any month commencing January 31, 2004
(a) the aggregate outstanding principal balance of Subordinated Debt of
the Sponsor and its Subsidiaries minus (b) any accrued interest added
to the outstanding principal balance of the Subordinated Debt as
permitted by the applicable governing documents is not less than the
aggregate outstanding principal balance of the Subordinated Debt of the
Sponsor and its Subsidiaries as of the end of the prior month
(xxi) a Change of Control shall occur;
(xxii) a Change of Executive Management shall occur; and
(xxiii) the end of the Commitment Term.
"Appraised Value": As to any Mortgaged Property, the appraised value of
the Mortgaged Property based upon the appraisal made by or on behalf of the
related Originator at the time referred to in the related Basic Documents or, in
the case of a Mortgage Loan that is a purchase money mortgage loan, the sales
price of the Mortgaged Property, if such sales price is less than such appraised
value.
"Assignment": Each Assignment of Mortgage Loans and other related
property, executed by the related Originators or the Depositor, as the case may
be, in substantially the form attached to the Sale and Servicing Agreement as
Exhibit J.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the
Indenture Trustee, for the benefit of the Noteholders.
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"Authenticating Agent": The Person, if any, appointed as Authenticating
Agent by the Owner Trustee, acting at the direction of the Majority
Certificateholders, pursuant to Section 6.14 of the Indenture, until any
successor Authenticating Agent for the Secured Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of the Indenture applicable to the Authenticating Agent.
"Authorized Company Representative": A representative of the Sponsor
duly authorized by its Board of Directors (or by an officer to whom such
authority has been delegated by its Board of Directors) to execute any
certificate, schedule or other document contemplated or required by the Sale and
Servicing Agreement or the Basic Documents on behalf of the Sponsor and as its
act and deed. A list of Authorized Company Representatives current as of the
Closing Date is attached as Schedule I to the Sale and Servicing Agreement. The
Sponsor will use its best efforts to provide an updated list of Authorized
Company Representatives to the Indenture Trustee promptly following each
addition to or subtraction from such list, and the Indenture Trustee and the
Note Purchaser shall be entitled to rely on each such list until such an updated
list is received by the Indenture Trustee.
"Authorized Denominations": A minimum Percentage Interest corresponding
to a minimum denomination of $5,000,000 or integral multiples of $1,000 in
excess thereof; provided, however, that one Secured Note is issuable in a
denomination equal to any such multiple plus an additional amount such that the
aggregate denomination of all Secured Notes shall be equal to the original Note
Principal Balance.
"Authorized Officer": With respect to (i) the Indenture Trustee, any
Responsible Officer, (ii) the Owner Trustee or the Collateral Agent, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or any other officer of the Owner Trustee or the Collateral Agent customarily
performing functions similar to those performed by the above officers and (iii)
any other Person, the chairman, chief operating officer, president or any vice
president of such Person.
"Available Funds": With respect to any Payment Date and the Collection
Account, the amount to be on deposit in such Account on such Payment Date as a
result of the Servicer's remittance of collections and proceeds on the Mortgage
Loans and the Servicer's deposit of Periodic Advances, Monthly Advances and
Compensating Interest. For purposes of calculating the Available Funds, any
Repurchase Price or Substitution Adjustment that is paid shall be deemed
deposited in the Collection Account in the Due Period preceding such
Determination Date.
"Bailee Letter": The Bailee Letter, in the form attached as Exhibit F
to the Sale and Servicing Agreement, for use by the Collateral Agent in
connection with the delivery of a Custodial Loan File, for the purpose of
delivering such Custodial Loan File to a Disposition Participant.
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"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Basic Documents": The Indenture, the Trust Agreement, the Sale and
Servicing Agreement, the Purchase Agreement, the Note Purchase Agreement, the
Administration Agreement, the Secured Notes and the Fee Letter.
"Book Entry Note": A Permitted Investment issued in book entry form.
"Business Day": Any day other than (i) a Saturday or Sunday or (ii) a
day that is either a legal holiday or a day on which banking institutions in the
State of Texas, the State of New York, the State of Delaware, the State of
Pennsylvania or the state in which the Indenture Trustee's office from which
payments will be made to Certificateholders, are authorized or obligated by law,
regulation or executive order to be closed.
"Business Purpose Property": Any mixed use property, commercial
property, or four or more unit multifamily property.
"Cash Equivalents": Any of (i) U.S. Treasury securities none of which
has a final maturity date later than one (1) year later than the Commitment
Term; (ii) certificates of deposit or investor certificates issued by the Agent
and (iii) any shares in a AAA rated short term cash investment fund.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"Certificateholder": Has the meaning ascribed thereto in Section 1.01
of the Trust Agreement.
"Change of Control": In respect of the Sponsor, the Servicer, the
Originators, the Depositor and their respective Subsidiaries means and includes:
(a) a sale of substantially all of the assets of any of the
Sponsor, the Servicer, the Originators, the Depositor and their
respective Subsidiaries to any Person or Persons;
(b) without the Indenture Trustee's and Note Purchaser's prior
written consent, any merger or consolidation of any of the Sponsor, the
Servicer, the Originators, the Depositor and their respective
Subsidiaries with or into another Person with the effect that the
Persons who have been represented to the Note Purchaser as owning all
of the Sponsor's, the Servicer's, the Originators', the Depositor's and
their respective Subsidiaries' equity interests on the Closing Date
(the "Current Company Equity Holders") or their Affiliates hold less
than fifty-one percent (51%) of the total voting power entitled to vote
in the election of directors, managers or trustees of the survivor of
such merger or consolidation;
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(c) the occurrence of any other event after which the Sponsor,
the Servicer, the Originators or the Depositor no longer owns one
hundred percent (100%) of the total voting power entitled to vote in
the election of such company's directors, or the Current Company Equity
Holders or their Affiliates no longer own at least fifty-one percent
(51%) of the total voting power entitled to vote in the election of
such company's directors;
(d) the Sponsor's, the Servicer's, the Originators' or the
Depositor's own liquidation or dissolution; or (e) the Sponsor shall
fail to, directly or indirectly, own 100% of the outstanding common
stock of each of the Originators.
"Change of Executive Management": Any of Xxxxxxx X. Xxxxxxxx, President
and Chief Executive Officer of the Sponsor, Xxxxxxx Xxxxxxxx, Executive Vice
President of the Sponsor, Xxxxxxx X. Xxxxx, Executive Vice President of the
Sponsor, or Xxxxxx X. Xxxxxx, Chief Financial Officer of the Sponsor, has been
removed from, or has ceased for any reason, voluntarily or involuntarily, to
occupy, any such office or to be responsible for and carry out its principal
duties, and has not been replaced or his or her absence accommodated for within
(i) one hundred twenty (120) days thereafter in the event of his or her death or
disability or ninety (90) days thereafter in any other event thereafter by
another Person or Persons and in a manner reasonably acceptable to and approved
by the Note Purchaser, such approval not to be unreasonably withheld,
conditioned or delayed.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Closing Date": October 16, 2003.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral": The Sold Mortgage Loans, Accounts and other collateral
described in the grant of security interest securing payment of the Secured
Notes.
"Collateral Agent": JPMorgan Chase Bank, a New York banking
corporation, in its capacity as Collateral Agent under the Sale and Servicing
Agreement, any successor-in-interest, or any successor Collateral Agent
appointed as provided in Section 11.08 of the Sale and Servicing Agreement.
"Collateral Agent Fee": As to any Payment Date the fee payable to the
Collateral Agent in respect of its services pursuant to Section 11.05 of the
Sale and Servicing Agreement, as set forth in the Fee Letter.
"Collateral Deficiency Event": A situation which shall be deemed to be
existing as of any day on which (a) the aggregate Note Principal Balance of the
Secured Notes as of such day exceeds, (b) the Mortgage Loan Base as of such day.
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"Collection Account": The Eligible Account established and maintained
pursuant to Section 8.03 of the Sale and Servicing Agreement.
"Combined Loan-to-Value Ratio" or "CLTV": As to any Mortgage Loan at
any time, the fraction, expressed as a percentage, the numerator of which is the
sum of (i) the Principal Balance thereof at such time and (ii) if such Mortgage
Loan is subject to a second mortgage, the unpaid principal balance of any
related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Originators to underwrite such Mortgage Loan.
"Commitment Term": That period of time commencing on the date hereof
and continuing until the earlier of (i) October 31, 2003, and (ii) the date upon
which the Obligations are declared to be, or become, due and payable in full in
accordance with Article X or Section 5.02 of the Indenture.
