Document:

EXECUTION COPY

Exhibit 10.3

 

EXECUTION

COPY

 

 

TRANSFER AND SERVICING AGREEMENT

 

 

by and among

 

 

ACAS BUSINESS LOAN TRUST 2002–1,

as the Issuer,

 

 

ACAS BUSINESS LOAN LLC, 2002–1,

as the Trust Depositor,

 

 

AMERICAN CAPITAL STRATEGIES, LTD.,

as the Originator, the Servicer and the Swap

Guarantor,

 

 

and

 

 

WELLS FARGO BANK MINNESOTA, NATIONAL

ASSOCIATION,

as the Indenture Trustee and as the Backup

Servicer

 

 

Dated as of March 15, 2002

 

 

ACAS Business Loan Trust Notes Series 2002–1

Class A, Class B and Class C Notes

 

 

 

TABLE OF CONTENTS

 

	

  ARTICLE I  DEFINITIONS

  
	

  Section 1.01

  	

  Definitions.

  
	

  Section 1.02

  	

  Other Terms.

  
	

  Section 1.03

  	

  Computation of Time Periods.

  
	

  Section 1.04

  	

  Interpretation.

  
	

  Section 1.05

  	

  Section References.

  
	

  Section 1.06

  	

  Calculations.

  
	

   

  	

   

  
	

  ARTICLE II 

  ESTABLISHMENT OF ISSUER; TRANSFER OF LOAN ASSETS

  
	

  Section 2.01

  	

  Creation and Funding of Issuer; Transfer of

  Loan Assets.

  
	

  Section 2.02

  	

  Conditions to Transfer of Loan Assets to

  Issuer.

  
	

  Section 2.03

  	

  Acceptance by Issuer.

  
	

  Section 2.04

  	

  Conveyance of Substitute Loans.

  
	

  Section 2.05

  	

  Release of Released Amounts.

  
	

  Section 2.06

  	

  Delivery of Loan Files.

  
	

  Section 2.07

  	

  Certification by Indenture Trustee; Possession

  of Loan Files.

  
	

   

  	

   

  
	

  ARTICLE III  REPRESENTATIONS AND WARRANTIES

  
	

  Section 3.01

  	

  Representations and Warranties Regarding

  the Originator.

  
	

  Section 3.02

  	

  Representations and Warranties Regarding

  Each Loan and as to Certain Loans in the Aggregate.

  
	

  Section 3.03

  	

  Representations and Warranties Regarding

  the Initial Loans in the Aggregate.

  
	

  Section 3.04

  	

  Representations and Warranties Regarding

  the Loan Files.

  
	

  Section 3.05

  	

  Representations and Warranties Regarding

  Concentrations of Initial Loans.

  
	

  Section 3.06

  	

  Representations and Warranties Regarding

  the Trust Depositor.

  
	

  Section 3.07

  	

  Representations and Warranties Regarding

  the Servicer.

  
	

  Section 3.08

  	

  Representations and Warranties of the

  Backup Servicer and the Indenture Trustee.

  
	

   

  	

   

  
	

  ARTICLE IV 

  PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  
	

  Section 4.01

  	

  Custody of Loans.

  
	

  Section 4.02

  	

  Filing.

  
	

  Section 4.03

  	

  Changes in Name, Corporate Structure or

  Location.

  
	

  Section 4.04

  	

  Chief Executive Office.

  
	

  Section 4.05

  	

  Costs and Expenses.

  
	

  Section 4.06

  	

  Sale Treatment.

  
	

  Section 4.07

  	

  Separateness from Trust Depositor.

  
	

   

  	

   

  
	

  ARTICLE V  SERVICING OF LOANS

  
	

  Section 5.01

  	

  Appointment and Acceptance; Responsibility

  for Loan Administration.

  
	

  Section 5.02

  	

  General Duties.

  
	

  Section 5.03

  	

  Administration.

  
	

  Section 5.04

  	

  Disposition upon Termination of Loan.

  
	

  Section 5.05

  	

  Subservicers.

  
	

  Section 5.06

  	

  Further Assurance.

  
	

  Section 5.07

  	

  Notice to Obligors.

  
	

  Section 5.08

  	

  Collection Efforts; Modification of Loans;

  Release of Loan Files.

  
	

  Section 5.09

  	

  Prepaid Loan.

  
	

  Section 5.10

  	

  Acceleration.

  
	

  Section 5.11

  	

  Taxes.

  
	

  Section 5.12

  	

  Insurance Premiums.

  
	

  Section 5.13

  	

  Remittances.

  
	

  Section 5.14

  	

  Servicer Advances.

  
	

  Section 5.15

  	

  Realization upon Defaulted Loan.

  

 

i

 

	

  Section 5.16

  	

  Maintenance of Insurance Policies.

  
	

  Section 5.17

  	

  Other Servicer Covenants.

  
	

  Section 5.18

  	

  Servicing Compensation.

  
	

  Section 5.19

  	

  Payment of Certain Expenses by Servicer.

  
	

  Section 5.20

  	

  Records.

  
	

  Section 5.21

  	

  Inspection.

  
	

  Section 5.22

  	

  The Backup Servicer.

  
	

  Section 5.23

  	

  [Reserved].

  
	

  Section 5.24

  	

  Covenants of the Backup Servicer.

  
	

  Section 5.25

  	

  Appointment of Successor Backup Servicer;

  Successor Backup Servicer to Act.

  
	

   

  	

   

  
	

  ARTICLE VI 

  COVENANTS OF THE TRUST DEPOSITOR

  
	

  Section 6.01

  	

  Legal Existence.

  
	

  Section 6.02

  	

  Loans Not to Be Evidenced by Promissory

  Notes.

  
	

  Section 6.03

  	

  Security Interests.

  
	

  Section 6.04

  	

  Delivery of Collections.

  
	

  Section 6.05

  	

  Regulatory Filings.

  
	

  Section 6.06

  	

  Compliance with Law.

  
	

  Section 6.07

  	

  Activities.

  
	

  Section 6.08

  	

  Indebtedness.

  
	

  Section 6.09

  	

  Guarantees.

  
	

  Section 6.10

  	

  Investments.

  
	

  Section 6.11

  	

  Merger; Sales.

  
	

  Section 6.12

  	

  Distributions.

  
	

  Section 6.13

  	

  Other Agreements.

  
	

  Section 6.14

  	

  Separate Legal Existence.

  
	

  Section 6.15

  	

  [Reserved].

  
	

  Section 6.16

  	

  Liability of Trust Depositor and Others.

  
	

  Section 6.17

  	

  Bankruptcy Limitations.

  
	

  Section 6.18

  	

  [Reserved].

  
	

  Section 6.19

  	

  Chief Executive Office.

  
	

   

  	

   

  
	

  ARTICLE VII  ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND

  
	

  Section 7.01

  	

  Trust Accounts; Collections.

  
	

  Section 7.02

  	

  Reserve Fund Deposit.

  
	

  Section 7.03

  	

  Trust Account Procedures.

  
	

  Section 7.04

  	

  Securityholder Distributions.

  
	

  Section 7.05

  	

  Allocations and Distributions.

  
	

  Section 7.06

  	

  Determination of LIBOR.

  
	

   

  	

   

  
	

  ARTICLE VIII  SERVICER DEFAULT; SERVICE TRANSFER

  
	

  Section 8.01

  	

  Servicer Default.

  
	

  Section 8.02

  	

  Servicer Transfer.

  
	

  Section 8.03

  	

  Appointment of Successor Servicer;

  Reconveyance; Successor Servicer to Act.

  
	

  Section 8.04

  	

  Notification to Securityholders and Swap

  Counterparties.

  
	

  Section 8.05

  	

  Effect of Transfer.

  
	

  Section 8.06

  	

  Database File.

  
	

  Section 8.07

  	

  Successor Servicer Indemnification.

  
	

  Section 8.08

  	

  Responsibilities of the Successor Servicer.

  
	

  Section 8.09

  	

  Rating Agency Condition for Servicer

  Transfer.

  
	

   

  	

   

  
	

  ARTICLE IX  REPORTS

  
	

  Section 9.01

  	

  Monthly Reports.

  
	

  Section 9.02

  	

  Officer’s Certificate.

  
	

  Section 9.03

  	

  Other Data.

  
	

  Section 9.04

  	

  Annual Report of Accountants.

  

 

ii

 

	

  Section 9.05

  	

  Annual Statement of Compliance from

  Servicer.

  
	

  Section 9.06

  	

  Annual Summary Statement.

  
	

  Section 9.07

  	

  Reports of Foreclosure and Abandonment of

  Mortgaged Property.

  
	

  Section 9.08

  	

  Notices.

  
	

   

  	

   

  
	

  ARTICLE X  TERMINATION

  
	

  Section 10.01

  	

  Sale of Loan Assets.

  
	

   

  	

   

  
	

  ARTICLE XI 

  REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION

  
	

  Section 11.01

  	

  Repurchases of, or Substitution for, Loans

  for Breach of Representations and Warranties.

  
	

  Section 11.02

  	

  Reassignment of Repurchased or Substituted

  Loans.

  
	

   

  	

   

  
	

  ARTICLE XII  INDEMNITIES

  
	

  Section 12.01

  	

  Indemnification by Servicer.

  
	

  Section 12.02

  	

  Indemnification by Trust Depositor.

  
	

  Section 12.03

  	

  Liabilities to Obligors.

  
	

  Section 12.04

  	

  Tax Indemnification.

  
	

  Section 12.05

  	

  Adjustments.

  
	

  Section 12.06

  	

  Operation of Indemnities.

  
	

   

  	

   

  
	

  ARTICLE XIII  MISCELLANEOUS

  
	

  Section 13.01

  	

  Amendment.

  
	

  Section 13.02

  	

  Protection of Title to Issuer.

  
	

  Section 13.03

  	

  Governing Law.

  
	

  Section 13.04

  	

  Notices.

  
	

  Section 13.05

  	

  Severability of Provisions.

  
	

  Section 13.06

  	

  Third Party Beneficiaries.

  
	

  Section 13.07

  	

  Counterparts.

  
	

  Section 13.08

  	

  Headings.

  
	

  Section 13.09

  	

  No Bankruptcy Petition; Disclaimer.

  
	

  Section 13.10

  	

  Jurisdiction.

  
	

  Section 13.11

  	

  Tax Characterization.

  
	

  Section 13.12

  	

  Prohibited Transactions with Respect to the

  Issuer.

  
	

  Section 13.13

  	

  Merger or Consolidation of Originator or

  Servicer.

  
	

  Section 13.14

  	

  Assignment or Delegation by the Originator.

  
	

  Section 13.15

  	

  Limitation of Liability of Owner Trustee.

  
	

  Section 13.16

  	

  No Partnership.

  
	

  Section 13.17

  	

  Successors and Assigns.

  
	

  Section 13.18

  	

  Acts of Holders.

  
	

  Section 13.19

  	

  Duration of Agreement.

  
	

  Section 13.20

  	

  Servicer Assignment and Resignation.

  
	

   

  	

   

  
	

  ARTICLE XIV  SWAP GUARANTY

  
	

  Section 14.01

  	

  Unconditional Undertaking.

  
	

  Section 14.02

  	

  Obligations Absolute.

  
	

  Section 14.03

  	

  Pari Passu Treatment of Obligations of Swap

  Guarantor.

  
	

  Section 14.04

  	

  Waiver.

  
	

  Section 14.05

  	

  Subrogation.

  

 

EXHIBITS AND SCHEDULES

 

	

  Exhibit A

  	

  Form of Assignment

  
	

  Exhibit B

  	

  Form of Closing Certificate of Trust Depositor

  
	

  Exhibit C

  	

  Form of Closing Certificate of Servicer/Originator

  

 

iii

 

	

  Exhibit D–1

  	

  Form of Initial Certificate

  
	

  Exhibit D–2

  	

  Form of Final Certificate

  
	

  Exhibit E

  	

  Form of Request for Release of Documents

  
	

  Exhibit F

  	

  Form of Certificate Regarding Repurchased Loans

  
	

  Exhibit G

  	

  List of Loans

  
	

  Exhibit H

  	

  Form of Monthly Report to Securityholders and Swap Counterparties

  
	

  Exhibit I

  	

  Form of Subsequent Transfer Agreement

  
	

  Exhibit J

  	

  Form of Subsequent Purchase Agreement

  
	

  Exhibit K

  	

  Credit and Collection Policy

  
	

  Exhibit L

  	

  List of Subordinated Loans

  

 

iv

 

TRANSFER AND SERVICING AGREEMENT

 

THIS TRANSFER AND SERVICING AGREEMENT,

dated as of March 15, 2002, is by and among:

 

(1)                                  ACAS BUSINESS LOAN TRUST 2002–1, a business

trust created and existing under the laws of the State of Delaware, as the issuer

(together with its successors and assigns, in such capacity, the “Issuer”);

 

(2)                                  ACAS BUSINESS LOAN LLC, 2002–1, a Delaware

limited liability company, as the trust depositor (together with its successor

and assigns, in such capacity, the “Trust Depositor”);

 

(3)                                  AMERICAN CAPITAL STRATEGIES, LTD., a

Delaware corporation (together with its successors and assigns, “ACAS”),

as the servicer (together with its successors and assigns, in such capacity,

the “Servicer”), as the originator (together with its wholly–owned

subsidiaries, successors and assigns, in such capacity, the “Originator”)

and as the swap guarantor (together with its successors and assigns, in such

capacity, the “Swap Guarantor”); and

 

(4)                                  WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

(together with its successors and assigns, “Wells Fargo”), not in its

individual capacity but as the indenture trustee (together with its successors

and assigns, in such capacity, the “Indenture Trustee”), and not in its

individual capacity but as the backup servicer (together with its successors

and assigns, in such capacity, the “Backup Servicer”).

 

R  E  C  I

T  A  L  S

 

WHEREAS, in the

regular course of its business, the Originator originates, purchases and/or

acquires Loans (as defined herein);

 

WHEREAS, the Trust

Depositor acquired the Initial Loans from the Originator and may acquire from

time to time thereafter certain Substitute Loans (such Initial Loans and

Substitute Loans, together with certain related property as more fully

described herein, being the Loan Assets as defined herein);

 

WHEREAS, it was a

condition to the Trust Depositor’s acquisition of the Initial Loans from the

Originator that the Originator make certain representations and warranties

regarding the Loan Assets for the benefit of the Trust Depositor as well as the

Issuer;

 

WHEREAS, on the

Closing Date (defined herein) the Trust Depositor will fund the Issuer by

selling, conveying and assigning all its right, title and interest in such Loan

Assets and certain other assets to the Issuer;

 

WHEREAS, the Issuer

is willing to purchase and accept assignment of the Loan Assets from the Trust

Depositor pursuant to the terms hereof; and

 

WHEREAS, the

Servicer is willing to service the Loan Assets for the benefit and account of

the Issuer pursuant to the terms hereof;

 

NOW, THEREFORE,

based upon the above recitals, the mutual premises and agreements contained

herein, and other good and valuable consideration, the receipt and sufficiency

of which are hereby acknowledged, the parties hereto, intending to be legally

bound, hereby agree as follows:

 

1

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                            Definitions.

 

Whenever used in this Agreement, the following words and phrases,

unless the context otherwise requires, shall have the following meanings:

 

“ACAS” has the meaning given to such term in the Preamble.

 

“ACAS Transfer Agreement” means the ACAS Transfer Agreement,

dated as of the date hereof, between ACAS and the Trust Depositor, as amended,

modified, restated, replaced, waived, substituted, supplemented or extended

from time to time.

 

“Addition Notice” means, with respect to any transfer of

Substitute Loans to the Issuer pursuant to Section 2.04 (and the

Trust Depositor’s corresponding prior purchase of such Loans from the

Originator), a notice, which shall be given at least five (5) days prior to the

related Subsequent Transfer Date, identifying the Substitute Loans to be

transferred, the Outstanding Loan Balance of such Substitute Loans and the

related Substitution Event (with respect to an identified Loan or Loans then in

the Loan Pool) to which such Substitute Loan relates, with such notice to be

signed both by the Trust Depositor and the Originator.

 

“Additional Principal Amount” means, with respect to any Payment

Date, an amount equal to, but in no event less than zero, the excess of the

Aggregate Outstanding Principal Balance prior to any distribution on such day

over (i) the sum of the Aggregate Outstanding Loan Balance as of the last

Business Day of the related Collection Period and (ii) all Principal

Collections on deposit in the Collection Account as of the last Day of the

immediately preceding Collection Period.

 

“Additional Servicing Fee” means an amount, in addition to the

Servicing Fee, necessary to induce a Successor Servicer to serve as Servicer

hereunder.

 

“Affiliate” of any specified Person means any other Person

controlling or controlled by, or under common control with, such specified

Person.  For the purposes of this

definition, “control” (including the terms “controlling”, “controlled by” and

“under common control with”), when used with respect to any specified Person

means the possession, direct or indirect, of the power to vote 5% or more of

the voting securities of such Person or to direct or cause the direction of the

management and policies of such Person whether through the ownership of voting

securities, by contract or otherwise.

 

“Agented Notes” means one or more promissory notes issued by an

Eligible Obligor wherein (a) the note(s) are originated in accordance with

the Credit and Collection Policy as a part of a syndicated loan transaction,

(b) upon an assignment of the note to the Trust Depositor under the ACAS

Transfer Agreement and in turn to the Issuer under this Agreement, the original

note will be endorsed to the Indenture Trustee, and held by the Indenture

Trustee, on behalf of the Noteholders and the Swap Counterparties, (c) the

Issuer, as assignee of the note, will have all of the rights (but none of the

obligations) of the Originator with respect to such note and the Collateral,

including the right to receive and collect payments directly in its own name

and to enforce its rights directly against the Obligor thereof, (d) the note is

secured by an undivided interest in the Collateral which also secures and is

shared by, on a pro–rata basis, all other holders of such Obligor’s notes of

equal priority and (e) other than with respect to the Loan to Marcal which

will be sold to the Trust Depositor and the Issuer, respectively, on the Closing

Date, the Originator (or American Capital Financial Services, Inc., a

wholly–owned subsidiary of the Originator) is the collateral agent and payment

agent for all noteholders of such Obligor; provided,

however, Agented Notes

shall not include (1) the obligations, if any, of any agents under the

Loan Documents evidencing such Agented Loans, and (2) the interests, rights and

obligations under the Loan Documents evidencing such Agented Notes that are

retained by the Originator or are owned or owed by other noteholders.

 

“Aggregate Notional Amount” shall have the meaning given to such

term in the Indenture.

 

2

 

“Aggregate Outstanding Loan Balance” means, with respect to any

Payment Date, an amount equal to the aggregate remaining Outstanding Loan

Balance of the Loans as of the last day of the related Collection Period after

giving effect to Defaulted Loans, Prepaid Loans, Ineligible Loans and Excess

Loans.

 

“Aggregate Outstanding Principal Balance” means, as of any date

of determination, the sum of the Outstanding Principal Balances of each Class

of Notes outstanding on such date.

 

“Agreement” means this Transfer and Servicing Agreement, as

amended, modified, restated, replaced, waived, substituted, supplemented or

extended from time to time.

 

“Assignment” means each Assignment, substantially in the form of

Exhibit A, relating to an assignment, transfer and conveyance of

Loans and related property by the Trust Depositor to the Issuer.

 

“Assignment Date” means each date on which the Trust Depositor

transfers Loans, or portions thereof, to the Issuer, which date shall be

(i) the Closing Date, in the case of the Initial Loans and (ii) the

applicable Subsequent Transfer Date, in the case of the Subsequent Loans.

 

“Assignment of Mortgage” means, as to each Loan secured by an

interest in real property, one or more assignments, notices of transfer or

equivalent instruments, each in recordable form and sufficient under the laws

of the relevant jurisdiction to reflect the transfer of an undivided interest

in the related mortgage, deed of trust, security deed or similar security

instrument and all other documents related to such Loan to the Issuer as

assignee of the Trust Depositor and to grant a perfected Lien thereon in favor

of the Indenture Trustee on behalf of the Noteholders and the Swap

Counterparties; provided, however, with respect to Agented Notes

and all other Loans where a collateral agent has been appointed under the

related Loan Documents to hold the collateral securing the Loan, Assignment of

Mortgage shall mean such documents, including assignments, notices of transfer

or equivalent instruments, each in recordable form as necessary, as are

sufficient under the laws of the relevant jurisdiction to reflect the transfer

to the Originator (or American Capital Financial Services, Inc., a wholly–owned

subsidiary of the Originator), as collateral agent for all noteholders of the

Obligor, of the related mortgage, deed of trust, security deed or other similar

instrument securing such notes and all other documents relating to such notes

and to grant a perfected Lien thereon by the Obligor in favor of the Originator

(or American Capital Financial Services, Inc., a wholly–owned subsidiary of the

Originator), as collateral agent for all such noteholders.

 

“Available Amounts” means, as of any Payment Date, the sum of

(i) all Collections on deposit in the Collection Account as of the

immediately preceding Determination Date (ii) all Investment Earnings

credited to the Trust Accounts as of the last day of the immediately preceding

Collection Period, and (iii) all amounts on deposit in the Reserve Fund.

 

“Backup Servicer” has the meaning given to such term in the Preamble

and includes any successor backup servicer hereunder.

 

“Backup Servicer Termination Notice” has the meaning given to

such term in subsection 5.25(a).

 

“Backup Servicer Transfer” has the meaning given to such term in

subsection 5.25(b).

 

“Backup Servicing Fee” has the meaning given to such term in the

fee letter, dated as of the date hereof, among the Originator, the Trust

Depositor, the Issuer and the Backup Servicer, as amended, modified, restated,

replaced, waived, substituted, supplemented or extended from time to time.

 

“Business Day” means any day which is neither a Saturday or a

Sunday, nor another day on which banking institutions in the cities of New

York, New York or Minneapolis, Minnesota are authorized or obligated by law,

executive order, or governmental decree to be closed.

 

“Business Trust Statute” means Chapter 38 of Title 12

of the Delaware Code, 12 Del Code 3801 et. seq., as the same

may be amended from time to time, or any successor legislation thereto.

 

“Case Logic” means Case Logic, Inc. and CL Holdings, Inc.

 

3

 

“Casualty Loss” means, with respect to any item of Collateral,

the loss, theft, damage beyond repair or governmental condemnation or seizure

of such item of Collateral.

 

“Certificate” means each ACAS Business Loan Trust 2002–1

Certificate representing a beneficial equity interest in the Issuer and issued

pursuant to the Trust Agreement.

 

“Certificate Distribution Account” has the meaning given to such

term in the Trust Agreement.

 

“Certificate Register” has the meaning given to such term in the

Trust Agreement.

 

“Certificateholder” has the meaning given to such term in the

Trust Agreement.

 

“Class” means any of the group of Notes identified herein as, as

applicable, the Class A Notes, the Class B Notes or the Class C

Notes.

 

“Class A Interest Amount” means, with respect to each Interest

Accrual Period, an amount equal to the product of (i) the Outstanding Principal

Balance of the Class A Notes as of the first day of such Interest Accrual

Period (after giving effect to all distributions made on such day) and

(ii) the applicable Class A Interest Rate for such Interest Accrual

Period.

 

“Class A Interest Rate” means the annual rate of interest

payable with respect to the Class A Notes, which shall be equal to 2.40% for

the first Payment Date and, thereafter, shall be equal to LIBOR plus 0.50% per

annum (in each case calculated on the basis of a year of 360 days and actual

days elapsed in the Interest Accrual Period).

 

“Class A Expected Maturity Date” means November 20, 2005.

 

“Class A Noteholder” means each Person in whose name a

Class A Note is registered in the Note Register.

 

“Class A Notes” means the ACAS Business Loan Trust 2002–1,

Class A Loan–Backed Notes, Series 2002–1, issued pursuant to the Indenture.

 

“Class A Trigger” means any Payment Date on or after November

20, 2005 on which any of the Class A Notes shall be outstanding.

 

“Class B Accrued Payable” means, with respect to any Payment

Date, the sum of, for each preceding Payment Date, the excess, if any, of (i)

the amount that would have been calculated as the Class B Interest Amount on

each such preceding Payment Date if the calculation was made using clause

(ii)(a) of the definition of “Class B Interest Amount” only and clause

(ii)(b) of the definition was not used over (ii) the amount calculated as

the Class B Interest Amount on each such preceding Payment Date, together with

interest thereon at the then applicable Class B Interest Rate.

 

“Class B Interest Amount” means, with respect to each Interest

Accrual Period, an amount equal to the product of (i) the applicable Class B

Interest Rate for such Interest Accrual Period and (ii) the lesser of (a)

the Outstanding Principal Balance of the Class B Notes as of the first day of

such Interest Accrual Period (after giving effect to all distributions on such

day) and (b) the excess, if any, of (x) the Aggregate Outstanding Loan Balance

as of the last day of the related Collection Period over (y) the Outstanding

Principal Balance of the Class A Notes as of the first day of such Interest

Accrual Period (after giving effect to all distributions on such day); provided, however, that for purposes of this

definition, in no event will the amount determined pursuant to clause (b)

hereof be less than zero.

 

“Class B Interest Rate” means the annual rate of interest

payable with respect to the Class B Notes, which shall be equal to 3.40%

for the first Payment Date and, thereafter, shall be equal to LIBOR plus 1.50%

per annum (in each case calculated on the basis of a year of 360 days and

actual days elapsed in the Interest Accrual Period).

 

“Class B Expected Maturity Date” means March 20, 2007.

 

4

 

“Class B Noteholder” means each Person in whose name a

Class B Note is registered in the Note Register.

 

“Class B Notes” means the ACAS Business Loan Trust 2002–1,

Class B Loan–Backed Notes, Series 2002–1, issued pursuant to the Indenture.

 

“Class B Trigger” means any Payment Date on or after March 20,

2007 on which any of the Class B Notes shall be outstanding.

 

“Class C Expected Maturity Date” means June 20, 2009.

 

“Class C Noteholder” means each Person in whose name a

Class C Note is registered in the Note Register.

 

“Class C Notes” means the ACAS Business Loan Trust 2002–1,

Class C Loan–Backed Notes, Series 2002–1, issued pursuant to the Indenture.

 

“Closing Date” means March 15, 2002.

 

“Code” means the Internal Revenue Code of 1986, as amended from

time to time, or any successor legislation thereto.

 

“Collateral” means the assets of each Obligor that have been

pledged as security for each Loan, including but not limited to real and

personal property, accounts receivable, inventory, equipment and intellectual

property rights.

 

“Collection Account” means the Trust Account so designated and

established pursuant to Section 7.01.

 

“Collection Period” means (a) with respect to the first Payment

Date, the period from and including the Initial Cut–Off Date to but excluding

the 10th day of the calendar month in which such Payment Date occurs, and (b)

with respect to any subsequent Payment Date, the period from and including the

10th day of the previous calendar month to but excluding the 10th day of the

calendar month in which such Payment Date occurs.

 

“Collections” means all payments received on or with respect to

the Loans in the Loan Pool or the related Collateral, including, without

limitation, Net Trust Swap Receipts, Swap Breakage Receipts, Scheduled

Payments, Prepayments, Prepayment Premiums, Insurance Proceeds, Liquidation

Proceeds and Late Charges, all as related to amounts attributable to the Loans

in the Loan Pool or the related Collateral, but excluding any Excluded Amounts

and Retained Interest.

 

“Commission” means the United States Securities and Exchange

Commission or any successor thereto.

 

“Computer Records” means the computer records generated by the

Servicer or any subservicer that provide information relating to the Loans and

that were used by the Originator in selecting the Loans conveyed to the Trust

Depositor pursuant to Section 2.01 (and any Substitute Loans

conveyed to the Trust Depositor pursuant to Section 2.04).

 

“Contractual Obligation” means, with respect to any Person, any

provision of any securities issued by such Person or any indenture, mortgage,

deed of trust, contract, undertaking, agreement, instrument or other document

to which such Person is a party or by which it or any of its property is bound

or is subject.

 

“Corporate Trust Office” means, with respect to the Indenture

Trustee or Owner Trustee, as applicable, the office of the Indenture Trustee or

Owner Trustee at which at any particular time its corporate trust business

shall be principally administered, which offices at the date of the execution

of this Agreement are located at the addresses set forth in Section 13.04.

 

“CP Transaction” means the Loan Funding and Servicing Agreement,

dated as of March 31, 1999, among ACS Funding Trust I, the Servicer, the

Investors named therein, Variable Funding Capital Corporation, First Union

Securities, Inc. (f/k/a First Union Capital Markets Corp.), First Union

National Bank and Wells Fargo Bank Minnesota, National Association (f/k/a

Norwest Bank Minnesota, National Association), as amended, modified,

 

5

 

restated, replaced, waived, substituted, supplemented or extended from

time to time, and all documents executed in connection therewith and all

transactions contemplated thereby.

 

“Credit and Collection Policy” means those credit, collection,

customer relation and service policies relating to the Loans and related Loan

Files described in Exhibit K, as the same may be amended or modified

from time to time in accordance with subsection 5.17(g); and, with

respect to any Successor Servicer, the collection procedures and policies of

such Person at the time such Person becomes Successor Servicer.

 

“Cut–Off Date” means either or both (as the context may require)

the Initial Cut–Off Date and any Subsequent Cut–Off Date, as applicable to the

Loan or Loans in question.

 

“Cycle Gear” means Cycle Gear, Inc.

 

“Date of Processing” means, with respect to any transaction or

Collection, the date on which such transaction or Collection is first recorded

(and, in the case of a transaction or Collection related to a particular Loan,

identified as to such particular Loan) on the Originator’s or Servicer’s

computer master file of Loans (without regard to the effective date of such

recordation).

 

“Deal Agent” means First Union Securities, Inc., as deal agent

under the CP Transaction.

 

“Defaulted Loan” means a Loan in the Loan Pool with respect to

which there has occurred one or more of the following: (i) the occurrence

of both (a) any portion of a payment of interest on or principal of such

Loan is not paid when due (without giving effect to any grace period) and (b) within

one hundred twenty (120) days of when such delinquent payment was first due,

all delinquencies have not been cured, (ii) an Insolvency Event has occurred

with respect to the related Obligor, (iii) the related Obligor has suffered any

material adverse change, (iv) the Servicer has determined in its sole

discretion, in accordance with its Credit and Collection Policy, that such Loan

is not collectible or (v) if on a quarterly mark–to–market the value is

written down due to a credit event, then that portion of the Loan is defaulted.

 

“Deferred Interest Loans” means a Loan that requires the Obligor

to pay only a portion of the accrued and unpaid interest on a current basis,

the remainder of which is deferred and paid later together with interest

thereon as a lump sum and is treated as Interest Collections at the time it is

received.

 

“Definitive Notes” shall have the meaning specified in the

Indenture.

 

“Delinquent” means, with

respect to a Loan, (i) both (a) any portion of a payment of interest or

principal on such Loan is not paid when due (without giving effect to any grace

period) and (b) within sixty (60) days of when such delinquent payment was

first due all delinquencies have not been cured, (ii) the Loan is modified,

waived or varied by the Servicer or any subservicer due to an Obligor’s

inability to pay principal or interest or (iii) the related Obligor is not

paying any of the accrued and unpaid interest on a current basis.

 

“Determination Date” means, with respect to any Payment Date,

the third (3rd) Business Day prior to such Payment Date.

 

“Eligible Deposit Account” means either (a) a segregated

account with a Qualified Institution, or (b) a segregated trust account

with the corporate trust department of a depository institution organized under

the laws of the United States or any one of the states thereof, including the

District of Columbia (or any domestic branch of a foreign bank), and acting as

a trustee for funds deposited in such account, so long as any of the securities

of such depository institution shall have a (i) in the case of Moody’s, a

credit rating in one of its short–term credit rating categories that signifies

investment grade, (ii) in the case of Fitch, a short–term credit rating of

at least “F–1+”, and (iii) in the case of S&P, a commercial paper,

short–term debt rating of “A–1+” and a long–term unsecured debt rating of

“AA–”.

 

“Eligible Investments” means, with respect to any Payment Date,

negotiable instruments or securities or other investments maturing on or before

such Payment Date (a) which, except in the case of demand or time

deposits, investments in money market funds and Eligible Repurchase

Obligations, are represented by instruments in bearer or registered form or

ownership of which is represented by book entries by a clearing agency or by a

Federal

 

6

 

Reserve Bank in favor of depository institutions eligible to have an

account with such Federal Reserve Bank who hold such investments on behalf of

their customers, (b) that, as of any date of determination, mature by

their terms on or prior to the Payment Date immediately following such date of

determination, and (c) that evidence:

 

(i)            direct

obligations of, and obligations fully guaranteed as to full and timely payment

by, the United States (or by any agency thereof to the extent such obligations

are backed by the full faith and credit of the United States);

 

(ii)           demand

deposits, time deposits or certificates of deposit of depository institutions

or trust companies incorporated under the laws of the United States or any

state thereof and subject to supervision and examination by federal or state

banking or depository institution authorities; provided, however,

that at the time of the Issuer’s investment or contractual commitment to invest

therein, the commercial paper, if any, and short-term unsecured debt

obligations (other than such obligation whose rating is based on the credit of

a Person other than such institution or trust company) of such depository

institution or trust company shall have a credit rating from each Rating Agency

in the Highest Required Investment Category granted by such Rating Agency,

which, in the case of Fitch, shall be “F–1+”;

 

(iii)          commercial

paper, or other short term obligations, having, at the time of the Issuer’s

investment or contractual commitment to invest therein, a rating in the Highest

Required Investment Category granted by each Rating Agency, which, in the case

of Fitch, shall be “F–1+”;

 

(iv)          demand

deposits, time deposits or certificates of deposit that are fully insured by

the FDIC and either have a rating on their certificates of deposit or

short-term deposits from Moody’s and S&P of “P–1” and “A–1+”, respectively,

and, if rated by Fitch, from Fitch of “F–1+”;

 

(v)           notes

that are payable on demand or bankers’ acceptances issued by any depository

institution or trust company referred to in clause (ii) above;

 

(vi)          investments

in taxable money market funds or other regulated investment companies having,

at the time of the Issuer’s investment or contractual commitment to invest

therein, a rating of the Highest Required Investment Category from Moody’s,

S&P and Fitch (if rated by Fitch) or otherwise subject to satisfaction of

the Rating Agency Condition;

 

(vii)         time

deposits (having maturities of not more than ninety (90) days) by an entity the

commercial paper of which has, at the time of the Issuer’s investment or

contractual commitment to invest therein, a rating of the Highest Required

Investment Category granted by each Rating Agency;

 

(viii)        Eligible

Repurchase Obligations with a rating acceptable to the Rating Agencies, which,

in the case of Fitch, shall be “F–1+” and in the case of S&P shall be

“A–1+”; or

 

(ix)           any

negotiable instruments or securities or other investments subject to

satisfaction of the Rating Agency Condition.

 

The Indenture Trustee may purchase or sell to itself or an Affiliate,

as principal or agent, the Eligible Investments described above.

 

“Eligible Loan” means, as of any date of determination, each

Loan with respect to which each of the following is true:

 

(1)           the

Loan and the pledge of Collateral thereunder is valid, binding and enforceable,

except the enforcement may be limited by insolvency, bankruptcy, moratorium,

reorganization or other similar laws affecting enforceability of creditors’

rights and the availability of equitable remedies, and, except with respect to

the Loan to Omnova, the Loan contains a clause substantially to the effect that

the related Obligor agrees to make payments without any deduction, offset,

netting, recoupment, defenses, reservation of rights or counterclaim;

 

7

 

(2)           the

Loan is evidenced by an Underlying Note that has been duly authorized and that

is in full force and effect and constitutes the legal, valid and binding

obligation of the Obligor of such Loan to pay the stated amount of the Loan and

interest thereon;

 

(3)           the

Loan was originated in accordance with the terms of the Credit and Collection

Policy and arose in the ordinary course of the Originator’s business from the

loaning of money to the Obligor thereof;

 

(4)           the

Loan is not a Defaulted Loan and is not Delinquent;

 

(5)           the

Obligor of such Loan has executed all appropriate documentation required by the

Originator;

 

(6)           the

Loan, together with the Loan File related thereto, is a “general intangible”,

“payment intangible”, an “instrument”, an “account”, or “chattel paper” within

the meaning of the UCC of all jurisdictions that govern the perfection of a

security interest granted therein;

 

(7)           all

material consents, licenses, approvals or authorizations of, or registrations

or declarations with, any Governmental Authority required to be obtained,

effected or given in connection with the making of such Loan have been duly

obtained, effected or given and are in full force and effect;

 

(8)           the

Loan is denominated and payable only in United States dollars in the United

States;

 

(9)           the

Loan bears some current interest, which is due and payable monthly or

quarterly;

 

(10)         the

Loan, together with the Loan File related thereto, does not contravene in any

material respect any Requirements of Law (including, without limitation, laws,

rules and regulations relating to usury, truth in lending, fair credit billing,

fair credit reporting, equal credit opportunity, fair debt collection practices

and privacy) and with respect to which no party to the Loan File related

thereto is in material violation of any such Requirements of Law;

 

(11)         no

consent or waiver is required in connection with the transfer of the Loan or

the Loans File, or, if such consent or waiver is required, such consent or

waiver has been obtained, and, if such Loan is secured by an interest in real

property, an Assignment of Mortgage has been delivered to the Indenture Trustee

(excluding the Loan to Cycle Gear);

 

(12)         the

Loan was documented and closed in accordance with the Credit and Collection

Policy, including the delivery of relevant opinions and assignments, and there

is only one current original Underlying Note with respect to such Loan and such

Underlying Note has been delivered to the Indenture Trustee and is duly

endorsed;

 

(13)         the

Loan and all related Collateral are free of any Liens except for Permitted

Liens, and all filings and other actions required to perfect the security

interest of (i) the Indenture Trustee in the Originator’s, the Trust

Depositor’s and the Issuer’s interest in the Collateral have been made or taken

and (ii) in the case of Agented Notes, the collateral agent, as agent for

all noteholders of the related Obligor, in the Collateral;

 

(14)         the

Loan has an original term to maturity of no more than one hundred twenty–one

(121) months, and is either fully amortizing in installments (which

installments need not be in identical amounts) over such term or the principal

amount thereof is due in a single installment at the end of such term;

 

(15)         no

right of rescission, set off, counterclaim, defense or other material dispute

has been asserted with respect to such Loan;

 

(16)         any

related Collateral with respect to such Loan is insured under an Insurance

Policy in accordance with the Credit and Collection Policy;

 

8

 

(17)         the

Obligor with respect to such Loan is an Eligible Obligor;

 

(18)         such

Loan does not represent payment obligations relating to “put” rights;

 

(19)         the

Loan is not a loan or extension of credit made by the Originator or one of its

subsidiaries to an Obligor for the purpose of making any principal, interest

(other than deferred interest) or other payment on a loan to the same Obligor

necessary in order to keep such loan from becoming delinquent and such Loan is

not being kept current by the Originator or one of its Affiliates making any

other loans to this Obligor;

 

(20)         no

provision of the Loan has been waived, altered or modified in any way, except

by instruments or documents contained in the Loan File relating to the Loan;

 

(21)         the

Loan has an Eligible Risk Rating, with the exception of Loans to two (2)

Obligors representing less than 8.3% of the Initial Aggregate Outstanding Loan

Balance;

 

(22)         the

Loan is an “eligible asset” as defined in Rule 3a–7 of the Investment Company

Act of 1940, as amended;

 

(23)         if

such Loan was originated on or after December 1, 2000, the Obligor of such Loan

has waived all rights of set–off, counterclaim, rescission and/or defense to

payment against the Originator of the Loan and all assignees thereof;

 

(24)         with

respect to Agented Notes, the related Loan Documents (a) shall include a note

purchase agreement containing provisions relating to the appointment and duties

of a payment agent and a collateral agent and intercreditor and (if applicable)

subordination provisions substantially similar to the forms provided to and

approved by the Deal Agent in the CP Transaction, and (b) are duly authorized,

fully and properly executed and are the valid, binding and unconditional

payment obligation of the Obligor thereof;

 

(25)         with

respect to Agented Notes (other than the Loan to Marcal), the Originator (or

American Capital Financial Services, Inc., a wholly–owned subsidiary of the

Originator) has been appointed the collateral agent of the security and the

payment agent for all such notes prior to such Agented Note becoming a part of

the Loan Assets;

 

(26)         with

respect to Agented Notes, if the entity serving as the collateral agent of the

security for all syndicated notes of the Obligor has or will change from the

time of the origination of the notes, all appropriate assignments of the

collateral agent’s rights in and to the collateral on behalf of the noteholders

have been executed and filed or recorded as appropriate prior to such Agented

Note becoming a part of the Loan Assets;

 

(27)         with

respect to Agented Notes, all required notifications, if any, have been given

to the collateral agent, the payment agent and any other parties required by

the Loan Documents of, and all required consents, if any, have been obtained

with respect to, the Originator’s assignment of the Agented Notes and the

Originator’s right, title and interest in the Collateral to the Issuer as

assignee of the Trust Depositor and the Indenture Trustee’s security interest

therein on behalf of the Securityholders and the Swap Counterparties;

 

(28)         with

respect to Agented Notes, the right to control the actions of and to replace

the collateral agent and/or the paying agent of the syndicated notes is by the

Note Majority;

 

(29)         with

respect to Agented Notes, all syndicated notes of the Obligor of the same

priority are cross–defaulted, the Collateral securing such notes is held by the

collateral agent for the benefit of all holders of the syndicated notes, and

all holders of such notes (a) have an undivided interest in the collateral 

 

9

 

securing such notes, (b) share in the proceeds of the sale or other

disposition of such collateral on a pro–rata basis and (c) may transfer or

assign their right, title and interest in the Collateral securing such notes;

 

(30)         with

regard to the Loan to Case Logic, the Underlying Note evidencing the Loan has

been issued in the name of the Issuer and received by the Indenture Trustee

within fifteen (15) Business Days after the Closing Date;

 

(31)         all

information in the List of Loans is true and correct;

 

(32)         all

original or certified documentation, including but not limited to the original

Underlying Notes, required to be delivered to the Indenture Trustee with

respect to such Loans has been or will be delivered on the related Assignment

Date (or, in the case of the Loan to Case Logic, within fifteen (15) Business

Days after the Closing Date);

 

(33)         immediately

prior to the transfer of the Loan, the Originator held good and indefeasible

title to and was the sole owner of the Loan being transferred to the Trust

Depositor and the Issuer, subject to no Liens or rights of others except for

Permitted Liens, and upon such transfer, the Issuer will hold good and

indefeasible title to and be the sole owner of such Loans;

 

(34)         to

the actual knowledge of the Originator, the documents signed by a Responsible

Officer of the Originator, contained in the Loan Files, do not (taken as a

whole together with the other components of the Loan File) contain any untrue

statement of material fact or omit to state a material fact necessary to make

the statements contained therein not misleading in light of the circumstances

under which they were made;

 

(35)         as

of the related assignment date, no payment related default, breach or violation

has occurred under the Underlying Note, and no event which, with the passage of

time or with notice and the expiration of any grace or cure period, would

constitute a payment related default, breach or violation;

 

(36)         all

parties executing the Underlying Note had a legal capacity to execute the

Underlying Note at the time it was executed; and

 

(37)         as

of the Initial–Cut Off Date, no Loan contained a provision obligating the

Originator to make additional fundings with respect to the Underlying Note.

 

“Eligible Obligor” means, as of any date of determination, any

Obligor that satisfies each of the following requirements at all times:

 

(1)           such

Obligor is not in the gaming, nuclear waste, bio–tech, oil and gas or real

estate industries;

 

(2)           such

Obligor is a legal operating entity, duly organized, validly existing and in

good standing under the laws of its jurisdiction of organization;

 

(3)           the

business being financed by such Obligor has an Operating History of at least

sixty (60) months from the date of its incorporation;

 

(4)           such

Obligor is not the subject of any Insolvency Event;

 

(5)           such

Obligor is not an Affiliate of any other Obligor hereto (other than as a result

of being an Affiliate of the Originator);

 

(6)           no

other Loan of such Obligor is delinquent for more than thirty (30) days;

 

(7)           such

Obligor is not a Governmental Authority;

 

10

 

(8)           such

Obligor is in compliance with all material terms and conditions of its Loan

Documents;

 

(9)           such

Obligor’s principal office and any related Collateral are located in the United

States; and

 

(10)         such

Obligor has an Eligible Risk Rating.

 

“Eligible Repurchase Obligations” means repurchase obligations

with respect to any security that is a direct obligation of, or fully

guaranteed by, the United States or any agency or instrumentality thereof, the

obligations of which are backed by the full faith and credit of the United

States, in either case entered into with a depository institution or trust

company (acting as principal) described in clauses (c)(ii) and (c)(iv)

of the definition of Eligible Investments.

 

“Eligible Risk Rating” means, on any date of determination, with

respect to a designated Obligor, a risk rating of “Grade 3” or “Grade 4.”

 

“Event of Default” shall have the meaning specified in Section 5.01

of the Indenture.

 

“Excess Loan” means, as of any date of determination, each Loan

selected by the Servicer in accordance with Section 11.01 at such

time as there shall have been discovered a breach of any of the representations

and warranties set forth in Section 3.05, the removal of which

pursuant to Section 11.01 and the Originator’s repurchase thereof

or substitution of a Substitute Loan therefor pursuant to Section 11.01

shall remedy such breach.

 

“Exchange Act” means the Securities Exchange Act of 1934, as

amended from time to time, or any successor legislation thereto.

 

“Excluded Amounts” means any collections with respect to

repurchased or substituted Loans.

 

“FDIC” shall mean the Federal Deposit Insurance Corporation, or

any successor thereto.

 

“Fee Event” shall have the meaning given to such term in the

Indenture.

 

“Fitch” means Fitch, Inc. or any successor thereto.

 

“Fixed Rate Loans” means Loans with a fixed interest rate.

 

“Fixed Rate Permitted Excess Amount” shall have the meaning

given to such term in the Indenture.

 

“Floating Rate Loans” means Loans with a floating interest rate

based on the prime interest rate plus a spread.

 

“Floating Rate Permitted Excess Amount” shall have the meaning

given to such term in the Indenture.

 

“Governmental Authority” means, with respect to any Person, any

nation or government, any state or other political subdivision thereof, any

central bank (or similar monetary or regulatory authority) thereof, any entity

exercising executive, legislative, judicial, regulatory or administrative

functions of or pertaining to government, and any court or arbitrator having

jurisdiction over such Person.

 

“Grade 2” means that, under the Originator’s loan grading

system, which ranks loans based on its analysis of the credit quality of the

underlying assets, (i) the Obligor is performing below expectations and the

loan risk has increased since origination; (ii) the Obligor may be out of

compliance with debt covenants; however,

loan payments are not more than one hundred twenty (120) days past due; and

(iii) the Originator will increase procedures to monitor the Obligor and will

write down the fair value of the loan if it is deemed to be impaired in

accordance with the Credit and Collection Policy.

 

11

 

“Grade 3” means that, under the Originator’s loan grading

system, which ranks loans based on its analysis of credit quality of the

underlying assets, the Obligor is performing as expected, the risk factors are

neutral to favorable and the Loan risk is at an acceptable level that is

similar to the risk at the time of origination.

 

“Grade 4” means that, under the Originator’s loan grading

system, which ranks loans based on its analysis of credit quality of the

underlying assets, the Obligor is performing above expectations, the trends and

risk factors are generally favorable and the Loan involves the least amount of

risk in the Originator’s portfolio.

 

“Highest Required Investment Category” means (i) with

respect to ratings assigned by Fitch (if such investment is rated by Fitch),

F–1+for short–term instruments and AAA for long–term instruments,

(ii) with respect to ratings assigned by Moody’s, A2 and P–1 for one (1)

month instruments, A1 and P–1 for three (3) month instruments, Aa3 and P–1 for

six (6) month instruments and Aaa and P–1 for instruments with a term in excess

of six (6) months, and (iii) with respect to ratings assigned by S&P,

A–1+ for short–term instruments and AAA for long–term instruments.

 

“Holder” means (i) with respect to a Certificate, the

Person in whose name such Certificate is registered in the Certificate

Register, and (ii) with respect to a Note, the Person in whose name such

Note is registered in the Note Register.

 

“Indebtedness” means, with respect to any Person at any date,

(a) all indebtedness of such Person for borrowed money or for the deferred

purchase price of property or services (other than current liabilities incurred

in the ordinary course of business and payable in accordance with customary

trade practices) or which is evidenced by a note, bond, debenture or similar

instrument, (b) all obligations of such Person under capital leases,

(c) all obligations of such Person in respect of acceptances issued or

created for the account of such Person, and (d) all liabilities secured by

any Lien on any property owned by such Person even though such Person has not

assumed or otherwise become liable for the payment thereof.

 

“Indenture” means the Indenture, dated as of the date hereof,

between the Issuer and the Indenture Trustee, as amended, modified, restated,

replaced, waived, substituted, supplemented or extended from time to time.

 

“Indenture Collateral” has the meaning given to such term in the

“granting clause” of the Indenture.

 

“Indenture Trustee” means the Person acting as Indenture Trustee

under the Indenture, its successors in interest and any successor trustee under

the Indenture.

 

“Indenture Trustee Fee” has the meaning given to such term in

the fee letter, dated as of the date hereof, among the Originator, the Trust

Depositor, the Issuer and the Indenture Trustee, as amended, modified,

restated, replaced, waived, substituted, supplemented or extended from time to

time.

 

“Independent” means, when used with respect to any specified

Person, a Person who (i) is in fact independent of each of the Issuer, the

Trust Depositor or ACAS, (ii) is not a director, officer or employee of

any Affiliate of any of the Issuer, the Trust Depositor or ACAS, (iii) is

not a Person related to any officer or director of any of the Issuer, the Trust

Depositor or ACAS or any of their respective Affiliates, (iv) is not a

holder (directly or indirectly) of more than 10% of any voting securities of

any of the Issuer, the Trust Depositor or ACAS or any of their respective

Affiliates, and (v) is not connected with any of the Issuer, the Trust Depositor

or ACAS as an officer, employee, promoter, underwriter, trustee, partner,

director or Person performing similar functions; provided, however,

a Person that otherwise satisfies the requirements of clauses (i)

through (v), but is a director, officer or manager of a bankruptcy

remote special purpose Affiliate of ACAS, will be deemed to be Independent for

purposes hereof.

 

“Independent Accountants” has the meaning given to such term in subsection 9.04(a).

 

“Ineligible Loan” has the meaning given to such term in Section 11.01

and includes such Loans described in subsection 12.05(b).

 

“Initial Aggregate Outstanding Loan Balance” means the Aggregate

Outstanding Loan Balance as of the Initial Cut–Off Date of the Loans

transferred to the Issuer as of the Closing Date.

 

12

 

“Initial Aggregate Outstanding Principal Balance” means, when

used in the context of a reference to an individual Class of Notes, the

initial class principal balance applicable to such Class, and otherwise means,

collectively, the sum of the Initial Class A Principal Balance, the

Initial Class B Principal Balance and the Initial Class C Principal

Balance, i.e., $196,397,068.03.

 

“Initial Class A Principal Balance” means $98,198,000.00.

 

“Initial Class B Principal Balance” means $49,099,000.00.

 

“Initial Class C Principal Balance” means $49,100,068.03.

 

“Initial Cut–Off Date” means February 10, 2002.

 

“Initial Loans” means those Loans conveyed to the Issuer on the

Closing Date and identified on the initial List of Loans required to be

delivered pursuant to subsection 2.02(iv).

 

“Initial Purchaser” means First Union Securities, Inc.

 

“Insolvency Event” means, with respect to a specified Person,

(a) the filing of a decree or order for relief by a court having

jurisdiction in the premises in respect of such Person or any substantial part

of its property in an involuntary case under any applicable Insolvency Law now

or hereafter in effect, or appointing a receiver, liquidator, assignee,

custodian, trustee, sequestrator or similar official for such Person or for any

substantial part of its property, or ordering the winding–up or liquidation of

such Person’s affairs, and such decree or order shall remain unstayed or

undismissed and in effect for a period of sixty (60) consecutive days; or

(b) the commencement by such Person of a voluntary case under any

applicable Insolvency Law now or hereafter in effect, or the consent by such

Person to the entry of an order for relief in an involuntary case under such

law, taking possession by a receiver, liquidator, assignee, custodian, trustee,

sequestrator or similar official for such Person or for any substantial part of

this property, or the making by such Person of any general assignment for the

benefit of creditors, or the failure by such Person generally to pay its debts

as such debts become due, or the taking of action by such Person in furtherance

of any of the foregoing.

 

“Insolvency Laws” means the Bankruptcy Code of the United States

and all other applicable liquidation, conservatorship, bankruptcy, moratorium,

rearrangement, receivership, insolvency, reorganization, suspension of payments

or similar debtor relief laws from time to time in effect affecting the rights

of creditors generally.

 

“Insolvency Proceeds” has the meaning given to such term in Section 10.01.

 

“Insurance Policy” means, with respect to any Loan, an insurance

policy covering physical damage to or loss of the related Collateral, and any

other insurance policies relating to such Loan, including but not limited to

title, property, hazard, liability, life and/or accident insurance policies.

 

“Insurance Proceeds” means, depending on the context, any

amounts payable or any payments made under any Insurance Policy covering a Loan

or the Collateral.

 

“Interest Accrual Period” means the period from and including

the most recent Payment Date to but excluding the following Payment Date; provided, that, the initial Interest Accrual

Period following the Closing Date shall be the period from and including the

Closing Date to but excluding the first Payment Date following the Closing

Date.

 

“Interest Collection Account” means a sub–account of the

Collection Account established pursuant to Section 7.01.

 

“Interest Collections” mean, with respect to any Collection

Period, the aggregate amount of (i) the payments received by the Servicer

on the Loans attributable to interest on such Loans, including payments of

capitalized interest with respect to Deferred Interest Loans and all Late

Charges and default and waiver charges, (ii) all Liquidation Proceeds on

Defaulted Loans whether attributable to interest or principal, (iii) any

Net Trust Swap Receipts and Swap Breakage Receipts and (iv) the interest

portion of all Prepayments.

 

13

 

“Internal Revenue Code” means the Internal Revenue Code of 1986,

as amended from time to time, or any successor legislation thereto.

 

“Investment Earnings” means the investment earnings (net of

losses and investment expenses) on amounts on deposit in the Trust Accounts to

be credited to the Collection Account on the applicable Payment Date pursuant

to Section 7.03.

 

“Issuer” means the trust created by the Trust Agreement and

funded pursuant to this Agreement, consisting primarily of the Loan Assets.

 

“Late Charges” means any late payment fees paid by Obligors in

accordance with the Servicer’s Credit and Collection Policy.

 

“Legal Final Maturity Date” has the meaning given to such term

in the Indenture.

 

“LIBOR” means, as to any Payment Date, the London interbank

offered rate for one (1) month Eurodollar deposits, as determined by the

Indenture Trustee on the related Determination Date, in accordance with Section 7.06.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation,

assignment, deposit arrangement, encumbrance, lien (statutory or other), equity

interest, participation interest, preference, priority or other security

agreement or preferential arrangement of any kind or nature whatsoever,

including, without limitation, any conditional sale or other title retention

agreement, and any financing lease having substantially the same economic

effect as any of the foregoing.

 

“Liquidation Expenses” means, with respect to any Loan, the

aggregate amount of all out–of–pocket expenses reasonably incurred by the

Servicer (including amounts paid to any subservicer) and any reasonably

allocated costs of internal counsel, in each case in accordance with the

Servicer’s Credit and Collection Policy in connection with the foreclosure and

disposition of any related Collateral or the bankruptcy of an Obligor upon or

after the expiration or earlier termination or acceleration of such Loan, and

other out–of–pocket costs related to the liquidation of any such Collateral,

including the attempted collection of any amount owing pursuant to such Loan if

it is a Defaulted Loan, but only to the extent gross recoveries with respect to

such Loan provide funds sufficient, after payment of all principal and accrued

finance charges due with respect to such Loan, to cover such expenses and

costs; provided, however,

to the extent any such “Liquidation Expenses” relate to any Loan with a

Retained Interest, such expenses shall be allocated pro–rata to such Loan based

on the Outstanding Loan Balance of such Loan included in the Loan Pool and the

outstanding loan balance of the Retained Interest.

 

“Liquidation Proceeds” means, with respect to a Defaulted Loan,

proceeds from the sale of the Collateral, Insurance Proceeds and any other

recoveries with respect to such Defaulted Loan and the related Collateral, net

of Liquidation Expenses and amounts, if any, so received that are required

either to be refunded to the Obligor on such Loan or paid to a third party.

 

“List of Loans” means the list identifying each Loan constituting

part of the Loan Assets, which list shall consist of the initial List of Loans

reflecting the Initial Loans transferred to the Issuer on the Closing Date,

together with any Subsequent List of Loans amending the most current List of

Loans reflecting the Substitute Loans transferred to the Issuer on the related

Subsequent Transfer Date (together with a deletion from such list of the

related Loan or Loans identified on the corresponding Addition Notice with

respect to which a Substitution Event has occurred), and (1) which list in

each case (a) identifies by account number and Obligor name each Loan

included in the Loan Pool, and (b) sets forth as to each such Loan

(i) the Outstanding Loan Balance as of the applicable Cut–Off Date, and (ii) the

maturity date, and (2) which list (as in effect on the Closing Date) is

attached to this Agreement as Exhibit G.

 

“Loan” means the payment obligations of each Obligor to the

Originator under senior or subordinated loans created under the related Loan

Documents and evidenced by an Underlying Note, transferred by the Originator to

the Trust Depositor and by the Trust Depositor to the Issuer, and including

both Initial Loans and Substitute Loans.

 

“Loan Assets” has the meaning given to such term in subsection 2.01(b)

hereof (and in subsection 2.04(a) hereof in respect of Substitute

Loans and related assets transferred to the Issuer pursuant to Subsequent

Transfer Agreements).

 

14

 

“Loan Documents” means, with respect to any Loan, the related

Underlying Note and any related loan agreement, security agreement, note

purchase agreement (if applicable), intercreditor and/or subordination

agreement (if applicable), mortgage, assignment of Loans, all guarantees and

UCC financing statements and continuation statements (including amendments or

modifications thereof) executed by the Obligor thereof or by another Person on

the Obligor’s behalf in respect of such Loan and the related Underlying Note,

and for each Loan secured by real property, an Assignment of Mortgage

(excluding the Loan to Cycle Gear), and for all Loans secured by an Underlying

Note, an assignment in blank signed by an officer of the Originator.

 

“Loan File” means, with respect to each Loan, the Loan

Documents, and such other documents, if any, that the Servicer keeps on file in

accordance with its Credit and Collection Policy and all other documents

originally delivered to the Originator or held by the Servicer with respect to

any Loan; provided, that, all documents, other than the

Underlying Note along with any assignment (which may be by allonge),

constituting the Loan File may be copies of such documents.

 

“Loan Pool” means, as of any date of determination, the Initial

Loans and the Substitute Loans (if any), other than any such Loans that

(i) have been reconveyed by the Issuer to the Trust Depositor, and

concurrently by the Trust Depositor to the Originator, pursuant to Section 11.02

hereof, or (ii) have been paid (or prepaid) in full.

 

“London Banking Day” means any day on which dealings in deposits

in United States dollars are transacted in the London interbank market.

 

“Marcal” means Marcal Paper Mills, Inc.

 

“Materially Modified Loan” means a Loan that has been

terminated, released (including pursuant to prepayment), amended, modified,

waived or subject to an equivalent similar undertaking or agreement by the

Servicer which is not permitted under the standards and criteria set forth in Sections 5.08

and/or 5.09 hereof, as applicable.

 

“Maturity Date” means, as applicable, the Class A Expected

Maturity Date, the Class B Expected Maturity Date or the Class C

Expected Maturity Date.

 

“Monthly Report” has the meaning given to such term in Section 9.01.

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor

thereto.

 

“Net Trust Swap Payments” means, with respect to each Payment

Date, the excess, if any, of (i) the payments required to be made on such

date by the Issuer to the Swap Counterparties under Section 2(a) of each

Swap over (ii) the payments required to be made on such date by the Swap

Counterparties to the Issuer under Section 2(a) of each Swap, together

with any interest thereon.

 

“Net Trust Swap Receipts” means, with respect to each Payment

Date, the excess, if any, of (i) the payments required to be made on such

date by the Swap Counterparties to the Issuer under Section 2(a) of each

Swap over (ii) the payments required to be made on such date by the Issuer to

the Swap Counterparties under Section 2(a) of each Swap, together with

any interest thereon.

 

“New York Business Day” means any Business Day in the city of

New York, New York.

 

“Note” means any one of the notes of the Issuer of any

Class executed and authenticated in accordance with the Indenture.

 

“Note Distribution Account” means the account established and

maintained as such pursuant to Section 7.01.

 

“Note Register” has the meaning given to such term in Section 2.04

of the Indenture.

 

“Note Majority” means, with respect to Agented Notes, the

holders of the notes evidencing not less than 66 2/3% of the outstanding amount

of all such notes of the Obligor.

 

15

 

“Obligor” means, with respect to any Loan, the Person or Persons

obligated to make payments with respect to such Loan, including any guarantor thereof.

 

“Officer’s Certificate” shall mean a certificate signed by any

officer of the Trust Depositor or the Servicer and delivered to the Owner

Trustee or the Indenture Trustee, as the case may be.

 

“Omnova” means Omnova Solutions, Inc.

 

“One–Month Index Maturity” has the meaning given to such term in

Section 7.06.

 

“Operating History” means, with respect to any specified Person,

the time since the date of such Person’s incorporation that it has continuously

operated its business; provided,

however, the Operating

History of any Person newly formed as a result of a merger of two or more

Persons or as a result of the acquisition of one or more Persons by a newly

formed Person (“Merged Parties”) shall be based on the weighted average

(by relative sales) of the Operating Histories of the Merged Parties (excluding

for such purposes, entities that are created only for the purpose of being

acquisition entities); for  example, if Corporation A, with sales

of $10 million, has an Operating History of 4 years, and Corporation B, with

sales of $20 million, has an Operating History of 8 years, merge to form

“NEWCO”, the Operating History of NEWCO will be 6.67 years.

 

“Opinion of Counsel” means a written opinion of counsel, who may

be outside counsel, or internal counsel (except with respect to federal

securities law (including the Trust Indenture Act) or tax law matters), for the

Trust Depositor or the Servicer and who shall be reasonably acceptable to the

Owner Trustee or the Indenture Trustee, as the case may be.

 

“Originator” has the meaning given to such term in the Preamble.

 

“Other Assets” has the meaning given to such term in subsection 13.09(b).

 

“Outstanding” has the meaning given to such term in the

Indenture.

 

“Outstanding Loan Balance” means, with respect to a Loan, as of

any date of determination, the sum of the total remaining amounts of principal

payable as of such time by the Obligor thereunder, exclusive of (a) interest

payments and (b) capitalized interest amounts, it being understood that any

principal previously covered by a Servicer Advance will be excluded from

principal amounts payable for purposes of this definition.

 

“Outstanding Principal Balance” means, with respect to any Class

of Notes, as of any date of determination, the aggregate initial principal

amount thereof, plus, in the case of the Class B Notes only, the capitalized

interest from the Class B Accrued Payable, as reduced by the aggregate amount

of any distributions applied in reduction of such principal amount.

 

“Owner Trustee” means the Person acting, not in its individual

capacity, but solely as Owner Trustee, under the Trust Agreement, its

successors in interest and any successor owner trustee under the Trust

Agreement.

 

“Owner Trustee Fee” has the meaning given to such term in the

fee letter, dated as of the date hereof, among the Owner Trustee, the Trust

Depositor, the Originator and the Issuer, as amended, modified, restated,

replaced, waived, substituted, supplemented or extended from time to time.

 

“Paying Agent” has the meaning given to such term in Section 3.03

of the Indenture and Section 3.10 of the Trust Agreement.

 

“Payment Date” shall mean the 20th day of each calendar month

or, if such 20th day is not a Business Day, the next succeeding Business Day,

with the first such Payment Date hereunder occurring in March, 2002.

 

“Permitted Liens” means:

 

16

 

(a)           with respect to

Loans in the Loan Pool:

 

(i)            Liens

in favor of the Trust Depositor created pursuant to the ACAS Transfer Agreement

and transferred to the Issuer pursuant hereto;

 

(ii)           Liens

in favor of the Issuer created pursuant to this Agreement; and

 

(iii)          Liens

in favor of the Indenture Trustee created pursuant to the Indenture and/or this

Agreement; and

 

(b)           with respect to the

interest of the Originator, the Trust Depositor and the Issuer in the related

Collateral:

 

(i)            materialmen’s,

warehousemen’s, mechanics’ and other Liens arising by operation of law in the

ordinary course of business for sums not due or sums that are being contested

in good faith;

 

(ii)           Liens

for state, municipal and other local taxes if such taxes shall not at the time

be due and payable or if the Trust Depositor shall currently be contesting the

validity thereof in good faith by appropriate proceedings;

 

(iii)          Liens

in favor of the Trust Depositor created, and transferred by the Trust Depositor

to the Issuer, pursuant to the ACAS Transfer Agreement and this Agreement;

 

(iv)          Liens

in favor of the Issuer created pursuant to this Agreement;

 

(v)           Liens

in favor of the Indenture Trustee created pursuant to the Indenture and/or this

Agreement;

 

(vi)          purchase

money security interests in equipment and Liens held by senior lenders with

respect to any subordinated Loans listed on Exhibit L; and

 

(vii)         with

respect to Agented Notes, Liens in favor of the collateral agent on behalf of

all noteholders of the related Obligor.

 

“Person” means any individual, corporation, estate, partnership,

business trust, limited liability company, sole proprietorship, joint venture,

association, joint stock company, trust (including any beneficiary thereof),

unincorporated organization, government, agency or political subdivision

thereof, or any other entity.

 

“Prepaid Loan” means any Loan that has terminated or been

prepaid in full prior to its scheduled expiration date, other than a Defaulted

Loan.

 

“Piper Aircraft” means New Piper Aircraft, Inc.

 

“Prepayment” means any and all (i) partial and full

prepayments, including any Prepayment Premiums, on a Loan (including, with

respect to any Loan and any Collection Period), (ii) any Scheduled Payment

(or portion thereof) that is due in a subsequent Collection Period that the

Servicer has received (and to the extent permission therefor was necessary,

expressly permitted the related Obligor to make) in advance of its scheduled

due date, (iii) Liquidation Proceeds and (iv) amounts received in

respect of Transfer Deposit Amounts.

 

“Prepayment Amount” has the meaning given to such term in Section 5.09.

 

“Prepayment Premiums” means any prepayment premiums paid by an

Obligor in connection with any Prepayment.

 

“Principal Collection Account” means a sub–account of the

Collection Account established pursuant to Section 7.01.

 

17

 

“Principal Collections” means, with respect to any Collection

Period, the sum of, without duplication: 

(i) the aggregate amount of payments received by the Servicer on the

Loans attributable to principal on such Loans; (ii) the principal portion of

any Loan repurchased by the Originator; (iii) the principal portion of all

Prepayments and (iv) all other amounts received with respect to the Loans that

are not Interest Collections.

 

“Private Placement Memorandum” has the meaning given to such

term in the Purchase Agreement.

 

“Purchase Agreement” means the Purchase Agreement, dated as of

March 15, 2002, among the Initial Purchaser, the Trust Depositor, the Issuer

and ACAS, as amended, modified, restated, replaced, waived, substituted,

supplemented or extended from time to time.

 

“Qualified Eligible Investments” means Eligible Investments

acquired by the Indenture Trustee in its name and in its capacity as Indenture

Trustee at the written direction of the Issuer, which are held by the Indenture

Trustee in the Collection Account or the Reserve Fund and with respect to which

(a) the Indenture Trustee has noted its interest therein on its books and

records, and (b) the Indenture Trustee has purchased such investments at

the written direction of the Issuer for value without notice of any adverse

claim thereto (and, if such investments are securities or other financial

assets or interests therein, within the meaning of Section 8–102 of the

UCC as enacted in Minnesota, without acting in collusion with a securities

intermediary in violating such securities intermediary’s obligations to

entitlement holders in such assets, under Section 8–504 of such UCC, to

maintain a sufficient quantity of such assets in favor of such entitlement

holders), and (c) either (i) such investments are in the possession of

the Indenture Trustee, or (ii) such investments, (A) if certificated

securities and in bearer form, have been delivered to the Indenture Trustee, or

in registered form, have been delivered to the Indenture Trustee and either

registered by the issuer in the name of the Indenture Trustee or endorsed by

effective endorsement to the Indenture Trustee or in blank; (B) if

uncertificated securities, the ownership of which has been registered to the

Indenture Trustee on the books of the issuer thereof (or another Person, other

than a securities intermediary, either becomes the registered owner of the

uncertified security on behalf of the Indenture Trustee or, having previously

become the registered owner, acknowledges that it holds for the Indenture

Trustee); or (C) if securities entitlements (within the meaning of

Section 8 – 102 of the UCC as enacted in Minnesota) representing

interests in securities or other financial assets (or interests therein) held

by a securities intermediary (within the meaning of said Section 8–102), a

securities intermediary indicates by book entry that a security or other

financial asset has been credited to the Indenture Trustee’s securities account

with such securities intermediary.  Any

such Qualified Eligible Investment may be purchased by or through the Indenture

Trustee or any of its Affiliates acting at the written direction of the Issuer.

 

“Qualified Institution” means (a) the corporate trust

department of the Indenture Trustee, or (b) a depository institution

organized under the laws of the United States or any one of the states thereof

or the District of Columbia (or any domestic branch of a foreign bank),

(i) (A) that has either (1) a long–term unsecured debt rating

acceptable to the Rating Agencies, which, in the case of S&P, shall be

“AA–”, and in the case of Fitch, shall be “AAA” or (2) a short–term

unsecured debt rating or certificate of deposit rating acceptable to the Rating

Agencies, which, in the case of S&P, shall be “A–1+”, and in the case of

Fitch, shall be “F–1+”, (B) the parent corporation, if such parent

corporation guarantees the obligations of the depository institution, of which

has either (1) a long–term unsecured debt rating acceptable to the Rating

Agencies, which, in the case of S&P, shall be “AA–”, and in the case of

Fitch, shall be “AAA” or (2) a short–term unsecured debt rating or certificate

of deposit rating acceptable to the Rating Agencies, which, in the case of

S&P, shall be “A–1+”, and in the case of Fitch, shall be “F–1+” or

(C) otherwise satisfies the Rating Agency Condition, and (ii) whose

deposits are insured by the FDIC and satisfies the Rating Agency Condition.

 

“Qualified Swap Counterparty” has the meaning given to such term

in the Indenture.

 

“Rating Agency” means each of S&P, Moody’s and Fitch, so

long as such Persons maintain a rating on the Class A Notes and the Class B

Notes; and if any of S&P, Moody’s or Fitch no longer maintains a rating on

the Class A Notes and the Class B Notes, such other nationally recognized

statistical rating organization selected by the Trust Depositor.

 

“Rating Agency Condition” means, with respect to any action or

series of related actions or proposed transaction or series of related proposed

transactions, that each Rating Agency shall have notified the Trust Depositor,

the Owner

 

18

 

Trustee and the Indenture Trustee in writing that such action or series

of related actions or the consummation of such proposed transaction or series

of related transactions will not result in a Ratings Effect.

 

“Ratings Effect” means, with respect to any action or series of

related actions or proposed transaction or series of related proposed

transactions, a reduction or withdrawal of the rating of any outstanding

Class with respect to which a Rating Agency has previously issued a rating

as a result of such action or series of related actions or the consummation of

such proposed transaction or series of related transactions.

 

“Record Date” means, with respect to a Payment Date, (i) for book–entry

Notes, the calendar day immediately preceding a Payment Date and (ii) if

definitive Notes are issued and for the Class C Notes, the last Business Day of

the preceding calendar month.

 

“Reference Banks” means leading banks selected by the Indenture

Trustee and engaged in transactions in Eurodollar deposits in the international

Eurocurrency market.

 

“Released Amounts” means, with respect to any payment or

collection received with respect to any Loan on any Business Day (whether such

payment or collection is received by the Servicer, the Owner Trustee or the

Trust Depositor), an amount equal to that portion of such payment or collection

constituting Excluded Amounts or Retained Interest.

 

“Representative Amount” means an amount that is representative for

a single transaction in the relevant market at the relevant time.

 

“Required Holders” means (i) prior to the payment in full

of the Class A Notes and the Class B Notes, the Class A Noteholders

and Class B Noteholders evidencing more than 66 2/3% of the aggregate

Outstanding Principal Balance of all Class A Notes and Class B Notes

outstanding and (ii) from and after the payment in full of the Class A

Notes and the Class B Notes, Class C Noteholders evidencing more than

66 2/3% of the aggregate Outstanding Principal Balance of all Class C

Notes outstanding.

 

“Required Reserve Amount” means, with respect to any Payment

Date, an amount equal to the sum of (i) the Outstanding Loan Balance of

all Delinquent Loans and (ii) three (3) times the sum of the Class A Interest

Amount and Class B Interest Amount due on the next Payment Date.

 

“Requirements of Law” for any Person means the certificate of

incorporation or articles of association and by–laws or other organizational or

governing documents of such Person, and any law, treaty, rule, regulation, or

order or determination of an arbitrator or Governmental Authority, in each case

applicable to or binding upon such Person or to which such Person is subject,

whether Federal, state or local (including, without limitation, usury laws, the

Federal Truth in Lending Act and Regulation Z and Regulation B of the

Board of Governors of the Federal Reserve System).

 

“Reserve Fund” means the Reserve Fund established and maintained

pursuant to Section 7.01 hereof.

 

“Reserve Fund Initial Deposit” means the product of (a) the sum

of the Outstanding Principal Balance of the Class A Notes and Class B Notes as

of the Closing Date, (b) the weighted average interest rate of the Class A

Interest Rate and the Class B Interest Rate in effect for the initial Interest

Accrual Period (weighted by the Outstanding Principal Balance of each of the

Class A Notes and Class B Notes) and (c) the quotient of 90 divided

by 360.

 

“Responsible Officer” means, with respect to the Owner Trustee,

any officer in its Corporate Trust Administration Department (or any similar

group of a successor Owner Trustee), and with respect to the Indenture Trustee,

has the meaning given to such term in the Indenture.

 

“Retained Interest” means, for each Loan, the following interests,

rights and obligations in such Loan and under the associated Loan Documents,

which are being retained by the Originator: 

(i) all of the obligations, if any, to provide additional funding

with respect to such Loan, (ii) all of the rights and obligations, if any,

of the agent(s) under the documentation evidencing such Loan, (iii) the

applicable portion of the interests, rights and obligations under the

documentation evidencing such Loan that relate to such portion(s) of the

indebtedness that is owned by another

 

19

 

lender or is being retained by the Originator, (iv) any unused,

commitment or similar fees associated with the additional funding obligations

that are not being transferred in accordance with clause (i) of this

definition, (v) any agency or similar fees associated with the rights and

obligations of the agent that are not being transferred in accordance with clause

(ii) of this definition, (vi) any advisory, consulting or similar fees due

from the Obligor associated with services provided by the agent that are not

being transferred in accordance with clause (ii) of this definition, and

(vii) any and all warrants, options, and other equity instruments issued in the

name of the Originator or its Affiliates in connection with or relating to any

Loan.

 

“S&P” means Standard & Poor’s Ratings Services, a

division of The McGraw–Hill Companies, Inc.

 

“Scheduled Payment” means, with respect to any Loan, the

monthly, quarterly, semi–annual or annual financing (whether interest,

principal or principal and interest) payment scheduled to be made by the

related Obligor under the terms of such Loan on and after the related Cut–Off

Date and any such payment received after the related Cut–Off Date, it being understood

that Scheduled Payments do not include any Excluded Amounts.

 

“Securities” means the Notes and the Certificate, or any of

them.

 

“Securities Act” means the Securities Act of 1933, as amended

from time to time, or any successor legislation thereto.

 

“Securityholders” means the Holders of the Notes or the

Certificate.

 

“Servicer” means initially ACAS, or its successor; after any

Servicer Transfer hereunder, means the Successor Servicer appointed pursuant to

Article VIII with respect to the duties and obligations required of

the Servicer under this Agreement.

 

“Servicer Advance” means, with respect to any Payment Date, the

amounts, if any, deposited by the Servicer in the Collection Account for such

Payment Date in respect of Scheduled Payments pursuant to Section 5.14.

 

“Servicer Default” shall have the meaning given to such term in Section 8.01.

 

“Servicing Fee” has the meaning given to such term in Section 5.18.

 

“Servicing Fee Percentage” means 1.00%.

 

“Servicer Transfer” has the meaning given to such term in subsection 8.02(b).

 

“Servicing Officer” means any officer of the Servicer involved

in, or responsible for, the administration and servicing of Loans whose name

appears on a list of servicing officers appearing in an Officer’s Certificate

furnished to the Indenture Trustee by the Servicer, as the same may be amended

from time to time.

 

“Solvent” means, as to any Person at any time, that (a) the

fair value of the property of such Person is greater than the amount of such

Person’s liabilities (including disputed, contingent and unliquidated

liabilities), as such value is established and liabilities evaluated for

purposes of Section 101(32) of the Bankruptcy Code; (b) such Person

is able to realize upon its property and pay its debts and other liabilities

(including disputed, contingent and unliquidated liabilities) as they mature in

the normal course of business; (c) such Person does not intend to, and

does not believe that it will, incur debts or liabilities beyond such Person’s

ability to pay as such debts and liabilities mature; and (d) such Person

is not engaged in business or a transaction, and is not about to engage in a

business or a transaction, for which such Person’s property would constitute

unreasonably small capital.

 

“Subsequent Cut–Off Date” means the date specified as such for

Substitute Loans in the related Subsequent Transfer Agreement.

 

“Subsequent List of Loans” means a list, in the form of the

initial List of Loans delivered on the Closing Date, but listing each

Substitute Loan transferred to the Issuer pursuant to the related Subsequent

Transfer Agreement.

 

20

 

“Subsequent Purchase Agreement” means, with respect to any

Substitute Loans, the agreement between the Originator and the Trust Depositor

pursuant to which the Originator will transfer the Substitute Loans to the

Trust Depositor, the form of which is attached to hereto as Exhibit J.

 

“Subsequent Transfer Agreement” means the agreement described in

Section 2.04 hereof, the form of which is attached hereto as Exhibit I.

 

“Subsequent Transfer Date” means any date on which Substitute

Loans are transferred to the Issuer.

 

“Substitute Loan” means a Loan that is (a) transferred to

the Issuer under Section 2.04 with respect to which a related

Substitution Event has occurred with respect to a Loan or Loans then held in

the Loan Pool and identified in the related Addition Notice and

(b) becomes part of the Loan Pool.

 

“Substitute Loan Qualification Conditions” means, with respect

to any Substitute Loan being transferred to the Issuer pursuant to Section 2.04,

the accuracy of each of the following statements as of the related Cut–Off Date

for such Loan:

 

(a)           the Outstanding Loan

Balance of such Substitute Loan is not less than that of the Loan identified on

the related Addition Notice as the Loan to be reassigned by the Issuer to the

Trust Depositor and reconveyed to the Originator in exchange for such

Substitute Loan;

 

(b)           the remaining

maturity of the Substitute Loan is less than or equal to the remaining maturity

of the Loan identified on the related Addition Notice as the Loan to be

reassigned by the Issuer to the Trust Depositor and reconveyed to the

Originator in exchange for such Substitute Loan;

 

(c)           the current interest

rate on such Substitute Loan is not less than the current interest rate on the

Loan identified on the related Addition Notice as the Loan to be reassigned by

the Issuer to the Trust Depositor and reconveyed to the Originator in exchange

for such Substitute Loan;

 

(d)           the total interest

rate (inclusive of any deferred interest component) of the Substitute Loan is

greater than or equal to the total interest rate on the Loan identified on the

related Addition Notice as the Loan to be reassigned by the Issuer to the Trust

Depositor and reconveyed to the Originator in exchange for such Substitute

Loan;

 

(e)           the Obligor of such

Substitute Loan is not already an Obligor of any Loan owned by the Issuer;

 

(f)            no adverse

selection procedure shall have been employed in the selection of such

Substitute Loan from the Originator’s portfolio;

 

(g)           all actions or

additional actions (if any) necessary to perfect the security interest and

assignment of such Substitute Loan and related Collateral to the Trust

Depositor, the Issuer, and the Indenture Trustee shall have been taken as of or

prior to the Subsequent Transfer Date;

 

(h)           the maturity date

for the last Scheduled Payment due under such Substitute Loan is not later than

June 20, 2012;

 

(i)            the weighted

average life of such Loan is less than or equal to the Loan being replaced;

 

(j)            for Prepaid Loans

only, prior to such substitution the Originator has received written

confirmation from the Rating Agencies (which shall respond to the Originator

within five (5) Business Days after receiving written confirmation from the

Originator of its intention to substitute a Loan) that the proposed

substitution will not result in a Ratings Effect; provided, however,

that any failure by each of the Rating Agencies to respond to the Originator

shall be deemed to be non–approval by the Rating Agencies; provided, further, however, only notice to, and not confirmation from,

Fitch shall be required; and

 

(k)           the Eligible Risk

Rating of the Substitute Loan is equal to or higher than the Loan being

replaced.

 

21

 

“Substitution Event” shall have occurred if a Loan then held by

the Issuer and identified in the related Addition Notice is either (a) a

Prepaid Loan, (b) a Defaulted Loan, (c) a Loan that has a covenant default,

(d) a Materially Modified Loan, (e) an Excess Loan or (f) the

subject of a breach of a representation or warranty under this Agreement or

other provision, which breach or other provision, in the absence of the

substitution of a Substitute Loan for such Loan pursuant to Section 2.04,

would require the payment of the Transfer Deposit Amount to the Issuer in

respect of such Loan pursuant to Section 11.01; provided, however, that no Substitution Event

shall be permitted under clauses (a) – (d) to the extent

Substitute Loans having an aggregate Outstanding Loan Balance as of the date of

substitution of greater than 20% of the Initial Aggregate Outstanding Loan

Balance have previously been substituted under such clauses.

 

“Successor Backup Servicer” has the meaning given to such term

in subsection 5.25(a).

 

“Successor Servicer” has the meaning given to such term in subsection 8.02(b).

 

“Swap” has the meaning given to such term in the Indenture.

 

“Swap Breakage Costs” means, for any Swap Transaction, any amount

(other than Net Trust Swap Payments applicable thereto) payable by the Issuer

for the early termination of that Swap Transaction or any portion thereof.

 

“Swap Breakage Receipts” means, for any Swap Transaction, any

amount (other than Net Trust Swap Receipts applicable thereto) payable to the

Issuer for the early termination of that Swap Transaction or any portion

thereof.

 

“Swap Counterparty” has the meaning given to such term in the

Indenture.

 

“Swap Guarantor” means ACAS.

 

“Swap Guaranty Requirements” has the meaning given to such term

in Section 14.01.

 

“Swap Transaction” means each interest rate swap transaction

between the Issuer and a Swap Counterparty that is governed by a Swap.

 

“Tape” has the meaning given to such term in subsection 5.22(b)(ii).

 

“Tax Opinion” means, with respect to any action, an Opinion of

Counsel to the effect that, for federal income tax purposes, (i) following

such action the Issuer will not be deemed to be an association, taxable

mortgage pool, or publicly traded partnership taxable as a corporation, and

(ii) such action will not affect the tax characterization as debt of the

Class A Notes and the Class B Notes or any outstanding Class issued by the

Issuer for which an Opinion of Counsel has been provided that such Notes are

debt.

 

“Telerate Page 3750” means the display page currently so

designated on the Dow Jones Telerate Service (or such other page as may replace

that page on that service for the purpose of displaying comparable rates or

prices).

 

“Transaction Documents” means this Agreement, the Indenture, the

Trust Agreement, the Administration Agreement, the ACAS Transfer Agreement, any

Subsequent Transfer Agreement, any Subsequent Purchase Agreement, the Purchase

Agreement, any Swap, and all documents executed in connection with, or

identified as “Transaction Documents” in, any of the foregoing documents, all

as the same are amended, modified, restated, replaced, waived, substituted,

supplemented or extended from time to time.

 

“Transfer Date” means the Business Day immediately preceding

each Payment Date.

 

“Transfer Deposit Amount” means, with respect to each Ineligible

Loan or Excess Loan, on any date of determination, the sum of the Outstanding

Loan Balance of such Loan, together with accrued interest thereon through such

date of determination at the interest rate provided for thereunder, and any

outstanding Servicer Advances thereon reimbursement of which has not been

waived by the Servicer entitled thereto.

 

22

 

“Trust Account Property” means the Trust Accounts, all amounts

and investments held from time to time in any Trust Account (whether in the

form of deposit accounts, physical property, book–entry securities,

uncertificated securities or otherwise), including, without limitation, the

Reserve Fund Initial Deposit, and all proceeds of the foregoing.

 

“Trust Accounts” means, collectively, the Collection Account

(including the Interest Collection Account and Principal Collection Account),

the Reserve Fund, the Note Distribution Account and the Certificate

Distribution Account, or any of them.

 

“Trust Agreement” means the Trust Agreement, dated as of March

1, 2002, between the Trust Depositor and the Owner Trustee, as amended,

modified, restated, replaced, waived, substituted, supplemented or extended

from time to time.

 

“Trust Depositor” has the meaning given to such term in the Preamble,

or any successor entity thereto.

 

“Trust Estate” shall have the meaning given to such term in the

Trust Agreement.

 

“Trustees” means the Owner Trustee and the Indenture Trustee, or

any of them individually as the context may require.

 

“UCC” means the Uniform Commercial Code, as amended from time to

time, as in effect in the applicable jurisdiction.

 

“UCC Filing Locations” means the State of Delaware.

 

“Uncollectible Advance” means, with respect to any Determination

Date and any Loan, the amount, if any, advanced by the Servicer pursuant to Section 5.14

which the Servicer has, as of such Determination Date, determined in good faith

will not be ultimately recoverable by the Servicer.

 

“Underlying Note” means the promissory note of an Obligor

evidencing a Loan.

 

“United States” means the United States of America.

 

“Unreimbursed Servicer Advances” means, at any time, the amount

of all previous Servicer Advances (or portions thereof) as to which the

Servicer has not been reimbursed as of such time pursuant to Sections 7.01

or 7.05 and which the Servicer has determined in its sole discretion are

Uncollectible Advances, and with respect to which the Servicer has given a

written certification to such effect to each Trustee.

 

“USD–LIBOR–Reference Banks” has the meaning given to such term

in subsection 7.06(a).

 

“Vice President” of any Person means any vice president of such

Person, whether or not designated by a number or words before or after the

title “Vice President,” who is a duly elected officer of such Person in such

capacity.

 

Section 1.02                            Other Terms.

 

All accounting terms used but not specifically defined herein shall be

construed in accordance with generally accepted accounting principles.  The symbol “$” shall mean the lawful

currency of the United States.  All

terms used in Article 9 of the UCC in the State of New York, and not

specifically defined herein, are used herein as defined in such Article 9.

 

Section 1.03                            Computation of Time

Periods.

 

Unless otherwise stated in this Agreement, in the computation of a

period of time from a specified date to a later specified date, the word “from”

means “from and including”, the words “to” and “until” each mean “to but

excluding”, and the word “within” means “from and excluding a specified date

and to and including a later specified date”.

 

23

 

Section 1.04                            Interpretation.

 

In this Agreement, unless a contrary intention appears:

 

(i)            the

singular number includes the plural number and vice

versa;

 

(ii)           reference

to any Person includes such Person’s successors and assigns but, if applicable,

only if such successors and assigns are permitted by the Transaction Documents;

 

(iii)          reference

to any gender includes each other gender;

 

(iv)          reference

to day or days without further qualification means calendar days;

 

(v)           unless

otherwise stated, reference to any time means New York, New York time;

 

(vi)          references

to “writing” include printing, typing, lithography, electronic or other means

of reproducing words in a visible form;

 

(vii)         reference

to any agreement (including any Transaction Document), document or instrument

means such agreement, document or instrument as amended, modified,

supplemented, replaced, restated, waived or extended and in effect from time to

time in accordance with the terms thereof and, if applicable, the terms of the

other Transaction Documents, and reference to any promissory note includes any

promissory note that is an extension or renewal thereof or a substitute or

replacement therefor; and

 

(viii)        reference

to any Requirement of Law means such Requirement of Law as amended, modified,

codified, replaced or reenacted, in whole or in part, and in effect from time

to time, including rules and regulations promulgated thereunder and reference

to any Section or other provision of any Requirement of Law means that

provision of such Requirement of Law from time to time in effect and constituting

the substantive amendment, modification, codification, replacement or

reenactment of such Section or other provision.

 

Section 1.05                            Section References.

 

All Section references (including in the Preamble), unless

otherwise indicated, shall be to Sections (and the Preamble) in

this Agreement.

 

Section 1.06                            Calculations.

 

Except as otherwise provided herein, all interest rate and basis point

calculations hereunder will be made on the basis of a 360–day year and the

actual days elapsed in the relevant period and will be carried out to at least

three decimal places.

 

 

ARTICLE II

 

ESTABLISHMENT OF ISSUER; TRANSFER OF LOAN ASSETS

 

Section 2.01                            Creation and Funding of

Issuer; Transfer of Loan Assets.

 

(a)           The Issuer shall be

created pursuant to the terms and conditions of the Trust Agreement upon the

execution and delivery of the Trust Agreement and the filing by the Owner

Trustee of an appropriately completed Certificate of Trust (as defined in the

Trust Agreement) under the Business Trust Statute.  The Trust Depositor, as settlor of the Issuer, shall fund and

convey assets to the Issuer pursuant to the terms and provisions hereof.  The Issuer shall be administered pursuant to

the provisions of this Agreement, the Administration Agreement and the Trust

Agreement for the benefit of the Securityholders and the Swap

Counterparties.  The Owner Trustee is

hereby

 

24

 

specifically recognized by the parties hereto as empowered to conduct

business dealings on behalf of the Issuer in accordance with the terms hereof

and of the Trust Agreement.

 

(b)           Subject to and upon

the terms and conditions set forth herein, the Trust Depositor hereby sells,

transfers, assigns, sets over and otherwise conveys to the Issuer, for a

purchase price consisting of $145,333,029.32 in cash (less placement expenses

and certain other expenses associated with the initial offer and sale of the

Notes, the proceeds of which represent the consideration paid by the Issuer

herein) and the Certificate of the Issuer in the original certificate balance

of $10.00, all of the right, title and interest of the Trust Depositor in and

to the following (the items in (i)–(vii) below, but in each case excluding the

Retained Interest and Excluded Amounts, being collectively referred to herein

as the “Loan Assets”):

 

(i)            the

Initial Loans and all Collections and other monies due or to become due in

payment of such Loans on and after the Initial Cut–Off Date, including any

Prepayment amounts, any Prepayment Premiums, any Late Charges, any payments in

respect of a casualty or early termination, any Insurance Proceeds and any

Liquidation Proceeds received with respect to the foregoing;

 

(ii)           the

Collateral related to such Loans (to the extent the Originator, other than

solely in its capacity as collateral agent under any loan agreement with an

Obligor, has been granted a Lien thereon), including the security interest of

the Trust Depositor in such Collateral, all proceeds from any sale or other

disposition of such Collateral and all Insurance Policies;

 

(iii)          the

Loan Files and all documents and records (including computer records) relating

thereto;

 

(iv)          all

guarantees, indemnities, warranties and other agreements or arrangements of

whatever character from time to time supporting or securing payment of such

Loans;

 

(v)           the

Trust Accounts and all Trust Account Property (to the extent of the Trust

Depositor’s interest if any therein); and

 

(vi)          all

income, payments, products, proceeds and other benefits of any and all of the

foregoing.

 

(c)           The Originator and

the Trust Depositor acknowledge that the representations and warranties of the

Originator and Trust Depositor in Sections 3.01, 3.02, 3.03,

3.04 and 3.05 will run to and be for the benefit of the Issuer,

the Trustees and the Swap Counterparties, and the Issuer and the Trustees may

enforce, directly without joinder of Trust Depositor, the repurchase

obligations of the Originator with respect to breaches of such representations

and warranties as set forth herein and in Section 11.01.

 

(d)           The sale, transfer,

assignment, set–over and conveyance of the Loan Assets by the Trust Depositor

to the Issuer pursuant to this Agreement does not constitute and is not

intended to result in a creation or an assumption by the Trust Depositor or the

Issuer of any obligation of the Originator in connection with the Loan Assets,

or any agreement or instrument relating thereto, including, without limitation,

(i) any obligation to any Obligor, if any, not financed by the Originator, (ii)

any taxes, fees, or other charges imposed by any Governmental Authority and

(iii) any insurance premiums that remain owing with respect to any Loan at

the time such Loan is sold hereunder. 

The Trust Depositor also hereby assigns to the Issuer all of the Trust

Depositor’s right, title and interest (but none of its obligations) under the

ACAS Transfer Agreement, including but not limited to the Trust Depositor’s

right to exercise the remedies created by the ACAS Transfer Agreement.

 

(e)           The Originator, the

Trust Depositor and the Issuer intend and agree that (i) the transfer of

the Loan Assets to the Trust Depositor and the transfer of the Loan Assets to

the Issuer are intended to be a sale, conveyance and transfer of ownership of

the Loan Assets rather than the mere granting of a security interest to secure

a borrowing and (ii) such Loan Assets shall not be part of the

Originator’s or the Trust Depositor’s estate in the event of a filing of a

bankruptcy petition or other action by or against such Person under any Insolvency

Law.  In the event, however, that

notwithstanding such intent and agreement, such transfers are deemed to be a

grant of a mere security interest to secure indebtedness, the Originator shall

be deemed to have granted (and hereby does grant) the

 

25

 

Trust Depositor and the Trust Depositor shall be deemed to have granted

(and hereby does grant) the Issuer, as the case may be, a perfected first

priority security interest in such Loan Assets, and this Agreement shall

constitute a security agreement under Requirements of Law securing the

repayment of the purchase price paid hereunder, the obligations and/or

interests represented by the Securities and the obligations of the Issuer under

the Swap Transactions and the Swaps, in the order and priorities, and subject

to the other terms and conditions of, this Agreement, the Indenture, the Trust

Agreement and the Swaps, together with such other obligations or interests as

may arise hereunder and thereunder in favor of the parties hereto and thereto.

 

(f)            If any such

transfer of the Loan Assets is deemed to be the mere granting of a security

interest to secure a borrowing, the Trust Depositor may, to secure the Trust

Depositor’s own borrowing under this Agreement (to the extent that the transfer

of the Loan Assets hereunder is deemed to be a mere granting of a security

interest to secure a borrowing) repledge and reassign (i) all or a portion of

the Loan Assets pledged to the Trust Depositor by the Originator and with

respect to which the Trust Depositor has not released its security interest at

the time of such pledge and assignment, and (ii) all proceeds thereof.  Such repledge and reassignment may be made

by the Trust Depositor with or without a repledge and reassignment by the Trust

Depositor of its rights under any agreement with the Originator, and without

further notice to or acknowledgment from the Originator.  The Originator waives, to the extent

permitted by Requirements of Law, all claims, causes of action and remedies,

whether legal or equitable (including any right of setoff), against the Trust

Depositor or any assignee of the Trust Depositor relating to such action by the

Trust Depositor in connection with the transactions contemplated by this

Agreement.

 

Section 2.02                            Conditions to Transfer

of Loan Assets to Issuer.

 

On or before the Closing Date, the Originator or the Trust Depositor,

as applicable, shall deliver or cause to be delivered to the Owner Trustee and

the Indenture Trustee each of the following documents, certificates and other

items:

 

(i)            a

certificate of an officer of the Originator substantially in the form of Exhibit C

hereto;

 

(ii)           copies

of resolutions of the Board of Directors of the Originator and the Servicer of

the Executive Committee of the Board of Directors of the Originator and the

Servicer approving the execution, delivery and performance of this Agreement

and the transactions contemplated hereunder, certified in each case by the

Secretary or an Assistant Secretary of the Originator, the Servicer and the

member of the Trust Depositor;

 

(iii)          officially

certified recent evidence of due incorporation and good standing of the

Originator, the Servicer and the Trust Depositor under the laws of the State of

Delaware;

 

(iv)          the

initial List of Loans, certified by an officer of the Trust Depositor, together

with an Assignment substantially in the form of Exhibit A (along

with the delivery of any instruments and Loan Documents as required under Section 2.06

below);

 

(v)           a

certificate of an officer of the Trust Depositor substantially in the form of Exhibit B

hereto;

 

(vi)          a

letter from Ernst & Young, or another nationally recognized accounting

firm, addressed to the Originator and the Trust Depositor, (a) stating

that such firm has reviewed a sample of the Initial Loans and performed

specific procedures for such sample with respect to certain loan terms and

(b) identifying those Initial Loans that do not conform to the procedures;

 

(vii)         a

letter from each Rating Agency assigning to each of the Offered Notes the

ratings disclosed in the Private Placement Memorandum;

 

(viii)        copies

of resolutions of the Board of Managers of the Trust Depositor or of the

Executive Committee of the Board of Managers of the Trust Depositor approving

the execution, delivery and performance of this Agreement and the transactions

contemplated hereunder, certified in each case by the Secretary or an Assistant

Secretary of the Trust Depositor;

 

26

 

(ix)           evidence

of proper filing with appropriate offices in the UCC Filing Locations of UCC

financing statements executed by the Originator, as debtor, naming the Trust

Depositor as secured party (and the Issuer as assignee) and identifying the

Loan Assets as collateral; and evidence of proper filing with appropriate

officers in the UCC Filing Locations of UCC financing statements delivered by

the Trust Depositor, as debtor, naming the Issuer as secured party (and the

Indenture Trustee as assignee) and identifying the Loan Assets as collateral;

and evidence of proper filing with appropriate officers in the UCC Filing

Locations of UCC financing statements delivered by the Issuer and naming the

Indenture Trustee as secured party and identifying the Indenture Collateral, as

collateral;

 

(x)            an

Officer’s Certificate listing the Servicer’s Servicing Officers;

 

(xi)           evidence

of deposit in the Collection Account of all funds received with respect to the

Initial Loans on and after the Initial Cut–Off Date to the date two (2) days

preceding the Closing Date, together with an Officer’s Certificate from the

Servicer to the effect that such amount is correct;

 

(xii)          evidence

of deposit in the Reserve Fund of the Reserve Fund Initial Deposit by the

Issuer;

 

(xiii)         a

fully executed copy of each Transaction Document;

 

(xiv)        opinions

of counsel for the Originator and the Trust Depositor, in form and substance

satisfactory to the Initial Purchaser (and including as an addressee thereof

each Rating Agency);

 

(xv)         an

opinion of Winston & Strawn to the effect that, for federal income tax

purposes, the Class A Notes and Class B Notes will be characterized

as debt and the Issuer will not be characterized as an association, taxable

mortgage pool, or publicly traded partnership taxable as a corporation; and

 

(xvi)        an

opinion of Winston & Strawn to the effect that the Issuer will not be

subject to income tax imposed by the State of Maryland, and holders of the

Class A Notes and the Class B Notes that are not otherwise subject to State of

Maryland income tax jurisdiction will not become subject to income taxation by

the State of Maryland solely as a result of their ownership of the Class A

Notes and Class B Notes.

 

Section 2.03                            Acceptance by Issuer.

 

On the Closing Date, if the conditions set forth in Section 2.02

have been satisfied or waived, the Issuer shall issue to, or upon the order of,

the Trust Depositor the Certificate representing ownership of a beneficial

interest in 100% of the Issuer and the Issuer shall issue, and the Indenture

Trustee shall authenticate, to, or upon the order of, the Trust Depositor the

Notes secured by the Indenture Collateral. 

The Owner Trustee hereby acknowledges its acceptance, on behalf of the

Issuer, of the Loan Assets, and declares that it shall maintain such right,

title and interest in accordance with the terms of this Agreement and the Trust

Agreement upon the terms herein and therein set forth.

 

Section 2.04                            Conveyance of Substitute

Loans.

 

(a)           Subject to subsections 2.01(d)

and (e) above and the satisfaction of the conditions set forth in subsection 2.04(c),

the Originator may at its option (but shall not be obligated to) sell,

transfer, assign, set over and otherwise convey to the Trust Depositor (by

delivery of an executed Subsequent Purchase Agreement substantially in the form

attached as Exhibit J hereto), without recourse other than as

expressly provided herein and therein (and the Trust Depositor shall be

required to purchase through cash payment or by exchange of one or more related

Loans released by the Issuer to the Trust Depositor on the Subsequent Transfer

Date), all of the right, title and interest of the Originator in and to the

following (the items in clauses (i)–(vii) below, but in each case

excluding the Retained Interest and the Excluded Amounts, upon such transfer,

becoming part of the “Loan Assets”):

 

(i)            the

Substitute Loans identified in the related Addition Notice and all Collections

and other monies received in payment of such Substitute Loans on and after the

related Subsequent Cut–Off

 

27

 

Date, including any Prepayment amounts, any Prepayment Premiums, any

Late Charges, any payments in respect of a casualty or early termination, any

Insurance Proceeds and any Liquidation Proceeds received with respect to the

foregoing;

 

(ii)           the

Collateral related to such Loans (to the extent the Originator, other than

solely in its capacity as collateral agent under any loan agreement with an

Obligor, has been granted a Lien thereon), including the security interest of

the Trust Depositor in such Collateral, all proceeds from any sale or other

disposition of such Collateral and all Insurance Policies;

 

(iii)          the

Loan Files and all documents and records (including computer records) relating

thereto;

 

(iv)          all

guarantees, indemnities, warranties and other agreements or arrangements of

whatever character from time to time supporting or securing payment of such

Loans;

 

(v)           the

Trust Accounts and all Trust Account Property (to the extent of the Trust

Depositor’s interest if any therein); and

 

(vi)          all

income, payments, products, proceeds and other benefits of any and all of the

foregoing.

 

(b)           Subject to subsections 2.01(d)

and (e) and the conditions set forth in subsection 2.04(c),

the Trust Depositor shall sell, transfer, assign, set over and otherwise convey

to the Issuer, without recourse other than as expressly provided herein and

therein, (i) all the right, title and interest of the Trust Depositor in

and to the Substitute Loans purchased pursuant to subsection 2.04(a),

and (ii) all other rights and property interests consisting of Loan Assets

related to such Substitute Loans (the property in clauses (i)–(ii)

above, upon such transfer, shall then be included in the term “Loan Assets”).

 

(c)           The Originator shall

transfer to the Trust Depositor and the Trust Depositor shall transfer to the

Issuer the Substitute Loans and the other property and rights related thereto

described in subsection 2.04(a), in the case of the Originator, or subsection 2.04(b),

in the case of the Trust Depositor, above only upon the satisfaction of each of

the following conditions on or prior to the related Subsequent Transfer Date

(and the delivery of a related Addition Notice by the Trust Depositor shall be

deemed a representation and warranty by the Trust Depositor and of the

Originator that such conditions have been or will be, as of the related

Subsequent Transfer Date, satisfied):

 

(i)            the

Trust Depositor shall have provided the Issuer and the Indenture Trustee with a

timely Addition Notice complying with the definition thereof contained herein,

which notice shall in any event be no later than five (5) days prior to the

date of addition;

 

(ii)           there

shall have occurred, with respect to each such Substitute Loan, a corresponding

Substitution Event with respect to one or more Loans then in the Loan Pool;

 

(iii)          the

Substitute Loan(s) being conveyed to the Issuer satisfy the Substitute Loan

Qualification Conditions;

 

(iv)          the

Originator shall have delivered to the Trust Depositor a duly executed written

Subsequent Purchase Agreement, which shall include a Subsequent List of Loans

listing the Substitute Loans;

 

(v)           the

Trust Depositor shall have delivered to the Issuer a duly executed written

Subsequent Transfer Agreement, which shall include a Subsequent List of Loans

listing the Substitute Loans;

 

(vi)          the

Trust Depositor shall have deposited or caused to be deposited in the

Collection Account all Collections received with respect to the Substitute

Loans on and after the related Subsequent Cut–Off Date;

 

28

 

(vii)         as

of each Subsequent Transfer Date, neither the Originator nor the Trust

Depositor was insolvent nor will either of them have been made insolvent by

such transfer nor is either of them aware of any pending insolvency;

 

(viii)        no

selection procedures believed by the Originator or the Trust Depositor to be

adverse to the interests of the Securityholders or the Swap Counterparties

shall have been utilized in selecting the Substitute Loans;

 

(ix)           each

of the representations and warranties made by the Originator and Trust

Depositor pursuant to subsections 3.02 (including without

limitation that such Substitute Loan is an Eligible Loan), 3.03(b)(i), (ii)

and (iv), 3.04, and 3.05 applicable to the Substitute

Loans shall be true and correct as of the related Subsequent Transfer Date; provided, however, that,

(a) with respect to the representation and warranty made by the Originator

and Trust Depositor in subsection 3.05(a), such representation and

warranty shall only apply to a Loan that is being substituted for a Loan that

is not an Eligible Loan, (b) the representations and warranties made by

the Originator and Trust Depositor in subsections 3.03(b)(iv) and 3.05

shall be determined as if such Substitute Loan were included in the Loan Pool

as of the Initial Cut–Off Date and (c) the representation in clause 37 of

the definition of Eligible Loan shall not apply to Substitute Loans that are

not fully funded Loans;

 

(x)            the

Originator shall, at its own expense, on or prior to the Subsequent Transfer

Date, indicate in its Computer Records that ownership of the Substitute Loans

identified on the Subsequent List of Loans in the Subsequent Transfer Agreement

has been sold to the Issuer through the Trust Depositor pursuant to this Agreement;

and

 

(xi)           prior

to such substitution the Originator has received written confirmation from the

Rating Agencies (which shall respond to the Originator within five (5) Business

Days after receiving written notice from the Originator of its intention to

substitute a Loan) that the proposed substitution will not result in a Ratings

Effect; provided, however, that any failure by each of

the Rating Agencies to respond to the Originator shall be deemed to be a

non–approval by the Rating Agencies; provided,

further, however, with respect to the substitution of a

Prepaid Loan, only notice to, and not confirmation from, Fitch shall be

required.

 

Section 2.05                            Release of Released

Amounts.

 

(a)           The Indenture

Trustee hereby agrees to release to the Issuer from the Loan Assets, and the

Issuer hereby agrees to release to the Trust Depositor, an amount equal to the

Released Amounts immediately upon identification thereof and upon receipt of an

Officer’s Certificate of the Servicer, which release shall be automatic and

shall require no further act by the Indenture Trustee or the Issuer; provided,  that, the Indenture Trustee or Issuer shall execute

and deliver such instruments of release and assignment, or otherwise confirm

the foregoing release, as may reasonably be requested by the Trust Depositor in

writing.  Upon such release, such

Released Amounts shall not constitute and shall not be included in the Loan

Assets.

 

(b)           Immediately upon the

release to the Trust Depositor by the Indenture Trustee of the Released Amounts,

the Trust Depositor hereby irrevocably agrees to release to the Originator such

Released Amounts, which release shall be automatic and shall require no further

act by the Trust Depositor; provided,  that, the Trust Depositor shall

execute and deliver such instruments of release and assignment, or otherwise

confirming the foregoing release of any Released Amounts, as may be reasonably

requested by the Originator.

 

Section 2.06                            Delivery of Loan Files.

 

(a)           The Originator and

the Trust Depositor shall deliver possession of all “instruments” (within the

meaning of Article 9 of the UCC) not constituting part of “chattel paper”

(within the meaning of such Article 9) that evidence any Loan, including

all Underlying Notes, and all other portions of the Loan Files to the Indenture

Trustee on behalf of the Issuer and the Swap Counterparties five (5) Business

Days prior to the applicable Assignment Date, in each case endorsed in blank

without recourse.  Pursuant to Section 3.06

of the Indenture, the Issuer is required to deliver such instruments and Loan

Files to the Indenture Trustee as pledgee under the Indenture for the benefit

of the

 

29

 

Noteholders and the Swap Counterparties.  Accordingly, the Issuer hereby authorizes and directs the

Originator and the Trust Depositor to deliver possession of all such

instruments and the Loan Files to the Indenture Trustee on behalf of and for

the account of the Issuer, and agrees that such delivery shall satisfy the

condition set forth in the first sentence of this Section 2.06.  The Originator and the Trust Depositor shall

also identify on the List of Loans (including any deemed amendment thereof

associated with any Substitute Loans), whether by attached schedule or marking

or other effective identifying designation, all Loans that are or are evidenced

by such instruments.

 

(b)           Prior to the

occurrence of an Event of Default or a Servicer Default, the Indenture Trustee

shall not record the Assignments of Mortgage delivered pursuant to subsection 2.06(a)

and the definition of Loan Documents. 

Upon the occurrence of an Event of Default or a Servicer Default, the

Indenture Trustee shall cause to be recorded in the appropriate offices each

Assignment of Mortgage delivered to it with respect to all Loans except those

Loans covered by the proviso to the definition of Assignment of Mortgage.  Each such recording shall be at the expense

of the Servicer; provided,

however, to the extent the

Servicer does not pay such expense, then the Indenture Trustee shall be

reimbursed pursuant to the provisions of Section 7.05.

 

(c)           If the Indenture

Trustee does not receive the Underlying Note for the Loan to Case Logic issued

in the name of the Issuer as provided in clause 30 of the definition of

Eligible Loan, the Indenture Trustee shall promptly notify the Originator, the

Trust Depositor and the Issuer of same and such Loan shall be deemed to be an

Ineligible Loan.

 

Section 2.07                            Certification by

Indenture Trustee; Possession of Loan Files.

 

(a)           On or prior to the

applicable Assignment Date, the Indenture Trustee shall review the Loan Files

required to be delivered pursuant to subsection 2.06(a) on the

applicable Assignment Date and shall deliver to the Originator, the Trust

Depositor, the Swap Counterparties and the Servicer a certification in the form

attached hereto as Exhibit D–1 on or prior to such Assignment

Date.  Within 360 days after each

Assignment Date, the Indenture Trustee shall deliver to the Originator, the

Servicer, the Trust Depositor, the Swap Counterparties and any Noteholder who

requests a copy from the Indenture Trustee a final certification in the form

attached hereto as Exhibit D–2 evidencing the completeness of the

Loan Files with respect to the Loans being transferred on such Assignment Date.

 

(b)           If the Indenture

Trustee during the process of reviewing the Loan Files finds any document

constituting a part of a Loan File which is not properly executed, has not been

received, is unrelated to a Loan identified in the List of Loans, or does not

conform in a material respect to the requirements of the definition of Loan

File, or the description thereof as set forth in the List of Loans, the

Indenture Trustee shall promptly so notify the Originator, the Trust Depositor

and the Servicer.  In performing any

such review, the Indenture Trustee may conclusively rely on the Originator as

to the purported genuineness of any such document and any signature

thereon.  It is understood that the

scope of the Indenture Trustee’s review of the Loan Files is limited solely to

confirming that the documents listed in the definition of Loan File have been

executed and received and relate to the Loans identified in the List of Loans; provided, however, with respect to the UCC

financing statements referenced in the definition of Loan File, the Indenture

Trustee’s sole responsibility will be to confirm that the Loan File contains

UCC financing statements and not to make determinations about the materiality

of such UCC financing statements.  The

Originator agrees to use reasonable efforts to remedy a material defect in a

document constituting part of a Loan File of which it is so notified by the

Indenture Trustee.  If, however, within

thirty (30) days after the Indenture Trustee’s notice to it respecting such

material defect the Originator has not remedied the defect and such defect

materially and adversely affects the value of the related Loan, such Loan will

be treated as an “Ineligible Loan” and the Originator will (i) substitute

in lieu of such Loan a Substitute Loan in the manner and subject to the

conditions set forth in Section 11.01 or (ii) repurchase such

Loan at a purchase price equal to the Transfer Deposit Amount, which purchase

price shall be deposited in the Collection Account within such thirty (30) day

period.

 

(c)           Release of Entire

Loan File Upon Substitution. 

Subject to subsection 5.08(c), upon receipt by the Indenture

Trustee of a certification of a Servicing Officer of the Servicer of such

substitution or of such purchase and the deposit of the amounts described in subsection 2.07(b)

in the Collection Account (which certification shall be in the form of Exhibit E

hereto), the Indenture Trustee shall release to the Servicer for release to the

Originator the related Loan File and the Indenture Trustee and the Issuer shall

execute, without recourse, and deliver such instruments of transfer

 

30

 

prepared by the Servicer necessary to transfer all right, title and

interest in such Loan to the Originator free and clear of any Liens created by

the Transaction Documents.  All costs of

any such transfer shall be borne by the Servicer.

 

(d)           Partial Release

of Loan File and/or Collateral. 

Subject to subsection 5.08(d), if in connection with taking

any action in connection with a Loan (including, without limitation, the

amendment to documents in the Loan File and/or a revision to Collateral), the

Servicer requires any item constituting part of the Loan File, or the release

from the Lien of the related Loan of all or part of any Collateral, the

Servicer shall deliver to the Indenture Trustee a certificate to such effect in

the form attached as Exhibit E hereto.  Upon receipt of such certification, the Indenture Trustee shall

deliver to the Servicer within two (2) Business Days of such request (if such

request was received by 2:00 p.m., central time), the requested documentation,

and the Indenture Trustee shall execute, without recourse, and deliver such

instruments of transfer necessary to release all or the requested part of the

Collateral from the Lien of the related Loan and/or the Lien under the

Transaction Documents.

 

(e)           Annual

Certification.  On the Payment Date

in March of each year, commencing March 2003, the Indenture Trustee shall

deliver to the Originator, the Trust Depositor, each Swap Counterparty and the

Servicer a certification detailing all transactions with respect to the Loans

for which the Indenture Trustee holds the Loan Files pursuant to this Agreement

during the prior calendar year.  Such

certification shall list all Loan Files which were released by or returned to

the Indenture Trustee during the prior calendar year, the date of such release

or return and the reason for such release or return.

 

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

The Originator makes, and upon execution of each Subsequent Purchase

Agreement is deemed to make, the following representations and warranties, on

which the Trust Depositor will rely in conveying the Loan Assets on the

applicable Assignment Date to the Issuer, and on which the Issuer, the

Securityholders and the Swap Counterparties will rely.  The Trust Depositor acknowledges that such

representations and warranties are being made by the Originator for the benefit

of the Issuer, the Securityholders and the Swap Counterparties.

 

Such representations and warranties speak as of the execution and

delivery of this Agreement and as of the applicable Assignment Date, but shall

survive the sale, transfer and assignment of the Loan Assets to the

Issuer.  The repurchase obligation or

substitution obligation of the Originator set forth in Section 11.01

constitutes the sole remedy available for a breach of a representation or

warranty of the Originator set forth in Sections 3.01, 3.02,

3.03, 3.04 or 3.05 of this Agreement.  Notwithstanding the foregoing, the

Originator shall not be deemed to be remaking any of the representations set

forth in Section 3.03 on a Subsequent Transfer Date with respect to

the Substitute Loans, as such representations relate solely to the composition of

the Initial Loans conveyed on the Closing Date.

 

Section 3.01                            Representations and

Warranties Regarding the Originator.

 

By its execution of this Agreement and each Subsequent Purchase

Agreement, the Originator represents and warrants that:

 

(a)           Organization and

Good Standing.  The Originator is a

corporation duly organized, validly existing and in good standing under the

laws of the jurisdiction of its organization and has the requisite corporate

power to own or lease its assets and to transact the business in which it is

currently engaged.  The Originator is

duly qualified to do business as a foreign corporation and is in good standing

in each jurisdiction in which the character of the business transacted by it or

properties owned or leased by it requires such qualification and in which the

failure so to qualify would not reasonably be expected have a material adverse

effect on the business, properties, assets, or condition (financial or

otherwise) of the Originator or Trust Depositor.  The Originator is properly licensed in each jurisdiction to the

extent required by the laws of such jurisdiction in order to originate, and (if

the Originator is to be the Servicer) service the Loans in accordance with the

terms of this Agreement.

 

(b)           Authorization.  The Originator has the power and authority

to make, execute, deliver and perform this Agreement and the other Transaction

Documents to which the Originator is a party and all of the transactions

 

31

 

contemplated under this Agreement and the other Transaction Documents

to which the Originator is a party, and has taken all necessary corporate

action to authorize the execution, delivery and performance of this Agreement

and the other Transaction Documents to which the Originator is a party.

 

(c)           Valid Sale.  This Agreement and each Subsequent Purchase

Agreement, if any, shall effect a valid sale, transfer and assignment of the

Loan Assets from the Originator to the Trust Depositor, enforceable against the

Originator in accordance with their terms.

 

(d)           Binding

Agreements.  This Agreement and the

other Transaction Documents to which the Originator is a party constitute the

legal, valid and binding obligation of the Originator enforceable in accordance

with their terms, except as enforcement of such terms may be limited by

bankruptcy, insolvency or similar laws affecting the enforcement of creditors’

rights generally and by the availability of equitable remedies.

 

(e)           No Consent

Required.  The Originator is not

required to obtain the consent of any other party or any consent, license,

approval or authorization from, or registration or declaration with, any

Governmental Authority in connection with the execution, delivery, performance,

validity or enforceability of this Agreement and the other Transaction

Documents to which the Originator is a party except (i) for the filing of the

UCC financing statements and (ii) such consents, licenses, approvals,

authorizations, registrations and declarations which have been obtained and are

in full force and effect.

 

(f)            No Violations.  The Originator’s execution, delivery and

performance of this Agreement and the other Transaction Documents to which the

Originator is a party will not violate any provision of any Requirements of Law

or any order or decree of any court or the Certificate of Incorporation or

Bylaws of the Originator, or constitute (with or without notice or lapse of

time or both) a material breach of any mortgage, indenture, contract or other

agreement to which the Originator is a party or by which the Originator or any

of the Originator’s properties may be bound.

 

(g)           Litigation.  No litigation or administrative proceeding

of or before any court, tribunal or governmental body is currently pending, or,

to the knowledge of the Originator, threatened, against the Originator or any

of its respective properties or with respect to this Agreement or any other

Transaction Document to which the Originator is a party that, if adversely

determined, would, in the reasonable opinion of the Originator, be expected to

have a material adverse effect on the business, properties, assets or condition

(financial or other) of the Originator or the transactions contemplated by this

Agreement or any other Transaction Document to which the Originator is a party.

 

(h)           Name and

Location; No Changes.  The

Originator’s name and location (within the meaning of Article 9 of the

UCC) are as set forth in Section 13.04.  The Originator has not changed its name, identity, structure,

existence or state of incorporation, whether by amendment of its certificate of

incorporation, by reorganization or otherwise, and has not changed its location

(within the meaning of Article 9 of the UCC) within the four (4) months

preceding the Closing Date.

 

(i)            No Bulk Sales.  The execution, delivery and performance of

this Agreement by the Originator do not require compliance with any “bulk

sales” laws by the Originator.

 

(j)            Solvency.  The Originator on each date of, and after

giving effect to, the transfer of the Loans and any Substitute Loans, as the

case may be, to the Trust Depositor pursuant to the ACAS Transfer Agreement is

and will be Solvent.

 

(k)           Use of Proceeds.  No proceeds of the sale of any Initial Loan

or Substitute Loan hereunder received by the Originator will be used by the

Originator to purchase or carry any “margin stock” as such term is defined in

Regulation T, U or X of the Board of Governors of the Federal Reserve

System.

 

(l)            An Investment

Company.  The Originator is properly

registered as an “investment company” within the meaning, and is in compliance

with all requirements, of the Investment Company Act of 1940, as amended.

 

32

 

(m)          Taxes.  To the best of the Originator’s knowledge,

(i) the Originator has filed all tax returns required to be filed in the

normal course of its business and has paid or made adequate provisions for the

payment of all taxes, assessments and other governmental charges due from the

Originator or is contesting any such tax, assessment or other governmental

charge in good faith through appropriate proceedings, (ii) no tax Lien has

been filed with respect thereto, and (iii) no claim is being asserted with

respect to any such tax, fee or other charge.

 

(n)           Sale Treatment.  The Originator has treated the transfer of

Loan Assets to the Trust Depositor for all purposes (other than for financial

accounting purposes) as a sale and purchase on all of its relevant books,

records, financial statements and other applicable documents, except to the

extent applicable tax laws require otherwise.

 

(o)           Marking of Files.  The Originator will have, at its own

expense, prior to the close of business on the Closing Date, (i) indicated

in its Computer Records that ownership of the Loans transferred by it to the

Trust Depositor and identified on the List of Loans have been sold to the Trust

Depositor and (ii) cause to be affixed to the original of each Underlying

Note and the copy of each loan agreement the following legend:

 

This loan agreement/note is subject to a security interest granted to

Wells Fargo Bank Minnesota, National Association, as Indenture Trustee on

behalf of the Noteholders and the Swap Counterparties.  UCC–1 Financing Statements covering this

loan agreement/note have been filed with the Secretary of State of the State of

Delaware.  Such Lien will be released

only in connection with appropriate filings in such offices.  Consequently, potential purchasers of this

loan agreement/note must refer to such filings to determine whether such Lien

has been released.

 

(p)           Security Interest.