"Compensating Interest": As defined in Section 7.13 of the Sale and
Servicing
Agreement.
"Controlled Group": All members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Sponsor and the Originators, are treated as a single
employer under Section 414 of the Code.
"Corporate Trust Office": With respect to (x) the Indenture Trustee,
the principal office of the Indenture Trustee at which at any particular time
its corporate trust business shall be principally administered, which office at
the date of the execution of the Basic Documents is located at 0 Xxx Xxxx Xxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Institutional Trust Services -
ABFS Mortgage Loan Warehouse Trust 2000-2; (y) the Owner Trustee, the principal
office of the Owner Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the date of the
execution of the Basic Documents is located at One Xxxxxx Square, 000 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration; and (z) the Collateral Agent, the principal office of the
Collateral Agent at which at any particular time its corporate trust business
shall be principally administered, which office at the date of the execution of
the Basic Documents is located at 0000 Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000,
Attention: Xxxxx Xxxx, Associate.
"Credit Agreement": The Amended and Restated Senior Secured Credit
Agreement , dated as of March 15, 2002, as it may be amended from time to time,
between the Originators, Tiger Relocation Company, a Pennsylvania corporation,
the Sponsor and the Indenture Trustee, relating to the $50,000,000 senior,
secured, revolving line of credit.
"Custodial Loan File": For each Mortgage Loan, the mortgage loan
documents set forth in Section 2.06(a) of the Sale and Servicing Agreement that
are delivered to the Collateral Agent pursuant to Section 2.06(a) of the Sale
and Servicing Agreement or which at any time come into the possession of the
Collateral Agent.
"Custodial Delivery Failure": As defined in Section 11.10(b) of the
Sale and Servicing Agreement.
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"Custodial Register": As defined in Section 2.08(d) of the Sale and
Servicing Agreement.
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage loan in full, nor is intended to cure a
Delinquency nor is it intended as a future payment.
"Cut-Off-Date": With respect to each Mortgage Loan, the date designated
as such in the related Assignment.
"Daily Report": As defined in Section 8.02 of the Sale and Servicing
Agreement.
"Debt": With respect to any Person, on any day, the sum of the
following (without duplication):
(a) all of that Person's debt or other obligations which, in
accordance with GAAP, should be included in determining total
liabilities as shown on the liabilities side of that Person's balance
sheet for that day;
(b) all of that Person's debt or other obligations for
borrowed money or for the deferred purchase price of property or
services, except that Structured Securities Debt arising out of
transactions structured to qualify for GAAP sale treatment shall be
excluded;
(c) all of any other Person's debt or other obligations for
borrowed money or for the deferred purchase price of property or
services in respect of which such Person is liable -- contingently or
otherwise -- to pay or advance money or property as guarantor, surety,
endorser or otherwise (excluding such Person's contingent liability as
endorser of negotiable instruments for collection in the ordinary
course of business), or which such Person has agreed to purchase or
otherwise acquire; and
(d) all debt for borrowed money or for the deferred purchase
price of property or services secured by a Lien on any property owned
or being purchased by that Person (even though that Person has not
assumed or otherwise become liable for the payment of such debt) to the
extent that such debt would not be otherwise counted as a liability for
purposes of determining that Person's net worth and to the extent that
such debt is less than or equal to the net book value of such property;
provided that, for purposes of the Basic Documents, there shall be
excluded from the calculation of Debt for that day, (1) loan loss reserves and
indemnification reserves, (2) deferred taxes arising from capitalized excess
service fees, (3) gestation repurchase obligations and (4) the portion of
Subordinated Debt that is not due within one (1) year of that day.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
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"Default": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Defective Mortgage Loan": A Mortgage Loan which is subject to purchase
or replacement (i) as having one or more exceptions in the Exceptions Report as
contemplated by Section 2.07(b) of the Sale and Servicing Agreement or (ii) for
breaches of representations and warranties as contemplated by Section 4.02(b) or
4.02(c) of the Sale and Servicing Agreement.
"Deficient Mortgage Loan": Any Mortgage Loan that (i) has become 60 or
more days Delinquent, (ii) has been in default for a period of 30 days or more
(other than a Mortgage Loan referred to in the preceding clause (i)), (iii) does
not meet criteria established by independent rating agencies or surety agency
conditions for Dispositions which criteria have been established at the related
Transfer Date and may be modified only to match changed criteria of independent
rating agencies or surety agents, or (iv) is inconsistent with the intended tax
status of a Securitization.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Notes": Secured Notes other than Book Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
a Qualified Substitute Mortgage Loan.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due or the commencement of a case in bankruptcy involving any
Mortgagor has occurred and, measured from the most recent preceding month end,
had continued for more than thirty (30) days but less than sixty (60) days. A
Mortgage Loan is "30 days delinquent" if such payment has not been received by
the close of business on the corresponding day of the month immediately
succeeding the month in which such payment was due, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31-day month in which
a payment was due on the 31st day of such month) then on the last day of such
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
"Delivery" When used with respect to any Permitted Investments means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit, promissory notes and writings that
constitute "instruments" within the meaning of Section 9-102(a)(47) of
the UCC, transfer thereof by physical delivery to the Indenture Trustee
endorsed to the Indenture Trustee or endorsed in blank by an effective
endorsement, and, with respect to a certificated security (as defined
in Section 8-102(a)(4) of the UCC) (i) the acquisition of possession by
the Indenture Trustee of the "security certificate" (as defined in
8-102(a)(16) of the UCC), or (ii) another person, other than a
"securities intermediary" (as defined in 8-102(a)(14) of the UCC),
either acquires possession of the security certificate on behalf of the
Indenture Trustee or, having previously acquired possession of a
certificate, acknowledges that it holds for the Indenture Trustee, or
(iii) a securities intermediary acting on behalf of the Indenture
Trustee acquires possession of the security certificate, only if the
certificate is in "registered form" (as defined in 8-102(a)(13) of the
UCC) and has been specially indorsed to the Indenture Trustee by an
effective "indorsement" (as defined in 8-102(a)(l1) of the UCC) (all of
the foregoing "Physical Property") and, in any event, any such Physical
Property in registered form shall be registered in the name of the
Indenture Trustee, and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of
ownership of or the creation and perfection of a first priority
security interest in any such Eligible Investment to the Indenture
Trustee, consistent with changes in applicable law or regulations or
the interpretation thereof;
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(b) with respect to any security that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8
and 9 of the UCC, book-entry credit of such book-entry credit to an
appropriate Participant's Securities Account (as defined in such
applicable federal regulations) maintained with a Federal Reserve Bank
by a financial institution which is a "Participant" pursuant to
applicable federal regulations; and the indication by book-entry by
such financial institution (which shall be a securities intermediary)
that such book-entry has been credited to a securities account as to
which the Indenture Trustee is the "entitlement holder" (as defined in
Section 8-102(a)(8) of the UCC); and such additional or alternative
procedures as may be or hereafter become requisite or appropriate to
effect complete transfer of ownership of or the creation and perfection
of a first-priority security interest in any such Eligible Investment
to the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any Eligible Investment that is an
uncertificated security under Article 8 of the UCC; (i) registration by
the issuer of the Indenture Trustee as the registered owner, upon
original issue or registration or transfer, or (ii) another person,
other than a securities intermediary, either becomes the registered
owner of the uncertificated security on behalf of the Indenture Trustee
or, having previously become the registered owner, acknowledges that it
holds for the Indenture Trustee; and such additional or alternative
procedures as may be or hereafter become requisite or appropriate to
effect complete transfer of ownership of or the creation of a
first-priority security interest in any such Eligible Investment to the
Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof.
"Delivery Instructions": The written communications received by the
Collateral Agent from an authorized representative of the Note Purchaser,
including communications received by facsimile, or other telecommunications
device capable of transmitting or creating a written record.
"Depositor": ABFS Greenmont, Inc., a Delaware corporation.
"Determination Date": With respect to any Payment Date, the 10th day of
the month in which such Payment Date occurs, or if such 10th day is not a
Business Day, the Business Day preceding such 10th day.
"Disbursement Order": The disbursement order in the form attached as
Exhibit I to the Sale and Servicing Agreement.
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"Disposition": A Securitization, Whole Loan Sale transaction, or other
disposition of Mortgage Loans, including, without limitation, any transfer of
Mortgage Loans to another financing facility maintained by the Sponsor or its
Affiliates (which may include a sale of the servicing rights), which, in each
case, occurs in connection with a redemption of the Secured Notes effected
pursuant to Section 10.01 of the Indenture.
"Disposition Agent": JPMorgan Chase Bank and its successors and assigns
acting at the written direction of the Majority Noteholders.
"Disposition Participant": As applicable, with respect to a
Disposition, any "depositor" with respect to such Disposition, the Majority
Noteholders, the Trust, the Servicer, the related trustee and the related
custodian, any nationally recognized credit rating agency, the related
underwriters, the related placement agent, the related credit enhancer, the
related whole-loan purchaser, the related purchaser of securities and/or any
other party necessary or, in the good faith belief of any of the foregoing,
desirable to effect a Disposition; it being understood that no Originator, their
Affiliates or agents may purchase the Mortgage Loans in connection with a
Disposition.
"Disposition Proceeds": With respect to a Disposition, (x) the proceeds
of the Disposition remitted to the Trust in respect of the Mortgage Loans
transferred on the date of and with respect to such Disposition, including
without limitation, any cash and Excess Interest Securities created in any
related Securitization less all costs, fees and expenses incurred in connection
with such Disposition, including, without limitation, all amounts deposited into
any reserve accounts upon the closing thereof, minus (y) all other amounts
agreed upon in writing by the Note Purchaser, the Trust and the Servicer.
"Dollar" and "$": Lawful money of the United States of America.
"Due Date": With respect to each Mortgage Loan and any Payment Date,
the day of the calendar month preceding the calendar month in which such Payment
Date occurs on which the Monthly Payment for such Mortgage Loan was due.
"Due Period": With respect to each Payment Date, the calendar month
preceding the related Payment Date.
"Eligible Account": Either (A) an account or accounts maintained with
an institution (which may include the Indenture Trustee; provided, that the
Indenture Trustee otherwise meets these requirements) whose deposits are insured
by the FDIC, the unsecured and uncollateralized debt obligations of which
institution shall be rated "AA" or better by S&P and "Aa2" or better by Moody's
and in the highest short term rating category by S&P and Moody's, and which is
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution (including
the Indenture Trustee) duly organized, validly existing and in good standing
under the applicable banking laws of any state, (iii) a national banking
association duly organized, validly existing and in good standing under the
federal banking laws or (iv) a principal subsidiary of a bank holding company or
(B) a trust account or accounts maintained with the trust department of a
federal or state chartered depository institution or trust company (which may
include the Indenture Trustee; provided, that the Indenture Trustee otherwise
meets these requirements), having capital and surplus of not less the
$50,000,000, acting in its fiduciary capacity.
-13-
"Eligible Mortgage Loan": Each Mortgage Loan: (i) as to which no
representation and warranty made pursuant to Section 4.01 of the Sale and
Servicing Agreement has been breached; and (ii) that is not more than 29 days
Delinquent.
"Eligible Servicer": Either (x) American Business Credit, Inc., for so
long as it is considered an approved servicer by at least two nationally
recognized rating agencies (S&P, Moody's and/or Fitch) or (y) any other Person
to which the Majority Noteholders may consent in writing.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": With respect to any Person, any Person which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which such Person is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which such Person
is a member.
"Exception": With respect to any Custodial Loan File, any of the
following: (i) any variance from the requirements of Section 2.06(a) of the Sale
and Servicing Agreement with respect to such Custodial Loan File; and (ii) a
Mortgage Loan for which a Responsible Officer of the Collateral Agent receives
written notice or has actual knowledge of a lien or security interest in respect
of the related Mortgage Loan in favor of a Person other than the Indenture
Trustee.
"Exceptions Report": A list generated by the Collateral Agent in
accordance with Section 2.07(a) of the Sale and Servicing Agreement, of Mortgage
Loans with respect to which the Collateral Agent holds the Custodial Loan File
for the benefit of the Indenture Trustee as of the close of business on the
prior Business Day, which list includes codes indicating all Exceptions with
respect to each Custodial Loan File listed thereon. Each Exceptions Report shall
set forth all Exceptions with respect to the Mortgage Loans covered by the
then-current Trust Receipt, and shall be attached to such Trust Receipt.
"Excess Interest Securities": With respect to a Securitization, any
subordinated securities backed by excess spread expected to be, or which could
be, issued, in connection therewith.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
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"Event of Default": As defined in Section 5.01 of the Indenture.
"Xxxxxx Xxx": The Federal National Mortgage Association, and any
successor thereto.
"FDIC": The Federal Deposit Insurance Corporation, and any successor
thereto.
"Fee Letter": The letter agreement between the Collateral Agent, the
Indenture Trustee, the Note Purchaser, the Servicer, the Sponsor and the
Originators setting forth certain fees contemplated in the Basic Documents.
"FICA": The Federal Insurance Contributions Act.
"FICO Score": With respect to any Mortgage Loan the credit score
reported by Fair Xxxxx and Co.
"Final Stated Maturity Date": The October 2033 Payment Date.
"Fitch": Fitch Ratings, Inc. or any successor thereto.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, and any
successor thereto.
"GAAP": Generally accepted accounting principles, consistently applied.
"GAAP Net Worth": The meaning set forth in the definition of "Adjusted
Tangible Net Worth".
"General Operating Account": The account, designated as such,
established and maintained pursuant to Section 8.03 of the Sale and Servicing
Agreement.
"Grant": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Mortgage Loan
and the related Mortgage Files, a Permitted Investment, the Sale and Servicing
Agreement, or any other instrument shall include all rights, powers and options
(but none of the obligations) of the Granting party thereunder, including
without limitation the immediate and continuing right to claim for, collect,
receive and give receipts for principal and interest payments thereunder,
Insurance Proceeds, Loan Purchase prices and all other moneys payable thereunder
and all proceeds thereof, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise, and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"High Cost Mortgage Loan": A Mortgage Loan classified as (a) a "high
cost" loan under the Home Ownership and Equity Protection Act of 1994 or (b) a
"high cost," "threshold," "covered," or "predatory" loan under any other
applicable state, federal or local law (or a similarly classified loan using
different terminology under a law, regulation or ordinance imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees).
-15-
"Highest Lawful Rate": As defined in Section 11.19 of the Indenture.
"HUD": The U.S. Department of Housing and Urban Development or any
successor.
"Indenture": The Second Amended and Restated Indenture, dated as of
October 16, 2003, as it may be amended from time to time, between the Trust and
the Indenture Trustee, relating to the issuance of the Secured Notes.
"Indenture Trustee": JPMorgan Chase Bank, a New York banking
corporation, in its capacity as Indenture Trustee under the Indenture, its
successor-in-interest, or any successor Indenture Trustee appointed as provided
for in Section 6.09 of the Indenture.
"Indenture Trustee Fee": As to any Payment Date, the fee payable to the
Indenture Trustee in respect of its services as Indenture Trustee pursuant to
Section 6.16 of the Indenture that accrues at a monthly rate equal to
one-twelfth of 0.00875% on the Principal Balance of each Mortgage Loan, as of
the immediately preceding Due Date.
"Independent": When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Trust and any other obligor
upon the Secured Notes, (ii) does not have any direct financial interest or any
material indirect financial interest in the Trust or in any such other obligor
or in an Affiliate of the Trust or such other obligor, and (ii) is not connected
with the Trust or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by a Trust Order and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to the
related Mortgagor in accordance with Accepted Servicing Practices.
"Interest Amount Available": The aggregate amount on deposit in the
Collection Account as of the close of business on a Determination Date (A) that
are designated by the Servicer as "interest collections" on deposit in the
Collection Account on such Payment Date which relate to the prior Due Period,
(B) that constitute the interest portion of Disposition Proceeds, (C) that are
prepayment fees deposited into the Collection Account, (D) that constitute
investment earnings on amounts in deposit in the Collection Account and (E)
deposited by the Servicer as Servicing Advances, Periodic Advances or
Compensating Interest. The Interest Amount Available with respect to an
individual Secured Note is the portion of the amount described above which
related to the Related Mortgage Loans.
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"Interest Payment Amount": As to each Secured Note with respect to a
Payment Date, the amount distributed to the related Noteholder respecting
interest, as contemplated by Section 8.06(c) of the Sale and Servicing Agreement
and calculated in accordance with Section 8.03 of the Indenture.
"Investment Company Act": The Investment Company Act of 1940, as
amended.