 

(i)            This

Agreement creates a valid, continuing and enforceable security interest (as

defined in the applicable UCC) in the Loan Assets in favor of the Trust

Depositor, which security interest is prior to all other Liens (except for

Permitted Liens), and is enforceable as such against creditors of and

purchasers from the Originator;

 

(ii)           such

Loans, along with the related Loan Files, constitute either a “general

intangible,” an “instrument,” an “account,” “investment property,” or “chattel

paper,” within the meaning of the applicable UCC;

 

(iii)          the

Originator owns and has good and marketable title to such Loan Assets free and

clear of any Lien (other than Permitted Liens), claim or encumbrance of any

Person;

 

(iv)          the

Originator has received all consents and approvals required by the terms of the

Loan Assets to the sale of the Loan Assets under the ACAS Transfer Agreement to

the Trust Depositor;

 

(v)           the

Originator has caused the filing of all appropriate financing statements in the

proper filing office in the appropriate jurisdictions under Requirements of Law

in order to perfect the security interest in such Loan Assets granted to the

Trust Depositor under the ACAS Transfer Agreement;

 

(vi)          other

than the security interest granted to the Trust Depositor pursuant to the ACAS

Transfer Agreement and this Agreement, the Originator has not pledged,

assigned, sold, granted a security interest in or otherwise conveyed any of

such Loan Assets.  The Originator has

not authorized the filing of and is not aware of any financing statements

against the Originator that include a description of collateral covering such

Loan Assets other than any financing statement (A) relating to the

security interest granted to the Trust Depositor under the ACAS Transfer

Agreement and this Agreement, or (B) that has been terminated.  The Originator is not aware of the filing of

any judgment or tax Lien filings against the Originator;

 

(vii)         all

original executed copies of each Underlying Note that constitute or evidence

the Loan Assets have been delivered to the Indenture Trustee;

 

33

 

(viii)        the

Originator has received a written acknowledgment from the Indenture Trustee

that the Indenture Trustee or its bailee is holding the Underlying Notes that

constitute or evidence the Loan Assets solely on behalf of and for the benefit

of the Noteholders and the Swap Counterparties; and

 

(ix)           none

of the Underlying Notes that constitute or evidence the Loan Assets has any

marks or notations indicating that they have been pledged, assigned or

otherwise conveyed to any Person other than the Issuer and the Indenture

Trustee, as assignees of the Trust Depositor.

 

(q)           Value Given.  The cash payments received by the Originator

in respect of the purchase price of each Loan sold under the ACAS Transfer

Agreement constitutes the face value of such Loan and reasonably equivalent

value in consideration for the transfer to the Trust Depositor of such Loan

under the ACAS Transfer Agreement, such transfer was not made for or on account

of an antecedent debt owed by the Originator to the Trust Depositor, and such

transfer was not and is not voidable or subject to avoidance under any

Insolvency Law.

 

(r)            Mortgages.  Other than the Loan to Cycle Gear, if a Loan

is secured by real property and the Originator, other than solely in its

capacity as collateral agent under any Loan Document with an Obligor, is the

mortgagee, the mortgage has been assigned by the Originator to the Trust Depositor

and by the Trust Depositor to the Issuer and the Assignment of Mortgage has

been delivered to the Indenture Trustee.

 

(s)           Selection

Procedures.  No selection procedures

determined by the Originator to be materially adverse to the interests of the

Trust Depositor were utilized by the Originator in selecting the Loans to be

sold, assigned, transferred, set–over and otherwise conveyed hereunder.

 

(t)            Environmental.  At the

time of origination of each Loan where real property that is material to the

operations of the related business serves as Collateral for such Loan, the

related mortgaged property was free of contamination from toxic substances or

hazardous wastes requiring action under Requirements of Law or is subject to

ongoing environmental rehabilitation approved by the Servicer, and, as of the

Closing Date, the Originator has no knowledge of any such contamination from

toxic substances or hazardous waste material on any such real property unless

such items are below action levels.

 

The representations and warranties in subsection 3.01(p)

shall survive the termination of this Agreement and such representations and

warranties may not be waived by any party hereto.

 

Section 3.02                            Representations and

Warranties Regarding Each Loan and as to Certain Loans in the Aggregate.

 

The Originator represents and warrants (x) with respect to subsections (a)–(b)

below, as to each Loan to be transferred on the related Assignment Date as of

the applicable Cut–Off Date, and (y) with respect to subsections (c)–(d)

below, as to the Loan Pool in the aggregate as of the applicable Cut–Off Date

(after giving effect to the addition of any Substitute Loans to the Loan Pool),

that:

 

(a)           List of Loans.  The information set forth in the List of

Loans (as the same may be amended or deemed amended in respect of a conveyance

of Substitute Loans on a Subsequent Transfer Date) is true, complete and

correct as of the applicable Cut–Off Date.

 

(b)           Eligible Loan.  Such Loan satisfies the criteria for the

definition of Eligible Loan set forth in this Agreement as of the date of its

conveyance hereunder (or, with respect to clause 37 of the definition of

Eligible Loan, as of the Initial Cut–Off Date).

 

(c)           No Fraud.  Each Loan was originated without any fraud

or material misrepresentation by the Originator or, to the best of the

Originator’s knowledge, on the part of the Obligor.

 

(d)           Loans Secured by

Real Property.  Less than 40% of the

Aggregate Outstanding Loan Balance of the Loan Pool consists of Loans

principally secured by real property.

 

34

 

Section 3.03                            Representations and

Warranties Regarding the Initial Loans in the Aggregate.

 

The Originator represents and warrants, as of the Closing Date, that:

 

(a)           Amounts.  The Aggregate Outstanding Loan Balance of

the Loans as of the Initial Cut–Off Date equals the sum of the principal

balance of the Class A Notes, the Class B Notes, the Class C

Notes and the Certificate on the Closing Date.

 

(b)           Characteristics.  The Initial Loans as of the Initial Cut–Off

Date have the following additional characteristics: (i) no Loan has a

remaining maturity of more than 91 months; (ii) the final Scheduled

Payment on the Loan with the latest maturity is not later than June 1, 2009;

(iii) no Loan was originated after the Initial Cut–Off Date; (iv) not

more than 22.9% of the Initial Loans (as measured by the Aggregate Outstanding

Loan Balance) provide for Scheduled Payments due on a basis other than monthly.

 

Section 3.04                            Representations and

Warranties Regarding the Loan Files.

 

The Originator represents and warrants as of the applicable Assignment

Date that (i) to the extent that any Loans were pledged as collateral for

the CP Transaction, immediately prior to such date (as applicable), a

collateral custodian under the CP Transaction had possession of each such

original Underlying Note and a copy of the Loan and the related complete Loan

File, and there were no other custodial agreements relating to the same in

effect except for a custodial agreement between ACAS and ACS Funding Trust I

with respect to the CP Transaction; (ii) each of such documents which is

required to be signed by the Obligor has been signed by the Obligor in the

appropriate spaces; (iii) all blanks on any form have been properly filled

in and each form has otherwise been correctly prepared; and (iv) the

complete Loan File for each Loan is in the possession of the Indenture Trustee.

 

Section 3.05                            Representations and

Warranties Regarding Concentrations of Initial Loans.

 

The Originator represents and warrants as of the Closing Date, as to

the composition of the Initial Loans in the Loan Pool as of the Initial Cut–Off

Date, that:

 

(a)           the sum of the

Outstanding Loan Balances of Obligors that are in the same industry (by SIC

code) shall not exceed 7.6%;

 

(b)           [Reserved]; and

 

(c)           the sum of the

Outstanding Loan Balances of Obligors that have their principal executive

offices in the same State of the United States shall not exceed 20.4%.

 

Section 3.06                            Representations and

Warranties Regarding the Trust Depositor.

 

By its execution of this Agreement and each Subsequent Transfer

Agreement, the Trust Depositor represents and warrants to the Issuer, the

Indenture Trustee, the Securityholders and the Swap Counterparties that:

 

(a)           Confirmation of

the Originator’s Representations and Warranties.  The representations and warranties set forth in Section 3.01,

Section 3.02, Section 3.03, Section 3.04

and Section 3.05 of this Agreement and in the ACAS Transfer

Agreement are true and correct.

 

(b)           Organization and

Good Standing.  The Trust Depositor

is a limited liability company duly organized, validly existing and in good

standing under the laws of Delaware and has the power to own its assets and to

transact the business in which it is currently engaged.  The Trust Depositor is duly qualified to do

business as a foreign entity and is in good standing in each jurisdiction in

which the character of the business transacted by it or properties owned or

leased by it requires such qualification and in which the failure so to qualify

would not reasonably be expected have a material adverse effect on the

business, properties, assets, or condition (financial or other) of the Trust

Depositor or the Issuer.

 

35

 

(c)           Authorization.  The Trust Depositor has the power and

authority to make, execute, deliver and perform this Agreement and the other

Transaction Documents to which it is a party and all of the transactions

contemplated under this Agreement and the other Transaction Documents to which

it is a party, and to create the Issuer and cause it to make, execute, deliver

and perform its obligations under this Agreement and the other Transaction

Documents to which it is a party, and has taken all necessary corporate action

to authorize the execution, delivery and performance of this Agreement and the

other Transaction Documents to which it is a party and to cause the Issuer to

be created.

 

(d)           Valid Sale.  This Agreement and each Subsequent Transfer

Agreement, if any, shall effect a valid sale, transfer and assignment of the

Loan Assets from the Trust Depositor to the Issuer, enforceable against the

Trust Depositor and creditors of and purchasers from the Trust Depositor.

 

(e)           Binding

Agreements.  This Agreement and the

other Transaction Documents to which the Trust Depositor is a party constitute

the legal, valid and binding obligation of the Trust Depositor enforceable in

accordance with their terms, except as enforcement of such terms may be limited

by applicable Insolvency Laws and general principles of equity, whether

considered in a suit at law or in equity.

 

(f)            No Consent

Required.  The Trust Depositor is

not required to obtain the consent of any other party or any consent, license,

approval or authorization from, or registration or declaration with, any

Governmental Authority in connection with the execution, delivery, performance,

validity or enforceability of this Agreement or the other Transaction Documents

to which it is a party except (i) for the filing of the UCC financing statements

and (ii) such consents, licenses, approvals, authorizations, registrations and

declarations which have been obtained and are in full force and effect.

 

(g)           No Violations.  The execution, delivery and performance of

this Agreement and the other Transaction Documents to which it is a party by

the Trust Depositor, and the consummation of the transactions contemplated

hereby and thereby, will not violate any Requirement of Law applicable to the

Trust Depositor, or constitute a material breach of any mortgage, indenture,

contract or other agreement to which the Trust Depositor is a party or by which

the Trust Depositor or any of the Trust Depositor’s properties may be bound, or

result in the creation or imposition of any security interest, Lien, charge,

pledge, preference, equity or encumbrance of any kind upon any of its

properties pursuant to the terms of any such mortgage, indenture, contract or

other agreement, other than as contemplated by the Transaction Documents.

 

(h)           Litigation.  No litigation or administrative proceeding

of or before any court, tribunal or governmental body is currently pending, or

to the knowledge of the Trust Depositor threatened, against the Trust Depositor

or any of its properties or with respect to this Agreement, the other Transaction

Documents to which it is a party or the Securities (1) that, if adversely

determined, would in the reasonable judgment of the Trust Depositor be expected

to have a material adverse effect on the business, properties, assets or

condition (financial or otherwise) of the Trust Depositor or the Issuer or the

transactions contemplated by this Agreement or the other Transaction Documents

to which the Trust Depositor is a party or (2) seeking to adversely affect the

federal income tax or other federal, state or local tax attributes of the

Certificate or Notes.

 

(i)            Bulk Sales.  The execution, delivery and performance of

this Agreement do not require compliance with any “bulk sales” laws by the

Trust Depositor.

 

(j)            Solvency.  The Trust Depositor, at the time of and

after giving effect to each conveyance of Loan Assets hereunder, is and will be

Solvent.

 

(k)           Taxes.  The Trust Depositor has filed or caused to

be filed all tax returns that, to its knowledge, are required to be filed and

has paid all taxes shown to be due and payable on such returns or on any

assessments made against it or any of its property and all other taxes, fees or

other charges imposed on it or any of its property by any Governmental

Authority (other than any amount of tax due, the validity of which is currently

being contested in good faith by appropriate proceedings and with respect to

which reserves in accordance with generally accepted accounting principles have

been provided on the books of the Trust Depositor); no tax Lien has been filed

and, to the Trust Depositor’s knowledge, no claim is being asserted, with

respect to any such tax, fee or other charge.

 

36

 

(l)            Name and

Location; No Changes.  The Trust

Depositor’s name and location (within the meaning of Article 9 of the UCC)

are as set forth in Section 13.04. 

The Trust Depositor has not changed its name, identity, structure,

existence or state of formation, whether by amendment of its certificate of

formation, by reorganization or otherwise, and has not changed its location

(within the meaning of Article 9 of the UCC) within the four (4) months

preceding the Closing Date.

 

(m)          Not an Investment

Company.  The Trust Depositor is not

required to be registered as an “investment company” within the meaning of the

Investment Company Act of 1940, as amended (or the Trust Depositor is exempt

from all provisions of such act).

 

(n)           Sale Treatment.  The Trust Depositor has treated the transfer

of Loan Assets to the Trust Depositor for all purposes (other than for

financial accounting purposes) as a sale and purchase on all of its relevant

books, records, financial statements and other applicable documents, except to

the extent applicable tax laws require otherwise.

 

(o)           Security Interest.

 

(i)            This

Agreement creates a valid, continuing and enforceable security interest (as

defined in the applicable UCC) in the Loan Assets in favor of the Issuer, which

security interest is prior to all other Liens (except for Permitted Liens), and

is enforceable as such against creditors of and purchasers from the Trust

Depositor;

 

(ii)           such

Loans, along with the related Loan Files, constitute either a “general

intangible,” an “instrument,” an “account,” “investment property,” or “chattel

paper,” within the meaning of the applicable UCC;

 

(iii)          the

Trust Depositor owns and has good and marketable title to such Loan Assets free

and clear of any Lien (other than Permitted Liens), claim or encumbrance of any

Person;

 

(iv)          the

Trust Depositor has received all consents and approvals required by the terms

of the Loan Assets to the sale of the Loan Assets hereunder to the Issuer;

 

(v)           the

Trust Depositor has caused the filing of all appropriate financing statements

in the proper filing office in the appropriate jurisdictions under Requirements

of Law in order to perfect the security interest in such Loan Assets granted to

the Issuer under this Agreement;

 

(vi)          other

than the security interest granted to the Issuer pursuant to this Agreement,

the Trust Depositor has not pledged, assigned, sold, granted a security

interest in or otherwise conveyed any of such Loan Assets;

 

(vii)         the

Trust Depositor has not authorized the filing of and is not aware of any

financing statements against the Trust Depositor that include a description of

collateral covering such Loan Assets other than any financing statement

(A) relating to the security interest granted to the Issuer under this

Agreement, or (B) that has been terminated;

 

(viii)        the

Trust Depositor is not aware of the filing of any judgment or tax Lien filings

against the Trust Depositor;

 

(ix)           all

original executed copies of each Underlying Note that constitute or evidence

the Loan Assets have been delivered to the Indenture Trustee;

 

(x)            the

Trust Depositor has received a written acknowledgment from the Indenture

Trustee that the Indenture Trustee or its bailee is holding the Underlying

Notes that constitute or evidence the Loan Assets solely on behalf of and for

the benefit of the Securityholders and the Swap Counterparties; and

 

37

 

(xi)           none

of the Underlying Notes that constitute or evidence the Loan Assets has any

marks or notations indicating that they have been pledged, assigned or

otherwise conveyed to any Person other than the Issuer and the Indenture

Trustee.

 

(p)           No Liens.  The Trust Depositor owns each Loan Asset to

be sold by it hereunder free and clear of any Liens except as provided herein,

and upon the sale, transfer or assignment hereunder, the Issuer shall

(i) become the owner of each Loan Asset then existing or thereafter

arising, free and clear of any Lien except as provided herein or

(ii) acquire a first priority perfected security interest in such Loan

Asset.  No effective financing statement

or other instrument similar in effect covering any Loan Asset or the

Collections with respect thereto shall at any time be on file in any recording

office except such as may be filed in favor of the Issuer relating to this

Agreement or otherwise as provided under this Agreement.

 

(q)           Value Given.  The cash payments received by the Trust

Depositor in respect of the purchase price of each Loan sold hereunder

constitutes the face value of such Loan and reasonably equivalent value in

consideration for the transfer to the Issuer of such Loan under this Agreement,

such transfer was not made for or on account of an antecedent debt owed by the

Trust Depositor to the Issuer, and such transfer was not and is not voidable or

subject to avoidance under any Insolvency Law.

 

The representations and warranties in subsection 3.01(o)

shall survive the termination of this Agreement and such representations and

warranties may not be waived by any party hereto.

 

Section 3.07                            Representations and

Warranties Regarding the Servicer.

 

The Servicer represents and warrants to the Owner Trustee, the

Indenture Trustee, the Securityholders and the Swap Counterparties that:

 

(a)           Organization and

Good Standing.  The Servicer is a

corporation duly organized, validly existing and in good standing under the

laws of the jurisdiction of its organization and has the corporate power to own

its assets and to transact the business in which it is currently engaged.  The Servicer is duly qualified to do

business as a foreign corporation and is in good standing in each jurisdiction

in which the character of the business transacted by it or properties owned or

leased by it requires such qualification and in which the failure so to qualify

would not reasonably be expected to have a material adverse effect on the

business, properties, assets, or condition (financial or otherwise) of the

Servicer or the Issuer.  The Servicer is

properly licensed in each jurisdiction to the extent required by the laws of

such jurisdiction to service the Loans in accordance with the terms hereof.

 

(b)           Authorization.  The Servicer has the power and authority to

make, execute, deliver and perform this Agreement and the other Transaction

Documents to which the Servicer is a party and all of the transactions

contemplated under this Agreement and the other Transaction Documents to which

the Servicer is a party, and has taken all necessary corporate action to

authorize the execution, delivery and performance of this Agreement and the

other Transaction Documents to which the Servicer is a party.

 

(c)           Binding Obligations.  This Agreement and the other Transaction

Documents to which the Servicer is a party constitute the legal, valid and

binding obligation of the Servicer enforceable in accordance with their terms,

except as enforcement of such terms may be limited by Insolvency Laws and

general principles of equity, whether considered in a suit at law or in equity.

 

(d)           No Consent

Required.  The Servicer is not

required to obtain the consent of any other party or any consent, license,

approval or authorization from, or registration or declaration with, any

Governmental Authority in connection with the execution, delivery, performance,

validity or enforceability of this Agreement and the other Transaction

Documents to which the Servicer is a party except (i) for the filing of

the UCC financing statements and (ii) such consents, licenses, approvals,

authorizations, registrations and declarations which have been obtained and are

in full force and effect.

 

(e)           No Violations.  The execution, delivery and performance of

this Agreement and the other Transaction Documents to which the Servicer is a

party by the Servicer will not violate any Requirements of Law applicable to

the Servicer, or constitute a material breach of any mortgage, indenture,

contract or other agreement to

 

38

 

which the Servicer is a party or by which the Servicer or any of the

Servicer’s properties may be bound, or result in the creation of or imposition

of any security interest, Lien, pledge, preference, equity or encumbrance of

any kind upon any of its properties pursuant to the terms of any such mortgage,

indenture, contract or other agreement, other than as contemplated by the

Transaction Documents.

 

(f)            Litigation.  No litigation or administrative proceeding

of or before any court, tribunal or governmental body is currently pending, or

to the knowledge of the Servicer threatened, against the Servicer or any of its

properties or with respect to this Agreement or any other Transaction Document

to which the Servicer is a party that, if adversely determined, would, in the

reasonable judgment of the Servicer, be expected to have a material adverse

effect on the business, properties, assets or condition (financial or

otherwise) of the Servicer or the Issuer or the transactions contemplated by

this Agreement or any other Transaction Document to which the Servicer is a

party.

 

(g)           Reports.  All reports, certificates and other written

information furnished by the Servicer with respect to the Loans are correct in

all material respects.

 

Section 3.08                            Representations and

Warranties of the Backup Servicer and the Indenture Trustee.

 

Each of the Backup Servicer and Indenture Trustee hereby represents and

warrants to the Issuer, the Originator, the Servicer, the Trust Depositor, the

Owner Trustee, the Securityholders and the Swap Counterparties, as follows:

 

(a)           Organization.  It is a national banking association duly

organized, validly existing and in good standing under the federal laws of the

United States with all requisite power and authority to own its properties and

to conduct its business as presently conducted and to enter into and perform

its obligations pursuant to this Agreement.

 

(b)           Good Standing.  It is duly qualified to do business as a

national banking association and is in good standing, and has obtained all

necessary licenses and approvals, in all jurisdictions in which the ownership

or lease of its property and the conduct of its business requires such

qualification, licenses or approvals, except where the failure to so qualify or

have such licenses or approvals has not had, and would not be reasonably

expected to have, a material adverse effect on the interests of the

Securityholders or the Swap Counterparties.

 

(c)           Authorization.  It has the power and authority to execute

and deliver this Agreement and to carry out its terms, and it has duly

authorized the execution, delivery and performance of this Agreement by all

requisite action.

 

(d)           No Violations.  The consummation of the transactions

contemplated by, and the fulfillment of the terms of, this Agreement by it will

not (i) conflict with, result in any breach of any of the terms or provisions

of, or constitute a default under, its articles of association, bylaws or any

Contractual Obligation by which it or any of its property is bound, (ii) result

in the creation or imposition of any Lien upon any of its properties pursuant

to the terms of any Contractual Obligation (other than the Agreement), or (iii)

violate any Requirements of Law.

 

(e)           No Consent Required.  No consent, approval, authorization, order,

registration, filing, qualification, license or permit of or with any

Governmental Authority having jurisdiction over it or any of its respective

properties is required to be obtained in order for it to enter into this

Agreement or perform its obligations hereunder.

 

(f)            Binding

Obligation.  This Agreement

constitutes its legal, valid and binding obligation, enforceable in accordance

with its terms, except as such enforceability may be limited by

(i) applicable Insolvency Laws and (ii) general principles of equity

(whether considered in a suit at law or in equity).

 

(g)           Litigation.  There are no proceedings or investigations

pending or, to the best of its knowledge, threatened, against it before any

Governmental Authority (i) asserting the invalidity of this Agreement,

(ii) seeking to prevent the consummation of any of the transactions

contemplated by this Agreement or (iii) seeking any

 

39

 

determination or ruling that might (in its reasonable judgment) have a

material adverse effect on the interests of the Securityholders or the Swap

Counterparties.

 

 

ARTICLE IV

 

PERFECTION OF TRANSFER AND

PROTECTION OF SECURITY INTERESTS

 

Section 4.01                            Custody of Loans.

 

The contents of each Loan File shall be held in the custody of the

Indenture Trustee under the terms of this Agreement and the Indenture for the

benefit of, and as agent for, the Securityholders and the Swap Counterparties.

 

Section 4.02                            Filing.

 

On or prior to the Closing Date, the Originator, Trust Depositor and

Servicer shall cause the UCC financing statement(s) referred to in subsection 2.02(ix)

hereof to be filed, and from time to time the Servicer shall take and cause to

be taken such actions and execute such documents as are necessary or desirable

or as the Owner Trustee or Indenture Trustee (acting at the direction of the

Required Holders) may reasonably request to perfect and protect the Indenture

Trustee’s first priority perfected security interest in the Loan Assets against

all other Persons, including, without limitation, the filing of financing

statements, amendments thereto and continuation statements, the execution of

transfer instruments and the making of notations on or taking possession of all

records or documents of title. 

Notwithstanding the obligations of the Originator, the Trust Depositor

and the Servicer set forth in the preceding sentence, the Originator, the Trust

Depositor and the Servicer hereby authorize the Owner Trustee to prepare and

file, at the expense of the Servicer, UCC financing statements (including but

not limited to renewal, continuation or in lieu statements) and amendments or

supplements thereto or other instruments as the Owner Trustee may from time to

time deem necessary or appropriate in order to perfect and maintain the

security interest granted hereunder in accordance with the UCC.

 

Section 4.03                            Changes in Name,

Corporate Structure or Location.

 

(a)           During the term of

this Agreement, none of the Originator, the Servicer, the Trust Depositor or

the Issuer shall change its name, identity, structure, existence or location

(as defined in Article 9 of the UCC) without first giving at least thirty (30)

days’ prior written notice to the Owner Trustee, the Indenture Trustee and each

Swap Counterparty.

 

(b)           If any change in

either the Servicer’s, the Originator’s, the Trust Depositor’s or the Issuer’s

name, identity, structure, existence, location (as defined in Article 9 of the

UCC) or other action would make any financing or continuation statement or

notice of ownership interest or Lien relating to any Loan Asset seriously

misleading within the meaning of applicable provisions of the UCC or any title

statute, the Servicer, no later than five (5) Business Days after the effective

date of such change, shall file such amendments as may be required to preserve

and protect the Indenture Trustee’s security interest in the Loan Assets and

the proceeds thereof.  Promptly after

taking any of the foregoing actions, the Servicer shall deliver to the Owner

Trustee and the Indenture Trustee an Opinion of Counsel reasonably acceptable

to the Owner Trustee and the Indenture Trustee stating that, in the opinion of

such counsel, all financing statements or amendments necessary to preserve and

protect the Indenture Trustee’s security interest in the Loan Assets have been

filed, and reciting the details of such filing.

 

Section 4.04                            Chief Executive Office.

 

During the term of this Agreement, and subject to the other terms and

provisions herein relating to changes in location, the Originator will maintain

its chief executive office in one of the States of the United States.

 

40

 

Section 4.05                            Costs and Expenses.

 

The Servicer agrees to pay all reasonable costs and disbursements in

connection with the perfection and the maintenance of perfection, as against

all third parties, of the Issuer’s and the Indenture Trustee’s right, title and

interest in and to the Loan Assets (including, without limitation, the security

interest in the Collateral related thereto and the security interests provided

for in the Indenture).

 

Section 4.06                            Sale Treatment.

 

The Trust Depositor shall treat the transfer of Loan Assets made

hereunder for all purposes (other than for financial accounting purposes) as a

sale and purchase on all of its relevant books, records, financial statements

and other applicable documents. 

Notwithstanding the preceding sentence, for federal income tax purposes,

the transfer of Loan Assets by the Trust Depositor hereunder shall not be

treated as a sale and purchase for federal income tax purposes so long as the

Issuer is disregarded as a separate entity pursuant to Treasury Regulations

Section 301.7701–3(b)(1)(ii).

 

Section 4.07                            Separateness from Trust

Depositor.

 

The Originator agrees to take or refrain from taking or engaging in

with respect to the Trust Depositor each of the actions or activities specified

in the “substantive consolidation” opinion of Winston & Strawn (including

any certificates of the Originator attached thereto), delivered on the Closing

Date, upon which the conclusions therein are based.

 

 

ARTICLE V

 

SERVICING OF LOANS

 

Section 5.01                            Appointment and

Acceptance; Responsibility for Loan Administration.

 

(a)           ACAS is hereby

appointed as Servicer pursuant to this Agreement.  ACAS accepts the appointment and agrees to act as the Servicer

pursuant to this Agreement.

 

(b)           The Servicer will

have the sole obligation to manage, administer, service and make collections on

the Loans and perform or cause to be performed all contractual and customary

undertakings of the holder of the Loans to the Obligor.  The Owner Trustee, at the written request of

a Servicing Officer, shall furnish the Servicer with any powers of attorney or

other documents necessary or appropriate in the opinion of the Owner Trustee to

enable the Servicer to carry out its servicing and administrative duties

hereunder.  The Servicer is hereby

appointed the Servicer hereunder until such time as any Servicer Transfer may

be effected under Article VIII.

 

Section 5.02                            General Duties.

 

(a)           The Servicer will

service, administer and enforce the Loans in the Loan Pool on behalf of the

Issuer and will have full power and authority to do any and all things in

connection with such servicing and administration which it deems necessary or

desirable and as shall not contravene the provisions of this Agreement.  The Servicer will manage, service,

administer, and make collections on the Loans in the Loan Pool with reasonable

care, using that degree of skill and attention that the Servicer exercises with

respect to all comparable loans that it services for itself or others.  The Servicer’s duties will include

collection and posting of all payments, responding to inquiries of Obligors

regarding the Loans in the Loan Pool, investigating delinquencies, accounting

for collections, furnishing monthly and annual statements with respect to

collections and payments in accordance with Article IX hereof and

with its customary standards, policies and procedures, and using its best

efforts to maintain the perfected first priority security interest of the

Indenture Trustee in the Loan Assets. 

The Servicer will follow its customary standards, policies, and

procedures and will have full power and authority, acting alone (and consistent

with its customary standards, policies and procedures, in its own name), to do

any and all things in connection with such managing, servicing, administration

and collection, including, without limitation, litigation, that it deems

necessary or desirable.

 

41

 

(b)           If the Servicer

commences a legal proceeding to enforce a Defaulted Loan pursuant to Section 5.15

or commences or participates in a legal proceeding (including a bankruptcy

proceeding) relating to or involving a Loan in the Loan Pool, the Issuer will

be deemed to have automatically assigned such Loan to the Servicer immediately

prior to the commencement of any such legal proceeding, for purposes of

commencing or participating in any such proceeding as a party or claimant, and

the Servicer is authorized and empowered by the Issuer, pursuant to this subsection 5.02(b),

to execute and deliver, on behalf of itself and the Issuer, any and all

instruments of satisfaction or cancellation, or partial or full release or

discharge, and all other notices, demands, claims, complaints, responses,

affidavits or other documents or instruments in connection with any such

proceedings.  If in any enforcement suit

or legal proceeding it is held that the Servicer may not enforce a Loan on the

grounds that it is not a real party in interest or a holder entitled to enforce

the Loan, then the Owner Trustee will, at the Servicer’s expense and direction,

take steps on behalf of the Issuer to enforce the Loan, including bringing suit

in the Issuer’s name.

 

Section 5.03                            Administration.

 

The Servicer will act as administrator for the Issuer and the Owner

Trustee under the Transaction Documents and will provide the notices and

perform other administration obligations required to be provided or performed

by the Issuer and/or the Owner Trustee under the Transaction Documents.  The Servicer shall monitor the performance

of the Issuer and the Owner Trustee and shall advise the Owner Trustee when

action is necessary to comply with the Issuer’s or the Owner Trustee’s duties

under the Transaction Documents.  The

Servicer shall prepare for execution by the Owner Trustee or Issuer or shall

cause the preparation by other appropriate Persons of all such documents,

reports, filings, instruments, certificates and opinions as it shall be the

duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to

the Transaction Documents.  The Servicer

will also perform the accounting functions of the Issuer which the Owner Trustee

is required to perform under the Trust Agreement, including but not limited to

maintaining the books of the Issuer, filing tax returns for the Issuer and

delivering tax related reports to Noteholders, except Form 1099s and

Schedule K–1s, which shall be the responsibility of the Indenture Trustee

and Owner Trustee, respectively.

 

Section 5.04                            Disposition upon

Termination of Loan.

 

Upon the termination of a Loan included in the Loan Pool as a result of

a default by the Obligor thereunder, and upon any such Loan becoming a

Defaulted Loan, the Servicer will use commercially reasonable efforts to

dispose of any related Collateral for a purchase price equal to the fair market

value thereof as reasonably determined by the Servicer.

 

Section 5.05                            Subservicers.

 

The Servicer may enter into servicing agreements with one or more

subservicers (including any Affiliate of the Servicer) to perform all or a

portion of the servicing functions on behalf of the Servicer; provided,  that, the Servicer shall remain obligated and be

liable to the Issuer for servicing and administering the Loans in the Loan Pool

in accordance with the provisions of this Agreement without diminution of such

obligation and liability by virtue of the appointment of such subservicer, to

the same extent and under the same terms and conditions as if the Servicer

alone were servicing and administering such Loans.  The fees and expenses of the subservicer (if any) will be as

agreed between the Servicer and its subservicer and neither the Owner Trustee, the

Issuer, the Indenture Trustee, the Swap Counterparties nor the Securityholders

will have any responsibility therefor. 

All actions of a subservicer taken pursuant to such a subservicer

agreement will be taken as an agent of the Servicer with the same force and

effect as though performed by the Servicer.

 

Section 5.06                            Further Assurance.

 

The Owner Trustee and the Indenture Trustee will, at the written

request of the Servicer, furnish the Servicer, and the Servicer will furnish

any subservicer, with any powers of attorney and other documents necessary or

appropriate to enable the Servicer or a subservicer, as applicable, to carry

out its servicing and administrative duties under this Agreement, the forms of

which documents shall be prepared by the Servicer and submitted for execution

to the Owner Trustee or the Indenture Trustee, as the case may be.  The Servicer shall not, nor shall the

 

42

 

Servicer permit any sub–servicer to, initiate any action in the Indenture

Trustee’s name if such action were to require the Indenture Trustee to become

registered to do business in any state in which it was not already registered

and without both obtaining the Indenture Trustee’s written consent and

indicating the Servicer’s or such sub–servicer’s representative capacity.

 

Section 5.07                            Notice to Obligors.

 

The Servicer will not be required to notify any Obligor that such

Obligor’s Loan, or any security interest in such Loan or related Collateral,

has been sold, transferred, assigned, or conveyed pursuant to this Agreement; provided,  that, in the event that the Servicer is replaced,

then if the place for payment pursuant to any Loan is changed, the Successor

Servicer must give each related Obligor prompt written notice of the

appointment of the Successor Servicer and the place to which such Obligor

should make payments pursuant to each such Loan.

 

Section 5.08                            Collection Efforts;

Modification of Loans; Release of Loan Files.

 

(a)           The Servicer will

make reasonable efforts to collect all payments called for under the terms and

provisions of the Loans in the Loan Pool as and when the same become due, and

will follow those collection procedures which it follows with respect to all

comparable loans that it services for itself or others.

 

(b)           The Servicer may,

subject to Sections 5.09 and 5.10, at the request of an

Obligor and at the Servicer’s option, waive, modify or otherwise vary any

provision of a Loan in accordance with its Credit and Collection Policy; provided, that, (i) no such waiver,

modification or variance shall be used to circumvent the Required Reserve

Amount, (ii) except as provided in Sections 5.09, 5.10

and 5.15, no such waiver, modification or variance shall have a material

adverse effect on the Noteholders or the Swap Counterparties, and (iii) if

any Loan is waived, modified or varied due to an Obligor’s inability to pay

principal or interest, then the Loan shall be treated as a Delinquent Loan as

of the payment date that would have been missed had such Loan not been so

waived, modified or varied.

 

(c)           Upon the payment in

full of any Loan, the receipt by the Servicer of a notification that payment in

full will be escrowed in a manner customary for such purposes or the deposit

into the Collection Account of the purchase price of any Loan acquired by the

Trust Depositor, the Servicer or another Person pursuant to this Agreement, or

any other Transaction Document, the Servicer will immediately notify the

Indenture Trustee by a certification in the form of Exhibit E attached

hereto (which certification shall include a statement to the effect that all

amounts received or to be received in connection with such payment which are

required to be deposited in the Collection Account have been or will be so

deposited) of a Servicing Officer and shall request delivery to it of the Loan

File.  Upon receipt of such

certification and request, the Indenture Trustee shall in accordance with subsection 2.07(c)

release, within two (2) Business Days (if such request was received by 2:00 p.m.

central time), the related Loan File to the Servicer.  Expenses incurred in connection with any instrument of

satisfaction or deed of reconveyance shall be payable by the Servicer and shall

not be chargeable to the Collection Account or the Note Distribution Account.

 

(d)           From time to time

and as appropriate for the servicing or foreclosure of any Loan, the Indenture

Trustee shall, upon request of the Servicer and delivery to the Indenture

Trustee of a certification in the form of Exhibit E attached hereto

signed by a Servicing Officer, release the related Loan File to the Servicer

within two (2) Business Days (if such request was received by 2:00 p.m. central

time), and the Indenture Trustee shall execute such documents as shall be

necessary to the prosecution of any such proceedings.  The Servicer shall return the Loan File to the Indenture Trustee

when the need therefor by the Servicer no longer exists, unless the Loan has

been liquidated and the Liquidation Proceeds relating to the Loan have been

deposited in the Collection Account or the Loan File or such document has been

delivered to an attorney, or to a public trustee or other public official as

required by the Requirements of Law, for purposes of initiating or pursuing

legal action or other proceedings for the foreclosure or repossession of

Collateral either judicially or non–judicially, and the Servicer has delivered

to the Indenture Trustee a certificate of a Servicing Officer certifying as to

the name and address of the Person to whom such Loan File or such document was

delivered and the purpose or purposes of such delivery.  Upon receipt of a certificate of a Servicing

Officer stating that such Loan was liquidated, the servicing receipt relating

to such Loan shall be released by the Indenture Trustee to the Servicer.

 

43

 

(e)           The Indenture

Trustee shall execute and deliver to the Servicer any court pleadings, requests

for trustee’s sale or other documents provided to it necessary to the

foreclosure or trustee’s sale in respect of Collateral or to any legal action

brought to obtain judgment against any Obligor on the Underlying Note or other

agreement securing Collateral or to obtain a deficiency judgment, or to enforce

any other remedies or rights provided by the Underlying Note or other agreement

securing Collateral or otherwise available at law or in equity.  Together with such documents or pleadings,

the Servicer shall deliver to the Indenture Trustee a certificate of a

Servicing Officer requesting that such pleadings or documents be executed by

the Indenture Trustee and certifying as to the reason such documents or

pleadings are required and that the execution and delivery thereof by the

Indenture Trustee will not invalidate or otherwise adversely affect the Lien of

the agreement securing Collateral, except for the termination of such a Lien

upon completion of the foreclosure or trustee’s sale.  The Indenture Trustee shall, upon receipt of a written request from

a Servicing Officer, execute any document provided to the Indenture Trustee by

the Servicer or take any other action requested in such request that is, in the

opinion of the Servicer as evidenced by such request, required or appropriate

by any state or other jurisdiction to discharge the Lien securing Collateral

upon the satisfaction thereof and the Indenture Trustee will sign and post, but

will not guarantee receipt of, any such documents to the Servicer, or such

other party as the Servicer may direct, within five (5) Business Days of the Indenture

Trustee’s receipt of such certificate or documents.  Such certificate or documents shall establish to the Indenture

Trustee’s satisfaction that the related Loan has been paid in full by or on

behalf of the Obligor (or subject to a deficiency claim against such Obligor)

and that such payment has been deposited in the Collection Account.

 

(f)            Notwithstanding

anything contained in this Section 5.08 to the contrary, in no

event may the Servicer possess in excess of fifteen (15) Loan Files (excluding

Loan Files for Loans which have been paid in full or repurchased) at any given

time.

 

Section 5.09                            Prepaid Loan.

 

The Servicer may, at its option and in accordance with its Credit and

Collection Policy, agree to permit a Loan in the Loan Pool that is not otherwise

contractually prepayable by its terms to (a) prepay in part or

(b) become a Prepaid Loan; provided,  that, if the Originator is acting

as the Servicer hereunder, the Servicer will not permit the early termination

or full prepayment of such a Loan unless (i) such early termination or

full prepayment would not result in the Issuer receiving an amount (the “Prepayment

Amount”) less than the sum of (A) the Outstanding Loan Balance on the date

of such prepayment, plus any accrued and unpaid interest payments thereon and

(B) any Unreimbursed Servicer Advances thereon (unless effectively waived and

released by the Servicer) or (ii) if such early termination or full

prepayment would result in the Issuer receiving a Prepayment Amount less than

the amount set forth in clause (i), the Originator shall have

agreed to pay the Issuer the difference between the Prepayment Amount actually

paid and the amount set forth in clause (i) (such payment by the

Originator also to be considered a “Prepayment Amount”).

 

Section 5.10                            Acceleration.

 

The Servicer, at its option and consistent with its Credit and

Collection Policy, may accelerate (or elect not to accelerate) the maturity of

all or any Scheduled Payments under any Loan in the Loan Pool under which a

default under the terms thereof has occurred and is continuing (after the lapse

of any applicable grace period); provided,  that, promptly after such Loan

becomes a Defaulted Loan, the Servicer shall either accelerate the Scheduled

Payments due under the Loan or take other action in accordance with the

Originator’s past practice, including foreclosing on the related Collateral, to

realize upon the value of such Loan and the related Collateral to the fullest

extent permitted by the terms of such Loan.

 

Section 5.11                            Taxes.

 

To the extent provided for in any Loan in the Loan Pool, the Servicer

will make reasonable efforts to collect (or cause to be collected) all payments

with respect to amounts due for taxes and assessments relating to such Loans

and remit such amounts to the appropriate Governmental Authority on or prior to

the date such payments are due.

 

44

 

Section 5.12                            Insurance Premiums.

 

To the extent provided for in any Loan in the Loan Pool, the Servicer

will make reasonable efforts to collect (or cause to be collected) all payments

with respect to amounts due for insurance premiums relating to such Loans or

the Collateral and remit such amounts to the appropriate insurer on or prior to

the date such payments are due.

 

Section 5.13                            Remittances.

 

The Servicer will service all Collections in accordance with Section 7.01

hereof.

 

Section 5.14                            Servicer Advances.

 

For each Collection Period, if the Servicer determines that any

Scheduled Payment (or portion thereof) that was due and payable pursuant to a

Loan in the Loan Pool during such Collection Period was not received prior to

the end of such Collection Period, the Servicer has the right to elect, but is

not obligated, to make a Servicer Advance in an amount up to the amount of such

delinquent Scheduled Payment (or portion thereof) if the Servicer reasonably

believes that the advance will be reimbursed by the related Obligor.  The Servicer will deposit any Servicer

Advances into the Collection Account on or prior to 11:00 a.m. (New York City

time) on the related Transfer Date, in immediately available funds.  The Servicer will be entitled to be

reimbursed for Servicer Advances pursuant to subsections 7.05(a)

and 7.05(b).

 

Section 5.15                            Realization upon

Defaulted Loan.

 

The Servicer will use its reasonable best efforts consistent with its

Credit and Collection Policy in its servicing of Loans to repossess or

otherwise comparably convert the ownership of any Collateral relating to a

Defaulted Loan and will retain a sales agent to sell such Collateral consistent

with its current practices.  The

Servicer will follow such other practices and procedures as it deems necessary

or advisable and as are customary and usual in its servicing of loans and other

actions by the Servicer in order to realize upon such Collateral, which

practices and procedures may include reasonable efforts to enforce all

obligations of Obligors and foreclosing upon and selling such Collateral at a

public or private sale in circumstances. 

Without limiting the generality of the foregoing, the Servicer may sell

any such Collateral to the Servicer or its Affiliates for a purchase price

equal to the then fair market value thereof. 

The Servicer will remit to the Collection Account the Liquidation

Proceeds received in connection with the sale or disposition of Collateral

relating to a Defaulted Loan in accordance with Section 7.01.

 

Section 5.16                            Maintenance of Insurance

Policies.

 

(a)           The Servicer will

use its reasonable best efforts to ensure that each Obligor maintains an Insurance

Policy with respect to the related Collateral in an amount at least equal to

the original Outstanding Loan Balance of the related Loan in the Loan Pool; provided,  that, the Servicer, in accordance with its Credit

and Collection Policy, may allow Obligors to self–insure.

 

(b)           Additionally, the

Servicer will require that each Obligor maintain property damage insurance

during the term of each Loan in the Loan Pool in amounts and against risks

customarily insured against.  If an

Obligor fails to maintain property damage insurance, the Servicer may, but is

under no obligation to, purchase and maintain such insurance on behalf of, and

at the expense of, the Obligor in accordance with the Servicer’s Credit and

Collection Policy.  In connection with

its activities as Servicer of the Loans, the Servicer agrees to present, on

behalf of itself, the Issuer, the Indenture Trustee, the Swap Counterparties

and the Securityholders, claims to the insurer under each Insurance Policy, and

to settle, adjust and compromise such claims, in each case, consistent with the

terms of each Loan and the Servicer’s Credit and Collection Policy.

 

45

 

Section 5.17                            Other Servicer Covenants.

 

The Servicer hereby covenants that:

 

(a)           Loan Files.  The Servicer will, at its own cost and

expense, maintain copies of all Loan Files in its possession in accordance with

its customary procedures.  Without

limiting the generality of the preceding sentence, the Servicer will not

dispose of any documents constituting the Loan Files in any manner that is

inconsistent with the performance of its obligations as the Servicer pursuant

to this Agreement and will not dispose of any Loan except as contemplated by

this Agreement.

 

(b)           Compliance with

Law.  The Servicer will comply, in

all material respects, with all Requirements of Law applicable to the Servicer

or the Loans in the Loan Pool; provided,  that, the Servicer may contest any

such Requirements of Law in any reasonable manner that will not materially and

adversely affect the value of (or the rights of the Indenture Trustee, the

Securityholders or the Swap Counterparties with respect to) the Loan Assets.

 

(c)           Obligations with

Respect to Loans; Modifications. 

The Servicer will duly fulfill and comply with, in all material

respects, all obligations on the part of the Trust Depositor to be fulfilled or

complied with under or in connection with each Loan in the Loan Pool and will

do nothing to impair the rights of the Indenture Trustee, the Securityholders or

the Swap Counterparties in, to and under the Loan Assets.  The Servicer will perform such obligations

under the Loans in the Loan Pool and will not modify, waive or vary the Loans,

except as otherwise permitted hereby.

 

(d)           No Bankruptcy

Petition.  Prior to the date that is

one (1) year and one (1) day after the payment in full of all amounts owing in

respect of all outstanding Securities, the Servicer will not institute against

the Trust Depositor, or the Issuer, or join any other Person in instituting against

the Trust Depositor or the Issuer, any bankruptcy, reorganization, arrangement,

insolvency or liquidation proceedings or other similar proceedings under the

laws of the United States or any state of the United States.  This subsection 5.17(d) will survive

the termination of this Agreement.

 

(e)           Location of Loan

Files.  The Loan Files shall remain

at all times in the possession of the Indenture Trustee unless the Servicer

requests that a Loan File be delivered to it in order to enforce the rights of

the Issuer thereunder or for other purposes related to the servicing of the

Loans, to the extent provided in Section 5.08.

 

(f)            Regulatory

Filings.  The Servicer, on behalf of

the Trust Depositor, shall make any filings, reports, notices, applications and

registrations with, and seek any consents or authorizations from, the

Commission and any state securities authority as may be necessary or that the

Trust Depositor deems advisable to comply with any federal or state securities

or reporting requirements laws.

 

(g)           Modification of

Credit and Collection Policy.  The

Servicer shall not amend or modify its Credit and Collection Policy in a manner

that would have a material adverse effect on the Securityholders or the Swap

Counterparties.

 

(h)           Swap Covenants.

 

(1)           So

long as any of the Notes are outstanding, if on any date either:

 

(i)            the

then current Aggregate Notional Amount of all Swap Transactions hedging the

Fixed Rate Loans exceeds the Outstanding Loan Balance of the Fixed Rate Loans

for the corresponding Collection Period by more than the Fixed Rate Permitted

Excess Amount; or

 

(ii)           the

Aggregate Notional Amount for any future calculation period of all Swap

Transactions hedging the Fixed Rate Loans exceeds the projected Outstanding

Loan Balance of the Fixed Rate Loans for the corresponding Collection Period by

more than the Fixed Rate Permitted Excess Amount.

 

46

 

then, not later than 1:00 p.m. (New York City time) on the date that is

the second (2nd) New York Business Day prior to the Determination Date

preceding the next Payment Date, the Servicer will notify the Indenture

Trustee, the Swap Counterparties and the Rating Agencies of such event and with

effect on such next Payment Date one or more of the Swap Transactions hedging

the Fixed Rate Loans will be reduced or amended in accordance with the terms of

the applicable Swaps so that the Aggregate Notional Amount for each calculation

period of the Swap Transactions hedging the Fixed Rate Loans will not exceed the

Outstanding Loan Balance of the Fixed Rate Loans at the end of the

corresponding Collection Period or as projected to be outstanding at the end of

the corresponding Collection Period.

 

(2)           So

long as any of the Notes are outstanding, if on any date either:

 

(i)            the

then current Aggregate Notional Amount of all Swap Transactions hedging the

Floating Rate Loans exceeds the Outstanding Loan Balance of the Floating Rate

Loans for the corresponding Collection Period by more than the Floating Rate

Permitted Excess Amount; or

 

(ii)           the

Aggregate Notional Amount for any future calculation period of all Swap

Transactions hedging the Floating Rate Loans exceeds the projected Outstanding

Loan Balance of the Floating Rate Loans for the corresponding Collection Period

by more than the Floating Rate Permitted Excess Amount;

 

then, not later than 1:00 p.m. (New York City time) on the date that is

the second (2nd) New York Business Day prior to the Determination Date

preceding the next Payment Date, the Servicer will notify the Indenture

Trustee, the Swap Counterparties and the Rating Agencies of such event and with

effect on such next Payment Date one or more of the Swap Transactions hedging

the Floating Rate Loans will be reduced or amended in accordance with the terms

of the applicable Swaps so that the Aggregate Notional Amount of the Swap

Transactions hedging the Floating Rate Loans will not exceed the Outstanding

Loan Balance of the Floating Rate Loans at the end of the corresponding

Collection Period or as projected to be outstanding at the end of the

corresponding Collection Period.

 

Section 5.18                            Servicing Compensation.

 

As compensation for its servicing activities hereunder and

reimbursement for its expenses as set forth in Section 5.19, the

Servicer shall be entitled to receive a monthly servicing fee in respect of any

Collection Period (or portion thereof) prior to the termination of the Issuer

(with respect to each Collection Period, the “Servicing Fee”) equal to

one–twelfth of the product of (A) the Servicing Fee Percentage and (B) the

Aggregate Outstanding Loan Balance of the Loans as of the first day of such

Collection Period.  The Servicing Fee is

payable out of Interest Collections.

 

Section 5.19                            Payment of Certain

Expenses by Servicer.

 

The Servicer will be required to pay all expenses incurred by it in

connection with its activities under this Agreement, including fees and

disbursements of independent accountants, the Owner Trustee (including with

respect to an administrator acting on behalf of the Owner Trustee and the

Issuer), the Indenture Trustee, taxes imposed on the Servicer, expenses

incurred in connection with payments and reports pursuant to this Agreement,

and all other fees and expenses not expressly stated under this Agreement to be

for the account of the Issuer or the Trust Depositor.  The Servicer will be required to pay all reasonable fees and

expenses (including, without limitation, legal fees and expenses) owing to the

Owner Trustee or the Indenture Trustee in connection with the maintenance of

the Trust Accounts.  The Servicer shall

be required to pay such expenses for its own account and shall not be entitled

to any payment or reimbursement therefor other than (i) the Servicing Fee,

and (ii) the reimbursement for Liquidation Expenses to the extent gross

recoveries with respect to a Loan are sufficient, after payment of all

principal and finance charges due with respect to such Loan, to cover such

expenses.

 

Section 5.20                            Records.

 

The Servicer shall, during the period it is Servicer hereunder, maintain

such books of account and other records as will enable the Owner Trustee and

the Indenture Trustee to determine the status of each Loan.

 

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Section 5.21                            Inspection.

 

(a)           At all times during

the term hereof, the Servicer shall afford the Owner Trustee and the Indenture

Trustee and their respective authorized agents reasonable access during normal

business hours to the Servicer’s or any subservicer’s records relating to the

Loans and the Servicer’s performance or observance of the terms of this

Agreement.  The Servicer and any

subservicer will cause its personnel to assist in any examination of such

records by the Owner Trustee or the Indenture Trustee, or such authorized

agents, and allow copies of the same to be made.  The examination referred to in this subsection 5.21(a) will

be conducted in a manner that does not unreasonably interfere with the

Servicer’s or subservicer’s normal operations or customer or employee

relations.  Without otherwise limiting

the scope of the examination, the Owner Trustee or the Indenture Trustee may,

using generally accepted audit procedures, verify the status of each Loan and

review the Computer Records and other records relating thereto for conformity

to Monthly Reports prepared pursuant to Article IX and compliance

with the standards represented to exist as to each Loan in this Agreement.

 

(b)           At all times during

the term hereof, the Servicer shall keep available a copy of the List of Loans

at its principal executive office for inspection by Securityholders and Swap

Counterparties.

 

(c)           The Servicer shall,

if given reasonable notice by the Indenture Trustee after the end of any

Collection Period, provide the Indenture Trustee with a copy of the Computer

Record.

 

(d)           For

so long as any of the Notes are outstanding and are “restricted securities”

within the meaning of Rule 144(a)(3) of the Securities Act, (1) the

Servicer will provide or cause to be provided to any holder of such Notes and

any prospective purchaser thereof designated by such holder, upon the request

of such a holder or prospective purchaser, the information required to be

provided to such holder or prospective purchaser by Rule 144A(d)(4) under

the Securities Act; and (2) the Servicer shall update such information

from time to time in order to prevent such information from becoming false and

misleading and will take such other actions as are necessary to ensure that the

safe harbor exemption from the registration requirements of the Securities Act

under Rule 144A is and will be available for resales of such Notes

conducted in accordance with Rule 144A.

 

Section 5.22                            The Backup Servicer.

 

(a)           The Issuer, the

Indenture Trustee and the Trust Depositor hereby appoint Wells Fargo Bank

Minnesota, National Association to act as Backup Servicer in accordance with

the terms of this Agreement.  Wells

Fargo Bank Minnesota, National Association hereby accepts such appointment and

agrees to perform the duties and responsibilities with respect thereto set

forth herein.

 

(b)           The Backup Servicer

shall perform the following duties and obligations:

 

(i)            On

or before the Closing Date, the Backup Servicer shall accept from the Servicer

delivery of the information required to be set forth in the Monthly Reports in

hard copy and in an agreed upon electronic format.

 

(ii)           Not

later than 12:00 noon New York time two (2) Business Days prior to each

Determination Date, the Servicer shall provide to the Backup Servicer and the

Backup Servicer shall accept delivery of tape in an agreed upon electronic

format (the “Tape”) from the Servicer, which shall include but not be

limited to the following information: 

(x) for each Loan, the (1) Loan number, (2) legal name of the

related Obligor, (3) state of the Obligor’s chief executive office,

(4) SIC Code, (5) outstandings at cost, (6) type of Loan (i.e.,

term Loan or Revolving Loan), (7) type of security interest (i.e., senior

or subordinated), (8) term payment type (i.e., amortizing or balloon),

(9) origination date, (10) maturity date, (11) benchmark for the

Loan’s interest rate, (12) margin, (13) frequency of Scheduled

Payments, (14) controlling interest, (15) the collection status,

(16) the Loan status, and (17) the Outstanding Loan Balance, and

(y) the Aggregate Outstanding Loan Balance.

 

(iii)          Prior

to the related Payment Date, the Backup Servicer shall review the Monthly

Report to ensure that it is complete on its face and that the following items

in such Monthly Report have been accurately calculated, if applicable, and

reported:  (A) the Aggregate

Outstanding Loan Balance, (B) the

 

48

 

Backup Servicing Fee, (C) the Loans that are thirty (30) or more days

Delinquent (other than Defaulted Loans), (D) the Defaulted Loans, (E) the

Portfolio Yield and (F) the principal and interest payments due to

Noteholders.  The Backup Servicer shall

notify the Indenture Trustee, the Initial Purchaser and the Servicer of any

disagreements with the Monthly Report based on such review not later than the

Business Day preceding such Payment Date.

 

(iv)          If

the Servicer disagrees with the report provided under subsection 5.22(b)(iii)

by the Backup Servicer or if the Servicer or any subservicer has not reconciled

such discrepancy, the Backup Servicer agrees to confer with the Servicer to

resolve such disagreement on or prior to the next succeeding Determination Date

and shall settle such discrepancy with the Servicer, if possible, and notify

the Indenture Trustee, the Swap Counterparties and the Initial Purchaser of the

resolution thereof.  The Servicer hereby

agrees to cooperate, at its own expense, with the Backup Servicer in

reconciling any discrepancies herein. 

If, within twenty (20) days after the delivery of the report provided

under subsection 5.22(b)(iii) by the Backup Servicer, such

discrepancy is not resolved, the Backup Servicer shall promptly notify the

Servicer, the Indenture Trustee, the Swap Counterparties and the Initial

Purchaser of the continued existence of such discrepancy.  Following receipt of such notice by the

Indenture Trustee, the Swap Counterparties and the Initial Purchaser, the

Servicer shall deliver to the Indenture Trustee, the Swap Counterparties, the

Initial Purchaser, and the Backup Servicer, no later than the related Payment

Date, a certificate describing the nature and amount of such discrepancies and

the actions the Servicer proposes to take with respect thereto.

 

(c)           After the Servicer’s

and Backup Servicer’s receipt of an effective notice of termination terminating

the Servicer in accordance with this Agreement, all authority, power, rights

and responsibilities of the Servicer under this Agreement, whether with respect

to the Loans or otherwise, shall pass to and be vested in the Backup Servicer,

and the Backup Servicer shall be deemed the successor Servicer, subject to and

in accordance with the provisions of Section 8.03, as long as the

Backup Servicer is not prohibited by Requirements of Law from fulfilling the

same, as evidenced by an Opinion of Counsel.

 

(d)           Any Person (i) into

which the Backup Servicer may be merged or consolidated, (ii) that may result

from any merger or consolidation to which the Backup Servicer shall be a party,

or (iii) that may succeed to the properties and assets of the Backup Servicer

substantially as a whole, which Person in any of the foregoing cases executes

an agreement of assumption to perform every obligation of the Backup Servicer

hereunder, shall be the successor to the Backup Servicer under this Agreement

without further act on the part of any of the parties to this Agreement.

 

(e)           As compensation for

its backup servicing activities hereunder, the Backup Servicer shall be

entitled to receive the Backup Servicing Fee from the Servicer.  The Backup Servicer’s entitlement to receive

the Backup Servicing Fee (other than due and unpaid Backup Servicer Fees owed

through such date) shall cease on the earliest to occur of:  (i) it becoming the Successor Servicer, (ii)

its removal as Backup Servicer, or (iii) the termination of this Agreement.

 

(f)            The Backup Servicer

undertakes to perform only such duties and obligations as are specifically set

forth in this Agreement, it being expressly understood by all parties hereto

that there are no implied duties or obligations of the Backup Servicer

hereunder.  Without limiting the

generality of the foregoing, the Backup Servicer, except as expressly set forth

herein, shall have no obligation to supervise, verify, monitor or administer

the performance of the Servicer.  The

Backup Servicer may act through its agents, attorneys and custodians in

performing any of its duties and obligations under this Agreement, it being

understood by the parties hereto that the Backup Servicer will be responsible

for any misconduct or negligence on the part of such agents, attorneys or custodians

acting on the routine and ordinary day–to–day operations for and on behalf of

the Backup Servicer.  Neither the Backup

Servicer nor any of its officers, directors, employees or agents shall be

liable, directly or indirectly, for any damages or expenses arising out of the

services performed under this Agreement, other than damages or expenses that

result from the gross negligence or willful misconduct of it or them or the

failure to perform materially in accordance with this Agreement.

 

(g)           The Backup Servicer

shall not be liable for any obligation of the Servicer contained in this

Agreement or for any errors of the Servicer contained in any Tape, certificate

or other data or document delivered to the Backup Servicer hereunder or on

which the Backup Servicer must rely in order to perform its obligations

 

49

 

hereunder, and the parties hereto each agree to look only to the

Servicer to perform such obligations. 

With respect to subsection 5.22(b), the Backup Servicer, in

the performance of its duties and obligations hereunder, is entitled to rely

conclusively, and shall be fully protected in so relying, on the contents of

each Tape, including, but not limited to, the completeness and accuracy

thereof, provided by the Servicer.  The

Backup Servicer shall have no responsibility and shall not be in default

hereunder or incur any liability for any failure, error, malfunction or any

delay in carrying out any of its respective duties under this Agreement if such

failure or delay results from the Backup Servicer acting in accordance with

information prepared or supplied by a Person other than the Backup Servicer or

the failure of any such other Person to prepare or provide such information.  The Backup Servicer shall have no

responsibility, shall not be in default and shall incur no liability for

(i) any act or failure to act of any third party (other than any agent,

attorney or custodian acting on behalf of such Backup Servicer), including the

Servicer (ii) any inaccuracy or omission in a notice or communication

received by the Backup Servicer from any third party (other than any agent,

attorney or custodian acting on behalf of such Backup Servicer), (iii) the

invalidity or unenforceability of any Loan under Requirements of Law,

(iv) the breach or inaccuracy of any representation or warranty made with

respect to any Loan, or (v) the acts or omissions of any successor Backup

Servicer.

 

Section 5.23                            [Reserved].

 

Section 5.24                            Covenants of the Backup

Servicer.

 

The Backup Servicer hereby covenants that:

 

(a)           The Backup Servicer

will comply in all material respects with all Requirements of Law.

 

(b)           The Backup Servicer

will preserve and maintain its existence, rights, franchises and privileges as

a national banking association in good standing under the federal laws of the

United States.

 

(c)           The Backup Servicer

shall perform in all material respects all of its obligations and duties under

this Agreement.

 

Section 5.25                            Appointment of Successor

Backup Servicer; Successor Backup Servicer to Act.

 

(a)           The Backup Servicer

may be removed, with or without cause, by the Majority Noteholders or the

Indenture Trustee, by notice given in writing to the Backup Servicer (the “Backup

Servicer Termination Notice”).  The

Backup Servicer shall continue to perform all backup servicing functions under

this Agreement until the date specified in the Backup Servicer Termination

Notice or, if no such date is specified, until a date mutually agreed by the

Backup Servicer and the Indenture Trustee. 

The Indenture Trustee shall as promptly as possible after the giving of

a Backup Servicer Termination Notice appoint a Successor Backup Servicer (the “Successor

Backup Servicer”), and such Successor Backup Servicer shall accept its

appointment by a written assumption in a form acceptable to the Indenture

Trustee and Owner Trustee.