"Jumbo Mortgage Loan": A Mortgage Loan that satisfies the Underwriting
Guidelines and whose original principal amount is more than the maximum
principal amount allowable for purchase by Xxxxxx Xxx or Xxxxxxx Mac but not
more than Five Hundred Thousand Dollars ($500,000).
"LIBOR": For each day, the rate of interest per annum for dollar
deposits with a duration of one month that is displayed (i) on the Telerate Page
3750 at about 11:00 a.m. (London time) on the second LIBOR Business Day prior to
such day, or (ii) if that page ceases to display the necessary information, then
on whatever page replaces it on that service for the purpose of displaying that
information (the "Telerate Rate"). If the Telerate Rate cannot be determined,
then the one-month LIBOR rate" for any day means the arithmetic mean of the
rates of interest offered by two prime banks in the London interbank market
(selected by the Indenture Trustee) of dollar deposits with a duration of one
month at about 11:00 a.m. (London time) the second LIBOR Business Day prior to
such day. Each determination of the one-month LIBOR rate by the Indenture
Trustee pursuant to the provisions of this Agreement shall be conclusive and
binding absent manifest error.
"LIBOR Business Day": A Business Day on which trading in U.S. dollars
is conducted between banks in the London interbank market.
"Lien": Any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any finance lease or other contract in the nature thereof
and any agreement to give any security interest).
"Liquidated Loan Loss": With respect to any Payment Date, the aggregate
of the amount of losses with respect to each Mortgage Loan which became a
Liquidated Mortgage Loan prior to the Due Date preceding such Payment Date,
equal to the excess of (i) the unpaid Principal Balance of each such Liquidated
Mortgage Loan, plus accrued interest thereon in accordance with the amortization
schedule at the time applicable thereto at the applicable Mortgage Interest Rate
from the Due Date as to which interest was last paid with respect thereto
through the next succeeding Due Date following the date such Loan became a
Liquidated Mortgage Loan, over (ii) Net Liquidation Proceeds with respect to
such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to which the
related Mortgaged Property has been acquired, liquidated or foreclosed and with
respect to which the Servicer determines that all Liquidation Proceeds which it
expects to recover have been recovered.
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"Liquidation Expenses": Expenses reasonably incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 7.04 and 7.06 of the Sale and Servicing Agreement respecting the
related Mortgage Loan and any unreimbursed expenditures for real property taxes
or for property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds": The amount (other than Insurance Proceeds)
received by the Servicer in connection with (i) the taking of all or a part of
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan through a trustee's sale,
foreclosure sale, REO Disposition or otherwise or (iii) the liquidation of any
other security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related Mortgagor; provided that in no event shall net Liquidation
Proceeds be less than zero.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan as of
its date of origination, the ratio on such date borne by the outstanding
Principal Balance of the Mortgage Loan to the Appraised Value of the related
Mortgaged Property.
"Lost Note Affidavit": The lost note affidavit substantially in the
form attached to the Sale and Servicing Agreement as Exhibit M.
"Majority Certificateholders": The Holder or Holders of Trust
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
"Majority Noteholders": The Holder or Holders of Notes evidencing
Percentages Interests in excess of 50% in the aggregate.
"Manufactured Housing Loan": A manufactured home, including all
accessions thereto, that is legally classified as real property under state law.
"Margin": A rate per annum equal to 2.00%.
"Margin Option": As defined in Section 2.20 of the Sale and Servicing
Agreement.
"Market Value": The meaning assigned to such term in Section 8.10(a) of
the Sale and Servicing Agreement; provided, however, that to the extent that on
any day a Sold Mortgage Loan is not an Eligible Mortgage Loan, the fair market
value of such Mortgage Loan will be deemed zero.
"Material Adverse Effect": A material adverse effect on (a) the
property, business, operations, financial condition or prospects of the Sponsor
or any Affiliate, (b) the ability of the Sponsor or any Affiliate to perform its
obligations under any of the Basic Documents to which it is a party, (c) the
validity or enforceability of any of the Basic Documents, (d) the rights and
remedies of the Note Purchaser or any Noteholder under any of the Basic
Documents, (e) the timely payment of any amounts payable under the Basic
Documents, or (f) the Market Value of the Mortgage Loans taken as a whole.
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"Maximum Note Balance": $164,000,000.
"Minimum Margin Contribution": As defined in Section 2.20 of the Sale
and Servicing Agreement.
"Monthly Payment": As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the payment of principal and interest due thereon as
specified for such Due Date in the related amortization schedule at the time
applicable thereto (after adjustment, if any, for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations, or similar proceeding or any moratorium or similar waiver or grace
period).
"Monthly Report": The monthly report prepared by the Servicer and
delivered to the parties specified in Section 7.16(a) of the Sale and Servicing
Agreement and containing the following information:
(a) the total of any Substitution Adjustments and any
Repurchase Price amounts included in such payment;
(b) any Restoration Amount then outstanding;
(c) the aggregate Principal Balance of all Mortgage Loans that
have ceased to be Eligible Mortgage Loans since the initial Cut-Off
Date (such Principal Balance measured as of the day immediately
preceding the date on which each such Mortgage Loan ceased to be an
Eligible Mortgage Loan), provided that each such Mortgage Loan was
Delinquent more than 30 days at the time such Mortgage Loan ceased to
be an Eligible Mortgage Loan, but excluding any Mortgage Loans that
have been released from the lien of the Indenture due to the
Disposition of such Mortgage Loans;
(d) the number and Principal Balance of Mortgage Loans which
are 30-59 days Delinquent and which are 60-89 days Delinquent and which
are 90 days or more Delinquent;
(e) LIBOR for each day during the related Collection Period
together with a calculation of the daily amount of interest due based
on such rate; and
(f) the total amount of principal and interest scheduled to be
received on the Mortgage Loans during the related Collection Period.
"Moody's": Xxxxx'x Investors Service, Inc., a corporation organized and
existing under Delaware law.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on the Mortgaged Property.
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"Mortgage File": As described in Exhibit E to the Sale and Servicing
Agreement.
"Mortgage Insurance Policies": With respect to any Mortgaged Property
or Mortgage Loan, the insurance policies required pursuant to Section 4.01 of
the Sale and Servicing Agreement.
"Mortgage Interest Rate": As to any Mortgage Loan, the per annum fixed
rate at which interest accrues on the unpaid Principal Balance thereof.
"Mortgage Loan Base": 94.5% of the least of: (i) the net cash amount
paid for the Eligible Mortgage Loan, (2) the Principal Balance of the Mortgage
Loan or (3) the Market Value for such Mortgage Loan.
"Mortgage Loan Documents": Each Mortgage, each Mortgage Note and each
other agreement, instrument or other document executed by one or more Mortgagors
or other obligors (including the surety agreement in the case of a Mortgage Loan
secured by a Business Purpose Property) that constitutes a portion of the
related security with respect to any Mortgage Loan.