 

(b)           In the event that a

Successor Backup Servicer has not been appointed and has not accepted its

appointment at the time when the then Backup Servicer has ceased to act as

Backup Servicer, the Indenture Trustee shall petition a court of competent

jurisdiction to appoint any established financial institution having a net

worth of at least $50,000,000 and whose regular business includes the backup

servicing of loans similar to the Loans as the Successor Backup Servicer

hereunder.  The Successor Backup

Servicer shall be the successor in all respects to the Backup Servicer in its

capacity as Backup Servicer under this Agreement and the transactions set forth

or provided for herein, shall be subject to all the responsibilities, duties

and liabilities relating thereto placed on the Backup Servicer by the terms and

provisions hereof, and the terminated Backup Servicer shall be relieved of such

responsibilities, duties and liabilities arising after such backup servicer

transfer (the “Backup Servicer Transfer”); provided, however,

that the Successor Backup Servicer shall not be liable for any acts or

omissions of the Backup Servicer occurring prior to such Backup Servicer

Transfer or for any breach by the Backup Servicer of any of its representations

and warranties contained herein or in any related document or agreement.  As compensation therefor, the Successor

Backup Servicer shall be entitled to receive reasonable compensation equal to

the monthly Backup Servicing Fee from the Servicer.  Notwithstanding anything else herein to the contrary, in no event

shall the Issuer or the Indenture Trustee be liable for any Backup Servicing

Fee or for any differential in the amount of the backup servicing fee paid

hereunder and the amount necessary to induce any Successor Backup Servicer to

act as

 

50

 

Backup Servicer under this Agreement and the transactions set forth or

provided for herein.  The Issuer, the Indenture

Trustee and such successor shall take such action, consistent with this

Agreement, as shall be necessary to effectuate any such succession.

 

 

ARTICLE VI

 

COVENANTS OF THE TRUST DEPOSITOR

 

Section 6.01                            Legal Existence.

 

During the term of this Agreement, the Trust Depositor will keep in

full force and effect its existence, rights and franchises as a limited

liability company under the laws of the jurisdiction of its organization and

will obtain and preserve its qualification to do business in each jurisdiction

in which such qualification is or shall be necessary to protect the validity

and enforceability of this Agreement, the other Transaction Documents and each

other instrument or agreement necessary or appropriate to the proper

administration of this Agreement and the transactions contemplated hereby.  In addition, all transactions and dealings

between the Trust Depositor and its Affiliates will be conducted on an

arm’s–length basis.

 

Section 6.02                            Loans Not to Be

Evidenced by Promissory Notes.

 

The Trust Depositor will take no action to cause any Loan not

originally evidenced by an Underlying Note to be evidenced by an instrument (as

defined in the UCC), except in connection with the enforcement or collection of

such Loan.

 

Section 6.03                            Security Interests.

 

The Trust Depositor will not sell, pledge, assign or transfer to any

other Person, or grant, create, incur, assume or suffer to exist any Lien on

any Loan in the Loan Pool or related Collateral, whether now existing or

hereafter transferred to the Issuer, or any interest therein.  The Trust Depositor will immediately notify

the Owner Trustee, each Swap Counterparty and the Indenture Trustee of the

existence of any Lien on any Loan in the Loan Pool or related Collateral, and

the Trust Depositor shall defend the right, title and interest of the Issuer

in, to and under the Loans in the Loan Pool and the related Collateral against

all claims of third parties; provided,

however, that nothing in this Section 6.03 shall prevent

or be deemed to prohibit the Trust Depositor from suffering to exist Permitted

Liens upon any of the Loans in the Loan Pool or any related Collateral.

 

Section 6.04                            Delivery of Collections.

 

The Trust Depositor agrees to pay to the Servicer promptly (but in no

event later than two (2) Business Days after receipt) all Collections

received by the Trust Depositor in respect of the Loans, for application in

accordance with Section 7.05 hereof.

 

Section 6.05                            Regulatory Filings.

 

The Trust Depositor shall make any filings, reports, notices,

applications and registrations with, and seek any consents or authorizations

from, the Commission and any state securities authority on behalf of the Issuer

as may be necessary or that the Trust Depositor deems advisable to comply with

any federal or state securities or reporting requirements laws.

 

Section 6.06                            Compliance with Law.

 

The Trust Depositor hereby agrees to comply in all material respects

with all Requirements of Law applicable to the Trust Depositor.

 

51

 

Section 6.07                            Activities.

 

The Trust Depositor shall not engage in any business or activity of any

kind, or enter into any transaction or indenture, mortgage, instrument,

agreement, contract, lease or other undertaking, which is not directly related

to the transactions contemplated and authorized by this Agreement or the other

Transaction Documents; provided,

however, that the Trust

Depositor may purchase and sell (or grant Liens in respect of) assets similar

to the Loan Assets to other Persons in securitization or other non–recourse

financing transactions involving the Originator or any of its Affiliates on

terms and conditions (with respect to liabilities and restrictions on its

activities, as well as restrictions on its interactions with the Originator or

its Affiliates, relevant to the “bankruptcy remoteness” or “substantive

consolidation” analysis relating to the Trust Depositor) substantially similar

to the terms and conditions applicable to the Trust Depositor under the

Transaction Documents, so long as the Securityholders and the Swap

Counterparties are not materially and adversely affected thereby and the Rating

Agency Condition is satisfied.

 

Section 6.08                            Indebtedness.

 

The Trust Depositor shall not create, incur, assume or suffer to exist

any Indebtedness or other liability whatsoever, except (i) obligations

incurred under this Agreement and the other Transaction Documents,

(ii) liabilities incident to the maintenance of its corporate existence in

good standing or (iii) liabilities necessarily incurred to facilitate

securitizations referred to in the proviso in Section 6.07.

 

Section 6.09                            Guarantees.

 

The Trust Depositor shall not become or remain liable, directly or

contingently, in connection with any Indebtedness or other liability of any

other Person, whether by guarantee, endorsement (other than endorsements of

negotiable instruments for deposit or collection in the ordinary course of

business), agreement to purchase or repurchase, agreement to supply or advance

funds, or otherwise except in connection with the transactions described in Section 6.07.

 

Section 6.10                            Investments.

 

The Trust Depositor shall not make or suffer to exist any loans or

advances to, or extend any credit to, or make any investments (by way of

transfer of property, contributions to capital, purchase of stock or securities

or evidences of indebtedness, acquisition of the business or assets, or

otherwise) in, any Person except (i) for purchases of Loans from the

Originator or as otherwise contemplated by the Transaction Documents,

(ii) for investments in Eligible Investments in accordance with the terms

of this Agreement, (iii) as may be necessary to facilitate securitizations

referred to in the proviso in Section 6.07 or (iv) for

acquisition of the Class C Notes and the Certificate.  Without limiting the generality of the

foregoing, the Trust Depositor shall not: (i) provide credit to any

Securityholder for the purpose of enabling such Securityholder to purchase any

Securities or (ii) lend any money to the Issuer.

 

Section 6.11                            Merger; Sales.

 

The Trust Depositor shall not enter into any transaction of merger or

consolidation, liquidate or dissolve itself (or suffer any liquidation or

dissolution), acquire or be acquired by any Person, or convey, sell, lease or

otherwise dispose of all or substantially all of its property or business,

except as provided for in this Agreement.

 

Section 6.12                            Distributions.

 

The Trust Depositor shall not declare or pay, directly or indirectly,

any dividend or make any other distribution (whether in cash or other property)

with respect to the profits, assets or capital of the Trust Depositor or any

Person’s interest therein, or purchase, redeem or otherwise acquire for value

any of its member interests now or hereafter outstanding, except that, so long

as no Event of Default has occurred and is continuing, no Event of Default

would occur as a result thereof or after giving effect thereto, and the Trust

Depositor would continue to be Solvent as a result thereof and after giving

effect thereto, the Trust Depositor may declare and pay distributions to its

members.

 

52

 

Section 6.13                            Other Agreements.

 

The Trust Depositor shall not become a party to, or permit any of its

properties to be bound by, any indenture, mortgage, instrument, contract,

agreement, lease or other undertaking, except this Agreement and the other

Transaction Documents to which it is a party and any agreement relating to

another securitization transaction permitted by Section 6.07; nor

shall it amend or modify the provisions of its Certificate of Formation or

limited liability company operating agreement, or issue any power of attorney

other than to the Owner Trustee, the Indenture Trustee or the Servicer, except

in accordance with the Transaction Documents.

 

Section 6.14                            Separate Legal Existence.

 

The Trust Depositor shall:

 

(i)            Maintain

its own deposit account or accounts, separate from those of any Affiliate, with

commercial banking institutions.  The

funds of the Trust Depositor will not be diverted to any other Person or for

other than authorized uses of the Trust Depositor.

 

(ii)           Ensure

that, to the extent that it shares the same officers or other employees as any

of its members or Affiliates, the salaries of and the expenses related to

providing benefits to such officers and other employees shall be fairly

allocated among such entities, and each such entity shall bear its fair share

of the salary and benefit costs associated with all such common officers and

employees.

 

(iii)          Ensure

that, to the extent that it jointly contracts with any of its members or

Affiliates to do business with vendors or service providers or to share

overhead expenses, the costs incurred in so doing shall be allocated fairly

among such entities, and each such entity shall bear its fair share of such

costs.  To the extent that the Trust

Depositor contracts or does business with vendors or service providers when the

goods and services provided are partially for the benefit of any other Person,

the costs incurred in so doing shall be fairly allocated to or among such

entities for whose benefit the goods and services are provided, and each such

entity shall bear its fair share of such costs.  All material transactions between Trust Depositor and any of its

Affiliates shall be only on an arm’s length basis.

 

(iv)          To

the extent that the Trust Depositor and any of its members or Affiliates have

offices in the same location, there shall be a fair and appropriate allocation

of overhead costs among them, and each such entity shall bear its fair share of

such expenses.

 

(v)           Conduct

its affairs strictly in accordance with its Certificate of Formation and

limited liability company operating agreement and observe all necessary,

appropriate and customary limited liability company formalities, including, but

not limited to, holding all regular and special members’ and managers’ meetings

appropriate to authorize all limited liability company action, keeping separate

and accurate minutes of its meetings, passing all resolutions or consents

necessary to authorize actions taken or to be taken, and maintaining accurate

and separate books, records and accounts, including, but not limited to,

payroll and intercompany transaction accounts.

 

(vi)          Take

or refrain from taking, as applicable, each of the activities specified in the

“substantive consolidation” opinion of Winston & Strawn, delivered on the

Closing Date, upon which the conclusions expressed therein are based.

 

Section 6.15                            [Reserved].

 

Section 6.16                            Liability of Trust

Depositor and Others.

 

The Trust Depositor shall be liable in accordance herewith only to the

extent of the obligations specifically undertaken by the Trust Depositor under

this Agreement.  The Trust Depositor and

any director, officer, employee or agent of the Trust Depositor may rely in

good faith on any document of any kind, prima facie properly executed and

submitted by any Person respecting any matters arising hereunder.  The Trust Depositor and any director,

officer, employee or agent of the Trust Depositor shall be reimbursed by the

Indenture Trustee for any liability or

 

53

 

expense incurred by reason of the Indenture Trustee’s willful

misfeasance, bad faith or gross negligence (except errors in judgment) in the

performance of its duties hereunder, or by reason of the reckless disregard of

its obligations and duties hereunder. 

The Trust Depositor shall not be under any obligation to appear in,

prosecute or defend any legal action that shall not be incidental to its

obligations under this Agreement and that in its opinion may involve it in any

expense or liability.

 

Section 6.17                            Bankruptcy Limitations.

 

The Trust Depositor shall not, without the affirmative vote of a

majority of the managers of the Trust Depositor (which must include the

affirmative vote of at least two duly appointed Independent managers) (A)

dissolve or liquidate, in whole or in part, or institute proceedings to be

adjudicated bankrupt or insolvent, (B) consent to the institution of bankruptcy

or insolvency proceedings against it, (C) file a petition seeking or consent to

reorganization or relief under any applicable federal or state law relating to

bankruptcy, (D) consent to the appointment of a receiver, liquidator, assignee,

trustee, sequestrator (or other similar official) of the limited liability

company or a substantial part of its property, (E) make a general assignment

for the benefit of creditors, (F) admit in writing its inability to pay

its debts generally as they become due, or (G) take any limited liability

company action in furtherance of the actions set forth in clauses (A)

through (F) above; provided,

however, that no manager

may be required by any member of the Trust Depositor to consent to the

institution of bankruptcy or insolvency proceedings against the Trust Depositor

so long as it is Solvent.

 

Section 6.18                            [Reserved].

 

Section 6.19                            Chief Executive Office.

 

During the term of this Agreement, the Trust Depositor will maintain

its chief executive office in one of the States of the United States.

 

 

ARTICLE VII

 

ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND

 

Section 7.01                            Trust Accounts;

Collections.

 

(a)           On or before the

Closing Date, the Trust Depositor shall establish the Collection Account

(including two sub–accounts, the Interest Collection Account and the Principal

Collection Account), the Note Distribution Account and the Reserve Fund, each

with and in the name of the Indenture Trustee for the benefit of the

Securityholders and the Swap Counterparties. 

The Servicer and Indenture Trustee are hereby required to ensure that

each of the Trust Accounts is established and maintained as an Eligible Deposit

Account with a Qualified Institution. 

If any institution with which any of the accounts established pursuant

to this subsection 7.01(a) are established ceases to be a Qualified

Institution, the Servicer, or if the Servicer fails to do so, the Indenture

Trustee (as the case may be) shall within ten (10) Business Days establish a

replacement account at a Qualified Institution after notice of such event.  The Indenture Trustee and the Servicer shall

insure that each Qualified Institution maintaining an Eligible Deposit Account

agrees in writing to comply with all instructions originated by the Indenture

Trustee directing disposition of the funds in such account without the further

consent of the Trust Depositor or Issuer. 

The Trust Depositor and the Issuer agree and acknowledge that the

Indenture Trustee is to have “control” (within the meaning of the UCC) of

collateral comprised of “Investment Property” (within the meaning of the UCC)

for all purposes of this Agreement.  For

all purposes of this Agreement, the Indenture Trustee’s “jurisdiction” in

respect of matters governed by the UCC shall be the State of Minnesota.

 

(b)           The Servicer shall

deposit or cause to be deposited, without deposit into any intervening account,

into the Collection Account not later than two (2) Business Days following the

actual receipt of such remittance by the Servicer, all Collections on deposit

with the Servicer in the form of available funds and all Collections otherwise

received by the Servicer.  Collections

constituting Interest Collections shall be deposited in the Interest Collection

Account, and Collections constituting Principal Collections shall be deposited

in the Principal Collection Account.

 

54

 

(c)           Notwithstanding subsection 7.01(b),

the Servicer shall deposit or cause to be deposited, on the applicable

Assignment Date, in immediately available funds into the Collection Account all

Collections received after the applicable Cut–Off Date and through and

including the date two (2) days preceding the applicable Assignment Date in

respect of Loans being transferred to the Issuer on such date.  Such Collections constituting Interest

Collections shall be deposited in the Interest Collection Account, and those

constituting Principal Collections shall be deposited in the Principal

Collection Account.

 

(d)           [Reserved].

 

(e)           Notwithstanding subsections 7.01(b)

and (c), if (i) the Servicer makes a deposit into the Collection

Account in respect of a Collection of a Loan in the Loan Pool and such

Collection was received by the Servicer in the form of a check that is not

honored for any reason, or (ii) the Servicer makes a mistake with respect

to the amount of any Collection and deposits an amount that is less than or

more than the actual amount of such Collection, the Servicer shall

appropriately adjust the amount subsequently deposited into the Collection Account

to reflect such dishonored check or mistake. 

Any Scheduled Payment in respect of which a dishonored check is received

shall be deemed not to have been paid.

 

Section 7.02                            Reserve Fund Deposit.

 

On the Closing Date, the Owner Trustee, on behalf of the Issuer, shall

deposit the Reserve Fund Initial Deposit into the Reserve Fund from the net

proceeds of the sale of Securities.

 

Section 7.03                            Trust Account Procedures.

 

(a)           If the Servicer so

directs in writing, the Indenture Trustee shall accept such directions as

directions of the Issuer and shall invest the amounts in the Trust Accounts in

Qualified Eligible Investments of the type specified in such written direction

that mature or are withdrawable not later than one (1) Business Day prior to

the next succeeding Payment Date, except for investments in subsection (vi)

of the definition of Eligible Investments. 

Once such funds are invested, the Indenture Trustee shall not change the

investment of such funds.  Funds in the

Trust Accounts not so invested must be insured to the extent permitted by law

by the Bank Insurance Fund or the Savings Association Insurance Fund of the

Federal Deposit Insurance Corporation. 

Subject to the restrictions herein, the Indenture Trustee may purchase a

Qualified Eligible Investment from itself or an Affiliate.  Subject to the other provisions hereof, the

Indenture Trustee shall have sole control over each such investment and the

income thereon, and any certificate or other instrument evidencing any such

investment, if any, shall be delivered directly to the Indenture Trustee or its

agent, together with each document of transfer, if any, necessary to transfer

title to such investment to the Indenture Trustee in a manner which complies

with this Section 7.03.  All

Investment Earnings on investments of funds in the Trust Accounts shall be

deposited in the Collection Account pursuant to Section 7.01 and

distributed on the next Payment Date pursuant to Section 7.05.  The Trust Depositor and the Issuer agree and

acknowledge that the Indenture Trustee is to have “control” (within the meaning

of Section 9–104 of the UCC as enacted in New York) of collateral

comprised of “Investment Property” (within the meaning of Section 9–102 of

the UCC as enacted in New York) for all purposes of this Agreement.  For all purposes of this Agreement, the

Indenture Trustee’s “jursidiction” in respect of matters governed by the UCC

shall be the State of Minnesota.  In the

absence of timely written direction from the Servicer, the Indenture Trustee

shall invest amounts in the Trust Accounts in Qualified Eligible Investments of

the type specified in clause (vi) of the definition of Eligible

Investments herein.

 

(b)           On each

Determination Date, the Servicer shall instruct the Indenture Trustee to, and

on each Payment Date the Indenture Trustee shall, transfer to the Note

Distribution Account, for distribution as provided in Section 7.05,

all Interest Collections and Principal Collections on deposit in the

Collections Account, all funds on deposit in the Reserve Fund and all

Investment Earnings from the Trust Accounts.

 

Section 7.04                            Securityholder

Distributions.

 

(a)           Each Noteholder and

Certificateholder as of the related Record Date shall be paid on the next

succeeding Payment Date by check mailed to such Noteholder or Certificateholder

at the address for such Noteholder or Certificateholder appearing on the Note

Register or Certificate Register or by wire transfer if such

 

55

 

Noteholder or Certificateholder provides written instructions to the

Indenture Trustee, or Owner Trustee, respectively, at least ten (10) days prior

to such Payment Date.

 

(b)           The Indenture

Trustee shall serve as the Paying Agent hereunder and shall make the payments

to the Securityholders required hereunder. 

The Indenture Trustee hereby agrees that all amounts held by it for

payment hereunder will be held in trust for the benefit of the Securityholders.

 

Section 7.05                            Allocations and

Distributions.

 

(a)           On each

Determination Date prior to the occurrence of an Event of Default or the

occurrence and continuance of a Class A Trigger or a Class B Trigger, the

Servicer shall instruct the Indenture Trustee in writing to withdraw, and on

the related Payment Date the Indenture Trustee shall withdraw, from the Note

Distribution Account the sum of (i) all Interest Collections,

(ii) all Investment Earnings on funds held in Trust Accounts and

(iii) all amounts from the Reserve Fund, to the extent there are

sufficient funds, to distribute to the following parties in the following order

of priority:

 

FIRST, pro–rata, based on the amounts owed to such Persons under this

clause FIRST, to the Swap Counterparties, any amounts, including Net Trust Swap

Payments for the current and any prior Payment Dates, owing to the Swap

Counterparties under the Swaps (other than Swap Breakage Costs), together with

interest accrued thereon;

 

SECOND, to the Indenture Trustee, the Backup Servicer and the Owner

Trustee, any amounts owed to such parties under the Transaction Documents for

fees and expenses, other than for fees, expenses and other amounts related to

indemnification; provided, however,

that in no event shall the amounts payable pursuant to this clause SECOND (i)

to the Indenture Trustee and the Backup Servicer, in the aggregate, exceed

$5,000 for any twelve (12) month period (excluding amounts paid as part of the

Indenture Trustee Fee, the Backup Servicer Fee and recording expenses incurred

by the Indenture Trustee in recording Assignments of Mortgages after an Event

of Default or a Servicer Default to the extent not paid by the Servicer under subsection 2.06(b)),

(ii) to the Owner Trustee, exceed $5,000 for any twelve (12) month period

(excluding amounts paid as part of the Owner Trustee Fee) and (iii) if a

Successor Servicer is being appointed, to the Indenture Trustee for costs and

expenses associated with that appointment, exceed $100,000 in the aggregate for

any given Servicer Transfer;

 

THIRD, to the Servicer, reimbursement for the amount of any Servicer

Advances, relating to interest on the Loans, which were deposited in the

Interest Collection Account;

 

FOURTH, to the Servicer, the monthly Servicing Fee for the preceding

Collection Period, together with any amounts in respect of the Servicing Fee

that were due in respect of prior Collection Periods that remain unpaid;

 

FIFTH, to the holders of the Class A Notes, the Class A

Interest Amount for the related Interest Accrual Period and any related

Class A Interest Shortfall together with interest on such amount;

 

SIXTH, to the holders of the Class B Notes, the Class B

Interest Amount for the related Interest Accrual Period and any Class B

Interest Shortfall together with interest on such amount;

 

SEVENTH, to the holders of the Class A Notes and Class B

Notes, sequentially and in reduction of their respective Outstanding Principal

Balance, until reduced to zero, an amount equal to the Additional Principal

Amount;

 

EIGHTH, to the Reserve Fund an amount, if any, which, when so

deposited, causes the balance of the Reserve Fund to equal the Required Reserve

Amount;

 

NINTH, to the holders of the Class B Notes, the Class B Accrued

Payable, to the extent not previously paid;

 

TENTH, pro–rata, based on amounts owed to such Persons under this

clause TENTH, to the Swap Counterparties, any unpaid Swap Breakage Costs,

together with interest accrued thereon;

 

56

 

ELEVENTH, pro–rata, based on the amount owed to such Person under this

clause ELEVENTH, to the Indenture Trustee, the Backup Servicer and the Owner

Trustee, to the extent not paid pursuant to clause SECOND due to the

limitations set forth therein, amounts owed to such parties for fees and

expenses and other amounts, including such amounts related to indemnification

and, to a Successor Servicer, any Additional Servicing Fee; and

 

TWELFTH, to the Owner Trustee for payment to the Certificateholders,

any remaining amounts.

 

(b)           On each

Determination Date after the occurrence of an Event of Default or the

occurrence and continuance of a Class A Trigger or a Class B Trigger, the

Servicer shall instruct the Indenture Trustee in writing to withdraw, and on

the related Payment Date the Indenture Trustee shall withdraw, from the Note

Distribution Account the sum of (i) all Interest Collections, (ii) all

Investment Earnings on funds held in Trust Accounts and (iii) all amounts

from the Reserve Fund, to the extent there are sufficient funds, to distribute

to the following parties in the following order of priority:

 

FIRST, pro–rata, based on amounts owed to such Persons under this

clause FIRST, to the Swap Counterparties, any amounts, including Net Trust Swap

Payments for the current and any prior Payment Date, owing to the Swap

Counterparties under the Swaps (other than Swap Breakage Costs), together with

interest accrued thereon;

 

SECOND, (A) following the occurrence of an Event of Default that

is not a Fee Event, to the Indenture Trustee, the Backup Servicer and the Owner

Trustee, any amounts owed to such parties under the Transaction Documents for

fees and expenses, other than for fees, expenses and other amounts related to

indemnification; provided, however,

that in no event shall the amounts payable pursuant to this clause SECOND (i)

to the Indenture Trustee and the Backup Servicer, in the aggregate, exceed

$5,000 for any twelve (12) month period (excluding amounts paid as part of the

Indenture Trustee Fee, the Backup Servicer Fee and recording expenses incurred

by the Indenture Trustee in recording Assignments of Mortgages after an Event

of Default or a Servicer Default to the extent not paid by the Servicer under subsection 2.06(b)),

(ii) to the Owner Trustee, exceed $5,000 for any twelve (12) month period

(excluding amounts paid as part of the Owner Trustee Fee) and (iii) if a

Successor Servicer is being appointed, to the Indenture Trustee for costs and

expenses associated with that appointment, exceed $100,000 in the aggregate for

any given Servicer Transfer and (B) after the occurrence of a Fee Event,

to the Indenture Trustee, the Backup Servicer and the Owner Trustee, any

amounts owed to such parties under the Transaction Documents for fees and

expenses, other than for fees, expenses and other amounts related to

indemnification;

 

THIRD, to the Servicer, reimbursement for the amount of any Servicer

Advances relating to interest on the Loans which were deposited in the Interest

Collection Account;

 

FOURTH, to the Servicer, the monthly Servicing Fee for the preceding

Collection Period together with any amounts in respect of the Servicing Fee

that were due in respect of prior Collection Periods that remain unpaid;

 

FIFTH, to the holders of the Class A Notes, the Class A

Interest Amount for the related Interest Accrual Period and any Class A

Interest Shortfall Amount together with interest on such amount;

 

SIXTH, to the holders of the Class B Notes, the Class B

Interest Amount for the related Interest Accrual Period and any Class B

Interest Shortfall Amount together with interest on such amount; and

 

SEVENTH, the remaining amounts shall be included as Principal

Collections on such Payment Date.

 

(c)           On each

Determination Date, the Servicer shall instruct the Indenture Trustee in

writing to withdraw, and on the Payment Date the Indenture Trustee shall

withdraw, from the Note Distribution Account all Principal Collections and all

funds remaining on deposit therein, to the extent there are sufficient funds,

to distribute to the following parties in the following order of priority:

 

FIRST, to the Servicer, reimbursement for the amount of any Servicer

Advances relating to principal on the Loans which were deposited in the

Principal Collection Account;

 

57

 

SECOND, to the holders of the Class A Notes until the Outstanding

Principal Balance of the Class A Notes equals zero;

 

THIRD, to the holder of the Class B Notes, the Class B Accrued Payable

to the extent not previously paid;

 

FOURTH, to the holders of the Class B Notes, until the Outstanding

Principal Balance of the Class B Notes equals zero;

 

FIFTH, pro–rata, based on the amounts owed to such Persons under this

clause FIFTH, to the Swap Counterparties, any unpaid Swap Breakage Costs,

together with interest accrued thereon;

 

SIXTH, pro–rata, based on the amounts owed to such Persons under this

clause SIXTH, to the Indenture Trustee, the Backup Servicer and the Owner

Trustee, to the extent not paid pursuant to clause SECOND of subsection 7.05(b)

due to the limitations set forth therein, amounts owed to such parties for fees

and expenses and other amounts, including such amounts related to

indemnification, and, to a Successor Servicer, any Additional Servicing Fee;

 

SEVENTH, to the holder of the Class C Note until the Outstanding

Principal Balance of the Class C Note is reduced to zero; and .

 

EIGHTH, to the Owner Trustee for payment to the Certificateholders, any

remaining amounts.

 

(d)           If on any Payment

Date, the aggregate amounts on deposit in the Collection Account and the

Reserve Fund are greater than or equal to the sum of (i) the Aggregate

Outstanding Principal Balance, (ii) the interest accrued thereon, (iii) any

accrued and unpaid Servicing Fee, (iv) unreimbursed Servicer Advances and (v)

amounts owed to the Swap Counterparties, including Swap Breakage Costs, the

Indenture Trustee, the Backup Servicer and the Owner Trustee, the amounts on

deposit in the Reserve Fund will be deposited in the Collection Account and

used to redeem the Notes in full.  The

redemption price will be equal to the unpaid principal amount of the Notes plus

accrued and unpaid interest through the date of redemption.  It shall be a condition precedent to such

redemption that all Swap Transactions then outstanding under any Swaps then in

effect shall be terminated and all amounts payable to the Swap Counterparties,

including Swap Breakage Costs, upon such termination shall be paid in full.

 

Section 7.06                            Determination of LIBOR.

 

(a)           The Indenture

Trustee will determine the interest rate for each Interest Accrual Period by

determining the rate for deposits in U.S. Dollars for a period of one (1) month

(the “One–Month Index Maturity”) which appears on Telerate Page 3750 as

of 11:00 a.m., London time, on the day that is three (3) London Banking Days

preceding that Interest Accrual Period (“LIBOR”).  If such rate does not appear on Telerate

Page 3750 at such time, the rate for that Interest Accrual Period will be

determined as if the parties had specified “USD–LIBOR–Reference Banks” as the

applicable rate.  “USD–LIBOR–Reference

Banks” means that the interest rate for an Interest Accrual Period will be

determined on the basis of the rates at which deposits in U.S. Dollars are

offered by the Reference Banks at approximately 11:00 a.m., London time, on the

day that is three (3) London Banking Days preceding the beginning of that

Interest Accrual Period to prime banks in the London interbank market for the

One–Month Index Maturity commencing on the beginning of that Interest Accrual

Period and in a Representative Amount. 

The Indenture Trustee will request the principal London office of each

of the Reference Banks to provide a quotation of its rate.  If at least two (2) such quotations are

provided, the rate for that Interest Accrual Period will be the arithmetic mean

of the quotations.  If fewer than two

(2) quotations are provided as requested, the rate for that Interest Accrual

Period will be the arithmetic mean of the rates quoted by major banks in New

York City, selected by the Indenture Trustee, at approximately 11:00 a.m., New

York City time, on the beginning of that Interest Accrual Period for loans in

U.S. Dollars to leading European banks for the One–Month Index Maturity

commencing at the beginning of that Interest Accrual Period and in a

Representative Amount.

 

(b)           The establishment of

LIBOR by the Indenture Trustee and the Indenture Trustee’s subsequent

calculation of the rates of interest applicable to the Notes, in the absence of

manifest error, will be final and binding.

 

58

 

ARTICLE VIII

 

SERVICER DEFAULT; SERVICE TRANSFER

 

Section 8.01                            Servicer Default.

 

“Servicer Default” means the occurrence of any of the following:

 

(a)           any failure by the

Servicer to make any payment, transfer or deposit, or to give any instructions,

notice or report to the Owner Trustee or the Indenture Trustee pursuant to this

Agreement on or before the date occurring two (2) Business Days after the date

such payment, transfer or deposit, or such instruction, notice or report, is

required to be made or given, as the case may be, under the terms of this

Agreement;

 

(b)           any failure on the

part of the Servicer duly to observe or perform in any material respect any

other covenants or agreements of the Servicer set forth in this Agreement that

has a material adverse effect on the Noteholders or the Swap Counterparties,

which continues unremedied for a period of thirty (30) days after the first to

occur of (i) the date on which written notice of such failure requiring

the same to be remedied shall have been given to the Servicer by the Indenture

Trustee, or to the Servicer and the Indenture Trustee by the Noteholders, or

the Indenture Trustee on behalf of such Noteholders of Notes aggregating not

less than 25% of the Outstanding Principal Balance of any Class adversely

affected thereby and (ii) the date on which the Servicer becomes aware

thereof, and such failure continues to materially and adversely affect the

Noteholders or the Swap Counterparties for such period;

 

(c)           any representation,

warranty or certification made by the Servicer in this Agreement or in any

certificate delivered pursuant to this Agreement shall prove to have been

incorrect when made, which has a material adverse effect on the Noteholders or

the Swap Counterparties and which continues to be incorrect in any material

respect for a period of thirty (30) days after the first to occur of

(i) the date on which written notice of such incorrectness requiring the

same to be remedied shall have been given to the Servicer and the Owner Trustee

by the Indenture Trustee, or to the Servicer, the Owner Trustee and the Indenture

Trustee by Noteholders, or by the Indenture Trustee on behalf of Noteholders of

Notes aggregating not less than 25% of the Outstanding Principal Balance of any

Class adversely affected thereby and (ii) the date on which the

Servicer becomes aware thereof, and such incorrectness continues to materially

and adversely affect the Noteholders or the Swap Counterparties for such

period;

 

(d)           an Insolvency Event

shall occur with respect to the Servicer;

 

(e)           the Servicer shall

fail in any material respect to service the Loans in accordance with the Credit

and Collection Policy;

 

(f)            the Servicer alters

or amends the Credit and Collection Policy in a manner that has a material

adverse effect on the Noteholders or the Swap Counterparties;

 

(g)           the rendering against

the Servicer of a final judgment, decree or order for the payment of money in

excess of U.S. $5,000,000 (individually or in the aggregate) and the

continuance of such judgment, decree or order unsatisfied and in effect for any

period of sixty–one (61) consecutive days without a stay of execution; or

 

(h)           the failure of the

Servicer to make any payment due with respect to aggregate recourse debt or

other obligations with an aggregate principal amount exceeding U.S. $2,500,000

or the occurrence of any event or condition that would permit acceleration of

such recourse debt or other obligations if such event or condition has not been

waived or cured.

 

Notwithstanding the foregoing, a delay in or failure of performance

referred to under clause (a) above for a period of five (5) Business

Days or referred to under clause (b) or (c) for a period of sixty

(60) days (in addition to any period provided in clause (a), (b)

or (c)) shall not constitute a Servicer Default until the expiration of

such additional five (5) Business Days or sixty (60) days, respectively, if

such delay or failure could not be prevented by

 

59

 

the exercise of reasonable diligence by the Servicer and such delay or

failure was caused by an act of God or other events beyond the Servicer’s

control.  Upon the occurrence of any

such event, the Servicer shall not be relieved from using its best efforts to

perform its obligations in a timely manner in accordance with the terms of this

Agreement and the Servicer shall provide the Owner Trustee, the Indenture

Trustee, the Trust Depositor and each Swap Counterparty prompt notice of such

failure or delay by it, together with a description of its efforts to so

perform its obligations.  The Servicer

shall immediately notify the Indenture Trustee and each Swap Counterparty in

writing of any Servicer Default.

 

Section 8.02                            Servicer Transfer.

 

(a)           If a Servicer

Default has occurred and is continuing, (x) the Required Holders, or

(y) the Indenture Trustee, may, by written notice (a “Termination

Notice”) delivered to the parties hereto, terminate all (but not less than

all) of the Servicer’s management, administrative, servicing, custodial and

collection functions.

 

(b)           Upon delivery of the

notice required by subsection 8.02(a) (or, if later, on a date

designated therein), and on the date that a successor Servicer shall have been

appointed pursuant to Section 8.03 (such appointment being herein

called a “Servicer Transfer”), all rights, benefits, fees, indemnities,

authority and power of the Servicer under this Agreement, whether with respect

to the Loans, the Loan Files or otherwise, shall pass to and be vested in such

successor (the “Successor Servicer”) pursuant to and under this Section 8.02;

and, without limitation, the Successor Servicer is authorized and empowered to

execute and deliver on behalf of the Servicer, as attorney–in–fact or

otherwise, any and all documents and other instruments, and to do any and all

acts or things necessary or appropriate to effect the purposes of such notice

of termination.  The Servicer agrees to

cooperate with the Successor Servicer in effecting the termination of the

responsibilities and rights of the Servicer hereunder, including, without limitation,

the transfer to the Successor Servicer for administration by it of all cash

amounts which shall at the time be held by the Servicer for deposit, or have

been deposited by the Servicer, in the Collection Account, or for its own

account in connection with its services hereafter or thereafter received with

respect to the Loans.  The Servicer

shall transfer to the Successor Servicer (i) all records held by the

Servicer relating to the Loans in such electronic form as the Successor

Servicer may reasonably request and (ii) any Loan Files in the Servicer’s

possession.  In addition, the Servicer

shall permit access to its premises (including all computer records and

programs) to the Successor Servicer or its designee, and shall pay the

reasonable transition expenses of the Successor Servicer.  Upon a Servicer Transfer, the Successor

Servicer shall also be entitled to receive the Servicing Fee for performing the

obligations of the Servicer.

 

Section 8.03                            Appointment of Successor

Servicer; Reconveyance; Successor Servicer to Act.

 

(a)           Upon delivery of the

notice required by subsection 8.02(a) (or, if later, on a date

designated therein), the Servicer shall continue to perform all servicing

functions under this Agreement until the date specified in the Termination

Notice or, if no such date is specified, until a date mutually agreed by the

Servicer and the Indenture Trustee.  The

Indenture Trustee shall as promptly as possible after the giving of or receipt

of a Termination Notice, appoint a Successor Servicer (which shall be the

Backup Servicer, in accordance with subsection 5.22(c)), and such

Successor Servicer shall accept its appointment by a written assumption in a

form acceptable to the Indenture Trustee and Owner Trustee.  If within sixty (60) days of delivery of a

Termination Notice the Backup Servicer does not accept appointment as the

Successor Servicer, the Indenture Trustee is unable to obtain any bids from

eligible servicers and the Servicer shall have yet to cure the Servicer

Default, then the Indenture Trustee shall offer the Trust Depositor, and the

Trust Depositor shall offer the Originator, the right to accept retransfer of

all the Loan Assets, and such parties may accept retransfer of such Loan Assets

in consideration of the Trust Depositor’s delivery to the Collection Account on

or prior to the next upcoming Payment Date of a sum equal to the Aggregate

Outstanding Principal Balance of all Securities (other than the Certificates)

then outstanding, together with accrued and unpaid interest thereon through

such date of deposit and all other amounts due and owing to any Person under

the Transaction Documents, including amounts owing to each Swap Counterparty,

including Swap Breakage Costs, it being a condition precedent to such

retransfer that all Swap Transactions then outstanding under any Swaps then in

effect shall be terminated and all amounts payable to the Swap Counterparties,

including Swap Breakage Costs, upon such termination shall be paid in full; provided,  that, the Indenture Trustee, if so directed by the

Required Holders in writing, need not accept and effect such reconveyance in

the absence of evidence (which may include valuations of an investment bank or

similar entity) reasonably acceptable to such

 

60

 

Trustee or Required Holders that such retransfer would not constitute a

fraudulent conveyance of the Trust Depositor or the Originator.

 

(b)           In the event that a

Successor Servicer has not been appointed and has not accepted its appointment

at the time when the then Servicer has ceased to act as Servicer, the Indenture

Trustee, without further action, shall automatically be appointed the Successor

Servicer. Notwithstanding the foregoing, if the Indenture Trustee is legally

unable or prohibited from so acting, it shall petition a court of competent

jurisdiction to appoint any established financial institution having a net

worth of at least $50,000,000 and whose regular business includes the servicing

of loans similar to the Loans as the Successor Servicer hereunder.  On or after a Servicer Transfer, the

Successor Servicer shall be the successor in all respects to the Servicer in

its capacity as servicer under this Agreement and the transactions set forth or

provided for herein and shall be subject to all the responsibilities, duties and

liabilities relating thereto placed on the Servicer by the terms and provisions

hereof, and the terminated Servicer shall be relieved of such responsibilities,

duties and liabilities arising after such Servicer Transfer; provided, however, that

(i) the Successor Servicer will not assume any obligations of the Servicer

described in Section 8.02 (ii) the Successor Servicer shall

not be liable for any acts or omissions of the Servicer occurring prior to such

Servicer Transfer or for any breach by the Servicer of any of its

representations and warranties contained herein or in any related document or

agreement and (iii) the terminated Servicer shall not be liable for any acts or

omission of any Successor Servicer occurring on and after such Servicer Transfer

or for any breach by any Successor Servicer of any of its representations and

warranties contained herein or in any related document or agreement.  As compensation therefor, the Successor

Servicer shall be entitled to receive reasonable compensation equal to the

monthly Servicing Fee.  Notwithstanding

anything else herein to the contrary, in no event shall the Indenture Trustee

or the Backup Servicer be liable for any Servicing Fee or for any differential

in the amount of the servicing fee paid hereunder and the amount necessary to

induce any Successor Servicer to act as Successor Servicer under this Agreement

and the transactions set forth or provided for herein.  The Owner Trustee, Securityholders and the

Indenture Trustee and such successor shall take such action, consistent with

this Agreement, as shall be necessary to effectuate any such succession.  To the extent the terminated Servicer has

made Servicer Advances, it shall be entitled to reimbursement of the same

notwithstanding its termination hereunder, to the same extent as if it had

continued to service the Loans hereunder.

 

Section 8.04                            Notification to

Securityholders and Swap Counterparties.

 

(a)           Promptly following

the occurrence of any Servicer Default, the Servicer shall give written notice

thereof to the Trustees, the Trust Depositor and each Rating Agency at the

addresses described in Section 13.04 hereof, to each Swap

Counterparty at its address as set forth in the applicable Swap, and to the

Securityholders at their respective addresses appearing on the Note Register

and the Certificate Register, respectively.

 

(b)           Within ten (10) days

following any termination of a Servicer or appointment of a Successor Servicer

pursuant to this Article VIII, the Indenture Trustee shall give

written notice thereof to each Rating Agency and the Trust Depositor at the

addresses described in Section 13.04 hereof, to each Swap

Counterparty at its address as set forth in the applicable Swap and to the

Securityholders at their respective addresses appearing on the Note Register

and the Certificate Register, respectively.

 

Section 8.05                            Effect of Transfer.

 

(a)           After a Servicer

Transfer, the terminated Servicer shall have no further obligations with

respect to the management, administration, servicing, custody or collection of

the Loans and the Successor Servicer appointed pursuant to Section 8.03

shall have all of such obligations, except that the terminated Servicer will

transmit or cause to be transmitted directly to the Successor Servicer for its

own account, promptly on receipt and in the same form in which received, any

amounts (properly endorsed where required for the Successor Servicer to collect

them) received as payments upon or otherwise in connection with the Loans.

 

(b)           A Servicer Transfer

shall not affect the rights and duties of the parties hereunder (including but

not limited to the indemnities of the Servicer) other than those relating to

the management, administration, servicing, custody or collection of the Loans.

 

61

 

Section 8.06                            Database File.

 

Upon reasonable request by the Indenture Trustee or the Backup

Servicer, the Servicer will provide the Successor Servicer with a magnetic tape

containing the database file for each Loan (i) as of the applicable Cut–Off

Date, (ii) thereafter, as of the last day of the preceding Collection

Period and on the Determination Date prior to a Servicer Default and

(iii) on and as of the Business Day before the actual commencement of

servicing functions by the Successor Servicer following the occurrence of a

Servicer Default.

 

Section 8.07                            Successor Servicer

Indemnification.

 

The original Servicer shall defend, indemnify and hold the Successor

Servicer and any officers, directors, employees or agents of the Successor

Servicer harmless against any and all claims, losses, penalties, fines,

forfeitures, legal fees and related costs, judgments and any other costs, fees,

and expenses that the Successor Servicer may sustain in connection with the

claims asserted at any time by third parties against the Successor Servicer

which result from (i) any willful or grossly negligent act taken or

omission by the Servicer or (ii) a breach of any representations of the

Servicer in Section 3.07 hereof. 

The indemnification provided by this Section 8.07 shall

survive the termination of this Agreement and the removal or resignation of the

Successor Servicer.

 

Section 8.08                            Responsibilities of the

Successor Servicer.

 

(a)           The Successor

Servicer will not be responsible for delays attributable to the Servicer’s

failure to deliver information, defects in the information supplied by the

Servicer or other circumstances beyond the control of the Successor Servicer.

 

(b)           The Successor

Servicer will make arrangements with the Servicer for the prompt and safe transfer

of, and the Servicer shall provide to the Successor Servicer, all necessary

servicing files and records, including (as deemed necessary by the Successor

Servicer at such time): (i) microfiche loan documentation,

(ii) servicing system tapes, (iii) Loan payment history,

(iv) collections history and (v) the trial balances, as of the close

of business on the day immediately preceding conversion to the Successor

Servicer, reflecting all applicable Loan information.  The current Servicer shall be obligated to pay the costs

associated with the transfer of the servicing files and records to the

Successor Servicer.

 

(c)           The Successor

Servicer shall have no responsibility and shall not be in default hereunder nor

incur any liability for any failure, error, malfunction or any delay in

carrying out any of its duties under this Agreement if any such failure or

delay results from the Successor Servicer acting in accordance with information

prepared or supplied by a Person other than the Successor Servicer or the failure

of any such Person to prepare or provide such information.  The Successor Servicer shall have no

responsibility, shall not be in default and shall incur no liability

(i) for any act or failure to act by any third party, including the

Servicer, the Trust Depositor or the Trustees or for any inaccuracy or omission

in a notice or communication received by the Successor Servicer from any third

party or (ii) which is due to or results from the invalidity,

unenforceability of any Loan under Requirements of Law or the breach or the

inaccuracy of any representation or warranty made with respect to any Loan.

 

(d)           If the Indenture

Trustee or any other Successor Servicer assumes the role of Successor Servicer

hereunder, such Successor Servicer shall be entitled to the benefits of (and

subject to the provisions of) Section 5.05 concerning delegation of

duties to subservicers.

 

Section 8.09                            Rating Agency Condition

for Servicer Transfer.

 

Notwithstanding the foregoing provisions relating to a Servicer

Transfer, no Servicer Transfer shall be effective hereunder unless prior

written notice thereof shall have been given to the Rating Agencies, and the

Rating Agency Condition shall have been satisfied with respect thereto.

 

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ARTICLE IX

 

REPORTS

 

Section 9.01                            Monthly Reports.

 

With respect to each Payment Date and the related Collection Period,

the Servicer will provide to each Trustee, the Backup Servicer, each Rating

Agency and the Initial Purchaser on the related Determination Date, a monthly

statement (a “Monthly Report”) substantially in the form of Exhibit H

hereto.  On each Payment Date, the

Indenture Trustee will forward or make available to each Noteholder and each

Swap Counterparty a copy of the Monthly Report.

 

Section 9.02                            Officer’s Certificate.

 

Each Monthly Report delivered pursuant to Section 9.01

shall be accompanied by a certificate of a Servicing Officer certifying the

accuracy of the Monthly Report and that no Servicer Default or event that with

notice or lapse of time or both would become a Servicer Default has occurred,

or if such event has occurred and is continuing, specifying the event and its

status.

 

Section 9.03                            Other

Data.

 

In addition, the Servicer shall, upon the request of any Trustee, the

Backup Servicer or any Rating Agency, furnish such Trustee, Rating Agency or

the Backup Servicer, as the case may be, such underlying data used to generate

a Monthly Report as may be reasonably requested.  The Servicer will also forward to the Indenture Trustee, the

Owner Trustee, each Swap Counterparty, each Rating Agency and the Initial

Purchaser (a) within sixty (60) days after each calendar quarter (except

the fourth calendar quarter), commencing with the quarter ending June 30,

2002, the unaudited quarterly financial statement of the Servicer and

(b) within ninety (90) days after each fiscal year of the Servicer,

commencing with the fiscal year ending December 31, 2002, the audited annual

financial statement of the Servicer, together with the related report of the

independent accountants to the Servicer. 

On the Payment Date following the receipt of each such financial

statements and report, the Indenture Trustee will forward to each Noteholder of

record a copy of such financial statements and report.

 

Section 9.04                            Annual Report of

Accountants.

 

(a)           The Servicer shall

cause a firm of nationally recognized independent certified public accountants

(the “Independent Accountants”), who may also render other services to

the Servicer or its Affiliates, to deliver to the Indenture Trustee, the Owner

Trustee, each Swap Counterparty, the Backup Servicer and each Rating Agency, on

or before March 31 (ninety (90) days after the end of the Servicer’s fiscal

year) of each year, beginning on March 31, 2003, a report addressed to the

Board of Directors of the Servicer, the Indenture Trustee and the Owner Trustee

indicating that (i) with respect to the twelve (12) months ended the

immediately preceding December 31, to the effect that such Independent

Accountants have audited the financial statements of the Servicer, that as part

of that audit, nothing came to the attention of such Independent Accountant

that causes them to believe that the Servicer was not in compliance with any of

the terms, covenants, provisions or conditions of the relevant sections of the

Agreement, insofar as they relate to accounting matters, except for such

exceptions as such Independent Accountants shall believe to be immaterial and

such other exceptions as shall be set forth in such report, (ii) in connection

with the Independent Accountant’s audit of the Servicer, there were no

exceptions or errors in records related to Loans serviced by the Servicer,

except for such exceptions as such Independent Accountants shall believe to be

immaterial and such other exceptions as shall be set forth in such report, and

(iii) the Independent Accountant has performed certain procedures as

agreed by the Servicer, the Indenture Trustee (subject to the provisions of

this subsection 9.04(a)) and the Owner Trustee, whereby the

Independent Accountant will obtain the Monthly Report for four months with

respect to the twelve (12) months ended the immediately preceding

December 31 and, for each Monthly Report, the Independent Accountant will

agree all amounts in the Monthly Report to the Servicer’s computer, accounting

and other reports, which will include in such report any amounts which were not

in agreement.  In the event such firm of

Independent Accountants requires the Indenture Trustee to agree to the

procedures performed by such firm of Independent Accountants, the Servicer

shall direct the Indenture Trustee in writing to so agree; it being understood

and agreed that the Indenture Trustee will deliver such letter of agreement in

 

63

 

conclusive reliance upon the direction of the Servicer, and the

Indenture Trustee will not make any independent inquiry or investigation as to,

and shall have no obligation or liability in respect of, the sufficiency,

validity or correctness of such procedures.

 

(b)           The Independent

Accountant’s report shall also indicate that the firm is independent of the

Servicer within the meaning of the Code of Professional Ethics of the American

Institute of Certified Public Accountants.

 

Section 9.05                            Annual Statement of

Compliance from Servicer.

 

The Servicer will deliver to the Trustees, each Swap Counterparty and

each of the Rating Agencies, within ninety (90) days of the end of each fiscal

year commencing with the year ending December 31, 2002, an Officer’s

Certificate stating that (a) a review of the activities of the Servicer

during the prior calendar year and of its performance under this Agreement was

made under the supervision of the officer signing such certificate and

(b) to such officer’s knowledge, based on such review, the Servicer has

fully performed or caused to be performed in all material respects all its

obligations under this Agreement and no Servicer Default has occurred or is

continuing, or, if there has been a Servicer Default, specifying each such

default known to such officer and the nature and status thereof and the steps

being taken or necessary to be taken to remedy such event.  A copy of such certificate may be obtained

by any Securityholder by a request in writing to the Indenture Trustee, with

respect to any Noteholder, or the Owner Trustee, with respect to any

Certificateholder.

 

Section 9.06                            Annual Summary Statement.

 

Within ninety (90) days of the end of each fiscal year, commencing

December 31, 2002, the Servicer shall prepare and provide to each Trustee, each

Swap Counterparty and each Rating Agency a cumulative summary of the

information required to be included in the Monthly Reports for the Collection

Periods ending during the immediately preceding calendar year.

 

Section 9.07                            Reports of Foreclosure

and Abandonment of Mortgaged Property.

 

Each year the Servicer shall make the reports of foreclosures and

abandonment of any mortgaged property included in the Collateral as and to the

extent required by § 6050J of the Code. 

Promptly after filing any such report with the Code, the Servicer shall

provide the Indenture Trustee with an Officer’s Certificate certifying that

such report has been filed.

 

Section 9.08                            Notices.

 

(a)           The Servicer shall

furnish to the Indenture Trustee and each Swap Counterparty (i) promptly,

copies of any material and adverse notices (including, without limitation,

notices of defaults, breaches, potential defaults or potential breaches) given

to or received from its other lenders and (ii) immediately, notice of the

occurrence of any Event of Default or Servicer Default or of any situation

which the Servicer reasonably expects to develop into an Event of Default or

Servicer Default.

 

(b)           The Servicer also

agrees to make available on a reasonable basis to any Noteholder or Swap

Counterparty a knowledgeable financial or accounting officer for the purpose of

answering reasonable questions respecting recent developments affecting the

Servicer or the financial statements of the Servicer and to permit any

Noteholder or Swap Counterparty, at such Noteholder’s or Swap Counterparty’s

sole cost and expense, upon reasonable advance notice and subject to reasonable

confidentiality restrictions, to inspect the Servicer’s servicing facilities

during normal business hours and in a manner that does not unreasonably

interfere with the Servicer’s normal operations or customer or employee

relations for the purpose of satisfying such Noteholder or Swap Counterparty

that the Servicer has the ability to service the Loans in accordance with this

Agreement.

 

64

 

ARTICLE X

 

TERMINATION

 

Section 10.01                           Sale

of Loan Assets.

 

(a)           Upon any sale of the

assets of the Issuer pursuant to Section 9.02 of the Trust

Agreement, the Servicer shall instruct the Indenture Trustee in writing to

deposit the proceeds from such sale after all payments and reserves therefrom

have been made (the “Insolvency Proceeds”) in the Collection

Account.  On the Payment Date on which

the Insolvency Proceeds are deposited in the Collection Account (or, if such

proceeds are not so deposited on a Payment Date, on the Payment Date

immediately following such deposit), the Servicer shall instruct the Indenture

Trustee in writing to allocate and apply (after the application on such Payment

Date of Available Amounts pursuant to Section 7.05) the Insolvency

Proceeds as if (and in the same order of priority as) the Insolvency Proceeds

were Available Amounts being allocated and distributed on such date pursuant to

subsection 7.05(c).

 

(b)           As described in Article IX

of the Trust Agreement, notice of any termination of the Issuer shall be given

by the Servicer to the Owner Trustee, the Indenture Trustee and each Swap

Counterparty as soon as practicable after the Servicer has received notice thereof.

 

(c)           Following the

satisfaction and discharge of the Indenture, the payment in full of the

principal of and interest on the Notes, the termination of all Swap

Transactions then outstanding under all Swaps then in effect and the payment in

full of all amounts, including Swap Breakage Costs, payable to such Swap

Counterparties upon such terminations, the Certificateholders will succeed to

the rights of the Noteholders hereunder and the Owner Trustee will succeed to

the rights of the Indenture Trustee pursuant to this Agreement.

 

 

ARTICLE XI

 

REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION

 

Section 11.01                           Repurchases

of, or Substitution for, Loans for Breach of Representations and Warranties.

 

Upon a discovery by the Servicer, the Trust Depositor or the Trustees

of a breach of a representation or warranty of the Originator and the Trust

Depositor as set forth in Section 3.01, Section 3.02, Section 3.03,

Section 3.04, and Section 3.05, or as made or deemed

made in any Addition Notice or any Subsequent Purchase Agreement relating to

Substitute Loans, that materially and adversely affects the interest of the

Noteholders or any Swap Counterparty in such Loan (in either case without

regard to the benefits of the Reserve Fund) (an “Ineligible Loan”), or

of an inaccuracy with respect to the representations as to concentrations of

the Initial Loans made under Section 3.05, the party discovering

the breach shall give prompt written notice to the other parties (and the

Servicer shall, with respect to an inaccuracy concerning concentrations, select

one or more Loans, without employing adverse selection, to be the related

Excess Loan for purposes of this Section); provided,

that, the Trustees shall

have no duty or obligation to inquire or to investigate the breach by the

Originator of any of such representations or warranties.  The Trust Depositor and the Originator shall

repurchase each such Ineligible Loan or Excess Loan, at a repurchase price

equal to the Transfer Deposit Amount, not later than the next succeeding

Determination Date following the date the Trust Depositor or the Originator

becomes aware of, or receives written notice from any Trustee, the Servicer or

the Trust Depositor of, any such breach or inaccuracy and which breach or

inaccuracy has not otherwise been cured; provided,

however, that if the Trust Depositor and the Originator are able to

effect a substitution for any such Ineligible Loan or Excess Loan in compliance

with Section 2.04, the Trust Depositor and the Originator may, in

lieu of repurchasing such Loan, effect a substitution for such affected Loan

with a Substitute Loan not later than the date a repurchase of such affected

Loan would be required hereunder; and provided,

further, that, with respect to a breach of a

representation or warranty relating to the Loans in the aggregate and not to

any particular Loan, the Trust Depositor and the Originator may select Loans

(without adverse selection) to repurchase (or substitute for) such that, had

such Loans not been included as part of the Loan Assets (and, in the case of a

substitution, had such Substitute Loan been included as part of the Loan Assets

instead of the selected Loan), there would have been no breach of such

representation or warranty.  Notwithstanding

any other provision of this Agreement, the obligation of

 

65

 

the Trust Depositor and the Originator described in this Section 11.01

shall not (a) terminate or be deemed released by any party hereto upon a

Servicer Transfer pursuant to Article VIII or (b) include any

obligation to make payment on account of a breach of a Loan by an Obligor

subsequent to the date on which such Loan was transferred to the Issuer.  The repurchase obligation described in this Section 11.01

is in no way to be satisfied with monies in the Reserve Fund.

 

Section 11.02                     Reassignment of Repurchased or

Substituted Loans.

 

Upon receipt by the Indenture Trustee for deposit in the Collection

Account of the amounts described in Section 11.01 (or upon the

Subsequent Transfer Date related to a Substitute Loan described in Section 11.01),

and upon receipt of an Officer’s Certificate of the Servicer in the form

attached hereto as Exhibit F, the Indenture Trustee and the Issuer

shall assign to the Trust Depositor, and the Trust Depositor shall assign to

the Originator, all of the Issuer’s and the Indenture Trustee’s (or Trust

Depositor’s, as applicable) right, title and interest in the repurchased or

substituted Loan and related Loan Assets without recourse, representation or warranty.  Such reassigned Loan shall no longer

thereafter be included in any calculations of Outstanding Loan Balances

required to be made hereunder or otherwise be deemed a part of the Loan Pool.

 

 

ARTICLE XII

 

INDEMNITIES

 

Section 12.01                     Indemnification by Servicer.

 

The Servicer agrees to indemnify, defend and hold the Indenture Trustee

(as such and in its individual capacity), the Owner Trustee (as such and in its

individual capacity), the Backup Servicer (as such and in its individual

capacity), each Swap Counterparty (as such and in its individual capacity) and

each Noteholder and Certificateholder harmless from and against any and all

claims, losses, penalties, fines, forfeitures, reasonable legal fees and

related costs, judgments, and any other reasonable costs, fees and expenses

that such Person may sustain as a result of the material failure of the

Servicer to perform its duties and service the Loans in compliance with the

terms of this Agreement, except to the extent arising from (a) the gross negligence,

willful misconduct or fraud by the Person claiming indemnification or

(b) an Obligor’s financial difficulty. 

The Servicer shall immediately notify the Indenture Trustee and the

Owner Trustee if a claim is made by any party with respect to this Agreement,

and the Servicer shall assume (with the consent of the indemnified party) the

defense and any settlement 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 indemnified

party in respect of such claim.

 

Section 12.02                     Indemnification by Trust

Depositor.

 

(a)           The Trust Depositor

agrees to indemnify, defend, and hold the Indenture Trustee (as such and in its

individual capacity), the Owner Trustee (as such and in its individual

capacity), the Backup Servicer (as such and in its individual capacity), each

Swap Counterparty (as such and in its individual capacity) and each Noteholder

and Certificateholder harmless from and against any and all claims, losses,

penalties, fines, forfeitures, reasonable legal fees and related costs,

judgments, and any other reasonable costs, fees and expenses that such Person

may sustain as a result of the material failure of the Trust Depositor to

perform its duties in compliance with the terms of this Agreement and in the

best interests of the Securityholders and the Swap Counterparties, except to

the extent arising from (a) the gross negligence, willful misconduct or

fraud by the Person claiming indemnification or (b) an Obligor’s financial

difficulty.  The Trust Depositor shall

immediately notify the Indenture Trustee and the Owner Trustee if a claim is

made by a third party with respect to this Agreement, and the Trust Depositor

shall assume (with the consent of the indemnified party) the defense and any

settlement 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 indemnified party in

respect of such claim.

 

(b)           The Trust Depositor

agrees to indemnify, defend and hold harmless the Issuer, the Owner Trustee,

the Indenture Trustee and the Servicer from and against any taxes that may at

any time be asserted against any such Person with respect to the transactions

contemplated herein and in the other Transaction Documents, including any

 

66

 

sales, gross receipts, general corporation, tangible personal property,

Maryland personal property replacement privilege or license taxes (but, in the

case of the Issuer, not including any taxes asserted with respect to, and as of

the date of, the sale of the Loans to the Issuer or the issuance and original

sale of the Securities, or asserted with respect to ownership of the Loans, or

federal or other income taxes arising out of distributions on the Certificate

or the Notes) and costs and expenses in defending against the same.

 

(c)           The Trust Depositor

shall indemnify, defend and hold harmless the Issuer, the Owner Trustee, and

the Indenture Trustee, their officers, directors, agents and employees, from

and against all costs, expenses, losses, claims, damages and liabilities

arising out of or incurred in connection with the acceptance or performance of

the trusts and duties herein and, in the case of the Owner Trustee, in the

Trust Agreement and, in the case of the Indenture Trustee, in the Indenture,

and any other document or transaction contemplated in connection herewith or

therewith, except to the extent that such cost, expense, loss, claim, damage or

liability in the case of (i) the Owner Trustee, shall be due to the

willful misfeasance, bad faith or gross negligence of the Owner Trustee, or

shall arise from the breach by the Owner Trustee of any of its representations

or warranties set forth in Section 7.03 of the Trust Agreement, or

(ii) the Indenture Trustee, shall be due to the willful misfeasance, bad

faith or negligence of the Indenture Trustee.