"Mortgage Loan Schedule": The schedule of Mortgage Loans as of the
related Cut-Off Date attached as Schedule I to the related Assignment, which
will be deemed to be modified automatically to reflect any replacement, sale,
substitution, liquidation, transfer or addition of any Mortgage Loan, including
the addition of a Mortgage Loan, pursuant to the terms hereof. The Mortgage Loan
Schedule shall be transmitted either electronically or in hard copy, and shall
set forth the following information with respect to each Mortgage Loan so
pledged:
(i) the Originator's Mortgage Loan identifying number;
(ii) the Mortgagor's name and social security number;
(iii) the street address of the Mortgaged Property, including
the state and zip code;
(iv) a code indicating whether the Mortgaged Property was
represented by the Mortgagor as being owner-occupied on the date of
origination;
(v) the type of Residential Dwelling constituting the
Mortgaged Property; (vi) the months to maturity at origination, based
on the original amortization schedule;
(vii) the loan-to-value ratio at origination;
(viii) the rate of interest in effect on the Transfer Date;
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(ix) the day of the month on which the first monthly payment
was due, and, if different, the day of the month on which monthly
payments are due as of the Transfer Date;
(x) the stated maturity date;
(xi) the amount of the monthly payment due at origination;
(xii) the amount of the monthly payment due on the first due date after
the Transfer Date;
(xiii) the interest paid-through date;
(xiv) the last monthly payment date on which any portion of
the monthly payment was applied to the reduction of principal;
(xv) the original principal amount;
(xvi) the Principal Balance as of the close of business on the
Transfer Date;
(xvii) if the Mortgage Loan is an adjustable-rate loan, the
initial adjustment date thereunder, including the look-back period;
(xviii) if the Mortgage Loan is an adjustable-rate loan, the
gross margin over the applicable interest rate index;
(xix) a code indicating the purpose of the Mortgage Loan, as
indicated by the Mortgagor (i.e., purchase financing, rate/term
refinancing or cash-out refinancing);
(xx) if the Mortgage Loan is an adjustable-rate loan, the
maximum interest rate;
(xxi) if the Mortgage Loan is an adjustable-rate loan, the
minimum interest rate;
(xxii) the interest rate at origination;
(xxiii) if the Mortgage Loan is an adjustable-rate loan, the
periodic rate cap and the maximum adjustment in the interest rate that
may be made on the first adjustment date immediately following the
Transfer Date;
(xxiv) a code indicating the documentation program (i.e., full
documentation, limited documentation or stated income);
(xxv) if the Mortgage Loan is an adjustable-rate loan, the
applicable interest rate index to which the gross margin is added,
including the source of such index;
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(xxvi) if the Mortgage Loan is an adjustable-rate loan, the
first adjustment date thereunder to occur after the Transfer Date;
(xxvii) the risk grade; (xxviii) any risk upgrade;
(xxix) the appraised value of the Mortgaged Property at
origination;
(xxx) if different from the appraised value, the dollar value
of the review appraisal of the Mortgaged Property at origination;
(xxxi) the sale price of the Mortgaged Property, if
applicable;
(xxxii) the product type code (e.g., 3/27, 2/28, balloon,
etc.);
(xxxiii) a code indicating whether the Mortgage Loan is a
first-lien loan or a second-lien loan;
(xxxiv) if the Mortgage Loan is a second-lien loan, the
outstanding principal balance of the first lien on the date of
origination of such Mortgage Loan;
(xxxv) if the Mortgage Loan is a second-lien loan, the
combined loan-to-value ratio of such Mortgage Loan and the first lien
to which it is subject, as of the origination date of such Mortgage
Loan;
(xxxvi) the prepayment penalty code; (xxxvii) the prepayment
penalty term; (xxxviii) the late charge;
(xxxix) the rounding code (next highest or nearest 0.125%);
and (xl) the Mortgagor's FICO score, if any;
(xli) if there is mortgage insurance with respect to the
Mortgage Loan, a code so indicating;
(xlii) the date the Mortgage Loan was originated;
(xliii) if the Mortgage Loan is negatively amortizing, a code
so indicating;
(xliv) if the Mortgage Loan is a Section 32 Loan, a code so
indicating;
(xlv) the Mortgagor's debt to income ratio;
(xlvi) the number of units included in the Mortgaged Property;
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(xlvii) the remaining term of the Mortgage Loan, stated in
months;
(xlviii) the age of the Mortgage Loan, in months;
(xlix) the first monthly payment date under the Mortgage Loan;
(l) if the Mortgage Loan is an adjustable-rate loan, the
frequency at which the interest rate is adjusted;
(li) if the Mortgage Loan is an adjustable-rate loan, the
frequency at which the monthly payment amount is adjusted;
(lii) if the Mortgage Loan is an adjustable-rate loan, the
next reset date to occur after the Transfer Date;
(liii) if the Mortgage Loan is an adjustable-rate loan, the
maximum change that may be made in the interest rate on any adjustment
date; and
(liv) if the Mortgage Loan is a business purpose loan, a code
so indicating.
"Mortgage Loans": The mortgage loans, including the rights to receive
collections of principal and interest, to service such mortgage loans and to
receive prepayment penalties thereunder, and including the related Mortgage Loan
Documents, together with any Qualified Substitute Mortgage Loans substituted
therefor in accordance with the Basic Documents, as from time to time are held
as a part of the Trust. When used in respect of any Payment Date, the term
Mortgage Loans shall mean all Mortgage Loans (including those in respect of
which the Indenture Trustee has acquired the related Mortgaged Property) which
have not been repaid in full prior to the related Due Period, did not become
Liquidated Mortgage Loans prior to such related Due Period or were not purchased
or replaced by the Originators, the Depositor or the Sponsor prior to such
related Due Period.
"Mortgage Note": The original executed note or other evidence of any
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property or properties securing a
Mortgage Loan, consisting of a fee simple interest in one or more parcels of
land.
"Mortgagor": The obligor on a Mortgage Note.
"Multiemployer Plan": With respect to any Person, a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time
during the current year or the immediately preceding five years contributed to
by the Originators, Depositor, Sponsor or any ERISA Affiliate thereof on behalf
of its employees and which is covered by Title IV of ERISA.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances and Servicing Advances made by the Servicer. For all purposes
of the Basic Documents, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the unpaid
Principal Balance thereof.
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"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds net of
any related expenses of the Servicer.
"Nonrecoverable Advances": With respect to any Mortgage Loan, (a) any
Periodic Advance previously made and not reimbursed from late collections
pursuant to Section 7.02 of the Sale and Servicing Agreement, or (b) a Periodic
Advance proposed to be made in respect of a Mortgage Loan or REO Property either
of which, in the good faith business judgment of the Servicer, as evidenced by
an Officer's Certificate delivered to the Indenture Trustee no later than the
Business Day following such determination, would not ultimately be recoverable
pursuant to Section 7.02 of the Sale and Servicing Agreement.
"Noteholder" or "Holder": Initially, the Note Purchaser. Upon a
transfer of Secured Notes by the Note Purchaser, each Person in whose name a
Secured Note is registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request or demand pursuant to the
Indenture, any Secured Note registered in the name of the Servicer or any
Subservicer, or any Affiliate of any of them, shall be deemed not to be
outstanding and the undivided Percentage Interest evidenced thereby shall not be
taken into account in determining whether the requisite percentage of Notes
necessary to effect any such consent, waiver, request or demand has been
obtained.
"Note Principal Balance": As to any particular Secured Note and date of
determination, an amount equal to the sum of (i) the Sale Amount (disregarding
clause (ii) of the definition thereof) of such Secured Note, minus (ii) all
payments of principal on such Secured Note pursuant to the terms of the
Indenture.
"Note Purchase Agreement": The Purchase Agreement, dated as of October
16, 2003, between the Note Purchaser and the Seller.
"Note Purchaser": JPMorgan Chase Bank, or its Affiliate.
"Note Rate": With respect to each Business Day, the per annum rate
equal to the LIBOR rate for such day plus the Margin; provided, that on any day
on or after the occurrence and during the continuance of an Event of Default,
the rate shall be LIBOR plus 5.00% (or any lesser rate that the Note Purchaser
may require).
"Note Register": As defined in Section 2.06 of the Indenture.
"Note Registrar": As defined in Section 2.06 of the Indenture.
"Notice of Issue": A notice with respect to each sale of Mortgage Loans
and issue of Secured Notes, in the form set forth as Exhibit L to the Sale and
Servicing Agreement, delivered by the Trust to the Note Purchaser, the Indenture
Trustee and the Collateral Agent.
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"Obligations": Shall mean all amounts due and owing by the Trust to the
Note Purchaser in connection with any Basic Document, including: (i) the unpaid
principal and, interest (including interest accruing thereon after the Maturity
Date and after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceedings, relating to the Trust,
whether or not a claim for post-filing or post-petition interest is allowed in
the proceeding) on any Secured Note, when and as due, whether at maturity, by
acceleration or otherwise; and (ii) all other obligations and liabilities of
every nature of the Trust from time to time owing to the Note Purchaser, in each
case whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred (including any monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in the
proceeding).
"Officer's Certificate": A certificate signed by the chairman of the
board, the president or a vice president and the treasurer, the secretary or one
of the assistant treasurers or assistant secretaries, the Servicer, or the
Depositor, or, with respect to the Trust, a certificate signed by a Responsible
Officer of the Owner Trustee, at the direction of the related Majority
Certificateholders as required by any Basic Document.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be counsel for the Servicer, the Depositor, the Indenture Trustee,
the Owner Trustee, a Noteholder or a Noteholder's prospective transferee
(including except as otherwise provided herein, in-house counsel) reasonably
acceptable to each addressee of such opinion and experienced in matters relating
to the subject of such opinion.
"Optional Redemption Date": With respect to any Secured Note and at any
time, the day on which the Commitment Term is scheduled to end or, if such date
is not a Business Day, then the immediately preceding Business Day.
"Originators": American Business Credit, Inc., American Business
Mortgage Services, Inc., and HomeAmerican Credit, Inc., d/b/a Upland Mortgage.