 

(d)           The Trust Depositor

shall be liable directly to and will indemnify any injured party or any other

creditor of the Issuer for all losses, claims, damages, liabilities and

expenses of the Issuer to the extent that the Trust Depositor would be liable

if the Issuer were a partnership under the Delaware Revised Uniform Limited

Partnership Act in which the Trust Depositor were a general partner; provided, however, that the Trust Depositor

shall not be liable for any losses incurred by a Certificateholder in the

capacity of an investor in the Certificate or a Noteholder in the capacity of

an investor in the Notes.  In addition,

any third party creditors of the Issuer (other than in connection with the

obligations described in the immediately preceding sentence for which the Trust

Depositor shall not be liable) shall be deemed third party beneficiaries of

this paragraph.  The obligations of the

Trust Depositor under this paragraph shall be evidenced by the Certificate

described in the Trust Agreement.

 

(e)           The Trust Depositor

shall indemnify, defend and hold harmless the Owner Trustee and the Indenture

Trustee, their officers, directors, agents and employees, from and against any

loss, liability or expense incurred by reason of the Trust Depositor’s or

Issuer’s violation of federal or state securities laws in connection with the

offering and sale of the Notes.

 

Section 12.03                     Liabilities to Obligors.

 

No obligation or liability to any Obligor under any of the Loans is

intended to be assumed by the Trustees, the Issuer, the Securityholders or the

Swap Counterparties under or as a result of this Agreement and the transactions

contemplated hereby.

 

Section 12.04                     Tax Indemnification.

 

(a)           The Originator

agrees to pay, and to indemnify, defend and hold harmless the Trust Depositor,

the Issuer, the Trustees, the Backup Servicer, the Securityholders and the Swap

Counterparties from, any taxes that may at any time be asserted with respect

to, and as of the date of, the transfer of the Loans to the Trust Depositor,

the transfer by the Trust Depositor of the Loans to the Issuer and the further

pledge by the Issuer to the Indenture Trustee, including, without limitation,

any sales, gross receipts, general corporation, personal property, privilege or

license taxes (but not including any federal, state or other taxes arising out

of the creation of the Issuer and the issuance of the Notes and Certificates),

and costs, expenses and reasonable counsel fees in defending against the same,

whether arising by reason of the acts to be performed by the Originator or the

Servicer under this Agreement or imposed against the Issuer, the Trustees, the

Backup Servicer, a Noteholder, a Certificateholder, a Swap Counterparty or

otherwise.  Notwithstanding any other

provision of this Agreement, the obligation of the Originator under this Section 12.04

shall not terminate upon a Servicer Transfer pursuant to Article VIII

of this Agreement and shall survive any termination of this Agreement.

 

(b)           The Originator

agrees to pay and to indemnify, defend and hold harmless the Issuer, the

Trustees and the Swap Counterparties, on an after–tax basis (as hereinafter

defined), from any state or local personal property taxes, gross rent taxes,

leasehold taxes or similar taxes that may at any time be asserted with respect

to the

 

67

 

ownership of the Loans (including security interests therein) and the

receipt of rentals therefrom by the Issuer, and costs, expenses and reasonable

counsel fees in defending against the same, excluding, however, taxes based

upon or measured by gross or net income or receipts (other than taxes imposed

specifically with respect to rentals). As used in this Section, the term

“after–tax basis” shall mean, with respect to any payment to be received by an

indemnified Person, that the amount to be paid by the Originator shall be equal

to the sum of (i) the amount to be received without regard to this

sentence, plus (ii) any additional amount that may be required so that,

after reduction by all taxes imposed under any federal, state and local law,

and taking into account any current credits or deductions arising therefrom,

resulting either from the receipt of the payments described in both clauses

(i) and (ii) hereof, such sum shall be equal to the amount described

in clause (i) above.

 

Section 12.05                     Adjustments.

 

(a)           The Originator

agrees that, with respect to each Loan that provides for a prepayment amount

less than the amount calculated in accordance with the definition of

“Prepayment Amount”, the Originator shall indemnify the Trust Depositor or the

Issuer as assignee thereof in an amount at least equal to the excess of the

Prepayment Amount as calculated in accordance with the definition thereof over

the amount otherwise payable upon prepayment of such Loan.

 

(b)           The Originator

hereby further agrees that if any real property collateral securing any Loan

described in subsection 3.02(d) hereof becomes the subject of any

claims, proceedings, Liens or encumbrances with respect to any material

violation or claimed material violation of any federal or state environmental

laws or regulations, such Loan shall for all purposes hereunder be, at and

following the time of discovery by the Originator, the Trust Depositor, the

Servicer or any Trustee (it being understood and agreed that such Trustee is

under no duty of investigation) of such fact, deemed an Ineligible Loan subject

to the same remedial and recourse provisions hereunder as other Loans

determined to be Ineligible Loans hereunder.

 

Section 12.06                     Operation of Indemnities.

 

Indemnification under this Article XII shall include,

without limitation, reasonable fees and expenses of counsel and expenses of

litigation.  If the Servicer, Trust

Depositor or Originator has made any indemnity payments pursuant to this Article XII

and the indemnified party thereafter collects any of such amounts from others,

the indemnified party will repay such amounts collected to the Servicer, the

Originator or the Trust Depositor, as applicable, except that any payments

received by the indemnified parties from an insurance provider as a result of

the events under which the Servicer’s, the Originator’s or the Trust

Depositor’s, as applicable, indemnity payments arose shall be repaid prior to

any repayment of the Servicer’s, the Originator’s or the Trust Depositor’s, as

applicable, indemnity payment.

 

 

ARTICLE XIII

 

MISCELLANEOUS

 

Section 13.01                     Amendment.

 

(a)           This Agreement may

be amended by the Originator, the Trust Depositor, the Servicer, the Indenture

Trustee and the Owner Trustee on behalf of the Issuer, collectively, without

the consent of any Securityholders, to cure any ambiguity, to correct or

supplement any provisions in this Agreement that are inconsistent with the

provisions herein, or to add any other provisions with respect to matters or

questions arising under this Agreement that shall not be inconsistent with the

provisions of this Agreement; provided,

however, (i) that the

consent of the Noteholders shall be required unless the Issuer obtains an

Opinion of Counsel stating that the amendment does not adversely affect in any

material respect the interests of any Holder of the Class A Notes or

Class B Notes, (ii) the consent of each Swap Counterparty shall be

required for any amendments to subsection 5.17(h), and (iii) for

all other such amendments, the consent of each Swap Counterparty shall be

required unless the Issuer obtains an Opinion of Counsel stating that the

amendment does not adversely affect in any material respect the interests of

the Swap Counterparties.

 

68

 

(b)           This Agreement may

also be amended from time to time by the Originator, the Trust Depositor, the

Servicer, the Indenture Trustee and the Owner Trustee on behalf of the Issuer,

with the consent of the Required Holders and the Swap Counterparties, for the

purpose of adding any provisions to or changing in any manner or eliminating

any of the provisions of this Agreement or of modifying in any manner the

rights of the Securityholders or the Swap Counterparties; provided, however, that no such

amendment shall,

 

(1)           increase

or reduce in any manner the amount of, or accelerate or delay the timing of, or

change the method of calculating distributions which are required to be made on

any Note or the Certificate or the principal amount of the Notes or the

Certificate without the consent of each Securityholder affected thereby; or

 

(2)           change

the manner in which the Reserve Fund is applied, without the consent of each

Noteholder affected thereby; or

 

(3)           reduce

the aforesaid percentage required to consent to any amendment (including

through amendment of related definitions) without the consent of each

Noteholder affected thereby; or

 

(4)           modify,

amend or supplement the provisions of this Agreement relating to the allocation

of collections on the Loans without the consent of each Noteholder affected

thereby; or

 

(5)           make

any security issued by the Issuer payable in money other than U.S. dollars

without the consent of each Noteholder affected thereby;

 

(c)           Prior to the

execution of any such amendment or consent, the Indenture Trustee shall furnish

written notification of the substance of such amendment or consent, together

with a copy thereof, to each Rating Agency.

 

(d)           Promptly after the

execution of any such amendment or consent, the Owner Trustee and the Indenture

Trustee, as the case may be, shall furnish written notification of the

substance of such amendment or consent to each Certificateholder and

Noteholder, respectively.  It shall not

be necessary for the consent of the Securityholders or the Swap Counterparties

pursuant to subsection 13.01(b) to approve the particular form of

any proposed amendment or consent, but it shall be sufficient if such consent

shall approve the substance thereof. 

The manner of obtaining such consents and of evidencing the

authorization by the Securityholders and the Swap Counterparties of the

execution thereof shall be subject to such reasonable requirements as the Owner

Trustee or the Indenture Trustee may prescribe.

 

(e)           Prior to the

execution of any amendment to this Agreement, the Owner Trustee and the

Indenture Trustee shall be entitled to receive and conclusively rely upon an

Opinion of Counsel stating that the execution of such amendment is authorized

and permitted by this Agreement.  Such

Trustee may, but shall not be obligated to, enter into any such amendment that

affects such Trustee’s own rights, duties, indemnities or immunities under this

Agreement or otherwise.

 

Section 13.02                     Protection of Title to

Issuer.

 

(a)           The Servicer shall

execute and file such financing statements, and cause to be executed and filed

such amendments or continuation statements, all in such manner and in such

places as may be required by Requirements of Law fully to preserve, maintain

and protect the interest of the Issuer, the Securityholders, the Swap

Counterparties, the Indenture Trustee and the Owner Trustee in the Loans and in

the proceeds thereof.  The Servicer

shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture

Trustee file–stamped copies of, or filing receipts for, any document filed as

provided above, as soon as available following such filing.

 

(b)           The Servicer shall

maintain or cause to be maintained accounts and records as to each Loan

accurately and in sufficient detail to permit (i) the reader thereof to

know at any time the status of such Loan, including payments and recoveries

made and payments owing (and the nature of each) and (ii) reconciliation

between payments or recoveries on (or with respect to) each Loan and the amounts

from time to time deposited in or

 

69

 

credited to the Collection Account, including identifying amounts

credited to the Interest Collection Account and the Principal Collection

Account in respect of each Loan.

 

(c)           The Servicer shall

maintain or cause to be maintained its computer systems so that, from and after

the time of sale under this Agreement of the Loans, the Servicer’s master

computer records (including any backup archives) that shall refer to a Loan

indicate clearly the interest of the Issuer and the Indenture Trustee in such

Loan and that such Loan is owned by the Issuer and has been pledged to the

Indenture Trustee.  Indication of the

Issuer’s ownership of and the Indenture Trustee’s interest in a Loan shall be

deleted from or modified on the Servicer’s computer systems when, and only

when, the related Loan shall have been paid in full or repurchased or

substituted for.

 

(d)           The Servicer shall

deliver to the Owner Trustee, the Indenture Trustee, each Swap Counterparty and

each Rating Agency promptly after the execution and delivery of this Agreement

and of each amendment hereto, an Opinion of Counsel either (A) stating that, in

the opinion of such counsel, all financing statements and continuation

statements have been executed and filed that are necessary fully to preserve

and protect the interest of the Issuer and the Indenture Trustee and reciting

the details of each filing or referring to prior Opinions of Counsel in which

such details are given, or (B) stating that, in the opinion of such counsel, no

such action shall be necessary to preserve and protect such interest.

 

Section 13.03                     Governing Law.

 

(a)           This Agreement shall

be construed in accordance with the laws of the State of New York and the

obligations, rights, and remedies of the parties under the Agreement shall be

determined in accordance with such laws.

 

(b)           EACH PARTY HERETO

HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY REQUIREMENTS OF LAW, ANY

RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR

INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  Each party hereto (i) certifies that no

representative, agent or attorney of any other party has represented, expressly

or otherwise, that such other party would not, in the event of litigation, seek

to enforce the foregoing waiver and (ii) acknowledges that it and the

other parties hereto have been induced to enter into this Agreement by, among

other things, the mutual waivers and certifications in this subsection 13.03(b).

 

Section 13.04                     Notices.

 

All notices, demands, certificates, requests and communications

hereunder (“notices”) shall be in writing and shall be effective (a) upon

receipt when sent through the U.S. mails, registered or certified mail, return

receipt requested, postage prepaid, with such receipt to be effective the date

of delivery indicated on the return receipt, or (b) one (1) Business Day

after delivery to an overnight courier, or (c) on the date personally delivered

to an Authorized Officer of the party to which sent, or (d) on the date

transmitted by legible telecopier transmission with a confirmation of receipt,

in all cases addressed to the recipient as follows:

 

(i)            If to the Servicer,

the Originator or the Swap Guarantor:

 

American Capital Strategies, Ltd.

2 Bethesda Metro Center

14th Floor

Bethesda, Maryland  20814

Attention:                              Compliance

Officer

Facsimile No.:                       (301) 654–6714

 

70

 

 

(ii)           If to the Trust

Depositor:

 

ACAS Business Loan LLC, 2002–1

2 Bethesda Metro Center

14th Floor

Bethesda, Maryland  20814

Attention: 

                            Compliance

Officer

Facsimile No.:                       (301) 654–6714

 

(iii)          If to the Indenture

Trustee:

 

Wells Fargo Bank Minnesota, National

Association

Sixth Street and Marquette Avenue

MAC N9311–161

Minneapolis, Minnesota  55479

Attention: 

                            Corporate

Trust Services/Asset Backed Administration

Facsimile No.:                       (612) 667–3464

 

(iv)          If to the Owner

Trustee:

 

First Union Trust Company, National

Association

One Rodney Square, 1st Floor

920 King Street

Wilmington, Delaware  19801

Attention: 

                            Corporate

Trust Administration

Facsimile No.:                       (302) 888–7544

 

(v)           If to the Issuer:

 

ACAS Business Loan Trust 2002–1

c/o First Union Trust Company, National

Association

One Rodney Square, 1st Floor

920 King Street

Wilmington, Delaware  19801

Attention: 

                            Corporate

Trust Administration

Facsimile No.:                       (302) 888–7544

 

(vi)          If to S&P:

 

Standard & Poor’s Ratings Service

55 Water Street

41st Floor

New York, New York 10041

Attention:                              Surveillance:  Asset–Backed Services

Facsimile No.:                       (212) 438–2662

 

(vii)         If to Moody’s:

 

Moody’s Investors Service, Inc.

99 Church Street

4th Floor

New York, New York 10007

Attention:                              ABS

Monitoring Department

Facsimile No.:                       (212) 553–0344

 

71

 

(viii)        If to Fitch:

 

Fitch, Inc.

One State Street Plaza

New York, New York 10004

Attention: 

                            CDO

Surveillance

Facsimile No.:                       (212)

514–6501

 

(ix)           If to the Initial

Purchaser:

 

First Union Securities, Inc.

One Wachovia Center, Mail Code: NC0610

301 South College Street

Charlotte, North Carolina  28288–0610

Attention:                              Asset

Securitization Division

Facsimile No.:                       (704)

383–4012

 

(x)            If to a Swap

Counterparty:

 

                At the address set forth

for such party in the applicable Swap.

 

Each party hereto may, by notice given in accordance herewith to each

of the other parties hereto, designate any further or different address to

which subsequent notices shall be sent.

 

Section 13.05                     Severability of Provisions.

 

If one or more of the covenants, agreements, provisions or terms of

this Agreement shall be for any reason whatsoever held invalid, then such

covenants, agreements, provisions or terms shall be deemed severable from the

remaining covenants, agreements, provisions or terms of this Agreement and

shall in no way affect the validity or enforceability of the other provisions

of this Agreement, the Notes, the Certificates or the rights of the Holders

thereof, and any such prohibition, invalidity or unenforceability in any jurisdiction

shall not invalidate or render unenforceable such covenants, agreements,

provisions or terms in any other jurisdiction.

 

Section 13.06                     Third Party Beneficiaries.

 

Except as otherwise specifically provided herein, the parties hereto

hereby manifest their intent that no third party, other than the Swap

Counterparties and the Owner Trustee, shall be deemed a third party beneficiary

of this Agreement, and specifically that the Obligors are not third party

beneficiaries of this Agreement.

 

Section 13.07                     Counterparts.

 

This Agreement may be executed by facsimile signature and in several

counterparts, each of which shall be an original and all of which shall

together constitute but one and the same instrument.

 

Section 13.08                     Headings.

 

The headings of the various Articles and Sections herein are for

convenience of reference only and shall not define or limit any of the terms or

provisions hereof.

 

Section 13.09                     No Bankruptcy Petition;

Disclaimer.

 

(a)           Each of the

Originator, the Indenture Trustee, the Servicer, the Issuer acting through the

Owner Trustee and each Holder (by acceptance of the applicable Securities)

covenants and agrees that, prior to the date that is one (1) year and one (1)

day after the payment in full of all amounts owing in respect of all

outstanding Classes of Notes rated by any Rating Agency, it will not institute

against the Trust Depositor, or the Issuer, or join any other Person in

instituting against the Trust Depositor or the Issuer, any bankruptcy,

reorganization, arrangement,

 

72

 

insolvency or liquidation proceedings or other similar proceedings

under the laws of the United States or any state of the United States; provided, however, that nothing herein shall

prohibit the Indenture Trustee from filing proofs of claim or otherwise

participating in any such proceedings instituted by any other Person.  This Section 13.09 will survive

the termination of this Agreement.

 

(b)           The Issuer

acknowledges and agrees that the Certificates represent a beneficial interest

in the Issuer and Loan Assets only and the Securities do not represent an

interest in any assets (other than the Loan Assets) of the Trust Depositor

(including by virtue of any deficiency claim in respect of obligations not paid

or otherwise satisfied from the Loan Assets and proceeds thereof).  In furtherance of and not in derogation of

the foregoing, to the extent that the Trust Depositor enters into other

securitization transactions as contemplated in Section 6.07, the

Issuer acknowledges and agrees that it shall have no right, title or interest

in or to any assets (or interests therein), other than the Loan Assets,

conveyed or purported to be conveyed (whether by way of a sale, capital

contribution or by the granting of a Lien) by the Trust Depositor to any Person

other than the Issuer (the “Other Assets”).

 

(c)           To the extent that,

notwithstanding the agreements contained in this subsection 13.09,

the Issuer, any Securityholder or any Swap Counterparty, either

(i) asserts an interest in or claim to, or benefit from any Other Assets,

whether asserted against or through the Trust Depositor or any other Person

owned by the Trust Depositor, or (ii) is deemed to have any interest,

claim or benefit in or from any Other Assets, whether by operation of law,

legal process or pursuant to applicable provisions of Insolvency Laws or

otherwise (including without limitation pursuant to Section 1111(b) of the

federal Bankruptcy Code, as amended), and whether deemed asserted against or

through the Trust Depositor or any other Person owned by the Trust Depositor,

then the Issuer, each Securityholder by accepting a Note or Certificate and

each Swap Counterparty further acknowledges and agrees that any such interest,

claim or benefit in or from the Other Assets is and shall be expressly

subordinated to the indefeasible payment in full of all obligations and

liabilities of the Trust Depositor that, under the terms of the documents

relating to the securitization of the Other Assets, are entitled to be paid

from, entitled to the benefits of, or otherwise secured by such Other Assets

(whether or not any such entitlement or security interest is legally perfected

or otherwise entitled to a priority of distribution under Requirements of Law,

including Insolvency Laws, and whether asserted against the Trust Depositor or

any other Person owned by the Trust Depositor), including, without limitation,

the payment of post–petition interest on such other obligations and

liabilities.  This subordination

agreement shall be deemed a subordination agreement within the meaning of

Section 510(a) of the Bankruptcy Code. 

Each of the Issuer, the Securityholders and the Swap Counterparties is

deemed to have acknowledged and agreed that no adequate remedy at law exists

for a breach of this Section 13.09 and that the terms and

provisions of this Section 13.09 may be enforced by an action for

specific performance.

 

(d)           The provisions of

this Section 13.09 shall be for the third party benefit of those

entitled to rely thereon and shall survive the termination of this Agreement.

 

Section 13.10                     Jurisdiction.

 

Any legal action or proceeding with respect to this Agreement may be

brought in the courts of the United States for the Southern District of New

York, and by execution and delivery of this Agreement, each party hereto

consents, for itself and in respect of its property, to the non–exclusive

jurisdiction of those courts.  Each such

party irrevocably waives any objection, including any objection to the laying

of venue or based on the grounds of forum non conveniens, which it may now or

hereafter have to the bringing of any action or proceeding in such jurisdiction

in respect of this Agreement or any document related hereto.

 

Section 13.11                     Tax Characterization.

 

Notwithstanding

the provisions of Section 2.01 and Section 2.04 hereof, the Trust

Depositor and Owner Trustee agree that, for federal and State of Maryland

income tax purposes and pursuant to Treasury Regulations Section 301.7701—3(b),

in the event that the Trust Certificates and the Class C Notes are owned by a

single holder, the Issuer is to be disregarded as an entity separate from the

Trust Depositor, and in the event that the Trust Certificates and Class C Notes

are owned by more than one holder, the Issuer is to be treated as a partnership

the partners of which are the holders of the Trust Certificates and Class C

Notes.

 

73

 

Section 13.12                     Prohibited Transactions with

Respect to the Issuer.

 

The Originator shall not:

 

(a)           Provide credit to

any Noteholder or Certificateholder for the purpose of enabling such Noteholder

or Certificateholder to purchase Notes or Certificates, respectively;

 

(b)           Purchase any Notes

or Certificates in an agency or trustee capacity; or

 

(c)           Except in its

capacity as Servicer as provided in this Agreement, lend any money to the

Issuer.

 

Section 13.13                     Merger or Consolidation of

Originator or Servicer.

 

(a)           Each of the

Originator and the Servicer will keep in full force and effect its existence,

rights and franchise as a Delaware corporation, and each of the Originator and

the Servicer will obtain and preserve its qualification to do business as a

foreign corporation in each jurisdiction in which such qualification is or

shall be necessary to protect the validity and enforceability of this Agreement

and of any of the Loans and to perform its duties under this Agreement.

 

(b)           Any Person into

which the Originator or the Servicer, as the case may be, may be merged or

consolidated, or any corporation resulting from such merger or consolidation to

which the Originator or the Servicer, as the case may be, is a party, or any

Person succeeding by acquisition or transfer to substantially all of the assets

and the business of the Originator or the Servicer, as the case may be, shall

be the successor to the Originator or the Servicer, as the case may be,

hereunder, without execution or filing of any paper or any further act on the

part of any of the parties hereto, notwithstanding anything herein to the

contrary.

 

(c)           Upon the merger or

consolidation of the Originator or the Servicer, as the case may be, as

described in this Section 13.13, the Originator or the Servicer, as

the case may be, shall provide the Indenture Trustee, each Swap Counterparty

and the Rating Agencies notice of such merger, consolidation or transfer of

substantially all of the assets and business within thirty (30) days after

completion of the same.

 

Section 13.14                           Assignment

or Delegation by the Originator.

 

Except as specifically authorized hereunder, the Originator may not

convey and assign or delegate any of its rights or obligations hereunder absent

the prior written consent of the Trust Depositor, the Trustees and each Swap

Counterparty, and any attempt to do so without such consent shall be void.

 

Section 13.15                           Limitation

of Liability of Owner Trustee.

 

First Union Trust Company, National Association acts on behalf of the

Issuer solely as Owner Trustee hereunder and not in its individual capacity,

and all Persons having any claim against the Issuer by reason of the

transactions contemplated by this Agreement or any other Transaction Document

shall look only to the Trust Estate under the Trust Agreement for payment or

satisfaction thereof.  The Owner Trustee

makes no representations as to the validity or sufficiency of this Agreement,

any other Transaction Document, the Notes, or of any Loan or related

documents.  The Owner Trustee shall at

no time have any responsibility or liability for or with respect to the

legality, validity and enforceability of any Loan, the perfection and priority

of any security interest created by any Loan in any Collateral, the maintenance

of any such perfection and priority, or for or with respect to the sufficiency

of the Trust Estate under the Trust Agreement or its ability to generate the

payments to be distributed to the Certificateholders under the Trust Agreement

or the Noteholders under the Indenture, including, without limitation,

(i) the existence, condition and ownership of any Collateral;

(ii) the existence and enforceability of any insurance thereon;

(iii) the existence and contents of any Loan on any computer or other

record thereof; (iv) the validity of the assignment of any Loan to the

Issuer or of any intervening assignment; (v) the completeness of any Loan;

(vi) the performance or enforcement of any Loan; (vii) the compliance

by the Issuer, the Trust Depositor or the Servicer with any covenant, agreement

or other obligation or the accuracy of any warranty or representation made

under any Transaction Document or in any related document; or (viii) or

any action of the Administrator, the Indenture Trustee or the Servicer or any

subservicer taken in the name of the Owner Trustee or the Issuer.

 

74

 

Section 13.16                           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 Holders.

 

Section 13.17                           Successors

and Assigns.

 

This Agreement shall inure to the benefit of

and be binding upon the parties hereto and their respective successors and

permitted assigns.

 

Section 13.18                           Acts

of Holders.

 

Except as otherwise specifically provided herein,

whenever Holder 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 Holders if the Required Holders agree

to take such action or give such consent or approval.

 

Section 13.19                           Duration

of Agreement.

 

This Agreement shall continue in existence

and effect until terminated as herein provided.

 

Section 13.20                     Servicer Assignment and

Resignation.

 

The Servicer

shall not assign its rights and duties under this Agreement (other than in

connection with a subservicing arrangement) nor resign from the obligations and

duties hereby imposed on it as Servicer except (i) by mutual consent of the

Servicer, the Indenture Trustee, the Swap Counterparties and the Required

Holders, (ii) in connection with a merger, conversion or consolidation

permitted pursuant to Section 13.13 (in which case the Person resulting

from the merger, conversion or consolidation shall be the successor of the

Servicer), (iii) in connection with an assignment permitted pursuant to Section

13.13 (in which case the Assignee shall be the successor of the Servicer),

or (iv) upon the Servicer’s determination that its duties hereunder are no

longer permissible under Requirements of Law or administrative determination

and such incapacity cannot be cured by the Servicer.  Any such determination permitting the resignation of the Servicer

shall be evidenced by a written Opinion of Counsel to such effect delivered to

the Indenture Trustee, which Opinion of Counsel shall be in form and substance

reasonably acceptable to the Indenture Trustee.  No such resignation shall become effective until a successor has

assumed the Servicer’s responsibilities and obligations hereunder in accordance

with Section 8.03.

 

 

ARTICLE XIV

 

SWAP GUARANTY

 

Section 14.01                     Unconditional Undertaking.

 

The Swap Guarantor hereby unconditionally and irrevocably guarantees to

each Swap Counterparty the punctual payment when due of any Swap Breakage Costs

due such Swap Counterparty under its Swap and any other Transaction Document

(the “Swap Guaranty Requirements”). 

In the event that the Issuer shall fail to pay the Swap Guaranty

Requirements when the same shall be required to be paid under the applicable

Swap or any such other document (it being understood that any payment by the

Issuer in respect of Swap Breakage Costs would be paid pursuant to Section

7.05 hereof), then, upon either actual knowledge of an officer of the Swap

Guarantor or demand of the Indenture Trustee or the applicable Swap

Counterparty, the Swap Guarantor shall make payment upon demand to the

applicable Swap Counterparty to allow such Swap Guaranty Requirements to be

satisfied.  The Swap Guarantor shall also

pay all costs, fees and expenses (including reasonable attorneys fees) incurred

by each Swap Counterparty in collecting or enforcing the Swap Guarantor’s

obligations hereunder.

 

75

 

Section 14.02                     Obligations Absolute.

 

The Swap Guarantor undertakes that, subject to the provisions of Section 14.01,

the Swap Guaranty Requirements will be paid strictly in accordance with the

terms of this Agreement or any other Transaction Document, regardless of any

law, regulation or order now or hereafter in effect in any jurisdiction

affecting any of such terms or the rights of the applicable Swap Counterparty

with respect thereto.  A separate action

or actions may be brought and prosecuted against the Swap Guarantor to enforce

the provisions of this Article XIV, irrespective of whether any

action is brought against the Issuer or whether the Issuer is joined in any

such action or actions.  The liability

of the Swap Guarantor under this Article XIV shall be absolute and

unconditional irrespective of:

 

(i)            any

lack of validity or enforceability of any other provision of this Agreement or

any other Transaction Document as against the Originator, the Trust Depositor,

the Servicer, the Backup Servicer, the Indenture Trustee, the Owner Trustee or

the Issuer;

 

(ii)           any

change in the time, manner or place of payment of, or in any other term of, all

or any of the Swap Guaranty Requirements, or any other amendment or waiver of

or any consent to departure from any other provision of this Agreement or any

Transaction Document;

 

(iii)          any

taking, exchange, release or non–perfection of any collateral, or any taking,

release or amendment or waiver of or consent to departure from any guaranty,

for all or any of the Swap Guaranty Requirements;

 

(iv)          any

manner of application of collateral, or proceeds thereof, to all or any of the

Swap Guaranty Requirements, or any manner of sale or other disposition of any

collateral for all or any of the Swap Guaranty Requirements or any other assets

of the Originator, the Trust Depositor, the Servicer, the Backup Servicer, the

Indenture Trustee, the Owner Trustee or the Issuer;

 

(v)           any

change, restructuring or termination of the corporate structure or existence of

the Originator, the Trust Depositor, the Servicer, the Backup Servicer, the

Indenture Trustee, the Owner Trustee or the Issuer; or

 

(vi)          any

other circumstance that might otherwise constitute a defense available to, or a

discharge of, the Originator, the Trust Depositor, the Servicer, the Backup

Servicer, the Indenture Trustee, the Owner Trustee or the Issuer.

 

This Article XIV shall continue to be effective or be

reinstated, as the case may be, if at any time any payment of any of the Swap

Guaranty Requirements is rescinded or must otherwise be returned by a Swap

Counterparty upon the insolvency, bankruptcy or reorganization of the Issuer or

the Swap Guarantor or otherwise, all as though payment had not been made.  No provision of this Article XIV

may be amended, supplemented or modified, or any of the terms hereof waived

with respect to a Swap Counterparty, except in a writing signed by the Swap

Counterparties and the Swap Guarantor.

 

Section 14.03                     Pari Passu Treatment of

Obligations of Swap Guarantor.

 

The Swap Guaranty Requirements of the Swap Guarantor under this Article XIV

do rank and will rank pari  passu in priority of payment with all

other unsecured and unsubordinated obligations for borrowed money of the Swap

Guarantor.

 

Section 14.04                     Waiver.

 

The Swap Guarantor hereby waives notice of acceptance of this guaranty

and of the extension or continuation of the Swap Guaranty Requirements or any

part thereof, presentment, protest, notice, demand, action or delinquency in

respect of the Swap Guaranty Requirements or any part thereof, any other notice

with respect to any of the Swap Guaranty Requirements and this Article XIV,

and any requirement that the parties to this Agreement protect, secure, perfect

or insure any security interest or Lien or any property subject thereto, or

exhaust any right or take any action against the Issuer or any other Person,

entity or any collateral.

 

76

 

Section 14.05                     Subrogation.

 

Until payment in full in cash of all of the Swap Guaranty Requirements,

all other amounts payable under all Swaps and all amounts payable to the Class

A and Class B Noteholders under this Agreement and the other Transaction

Documents have been paid in full (including, without limitation, the

Outstanding Principal Balance of the Class A Notes and Class B Notes being

reduced to zero and all interest thereon having been paid in full), the Swap

Guarantor hereby waives and releases all rights of subrogation against the

Issuer and its property and all rights of indemnification, contribution and

reimbursement from the Issuer and its property, in each case in connection with

this Article XIV and any payments made hereunder, and regardless of

whether such rights arise by operation of law, pursuant to contract or

otherwise.

 

 

[Remainder of Page Intentionally Left Blank]

 

77

 

IN WITNESS WHEREOF,

the parties hereto have caused this Agreement to be duly executed by their

respective officers as of the day and year first above written.

 

 

	

   

  	

  ACAS BUSINESS LOAN TRUST 2002–1

  
	

   

  	

   

  
	

   

  	

  By:

  	

  FIRST UNION TRUST COMPANY, NATIONAL

  ASSOCIATION, not in its individual capacity but

  solely as the Owner Trustee on behalf of the Issuer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  ACAS BUSINESS LOAN LLC, 2002–1,

  as the Trust Depositor

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  AMERICAN CAPITAL STRATEGIES, LTD.,

  as the 

  Servicer, as the Originator and as the Swap Guarantor

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
						

 

[Signatures Continued on the Following Page]

 

S-1

 

	

   

  	

  WELLS FARGO BANK MINNESOTA, NATIONAL

  ASSOCIATION, as the Indenture Trustee and the Backup

  Servicer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
				

 

S-2EXECUTION COPY

Exhibit

10.4

 

EXECUTION

COPY

 

 

 

INDENTURE

 

 

by

and between

 

 

ACAS BUSINESS LOAN TRUST 2002–1,

as

the Issuer,

 

 

and

 

 

WELLS FARGO BANK MINNESOTA, NATIONAL

ASSOCIATION,

not

in its individual capacity but solely in its capacity,

as

the Indenture Trustee

 

 

Dated

as of March 15, 2002

 

 

 

 

ACAS Business Loan Trust 2002–1 Loan–Backed Notes

Class A, Class B and Class C Notes

 

 

 

 

TABLE OF CONTENTS

 

	

  ARTICLE I 

  DEFINITIONS

  AND INCORPORATION BY REFERENCE

  
	

  Section 1.01

  	

  Definitions

  
	

  Section 1.02

  	

  Incorporation

  by Reference of Trust Indenture Act

  
	

  Section 1.03

  	

  Rules of Construction

  
	

   

  	

   

  
	

  ARTICLE II 

  THE

  NOTES

  
	

  Section 2.01

  	

  Form

  
	

  Section 2.02

  	

  Execution,

  Authentication and Delivery

  
	

  Section 2.03

  	

  Opinions of

  Counsel

  
	

   

  	

   

  
	

  ARTICLE III  COVENANTS;

  REPRESENTATIONS AND WARRANTIES

  
	

  Section 3.01

  	

  Collection

  of Payments on Loans; Trust Accounts

  
	

  Section 3.02

  	

  Maintenance

  of Office or Agency

  
	

  Section 3.03

  	

  Money for

  Payments to be Held in Trust

  
	

  Section

  3.04

  	

  Existence.

  
	

  Section

  3.05

  	

  Payment

  of Principal and Interest

  
	

  Section

  3.06

  	

  Protection

  of Indenture Collateral

  
	

  Section

  3.07

  	

  Opinions

  as to Indenture Collateral

  
	

  Section

  3.08

  	

  [Reserved]

  
	

  Section

  3.09

  	

  Performance

  of Obligations; Servicing of Loans

  
	

  Section 3.10

  	

  Negative Covenants

  
	

  Section

  3.11

  	

  Representations

  and Warranties Concerning the Loans

  
	

  Section

  3.12

  	

  Indenture

  Trustee’s Review of Loan Files

  
	

  Section

  3.13

  	

  Indenture

  Collateral; Related Documents

  
	

  Section

  3.14

  	

  Amendments

  to Transfer and Servicing Agreement

  
	

  Section

  3.15

  	

  Servicer

  as Agent and Bailee of Indenture Trustee

  
	

  Section 3.16

  	

  Investment Company

  Act

  
	

  Section

  3.17

  	

  Issuer

  May Consolidate, etc. Only on Certain Terms

  
	

  Section 3.18

  	

  Successor or Transferee.

  
	

  Section 3.19

  	

  No Other Business

  
	

  Section 3.20

  	

  No Borrowing

  
	

  Section 3.21

  	

  Notice of

  Events of Default

  
	

  Section 3.22

  	

  Further

  Instruments and Acts

  
	

  Section 3.23

  	

  Compliance with Laws

  
	

  Section

  3.24

  	

  Amendments

  of Trust Agreement

  
	

  Section 3.25

  	

  Removal of Administrator

  
	

  Section

  3.26

  	

  Representations

  and Warranties of Issuer

  
	

  Section

  3.27

  	

  Covenants

  of the Issuer Relating to Swaps

  
	

  Section 3.28

  	

  Grant of

  Substitute Loans

  
	

  Section 3.29

  	

  Determination

  of Note Rate

  
	

   

  	

   

  
	

  ARTICLE IV  THE

  NOTES; SATISFACTION AND DISCHARGE OF INDENTURE

  
	

  Section

  4.01

  	

  The Notes

  
	

  Section

  4.02

  	

  Registration

  of Transfer and Exchange of Notes

  
	

  Section

  4.03

  	

  Mutilated,

  Destroyed, Lost or Stolen Notes

  

 

i

 

	

  Section

  4.04

  	

  Payment

  of Principal and Interest; Defaulted Interest

  
	

  Section 4.05

  	

  Tax Treatment

  
	

  Section

  4.06

  	

  Satisfaction

  and Discharge of Indenture

  
	

  Section 4.07

  	

  Application of

  Trust Money

  
	

  Section

  4.08

  	

  Repayment

  of Moneys Held by Paying Agent

  
	

   

  	

   

  
	

  ARTICLE V 

  REMEDIES

  
	

  Section 5.01

  	

  Events of Default

  
	

  Section

  5.02

  	

  Acceleration

  of Maturity; Rescission and Annulment

  
	

  Section

  5.03

  	

  Collection

  of Indebtedness and Suits for Enforcement by Indenture Trustee; Authority of

  Indenture Trustee

  
	

  Section

  5.04

  	

  Remedies

  
	

  Section

  5.05

  	

  Optional

  Preservation of the Indenture Collateral

  
	

  Section

  5.06

  	

  Priorities

  
	

  Section 5.07

  	

  Limitation of Suits

  
	

  Section

  5.08

  	

  Unconditional

  Rights of Noteholders to Receive Principal and Interest

  
	

  Section

  5.09

  	

  Restoration

  of Rights and Remedies

  
	

  Section 5.10

  	

  Rights and

  Remedies Cumulative

  
	

  Section

  5.11

  	

  Delay or

  Omission Not a Waiver

  
	

  Section 5.12

  	

  Control by

  Noteholders

  
	

  Section 5.13

  	

  Waiver of Past

  Defaults

  
	

  Section 5.14

  	

  Undertaking for

  Costs

  
	

  Section

  5.15

  	

  Waiver

  of Stay or Extension Laws

  
	

  Section 5.16

  	

  Action on Notes

  
	

  Section

  5.17

  	

  Performance

  and Enforcement of Certain Obligations

  
	

   

  	

   

  
	

  ARTICLE VI 

  THE

  INDENTURE TRUSTEE

  
	

  Section 6.01

  	

  Duties of

  Indenture Trustee

  
	

  Section 6.02

  	

  Rights of

  Indenture Trustee

  
	

  Section

  6.03

  	

  Individual

  Rights of Indenture Trustee

  
	

  Section

  6.04

  	

  Indenture

  Trustee’s Disclaimer

  
	

  Section

  6.05

  	

  Notice

  of Defaults or Events of Default

  
	

  Section

  6.06

  	

  Reports

  by Indenture Trustee to Holders

  
	

  Section 6.07

  	

  Compensation

  and Indemnity

  
	

  Section

  6.08

  	

  Replacement

  of Indenture Trustee

  
	

  Section

  6.09

  	

  Successor

  Indenture Trustee by Merger

  
	

  Section

  6.10

  	

  Appointment

  of Co–Indenture Trustee or Separate Indenture Trustee

  
	

  Section 6.11

  	

  Eligibility

  
	

  Section

  6.12

  	

  Preferential

  Collection of Claims Against Issuer

  
	

  Section

  6.13

  	

  Representations

  and Warranties of Indenture Trustee

  
	

  Section

  6.14

  	

  Directions

  to Indenture Trustee

  
	

  Section

  6.15

  	

  Conflicts

  
	

   

  	

   

  
	

  ARTICLE VII  NOTEHOLDERS’

  LISTS AND REPORTS

  
	

  Section

  7.01

  	

  Issuer

  to Furnish Indenture Trustee Names and Addresses of Noteholders

  
	

  Section

  7.02

  	

  Preservation

  of Information: Communication to Noteholders

  

 

ii

 

	

  Section 7.03

  	

  Reports by Issuer

  
	

  Section 7.04

  	

  Reports by

  Indenture Trustee

  
	

   

  	

   

  
	

  ARTICLE VIII  ACCOUNTS,

  DISBURSEMENTS AND RELEASES

  
	

  Section 8.01

  	

  Collection of Money

  
	

  Section 8.02

  	

  Trust Accounts

  
	

  Section

  8.03

  	

  General

  Provisions Regarding Accounts

  
	

  Section

  8.04

  	

  Release

  of Indenture Collateral

  
	

  Section 8.05

  	

  Opinion of Counsel

  
	

   

  	

   

  
	

  ARTICLE IX 

  SUPPLEMENTAL

  INDENTURES

  
	

  Section

  9.01

  	

  Supplemental

  Indentures Without Consent of Noteholders

  
	

  Section

  9.02

  	

  Supplemental

  Indentures With Consent of Noteholders

  
	

  Section

  9.03

  	

  Execution

  of Supplemental Indentures

  
	

  Section

  9.04

  	

  Effect

  of Supplemental Indenture

  
	

  Section

  9.05

  	

  [Reserved]

  
	

  Section

  9.06

  	

  Reference

  in Notes to Supplemental Indentures

  
	

  Section 9.07

  	

  Special

  Supplemental Agreement

  
	

   

  	

   

  
	

  ARTICLE X  REDEMPTION OF NOTES

  
	

  Section 10.01

  	

  Redemption

  
	

  Section 10.02

  	

  Form of

  Redemption Notice

  
	

  Section

  10.03

  	

  Notes

  Payable on Redemption Date

  
	

   

  	

   

  
	

  ARTICLE XI  MISCELLANEOUS

  
	

  Section

  11.01

  	

  Compliance

  Certificates and Opinions, etc

  
	

  Section

  11.02

  	

  Form

  of Documents Delivered to Indenture Trustee

  
	

  Section 11.03

  	

  Acts of Noteholders

  
	

  Section

  11.04

  	

  Notices

  
	

  Section

  11.05

  	

  Notices

  to Noteholders; Waiver

  
	

  Section

  11.06

  	

  Alternate

  Payment and Notice Provisions

  
	

  Section

  11.07

  	

  Effect

  of Headings and Table of Contents

  
	

  Section 11.08

  	

  Successors and

  Assigns

  
	

  Section 11.09

  	

  Separability

  
	

  Section 11.10

  	

  Benefits of

  Indenture

  
	

  Section 11.11

  	

  Legal Holidays

  
	

  Section 11.12

  	

  Governing Law

  
	

  Section 11.13

  	

  Counterparts

  
	

  Section 11.14

  	

  Recording of

  Indenture

  
	

  Section 11.15

  	

  Trust Obligation

  
	

  Section 11.16

  	

  No Petition

  
	

  Section 11.17

  	

  Inspection

  
	

  Section

  11.18

  	

  [Reserved]

  
	

  Section

  11.19

  	

  Communication

  by Note Owners With Other Note Owners

  
	

  Section

  11.20

  	

  Disclaimer

  and Subordination

  

 

iii

 

EXHIBITS

 

	

  Exhibit A–1

  	

  Form of Class A Note

  
	

  Exhibit A–2

  	

  Form of Class B Note

  
	

  Exhibit A–3

  	

  Form of Class C Note

  
	

  Exhibit B

  	

  List of Loans

  
	

  Exhibit C

  	

  Form

  of Wiring Instructions

  
	

  Exhibit D–1

  	

  Form

  of Transfer Letter [Non–Rule 144A]

  
	

  Exhibit D–2

  	

  Form of Rule 144A

  Certification

  
	

  Exhibit E

  	

  Form

  of Transfer Certificate for Rule 144A Global Note to Regulation S

  Global Note during Restricted Period

  
	

  Exhibit F

  	

  Form

  of Transfer Certificate for Rule 144A Global Note to Regulation S

  Global Note after Restricted Period

  
	

  Exhibit G

  	

  Form

  of Transfer Certificate for Regulation S Global Note to Rule 144A

  Global Note during Restricting Period

  
	

  Exhibit H

  	

  Form

  of Transfer Certificate for Regulation S Global Note during Restricted

  Period

  
	

  Exhibit I

  	

  Form of Investor Certification

  

 

iv

 

INDENTURE

 

THIS INDENTURE, dated as of March 15, 2002 (as amended, modified,

restated, replaced, substituted, supplemented, waived or extended from time to

time, the “Indenture”), is by and between ACAS BUSINESS LOAN TRUST

2002–1, a Delaware business trust, as the issuer (together with its successors

and assigns, in such capacity, the “Issuer”), and WELLS FARGO BANK

MINNESOTA, NATIONAL ASSOCIATION, not in its individual capacity but solely in

its capacity as the indenture trustee (together with its successors and

assigns, in such capacity, the “Indenture Trustee”).

 

Each party hereto agrees as

follows for the benefit of the other parties and for the equal and ratable

benefit of the Holders of the Issuer’s Class A Loan–Backed Notes, Series

2002–1 (the “Class A Notes”), Class B Loan–Backed

Notes, Series 2002–1 (the “Class B Notes”) and Class C

Loan–Backed Notes, Series 2002–1 (the “Class C Notes” and, together

with the Class A Notes and Class B Notes, the “Notes”):

 

GRANTING CLAUSE

 

The Issuer hereby Grants to the

Indenture Trustee on behalf of and for the benefit of the Holders of the Notes

and the Swap Counterparties, without recourse, subject to the terms of this

Indenture and the other Transaction Documents, a continuing security interest

and lien on all of the Issuer’s right, title and interest in and to all

accounts, cash and currency, chattel paper, tangible chattel paper, electronic

chattel paper, copyrights, copyright licenses, equipment, fixtures, general

intangibles, instruments, commercial tort claims, deposit accounts, inventory,

investment property, letter–of–credit rights, software, supporting obligations,

accessions, and other property consisting of, arising out of, or related to

(i) the Loans and all other assets included or to be included from time to

time in the Loan Assets, whether now existing or hereafter arising or acquired,

other than the Retained Interest, if any, as it may exist from time to time and

(ii) all payments under any Swap (collectively, the “Indenture Collateral”).

 

The foregoing Grant is made in

trust to secure the payment of principal of and interest on, and any other

amounts owing in respect of, the Notes, equally and ratably without prejudice,

priority or distinction and all other sums owing by the Issuer hereunder or

under any other Transaction Document or under any Swap Transaction, and to

secure compliance with the provisions of this Indenture, all as provided in

this Indenture.

 

The Indenture Trustee, as

Indenture Trustee on behalf of the Holders of the Notes and on behalf of the

Swap Counterparties, acknowledges such Grant, accepts the trust under this

Indenture in accordance with the provisions of this Indenture and agrees to

perform its duties required in this Indenture to the best of its ability.

 

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY

REFERENCE

 

Section

1.01         Definitions.

 

Certain defined terms used

throughout this Indenture are defined above or in this Section 1.01.  In addition, except as otherwise expressly

provided herein or unless the context otherwise requires, capitalized terms

used but not otherwise defined herein shall have the meanings given to such

terms in the Transfer and Servicing Agreement (as defined below), which are

incorporated herein by reference.

 

“Accredited Investors” shall have the meaning specified in

Rule 501(a)(1)–(3) or (7) under the Securities Act.

 

“Act” shall have the meaning specified in subsection 11.03(a).

 

“Aggregate Notional Amount” means, on any

date, the aggregate notional amount in respect of the payment obligations of

the relevant Swap Counterparty that is outstanding on that date under all Swap

Transactions or any group thereof, as the context requires.

 

“Applicable Procedures” has the meaning given to such term in subsection 4.02(j)(i).

 

“Authorized Newspaper” means a newspaper of general circulation

in the Borough of Manhattan, The City of New York, printed in the English

language and customarily published on each Business Day, whether or not

published on Saturdays, Sundays or holidays.

 

“Authorized Officer” means, with respect to any Person, any

person who is authorized to act for such Person in matters relating to the

Transaction Documents and whose action is binding upon such Person.  With respect to the Issuer, any officer of

the Owner Trustee who is authorized to act for the Owner Trustee in matters

relating to the Issuer.  With respect to

the Trust Depositor or the Servicer, initially those individuals the names of

whom appear on the lists of Authorized Officers delivered on the Closing Date

(as such list may be modified or supplemented from time to time

thereafter).  With respect to the

Indenture Trustee, the Chairman or Vice President of the Board of Directors or

Trustees, the Chairman or Vice Chairman of the Executive or Standing Committee

of the Board of Directors or Trustees, the President, the Chairman of the

Committee on Trust Matters, any vice president, any assistant vice president,

the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,

the Cashier, any assistant cashier, any trust officer, the Controller and any

assistant controller or any other officer of the Indenture Trustee customarily

performing functions similar to those performed by any of the above designated

officers and also, with respect to a particular matter, any other officer to

whom such matter is referred because of such officer’s knowledge of and

familiarity with particular subject.

 

“Beneficial Owner” means, with respect to a Note, the Person who

is the beneficial owner of such Note, as reflected on the books of the

Depository or on the books of a Person maintaining

 

2

 

an account with such Depository (directly or as an indirect

participant, in accordance with the rules of such Depository), as the case may

be.

 

“Certificate Account” has the meaning given to such term in Section 5.01

of the Trust Agreement.

 

“Certificate Registrar” means initially, the Indenture Trustee,

and thereafter, any successor appointed pursuant to the Trust Agreement.

 

“Clearstream” means Clearstream Banking, a société anonyme, a

limited liability company organized under the laws of Luxembourg.

 

“Corporate Trust Office” means in the case of Owner Trustee:

First Union Trust Company, National Association, One Rodney Square, 1st Floor,

Wilmington, Delaware 19801, Attention: 

Corporate Trust Administration, and in the case of the Indenture

Trustee:  Wells Fargo Bank Minnesota,

National Association, Sixth and Marquette Avenue, MAC N9311–161, Minneapolis,

Minnesota 55479, Attention:  Corporate

Trust Services/Asset Backed Administration, or at such other address as the

Owner Trustee or the Indenture Trustee may designate from time to time by

notice to the Issuer, or the principal corporate trust officer of any successor

Owner Trustee or Indenture Trustee at the address designated by such successor

by notice to the Issuer.

 

“Credit Support Provider” means, in

respect of a Swap Counterparty, any Person providing credit support on behalf

of such Swap Counterparty.

 

“Default” means any occurrence that is, or

with notice or the lapse of time or both would become, an Event of Default.

 

“Depository” means The Depository Trust Company or its

successors or assigns.

 

“Depository Participant” means a Person for whom, from time to

time, the Depository effects book–entry transfers and pledges of securities

deposited with the Depository.

 

“Direct Participant” means any broker–dealer, bank or other

financial institution for whom the nominee of the Depository holds an interest

in any Note.

 

“DTC” means The Depository Trust Company,

and its successors.

 

“DTC Custodian” means the Indenture Trustee as a custodian for

DTC.

 

“ERISA” means the Employee Retirement

Income Security Act of 1974, as amended from time to time, or any successor

legislation thereto, and the regulations promulgated and the rulings issued

thereunder.

 

“Event of Default” has the meaning

given to such term in Section 5.01.

 

3

 

“Exchange Act” means the Securities

Exchange Act of 1934, and regulations promulgated thereunder.

 

“Fee Event” means an Event of Default

other than the occurrence of the following:

 

(1)           the Class C Note is held by more than

ten (10) persons;

 

(2)           the Originator or the Servicer agrees

or consents to, or otherwise permits to occur, any amendment, modification,

change, supplement or recission of or to the Credit and Collection Policy in

whole or in part that could reasonably be expected to have a material adverse

effect on the Noteholders and the Swap Counterparties; and

 

(3)           on any day any Swap Transaction fails

to meet the requirements set forth in this Indenture.

 

“Fixed Rate Permitted Excess Amount”

means, with respect to Fixed Rate Loans, $150,000.

 

“Floating Rate Permitted Excess Amount”

means, with respect to Floating Rate Loans, $150,000.

 

“Global Note” means any Note registered in the name of the

Depository or its nominee, beneficial interests of which are reflected on the

books of the Depository or on the books of a Person maintaining any account

with such Depository (directly or as an indirect participant in accordance with

the rules of such Depository).  The

Global Note shall include the Rule 144A Global Notes and the

Regulation S Global Notes.

 

“Grant” means to mortgage, pledge,

bargain, sell, warrant, alienate, remise, release, convey, assign, transfer,

create and grant a lien upon and a security interest in and right of set–off

against, deposit, set over and confirm pursuant to this Indenture.  A Grant of the Indenture Collateral or of

any other agreement or instrument shall include all rights, powers and options

(but none of the obligations) of the granting party thereunder, including the

immediate and continuing right to claim for, collect, receive and give receipt

for principal and interest payments in respect of the collateral or other

agreement or instrument and all other moneys payable thereunder, to give and

receive notices and other communications, to make waivers or other agreements,

to exercise all rights and options, to bring Proceedings in the name of the

granting party or otherwise and generally to do and receive anything that the

granting party is or may be entitled to do or receive thereunder or with

respect thereto.

 

“Indenture Collateral” has the meaning

given to such term in the Granting Clauses.

 

“Indenture Trustee” has the meaning given

to such term in the Preamble.

 

“Independent” means, when used with

respect to any specified Person, that the Person (i) is in fact

independent of the Issuer, any other obligor upon the Notes, the Trust

Depositor, the Originator and any of their respective Affiliates,

(ii) does not have any direct financial interest or any material indirect

financial interest in the Issuer, any such other obligor, the Originator or any

 

4

 

of their respective Affiliates, and (iii) is

not connected with the Issuer, any such other obligor, the Originator or any

Affiliate of any of the foregoing Persons as an officer, employee, promoter,

underwriter, trustee, partner, director or person performing similar functions.

 

“Independent Certificate” means a

certificate or opinion to be delivered to the Indenture Trustee under the

circumstances described in, and otherwise complying with, the applicable

requirements of Section 11.01, made by an Independent appraiser or

other expert appointed by an Issuer Order and approved by the Indenture Trustee

in the exercise of reasonable care, and such opinion or certificate shall state

that the signer has read the definition of “Independent” in this Indenture and

that the signer is Independent within the meaning thereof.

 

“Indirect Participant” means any financial institution for whom

any Direct Participant holds an interest in any Note.

 

“Individual Note” means any Note registered in the name of a

holder other than the Depository or its nominee.

 

“Initial Purchaser” means First Union Securities, Inc., or any

successor thereto.

 

“Institutional Accredited Investor” means any Person meeting the

requirements of Rule 501(a) (1) – (3) or (7) of Regulation D under the

Securities Act.

 

“Interest Rate” means, as the context may

require, the Class A Interest Rate, the Class B Interest Rate and the

Class C Interest Rate, or any of them, in each case as defined in the

Transfer and Servicing Agreement.

 

“Issuer Order” and “Issuer Request”

means a written order or request signed in the name of the Issuer by any one of

its Authorized Officers and delivered to the Indenture Trustee.

 

“Legal Final Maturity Date” means June 20,

2012.

 

“Letter of Representations” means the Letter of Representations,

dated March 15, 2002, among the Issuer, the Indenture Trustee and the

Depository.

 

“Note Register” has the meaning given to such term in Section 4.02.

 

“Note Registrar” has the meaning given to such term in Section 4.02.

 

“Opinion” or “Opinion of Counsel” means a written opinion of

counsel, who may, without limitation, be internal counsel for ACAS or the

Servicer, reasonably acceptable to the Indenture Trustee and experienced in

matters relating thereto.

 

“Outstanding” means, as of the date of

determination, all Notes theretofore authenticated and delivered under this

Indenture except:

 

5

 

(i)            Notes theretofore cancelled by the

Note Registrar or delivered to the Note Registrar for cancellation;

 

(ii)           Notes or portions thereof the payment

for which money in the necessary amount has been theretofore deposited with the

Indenture Trustee or any Paying Agent in trust for the Holders of such Notes (provided,

however,

that if such Notes are to be redeemed, notice of such redemption has been duly

given pursuant to this Indenture or provision for such notice, satisfactory to

the Indenture Trustee, has been made); and

 

(iii)          Notes in exchange for or in lieu of

other Notes which have been authenticated and delivered pursuant to this

Indenture unless proof satisfactory to the Indenture Trustee is presented that

any such Notes are held by a bona fide purchaser;

 

provided, however,

that in determining whether the Holders of the requisite Outstanding Amount have

given any request, demand, authorization, direction, notice, consent or waiver

hereunder or under any other Transaction Document, Notes owned by the Issuer,

the Trust Depositor, the Originator, the Servicer or any of their respective

Affiliates shall be disregarded and deemed not to be Outstanding, except that,

in determining whether the Indenture Trustee shall be protected in relying upon

any such request, demand, authorization, direction, notice, consent or waiver,

only Notes that a Responsible Officer of the Indenture Trustee actually knows

to be so owned shall be so disregarded. 

Notes so owned that have been pledged in good faith may be regarded as

Outstanding if the pledgee establishes to the satisfaction of the Indenture

Trustee the pledgee’s right so to act with respect to such Notes and that the

pledgee is not the Issuer, any other obligor upon the Notes, the Trust

Depositor, the Originator or any of their respective Affiliates.

 

“Outstanding Amount” means the aggregate

principal amount of all Notes of one Class or of all Classes, as the case may

be, Outstanding at the date of determination.

 

“Owner” means each Holder of a Note.

 

“Owner Trustee” means First Union Trust

Company, National Association, not in its individual capacity, but solely as owner

trustee under the Trust Agreement, and any successor owner trustee under the

Trust Agreement.

 

“Participant” means a Person that has an account with DTC.

 

“Percentage Interest” means, with respect to a Class A

Note, Class B Note or Class C Note, the fraction, expressed as a

percentage, the numerator of which is the denomination represented by such

Class A Note, Class B Note or Class C Note and the denominator

of which is the Initial Class A Principal Balance, the Initial Class B

Principal Balance or the Initial Class C Principal Balance, as the case

may be.  With respect to a Trust

Certificate, the percentage set forth on the face thereof.

 

“Plan” has the meaning given to such term in subsection 4.02(t).

 

6

 

“Private Placement Memorandum” means the Private Placement

Memorandum, dated March 13, 2002 prepared in connection with the offer and sale

of the Class A Notes and the Class B Notes.

 

“Proceeding” means any suit in equity,

action at law or other judicial or administrative proceeding.

 

“Qualified Institutional Buyer” has the meaning given to such

term in Rule 144A under the Securities Act.

 

“Qualified Swap Counterparty” means a

party that is a recognized dealer in interest rate swaps, organized under the

laws of the United States or a jurisdiction located therein (or another

jurisdiction reasonably acceptable to the Issuer, the Indenture Trustee and

each Rating Agency), that with respect to itself or its Credit Support

Provider: (a) at the time it becomes a Swap Counterparty has a short–term

rating of at least “A–1” by S&P (for so long as any Class A Notes or Class

B Notes are deemed outstanding hereunder and are rated by S&P) and “F–1” by

Fitch (for so long as any Class A Notes or Class B Notes are deemed outstanding

hereunder and are rated by Fitch) and either a long–term senior unsecured debt

rating of at least “Aa3” by Moody’s (if such Person does not have a “P–1”

short–term debt rating by Moody’s) or a long–term senior unsecured debt rating

of “A1” by Moody’s (only if the short–term debt of such Person is rated “P–1”

by Moody’s) (for so long as any Class A Notes or Class B Notes are

deemed outstanding hereunder and are rated by Moody’s) and thereafter maintains

a short–term rating of at least “A–1” by S&P (for so long as any Class A

Notes or Class B Notes are deemed outstanding hereunder and are rated by

S&P) and “F–2” by Fitch (for so long as any Class A Notes or Class B Notes

are deemed outstanding hereunder and are rated by Fitch) and either a long–term

senior unsecured debt rating of at least “A1” by Moody’s (if such Person does

not have a “P–1” short–term debt rating by Moody’s) or a long–term senior

unsecured debt rating of at least “A2” by Moody’s (only if the short–term debt

of such Person is rated “P–1” by Moody’s) (for so long as any Class A Notes or

Class B Notes are deemed outstanding hereunder and are rated by Moody’s);

(b) legally and effectively accepts the rights and obligations under the

applicable Swap, or, as the case may be, alternate credit support arrangements

pursuant to a written agreement reasonably acceptable to the Issuer and the

Indenture Trustee and (c) in connection with a Substitute Swap

Counterparty, otherwise satisfies the Rating Agency Condition.

 

“Redemption Date” means, in the case of a

payment to Noteholders pursuant to Section 10.01, the Payment Date

specified by the Servicer or the Issuer pursuant to Section 10.01.

 

“Redemption Date Amount” means in the case

of a payment made to Noteholders pursuant to Section 10.01, the

amount on deposit in the Note Distribution Account, but not in excess of an

amount equal to the unpaid principal amount of the Notes redeemed plus accrued

and unpaid interest thereon at the weighted average of the Interest Rate for

each Class of Notes being so redeemed to but excluding the Redemption Date.

 

“Regulation S” means Regulation S under the Securities

Act.

 

7

 

“Regulation S Global Notes” means the Notes sold in

offshore transactions in reliance on Regulation S and represented by one

or more Global Notes deposited with the Indenture Trustee as custodian for the

Depository.

 

“Regulation S Investor” means, with respect to a transferee

of a Regulation S Global Note pursuant to Regulation S.

 

“Restricted Period” means the forty (40) day period prescribed

by Regulation S commencing on the later of (a) the date upon which

Notes are first offered to Persons other than the Initial Purchaser and any

other distributor (as such term is defined in Regulation S) of the Notes

and (b) the Closing Date.

 

“Rule 144A Certification” means a letter substantially in

the form attached to the Indenture as Exhibit D–2.

 

“Rule 144A Global Notes” means the Notes sold within the

United States to U.S. Persons, initially issued to Qualified Institutional

Buyers in the form of beneficial interests in one or more Global Notes,

deposited with the Indenture Trustee as custodian for the Depository.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securities Legend” “THIS NOTE HAS NOT BEEN AND WILL NOT BE

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),

OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE,

AGREES THAT THIS NOTE MAY BE RE–OFFERED, RESOLD, PLEDGED OR OTHERWISE

TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE

LAWS AND ONLY (1) (A) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT

(“RULE 144A”) TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A

QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”),

PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,

WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR

OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (B) IN

CERTIFICATED FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING

OF RULE 501(a)(1)–(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR

INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT

TO (X) THE RECEIPT BY THE INDENTURE TRUSTEE OF A LETTER SUBSTANTIALLY IN

THE FORM PROVIDED IN THE INDENTURE AND (Y) THE RECEIPT BY THE INDENTURE

TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE INDENTURE TRUSTEE THAT SUCH

REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT

AND OTHER APPLICABLE LAWS, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE

WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES

ACT, (3) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT

AND IN ACCORDANCE WITH ANY

 

8

 

APPLICABLE STATE SECURITIES LAWS, OR (4) PURSUANT TO AN EFFECTIVE

REGISTRATION STATEMENT.”

 

“Series” means 2002–1.

 

“State” means any one of the fifty (50)

states of the United States, or the District of Columbia or any of its

territories.

 

“Substitute Swap Counterparty” means any

substitute or replacement swap counterparty under a Swap.

 

“Swap” means each agreement between the

Issuer and a Swap Counterparty that governs one or more Swap Transactions,

which agreement shall consist of a “Master Agreement” in a form published by

the International Swaps and Derivatives Association, Inc., together with a

“Schedule” and “Credit Support Annex”, and each “Confirmation” thereunder confirming

the specific terms of each such Swap Transaction.

 

“Swap Counterparty” means First Union

National Bank or any other Qualified Swap Counterparty that agrees that in the

event that it or its Credit Support Provider fails to maintain certain ratings

as provided in the applicable Swap, then the Swap Counterparty shall

(i) transfer all of its rights and obligations under the Swap to a

Substitute Swap Counterparty as provided in the Swap or (ii) post

collateral, as applicable, as provided in the Swap.

 

“Swap Transactions” has the meaning given

to such term in the Transfer and Servicing Agreement.

 

“Termination Date” means the date on which

the Indenture Trustee shall have received payment and performance of all

amounts and obligations which the Issuer may owe to or on behalf of the

Indenture Trustee for the benefit of the Noteholders under this Indenture or

the Notes, all outstanding Swap Transactions under all Swaps then in effect

have been terminated and all amounts, including Swap Breakage Costs, payable in

connection with such termination have been paid in full to the Swap

Counterparties.

 

“Transfer” has the meaning given to such term in Section 4.02.

 

“Transfer and Servicing Agreement” means

the Transfer and Servicing Agreement, dated as of March 15, 2002, by and among

ACAS Business Loan Trust 2002–1, as the Issuer, ACAS Business Loan LLC, 2002–1,

as the Trust Depositor, American Capital Strategies, Ltd., as the Originator,

as the Servicer and as the Swap Guarantor, and Wells Fargo Bank Minnesota,

National Association, as the Indenture Trustee and as the Backup Servicer.

 

“Transferee Letter” means the letter set forth in Exhibit D–1

to the Indenture.

 

“Trust Agreement” means the Trust

Agreement, dated as of March 1, 2002, between the Trust Depositor and the Owner

Trustee.

 

9

 

“Trust Certificate” means a certificate evidencing the

beneficial interest of a Certificateholder in the Issuer, substantially in the

form of Exhibit A attached to the Trust Agreement.

 

“Trust Indenture Act” or “TIA”

means the Trust Indenture Act of 1939, as amended from time to time, as in

effect on any relevant date.

 

“UCC” means, unless the context otherwise

requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction,

as amended from time to time.

 

“U.S. Person” means a person that is a citizen or resident of

the United States, a corporation or partnership (except as provided in

applicable Treasury regulations) created or organized in or under the laws of

the United States, any State or the District of Columbia, including any entity

treated as a corporation or partnership for federal income tax purposes, an

estate whose income is subject to United States federal income tax regardless

of its source, or a trust if a court within the United States is able to

exercise primary supervision over the administration of such trust, and one or

more such U.S. Persons have the authority to control all substantial decisions

of such trust (or, to the extent provided as applicable Treasury regulations,

certain trusts in existence on August 20, 1996 which are eligible to elect

to be treated as a U.S. Person).

 

Section 1.02                            Incorporation by Reference of

Trust Indenture Act.

 

Whenever this Indenture refers

to a provision of the TIA, the provision is incorporated by reference in and

made a part of this Indenture.  The

following TIA terms used in this Indenture have the following meanings:

 

“Commission” means the

Securities and Exchange Commission.

 

“indenture securities” means the

Notes and the Swaps.

 

“indenture security holder”

means a Noteholder and a Swap Counterparty.

 

“indenture to be qualified”

means this Indenture.

 

“indenture trustee” or

“institutional trustee” means the Indenture Trustee.

 

“obligor” on the indenture

securities means the Issuer and any other obligor on the indenture securities.

 

All other TIA terms used in this

Indenture that are defined by the TIA, defined by TIA reference to another

statute or defined by Commission rule have the meaning assigned to them by such

definitions.

 

Section 1.03                            Rules of Construction.

 

Unless the context otherwise

requires:

 

10

 

(i)            a term has the meaning given to it;

 

(ii)           an accounting term not otherwise

defined has the meaning given to it in accordance with generally accepted

accounting principles as in effect from time to time;

 

(iii)          “or” is not by its use intended to

exclude all other items;

 

(iv)          “including” means including without

limitation;

 

(v)           words in the singular include the

plural and words in the plural include the singular;

 

(vi)          any agreement, instrument or statute

defined or referred to herein or in any instrument or certificate delivered in

connection herewith means such agreement, instrument or statute as from time to

time amended, modified, waived, supplemented or restated and includes (in the

case of agreements or instruments) references to all attachments thereto and

instruments incorporated therein; references to a Person are also to its

permitted successors and assigns; and

 

(vii)         the words “hereof,” “herein” and

“hereunder” and words of similar import when used in this Indenture shall refer

to this Indenture as a whole and not to any particular provision of this

Indenture; Section, subsection and Schedule references contained in this

Indenture are references to Sections, subsections and Schedules in or to this

Indenture unless otherwise specified.

 

ARTICLE II

 

THE NOTES

 

Section 2.01                            Form.

 

The Notes, in each case together

with the Indenture Trustee’s certificate of authentication, shall be in

substantially the forms set forth as Exhibits A–1, A–2 and A–3

to this Indenture with such appropriate insertions, omissions, substitutions

and other variations as are required or permitted by this Indenture and may

have such letters, numbers or other marks of identification and such legends or

endorsements placed thereon as may, consistently herewith, be determined by the

appropriate Authorized Officers executing such Notes, as evidenced by their

execution of the Notes.  Any portion of

the text of any Note may be set forth on the reverse thereof, with an

appropriate reference thereto on the face of the Note.

 

The Notes shall be typewritten,

printed, lithographed or engraved or produced by any combination of these

methods (with or without steel engraved borders), all as determined by the

Authorized Officers executing such Notes, as evidenced by their execution of

such Notes.

 

11

 

The terms of the Notes set forth

in Exhibits A–1, A–2 and A–3 hereto are part of the

terms of this Indenture.

 

Section 2.02                            Execution, Authentication and

Delivery.

 

The Notes shall be executed on

behalf of the Issuer by any of its Authorized Officers.  The signature of any such Authorized Officer

on the Notes may be manual or facsimile. 

Notes bearing the manual or facsimile signature of individuals who were

at any time Authorized Officers of the Issuer shall bind the Issuer,

notwithstanding that such individuals or any of them have ceased to hold such

offices prior to the authentication and delivery of such Notes or did not hold

such offices at the date of such Notes.

 

The Indenture Trustee shall,

upon receipt of an Issuer Order, authenticate and deliver for original issue

the Class A Notes for original issue in an aggregate amount equal to the

Initial Class A Principal Balance, Class B Notes for original issue

in an aggregate amount equal to the Initial Class B Principal Balance, and

Class C Notes for original issue in an aggregate amount equal to the

Initial Class C Principal Balance.

 

Each Note shall be dated the

date of its authentication.  The Notes

shall be issuable as registered Notes in the minimum denomination of $1,000,000

and in integral multiples of $100,000 in excess thereof; provided, however,

that one Note of each Class may be issued in a different denomination.

 

No Note shall be entitled to any

benefit under this Indenture or be valid or obligatory for any purpose, unless

there appears on such Note a certificate of authentication substantially in the

form provided for herein executed by the Indenture Trustee by the manual

signature of one of its authorized signatories, and such certificate upon any

Note shall be conclusive evidence, and the only evidence, that such Note has

been duly authenticated and delivered hereunder.

 

Section 2.03                            Opinions of Counsel.

 

On the Closing Date, the

Indenture Trustee shall have received: (i) an Opinion of Counsel, with

respect to securities law matters; (ii) an Opinion of Counsel, with

respect to the tax status of the arrangement created by this Indenture; and

(iii) an Opinion of Counsel to the Issuer, with respect to the due

authorization, valid execution and delivery of this Indenture and with respect

to its binding effect on the Issuer.

 

ARTICLE III

 

COVENANTS; REPRESENTATIONS AND

WARRANTIES

 

Section 3.01                            Collection of Payments on Loans;

Trust Accounts.

 

The Servicer shall establish and maintain each of the

Trust Accounts specified in Section 7.01 of the Transfer and

Servicing Agreement.  The Indenture

Trustee shall ensure that

 

12

 

each of the Trust Accounts is established and maintained as an Eligible

Deposit Account with a Qualified Institution. 

If any institution with which any of the Trust Accounts established

pursuant to subsection 7.01(a) of the Transfer and Servicing

Agreement are established ceases to be a Qualified Institution, the Servicer,

or if the Servicer fails to do so, the Indenture Trustee (as the case may be)

shall within ten (10) Business Days establish a replacement account at a

Qualified Institution after notice of such event.  The Indenture Trustee shall make payments of principal of and

interest on the Notes, subject to Section 3.03 and as provided in Section 3.05

herein from moneys on deposit in the Note Distribution Account.

 

Section 3.02                            Maintenance of Office or Agency.

 

The Issuer will maintain with

the Indenture Trustee an office or agency where, subject to the satisfaction of

conditions set forth herein, Notes may be surrendered for registration of

transfer or exchange, and where notices and demands to or upon the Issuer in

respect of the Notes and this Indenture may be served.  The Issuer hereby initially appoints the

Indenture Trustee to serve as its agent for the foregoing purposes.  The Issuer will give prompt written notice

to the Indenture Trustee of the location, and of any change in the location, of

any such office or agency.  If at any

time the Issuer shall fail to maintain any such office or agency or shall fail

to furnish the Indenture Trustee with the address thereof, such surrenders,

notices and demands may be made or served at the Corporate Trust Office of the

Indenture Trustee, and the Issuer hereby appoints the Indenture Trustee as its

agent to receive all such surrenders, notices and demands.

 

Section 3.03                            Money for Payments to be Held in

Trust.

 

As provided in Section 3.01,

all payments of amounts due and payable with respect to any Notes or Swaps that

are to be made from amounts withdrawn from the Collection Account and the Note

Distribution Account pursuant to Section 3.01 shall be made on

behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and

no amounts so withdrawn from the Collection Account and the Note Distribution

Account for payments of Notes or any Swaps shall be paid over to the Issuer

except as provided in this Section 3.03.

 

On or before the Business Day

immediately preceding each Payment Date and Redemption Date, the Issuer shall

deposit or cause to be deposited in the Note Distribution Account an aggregate

sum sufficient to pay the amounts then becoming due, such sum to be held in

trust for the benefit of the Persons entitled thereto and (unless the Paying

Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee in

writing of its action or failure so to act.

 

The Issuer will cause each

Paying Agent other than the Indenture Trustee to execute and deliver to the

Indenture Trustee an instrument in which such Paying Agent shall agree with the

Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby

so agrees), subject to the provisions of this Section 3.03, that

such Paying Agent will:

 

(i)            hold all sums held by it for the

payment of amounts due with respect to the Notes in trust for the benefit of

the Persons entitled thereto until such sums shall be paid

 

13

 

to

such Persons or otherwise disposed of as herein provided and pay such sums to

such Persons as herein provided;

 

(ii)           give the Indenture Trustee notice of

any default by the Issuer (or any other obligor upon the Notes) in the making

of any payment required to be made with respect to the Notes or the Swaps;

 

(iii)          at any time during the continuance of

any such default, upon the written request of the Indenture Trustee, forthwith

pay to the Indenture Trustee all sums so held in trust by such Paying Agent;

 

(iv)          immediately resign as a Paying Agent

and forthwith pay to the Indenture Trustee all sums held by it in trust for the

payment of Notes or the Swaps if at any time it ceases to meet the standards

required to be met by a Paying Agent at the time of its appointment; and

 

(v)           comply with all requirements of the

Code with respect to the withholding from any payments made by it on any Notes

of any applicable withholding taxes imposed thereon and with respect to any

applicable reporting requirements in connection therewith.

 

The Issuer may at any time, for

the purpose of obtaining the satisfaction and discharge of this Indenture or

for any other purpose, by Issuer Order direct any Paying Agent to pay to the

Indenture Trustee all sums held in trust by such Paying Agent, such sums to be

held by the Indenture Trustee upon the same trusts as those upon which the sums

were held by such Paying Agent; and upon such payment by any Paying Agent to

the Indenture Trustee, such Paying Agent shall be released from all further

liability with respect to such money.

 

Subject to applicable laws with

respect to escheat of funds, any money held by the Indenture Trustee or any

Paying Agent in trust for the payment of any amount due with respect to any

Note and remaining unclaimed for two (2) years after such amount has become due

and payable shall be discharged from such trust and upon receipt of an Issuer

Request shall be deposited by the Indenture Trustee in the Collection Account;

and the Holder of such Note shall thereafter, as an unsecured general creditor,

look only to the Issuer for payment thereof, and all liability of the Indenture

Trustee or such Paying Agent with respect to such trust money shall thereupon

cease; provided,

however,

that if such money or any portion thereof had been previously deposited by the

Issuer with the Indenture Trustee for the payment of principal or interest on

the Notes; and provided, further, that, the Indenture

Trustee or such Paying Agent, before being required to make any such repayment,

may at the expense of the Issuer cause to be published once, in an Authorized

Newspaper, notice that such money remains unclaimed and that, after a date

specified therein, which shall not be less than thirty (30) days from the date

of such publication, any unclaimed balance of such money then remaining will be

repaid to or for the account of the Issuer. 

The Indenture Trustee may also adopt and employ, at the expense of the

Issuer, any other reasonable means of notification of such repayment

(including, but not limited to, mailing notice of such repayment to Holders

whose Notes have been called but have not been surrendered for redemption or

whose right to or interest in moneys due and payable but

 

14

 

not claimed is determinable from the records of

the Indenture Trustee or of any Paying Agent, at the last address of record for

each such Holder).

 

Section 3.04                            Existence.

 

The Issuer will keep in full

effect its existence, rights and franchises as a business trust under the laws

of the State of Delaware (unless it becomes, or any successor Issuer hereunder

is or becomes, organized under the laws of any other state or of the United

States, in which case the Issuer will keep in full effect its existence, rights

and franchises under the laws of such other jurisdiction) and will obtain and

preserve its qualification to do business in each jurisdiction in which such

qualification is or shall be necessary to protect the validity and

enforceability of this Indenture, the Notes, the other Transaction Documents,

the Indenture Collateral and each other instrument or agreement included in the

Indenture Collateral.

 

Section 3.05                            Payment of Principal and

Interest.

 

The Issuer will duly and punctually pay (i) the

principal of and interest on the Notes in accordance with the terms of such

Notes, this Indenture and the Transfer and Servicing Agreement and

(ii) all amounts payable under the Swaps in accordance with the terms

thereof, this Indenture and the Transfer and Servicing Agreement.  The Issuer will cause to be distributed all

amounts on deposit in the Note Distribution Account on a Payment Date deposited

therein pursuant to the Transfer and Servicing Agreement for the benefit of the

Notes, to the applicable Noteholders, and for the benefit of the Swaps, to the

applicable Swap Counterparties.  Amounts

properly withheld under the Code or any applicable state law by any Person from

a payment to any Noteholder of interest and/or principal shall be considered as

having been paid by the Issuer to such Noteholder for all purposes of this

Indenture.

 

Section 3.06                            Protection of Indenture

Collateral.

 

(a)           The Issuer intends the security interest Granted pursuant

to this Indenture in favor of the Indenture Trustee on behalf of the

Noteholders and Swap Counterparties to be prior to all other liens in respect

of the Indenture Collateral, and the Issuer shall take all actions necessary to

obtain and maintain, for the benefit of the Indenture Trustee on behalf of the

Noteholders and Swap Counterparties, a first lien on and a first priority,

perfected security interest in the Indenture Collateral.  In connection therewith, pursuant to Section 2.07

of the Transfer and Servicing Agreement, the Issuer shall cause to be delivered

into the possession of the Indenture Trustee as pledgee hereunder, indorsed in

blank, any “instruments” (within the meaning of the UCC), not constituting part

of chattel paper, evidencing any Loan which is part of the Indenture Collateral

and all other portions of the Loan Files. 

The Indenture Trustee acknowledges and agrees that (i) it holds the

Loan Assets delivered to it under the ACAS Transfer Agreement for the benefit

of the Trust Depositor, (ii) it holds the Loan Assets delivered to it

under the Transfer and Serving Agreement for the benefit of the Trust, and

(iii) it holds the Indenture Collateral delivered to it pursuant to this

Indenture for the benefit of the Noteholders and Swap Counterparties.  The Indenture Trustee agrees to maintain

continuous possession of such delivered instruments and the Loan Files as

pledgee hereunder until this Indenture shall have terminated in accordance with

its terms or until, pursuant to the terms hereof or of the Transfer

 

15

 

and Servicing Agreement, the Indenture Trustee is

otherwise authorized to release such instrument from the Indenture

Collateral.  The Issuer will from time

to time execute and deliver all such supplements and amendments hereto and all

such financing statements, continuation statements, instruments of further

assurance and other instruments, all as prepared by the Servicer and delivered

to the Issuer, and will take such other action necessary or advisable to:

 

(i)            grant more effectively all or any

portion of the Indenture Collateral;

 

(ii)           maintain or preserve the lien and

security interest (and the priority thereof) created by this Indenture or carry

out more effectively the purposes hereof;

 

(iii)          perfect, publish notice of or protect

the validity of any Grant made or to be made by this Indenture;

 

(iv)          enforce any of the Indenture

Collateral;

 

(v)           preserve and defend title to the

Indenture Collateral and the rights of the Indenture Trustee, the Noteholders

and the Swap Counterparties in such Indenture Collateral against the claims of

all persons and parties; and

 

(vi)          pay all taxes or assessments levied or

assessed upon the Indenture Collateral when due.  The Issuer hereby designates the Indenture Trustee its agent and

attorney-in-fact to execute all financing statements, continuation statements

or other instruments required to be executed pursuant to this Section.  In no event shall the Indenture Trustee be

responsible for filing or maintaining such financing statements, continuation

statements or other instruments, unless it shall have become the Successor

Servicer.

 

(b)           Except as otherwise provided in or permitted by the

Transfer and Servicing Agreement or this Indenture, the Indenture Trustee shall

not remove any portion of the Indenture Collateral that consists of money or is

evidenced by an instrument, certificate or other writing from the jurisdiction

in which it was held at the date of the most recent Opinion of Counsel delivered

pursuant to Section 3.07 (or from the jurisdiction in which it was

held as described in the Opinion of Counsel delivered at the Closing Date

pursuant to subsection 3.07(a), if no Opinion of Counsel has yet

been delivered pursuant to subsection 3.07(b)) unless the Indenture

Trustee shall have first received an Opinion of Counsel to the effect that the

lien and security interest created by this Indenture with respect to such

property will continue to be maintained after giving effect to such action or

actions.

 

Section 3.07                            Opinions as to Indenture

Collateral.

 

(a)           On or before the Closing Date, the Issuer shall furnish to

the Indenture Trustee and Swap Counterparties an Opinion of Counsel either

stating that, in the opinion of such counsel, such action has been taken with

respect to the delivery of the Underlying Notes and any other requisite

documents, and with respect to the execution and filing of any financing

statements and continuation statements, as are necessary to perfect and make

effective the lien

 

16

 

and security interest of this Indenture and

reciting the details of such action, or stating that, in the opinion of such

counsel, no such action is necessary to make such lien and security interest

effective.

 

(b)           On or before December 31 in each calendar year,

beginning in 2003, the Servicer on behalf of the Issuer will furnish to the

Indenture Trustee and Swap Counterparties an Opinion of Counsel at the expense

of the Issuer either stating that, in the opinion of such counsel, such action

has been taken with respect to any other requisite documents and with respect

to the execution and filing of any financing statements and continuation

statements as is necessary to maintain the perfection of the lien and security

interest created by this Indenture and reciting the details of such action or

stating that in the opinion of such counsel no such action is necessary to

maintain the perfection of such lien and security interest.  Such Opinion of Counsel shall also describe

any other requisite documents and the execution and filing of any financing

statements and continuation statements that will, in the opinion of such

counsel, be required to maintain the lien and security interest of this

Indenture until December 31 in the following calendar year.

 

Section 3.08                            [Reserved].

 

Section 3.09                            Performance of Obligations;

Servicing of Loans.

 

(a)           The Issuer will not take any action and will use its best

efforts not to permit any action to be taken by others that would release any

Person from any such Person’s material covenants or obligations under any

instrument or agreement included in the Indenture Collateral or that would

result in the amendment, hypothecation, subordination, termination or discharge

of, or impair the validity or effectiveness of, any such instrument or

agreement, except in either case as expressly provided in the Transaction

Documents or such other instrument or agreement.

 

(b)           The Issuer may contract with other Persons to assist it in

performing its duties and obligations under this Indenture, and any performance

of such duties by a Person identified to the Indenture Trustee in an Officer’s

Certificate shall be deemed to be action taken by the Issuer.  The Indenture Trustee shall not be responsible

for the action or inaction of the Servicer or the Administrator.  Initially, the Issuer has contracted with

the Servicer and the Administrator to assist the Issuer in performing its

duties under this Indenture.

 

(c)           The Issuer will punctually perform and observe all of its

obligations and agreements contained in this Indenture, the other Transaction

Documents and in the instruments and agreements included in the Indenture

Collateral, including but not limited to filing or causing to be filed all UCC

financing statements and continuation statements required to be filed by the

terms of this Indenture and the Transfer and Servicing Agreement in accordance

with and within the time periods provided for herein and therein.  Except as otherwise expressly provided

therein, the Issuer shall not waive, amend, modify, supplement or terminate any

Transaction Document or any provision thereof without the consent of the

Indenture Trustee, the Required Holders and each Swap Counterparty.

 

(d)           If the Issuer shall have knowledge of the occurrence of a

Servicer Default, the Issuer shall promptly notify in writing the Indenture

Trustee, each Swap Counterparty and each

 

17

 

Rating Agency thereof.  Upon any termination of the Servicer’s rights and powers pursuant

to the Transfer and Servicing Agreement, the Issuer shall promptly notify the

Indenture Trustee and each Swap Counterparty in writing.  As soon as a Successor Servicer is appointed,

the Issuer shall notify in writing the Indenture Trustee, each Swap

Counterparty and the Rating Agencies of such appointment (to the extent such

party has not already been notified pursuant to the Transfer and Servicing

Agreement), specifying in such notice the name and address of such Successor

Servicer.

 

(e)           The Issuer agrees that it will not waive timely

performance or observance by the Servicer or the Originator of their respective

duties under the Transaction Documents if the effect thereof would adversely

affect the Holders of the Notes or the Swap Counterparties.

 

Section 3.10                            Negative Covenants.

 

So long as any Notes are

Outstanding, the Issuer shall not:

 

(i)            except as expressly permitted by the

Transaction Documents, sell, transfer, exchange or otherwise dispose of any of

the properties or assets of the Issuer, including those included in the

Indenture Collateral, unless directed to do so by the Indenture Trustee;

 

(ii)           claim any credit on, or make any

deduction from the principal or interest payable in respect of, the Notes

(other than amounts properly withheld from such payments under the Code or

applicable state law) or assert any claim against any present or former

Noteholder or Swap Counterparty by reason of the payment of the taxes levied or

assessed upon any part of the Indenture Collateral;

 

(iii)          (A) challenge the validity or

effectiveness of this Indenture, or permit the lien created by this Indenture

to be amended, hypothecated, subordinated, terminated or discharged, or permit

any Person (other than the Indenture Trustee) to be released from any covenants

or obligations with respect to this Indenture or the Notes under this Indenture

except as may be expressly permitted hereby, (B) permit any lien, charge,

excise, claim, security interest, mortgage or other encumbrance (other than the

lien of this Indenture) to be created on or extend to or otherwise arise upon

or burden the Indenture Collateral or any part thereof or any interest therein

or the proceeds thereof (other than Permitted Liens), (C) permit the lien

created by this Indenture not to constitute a valid first priority (other than

with respect to any tax, mechanics’ or other lien) security interest in the

Indenture Collateral, or (D) amend, modify or fail to comply with the

provisions of the Transaction Documents without the prior written consent of

the Indenture Trustee, except where the Transaction Documents allow for

amendment or modification without the consent or approval of the Indenture

Trustee; or

 

(iv)          dissolve or liquidate in whole or in

part.

 

18

 

Section 3.11                            Representations and Warranties Concerning the Loans.

 

The Issuer has pledged to the Indenture Trustee for

the benefit of the Noteholders and the Swap Counterparties all of its rights

under the Transfer and Servicing Agreement and the Indenture Trustee has the

benefit of the representations and warranties made by the Trust Depositor in

such document concerning the Loans transferred into the Loan Assets and the

right to enforce any remedy against the Originator and the Trust Depositor

provided in the Transfer and Servicing Agreement, to the same extent as though

such representations and warranties were made directly to the Indenture

Trustee.

 

Section 3.12                            Indenture Trustee’s Review of Loan Files.

 

The Indenture Trustee agrees, for the benefit of the

Noteholders and the Swap Counterparties, to review the Loan Files as provided

in Section 2.07 of the Transfer and Servicing Agreement.

 

Section 3.13                            Indenture Collateral; Related Documents.

 

(a)           When

instructed to do so by the Issuer or the Servicer, the Indenture Trustee shall

execute instruments to release property from the lien of this Indenture, or

convey the Indenture Trustee’s interest in the same, in a manner and under

circumstances which are not inconsistent with the provisions of this Indenture

or the Transfer and Servicing Agreement. 

No party relying upon an instrument executed by the Indenture Trustee as

provided in this Article III shall be bound to ascertain the

Indenture Trustee’s authority, inquire into the satisfaction of any conditions

precedent or see to the application of any moneys.

 

(b)           In

order to facilitate the servicing of the Loans, the Indenture Trustee

authorizes the Servicer in the name and on behalf of the Indenture Trustee and

the Issuer, to perform its respective duties and obligations under the Transfer

and Servicing Agreement and the Indenture Trustee agrees to perform its

obligations thereunder in accordance with the terms thereof.

 

(c)           The

Indenture Trustee shall, at such time as there are no Notes Outstanding and

after termination of each Swap Transaction and payment of all amounts payable

thereunder in connection with such termination, including Swap Breakage Costs,

release all of the Indenture Collateral to the Issuer (other than any cash held

for the payment of the Notes or the Swaps pursuant to Section 3.03

or 4.06), subject; however, to the rights of the

Indenture Trustee under Section 6.07.

 

Section 3.14                            Amendments to Transfer and Servicing Agreement.

 

The Indenture Trustee may enter into any amendment or

supplement to the Transfer and Servicing Agreement only in accordance with Section 13.01

of the Transfer and Servicing Agreement. 

The Indenture Trustee may, in its reasonable discretion, decline to

enter into or consent to any such supplement or amendment if its own rights,

duties or immunities shall be adversely affected in any material respect.

 

19

 

Section 3.15                            Servicer as Agent and Bailee of Indenture Trustee.

 

(a)           Solely

for purposes of perfection under Section 9–313 of the UCC or other similar

applicable law, rule or regulation of the state in which such property is held

by the Servicer, the Indenture Trustee hereby acknowledges that the Servicer is

acting as agent and bailee of the Indenture Trustee in holding amounts on

deposit in the Collection Account pursuant to Section 7.01 of the

Transfer and Servicing Agreement, as well as its agent and bailee in holding

any documents released to the Servicer pursuant to the Transfer and Servicing

Agreement, and any other items constituting a part of the Indenture Collateral

which from time to time come into the possession of the Servicer.  It is intended that, by the Servicer’s

execution and delivery of the Transfer and Servicing Agreement, the Indenture

Trustee, as a secured party, will be deemed to have possession of such

documents, such moneys and such other items for purposes of Section 9–313

of the UCC of the state in which such property is held by the Servicer.

 

(b)           Solely

for purposes of perfection under Section 9–313 of the UCC or other similar

applicable law, rule or regulation of the state in which such property is held

by the Indenture Trustee, if the transfer of the Loans and the other assets in

the Indenture Collateral by the Trust Depositor to the Issuer is deemed to be a

loan, the Indenture Trustee hereby acknowledges it is acting as agent and

bailee of the Issuer in holding items constituting a part of the Indenture

Collateral which from time to time come into the possession of the Indenture

Trustee.

 

Section 3.16                            Investment Company Act.

 

The Issuer shall not become an “investment company”

under the Investment Company Act of 1940, as amended (or any successor or

amendatory statute).

 

Section 3.17                            Issuer May Consolidate, etc.

Only on Certain Terms.

 

(a)           The Issuer shall not consolidate or merge with or into any

other Person, unless:

 

(i)            the Person (if other than the

Issuer) formed by or surviving such consolidation or merger shall be a Person

organized and existing under the laws of the United States or any State and

shall expressly assume, by an indenture supplemental hereto, executed and

delivered to the Indenture Trustee and each Swap Counterparty, in form and

substance satisfactory to the Indenture Trustee and the Swap Counterparties,

the due and punctual payment of the principal of and interest on all Notes and

all amounts payable under the Swaps and the performance or observance of every

agreement and covenant of this Indenture, the Swaps and each other Transaction

Document on the part of the Issuer to be performed or observed, all as provided

herein and therein;

 

(ii)           immediately after giving effect to

such transaction, no Default or Event of Default shall have occurred and be

continuing;

 

(iii)          the Rating Agency Condition shall have

been satisfied with respect to such transaction;

 

20

 

(iv)          the Issuer shall have received an

Opinion of Counsel, which shall be delivered to and shall be satisfactory to

the Indenture Trustee and the Swap Counterparties, to the effect that such

transaction will not have any material adverse tax consequence to the Trust,

any Noteholder or any Swap Counterparty;

 

(v)           any action as is necessary to

maintain the lien and security interest created by this Indenture shall have

been taken;

 

(vi)          the Issuer shall have delivered to the

Indenture Trustee and each Swap Counterparty an Officer’s Certificate and an

Opinion of Counsel (which shall describe the actions taken as required by clause (v)

above or that no such actions will be taken) each stating that such

consolidation or merger and such supplemental indenture comply with this Article III

and that all conditions precedent herein provided for relating to such

transaction have been complied with (including any filings required by the

Exchange Act); and

 

(vii)         the Person (if other than the Issuer)

formed by or surviving such consolidation or merger has a net worth,

immediately after such consolidation or merger, that is (A) greater than

zero and (B) not less than the net worth of the Issuer immediately prior

to giving effect to such consolidation or merger.

 

(b)           The Issuer shall not convey or transfer all or

substantially all of its properties or assets, including those included in the

Indenture Collateral, to any Person (except as expressly permitted by the

Transaction Documents), unless:

 

(i)            the Person that acquires by

conveyance or transfer the properties and assets of the Issuer shall

(A) be a United States citizen or a Person organized and existing under

the laws of the United States or any State, (B) expressly assume, by an

indenture supplemental hereto, executed and delivered to the Indenture Trustee

and each Swap Counterparty, in form and substance satisfactory to the Indenture

Trustee and the Swap Counterparties, the due and punctual payment of the

principal of and interest on all Notes, the amounts payable under the Swaps,

and the performance or observance of every agreement and covenant of this

Indenture, the Swaps and each other Transaction Document on the part of the

Issuer to be performed or observed, all as provided herein, (C) expressly

agree by means of such supplemental indenture that all right, title and

interest so conveyed or transferred shall be subject and subordinate to the rights

of Holders of the Notes and the Swap Counterparties and (D) unless

otherwise provided in such supplemental indenture, expressly agree to

indemnify, defend and hold harmless the Issuer against and from any loss,

liability or expense arising under or related to this Indenture and the Notes;

 

(ii)           immediately after giving effect to

such transaction, no Default or Event of Default shall have occurred and be

continuing;

 

(iii)          the Rating Agency Condition shall have

been satisfied with respect to such transaction;

 

21

 

(iv)          the Issuer shall have received an

Opinion of Counsel, which shall be delivered to and shall be satisfactory to

the Indenture Trustee and each Swap Counterparty, to the effect that such

transaction will not have any material adverse tax consequence to the Trust,

any Noteholder or any Swap Counterparty;

 

(v)           any action as is necessary to

maintain the lien and security interest created by this Indenture shall have

been taken;

 

(vi)          the Issuer shall have delivered to the

Indenture Trustee and each Swap Counterparty an Officer’s Certificate and an

Opinion of Counsel (which shall describe the actions taken as required by clause (v)

above or that no such actions will be taken) each stating that such conveyance

or transfer and such supplemental indenture comply with this Article III

and that all conditions precedent herein provided for relating to such

transaction have been complied with (including any filings required by the

Exchange Act); and

 

(vii)         the Issuer has a net worth, immediately

after such conveyance or transfer, that is (A) greater than zero and

(B) not less than the net worth of the Issuer immediately prior to giving

effect to such conveyance or transfer.

 

Section 3.18                            Successor or Transferee.

 

(a)           Upon any consolidation or merger of the Issuer in

accordance with Section 3.17, the Person formed by or surviving

such consolidation or merger (if other than the Issuer) shall succeed to, and

be substituted for, and may exercise every right and power of, the Issuer under

this Indenture with same effect as if such Person has been named as the Issuer

herein.

 

(b)           Upon a conveyance or transfer of all or substantially all

of the assets or properties of the Issuer pursuant to Section 3.17,

the Issuer will be released from every covenant and agreement of this Indenture

to be observed or performed on the part of the Issuer with respect to the Notes

immediately upon the delivery of written notice to the Indenture Trustee

stating that the Issuer is to be so released.

 

Section 3.19                            No Other Business.

 

The Issuer shall not engage in

any business other than financing, purchasing, owning, selling and managing the

Loans, entering into Swaps and issuing the Notes and Trust Certificates in the

manner contemplated by this Indenture and the other Transaction Documents and

activities incidental thereto.

 

Section 3.20                            No Borrowing.

 

The Issuer shall not issue,

incur, assume, guarantee or otherwise become liable, directly or indirectly,

for any Indebtedness except for (i) the Notes, (ii) the Swaps and

(iii) any other Indebtedness permitted by or arising under the other

Transaction Documents. The proceeds of

 

22

 

the Notes and the Trust Certificates shall be

used exclusively to fund the Issuer’s purchase of the Loans and the other

assets specified in the Transfer and Servicing Agreement, to fund the Reserve

Fund and to pay the transactional expenses of the Issuer.

 

Section 3.21                            Notice of Events of Default.

 

The Issuer shall give the Indenture

Trustee, each Swap Counterparty and each Rating Agency prompt written notice of

each Event of Default hereunder and of a Servicer Default under the Transfer

and Servicing Agreement.

 

Section 3.22                            Further Instruments and Acts.

 

Upon request of the Indenture

Trustee, the Issuer will execute and deliver such further instruments and do

such further acts as may be reasonably necessary or proper to carry out more

effectively the purpose of this Indenture.

 

Section 3.23                            Compliance with Laws.

 

The Issuer shall comply with the

requirements of all applicable laws, the non–compliance with which would,

individually or in the aggregate, materially and adversely affect the ability

of the Issuer to perform its obligations under the Notes, this Indenture or any

other Transaction Document.

 

Section 3.24                            Amendments of Trust Agreement.

 

The Issuer shall not agree to

any amendment to Section 11.01 of the Trust Agreement to eliminate

the requirements thereunder that the Indenture Trustee, the Holders of the

Notes or the Swap Counterparties consent to amendments thereto as provided

therein.

 

Section 3.25                            Removal of Administrator.

 

So long as any Notes are issued

and outstanding, the Issuer shall not remove the Administrator without cause

unless the Rating Agency Condition shall have been satisfied in connection with

such removal.

 

Section 3.26                            Representations and Warranties

of Issuer.

 

The Issuer represents and

warrants as follows:

 

(a)           Power and Authority.  It has full power, authority and legal right to execute, deliver and

perform its obligations as Issuer under this Indenture and the Notes (the

foregoing documents, the “Issuer Documents”) and under each of the other

Transaction Documents to which the Issuer is a party.

 

(b)           Due Authorization and Binding Obligation.  The execution and delivery of the Issuer

Documents and the Transaction Documents to which the Issuer is a party, and the

 

23

 

consummation of the transactions provided for

therein have been duly authorized by all necessary action on its part.  Each of the Issuer Documents and the other

Transaction Documents to which the Issuer is a party constitutes the legal,

valid and binding obligation of the Issuer and is enforceable in accordance

with its terms, except as enforcement of such terms may be limited by

bankruptcy, insolvency or similar laws affecting the enforcement of creditors’

rights generally and by the availability of equitable remedies.

 

(c)           No Conflict. 

The execution and delivery of the Issuer Documents and the other

Transaction Documents to which the Issuer is a party, the performance of the

transactions contemplated thereby and the fulfillment of the terms thereof will

not conflict with, result in any breach of any of the materials terms and

provisions of, or constitute (with or without notice or lapse of time or both)

a default under, any indenture, contract, agreement, mortgage, deed of trust,

or other instrument to which the Issuer is a party or by which it or any of its

property is bound.

 

(d)           No Violation. 

The execution and delivery of the Issuer Documents and the other

Transaction Documents to which the Issuer is a party, the performance of the

transactions contemplated thereby and the fulfillment of the terms thereof will

not conflict with or violate, in any material respect, any Requirements of Law

applicable to the Issuer.

 

(e)           All Consents Required.  All approvals, authorizations, consents, orders or other actions

of any Person or any Governmental Authority required in connection with the

execution and delivery of the Issuer Documents and the other Transaction

Documents to which the Issuer is a party, the performance of the transactions

contemplated thereby and the fulfillment of the terms thereof have been

obtained.

 

(f)            No Proceedings. 

No litigation or administrative proceeding of or before any court,

tribunal or governmental body is currently pending, or to the knowledge of the

Issuer, threatened, against the Issuer or any of its respective properties or

with respect to the Issuer Documents or any other Transaction Document to which

the Issuer is a party that, if adversely determined, would have a material

adverse effect on the business, properties, assets or condition (financial or

otherwise) of the Issuer or the transactions contemplated by the Issuer

Documents or any of the other Transaction Documents to which the Issuer is a

party.

 

(g)           Organization and Good Standing.  The Issuer is a business trust duly

organized, validly existing and in good standing under the laws of Delaware and

has the requisite power to own its assets and to transact the business in which

it is currently engaged, and had at all relevant times, and now has, all

necessary power, authority and legal right to acquire, own and pledge the

Indenture Collateral.

 

(h)           1940 Act.  The Issuer is not an “investment company” within the meaning of

the Investment Company Act of 1940, as amended.

 

(i)            Location. 

The Issuer is located (within the meaning of Article 9 of the UCC)

in Delaware.  The Issuer agrees that it

will not change its location (within the meaning of Article 9

 

24

 

of the UCC) without at least thirty (30) days

prior written notice to the Originator, the Servicer, the Indenture Trustee and

the Rating Agencies.

 

(j)            Security Interest in Collateral.

 

(i)            This Indenture creates a valid,

continuing and enforceable security interest (as defined in the applicable UCC)

in the Indenture Collateral in favor of the Indenture Trustee, which security

interest is prior to all other Liens (except for Permitted Liens), and is

enforceable as such against creditors of and purchasers from the Issuer;

 

(ii)           such Indenture Collateral constitutes

either a “general intangible,” an “instrument,” an “account,” “investment

property,” or “chattel paper,” within the meaning of the applicable UCC;

 

(iii)          the Issuer owns and has good and

marketable title to such Indenture Collateral free and clear of any Lien (other

than Permitted Liens), claim or encumbrance of any Person;

 

(iv)          the Issuer has received all consents

and approvals required by the terms of the Indenture Collateral to the pledge

of the Indenture Collateral hereunder to the Indenture Trustee;

 

(v)           the Issuer has caused the filing of

all appropriate financing statements in the proper filing office in the

appropriate jurisdictions under Requirements of Law in order to perfect the

security interest in such Indenture Collateral granted to the Indenture Trustee

under this Indenture;

 

(vi)          other than the security interest

granted by the Issuer pursuant to this Indenture, the Issuer has not pledged,

assigned, sold, granted a security interest in or otherwise conveyed any of

such Indenture Collateral.  The Issuer

has not authorized the filing of and is not aware of any financing statements

against the Issuer that include a description of collateral covering such

Indenture Collateral other than any financing statement (A) relating to

the security interest granted by the Issuer under this Indenture, or

(B) that has been terminated.  The

Issuer is not aware of the filing of any judgment or tax Lien filings against

the Issuer;

 

(vii)         all original executed copies of each

Underlying Note that constitute or evidence the Indenture Collateral have been

delivered to the Indenture Trustee;

 

(viii)        the Issuer has received a written

acknowledgment from the Indenture Trustee that the Indenture Trustee or its

bailee is holding the Underlying Notes that constitute or evidence the

Indenture Collateral solely on behalf of and for the benefit of the

Securityholders and the Swap Counterparties; and

 

25

 

(ix)           none of the Underlying Notes that

constitute or evidence the Indenture Collateral has any marks or notations

indicating that they have been pledged, assigned or otherwise conveyed to any

Person other than the Issuer and the Indenture Trustee.

 

The representations and warranties in subsection 3.26(j)

shall survive the termination of this Agreement and such representations and

warranties may not be waived by any party hereto.

 

Section 3.27                            Covenants of the Issuer Relating

to Swaps.

 

(a)           On each day, the Issuer shall maintain one or more Swap

Transactions, provided that such Swap Transactions shall:

 

(i)            be entered into with a Swap

Counterparty and governed by a Swap;

 

(ii)           have a schedule of periodic payment

periods which terminate not later than the date on which the Outstanding Amount

of the Notes is expected to be reduced to zero based on the contractual

provisions of the Loans as in effect from time to time;

 

(iii)          on the Closing Date, have an

amortizing notional amount such that the Aggregate Notional Amount during any

current or future calculation period thereunder shall be not less than the sum

of (A) the product of 100% and the Outstanding Loan Balance of the Fixed Rate Loans

for the corresponding Collection Period; and (B) the product of 100% and the

Outstanding Loan Balance of the Floating Rate Loans for the corresponding

Collection Period, in each case, based on the contractual provisions of the

Loans as in effect on such date;

 

(iv)          be maintained so that (A) the

Outstanding Loan Balance of the Fixed Rate Loans at the end of the then current

or any future Collection Period shall not exceed the Aggregate Notional Amount

of all Swap Transactions hedging the Fixed Rate Loans for the corresponding

calculation period by more than the Fixed Rate Permitted Excess Amount and (B)

the Outstanding Loan Balance of the Floating Rate Loans at the end of then

current or any future Collection Period shall not exceed the Aggregate Notional

Amount of all Swap Transactions hedging the Floating Rate Loans for the

corresponding calculation period by more than the Floating Rate Permitted

Excess Amount;

 

(v)           each Swap will provide that any

scheduled periodic payments required to be made by the Issuer and the Swap

Counterparty on the same date with respect to a Swap Transaction will be netted

so that only the net difference between such payments will be paid, with any

net periodic payments to be paid into the Note Distribution Account (if payable

by the Swap Counterparty) or from the Note Distribution Account (if payable by

the Issuer) and distributed pursuant to the terms of this Indenture and the

Transfer and Servicing Agreement.

 

(b)           As additional security hereunder, the Issuer hereby

assigns to the Indenture Trustee, on behalf of the Noteholders and the Swap

Counterparty, all right, title and interest of the Issuer in each Swap, each

Swap Transaction, and all present and future amounts payable by a

 

26

 

Swap Counterparty to the Issuer in accordance

with the terms of the respective Swap and Swap Transaction(s) with that Swap

Counterparty (“Swap Collateral”), and Grants a security interest to the

Indenture Trustee, as agent for the Noteholders and the Swap Counterparty, in

the Swap Collateral.  The Issuer

acknowledges that, as a result of that assignment, the Issuer may not, without

the prior written consent of the Indenture Trustee, exercise any rights under

any Swap or Swap Transaction, except for the Issuer’s right under any Swap to

enter into Swap Transactions in order to meet the Issuer’s obligations under Section 3.27

hereof or except as otherwise contemplated in this Section 3.27 and in subsection

5.17(h) of the Transfer and Servicing Agreement.  Nothing herein shall have the effect of releasing the Issuer from

any of its obligations under any Swap or any Swap Transaction, nor be construed

as requiring the consent of the Indenture Trustee, any Noteholder or any Swap

Counterparty for the performance by the Issuer of any such obligations.

 

(c)           The Issuer hereby agrees to maintain a register of

outstanding Swaps.  Such register shall

contain the name of each Swap Counterparty as well as the address of each Swap

Counterparty.  The Issuer shall provide such

names and addresses to the Indenture Trustee, the Backup Servicer and each

Rating Agency on a current basis.

 

Section 3.28                            Grant of Substitute Loans.

 

In consideration of the delivery on each Subsequent

Transfer Date pursuant to and in accordance with the terms of Section 2.04

of the Transfer and Servicing Agreement, the Issuer grants to the Indenture

Trustee a security interest in all of its right, title and interest in the

Loans transferred on such Subsequent Transfer Date and simultaneously with the

transfer of the Substitute Loans to the extent of the availability thereof, the

Issuer will cause the related Loan File to be delivered to the Indenture

Trustee.

 

Section 3.29                            Determination of Note Rate.

 

Until the Outstanding Principal Balance of each Class

of Notes has been reduced to zero, the Indenture Trustee shall determine LIBOR,

the Class A Note Interest Rate and the Class B Note Interest Rate for

each Class of Notes for each Interest Accrual Period as provided in Section 7.06

of the Transfer and Servicing Agreement and shall inform the Issuer, the Trust

Depositor and the Servicer at their respective email addresses given to the

Indenture Trustee in writing thereof. 

Any such determination by the Indenture Trustee of the amount of

interest distributable on the Class A Notes and the Class B Notes

shall be binding on the parties absent manifest error.

 

27

 

ARTICLE

IV

 

THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE

 

Section 4.01                            The Notes.

 

Certain of the Class A Notes and the Class B

Notes shall be registered initially in the name of Cede & Co. Beneficial

Owners will hold interests in the Class A Notes and the Class B Notes

through the book–entry facilities of the Depository in minimum denominations of

$1,000,000 and integral multiples of $100,000 in excess thereof.  Subject to subsections 4.02(b), (p),

(q) and (r), certain of the Class A Notes and

Class B Notes and all of the Class C Notes shall be issued in such

names and denominations as may be set forth on an Issuer Order delivered to the

Indenture Trustee.

 

The Notes shall, on original issue, be executed on

behalf of the Issuer by the Owner Trustee, not in its individual capacity but

solely as Owner Trustee, authenticated by the Note Registrar and delivered by

the Indenture Trustee to or upon the order of the Issuer.

 

Section 4.02                            Registration of Transfer and Exchange of Notes.

 

(a)           The

Indenture Trustee shall cause to be kept a Note Register (the “Note Register”)

in which, subject to such reasonable regulations as it may prescribe, the

Issuer shall provide for the registration of Notes and the registration of

transfers and exchanges of Notes as herein provided.  The Indenture Trustee shall be “Note Registrar” for the

purpose of registering Notes and transfers of Notes as herein provided.  The Note Register shall contain the name,

remittance instructions, Class of each Noteholder, as well as the Series and

the number in the Series.

 

(b)           Each

Class of Notes shall be issued in minimum denominations of $1,000,000 initial

principal amount and integral multiples of $100,000 in excess thereof, except

that one Note of each Class may be in a different denomination so that the sum

of the denominations of all outstanding Notes of such Class shall equal the applicable

Initial Class A Principal Balance, the Initial Class B Principal

Balance and the Initial Class C Principal Balance, respectively.  On the Closing Date, the Indenture Trustee

will execute and authenticate (i) one or more Global Notes and/or

(ii) Individual Notes all in an aggregate principal amount that shall

equal the applicable Initial Class A Principal Balance, the applicable

Initial Class B Principal Balance and the applicable Initial Class C

Principal Balance.

 

The Global Notes (i) shall be delivered by the

Issuer to the Depository or, pursuant to the Depository’s instructions, shall

be delivered by the Issuer on behalf of the Depository to and deposited with

the DTC Custodian, and in each case shall be registered in the name of Cede

& Co. and (ii) with respect to the Rule 144A Global Notes, shall

bear a legend substantially to the following effect:

 

“Unless this Note is presented by an authorized

representative of The Depository Trust Company, a New York corporation (“DTC”),

to the Note Registrar or its agent for registration of transfer, exchange or

payment, and any Note issued is registered in the

 

28

 

name of Cede & Co. or in such other name as is

requested by an authorized representative of DTC (and any payment is made to

Cede & Co. or to such other entity as is requested by an authorized

representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR

OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,

Cede & Co., has an interest herein.”

 

The Global Notes may be deposited with such other

Depository as the Issuer may from time to time designate, and shall bear such

legend as may be appropriate; provided, that, such successor

Depository maintains a book–entry system that qualifies to be treated as

“registered form” under Section 163(f)(3) of the Code.

 

The Issuer and the Indenture Trustee are hereby

authorized to execute and deliver a Letter of Representations with the

Depository relating to the Notes.

 

(c)           With

respect to Notes registered in the Note Register in the name of Cede & Co.,

as nominee of the Depository, the Issuer, the Servicer, the Owner Trustee (as

such and in its individual capacity) and the Indenture Trustee shall have no

responsibility or obligation to Direct or Indirect Participants or Beneficial

Owners for which the Depository holds Notes from time to time as a

Depository.  Without limiting the

immediately preceding sentence, the Issuer, the Servicer, the Owner Trustee,

(as such and in its individual capacity), and the Indenture Trustee shall have

no responsibility or obligation with respect to (a) the accuracy of the

records of the Depository, Cede & Co., or any Direct or Indirect

Participant with respect to the ownership interest in the Notes, (b) the

delivery to any Direct or Indirect Participant or any other Person, other than

a registered Holder of a Note, (c) the payment to any Direct or Indirect

Participant or any other Person, other than a registered Holder of a Note as shown

in the Note Register, of any amount with respect to any distribution of

principal or interest on the Notes or (d) the making of book–entry

transfers among Participants of the Depository with respect to Notes registered

in the Note Register in the name of the nominee of the Depository.  No Person other than a registered Holder of

a Note as shown in the Note Register shall receive a Note evidencing such Note.

 

(d)           Upon

delivery by the Depository to the Indenture Trustee of written notice to the

effect that the Depository has determined to substitute a new nominee in place

of Cede & Co., and subject to the provisions hereof with respect to the

payment of distributions by the mailing of checks or drafts to the registered

Holders of Notes appearing as registered Owners in the Note Register on a

Record Date, the name “Cede & Co.” in this Indenture shall refer to such

new nominee of the Depository.

 

(e)           In

the event that (i) the Depository or the Servicer advises the Indenture

Trustee in writing that the Depository is no longer willing or able to

discharge properly its responsibilities as nominee and depository with respect

to the Global Notes and the Servicer is unable to locate a qualified successor

or (ii) the Servicer at its sole option elects to terminate the book–entry

system through the Depository, the Global Notes shall no longer be restricted

to being registered in the Note Register in the name of Cede & Co. (or a

successor nominee) as nominee of the Depository.  At that time, the Servicer may determine that the Global Notes

shall be registered in the name of and deposited with a successor depository

operating a global book–entry system, as

 

29

 

may be acceptable to the Servicer, or such depository’s agent or

designee but, if the Servicer does not select such alternative global

book–entry system, then upon surrender to the Note Registrar of the Global

Notes by the Depository, accompanied by the registration instructions from the

Depository for registration, the Indenture Trustee shall at the Servicer’s

expense authenticate Individual Notes. 

Neither the Servicer nor the Indenture Trustee shall be liable for any

delay in delivery of such instructions and may conclusively rely on, and shall

be protected in relying on, such instructions. 

Upon the issuance of Individual Notes, the Indenture Trustee, the Note

Registrar, the Servicer, any Paying Agent and the Issuer shall recognize the

Holders of the Individual Notes as Noteholders hereunder.

 

(f)            Notwithstanding

any other provision of this Agreement to the contrary, so long as any Global

Notes are registered in the name of Cede & Co., as nominee of the

Depository, all distributions of principal and interest on such Global Notes

and all notices with respect to such Global Notes shall be made and given,

respectively, in the manner provided in the Letter of Representations.

 

(g)           Subject

to the preceding paragraphs, upon surrender for registration of transfer of any

Note at the office of the Note Registrar and, upon satisfaction of the

conditions set forth below, the Issuer shall execute in the name of the

designated transferee or transferees, a new Note of the same Percentage

Interest and dated the date of authentication by the Indenture Trustee.  The Note Registrar shall notify the Servicer

and the Indenture Trustee of any such transfer.

 

At the option of the Noteholders, Notes may be

exchanged for other Notes in authorized denominations of a like Class, upon

surrender of the Notes to be exchanged at such office.  Whenever any Notes are so surrendered for

exchange, the Issuer shall execute the Notes which the Noteholder making the

exchange is entitled to receive.  Every

Note presented or surrendered for transfer or exchange shall be accompanied by

wiring instructions, if applicable, in the form of Exhibit C.

 

(h)           No

service charge shall be made for any transfer or exchange of Notes, but prior

to transfer the Note Registrar may require payment by the transferor of a sum

sufficient to cover any tax or governmental charge that may be imposed in

connection with any transfer or exchange of Notes.

 

All Notes surrendered for payment, transfer and

exchange or redemption shall be marked canceled by the Note Registrar and

retained for one year and destroyed thereafter.

 

(i)            By

acceptance of an Individual Note, whether upon original issuance or subsequent

transfer, each holder of such a Note acknowledges the restrictions on the

transfer of such Note set forth in the Securities Legend and agrees that it

will transfer such a Note only as provided herein.  In addition to the provisions of subsection 4.02(n)

the following restrictions shall apply with respect to the transfer and

registration of transfer of an Individual Note to a transferee that takes

delivery in the form of an Individual Note:

 

30

 

(i)            The Note Registrar shall register

the transfer of an Individual Note if the requested transfer is being made to a

transferee who has provided the Note Registrar with a Rule 144A

Certification.

 

(ii)           The Note Registrar shall register the

transfer of any Individual Note if (x) the transferor has advised the Note

Registrar in writing that the Note is being transferred to an Institutional

Accredited Investor; and (y) prior to the transfer the transferee furnishes

to the Note Registrar a Transferee Letter; provided, that, if based upon

an Opinion of Counsel to the effect that the delivery of (x) and (y)

above are not sufficient to confirm that the proposed transfer is being made

pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the Securities Act and other applicable laws, the

Note Registrar may as a condition of the registration of any such transfer

require the transferor to furnish other certifications, legal opinions or other

information prior to registering the transfer of an Individual Note.

 

(j)            Subject

to subsection 4.02(n), so long as a Global Note remains outstanding

and is held by or on behalf of the Depository, transfers of beneficial

interests in the Global Note, or transfers by holders of Individual Notes to

transferees that take delivery in the form of beneficial interests in the

Global Note, may be made only in accordance with this subsection 4.02(j)

and in accordance with the rules of the Depository.

 

(i)            Rule 144A Global Note to

Regulation S Global Note During the Restricted Period.  If, during the Restricted Period, a

Beneficial Owner of an interest in a Rule 144A Global Note wishes at any

time to transfer its beneficial interest in such Rule 144A Global Note to

a Person who wishes to take delivery thereof in the form of a beneficial

interest in a Regulation S Global Note, such Beneficial Owner may, in

addition to complying with all applicable rules and procedures of the

Depository and Clearstream or Euroclear applicable to transfers by their

respective participants (the “Applicable Procedures”), transfer or cause

the transfer of such beneficial interest for an equivalent beneficial interest

in the Regulation S Global Note only upon compliance with the provisions

of this subsection 4.02(j)(i). 

Upon receipt by the Note Registrar at its Corporate Trust Office of

(1) written instructions given in accordance with the Applicable

Procedures from a Depository Participant directing the Note Registrar to credit

or cause to be credited to another specified Depository Participant’s account a

beneficial interest in the Regulation S Global Note in an amount equal to

the denomination of the beneficial interest in the Rule 144A Global Note

to be transferred, (2) a written order given in accordance with the

Applicable Procedures containing information regarding the account of the

Depository Participant (and the Euroclear or Clearstream account, as the case

may be) to be credited with, and the account of the Depository Participant to

be debited for, such beneficial interest, and (3) a certificate in the

form of Exhibit E hereto given by the Beneficial Owner that is

transferring such interest, the Note Registrar shall instruct the Depository to

reduce the denomination of the Rule 144A Global Note by the denomination

of the beneficial interest in the Rule 144A Global Note to be so

transferred and, concurrently with such reduction, to increase the denomination

of the Regulation S Global Note by the denomination of the beneficial

interest in the Rule 144A Global Note to be so transferred, and to credit

or 

 

31

 

cause to be credited to

the account of the Person specified in such instructions (who shall be a

Depository Participant acting for or on behalf of Euroclear or Clearstream, or

both, as the case may be) a beneficial interest in the Regulation S Global

Note having a denomination equal to the amount by which the denomination of the

Rule 144A Global Note was reduced upon such transfer.

 

(ii)           Rule 144A Global Note to

Regulation S Global Note After the Restricted Period.  If, after the Restricted Period, a

Beneficial Owner of an interest in a Rule 144A Global Note wishes at any

time to transfer its beneficial interest in such Rule 144A Global Note to

a Person who wishes to take delivery thereof in the form of a beneficial

interest in a Regulation S Global Note, such holder may, in addition to

complying with all Applicable Procedures, transfer or cause the transfer of such

beneficial interest for an equivalent beneficial interest in a

Regulation S Global Note only upon compliance with the provisions of this subsection 4.02(j)(ii).  Upon receipt by the Note Registrar at its

Corporate Trust Office of (1) written instructions given in accordance

with the Applicable Procedures from a Depository Participant directing the Note

Registrar to credit or cause to be credited to another specified Depository

Participant’s account a beneficial interest in the Regulation S Global

Note in an amount equal to the denomination of the beneficial interest in the

Rule 144A Global Note to be transferred, (2) a written order given in

accordance with the Applicable Procedures containing information regarding the

account of the Depository Participant (and, in the case of a transfer pursuant

to and in accordance with Regulation S, the Euroclear or Clearstream

account, as the case may be) to be credited with, and the account of the

Depository Participant to be debited for, such beneficial interest, and (3) a

certificate in the form of Exhibit F hereto given by the Beneficial

Owner that is transferring such interest, the Note Registrar shall instruct the

Depository to reduce the denomination of the Rule 144A Global Note by the

aggregate denomination of the beneficial interest in the Rule 144A Global

Note to be so transferred and, concurrently with such reduction, to increase

the denomination of the Regulation S Global Note by the aggregate

denomination of the beneficial interest in the Rule 144A Global Note to be

so transferred, and to credit or cause to be credited to the account of the

Person specified in such instructions (who shall be a Depository Participant

acting for or on behalf of Euroclear or Clearstream, or both, as the case may

be) a beneficial interest in the Regulation S Global Note having a

denomination equal to the amount by which the denomination of the

Rule 144A Global Note was reduced upon such transfer.