"Other Mortgage Loan Document" As defined in Section 4.01(a)(iv) of the
Sale and Servicing Agreement.
"Outstanding": As of the date of determination, all Secured Notes
theretofore authenticated and delivered under the Indenture except:
(a) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(b) Secured Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Indenture Trustee in trust for the Holders of such Secured
Notes; provided, however, that if such Secured Notes are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor, satisfactory to the Indenture
Trustee, has been made;
(c) Secured Notes in exchange for or in lieu of which other
Secured Notes have been authenticated and delivered pursuant to this
Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Secured Notes are held by a bona fide purchaser
(as defined by the Uniform Commercial Code of the applicable
jurisdiction); and
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(d) Secured Notes alleged to have been destroyed, lost or
stolen that have been paid as provided for in Section 2.07 of the
Indenture;
provided, however, that in determining whether the Holders of the requisite
percentage of the Note Principal Balance of the Outstanding Secured Notes have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder. Secured Notes owned by the Trust, any other obligor upon the Secured
Notes or any Affiliate of the Trust, the Servicer or the Depositor or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Secured Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Secured Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes the pledgee's right to act
with respect to such Secured Notes and that the pledgee is not the Trust, any
other obligor upon the Secured Notes or any Affiliate of the Trust, the Servicer
or the Depositor or such other obligor.
"Owner-Occupied Mortgage Property": A Residential Dwelling as to which
(a) the related Mortgagor represented an intent to occupy as such Mortgagors
primary residence at the origination of the Mortgage Loan, and (b) the
Originators have no actual knowledge that such Residential Dwelling is not so
occupied.
"Owner Trustee": Wachovia Trust Company, National Association (f/k/a
First Union Trust Company, National Association), a national banking
association, not in its individual capacity, but solely as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"Owner Trustee Fee": As described in Section 8.01 of the Trust
Agreement.
"Pass-Through Transfer": The sale or transfer of some or all of the
Mortgage Loans to a trust to be formed as part of a publicly issued and/or
privately placed, rated or unrated, mortgage pass-through or other
mortgage-backed securities transaction, retaining the Servicer as "servicer"
(with or without a master servicer) thereunder.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Secured Notes
on behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
"Payment Date": The 25th day of any month (or if such 25th day is not a
Business Day, the first Business Day immediately following) commencing on
October 25, 2003, or the day on which a Mortgage Loan is sold by the Trust.
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"PBGC": The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage Interest": With respect to a Secured Note, expressed as a
percentage rounded to four decimal places, equal to a fraction the numerator of
which is the current Note Principal Balance of such Secured Note and the
denominator of which is the current aggregate Note Principal Balance of all
outstanding Secured Notes. With respect to a Trust Certificate, the portion
evidenced thereby as stated on the face of such Trust Certificate.
"Periodic Advance": The aggregate of the advances required to be made
by the Servicer on any Determination Date pursuant to Section 7.18 of the Sale
and Servicing Agreement, the amount of any such advances being equal to the sum
of:
(a) with respect to each Mortgage Loan that was Delinquent as
of the close of business on the last day of the Due Period preceding
the related Determination Date, the product of (i) the Principal
Balance of such Mortgage Loan and (ii) one-twelfth of the Mortgage
Interest Rate for such Mortgage Loan net of the Servicing Fee, and
(b) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount
equal to the excess, if any, of (i) interest on the Principal Balance
of such REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the Servicing Fee, for the most recently ended Due
Period over (ii) the net proceeds from the REO Property transferred to
the Collection Account for such Payment Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
"Permitted Investments": As used herein, Permitted Investments shall
include the following:
(a) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when
such obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations specified in clause
(a) maturing not more than the day prior to the Payment Date, provided
that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated in one of the two highest rating
categories by the Rating Agencies;
(c) certificates of deposit, time deposits and bankers
acceptances (which, in the case of bankers' acceptances, shall in no
event have an original maturity of more than the day prior to the
Payment Date) of any U.S. depository institution or trust company,
incorporated under the laws of the United States of any state;
provided, that the debt obligations of such depository institution or
trust company at the date of acquisition thereof have been rated in one
of the two highest rating categories by the Rating Agencies;
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(d) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as
any such fund is rated in the highest rating category by Xxxxx'x or
S&P;
provided, that no instrument described hereunder shall evidence either the right
to receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may (i) be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity or (ii) provide any voting right or
substantially equivalent interest in the producer of such investment, whether
directly or indirectly, through conversion or any other manner or method.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
"Plan": A pension or benefit plan or individual retirement arrangement
that is subject to ERISA or Section 4975 of the Code.
"Portfolio Composition Criteria": As of any date of determination with
respect to any subcategory of Mortgage Loans, the maximum percentage (as
measured by the Principal Balance as of such date) of the category set forth
opposite such subcategory in the table set forth below that, as of such
determination, have been pledged to the Indenture Trustee on behalf of the Note
Purchaser under the Indenture and not released pursuant to the provisions
thereof, that may be represented by such product category, as set forth below:
------------------------------------------------------------------------------------------------------------
Product Maximum Percentage, Category
------------------------------------------------------------------------------------------------------------
Mortgage Loans with an LTV in excess of 80% 50% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Mortgage Loans with a credit grade of C 15% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Mortgage Loans with a CLTV in excess of 90% 5% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Mortgage Loans Delinquent in payment more than 30 days and 5% of the Outstanding Note Principal Balance
less than 60 days
------------------------------------------------------------------------------------------------------------
Mortgage Loans that are Manufactured Housing Loans with a 3% of the Outstanding Note Principal Balance
Principal Balance up to $150,000
------------------------------------------------------------------------------------------------------------
Jumbo Mortgage Loans 15% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Super Jumbo Mortgage Loans 5% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Jumbo Mortgage Loans and Super Jumbo Mortgage Loans in the 15% of the Outstanding Note Principal Balance
aggregate
------------------------------------------------------------------------------------------------------------
Second Lien Mortgage Loans 10% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Second Lien Mortgage Loans pledged under the Indenture for 0% of the Outstanding Note Principal Balance
60 days or more
------------------------------------------------------------------------------------------------------------
Aged Loans 10% of the Outstanding Note Principal Balance
------------------------------------------------------------------------------------------------------------
Mortgage Loans secured by non Owner-Occupied Mortgage 10% of the Outstanding Note Principal Balance
Property
------------------------------------------------------------------------------------------------------------
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"Predecessor Notes": With respect to any particular Secured Note, every
previous Secured Note evidencing all or a portion of the same debt as that
evidenced by such particular Secured Note; and, for the purpose of this
definition, any Secured Note authenticated and delivered under Section 2.07 of
the Indenture in lieu of a lost, destroyed or stolen Secured Note shall be
deemed to evidence the same debt as the lost, destroyed or stolen Secured Note.
"Preference Amount": Any amounts paid in respect of the Secured Notes
which are recovered from any Holder of a Secured Note as a voidable preference
by a trustee in bankruptcy pursuant to the Bankruptcy Code or other similar law
in accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Holder.
"Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date, other than
an early future Monthly Payment.
"Prepayment Interest Shortfall": With respect to any Payment Date, for
each Mortgage Loan that was the subject during the related Due Period of a
Prepayment, an amount equal to the excess, if any, of (a) 30 days' interest on
the Principal Balance of such Mortgage Loan at a per annum rate equal to (i) the
Mortgage Interest Rate (or at such lower rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act, any Deficient
Valuation and/or any Debt Service Reduction) minus (ii) the Servicing Fee Rate
over (b) the amount of interest actually remitted by the Mortgagor in connection
with such Prepayment less the Servicing Fee for such Mortgage Loan in such
month.
"Principal Amount Available": The aggregate amount on deposit in the
Collection Account as of the close of business on a Determination Date that has
been designated by the Servicer as "principal collections" with respect to the
prior Due Period as of the related Determination Date, or that constitute the
principal portion of Disposition Proceeds. The Principal Amount Available with
respect to an individual Secured Note is the portion of the amount described
above which relates to the Related Mortgage Loans.
"Principal Balance": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to prepayments received prior to
the end of the related Due Period and Deficient Valuations incurred prior to
such date of determination. The Principal Balance of a Mortgage Loan that is not
an Eligible Mortgage Loan or that becomes a Liquidated Mortgage Loan on or prior
to such date of determination shall be zero.
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"Principal Payment Amount": As to each Secured Note with respect to a
Payment Date, the amount actually distributed to the related Noteholder
respecting principal, as contemplated by Section 8.06(d) of the Sale and
Servicing Agreement.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Prospective Owner": The meaning assigned to such term in Section
2.12(a) of the Indenture.