 

(iii)          Regulation S Global Note to

Rule 144A Global Note.  If the

Beneficial Owner of an interest in a Regulation S Global Note wishes at

any time to transfer its beneficial interest in such Regulation S Global

Note to a Person who wishes to take delivery thereof in the form of a

beneficial interest in the Rule 144A Global Note, such holder may, in addition

to complying with all Applicable Procedures, transfer or cause the transfer of

such beneficial interest for an equivalent beneficial interest in the

Rule 144A Global Note only upon compliance with the provisions of this subsection 4.02(j)(iii).  Upon receipt by the Note Registrar at its

Corporate Trust Office of (1) written instructions given in accordance

with the Applicable Procedures from a Depository Participant directing the Note

Registrar to credit or cause to be credited to

 

32

 

another specified Depository Participant’s account a

beneficial interest in the Rule 144A Global Note in an amount equal to the

denomination of the beneficial interest in the Regulation S Global Note to

be transferred, (2) a written order given in accordance with the

Applicable Procedures containing information regarding the account of the

Depository Participant to be credited with, and the account of the Depository

Participant (or, if such account is held for Euroclear or Clearstream, the

Euroclear or Clearstream account, as the case may be) to be debited for such

beneficial interest, and (3) with respect to a transfer of a beneficial

interest in the Regulation S Global Note for a beneficial interest in the

related Rule 144A Global Note (i) during the Restricted Period, a

certificate in the form of Exhibit G hereto given by the Beneficial

Owner, or (ii) after the Restricted Period, a Rule 144A Certification

from the transferee to the effect that such transferee is a Qualified

Institutional Buyer, the Note Registrar shall instruct the Depository to reduce

the denomination of the Regulation S Global Note by the denomination of

the beneficial interest in the Regulation S Global Note to be transferred,

and, concurrently with such reduction, to increase the denomination of the

Rule 144A Global Note by the aggregate denomination of the beneficial

interest in the Regulation S Global Note to be so transferred, and to

credit or cause to be credited to the account of the Person specified in such

instructions (who shall be a Depository Participant acting for or on behalf of

Euroclear or Clearstream, or both, as the case may be) a beneficial interest in

the Rule 144A Global Note having a denomination equal to the amount by

which the denomination of the Regulation S Global Note was reduced upon

such transfer.

 

(iv)          Transfers Within Regulation S

Global Notes During Restricted Period. 

If, during the Restricted Period, the Beneficial Owner of an interest in

a Regulation S Global Note wishes at any time to transfer its beneficial

interest in such Trust Certificate to a Person who wishes to take delivery

thereof in the form of a Regulation S Global Note, such Beneficial Owner

may transfer or cause the transfer of such beneficial interest for an

equivalent beneficial interest in such Regulation S Global Note only upon

compliance with the provisions of this subsection 4.02(j)(iv) and

all Applicable Procedures.  Upon receipt

by the Note Registrar at its Corporate Trust Office of (1) written instructions

given in accordance with the Applicable Procedures from a Depository

Participant directing the Note Registrar to credit or cause to be credited to

another specified Depository Participant’s account a beneficial interest in

such Regulation S Global Note in an amount equal to the denomination of

the beneficial interest to be transferred, (2) a written order given in

accordance with the Applicable Procedures containing information regarding the

account of the Depository Participant to be credited with, and the account of

the Depository Participant (or, if such account is held for Euroclear or

Clearstream, the Euroclear or Clearstream account, as the case may be) to be

debited for, such beneficial interest and (3) a certificate in the form of

Exhibit H hereto given by the transferee, the Note Registrar shall

instruct the Depository to credit or cause to be credited to the account of the

Person specified in such instructions (who shall be a Depository Participant

acting for or on behalf of Euroclear or Clearstream, or both, as the case may

be) a beneficial interest in the Regulation S Global Note having a

denomination equal to the amount specified in such instructions by which the

account to be debited was reduced upon such transfer.  The Note Registrar shall not be required to monitor compliance by

Beneficial Owners of the provisions of this subsection 4.02(j)(iv).

 

33

 

(k)           Any

and all transfers from a Global Note to a transferee wishing to take delivery

in the form of an Individual Note will require the transferee to take delivery

subject to the restrictions on the transfer of such Individual Note described

on the face of such Note, and such transferee agrees that it will transfer such

Individual Note only as provided therein and herein.  No such transfer shall be made and the Note Registrar shall not

register any such transfer unless such transfer is made in accordance with this

subsection 4.02(k).

 

(i)            Transfers of a beneficial interest

in a Global Note to an Institutional Accredited Investor will require delivery

of such Note to the transferee in the form of an Individual Note and the Note

Registrar shall register such transfer only if prior to the transfer such

transferee furnishes to the Note Registrar (1) a Transferee Letter to the

effect that the transfer is being made to an Institutional Accredited Investor

in accordance with an applicable exemption under the Securities Act, and

(2) an Opinion of Counsel acceptable to the Indenture Trustee that such

transfer is in compliance with the Securities Act.

 

(ii)           Transfers of a beneficial interest in

a Global Note to a Qualified Institutional Buyer or a Regulation S

Investor wishing to take delivery in the form of an Individual Note will be

registered by the Note Registrar only upon compliance with the provisions of subsection 4.02(j)

and if the Note Registrar is provided with a Rule 144A Certification or a

Regulation S Transfer Certificate, as applicable.

 

(iii)          Notwithstanding the foregoing, no

transfer of a beneficial interest in a Regulation S Global Note to an

Individual Note pursuant to subparagraph (B) above shall be made prior to

the expiration of the Restricted Period. 

Upon acceptance for exchange or transfer of a beneficial interest in a

Global Note for an Individual Note, as provided herein, the Note Registrar

shall endorse on the schedule affixed to the related Global Note Registrar (or

on a continuation of such schedule affixed to such Global Note Registrar and

made a part thereof) an appropriate notation evidencing the date of such

exchange or transfer and a decrease in the denomination of such Global Note

Registrar equal to the denomination of such Individual Note Registrar issued in

exchange therefor or upon transfer thereof. 

Unless determined otherwise by the Company in accordance with applicable

law, an Individual Note Registrar issued upon transfer of or exchange for a

beneficial interest in the Global Note Registrar shall bear the Securities

Legend.

 

(l)            Transfers

of Individual Note to the Global Notes. 

If a Holder of an Individual Note wishes at any time to transfer such

Note to a Person who wishes to take delivery thereof in the form of a

beneficial interest in the related Regulation S Global Note or the related

Rule 144A Global Note, such transfer may be effected only in accordance

with the Applicable Procedures, and this subsection 4.02(l).  Upon receipt by the Note Registrar at the

Corporate Trust Office of (1) the Individual Note to be transferred with

an assignment and transfer, (2) written instructions given in accordance

with the Applicable Procedures from a Depository Participant directing the Note

Registrar to credit or cause to be credited to another specified Depository

Participant’s account a beneficial interest in such Regulation S Global

Note or such Rule 144A Global Note, as the case may be, in an amount equal

to the denomination of the Individual Note to be so

 

34

 

transferred, (3) a written order given in accordance with the

Applicable Procedures containing information regarding the account of the

Depository Participant (and, in the case of any transfer pursuant to

Regulation S, the Euroclear or Clearstream account, as the case may be) to

be credited with such beneficial interest, and (4) (x) if delivery is

to be taken in the form of a beneficial interest in the Regulation S

Global Note, a Regulation S Transfer Note from the transferor or

(y) a Transferee Letter from the transferee to the effect that such transferee

is a Qualified Institutional Buyer, if delivery is to be taken in the form of a

beneficial interest in the Rule 144A Global Note, the Note Registrar shall

cancel such Individual Note, execute and deliver a new Individual Note for the

denomination of the Individual Note not so transferred, registered in the name

of the Holder, and the Note Registrar shall instruct the Depository to increase

the denomination of the Regulation S Global Note or the Rule 144A

Global Note, as the case may be, by the denomination of the Individual Note to

be so transferred, and to credit or cause to be credited to the account of the

Person specified in such instructions (who, in the case of any increase in the

Regulation S Global Note during the Restricted Period, shall be a

Depository Participant acting for or on behalf of Euroclear or Clearstream, or

both, as the case may be) a corresponding denomination of the Rule 144A

Global Note or the Regulation S Global Note, as the case may be.

 

It is the intent of the foregoing that under no

circumstances may an Institutional Accredited Investor that is not a Qualified

Institutional Buyer take delivery in the form of a beneficial interest in a

Global Note.

 

(m)          An

exchange of a beneficial interest in a Global Note for an Individual Note or

Notes, an exchange of an Individual Note or Notes for a beneficial interest in

a Global Note and an exchange of an Individual Note or Notes for another

Individual Note or Notes (in each case, whether or not such exchange is made in

anticipation of subsequent transfer, and in the case of the Global Notes, so

long as the Global Notes remain outstanding and are held by or on behalf of the

Depository), may be made only in accordance with this Section 4.02

and in accordance with the rules of the Depository and Applicable Procedures.

 

(n)           (i)            Upon acceptance for exchange or

transfer of an Individual Note for a beneficial interest in the Global Note as

provided herein, the Note Registrar shall cancel such Individual Note and shall

(or shall request the Depository to) endorse on the schedule affixed to the

applicable Global Note (or on a continuation of such schedule affixed to the

Global Note and made a part thereof) an appropriate notation evidencing the

date of such exchange or transfer and an increase in the Note balance of the Global

Note equal to the Note balance of such Individual Note exchanged or transferred

therefor.

 

(ii)           Upon acceptance for exchange or

transfer of a beneficial interest in the Global Note for an Individual Note as

provided herein, the Note Registrar shall (or shall request the Depository to)

endorse on the schedule affixed to the Global Note (or on a continuation of

such schedule affixed to the Global Note and made a part thereof) an

appropriate notation evidencing the date of such exchange or transfer and a decrease

in the Note balance of the Global Note equal to the Note balance of such

Individual Note issued in exchange therefor or upon transfer thereof.

 

35

 

(o)           The

Securities Legend shall be placed on any Individual Note issued in exchange for

or upon transfer of another Individual Note or of a beneficial interest in the

Global Note.

 

(p)           Subject

to the restrictions on transfer and exchange set forth in this Section 4.02,

the holder of any Individual Note may transfer or exchange the same in whole or

in part (in an initial Note balance equal to the minimum authorized

denomination of $1,000,000 or any integral multiple of $100,000 in excess

thereof) by surrendering such Note at the Corporate Trust Office, or at the

office of any transfer agent, together with an executed instrument of

assignment and transfer satisfactory in form and substance to the Note

Registrar in the case of transfer and a written request for exchange in the

case of exchange.  The holder of a beneficial

interest in a Global Note may, subject to the rules and procedures of the

Depository, cause the Depository (or its nominee) to notify the Note Registrar

in writing of a request for transfer or exchange of such beneficial interest

for an Individual Note or Notes. 

Following a proper request for transfer or exchange, the Note Registrar

shall, within five (5) Business Days of such request made at such Corporate

Trust Office, cause the Indenture Trustee to authenticate and the Note

Registrar to deliver at such Corporate Trust Office, to the transferee (in the

case of transfer) or holder (in the case of exchange) or send by first class

mail at the risk of the transferee (in the case of transfer) or holder (in the

case of exchange) to such address as the transferee or holder, as applicable,

may request, an Individual Note or Notes, as the case may require, for a like

aggregate Percentage Interest and in such authorized denomination or

denominations as may be requested.  The

presentation for transfer or exchange of any Individual Note shall not be valid

unless made at the Corporate Trust Office by the registered holder in person,

or by a duly authorized attorney–in–fact.

 

(q)           No

transfer of any Note shall be made unless such transfer is exempt from the registration

requirements of the Securities Act and any applicable state securities laws or

is made in accordance with said Act and laws. 

No transfer of any Note shall be made if such transfer would require the

Issuer to register as an “investment company” under the Investment Company

Act.  In the event of any such transfer,

unless such transfer is made in reliance upon Rule 144A under the

Securities Act or Regulation S under the Securities Act, (i) the Indenture

Trustee may require a written Opinion of Counsel (which may be in–house

counsel) acceptable to and in form and substance reasonably satisfactory to the

Indenture Trustee that such transfer may be made pursuant to an exemption,

describing the applicable exemption and the basis therefor, from said Act and

laws or is being made pursuant to said Act and laws, which Opinion of Counsel

shall not be an expense of the Indenture Trustee, the Issuer, or the Servicer

and (ii) the Indenture Trustee shall require the transferee to execute a

Transferee Letter certifying to the Issuer and the Indenture Trustee the facts

surrounding such transfer, which Transferee Letter shall not be an expense of

the Indenture Trustee, the Issuer or the Servicer. The holder of a Note

desiring to effect such transfer shall, and by accepting a Note and the

benefits of this Indenture does hereby agree to, indemnify the Indenture

Trustee, the Issuer and the Servicer against any liability that may result if

the transfer is not so exempt or is not made in accordance with such federal

and state laws.  None of the Issuer, the

Indenture Trustee or the Trust Depositor intends or is obligated to register or

qualify any Note under the Securities Act or any state securities laws.

 

(r)            Notwithstanding

any other provision of this Agreement to the contrary, on the Closing Date, the

Indenture Trustee shall authenticate in the name of, and deliver to, the Trust

 

36

 

Depositor, the Class C Note in the form of a single Individual

Note in an aggregate principal amount equal to the Initial Class C

Principal Balance.  The Holder of the

Class C Note shall initially be the Trust Depositor.  No transfer, sale, pledge or other disposition

of one or more Class C Notes (a “Transfer”) shall be made unless

(1) simultaneously with the Transfer a proportionate amount of Trust

Certificates are Transferred so that the ratio of the Percentage Interest of

the Trust Certificates so Transferred to all Trust Certificates and the ratio

of the Percentage Interest of the Class C Notes so Transferred to all

Class C Notes are equal, (2) the Transfers of the Trust Certificates

and Class C Notes referred to herein are made to the same Person and

(3) the Percentage Interest of the Trust Certificates and Class C Notes,

respectively, so transferred is no less than ten (10%) percent.

 

(s)           The

Class C Notes may only be owned by United States Persons (as defined in

Section 7701(a)(30) of the Code).

 

(t)            The

Class C Notes may not be owned by any natural Person.

 

(u)           No

Class C Note may be acquired directly or indirectly, for, on behalf of or

with the assets of an employee benefit plan or other retirement arrangement

subject to ERISA, and/or Section 4975 of the Code (collectively, a “Plan”).  No transfer of a Class C Note

representing an Individual Note shall be made unless the Indenture Trustee

shall have received a certification from the transferee of such Individual

Note, acceptable to and in form and substance satisfactory to the Indenture

Trustee and the Issuer, to the effect that such transferee is acquiring a

Class C Note in conformance with the requirements of the preceding

sentence.  Notwithstanding anything else

to the contrary herein, in the event any purported transfer of any Class C Note

representing an Individual Note is made without delivery of the certification

referred to above, such certification shall be deemed to have been made by the

Transferee by its acceptance of such Individual Note.

 

Section 4.03                            Mutilated, Destroyed, Lost or Stolen Notes.

 

Subject to UCC § 8–405, if (i) any mutilated

Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives

evidence to its satisfaction of the destruction, loss or theft of any Note, and

(ii) there is delivered to the Indenture Trustee such security or

indemnity as may be required by it to hold the Issuer and the Indenture Trustee

harmless, then, in the absence of notice to the Issuer, the Note Registrar or

the Indenture Trustee that such Note has been acquired by a protected

purchaser, the Issuer shall execute, and upon its request the Indenture Trustee

shall authenticate and deliver, in exchange for or in lieu of any such

mutilated, destroyed, lost or stolen Note, a replacement Note; provided,  however,

that if any such destroyed, lost or stolen Note, but not a mutilated Note,

shall have become or within seven (7) days shall be due and payable, instead of

issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen

Note when so due or payable without surrender thereof.  If, after the delivery of such replacement

Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to

the preceding sentence, a protected purchaser of the original Note in lieu of

which such replacement Note was issued presents for payment such original Note,

the Issuer and the Indenture Trustee shall be entitled to recover such

replacement Note (or such payment) from the Person to whom it was delivered or

any Person taking such replacement Note from such Person

 

37

 

to whom such replacement Note was delivered or any assignee of such

Person, except a protected purchaser, and shall be entitled to recover upon the

security or indemnity provided therefor to the extent of any loss, damage, cost

or expense incurred by the Issuer or the Indenture Trustee in connection

therewith.

 

Upon the issuance of any replacement Note under this Section 4.03,

the Issuer may require the payment by the Holder of such Note of a sum

sufficient to cover any tax or other governmental charge that may be imposed in

relation thereto and any other reasonable expenses (including the fees and

expenses of the Indenture Trustee) connected therewith.

 

Every replacement Note issued pursuant to this Section 4.03

in replacement of any mutilated, destroyed, lost or stolen Note shall

constitute an original additional contractual obligation of the Issuer, whether

or not the mutilated, destroyed, lost or stolen Note shall be at any time

enforceable by anyone, and shall be entitled to all the benefits of this

Indenture equally and proportionately with any and all other Notes duly issued

hereunder.

 

The provisions of this Section 4.03 are

exclusive and shall preclude (to the extent lawful) all other rights and

remedies with respect to the replacement or payment of mutilated, destroyed,

lost or stolen Notes.

 

Section 4.04                            Payment of Principal and Interest; Defaulted Interest.

 

(a)           The

Notes shall accrue interest during each Interest Accrual Period on the basis of

the actual number of days elapsed during such Interest Accrual Period and a

year assumed to consist of 360 days. 

Any installment of interest or principal, if any, payable on any Note

which is punctually paid or duly provided for by the Issuer on the applicable

Payment Date shall be paid to the Person in whose name such Note is registered

on the Record Date, by check mailed first–class, postage prepaid, to such

Person’s address as it appears on the Note Register on such Record Date, except

that, unless Global Notes have been issued pursuant to Section 4.02,

with respect to Notes registered on the Record Date in the name of the nominee

of the Depository (initially, such nominee to be Cede & Co.), payment will

be made by wire transfer in immediately available funds to the account

designated by such Person and except for the final installment of principal

payable with respect to such Note on a Payment Date or on the Final Maturity

Date (and except for the Termination Price for any Note called for redemption

pursuant to Section 10.01) which shall be payable as provided

below.  The funds represented by any

such checks returned undelivered shall be held in accordance with Section 3.03.

 

(b)           The

principal of each Note shall be payable in installments on each Payment Date as

provided in the Transfer and Servicing Agreement.  Notwithstanding the foregoing, the entire unpaid principal amount

of the Notes shall be due and payable, if not previously paid, on the date on

which an Event of Default shall have occurred and be continuing, if the

Indenture Trustee with the consent of the Required Holders have declared the

Notes to be immediately due and payable in the manner provided in Section 5.02.  All principal payments among the Classes of

Notes shall be made in the order and priorities set forth herein and in the

Transfer and Servicing Agreement, and all principal payments on the Notes of

the same Class shall be made pro rata to the Noteholders of such Class.  The Indenture Trustee shall notify the

Person in whose name a

 

38

 

Note is registered at the close of business on the Record Date

preceding the Payment Date on which the Issuer expects that the final

installment of principal of and interest on such Note will be paid.  Such notice shall be mailed or transmitted

by facsimile prior to such final Payment Date and shall specify that such final

installment will be payable only upon presentation and surrender of such Note

and shall specify the place where such Note may be presented and surrendered

for payment of such installment. 

Notices in connection with redemptions of Notes shall be mailed to

Noteholders as provided in Section 10.02.

 

Section 4.05                            Tax Treatment.

 

The Issuer has entered into this Indenture, and the

Notes will be issued, with the intention that, for federal, state and local income,

business and franchise tax purposes, (i) the Notes (other than the

Class C Notes) will qualify as indebtedness secured by the Indenture

Collateral and (ii) the Issuer shall not be treated as an association,

taxable mortgage pool, or publicly traded partnership taxable as a

corporation.  The Issuer, by entering

into this Indenture, and each Noteholder (other than the Class C

Noteholders), by the acceptance of any such Note (and each Beneficial Owner of

a Note (other than a Class C Note), by its acceptance of an interest in the

applicable Note), agree to treat such Notes for federal, state and local income

and franchise tax purposes as indebtedness of the Issuer.  Each Holder of such Note (other than the

Class C Noteholders) agrees that it will cause any beneficial owner of

such Note acquiring an interest in a Note through it to comply with this

Indenture as to treatment of indebtedness under applicable tax law, as

described in this Section 4.05.

 

It is the intent of the Issuer, the Trust Depositor,

the Servicer, Class C Noteholders and the Certificateholders that, for

purposes of federal income taxes, in the event that the Trust Certificates and

the Class C Notes are owned by more than one holder the Issuer will be

treated as a partnership, the partners of which are the Certificateholders and

the Class C Noteholders and, in the event that the Trust Certificates and

the Class C Notes are all owned by a single holder, the Issuer will be

treated as a division of such holder. 

The Certificateholders and the Class C Noteholders, by acceptance

of a Trust Certificate and a Class C Note, respectively, agree to treat

the Trust Certificates and Class C Notes as equity and to take no action

inconsistent with the treatment of the Issuer, the Trust Certificates and Class C

Notes for such tax purposes as just described. 

The parties hereto agree that they shall not cause or permit the making,

as applicable, of any election under Treasury Regulation

Section 301.7701–3 whereby the Issuer or any portion thereof would be treated

as a corporation for federal income tax purposes, but shall treat the Issuer as

a partnership or disregarded entity, as appropriate, for federal income tax

purposes.  The provisions of this

Indenture shall be construed in furtherance of the foregoing intended tax

treatment.

 

Section 4.06                            Satisfaction and Discharge of

Indenture.

 

This Indenture shall cease to be

of further effect with respect to the Notes except as to (i) rights of

registration of transfer and exchange, (ii) substitution of mutilated, destroyed,

lost or stolen Notes, (iii) rights of Noteholders to receive payments of

principal thereof and interest thereon, (iv) Sections 3.01, 3.03,

3.04, 3.05, 3.07, 3.08, 3.10, 3.12, 3.13,

3.15, 3.16, 3.18, 3.19,

 

39

 

3.21, 3.22, 4.05 and 11.16

(v) the rights, obligations and immunities of the Indenture Trustee

hereunder (including the rights of the Indenture Trustee under Section 6.07

and the obligations of the Indenture Trustee under Section 4.07)

and (vi) the rights of Noteholders as beneficiaries hereof with respect to

the property so deposited with the Indenture Trustee payable to all or any of

them, and the Indenture Trustee, on written demand of and at the expense of the

Issuer, shall execute proper instruments acknowledging satisfaction and

discharge of this Indenture with respect to the Notes, when

 

(A)          any of the following has occurred:

 

(1)           all Notes of such Series theretofore

authenticated and delivered (other than (i) Notes that have been destroyed,

lost or stolen and that have been replaced or paid as provided in Section 4.03

and (ii) Notes for whose payment money has theretofore been deposited in

trust or segregated and held in trust by the Issuer and thereafter repaid to

the Issuer or discharged from such trust, as provided in Section 3.03)

have been delivered to the Indenture Trustee for cancellation;

 

(2)           all Notes not theretofore delivered

to the Indenture Trustee for cancellation

 

(i)            have become due and payable, or

 

(ii)           will become due and payable at the

applicable Maturity Date within one year, or

 

(iii)          are to be called for redemption within

one year under arrangements satisfactory to the Indenture Trustee for the

giving of notice of redemption by the Indenture Trustee in the name, and at the

expense, of the Issuer; or

 

(3)           if and only if the Trust Depositor is

the sole Holder of the Class C Notes, the Class A Notes and

Class B Notes have been paid in full,

 

and the Issuer, in the case of

(i), (ii) or (iii) above, has irrevocably deposited or caused to be irrevocably

deposited with the Indenture Trustee cash or direct obligations of or

obligations guaranteed by the United States (which will mature prior to the

date such amounts are payable), in trust in an Eligible Deposit Account (which shall

be the Collection Account or Note Distribution Account) for such purpose, in an

amount sufficient to pay and discharge the entire indebtedness on such Note not

theretofore delivered to the Indenture Trustee for cancellation when due to the

final scheduled Payment Date, as the case may be;

 

40

 

(B)           the Issuer has paid or performed or

caused to be paid or performed all amounts and obligations which the Issuer may

owe to or on behalf of the Indenture Trustee for the benefit of the Noteholders

under this Indenture or the Notes; and

 

(C)           the Issuer has delivered to the

Indenture Trustee an Officer’s Certificate and an Opinion of Counsel and an

Independent Certificate from a firm of certified public accountants, each

meeting the applicable requirements of subsection 11.01(a) and,

subject to Section 11.02, stating that all conditions precedent

herein provided for relating to the satisfaction and discharge of this

Indenture with respect to the Notes have been complied with and the Rating

Agency Condition has been satisfied.

 

This Indenture shall cease to be

of further effect with respect to each Swap when such Swap has been terminated

and the Swap Counterparty has received all amounts it is entitled to receive

upon such termination.

 

Section 4.07                            Application of Trust Money.

 

All moneys deposited with the

Indenture Trustee pursuant to Section 4.06 hereof shall be held in

trust and applied by it, in accordance with the provisions of the Notes and

this Indenture, to the payment, either directly or through any Paying Agent, as

the Indenture Trustee may determine, to the Holders of the particular Notes for

the payment or redemption of which such moneys have been deposited with the

Indenture Trustee, of all sums due and to become due thereon for principal and

interest; but such moneys need not be segregated from other funds except to the

extent required herein or in the Transfer and Servicing Agreement or required

by law.

 

Section 4.08                            Repayment of Moneys Held by

Paying Agent.

 

In connection with the

satisfaction and discharge of this Indenture with respect to the Notes, all

moneys then held by any Paying Agent other than the Indenture Trustee under the

provisions of this Indenture with respect to such Notes shall, upon demand of

the Issuer, be paid to the Indenture Trustee to be held and applied according

to Section 3.05 and thereupon such Paying Agent shall be released

from all further liability with respect to such moneys.

 

ARTICLE V

 

REMEDIES

 

Section 5.01                            Events of Default

 

“Event of Default,”

wherever used herein, means any one of the following events (whatever the

reason for such Event of Default and whether it shall be voluntary or

involuntary

 

41

 

or be effected by operation of law or pursuant to

any judgment, decree or order of any court or any order, rule or regulation of

any administrative or governmental body):

 

(a)           failure to pay on each Payment Date the full amount of

accrued interest on any Note and such failure continues unremedied for two (2)

Business Days;

 

(b)           failure to pay the then outstanding Outstanding Principal

Balance of any Note, if any, on the Legal Final Maturity Date;

 

(c)           (i) failure on the part of the Originator or the

Servicer to make any payment or deposit required under the Transfer and

Servicing Agreement within two (2) Business Days after the date the payment or

deposit is required to be made, or (ii) failure on the part of the

Originator, the Trust Depositor, the Issuer, the Indenture Trustee, the

Servicer or the Owner Trustee to observe or perform any other covenants or

agreements of such entity set forth in the Transfer and Servicing Agreement or

the Indenture, which failure continues unremedied for a period of thirty (30)

days after written notice; provided, that, no such thirty

(30) day cure period shall apply in the case of a failure by the Originator to

perform its agreement to repurchase or substitute for Ineligible Loans; and further,

provided,

that,

only a five (5) day cure period shall apply in the case of a failure by the

Originator, the Indenture Trustee or the Owner Trustee to observe their

respective covenants not to grant a security interest in or otherwise

intentionally create a lien on the Loans;

 

(d)           any representation, warranty, certification or written

statement made by the Originator, the Trust Depositor, the Indenture Trustee,

the Servicer or the Owner Trustee in the Transfer and Servicing Agreement or

the Indenture or any information required to be given by the Originator or the

Trust Depositor to the Trust or the Indenture Trustee to identify the Loans

proves to have been incorrect in any material respect when made and continues

to be incorrect in any material respect for a period of thirty (30) days after

written notice; provided, however, that an

Event of Default shall not be deemed to occur thereunder if the Originator has

repurchased or substituted for the related Loans through the Trust Depositor

during such period in accordance with the provisions of the Transfer and Servicing

Agreement;

 

(e)           the Class C Note is held by more than ten (10)

persons;

 

(f)            a Servicer Default occurs;

 

(g)           the Indenture Trustee, on behalf of the Noteholders and

the Swap Counterparties, shall fail for any reason to have a valid and

perfected first priority security interest in the Loans and the Collateral;

 

(h)           the Originator or the Servicer agrees or consents to, or

otherwise permits to occur, any amendment, modification, change, supplement or

recission of or to the Credit and Collection Policy in whole or in part that

could reasonably be expected to have a material adverse effect upon the

Noteholders and the Swap Counterparties;

 

42

 

(i)            on any day any Swap Transaction fails to meet the

requirements set forth in this Indenture;

 

(j)            the occurrence of an Insolvency Event relating to the

Trust Depositor or the Issuer;

 

(k)           the occurrence of an Insolvency Event relating to the

Originator or the Servicer; or

 

(l)            the Issuer becomes subject to registration as an

“investment company” under the Investment Company Act of 1940, as amended.

 

Section 5.02                            Acceleration of Maturity;

Rescission and Annulment.

 

If an Event of Default should occur and be continuing,

then and in every such case the Indenture Trustee or the Required Holders may

declare the Notes to be immediately due and payable, by a notice in writing to

the Issuer and the Rating Agencies (and to the Indenture Trustee if given by

Noteholders), and upon any such declaration the unpaid principal amount of such

Notes, together with accrued and unpaid interest thereon through the date of

acceleration, shall become immediately due and payable.

 

At any time after such declaration of acceleration of

maturity has been made and before a judgment or decree for payment of the money

due has been obtained by the Indenture Trustee as hereinafter in this Article V;

provided,

the Required Holders, by written notice to the Issuer and the Indenture Trustee

and the Swap Counterparty, may rescind and annul such declaration and its

consequences if:

 

(A)          the Issuer has paid or deposited with

the Indenture Trustee a sum sufficient to pay:

 

(i)            all payments of principal of and

interest on the Notes, all scheduled payments then due and payable under each

Swap and all other amounts that would then be due hereunder, upon the Notes and

under each Swap if the Event of Default giving rise to such acceleration had

not occurred; and

 

(ii)           all sums paid or advanced by the

Indenture Trustee hereunder and the reasonable compensation, expenses,

disbursements and advances of the Indenture Trustee and its agents and counsel;

and

 

(B)           all Events of Default, other than the

nonpayment of the principal of the Notes that has become due solely by such

acceleration, have been cured or waived as provided in Section 5.13.

 

No such rescission or annulment shall affect any

subsequent default or impair any right consequent thereto.  No such rescission or annulment shall affect

a Swap or any Swap Transaction that has been terminated in accordance with the terms

thereof.

 

43

 

Section 5.03                            Collection of Indebtedness and

Suits for Enforcement by Indenture Trustee; Authority of Indenture Trustee.

 

(a)           The Issuer covenants that if the Notes are accelerated

following the occurrence of an Event of Default, the Issuer will, upon demand

of the Indenture Trustee, pay to it, for the benefit of the Holders of the

Notes, the whole amount then due and payable on such Notes for principal and

interest, with interest upon the overdue principal, and, to the extent payment

at such rate of interest shall be legally enforceable, upon overdue

installments of interest, at the applicable Interest Rate and in addition

thereto such further amount as shall be sufficient to cover costs and expenses

of collection, including the reasonable compensation, expenses, disbursements

and advances of the Indenture Trustee and its agents and counsel.

 

(b)           The Indenture Trustee, following the occurrence of an

Event of Default, shall have full right, power and authority to take, or defer

from taking, any and all acts with respect to the administration, maintenance

or disposition of the Indenture Collateral.

 

(c)           If an Event of Default occurs and is continuing, the

Indenture Trustee may in its discretion (except as provided in subsection 5.03(d),

and shall, at the direction of the Required Holders), proceed to protect and

enforce its rights and the rights of the Noteholders, by such appropriate

Proceedings as shall be deemed most effective to protect and enforce any such

rights, whether for the specific enforcement of any covenant or agreement in

this Indenture or in aid of the exercise of any power granted herein, or to

enforce any other proper remedy or legal or equitable right vested in the

Indenture Trustee by this Indenture or by law.

 

(d)           Notwithstanding anything to the contrary contained in this

Indenture, if an Event of Default shall have occurred and be continuing, and if

the Issuer fails to perform its obligations under Section 10.01

when and as due, the Indenture Trustee may in its discretion, and shall, at the

direction of the Required Holders, proceed to protect and enforce its rights

and the rights of the Noteholders by such appropriate Proceedings as the

Indenture Trustee, or the Required Holders, as the case may be, shall deem most

effective to protect and enforce any such rights, whether for specific

performance of any covenant or agreement in this Indenture or in aid of the

exercise of any power granted herein, or to enforce any other proper remedy or

legal or equitable right vested in the Indenture Trustee by this Indenture or

by law; provided,

that,

the Indenture Trustee shall only be entitled to take any such actions to the

extent such actions (i) are taken only to enforce the Issuer’s obligations

to redeem the principal amount of Notes, and (ii) are taken only against

the Indenture Collateral, any investments therein and any proceeds thereof.

 

(e)           In case there shall be pending, relative to the Issuer or

any other obligor upon the Notes or any Person having or claiming an ownership

interest in the Indenture Collateral, Proceedings under any Insolvency Law, or

in case a receiver, assignee or trustee in bankruptcy or reorganization,

liquidator, sequestrator or similar official shall have been appointed for or

taken possession of the Issuer or its property or such other obligor or Person,

or in case of any other comparable judicial Proceedings relative to the Issuer

or other obligor upon the Notes, or to the creditors or property of the Issuer or

such other obligor, the Indenture Trustee, irrespective of whether the

principal of any Notes shall then be due and payable as therein expressed or by

 

44

 

declaration or otherwise and irrespective of whether

the Indenture Trustee shall have made any demand pursuant to the provisions of

this Section, shall be entitled and empowered, by intervention in such

Proceedings or otherwise:

 

(i)            to file and prove a claim or claims

for the whole amount of principal and interest owing and unpaid in respect of

the Notes and to file such other papers or documents as may be necessary or

advisable in order to have the claims of the Indenture Trustee (including any

claim for reasonable compensation to the Indenture Trustee and each predecessor

Indenture Trustee, and their respective agents, attorneys and counsel, and for

reimbursement of all expenses and liabilities incurred, and all advances made,

by the Indenture Trustee and each predecessor Indenture Trustee, except as a

result of negligence or bad faith) and of the Noteholders allowed in such

Proceedings in accordance with the written direction of a majority of the

Holders;

 

(ii)           unless prohibited by applicable law

and regulations, to vote on behalf of the Holders of Notes in any election of a

trustee, a standby trustee or Person performing similar functions in any such

Proceedings in accordance with the written direction of a majority of the

Holders;

 

(iii)          to collect and receive any moneys or

other property payable or deliverable on any such claims and to distribute all

amounts received with respect to the claims of the Noteholders and of the

Indenture Trustee on their behalf; and

 

(iv)          to file such proofs of claim and other

papers or documents as may be necessary or advisable in order to have the

claims of the Indenture Trustee or the Holders of Notes allowed in any judicial

proceedings relative to the Issuer, its creditors and its property;

 

and any trustee, receiver, liquidator, custodian

or other similar official in any such Proceeding is hereby authorized by each

of such Noteholders to make payments to the Indenture Trustee, as

administrative expenses associated with any such proceeding, and, in the event

that the Indenture Trustee shall consent to the making of payments directly to

such Noteholders, to pay to the Indenture Trustee such amounts as shall be

sufficient to cover reasonable compensation to the Indenture Trustee, each

predecessor Indenture Trustee and their respective agents, attorneys and

counsel, and all other reasonable expenses and liabilities incurred, and all

advances made, by the Indenture Trustee and each predecessor Indenture Trustee

except as a result of negligence or bad faith.

 

(f)            Nothing herein contained shall be deemed to authorize the

Indenture Trustee to authorize or consent to or vote for or accept or adopt on

behalf of any Noteholder any plan of reorganization, arrangement, adjustment or

composition affecting the Notes or the rights of any Holder thereof or to

authorize the Indenture Trustee to vote in respect of the claim of any

Noteholder in any such proceeding except, as aforesaid, to vote for the

election of a trustee in bankruptcy or similar Person.

 

45

 

(g)           All rights of action, and of asserting claims under this

Indenture or under any of the Notes, may be enforced by the Indenture Trustee

without the possession of any of the Notes or the production thereof in any

trial or other Proceedings relative thereto, and any such action or Proceedings

instituted by the Indenture Trustee shall be brought in its own name as trustee

of an express trust, and any recovery of judgment, subject to the payment of

the expenses, disbursements and compensation of the Indenture Trustee, each

predecessor Indenture Trustee and their respective agents and attorneys, shall

be for the ratable benefit of the Holders of the Notes.

 

(h)           In any Proceedings brought by the Indenture Trustee

(including any Proceedings involving the interpretation of any provision of

this Indenture), the Indenture Trustee shall be held to represent all of the

Holders of the Notes, and it shall not be necessary to make any Noteholder a

party to any such proceedings.

 

Section 5.04                            Remedies.

 

If an Event of Default shall

have occurred and be continuing, the Indenture Trustee (subject to Section 5.05)

may, and shall if so directed by the Required Holders in writing:

 

(i)            institute Proceedings in its own

name and as or on behalf of a trustee of an express trust for the collection of

all amounts then payable on the Notes or under this Indenture with respect

thereto, whether by declaration or otherwise, and all amounts payable under the

Transfer and Servicing Agreement, enforce any judgment obtained, and collect

from the Issuer and any other obligor upon such Notes moneys adjudged due;

 

(ii)           institute Proceedings from time to

time for the complete or partial foreclosure of this Indenture with respect to

the Indenture Collateral;

 

(iii)          exercise any remedies of a secured

party under the UCC and any other remedy available to the Indenture Trustee and

take any other appropriate action to protect and enforce the rights and

remedies of the Indenture Trustee on behalf of the Noteholders under this

Indenture or the Notes; and

 

(iv)          sell the Indenture Collateral or any

portion thereof or rights or interest therein, at one or more public or private

sales called and conducted in any manner permitted by law; provided, however,

that the Indenture Trustee may not sell or otherwise liquidate the Indenture

Collateral following an Event of Default, other than an Event of Default

described in subsection 5.01(a) or (b), unless (A) the

Holders of 100% of the Outstanding Amount of the Notes consent thereto (and,

unless it shall be paid in full all amounts payable to each Swap Counterparty

upon a termination of its Swap, each Swap Counterparty consents thereto),

(B) the proceeds of such sale or liquidation distributable to the

Noteholders are sufficient to discharge in full all amounts then due and unpaid

upon such Notes for principal and interest and all amounts payable to each Swap

Counterparty upon termination of the Swaps or (C) the Indenture Trustee

determines that the Indenture Collateral will not continue to provide

sufficient funds for the payment of principal of and interest on the Notes as

they would have become due if the Notes had not 

 

46

 

been declared due and payable,

and the Indenture Trustee provides prior written notice to each Rating Agency

and obtains the consent of the Holders of 100% of the Outstanding Amount of the

Notes (and, unless it shall be paid in full all amounts payable to each Swap

Counterparty upon a termination of its Swap, the consent of each Swap

Counterparty).  In determining such

sufficiency or insufficiency with respect to clauses (B) and (C),

the Indenture Trustee may, but need not, obtain and conclusively rely upon an

opinion of an Independent investment banking or accounting firm of national

reputation as to the feasibility of such proposed action and as to the

sufficiency of the Indenture Collateral for such purpose and shall in no event

be liable for relying on such opinions; provided, however, upon the

occurrence of an Event of Default described in subsection 5.01(k),

caused solely from an event described in such subparagraph occurring with

respect to the Trust Depositor or the Issuer, the Indenture Collateral will be

liquidated by the Indenture Trustee, at the expense of the Trust, and the Trust

will be terminated ninety (90) days after the date of such Insolvency Event,

unless, before the end of such ninety (90) day period, the relevant Trustee

shall have received written instructions from the Required Holders, to the

effect that such Required Holders disapprove of the liquidation of such

Indenture Collateral and termination of such Trust.

 

Section 5.05                            Optional Preservation of the

Indenture Collateral.

 

Following an Event of Default

and if such Event of Default has not been rescinded and annulled, and except as

otherwise provided above, the Indenture Trustee may, but need not, elect to

maintain possession of the Indenture Collateral; provided, however,

that the Indenture Trustee shall at all times maintain possession of the

Indenture Collateral, consisting of “instruments” (within the meaning of the

UCC), not constituting part of chattel paper (if any), evidencing any Loan that

had previously been delivered to the Indenture Trustee as part of the Indenture

Collateral, unless and until such “instruments” are delivered in connection

with a realization with respect to the Indenture Collateral in accordance with

the terms of this Indenture. It is the desire of the parties hereto and the

Noteholders that there be at all times sufficient funds for the payment of

principal and interest on the Notes and amounts due under the Swaps, and the

Indenture Trustee shall take such desire into account when determining whether

or not to maintain possession of the Indenture Collateral. In determining

whether to maintain possession of the Indenture Collateral, the Indenture

Trustee may, but need not, obtain and conclusively rely upon an opinion of an

Independent investment banking or accounting firm of national reputation as to

the feasibility of such proposed action and as to the sufficiency of the

Indenture Collateral for such purpose.

 

Section 5.06                            Priorities.

 

(a)           If the Indenture Trustee collects any money or property

pursuant to this Article V, it shall pay out the money or property

as set forth in Section 7.05 of the Transfer and Servicing

Agreement.

 

(b)           The Indenture Trustee may fix a record date and Payment

Date for any payment to Noteholders pursuant to this Section 5.06.  At least five (5) days before such record

date, the

 

47

 

Issuer shall mail to each Noteholder and the

Indenture Trustee a notice that states the record date, the Payment Date and

the amount to be paid.

 

Section 5.07                            Limitation of Suits.

 

No Holder of any Note shall have

any right to institute any Proceeding, judicial or otherwise, with respect to

this Indenture, or for the appointment of a receiver or trustee, or for any

other remedy hereunder, unless (and in all events subject to Section 11.16

hereof):

 

(i)            such Holder has previously given

written notice to the Indenture Trustee of a continuing Event of Default;

 

(ii)           the Holders of not less than 25% of

the Outstanding Amount of the Notes have made written request to the Indenture

Trustee to institute such Proceeding in respect of such Event of Default in its

own name as Indenture Trustee hereunder;

 

(iii)          such Holder or Holders have offered to

the Indenture Trustee indemnity satisfactory to it against the costs, expenses

and liabilities to be incurred in complying with such request;

 

(iv)          the Indenture Trustee for sixty (60)

days after its receipt of such notice, request and offer of indemnity has

failed to institute such Proceeding; and

 

(v)           no direction inconsistent with such

written request has been given to the Indenture Trustee during such sixty (60)

day period by the Holders of a majority of the Outstanding Amount of the Notes,

voting together as a single class.

 

It is understood and intended that no one or more

Holders of Notes shall have any right in any manner whatever by virtue of, or

by availing of, any provision of this Indenture to affect, disturb or prejudice

the rights of any other Holders of Notes or to obtain or to seek to obtain

priority or preference over any other Holders or to enforce any right under

this Indenture, except in the manner herein provided.

 

In the event the Indenture

Trustee shall receive conflicting or inconsistent requests and indemnity from

two or more groups of Holders of Notes, each representing less than a majority

of the Outstanding Amount of the Notes, the Indenture Trustee shall act at the

direction of the group of Holders representing the greater percentage of the

Outstanding Amount of the Notes.

 

Section 5.08                            Unconditional Rights of

Noteholders to Receive Principal and Interest.

 

Notwithstanding any other

provisions in the Indenture, the Holder of any Note shall have the right, which

is absolute and unconditional, to receive payment of the principal of and

interest on such Note on or after the respective due dates thereof expressed in

such Note or in this Indenture (or, in the case of redemption, on or after the

Redemption Date) and to institute suit for

 

48

 

the enforcement of any such payment, and such

right shall not be impaired without the consent of such Holder.

 

Section 5.09                            Restoration of Rights and

Remedies.

 

If the Indenture Trustee or any

Noteholder has instituted any Proceeding to enforce any right or remedy under

this Indenture and such Proceeding has been discontinued or abandoned for any

reason or has been determined adversely to the Indenture Trustee or to such

Noteholder, then and in every such case the Indenture Trustee and the

Noteholders shall, subject to any determination in such Proceeding, be restored

severally and respectively to their former positions hereunder, and thereafter

all rights and remedies of the Indenture Trustee and the Noteholders shall

continue as though no such Proceeding had been instituted.

 

Section 5.10                            Rights and Remedies Cumulative.

 

No right or remedy herein

conferred upon or reserved to the Indenture Trustee or to the Noteholders is

intended to be exclusive of any other right or remedy, and every right and

remedy shall, to the extent permitted by law, be cumulative and in addition to

every other right and remedy given hereunder or now or hereafter existing at law

or in equity or otherwise.  The

assertion or employment of any right or remedy hereunder, or otherwise, shall

not prevent the concurrent assertion or employment of any other appropriate

right or remedy.

 

Section 5.11                            Delay or Omission Not a Waiver.

 

No delay or omission of the

Indenture Trustee or any Holder of any Note to exercise any right or remedy

accruing upon any Default or Event of Default shall impair any such right or

remedy or constitute a waiver of any such Default or Event of Default or an acquiescence

therein.  Every right and remedy given

by this Article V or by law to the Indenture Trustee or to the

Noteholders may be exercised from time to time, and as often as may be deemed

expedient, by the Indenture Trustee or by the Noteholders, as the case may be.

 

Section 5.12                            Control by Noteholders.

 

The Required Holders shall have

the right to direct the time, method and place of conducting any Proceeding for

any remedy available to the Indenture Trustee with respect to the Notes or

exercising any trust or power conferred on the Indenture Trustee (in all events

subject to subsection 6.02(f)); provided, that:

 

(i)            such direction shall not be in

conflict with any rule of law or with any other provision of this Indenture;

 

(ii)           subject to the terms of Section 5.04,

any direction to the Indenture Trustee to sell or liquidate the Indenture

Collateral shall be by the Holders of Notes representing not less than 100% of

the Outstanding Amount of the Notes;

 

49

 

(iii)          if the conditions set forth in Section 5.05

have been satisfied and the Indenture Trustee elects to retain the Indenture

Collateral pursuant to such Section, then any direction to the Indenture

Trustee by Holders of Notes representing less than 100% of the Outstanding

Amount of the Notes to sell or liquidate the Indenture Collateral shall be of

no force and effect; and

 

(iv)          the Indenture Trustee may take any

other action deemed proper by the Indenture Trustee that is not inconsistent

with such direction.

 

Notwithstanding the rights of Noteholders set

forth in this Section, subject to Section 6.01, the Indenture

Trustee need not take any action that it determines might involve it in

liability or might materially and adversely affect the rights of any Noteholders

not consenting to such action.

 

Section 5.13                            Waiver of Past Defaults.

 

In the case of any waiver of an

Event of Default, the Issuer, the Indenture Trustee and the Holders of the

Notes shall be restored to their former positions and rights hereunder,

respectively; but no such waiver shall extend to any subsequent or other Event

of Default or impair any right consequent thereto.  Upon any such waiver, such Event of Default shall cease to exist

and be deemed to have been cured and not to have occurred, for every purpose of

this Indenture, but no such waiver shall extend to any subsequent or other

Event of Default or impair any right consequent thereto.  No such waiver shall affect a Swap or any

Swap Transaction that has been terminated in accordance with the terms thereof.

 

Section 5.14                            Undertaking for Costs.

 

All parties to this Indenture

agree, and each Holder of any Note by such Holder’s acceptance thereof shall be

deemed to have agreed, that any court may in its discretion require, in any

suit for the enforcement of any right or remedy under this Indenture, or in any

suit against the Indenture Trustee for any action taken, suffered or omitted by

it as Indenture Trustee, the filing by any party litigant in such suit of an

undertaking to pay the costs of such suit and that such court may in its

discretion assess reasonable costs, including reasonable attorneys’ fees,

against any party litigant in such suit, having due regard to the merits and

good faith of the claims or defenses made by such party litigant; but the

provisions of this Section 5.14 shall not apply to (i) any

suit instituted by the Indenture Trustee, (ii) any suit instituted by any

Noteholder, or group of Noteholders, in each case holding in the aggregate more

than 10% of the Outstanding Amount of the Notes or (iii) any suit

instituted by any Noteholder for the enforcement of the payment of principal of

or interest on any Note on or after the respective due dates expressed in such

Note and in this Indenture (or, in the case of redemption, on or after the

Redemption Date).

 

Section 5.15                            Waiver of Stay or Extension Laws.

 

The Issuer covenants (to the

extent that it may lawfully do so) that it will not at any time insist upon, or

plead or in any manner whatsoever, claim or take the benefit or advantage of,

any stay or extension law wherever enacted, now or at any time hereafter in

force, that may affect the covenants or the performance of this Indenture; and

the Issuer (to the extent that it may lawfully

 

50

 

do so) hereby expressly waives all benefit or

advantages of any such law, and covenants that it will not hinder, delay or

impede the execution of any power herein granted to the Indenture Trustee, but

will suffer and permit the execution of every such power as though no such law

had been enacted.

 

Section 5.16                            Action on Notes.

 

The Indenture Trustee’s right to

seek and recover judgment on the Notes or under this Indenture shall not be

affected by the seeking, obtaining or application of any other relief under or

with respect to this Indenture.  Neither

the lien of this Indenture nor any rights or remedies of the Indenture Trustee,

the Swap Counterparties or the Noteholders shall be impaired by the recovery of

any judgment by the Indenture Trustee against the Issuer or by the levy of any

execution under such judgment upon any portion of the Indenture Collateral or

upon any of the assets of the Issuer. 

Any money or property collected by the Indenture Trustee shall be

applied in accordance with Section 5.06.

 

Section 5.17                            Performance and Enforcement of

Certain Obligations.

 

(a)           Promptly following a request from the Indenture Trustee to

do so and at the Administrator’s expense, the Issuer shall take all such lawful

action as the Indenture Trustee may request to compel or secure the performance

and observance by the Trust Depositor and the Servicer, as applicable, of each

of their obligations to the Issuer under or in connection with the Transfer

Agreement and the Transfer and Servicing Agreement in accordance with the terms

thereof, and to exercise any and all rights, remedies, powers and privileges

lawfully available to the Issuer under or in connection with the Transfer

Agreement and the Transfer and Servicing Agreement to the extent and in the manner

directed by the Indenture Trustee, including the transmission of notices of

default on the part of the Trust Depositor or the Servicer  thereunder and the institution of legal or

administrative actions or proceedings to compel or secure performance by the

Trust Depositor or the Servicer of each of their obligations under the Transfer

Agreement and the Transfer and Servicing Agreement.

 

(b)           If an Event of Default has occurred and is continuing, the

Indenture Trustee may, and at the direction (which direction shall be in

writing, including facsimile) of the Required Holders shall, exercise all

rights, remedies, powers, privileges and claims of the Issuer against the Trust

Depositor or the Servicer under or in connection with the Transfer Agreement

and the Transfer and Servicing Agreement, including the right or power to take

any action to compel or secure performance or observance by the Trust Depositor

or the Servicer of each of their obligations to the Issuer thereunder and to

give any consent, request, notice, direction, approval, extension or waiver

under the Transfer Agreement and the Transfer and Servicing Agreement, and any

right of the Issuer to take such action shall be suspended.

 

51

 

ARTICLE VI

 

THE INDENTURE TRUSTEE

 

Section 6.01                            Duties of Indenture Trustee.

 

(a)           If an Event of Default has occurred and is continuing, the

Indenture Trustee shall exercise the rights and powers vested in it by this

Indenture and use the same degree of care and skill in their exercise as a

prudent person would exercise or use under the circumstances in the conduct of

such person’s own affairs with respect to the Indenture Collateral.

 

(b)           Except during the continuance of an Event of Default:

 

(i)            the Indenture Trustee undertakes to

perform such duties and only such duties as are specifically set forth in this

Indenture and no implied covenants or obligations shall be read into this

Indenture against the Indenture Trustee; and

 

(ii)           in the absence of bad faith on its

part, the Indenture Trustee may conclusively rely, as to the truth of the

factual statements and the correctness of the opinions expressed therein, upon

certificates or opinions furnished to the Indenture Trustee and conforming to

the requirements of this Indenture; however, the Indenture Trustee shall

examine the certificates and opinions to determine whether or not they conform

to the requirements of this Indenture and the other Transaction Documents to

which the Indenture Trustee is a party.

 

(c)           The Indenture Trustee may not be relieved from liability

for its own negligent action, its own negligent failure to act or its own

willful misconduct, except that:

 

(i)            this paragraph does not limit the

effect of subsection 6.01(b);

 

(ii)           the Indenture Trustee shall not be

liable for any error of judgment made in good faith by a Responsible Officer

unless it is proved that the Indenture Trustee was negligent in ascertaining

the pertinent facts; and

 

(iii)          the Indenture Trustee shall not be

liable with respect to any action it takes or omits to take in good faith in

accordance with a direction received by it pursuant to Section 5.12.

 

(d)           Every provision of this Indenture that in any way relates

to the Indenture Trustee is subject to subsections 6.01(a), (b)

and (c).

 

(e)           Money held in trust by the Indenture Trustee need not be

segregated from other funds except to the extent required by law or the terms

of this Indenture or the Transfer and Servicing Agreement.

 

52

 

(f)            No provision of this Indenture shall require the

Indenture Trustee to expend or risk its own funds or otherwise incur financial

liability in the performance of any of its duties hereunder or in the exercise

of any of its rights or powers, if it shall have reasonable grounds to believe

that repayments of such funds or indemnity satisfactory to it against such risk

or liability is not reasonably assured to it.

 

(g)           The Indenture Trustee shall have no discretionary duties

other than those explicitly set forth in this Indenture.

 

(h)           Every provision of this Indenture relating to the conduct

or affecting the liability of or affording protection to the Indenture Trustee

shall be subject to the provisions of this section and to the provisions of the

TIA.

 

Section 6.02                            Rights of Indenture Trustee.

 

(a)           The Indenture Trustee may conclusively rely on any

document believed by it to be genuine and to have been signed or presented by

the proper person.  The Indenture

Trustee need not investigate any fact or matter stated in the document.

 

(b)           Before the Indenture Trustee acts or refrains from acting,

it may require an Officer’s Certificate (with respect to factual matters) or an

Opinion of Counsel, as applicable. The Indenture Trustee shall not be liable

for any action it takes or omits to take in good faith in reliance on the

Officer’s Certificate or Opinion of Counsel.

 

(c)           The Indenture Trustee may execute any of the trusts or

powers hereunder or perform any duties hereunder either directly or by or

through agents or attorneys or a custodian or nominee, and the Indenture

Trustee shall not be responsible for any misconduct or negligence on the part

of, or for the supervision of, any such agent, attorney, custodian or nominee

appointed with due care by it hereunder.

 

(d)           The Indenture Trustee shall not be liable for any action

it takes or omits to take in good faith which it believes to be authorized or

within its rights or powers; provided, however, that the

Indenture Trustee’s conduct does not constitute willful misconduct, negligence

or bad faith.

 

(e)           The Indenture Trustee may consult with counsel, and the

advice or Opinion of Counsel with respect to legal matters relating to this

Indenture and the Notes shall be full and complete authorization and protection

from liability in respect to any action taken, omitted or suffered by it

hereunder in good faith and in accordance with the advice or opinion of such

counsel.

 

(f)            The Indenture Trustee shall be under no obligation to

institute, conduct or defend any litigation under this Indenture or in relation

to this Indenture, at the request, order or direction of any of the Holders of

Notes, pursuant to the provisions of this Indenture, unless such Holders of

Notes shall have offered to the Indenture Trustee security or indemnity satisfactory

to it against the costs, expenses and liabilities that may be incurred therein

or thereby; provided,

 

53

 

however, that the Indenture Trustee shall, upon the occurrence of an Event of

Default (that has not been cured), exercise the rights and powers vested in it

by this Indenture in a manner consistent with Section 6.01.

 

(g)           The Indenture Trustee shall not be bound to make any

investigation into the facts or matters stated in any resolution, certificate,

statement, instrument, opinion, report, notice, request, consent, order,

approval, bond or other paper or document, unless so requested in writing by

the Holders of Notes evidencing not less than 25% of the Outstanding Amount of

the Notes; provided, however, that if the payment within a

reasonable time to the Indenture Trustee of the costs, expenses or liabilities

likely to be incurred by it in the making of such investigation is, in the

opinion of the Indenture Trustee, not reasonably assured to the Indenture

Trustee by the security afforded to it by the terms of this Indenture or the

Transfer and Servicing Agreement, the Indenture Trustee may require indemnity

satisfactory to it against such cost, expense or liability as a condition to so

proceeding; the reasonable expense of every such examination shall be paid by

the Person making such request, or, if paid by the Indenture Trustee, shall be

reimbursed by the Person making such request upon demand.

 

(h)           The Indenture Trustee shall not be required to give any

bond or surety in respect of the performance of its powers and duties

hereunder.

 

(i)            The Indenture Trustee shall not be bound to ascertain or

inquire as to the performance or observance of any covenants, conditions or

agreements on the part of the Issuer.

 

(j)            The permissive rights of the Indenture Trustee to do

things enumerated in this Indenture shall not be construed as a duty and the

Indenture Trustee shall not be answerable for other than its negligence or

willful default.

 

(k)           Except for (i) a default under subsections 5.01(a)

or (b) hereof or (ii) any other event of which a Responsible

Officer of the Indenture Trustee has “actual knowledge” and which event, with

the giving of notice or the passage of time or both, would constitute an Event

of Default under this Indenture, the Indenture Trustee shall not be deemed to

have notice of any Event of Default or Servicer Default unless specifically

notified in writing of such event by the Issuer or any Noteholder; as used

herein, the term “actual knowledge” means the actual fact or statement of

knowing, by a Responsible Officer without any duty to make any investigation

with regard thereto.

 

(l)            In the event that the Indenture Trustee is also acting as

Paying Agent or Transfer Agent and Registrar hereunder, the rights and

protections afforded to the Indenture Trustee pursuant to this Article VI

shall also be afforded to such Paying Agent or Transfer Agent or Registrar.

 

(m)          In no event shall the Indenture Trustee be liable for the

selection of Eligible Investments or for investment losses incurred

thereon.  The Indenture Trustee shall

have no liability in respect of losses incurred as a result of the liquidation

of any such investment prior to its stated maturity or the failure of the party

directing such investment to provide timely written

 

54

 

investment direction.  The Indenture Trustee shall have no obligation to invest or

reinvest any amounts held hereunder in the absence of such written investment

direction.

 

Section 6.03                            Individual Rights of Indenture

Trustee.

 

The Indenture Trustee in its

individual or any other capacity may become the owner or pledgee of Notes and

may otherwise deal with the Issuer or its Affiliates with the same rights it

would have if it were not Indenture Trustee. 

Any Paying Agent, Note Registrar, co–registrar or co–paying agent may do

the same with like rights. However, the Indenture Trustee is required to comply

with Section 6.11.

 

Section 6.04                            Indenture Trustee’s Disclaimer.

 

The Indenture Trustee shall not

be responsible for and makes no representation as to the validity or adequacy

of this Indenture, the Indenture Collateral or the Notes, it shall not be

accountable for the Issuer’s use of the proceeds from the Notes, and it shall

not be responsible for any statement of the Issuer in this Indenture or in any

document issued in connection with the sale of the Notes or in the Notes other

than the Indenture Trustee’s certificate of authentication.

 

Section 6.05                            Notice of Defaults or Events of

Default.

 

If a Default or Event of Default

occurs and is continuing and if it is actually known to a Responsible Officer

of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder

and the Swap Counterparty notice of the Default or Event of Default within

ninety (90) days after it occurs. 

Except in the case of a Default or Event of Default with respect to the

payment of principal of or interest on any Note (including payments pursuant to

the redemption of such Notes), the Indenture Trustee may withhold the notice if

and so long as a committee of its Responsible Officers in good faith determines

that withholding the notice is in the interests of Noteholders and the Swap

Counterparties.

 

Section 6.06                            Reports by Indenture Trustee to

Holders.

 

The Indenture Trustee shall

deliver to each Noteholder such information as may be required to enable such

Holder to prepare its federal and state income tax returns.  In addition, upon the Issuer’s or a Holder’s

written request, the Indenture Trustee shall promptly furnish information

reasonably requested by the Issuer or such Holder that is reasonably available

to the Indenture Trustee to enable the Issuer or such Holder to perform its

federal and state income tax reporting obligations.

 

Section 6.07                            Compensation and Indemnity.