"PUHC Act": The Public Utility Holding Company Act of 1935, as amended.
"Purchase Agreement": The Purchase Agreement, dated as of October 16,
2003 between the Note Purchaser, the Trust and the Depositor.
"Purchase Price": With respect to any Mortgage Loan, the Sales Price
with respect thereto.
"Qualified Appraiser": An appraiser, duly appointed by the Originators,
who had no interest, direct or indirect, in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
"Qualified Institutional Buyer": As defined in Rule 144A under the
Securities Act.
"Qualified Purchaser": A "qualified purchaser" as defined in Section
2(a)(51) of the Investment Company Act.
"Qualified Substitute Mortgage Loan": A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.07(b) or 4.02(b)
of the Sale and Servicing Agreement, which (a) has or have an interest rate at
least equal to those applicable to the Deleted Mortgage Loan, (b) relates or
relate to a detached one-family residence or to the same type of Residential
Dwelling or Business Purpose Property, or any combination thereof, as the
Deleted Mortgage Loan and in each case has or have the same or a better lien
priority as the Deleted Mortgage Loan and has or have the same occupancy status
as the Deleted Mortgage Loan or is or are Owner-Occupied Mortgaged
Property(ies), (c) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value; of the Deleted Mortgage Loan, (e) has or have a Combined
Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time of such
substitution no higher than the Combined Loan-to-Value Ratio of the Deleted
Mortgage Loan, (f) has or have a Principal Balance or Principal Balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, and (g) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01 of
the Sale and Servicing Agreement.
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"Rating Agency": Any of S&P, Xxxxx'x or Fitch.
"Record Date": The Business Day immediately preceding the related
Payment Date.
"Redemption Date": The Payment Date, if any, on which the Indenture is
terminated and all of the Secured Notes are redeemed pursuant to Article X of
the Indenture, which date may occur on or after the Optional Redemption Date,
but on or before the Final Stated Maturity Date.
"Related Mortgage Loans": With respect to a particular Secured Note,
the Mortgage Loans listed on the Trust Receipt issued concurrently with such
Secured Note.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"Remittance Report": The report required to be made by the Paying Agent
pursuant to Section 3.03(a) and (g) of the Indenture.
"REO Disposition": The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust.
"REO Proceeds": Proceeds received in respect of any REO Mortgage Loan
(including, without limitation, proceeds from the rental of the related
Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Servicer in the
name of the Indenture Trustee on behalf of the Noteholders through foreclosure
or deed-in-lieu of foreclosure.
"Repurchase Price": With respect to any Mortgage Loan, the Principal
Balance of such Mortgage Loan as of the date of purchase, plus all accrued and
unpaid interest on such Principal Balance computed, as of the next succeeding
Due Date for such repurchased Mortgage Loan, at the Mortgage Interest Rate, plus
the amount of any unreimbursed Servicing Advances made by the Servicer with
respect to such Mortgage Loan, which purchase price shall be deposited in the
Collection Account on the next succeeding Determination Date, after deducting
therefrom any amounts received in respect of such repurchased Mortgage Loan or
Loans and being held in the Collection Account for future payment to the extent
such amounts have not yet been applied to principal or interest on such Mortgage
Loan.
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"Repurchased Defaulted Mortgage Loan": A defaulted single-family
Mortgage Loan purchased by the Sponsor from an investor or out of a pool of
Mortgage Loans pursuant to the Sponsor's contractual obligation or election as
seller or servicer to do so.
"Request for Release": A request for release in substantially the form
attached as Exhibit D of the Sale and Servicing Agreement.
"Residential Dwelling": A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development or a townhouse.
"Responsible Officer": When used with respect to the Indenture Trustee,
the Collateral Agent or the Owner Trustee, any officer assigned to the Corporate
Trust Division (or any successor thereto), including any Vice President, Second
Vice President, Senior Trust Officer, Trust Officer, Assistant Trust Officer,
any Assistant Secretary, any trust officer or any other officer of the Indenture
Trustee or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject. When used with respect to the
Servicer, any officer of the Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans whose name and specimen
signature appear on a list of servicing officers furnished to the Indenture
Trustee, the Collateral Agent and the Note Purchaser by the Servicer, as such
list may from time to time be amended.
"Restoration Amount": As of any date of determination, the amount, if
any, by which (a) the outstanding principal amount of the Secured Notes
(including accrued interest thereon) as of such day exceeds, (b) the Sale Amount
as of such day.
"Review Procedures": The procedures regarding the Collateral Agent's
review of the Custodial Loan Files attached to the Sale and Servicing Agreement
as Exhibit K.
"S&P": Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies Inc.
"Sale": The meaning specified in Section 5.17 of the Indenture.
"Sale Amount": The principal amount of the Secured Notes to be issued
on a Transfer Date pursuant to the Indenture; provided, that such amount shall
not cause a Collateral Deficiency Event to occur on such Transfer Date.
"Sales Price": For any Transfer Date: (i) with respect to the sale of
the related Mortgage Loans from the Depositor to the Trust the sum of the
Mortgage Loan Base with respect to each Mortgage Loan conveyed on such Transfer
Date; (ii) with respect to the sale of the related Mortgage Loans from the
Originators to the Depositor, the sum of the Market Values with respect to each
Mortgage Loan conveyed on such Transfer Date.
"Sale and Servicing Agreement": The Second Amended and Restated Sale
and Servicing Agreement, dated as of October 16, 2003, among the Trust, the
Servicer, the Originators, the Subservicers, the Sponsor, the Depositor, the
Collateral Agent and the Indenture Trustee, providing for, among other things,
the sale of the Mortgage Loans from the Depositor to the Trust and the servicing
of the Mortgage Loans, as the same may be amended from time to time with the
consent of the Majority Noteholder.
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"SEC": The Securities and Exchange Commission, or any successor
thereto.
"Second Lien Mortgage Loan": A Mortgage Loan secured by a second lien
on the related Mortgaged Property.
"Secured Note": Any note designated as a "Secured Note" on the face
thereof, in the form of Exhibit A to the Indenture.
"Securities Act": The Securities Act of 1933, as amended.
"Securitization": The retirement of the Secured Notes issued by the
Trust through the offering of new securities secured or otherwise backed by the
Mortgage Loans through a owner trust, REMIC, FASIT, collateralized mortgage
obligation or other securitization vehicle.
"Securitization Agreement": The agreement or agreements entered into by
the Servicer and certain third parties on the Securitization Date(s) with
respect to any or all of the Mortgage Loans serviced hereunder, in connection
with a Pass-Through Transfer as set forth in Section 13.01 of the Sale and
Servicing Agreement, including, but not limited to, a pooling and servicing
agreement, trust agreement or indenture and/or a subservicing/master servicing
agreement and related custodial/trust agreement and related documents with
respect to a Pass-Through Transfer. Such agreement or agreements shall prescribe
the rights and obligations of the Servicer in servicing the related Mortgage
Loans and shall provide for servicing compensation to the Servicer (calculated
on a weighted average basis for all the related Mortgage Loans as of the
Securitization Date) at least equal to the Servicing Fee due the Servicer in
accordance with this Agreement. The form of relevant Securitization Agreement to
be entered into by the master servicer or trustee and the Servicer with respect
to Pass-Through Transfers shall be reasonably satisfactory in form and substance
to the Note Purchaser and the Servicer (giving due regard to any rating or
master servicing requirements) and the representations and warranties and
servicing provisions contained therein shall be substantially similar to those
contained in this Agreement, unless otherwise mutually agreed by the parties.
"Securityholder": Any Noteholder or Certificateholder.
"Seller": UBS Warburg Real Estate Securities Inc.
"Serviced Loans": All Mortgage Loans serviced or required to be
serviced by the Sponsor and its consolidated Subsidiaries under any Servicing
Agreement, irrespective of whether the actual servicing is done by another
Person (a subservicer) retained by the Sponsor and its consolidated Subsidiaries
for that purpose.
"Servicer": American Business Credit, Inc., a Pennsylvania corporation,
or any successor appointed as herein provided.
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"Servicer Call": The optional purchase by the Servicer as contemplated
by Section 7.15 of the Sale and Servicing Agreement.
"Servicer Event of Default": As defined in Section 9.01 of the Sale and
Servicing Agreement.
"Servicer Extension Notice": As defined in Section 9.01(c) of the Sale
and Servicing Agreement.
"Servicer Remittance Amount": With respect to any Determination Date,
an amount equal to the sum of (i) all collections of principal and interest on
the Mortgage Loans (including Prepayments, Net REO Proceeds and Net Liquidation
Proceeds, if any) collected by the Servicer during the related Due Period, (ii)
all Periodic Advances made by the Servicer with respect to interest payments due
to be received on the Mortgage Loans on the related Due Date and (iii) any other
amounts required to be placed in the Collection Account by the Servicer pursuant
to the Sale and Servicing Agreement.
"Servicer's Loan File": With respect to each Mortgage Loan, the file
held by the Servicer, consisting of all documents (or electronic images thereof)
relating to such Mortgage Loan, including, without limitation, copies of all of
the Mortgage Loan Documents included in the related Custodial Loan File.
"Servicing Advances": All reasonable and customary "out-of-pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the REO Property, including reasonable fees paid to any independent
contractor in connection therewith, (d) compliance with the obligations under
Section 7.06 of the Sale and Servicing Agreement, all of which reasonable and
customary out-of-pocket costs and expenses are reimbursable to the Servicer to
the extent provided in Section 8.06(e)(i) of the Sale and Servicing Agreement.
"Servicing Agreement": With respect to any Person, the arrangement,
whether or not in writing, pursuant to which that Person acts as servicer of
Mortgage Loans, whether owned by that Person or by others.
"Servicing Compensation": The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 7.08 of the Sale and Servicing
Agreement.
"Servicing Fee": As to each Mortgage Loan, the annual fee payable to
the Servicer, which is calculated as an amount equal to the product of (a)
Servicing Fee Rate, and (b) the Principal Balance thereof. Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
Principal Balance and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
"Servicing Fee Rate": 0.50% per annum.
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"Shortfall": The meaning assigned to such term in Section 2.20 of the
Sale and Servicing Agreement.
"Sold Mortgage Loans": The Mortgage Loans sold by the Originators to
the Depositor, sold by the Depositor to the Trust and pledged to the Indenture
Trustee pursuant to the Indenture.
"Sponsor": American Business Financial Services, Inc. a Delaware
corporation.
"Statement Date": December 31, 2002, the date of the Sponsor's and the
Originators'most recent consolidated and consolidating financial statements for
a regular financial reporting period before the Closing Date.
"Statement Date Financial Statements": As defined in Section 3.01(u) of
the Sale and Servicing Agreement.
"Stock": All shares, options, warrants, interests, participation or
other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, convertible debentures and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of the
foregoing.
"Structure Fee": As set forth in the Fee Letter.
"Structured Securities": Collateralized mortgage obligations and other
mortgage-backed securities.
"Subordinated Debt": Debt of the Sponsor, the Originators, the
Servicer, the Depositor or any of their respective Subsidiaries to any Person
(i) the papers evidencing, securing, governing or otherwise related to which
Debt impose covenants and conditions on the debtor under them that are no more
restrictive or onerous than the covenants and conditions imposed on the Sponsor,
the Originators, the Servicer, the Depositor or any of their respective
Subsidiaries by the Basic Documents, and (ii) that is not secured by the
Sponsor's, the Originators', the Servicer's, the Depositor's or any of their
respective Subsidiaries' property.
"Subservicers": HomeAmerican Credit, Inc., d/b/a Upland Mortgage, a
Pennsylvania corporation, or its successor in interest and American Business
Mortgage Services, Inc., a New Jersey corporation, or its successor in interest.
"Subsidiary": Any corporation, association or other business entity
(including a trust) in which any Person (directly or through one or more other
Subsidiaries or other types of intermediaries), owns or controls:
(a) more than fifty percent (50%) of the total voting power or
shares of stock entitled to vote in the election of its directors,
managers or trustees; or
-35-
(b) more than ninety percent (90%) of the total assets and
more than ninety percent (90%) of the total equity through the
ownership of capital stock (which may be non-voting) or a similar
device or indicia of equity ownership.
"Substitution Adjustment": As to any date on which a substitution
occurs pursuant to Sections 2.19 or 4.02 of the Sale and Servicing Agreement,
the amount (if any) by which the aggregate principal balances (after application
of principal payments received on or before the date of substitution) of any
Qualified Substitute Mortgage Loans as of the date of substitution, are less
than the aggregate of the Principal Balances of the related Deleted Mortgage
Loans together with 30-days' interest thereon at the Mortgage Interest Rate.
"Successor Servicer": The successor servicer appointed by the Majority
Noteholders with the consent of the Note Purchaser, pursuant to Section 9.02 of
the Sale and Servicing Agreement.
"Super Jumbo Mortgage Loan": A Mortgage Loan with an unpaid principal
balance in excess of $500,000 but not greater than $1,500,000.
"Take-out Commitment": A commitment by the Originator to sell one or
more Mortgage Loans to a Disposition Participant and the corresponding
Disposition Participant commitment back to the applicable Originator to
effectuate the foregoing.
"Telerate Page 3750": The display designated as Telerate Page 3750 on
the Telerate Service (or such other page as may replace the Telerate page on
that service for the purpose of displaying London interbank offered rates of
major banks).
"Total Delinquency Rate": The (x) the total delinquencies (Mortgage
Loans and Leases with at least one payment due for thirty (30) days or more,
excluding REO Properties) in the Sponsor's and its consolidated Subsidiaries'
total (managed and owned) portfolio of Serviced Loans expressed as a percentage
of (y) the aggregate amount of such total portfolio.
"Transfer Date": With respect to each Mortgage Loan, the day such
Mortgage Loan is sold and conveyed to the Depositor by the Originator and to the
Trust by the Depositor, which results in the issuance of a Secured Note in an
original principal amount equal to the related Sale Amount, subject to any
limitations in frequency and minimum amounts as may be imposed by the Indenture.
With respect to any Qualified Substitute Mortgage Loan, the Transfer Date shall
be the day such Mortgage Loan is conveyed to the Trust pursuant to Section 2.07
or 4.02 of the Sale and Servicing Agreement.
"Transfer Period": Shall mean the period commencing on the Closing Date
and ending on the earliest to occur of (i) the last day of the Commitment Term,
(ii) an Amortization Event or (iii) the early termination thereof by the Note
Purchaser pursuant to Section 2.16 of the Sale and Servicing Agreement.
"Trust": ABFS Mortgage Loan Warehouse Trust 2000-2, a Delaware
statutory trust.
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"Trust Agreement": The Third Amended and Restated Trust Agreement,
dated as of October 16, 2003, between the Depositor and the Owner Trustee,
relating to the governance of the Trust, as it may be amended or restated from
time to time.
"Trust Certificate": A certificate evidencing beneficial ownership
interest in the assets of the Trust.
"Trust Certificateholder" or "Holder": A Person in whose name a Trust
Certificate is registered.
"Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of the Indenture, for the benefit of the
Noteholders, as of any particular time, including, without limitation, all
property and interest, including all proceeds thereof, Granted to the Indenture
Trustee, for the benefit of the Noteholders, pursuant to the Granting Clauses of
the Indenture.
"Trust Order" and "Trust Request": A written order or request of the
Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, at the direction of the related Majority Certificateholders and
delivered to the Indenture Trustee or the Authenticating Agent, as applicable.
"Trust Receipt": A document substantially in the form of Exhibit B to
the Sale and Servicing Agreement.
"Underwriting Guidelines": Has the meaning set forth in Section 8.09 of
the Sale and Servicing Agreement.
"Unfunded Liabilities": With respect to any Plan, at any time, the
amount (if any) by which (a) the present value of all benefits under such Plan
exceeds (b) the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent actuarial valuation report for such
Plan, but only to the extent that such excess represents a potential liability
of the Sponsor or any member of the Controlled Group to the PBGC or a Plan under
Title IV of ERISA. With respect to multi-employer Plans, the term "Unfunded
Liabilities" shall also include contingent liability for withdrawal liability
under Section 4201 of ERISA to all multi-employer Plans to which the Sponsor or
any member of a Controlled Group for employees of the Sponsor or the Originators
contributes in the event of complete withdrawal from such plans.
"Uniform Commercial Code": The Uniform Commercial Code as in affect in
the State of New York.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States or a
trust if a court within the United States can exercise primary jurisdiction over
its administration and at least one United States fiduciary has the authority to
control all substantial decisions of the trust.
"Whole Loan Sale": A Disposition of Mortgage Loans pursuant to a
whole-loan sale.
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