 

The Issuer shall pay or shall

cause the Administrator or Servicer to pay to the Indenture Trustee from time

to time reasonable compensation for its services as Indenture Trustee and as

Paying Agent (if the Indenture Trustee serves as such) to the extent such

compensation is not otherwise paid to the Indenture Trustee.  The Indenture Trustee’s compensation shall

not be limited by any law on compensation of a trustee of an express

trust.  The Issuer shall or shall

 

55

 

cause the Administrator or the Servicer to

reimburse the Indenture Trustee for all reasonable out–of–pocket expenses

incurred or made by it, including costs of collection, in addition to the

compensation for its services.  Such

expenses shall include the reasonable compensation and expenses, disbursements

and advances of the Indenture Trustee’s agents, counsel, accountants and

experts.  The Issuer shall indemnify or

shall cause the Administrator or the Servicer to indemnify the Indenture

Trustee against any and all loss, liability or expense (including attorneys’

fees and expenses) incurred by it in connection with the administration of this

Indenture and the performance of its duties hereunder, under the Transfer and

Servicing Agreement and any other document or transaction contemplated herewith

or therewith or as a Paying Agent for the Issuer.  The Indenture Trustee shall notify the Issuer and the

Administrator promptly of any claim for which it may seek indemnity.  Failure by the Indenture Trustee to so

notify the Issuer and the Administrator shall not relieve the Issuer or the

Administrator of its obligations hereunder. 

The Issuer shall defend or shall cause the Administrator or the Servicer

to defend any such claim, and the Indenture Trustee may have separate counsel

and the Issuer shall pay or shall cause the Administrator or the Servicer to

pay the fees and expenses of such counsel. 

Neither the Issuer nor the Administrator or the Servicer need reimburse

any expense or indemnify against any loss, liability or expense incurred by the

Indenture Trustee through the Indenture Trustee’s own willful misconduct,

negligence or bad faith.

 

The Issuer’s payment and

indemnification obligations to the Indenture Trustee pursuant to this Section

shall survive the discharge of this Indenture and the earlier removal or

resignation of the Indenture Trustee. 

When the Indenture Trustee incurs expenses after the occurrence of a Default

specified in subsections 5.01(j) and (k) with respect to the

Issuer, the expenses are intended to constitute expenses of administration

under applicable Insolvency Law.

 

Section 6.08                            Replacement of Indenture Trustee.

 

The Indenture Trustee may resign

at any time by so notifying the Issuer and the Servicer. The Issuer may remove

the Indenture Trustee if:

 

(i)            the Indenture Trustee fails to

comply with Section 6.11;

 

(ii)           a court having jurisdiction in the

premises in respect of the Indenture Trustee in an involuntary case or

proceeding under federal or state banking or bankruptcy laws, as now or

hereafter constituted, or any other applicable federal or state bankruptcy,

insolvency or other similar law, shall have entered a decree or order granting

relief or appointing a receiver, liquidator, assignee, custodian, trustee,

conservator, sequestrator (or similar official) for the Indenture Trustee or

for any substantial part of the Indenture Trustee’s property, or ordering the

winding–up or liquidation of the Indenture Trustee’s affairs, provided any such

decree or order shall have continued unstayed and in effect for a period of

thirty (30) consecutive days;

 

(iii)          the Indenture Trustee commences a

voluntary case under any federal or state banking or bankruptcy laws, as now or

hereafter constituted, or any other applicable federal or state bankruptcy,

insolvency or other similar law, or consents to the appointment of or taking

possession by a receiver, liquidator, assignee, custodian, trustee,

 

56

 

conservator, sequestrator or

other similar official for the Indenture Trustee or for any substantial part of

the Indenture Trustee’s property, or makes any assignment for the benefit of

creditors or fails generally to pay its debts as such debts become due or takes

any corporate action in furtherance of any of the foregoing; or

 

(iv)          the Indenture Trustee otherwise

becomes incapable of acting.

 

If the Indenture Trustee resigns

or is removed or if a vacancy exists in the office of Indenture Trustee for any

reason (the Indenture Trustee in such event being referred to herein as the

retiring Indenture Trustee), the Issuer shall promptly appoint a successor

Indenture Trustee.

 

A successor Indenture Trustee

shall deliver a written acceptance of its appointment to the retiring Indenture

Trustee and to the Issuer.  Thereupon

the resignation or removal of the retiring Indenture Trustee shall become

effective, and the successor Indenture Trustee shall have all of the rights,

powers and duties of the Indenture Trustee under this Indenture.  No successor Indenture Trustee shall accept

appointment as provided in this Section 6.08 unless at the time of such

acceptance such Person shall be eligible under Section 6.11.  The Issuer or the successor Indenture

Trustee shall mail a notice of its succession to the Noteholders and the Swap

Counterparties (at their addresses shown in the register kept by the Issuer,

and provided to the Indenture Trustee). 

The retiring Indenture Trustee shall promptly transfer, at the expense

of the Issuer, all property held by it as Indenture Trustee to the successor

Indenture Trustee and shall execute and deliver such instruments and other

documents as may reasonably be required to more fully and certainly vest and

confirm in the successor Indenture Trustee all such rights, duties, powers and

obligations.

 

If a successor Indenture Trustee

does not take office within sixty (60) days after the retiring Indenture

Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or

the Holders of a majority in Outstanding Amount of the Notes may petition any

court of competent jurisdiction for the appointment of a successor Indenture

Trustee.

 

If the Indenture Trustee fails

to comply with Section 6.11, any Noteholder may petition any court

of competent jurisdiction for the removal of the Indenture Trustee and the

appointment of a successor Indenture Trustee.

 

Any resignation or removal of

the Indenture Trustee and appointment of a successor Indenture Trustee pursuant

to any of the provisions of this Section shall not become effective until

acceptance of appointment by the successor Indenture Trustee pursuant to this Section

6.08 and payment of all fees and expenses owed to the outgoing Indenture

Trustee.  Notwithstanding the

replacement of the Indenture Trustee pursuant to this Section 6.08,

the retiring Indenture Trustee shall be entitled to payment or reimbursement of

such amounts as such Person is entitled pursuant to Section 6.07.

 

Section 6.09                            Successor Indenture Trustee by

Merger.

 

If the Indenture Trustee

consolidates with, merges or converts into, or transfers all or substantially

all of its corporate trust business or assets to, another corporation or

banking

 

57

 

association, the resulting, surviving or

transferee corporation without any further act shall be the successor Indenture

Trustee; provided,

that,

such corporation or banking association shall be otherwise qualified and

eligible under Section 6.11. 

The Indenture Trustee shall provide each Rating Agency and the Swap

Counterparties prompt notice of any such transaction.

 

In case at the time such

successor or successors by merger, conversion or consolidation to the Indenture

Trustee shall succeed to the trusts created by this Indenture any of the Notes

shall have been authenticated but not delivered, any such successor to the

Indenture Trustee may adopt the certificate of authentication of any

predecessor Indenture Trustee, and deliver such Notes so authenticated; and in

case at that time any of the Notes shall not have been authenticated, any

successor to the Indenture Trustee may authenticate such Notes either in the

name of any predecessor hereunder or in the name of the successor to the

Indenture Trustee; and in all such cases such certificates shall have the full

force which it is anywhere in the Notes or in this Indenture provided that the

certificate of the Indenture Trustee shall have.

 

Section 6.10                            Appointment of Co–Indenture

Trustee or Separate Indenture Trustee.

 

(a)           Notwithstanding any other provision of this Indenture, at

any time, for the purpose of meeting any legal requirement of any jurisdiction

in which any part of the Indenture Collateral may at the time be located, the

Indenture Trustee and the Administrator acting jointly shall have the power and

may execute and deliver all instruments to appoint one or more Persons to act

as a co–Indenture Trustee or co–Indenture Trustees, jointly with the Indenture

Trustee, or separate Indenture Trustee or separate Indenture Trustees, of all

or any part of the Trust, and to vest in such Person or Persons, in such

capacity and for the benefit of the Noteholders and the Swap Counterparties,

such title to the Indenture Collateral, or any part hereof, and, subject to the

other provisions of this Section, such powers, duties, obligations, rights and

trusts as the Indenture Trustee and the Administrator may consider necessary or

desirable.  If the Administrator shall

not have joined in such appointment within fifteen (15) days after the receipt

by it of a request so to do, the Indenture Trustee alone shall have the power

to make such appointment.  No

co–Indenture Trustee or separate Indenture Trustee hereunder shall be required

to meet the terms of eligibility of a successor Indenture Trustee under Section 6.11

and no notice to Noteholders or Swap Counterparties of the appointment of any

co–Indenture Trustee or separate Indenture Trustee shall be required under Section 6.08.  If the Indenture Trustee is incompetent or

unqualified in any jurisdiction to perform as required by this Indenture, all

rights, powers, duties and obligations conferred or imposed upon the Indenture

Trustee shall be conferred or imposed upon such separate Indenture Trustee or

co–Indenture Trustee who shall exercise and perform such rights, powers, duties

and obligations solely at the direction of the Indenture Trustee.

 

(b)           Every separate Indenture Trustee and co–Indenture Trustee

shall, to the extent permitted by law, be appointed and act subject to the

following provisions and conditions:

 

(i)            all rights, powers, duties and

obligations conferred or imposed upon the Indenture Trustee shall be conferred

or imposed upon and exercised or performed by the Indenture Trustee and such

separate Indenture Trustee or co–Indenture Trustee jointly (it

 

58

 

being understood that such

separate Indenture Trustee or co–Indenture Trustee is not authorized to act

separately without the Indenture Trustee joining in such act), except to the

extent that under any law of any jurisdiction in which any particular act or

acts are to be performed the Indenture Trustee shall be incompetent or

unqualified to perform such act or acts, in which event such rights, powers,

duties and obligations (including the holding of title to the Trust or any

portion thereof in any such jurisdiction) shall be exercised and performed

singly by such separate Indenture Trustee or co–Indenture Trustee, but solely

at the direction of the Indenture Trustee;

 

(ii)           no Indenture Trustee hereunder shall

be personally liable by reason of any act or omission of any other Indenture

Trustee hereunder; and

 

(iii)          the Indenture Trustee and the

Administrator may at any time accept the resignation of or remove any separate

Indenture Trustee or co–Indenture Trustee.

 

(c)           Any notice, request or other writing given to the

Indenture Trustee shall be deemed to have been given to each of the then

separate Indenture Trustees and co–Indenture Trustees, as effectively as if

given to each of them.  Every instrument

appointing any separate Indenture Trustee or co–Indenture Trustee shall refer

to this Indenture and the conditions of this Article.  Each separate Indenture Trustee and co–Indenture Trustee, upon

its acceptance of the trusts conferred, shall be vested with the estates or

property specified in its instrument of co–appointment, either jointly with the

Indenture Trustee or separately, as may be provided therein, subject to all of

the provisions of this Indenture, specifically including every provision of

this Indenture relating to the conduct of, affecting the liability of or

affording protection to, the Indenture Trustee.  Every such instrument shall be filed with the Indenture Trustee

and a copy thereof given to the Administrator.

 

(d)           Any separate Indenture Trustee or co–Indenture Trustee may

at any time constitute the Indenture Trustee, its agent or attorney–in–fact

with full power and authority, to the extent not prohibited by law, to do any

lawful act under or in respect of this Agreement on its behalf and in its

name.  If any separate Indenture Trustee

or co–Indenture Trustee shall die, become incapable of acting, resign or be

removed, all of its estates, properties, rights, remedies and trusts shall vest

in and be exercised by the Indenture Trustee, to the extent permitted by law,

without the appointment of a new or successor Indenture Trustee.  Notwithstanding anything to the contrary in

this Indenture, the appointment of any separate Indenture Trustee or co–Indenture

Trustee shall not relieve the Indenture Trustee of its obligations and duties

under this Indenture.

 

Section 6.11                            Eligibility.

 

The Indenture Trustee shall at

all times satisfy the requirements of TIA §310(a).  The Indenture Trustee hereunder shall at all

times be a financial institution organized and doing business under the laws of

the United States or any state, authorized under such laws to exercise

corporate trust powers, whose long term unsecured debt is rated at least Baa3

by Moody’s, BBB– by S&P and BBB– by Fitch (if rated by Fitch) and shall

have a combined capital and surplus of at least $50,000,000 or shall be a

member of a bank holding system the aggregate combined capital and surplus of

which is $50,000,000 and subject to supervision or examination

 

59

 

by federal or state authority; provided,

that,

the Indenture Trustee’s separate capital and surplus shall at all times be at

least the amount required by Section 310(a)(2) of the TIA.  If such Person publishes reports of condition

at least annually, pursuant to law or to the requirements of a supervising or

examining authority, then for the purposes of this Section 6.11,

the combined capital and surplus of such Person shall be deemed to be its

combined capital and surplus as set forth in its most recent report of

condition so published. In case at any time the Indenture Trustee shall cease

to be eligible in accordance with the provisions of this Section 6.11,

the Indenture Trustee shall resign immediately in the manner and with the

effect specified in Section 6.08. 

The Indenture Trustee shall comply with TIA §310(b); provided,

however,

that there shall be excluded from the operation of TIA §310(b)(1) any

indenture or indentures under which other securities of the Issuer are outstanding

if the requirements for such exclusion set forth in TIA §310(b)(1) are

met.

 

Section 6.12                            Preferential Collection of

Claims Against Issuer.

 

The Indenture Trustee shall

comply with TIA §311(a), excluding any creditor relationship listed in

TIA §311(b).  An Indenture Trustee

who has resigned or been removed shall be subject to TIA §311(a) to the

extent indicated.

 

Section 6.13                            Representations and Warranties

of Indenture Trustee.

 

The Indenture Trustee in its

individual capacity and as Indenture Trustee represents and warrants as

follows:

 

(a)           Organization and Corporate Power.  It is a duly organized and validly existing

national banking association in good standing under the laws of each

jurisdiction where its business so requires. 

It has full corporate power, authority and legal right to execute,

deliver and perform its obligations as Indenture Trustee under this Indenture

and the Transfer and Servicing Agreement (the foregoing documents, the “Indenture

Trustee Documents”) and to authenticate the Notes.

 

(b)           Due Authorization. 

The execution and delivery of the Indenture Trustee Documents, the

consummation of the transactions provided for therein and the authentication of

the Notes have been duly authorized by all necessary corporate action on its

part, either in its individual capacity or as Indenture Trustee, as the case

may be.

 

(c)           No Conflict. 

The execution and delivery of the Indenture Trustee Documents, the

performance of the transactions contemplated thereby and the fulfillment of the

terms thereof (including the authentication of the Notes) will not conflict

with, result in any breach of any of the material terms and provisions of, or

constitute (with or without notice or lapse of time or both) a default under,

any indenture, contract, agreement, mortgage, deed of trust, or other

instrument to which the Indenture Trustee is a party or by which it or any of

its property is bound.

 

(d)           No Violation. 

The execution and delivery of the Indenture Trustee Documents, the

performance of the transactions contemplated thereby and the fulfillment of the

terms thereof

 

60

 

(including the authentication of the Notes) will

not conflict with or violate, in any material respect, any Requirements of Law

applicable to the Indenture Trustee.

 

(e)           All Consents Required.  All approvals, authorizations, consents, orders or other actions

of any Person or any Governmental Authority applicable to the Indenture

Trustee, required in connection with the execution and delivery of the

Indenture Trustee Documents, the performance by the Indenture Trustee of the

transactions contemplated thereby and the fulfillment by the Indenture Trustee

of the terms thereof (including the authentication of the Notes), have been

obtained.

 

(f)            Validity, Etc. 

Each Indenture Trustee Document constitutes a legal, valid and binding

obligation of the Indenture Trustee, enforceable against the Indenture Trustee

in accordance with its terms, except as such enforceability may be limited by

Insolvency Laws and except as such enforceability may be limited by general

principles of equity, concepts of materiality and reasonableness (whether

considered in a suit at law or in equity) or by an implied covenant of good

faith and fair dealing.

 

Section 6.14                            Directions to Indenture Trustee.

 

The Indenture Trustee is hereby

directed:

 

(i)            to accept a collateral assignment of

the Loans and hold the assets of the Indenture Collateral as security for the

Noteholders and Swap Counterparties;

 

(ii)           to authenticate and deliver the Notes

substantially in the form prescribed by Exhibit A in accordance

with the terms of this Indenture;

 

(iii)          to execute and deliver the Transaction

Documents to which it is a party; and

 

(iv)          to take all other actions as shall be

required to be taken by the terms of this Indenture.

 

Section 6.15                            Conflicts.

 

If a Default occurs and is continuing and the

Indenture Trustee is deemed to have a “conflicting interest” (as defined in the

TIA) as a result of acting as trustee for both the Class A Notes and the Class

B Notes and the Class C Notes, the Issuer shall appoint a successor Indenture

Trustee for the Class A Notes and the Class B Notes and a successor for the

Class C Notes so that there will be separate Indenture Trustees for the Class A

Notes and the Class B Notes on the one hand, and for the Class C Notes on the

other hand.  No such event shall alter

the voting rights of the Noteholders under this Indenture or under any of the

other Transaction Documents.

 

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ARTICLE VII

 

NOTEHOLDERS’ LISTS AND REPORTS

 

Section 7.01                            Issuer to Furnish Indenture

Trustee Names and Addresses of Noteholders.

 

The Issuer will furnish or cause

to be furnished to the Indenture Trustee (i) not more than five (5) days

after the earlier of (a) each Record Date and (b) three (3) months

after the last Record Date, a list, in such form as the Indenture Trustee may

reasonably require, of the names and addresses of the Noteholders as of such

Record Date and (ii) at such other times as the Indenture Trustee may

request in writing, within thirty (30) days after receipt by the Issuer of any

such request, a list of similar form and content as of a date not more than ten

(10) days prior to the time such list is furnished; provided, however,

that so long as the Indenture Trustee is the Note Registrar, no such list shall

be required to be furnished.

 

Section 7.02                            Preservation of Information:

Communication to Noteholders.

 

(a)           The Indenture Trustee shall preserve, in as current a form

as is reasonably practicable, the names and addresses of the Noteholders

contained in the most recent list furnished to the Indenture Trustee as

provided in Section 7.01 and the names and addresses of Noteholders

received by the Indenture Trustee in its capacity as Note Registrar and shall

otherwise comply with TIA §312(a). 

The Indenture Trustee may destroy any list furnished to it as provided

in such Section 7.01 upon receipt of a new list so furnished.

 

(b)           Noteholders may communicate pursuant to TIA §312(b) with

other Noteholders with respect to their rights under this Indenture or under

the Notes.

 

(c)           The Issuer, the Indenture Trustee and the Note Registrar

shall have the protection of TIA §312(c).

 

Section 7.03                            Reports by Issuer.

 

(a)           The Issuer shall:

 

(i)            file with the Indenture Trustee,

within fifteen (15) days after the Issuer is required (if at all) to file the

same with the Commission, copies of the annual reports and of the information,

documents and other reports (or copies of such portions of any of the foregoing

as the Commission may from time to time by rules and regulations prescribe)

that the Issuer may be required to file with the Commission pursuant to

Section 13 or 15(d) of the Exchange Act;

 

(ii)           file with the Indenture Trustee and

the Commission in accordance with rules and regulations prescribed from time to

time by the Commission such additional information, documents and reports with

respect to compliance by the Issuer with the

 

62

 

conditions and covenants of this

Indenture as may be required from time to time by such rules and regulations;

 

(iii)          supply to the Indenture Trustee (and

the Indenture Trustee shall transmit by mail to all Noteholders described in

TIA §313(c) and the Swap Counterparties) such summaries of any

information, documents and reports required to be filed by the Issuer pursuant

to clauses (i) and (ii) of this subsection 7.03(a)

and by rules and regulations prescribed from time to time by the Commission.

 

(b)           Unless the Issuer otherwise determines, the fiscal year of

the Issuer shall end on March 31 of each year.

 

Section 7.04                            Reports by Indenture Trustee.

 

(a)           If required by TIA §313(a), within sixty (60) days

after January 31 beginning with January 31, 2003, the Indenture

Trustee shall mail to each Noteholder as required by TIA §313(c) and each

Swap Counterparty a brief report dated as of such date that complies with TIA

§313(a).  The Indenture Trustee also

shall comply with TIA §313(b).

 

A copy of each report at the

time of its mailing to Noteholders and each Swap Counterparty shall be filed by

the Issuer, or the Trust Depositor on the Issuer’s behalf, with the Commission

and each stock exchange, if any, on which the Notes are listed.  The Issuer shall notify the Indenture

Trustee in writing if and when the Notes are listed on any stock exchange.

 

The Indenture Trustee shall mail

to each Noteholder within a reasonable period of time after the end of each

calendar year, but in no event later than February 28, commencing in February,

2003, a Form 1099 under the Code with respect to amounts paid to such

Noteholder with respect to the Notes during the immediately preceding calendar

year ending December 31.

 

(b)           The Indenture Trustee shall forward by mail to each

Noteholder and the Swap Counterparties the statements delivered to it pursuant

to Article IX of the Transfer and Servicing Agreement except for

the Monthly Report.  The Indenture

Trustee may make available to the Noteholders, the Swap Counterparties and to

the parties to the Transaction Documents and the Rating Agencies, via the

Indenture Trustee’s Internet website, each Monthly Report and, with the consent

or at the direction of the Trust Depositor, such other information regarding

the Notes and/or the Loans as the Indenture Trustee may have in its possession,

but only with the use of a password provided by the Indenture Trustee or its

agent to such Person upon receipt by the Indenture Trustee from such Person of

a certification in the form of Exhibit I; provided, however,

that the Indenture Trustee or its agent shall provide such password to the Swap

Counterparties and to the parties to the Transaction Documents and the Rating

Agencies without requiring such certification.

 

The Indenture Trustee’s Internet website shall be

initially located at “www.ABSNet.net” or at such other address as shall be

specified by the Indenture Trustee from time to time in writing to the

Noteholders and the Swap Counterparties, the parties to the Transaction

Documents and the Rating Agencies.  In

connection with providing access to the Indenture

 

63

 

Trustee’s Internet website, the Indenture Trustee may (other than with

respect to the Swap Counterparties and the parties to the Transaction Documents

and the Rating Agencies) require registration and the acceptance of a

disclaimer.  The Indenture Trustee shall

not be liable for the dissemination of information in accordance with this

Agreement.

 

ARTICLE VIII

 

ACCOUNTS, DISBURSEMENTS AND

RELEASES

 

Section 8.01                            Collection of Money.

 

Except as otherwise expressly

provided herein, the Indenture Trustee may demand payment or delivery of, and

shall receive and collect, directly and without intervention or assistance of

any fiscal agent or other intermediary, all money and other property payable to

or receivable by the Indenture Trustee pursuant to this Indenture and the

Transfer and Servicing Agreement.  The

Indenture Trustee shall apply all such money received by it as provided in this

Indenture.  Except as otherwise

expressly provided in this Indenture, if any default occurs in the making of

any payment or performance under any agreement or instrument that is part of

the Indenture Collateral, the Indenture Trustee may take such action as may be

appropriate to enforce such payment or performance, including the institution

and prosecution of appropriate Proceedings. 

Any such action shall be without prejudice to any right to claim a

Default or Event of Default under this Indenture and any right to proceed

thereafter as provided in Article V.

 

Section 8.02                            Trust Accounts.

 

(a)           On or prior to the Closing Date, the Issuer shall cause

the Servicer to establish and maintain, with the Indenture Trustee and in the

name of the Indenture Trustee, for the benefit of the Noteholders, the Swap

Counterparties, and the Certificateholders, the Trust Accounts as provided in Section 7.01

of the Transfer and Servicing Agreement.

 

(b)           On or before each Payment Date, all amounts required to be

disbursed to the Indenture Trustee with respect to the preceding Collection

Period pursuant to Section 7.01 of the Transfer and Servicing

Agreement will be transferred from the Collection Account and/or the Reserve

Fund and deposited by the Indenture Trustee upon receipt to the Note

Distribution Account.

 

(c)           On each Determination Date prior to the occurrence of an

Event of Default or the occurrence and continuance of a Class A Trigger or

Class B Trigger, the Servicer shall instruct the Indenture Trustee in

writing to withdraw, and on the related Payment Date the Indenture Trustee

shall withdraw, from the Interest Collection Account and the Reserve Fund all

amounts (to the extent there are sufficient funds available) to make payments

as provided in subsection 7.05(a) of the Transfer and Servicing Agreement.

 

(d)           On each Determination Date after the occurrence and

continuance of an Event of Default or the occurrence and continuance of a

Class A Trigger or Class B Trigger, the Servicer

 

64

 

shall instruct the Indenture Trustee in writing

to withdraw, and on the related Payment Date the Indenture Trustee shall

withdraw, from the Interest Collection Account and the Reserve Fund all amounts

(to the extent there are sufficient funds available) to make payments as

provided in Section 7.05(b) of the Transfer and Servicing

Agreement.

 

(e)           On each Determination Date, the Servicer shall instruct

the Indenture Trustee in writing to withdraw, and on the related Payment Date

the Indenture Trustee shall withdraw, from the Principal Collection Account all

amounts (to the extent there are sufficient funds available) to make payments

as provided in subsection 7.05(c) of the Transfer and Servicing

Agreement.

 

(f)            If on any Payment Date, the aggregate amounts on deposit

in the Collection Account and the Reserve Fund are greater than or equal to the

sum of (i) the Aggregate Outstanding Principal Balance, (ii) the

interest accrued thereon, (iii) any accrued and unpaid Servicing Fee,

(iv) unreimbursed Servicer Advances, (v) amounts owed to the

Indenture Trustee, the Backup Servicer and the Owner Trustee, and

(vi) amounts owed to the Swap Counterparties, including Swap Breakage

Costs, the amounts on deposit in the Reserve Fund will be deposited in the

Collection Account and used to redeem the Notes in full.  The redemption price will be equal to the

unpaid principal amount of the Notes plus accrued and unpaid interest through

the date of redemption.  It shall be a

condition to such redemption that all Swap Transactions then outstanding under

all Swaps then in effect be terminated and all amounts payable upon such

termination to the Swap Counterparties have been paid in full.

 

Section 8.03                            General Provisions Regarding

Accounts.

 

(a)           So long as no Default or Event of Default shall have

occurred and be continuing, all or a portion of the funds in the Trust Accounts

(other than any Swap Collateral accounts) shall be invested in accordance with

the provisions of Section 7.03 of the Transfer and Servicing

Agreement.  Except as otherwise provided

in Section 7.03 of the Transfer and Servicing Agreement, all income

or other gain from investments of moneys deposited in such Trust Accounts shall

be deposited by the Indenture Trustee in the Collection Account, and any loss

resulting from such investments shall be charged to the related Trust

Account.  The Issuer will not direct the

Indenture Trustee or permit the Servicer to make any investment of any funds or

to sell any investment held in any of the Trust Accounts unless the security

interest granted and perfected in such account will continue to be perfected in

such investment or the proceeds of such sale, in either case without any

further action by any Person, and, in connection with any direction to the

Indenture Trustee to make any such investment or sale, if requested by the

Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion

of Counsel, acceptable to the Indenture Trustee, to such effect.

 

(b)           Subject to subsection 6.01(c), the Indenture

Trustee shall not in any way be held liable by reason of any insufficiency in

any of the Trust Accounts resulting from any loss on any Eligible Investment

included therein except for losses attributable to the Indenture Trustee’s

failure to make payments on such Eligible Investments issued by the Indenture

Trustee, in its commercial capacity as principal obligor and not as Indenture

Trustee, in accordance with their terms.

 

65

 

(c)           If (i) the Issuer or the Servicer shall have failed

to give written investment directions for any funds on deposit in the Trust

Accounts to the Indenture Trustee by 11:00 a.m., New York City time (or

such other time as may be agreed by the Issuer or the Servicer and Indenture

Trustee), on any Business Day or (ii) a Default or Event of Default shall

have occurred and be continuing with respect to the Notes but the Notes shall

not have been declared due and payable pursuant to Section 5.02 or

(iii) if such Notes shall have been declared due and payable following an

Event of Default, but amounts collected or receivable from the Indenture

Collateral are being applied in accordance with Section 5.06 as if

there had not been such a declaration, then the Indenture Trustee shall invest

funds in the Trust Accounts in investments meeting the requirements of clause (vi)

of the definition of Eligible Investment in the Transfer and Servicing

Agreement and shall promptly notify the Issuer.  The Indenture Trustee shall have no responsibility for losses on

investments made in accordance with this subsection 8.03(c), and

all income and losses shall be for the account of the related Trust Account.

 

Section 8.04                            Release of Indenture Collateral.

 

(a)           Subject to the payment of its fees and expenses pursuant

to Section 6.07, the Indenture Trustee may, and when required by

the provisions of this Indenture or the Transfer and Servicing Agreement shall,

execute instruments to release property from the lien of this Indenture, or

convey the Indenture Trustee’s interest in the same, in a manner and under

circumstances that are not inconsistent with the provisions of this

Indenture.  No party relying upon an

instrument executed by the Indenture Trustee as provided in this

Article shall be bound to ascertain the Indenture Trustee’s authority,

inquire into the satisfaction of any conditions precedent or see to the

application of any moneys.

 

(b)           The Indenture Trustee shall, at such time as

(i) there are no Notes Outstanding, (ii) all outstanding Swap

Transactions under all Swaps then in effect have been terminated and all

payments payable to the Swap Counterparties in connection with such termination

have been paid in full, and (iii) all sums due the Indenture Trustee

pursuant to Section 6.07 have been paid, release any remaining

portion of the Indenture Collateral that secured the Notes from the lien of

this Indenture without representation, warranty or recourse and release to the

Issuer or any other Person entitled thereto any funds then on deposit in the

Trust Accounts.  The Indenture Trustee

shall release property from the lien of this Indenture pursuant to this subsection 8.04(b)

only upon receipt of an Issuer Request accompanied by an Officer’s Certificate,

an Opinion of Counsel and (if required by the TIA as so stated in the Opinion

of Counsel) Independent Certificates in accordance with TIA §§314(c) and

314(d)(1) and in each case meeting the applicable requirements of Section 11.01.

 

Section 8.05                            Opinion of Counsel.

 

The Indenture Trustee shall

receive at least seven (7) days prior written notice when requested by the

Issuer to take any action pursuant to subsection 8.04(a),

accompanied by copies of any instruments involved, and the Indenture Trustee

shall also require, as a condition to such action, an Opinion of Counsel, in

form and substance satisfactory to the Indenture Trustee, stating the legal

effect of any such action, outlining the steps required to complete the same,

and concluding that all conditions precedent to the taking of such action have

been complied with

 

66

 

and such action will not materially and adversely

impair the security for the Notes or the Swaps or the rights of the Noteholders

or the Swap Counterparties in contravention of the provisions of this

Indenture; provided, that, notwithstanding the foregoing,

no Opinion of Counsel shall be required hereunder (i) to release the lien

of this Indenture on any Collateral related to a Loan that has been repaid in

full (including a repayment in full at less than the full principal amount, if

permitted under subsection 5.05(b)), (ii) to release the lien

of this Indenture on any Collateral the interest of the Trust in which is

created by a subordinated lien in connection with the foreclosure of a senior

lien that is a Permitted Lien or (iii) to release the lien of this

Indenture on any Collateral the interest of the Trust in which is created by a

senior lien (not subject to a subordination agreement) if the value of such

Collateral being released is less than 25% of the total value of the Collateral

as of the date such Collateral became subject to the lien of this Indenture; provided,

further,

that,

such Opinion of Counsel shall not be required to express an opinion as to the

fair value of the Indenture Collateral. 

Counsel rendering any such opinion may rely, without independent

investigation, on the accuracy and validity of any certificate or other

instrument delivered to the Indenture Trustee in connection with any such

action.

 

ARTICLE IX

 

SUPPLEMENTAL INDENTURES

 

Section 9.01                            Supplemental Indentures Without

Consent of Noteholders.

 

Without the consent of the

Holders of any Notes and with prior notice to each Rating Agency, the Issuer

and the Indenture Trustee, when authorized by an Issuer Order may enter into

one or more indentures supplemental hereto (which shall conform to the

provisions of the TIA as in force at the date of the execution thereof), in

form satisfactory to the Indenture Trustee, for any of the following purposes:

 

(i)            to correct or amplify the

description of any property at any time subject to the lien of this Indenture,

or better to assure, convey and confirm unto the Indenture Trustee any property

subject or required to be subjected to the lien created by this Indenture, or

to subject to the lien created by this Indenture additional property;

 

(ii)           to evidence the succession, in

compliance with the applicable provisions hereof, of another Person to the

Issuer, and the assumption by any such successor of the covenants of the Issuer

herein and in the Notes contained;

 

(iii)          to add to the covenants of the Issuer,

for the benefit of the Holders of the Notes, or to surrender any right or power

herein conferred upon the Issuer;

 

(iv)          to convey, transfer, assign, mortgage

or pledge any property to or with the Indenture Trustee;

 

(v)           to cure any ambiguity, to correct or

supplement any provision herein or in any supplemental indenture that may be

inconsistent with any other provision herein or in

 

67

 

any supplemental indenture or

the Transaction Documents or to make any other provisions with respect to

matters or questions arising under this Indenture or in any supplemental

indenture; 

 

(vi)          to evidence and provide for the

acceptance of the appointment hereunder by a successor Indenture Trustee with

respect to the Notes and to add to or change any of the provisions of this

Indenture as shall be necessary to facilitate the administration of the trusts

hereunder by more than one Indenture Trustee, pursuant to the requirements of Article VI;

and

 

(vii)         to modify, eliminate or add to the

provisions of this Indenture to such extent as shall be necessary to effect the

qualification of this Indenture under the TIA or under any similar federal

statute hereafter enacted and to add to this Indenture such other provisions as

may be expressly required by the TIA.

 

The Indenture Trustee is hereby

authorized to join in the execution of any such supplemental indenture and to

make any further appropriate agreements and stipulations that may be therein

contained.  Any amendment or

supplemental indenture entered into pursuant to this Section 9.01

shall not adversely affect the interests of the Holders of the Notes in any

material respect, as evidenced by an Opinion of Counsel delivered to the Indenture

Trustee.  The consent of each Swap

Counterparty will be required unless the Trust obtains an opinion of counsel

stating that the amendment does not adversely affect in any material respect

the interests of the Swap Counterparties.

 

Section 9.02                            Supplemental Indentures With

Consent of Noteholders.

 

The Issuer and the Indenture

Trustee, when authorized by an Issuer Order, also may, with prior notice to

each Rating Agency, and with the consent of the Required Holders and each Swap

Counterparty, by Act of such Holders delivered to the Issuer and the Indenture

Trustee, enter into an indenture or indentures supplemental hereto for the

purpose of adding any provisions to, or changing in any manner or eliminating

any of the provisions of, this Indenture or of modifying in any manner the

rights of the Holders of the Notes under this Indenture; provided, however,

that,

no such supplemental indenture shall, without the consent of the Holder of each

Outstanding Note and each Swap Counterparty:

 

(i)            reduce the amount or extend the time

of payment of any amount owing or payable under any Note;

 

(ii)           increase or reduce the interest

payable on any Note;

 

(iii)          alter or modify the provisions of the

Transfer and Servicing Agreement with respect to the order of priorities in

which Collections on the Loans shall be paid to Noteholders or with respect to

the amount or timing of payments on the Notes;

 

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(iv)          reduce, modify or amend any

indemnities in favor of any Noteholder or in favor of or to be paid by the

Trust Depositor, or alter the definition of the parties that are indemnified

hereunder to exclude any Noteholder;

 

(v)           make any interest or principal

payable in a currency other than U.S. dollars;

 

(vi)          permit the creation of any Lien on the

Loans senior to or on a parity with the lien of the Indenture or permit the

termination or derogation of the lien of the Indenture;

 

(vii)         modify, amend or supplement the

provisions of the Transfer and Servicing Agreement relating to amendments,

waivers and supplements to the Indenture, the Transfer and Servicing Agreement

or any other document; or

 

(viii)        modify the percentage of Noteholders

required to make any modification of the Indenture or to direct the Indenture

Trustee to sell or liquidate the Loans;

 

provided, that,

only the consent of the Holder of each Outstanding Note affected thereby shall

be required for any decrease in an amount of or the rate of interest payable on

the Note or any extension for the time of payment of any amount payable under

the Note or any reduction, modification or amendment of any indemnities in

favor of such Noteholder or in favor of or to be paid by the Trust Depositor,

or the alteration of the definition of “indemnified parties” to exclude such

Noteholder; provided, further, that, Section 3.27

of this Indenture shall not be amended without the consent of each Swap

Counterparty.

 

Neither the Issuer, the

Indenture Trustee nor any of their respective affiliates shall, directly or

indirectly, pay or cause to be paid any consideration, whether by way of

interest, fee or otherwise, to any Note Owner for or as an inducement to any

consent, waiver or amendment of any of the terms or provisions of this

Indenture, the Transfer and Servicing Agreement or the Notes unless such

consideration is offered to be paid to all Note Owners that so consent, waive

or agree to amend in the time frame set forth in solicitation documents

relating to such consent, waiver or agreement.

 

It shall not be necessary for

any Act of Noteholders, as herein defined, under this Section to approve the

particular form of any proposed supplemental indenture, but it shall be

sufficient if such Act shall approve the substance thereof.

 

Promptly after the execution by

the parties hereto of any supplemental indenture pursuant to this Section

9.02, the Indenture Trustee shall mail to the Swap Counterparties and to

the Holders of the Notes to which such amendment or supplemental indenture

relates a notice setting forth in general terms the substance of such

supplemental indenture.  Any failure of

the Indenture Trustee to mail such notice, or any defect therein, shall not,

however, in any way impair or affect the validity of any such supplemental

indenture.

 

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Section 9.03                            Execution of Supplemental

Indentures.

 

In executing, or permitting the

additional trusts created by, any supplemental indenture permitted by this

Article or the modifications thereby of the trusts created by this Indenture,

the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01

and 6.02 shall be fully protected in relying upon, an Opinion of Counsel

stating that the execution of such supplemental indenture is authorized or

permitted by this Indenture, that all conditions precedent to the execution of

such supplemental indenture have been met and that such actions shall not

adversely affect the interests of the Holders of the Notes in any material

respect.  The Indenture Trustee may, but

shall not be obligated to, enter into any such supplemental indenture that

affects the Indenture Trustee’s own rights, duties, liabilities or immunities

under this Indenture or otherwise.

 

Section 9.04                            Effect of Supplemental Indenture.

 

Upon the execution of any

supplemental indenture pursuant to the provisions hereof, this Indenture shall

be and be deemed to be modified and amended in accordance therewith with

respect to the Notes affected thereby, and the respective rights, limitations

of rights, obligations, duties, liabilities and immunities under this Indenture

of the parties hereto and the Holders of the Notes shall thereafter be

determined, exercised and enforced hereunder subject in all respects to such

modifications and amendments, and all of the terms and conditions of any such

supplemental indenture shall be and be deemed to be part of the terms and

conditions of this Indenture for any and all purposes.

 

Section 9.05                            [Reserved].

 

Section 9.06                            Reference in Notes to

Supplemental Indentures.

 

Notes authenticated and

delivered after the execution of any supplemental indenture pursuant to this

Article may, and if required by the Indenture Trustee shall, bear a notation in

form approved by the Indenture Trustee as to any matter provided for in such

supplemental indenture.  If the Issuer

or the Indenture Trustee shall so determine, new notes so modified as to

conform, in the opinion of the Indenture Trustee and the Issuer, to any such

supplemental indenture may be prepared and executed by the Issuer and

authenticated and delivered by the Indenture Trustee in exchange for

Outstanding Notes.

 

Section 9.07                            Special Supplemental Agreement.

 

If any party to this Indenture

is unable to sign any amendment or a supplement due to its dissolution, winding

up or comparable circumstances, then the consent of the Required Holders shall

be sufficient to amend this Agreement without such party’s consent.

 

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ARTICLE X

 

REDEMPTION OF NOTES

 

Section 10.01                     Redemption.

 

(a)           In the event that the assets of the Trust are sold

pursuant to Section 9.02 of the Trust Agreement or subsection 5.03(b)

of this Indenture, the proceeds of such sale shall be distributed as provided

in Section 5.06.  If amounts

are to be paid to Noteholders pursuant to this subsection 10.01(a), the

Servicer or the Issuer shall, to the extent practicable, furnish written notice

of such event to the Indenture Trustee and each Swap Counterparty not later

than twenty (20) days prior to the Redemption Date whereupon all such amounts

shall be payable on the Redemption Date. 

It shall be a condition to any such redemption that all Swap

Transactions outstanding under all Swaps then in effect be terminated and all

amounts, including Swap Breakage Costs, owed to the Swap Counterparties shall

be payable on the Redemption Date.

 

(b)           In the event

that on any Payment Date, the aggregate

amounts on deposit in the Collection Account and the Reserve Fund are greater

than or equal to the sum of

 

(i)            the Aggregate Outstanding Principal

Balance of the Notes;

 

(ii)           the interest accrued thereon;

 

(iii)          amounts owed to the Swap

Counterparties, including Swap Breakage Costs;

 

(iv)          any amounts owed to the Indenture

Trustee, the Backup Servicer and the Owner Trustee;

 

(v)           any accrued and unpaid Servicing Fee;

and

 

(vi)          unreimbursed Servicer Advances, the

Notes shall be redeemed in whole, but not in part, for a price equal to the

Redemption Date Amount.  The Redemption

Date Amount shall be paid from amounts on deposit in the Reserve Fund that will

be deposited by the Indenture Trustee into the Collection Account on the

related Redemption Date. If amounts are to

be paid to Noteholders pursuant to this subsection 10.01(b), the

Servicer or the Issuer shall, to the extent practicable, furnish written notice

of such event to the Indenture Trustee and to the Swap Counterparties not later

than twenty (20) days prior to the Redemption Date whereupon all such amounts

shall be payable on the Redemption Date. 

It shall be a condition to such redemption that all Swap Transactions then

outstanding under all Swaps then in effect be terminated and all amounts

payable upon such termination to the Swap Counterparties be paid in full.

 

71

 

Section 10.02                     Form of Redemption Notice.

 

Notice of redemption under Section 10.01

shall be given by the Indenture Trustee by first–class mail, postage prepaid,

mailed not less than five (5) days prior to the applicable Redemption Date to

each Holder of Notes, as of the close of business on the Record Date preceding

the applicable Redemption Date, at such Holder’s address appearing in the Note

Register.

 

All notices of redemption shall

state:

 

(i)            the Redemption Date;

 

(ii)           the Redemption Date Amount; and

 

(iii)          the place where such Notes are to be

surrendered for payment of the Redemption Date Amount (which shall be the

office or agency of the Issuer to be maintained as provided in Section 3.02).

 

Notice of redemption of the

Notes shall be given by the Indenture Trustee in the name and at the expense of

the Issuer.  Failure to give notice of

redemption, or any defect therein, to any Holder of any Note shall not impair

or affect the validity of the redemption of any other Note.

 

Section 10.03                     Notes Payable on Redemption Date.

 

The Notes to be redeemed shall,

following notice of redemption (if any) as required by Section 10.02,

on the Redemption Date become due and payable at the Redemption Date Amount and

(unless the Issuer shall default in the payment of the Redemption Date Amount)

no interest shall accrue on the Redemption Date Amount for any period after the

date to which accrued interest is calculated for purposes of calculating the

Redemption Date Amount.

 

ARTICLE XI

 

MISCELLANEOUS

 

Section 11.01                     Compliance Certificates and

Opinions, etc.

 

(a)           Upon any application or request by the Issuer to the

Indenture Trustee to take any action under any provision of this Indenture, the

Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate

stating that all conditions precedent, if any, provided for in this Indenture

relating to the proposed action have been complied with, (ii) an Opinion

of Counsel stating that in the opinion of such counsel all such conditions

precedent, if any, have been complied with, and (iii) (if required by the

TIA as so stated in the Opinion of Counsel) an Independent Certificate from a

firm of certified public accountants meeting the applicable requirements of

this Section and TIA §§314(c) and 314(d)(1), except that, in the case of

any such

 

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application or request as to which the furnishing

of such documents is specifically required by any provision of this Indenture,

no additional certificate or opinion need be furnished.

 

Every certificate or opinion

with respect to compliance with a condition or covenant provided for in this

Indenture shall include:

 

(i)            a statement that each signatory of

such certificate or opinion has read or has caused to be read such covenant or

condition and the definitions herein relating thereto;

 

(ii)           a brief statement as to the nature

and scope of the examination or investigation upon which the statements or

opinions contained in such certificate or opinion are based;

 

(iii)          a statement that, in the opinion of

each such signatory, such signatory has made such examination or investigation

as is necessary to enable such signatory to express an informed opinion as to

whether or not such covenant or condition has been complied with; and

 

(iv)          a statement as to whether, in the

opinion of each such signatory, such condition or covenant has been complied

with.

 

(b)           (i)            Prior

to the deposit of any Indenture Collateral or other property or securities with

the Indenture Trustee that is to be made the basis for authentication and

delivery of the Notes or the release of any property subject to the lien

created by this Indenture, the Issuer shall, in addition to any obligation

imposed in subsection 11.01(a) or elsewhere in this Indenture,

furnish to the Indenture Trustee an Officer’s Certificate certifying or stating

the opinion of the signer thereof as to the fair value (within ninety (90) days

of such deposit) to the Issuer of the Indenture Collateral or other property or

securities to be so deposited.

 

(ii)           Whenever the Issuer is required to

furnish to the Indenture Trustee an Officer’s Certificate certifying or stating

the opinion of any signer thereof as to the matters described in clause (i)

above, the Issuer shall also deliver to the Indenture Trustee an Independent

Certificate as to the named matters, if the fair value to the Issuer of the

property to be so deposited and of all other such property made the basis of

any such withdrawal or release since the commencement of the then current

fiscal year of the Issuer, as set forth in the certificates delivered pursuant

to clause (i) above and this clause (ii), is 10% or

more of the Outstanding Amount of the Notes, but such a certificate need not be

furnished with respect to any property so deposited, if the fair value thereof

to the Issuer as set forth in the related Officer’s Certificate is less than

$25,000 or less than one percent of the then Outstanding Amount of the Notes.

 

(iii)          Other than with respect to any release

described in clause (A) or (B) of subsection 11.01(b)(v),

whenever any property or securities are to be released from the lien created by

this Indenture, the Issuer shall also furnish to the Indenture Trustee an

 

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Officer’s Certificate certifying

or stating the opinion of each person signing such certificate as to the fair

value (within ninety (90) days of such release) of the property or securities

proposed to be released and stating that in the opinion of such person the

proposed release will not impair the security created by this Indenture in contravention

of the provisions hereof.

 

(iv)          Whenever the Issuer is required to

furnish to the Indenture Trustee an Officer’s Certificate certifying or stating

the opinion of any signer thereof as to the matters described in clause (iii)

above, the Issuer shall also furnish to the Indenture Trustee an Independent

Certificate as to the same matters if the fair value of the property or

securities and of all other property or securities (other than property

described in clauses (A) or (B) of subsection 11.01(b)(v))

released from the lien created by this Indenture since the commencement of the

then current fiscal year, as set forth in the certificates required by clause (iii)

above and this clause (iv), equals 10% or more of the Outstanding

Amount of the Notes, but such a certificate need not be furnished in the case

of any release of property or securities if the fair value thereof as set forth

in the related Officer’s Certificate is less than $25,000 or less than one

percent of the then Outstanding Amount of the Notes.

 

(v)           Notwithstanding any other provision

of this Section, the Issuer may, without compliance with the other provisions

of this Section, (A) collect, liquidate, sell or otherwise dispose of the

Loans as and to the extent permitted or required by the Transaction Documents,

(B) make cash payments out of the Trust Accounts as and to the extent

permitted or required by the Transaction Documents, so long as the Issuer shall

deliver to the Indenture Trustee every six (6) months, commencing February 1,

2003, an Officer’s Certificate stating that all the dispositions of Indenture

Collateral described in clauses (A) or (B) that occurred

during the preceding six (6) calendar months were in the ordinary course of the

Issuer’s business and that the proceeds thereof were applied in accordance with

the Transaction Documents.

 

Section 11.02                     Form of Documents Delivered to

Indenture Trustee.

 

In any case where several

matters are required to be certified by, or covered by an opinion of, any

specified Person, it is not necessary that all such matters be certified by, or

covered by the opinion of, only one such Person, or that they be so certified

or covered by only one document, but one such Person may certify or give an

opinion with respect to some matters and one or more other such Person as to

other matters, and any such Person may certify or give an opinion as to such

matters in one or several documents.

 

Any certificate or opinion of an

Authorized Officer of the Issuer may be based, insofar as it relates to legal matters,

upon a certificate or opinion of, or representations by, counsel, unless such

officer knows, or in the exercise of reasonable care should know, that the

certificate or opinion or representations with respect to the matters upon

which his certificate or opinion is based are erroneous.  Any such certificate of an Authorized

Officer or Opinion of Counsel may be based, insofar as it relates to factual

matters, upon a certificate or opinion of, or representations by, an officer or

officers of the Servicer, the Originator or the Issuer, stating that

 

74

 

the information with respect to such factual

matters is in the possession of the Servicer, the Originator or the Issuer,

unless such counsel knows, or in the exercise of reasonable care should know,

that the certificate or opinion or representations with respect to such matters

are erroneous.

 

Where any Person is required to

make, give or execute two (2) or more applications, requests, consents,

certificates, opinions or other instruments under this Indenture, they may, but

need not, be consolidated and form one instrument.

 

Whenever in this Indenture, in

connection with any application or certificate or report to the Indenture

Trustee, it is provided that the Issuer shall deliver any document as a

condition of the granting of such application, or as evidence of the Issuer’s

compliance with any term hereof, it is intended that the truth and accuracy, at

the time of the granting of such application or at the effective date of such

certificate or report (as the case may be), of the facts and opinions stated in

such document shall in such case be conditions precedent to the right of the

Issuer to have such application granted or to the sufficiency of such certificate

or report.  The foregoing shall not,

however, be construed to affect the Indenture Trustee’s right to conclusively

rely upon the truth and accuracy of any statement or opinion contained in any

such document as provided in Article VI.

 

Section 11.03                     Acts of Noteholders.

 

(a)           Any request, demand, authorization, direction, notice,

consent, waiver or other action provided by this Indenture to be given or taken

by the Noteholders may be embodied in and evidenced by one or more instruments

of substantially similar tenor signed by such Noteholders in person or by

agents duly appointed in writing; and except as herein otherwise expressly

provided such action shall become effective when such instrument or instruments

are delivered to the Indenture Trustee, and, where it is hereby expressly

required, to the Issuer.  Such

instrument or instruments (and the action embodied therein and evidenced

thereby) are herein sometimes referred to as the “Act” of the

Noteholders signing such instrument or instruments. Proof of execution of any

such instrument or of a writing appointing any such agent shall be sufficient

for any purpose of this Indenture and (subject to Section 6.01)

conclusive in favor of the Indenture Trustee and the Issuer, if made in the

manner provided in this Section.

 

(b)           The fact and date of the execution by any person of any

such instrument or writing may be proved in any manner that the Indenture

Trustee deems sufficient.

 

(c)           The ownership of Notes shall be proved by the Note

Register.

 

(d)           Any request, demand, authorization, direction, notice,

consent, waiver or other action by the Holder of any Notes shall bind the

Holder of every Note issued upon the registration thereof or in exchange

therefor or in lieu thereof, in respect of anything done, omitted or suffered

to be done by the Indenture Trustee or the Issuer in reliance thereon, whether

or not notation of such action is made upon such Note.

 

75

 

Section 11.04                     Notices.

 

All notices, demands,

certificates, requests and communications hereunder (“notices”) shall be

in writing and shall be effective (a) upon receipt when sent through the

U.S. mails, registered or certified mail, return receipt requested, postage

prepaid, with such receipt to be effective the date of delivery indicated on

the return receipt, or (b) one (1) Business Day after delivery to an

overnight courier, or (c) on the date personally delivered to, with

respect to the Indenture Trustee, a Responsible Officer or an Authorized Officer

of any other party to which sent, or (d) on the date transmitted by

legible telecopier transmission with a confirmation of receipt, in all cases

addressed to the recipient at the address specified in the Transfer and

Servicing Agreement for such recipient.

 

Each party hereto may, by notice

given in accordance herewith to each of the other parties hereto, designate any

further or different address to which subsequent notices shall be sent.

 

Section 11.05                     Notices to Noteholders; Waiver.

 

Where this Indenture provides

for notice to Noteholders of any event, such notice shall be sufficiently given

(unless otherwise herein expressly provided) if in writing and mailed,

first–class, postage prepaid to each Noteholder affected by such event, at his

address as it appears on the Note Register, not later than the latest date, and

not earlier than the earliest date, prescribed for the giving of such

notice.  In any case where notice to

Noteholders is given by mail, neither the failure to mail such notice nor any

defect in any notice so mailed to any particular Noteholder shall affect the

sufficiency of such notice with respect to other Noteholders, and any notice

that is mailed in the manner herein provided shall conclusively be presumed to

have been duly given.

 

Where this Indenture provides

for notice in any manner, such notice may be waived in writing by any Person

entitled to receive such notice, either before or after the event, and such

waiver shall be the equivalent of such notice. 

Waivers of notice by Noteholders shall be filed with the Indenture

Trustee but such filing shall not be a condition precedent to the validity of

any action taken in reliance upon such a waiver.

 

In case, by reason of the

suspension of regular mail service as a result of a strike, work stoppage or

similar activity, it shall be impractical to mail notice of any event to

Noteholders when such notice is required to be given pursuant to any provision

of this Indenture, then any manner of giving such notice as shall be

satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving

of such notice.

 

Where this Indenture provides

for notice to the Rating Agencies, failure to give such notice shall not affect

any other rights or obligations created hereunder, and shall not under any

circumstance constitute a Default or Event of Default.

 

76

 

Section 11.06                     Alternate Payment and Notice

Provisions.

 

Notwithstanding any provisions

of this Indenture or any of the Notes to the contrary, the Issuer may enter

into any agreement, with the consent of any Paying Agent, including the

Indenture Trustee if acting as Paying Agent, and the consent of the Indenture

Trustee with any Holder of a Note providing for a method of payment, or notice

by the Indenture Trustee or any Paying Agent to such Holder, that is different

from the methods provided for in this Indenture for such payments or

notices.  The Issuer will furnish to the

Indenture Trustee a copy of each such agreement and the Indenture Trustee will

cause payments to be made and notices to be given in accordance with such

agreements.

 

Section 11.07                     Effect of Headings and Table of

Contents.

 

The Article and Section headings

herein and the Table of Contents are for convenience only and shall not affect

the construction hereof.

 

Section 11.08                     Successors and Assigns.

 

All covenants and agreements in

this Indenture and the Notes by the Issuer shall bind its successors and

assigns, whether so expressed or not. 

All agreements of the Indenture Trustee in this Indenture shall bind its

successors, co–Indenture Trustees and agents.

 

Section 11.09                     Separability.

 

In case any provision in this

Indenture or in the Notes shall be invalid, illegal or unenforceable, the

validity, legality and enforceability of the remaining provisions shall not in

any way be affected or impaired thereby.

 

Section 11.10                     Benefits of Indenture.

 

Nothing in this Indenture or in

the Notes, express or implied, shall give to any Person, other than the parties

hereto and their successors hereunder, and the Noteholders, and any other party

secured hereunder (including the Swap Counterparties), and any other Person

with an ownership interest in any part of the Indenture Collateral, any benefit

or any legal or equitable right, remedy or claim under this Indenture.

 

Section 11.11                     Legal Holidays.

 

In any case where the date on

which any payment is due shall not be a Business Day, then (notwithstanding any

other provision of the Notes or this Indenture) payment need not be made on

such date, but may be made on the next succeeding Business Day with the same

force and effect as if made on the date on which nominally due, and no interest

shall accrue for the period from and after any such nominal date.

 

77

 

Section 11.12                     Governing Law.

 

(a)           THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE

LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE

PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

(b)           EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN

RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN

CONNECTION WITH THIS INDENTURE.  Each

party hereto (i) certifies that no representative, agent or attorney of

any other party has represented, expressly or otherwise, that such other party

would not, in the event of litigation, seek to enforce the foregoing waiver and

(ii) acknowledges that it and the other parties hereto have been induced

to enter into this Indenture by, among other things, the mutual waivers and

certifications in this subsection 11.12(b).

 

Section 11.13                     Counterparts.

 

This Indenture may be executed

in several counterparts, each of which shall be an original and all of which

shall constitute but one and the same instrument.

 

Section 11.14                     Recording of Indenture.

 

If this Indenture is subject to

recording in any appropriate public recording offices, such recording is to be

effected by the Issuer and at its expense accompanied by an Opinion of Counsel

(which may be counsel to the Indenture Trustee or any other counsel reasonably

acceptable to the Indenture Trustee) to the effect that such recording is

necessary either for the protection of the Noteholders or any other Person

secured hereunder or for the enforcement of any right or remedy granted to the

Indenture Trustee under this Indenture.

 

Section 11.15                     Trust Obligation.

 

No recourse may be taken,

directly or indirectly, with respect to the obligations of the Issuer, the

Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or

any certificate or other writing delivered in connection herewith or therewith,

against (i) the Indenture Trustee or the Owner Trustee in its individual

capacity, (ii) any owner of a beneficial interest in the Issuer or

(iii) any partner, owner, beneficiary, agent, officer, director, employee

or agent of the Indenture Trustee or the Owner Trustee in its individual

capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee

or the Indenture Trustee or of any successor or assign of the Indenture Trustee

or the Owner Trustee in its individual capacity, except as any such Person may

have expressly agreed (it being understood that the Indenture Trustee and the

Owner Trustee have no such obligations in their individual capacity) and except

that any such partner, owner or beneficiary shall be fully liable, to the

extent provided by applicable law, for any unpaid consideration for stock,

unpaid capital contribution or failure to pay any installment or call owing to

such entity.  For all purposes of this

Indenture, in the performance of any duties

 

78

 

or obligations of the Issuer hereunder, the Owner

Trustee shall be subject to, and entitled to the benefits of, the terms and

provisions of Article VI, VII and VIII of the Trust

Agreement.

 

First Union Trust Company,

National Association acts solely as Owner Trustee of the Trust hereunder and

not in its individual capacity, and all Persons having any claim against the

Trust by reason of the transactions contemplated by this Agreement or any other

Transaction Document shall look only to the Trust Estate for payment or

satisfaction thereof.  The Owner Trustee

shall at no time have any responsibility or liability for or with respect to

the legality, validity and enforceability of any Loan, or the perfection and

priority of any security interest created by any Loan in any Indenture

Collateral 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 the Noteholders hereunder, including, without

limitation, the existence, condition and ownership of any Indenture Collateral;

the existence and enforceability of any insurance thereon; the existence and

contents of any Loan on any computer or other record thereof; the validity of

the assignment of any Loan to the Trust or of any intervening assignment; the

completeness of any Loan; the performance or enforcement of any Loan; the

compliance by the Issuer, the Trust Depositor or the Servicer with any

covenant, agreement or other obligation or any warranty or representation made

under any Transaction Document or in any related document or the accuracy of

any such warranty or representation; or any action of the Administrator, the

Indenture Trustee or the Servicer or any subservicer taken in the name of the

Owner Trustee or the Trust.

 

Section 11.16                     No Petition.

 

Each of the parties hereto covenants and agrees that,

prior to the date that is one (1) year and one (1) day after the payment in

full of each Class of Notes rated by any Rating Agency, it will not institute

against the Originator or the Issuer or join any other Person in instituting

against the Originator or the Issuer any bankruptcy, reorganization,

arrangement, insolvency or liquidation proceedings or other similar proceedings

under the laws of the United States or any state of the United States; provided,

however,

that nothing herein shall prohibit the Indenture Trustee from filing proofs of

claim or otherwise participating in any such proceedings instituted by any

other Person.  This Section 11.16

will survive the termination of this Indenture.

 

Section 11.17                     Inspection.

 

The Issuer agrees that, on

reasonable prior notice, it will permit any representative of the Indenture

Trustee or the Backup Servicer during the Issuer’s normal business hours, to

examine all the books of account, records, reports and other papers of the

Issuer, to make copies and extracts therefrom, to cause such books to be

audited by independent certified public accountants, and to discuss the

Issuer’s affairs, finances and accounts with the Issuer’s officers, employees

and independent certified public accountants, all at such reasonable times and

as often as may be reasonably requested. The Indenture Trustee shall and shall

cause its representatives to hold in confidence all such information except to

the extent disclosure may be required by law (and all reasonable applications

for confidential treatment are unavailing) and except to the extent that the

Indenture Trustee or the Backup Servicer may reasonably determine that such

disclosure is consistent with its obligations hereunder.  Notwithstanding anything herein to the

 

79

 

contrary, the foregoing shall not be construed to

prohibit (i) disclosure of any and all information that is or becomes

publicly known through no fault of the Indenture Trustee or the Backup

Servicer, or information obtained by the Indenture Trustee or the Backup

Servicer from sources other than the Issuer, (ii) disclosure of any and

all information (A) if required to do so by any applicable statute, law,

rule or regulation, (B) to any government agency or regulatory body having

or claiming authority to regulate or oversee any aspects of the Indenture

Trustee’s business or the Backup Servicer or that of its affiliates,

(C) pursuant to any subpoena, civil investigative demand or similar demand

or request of any court, regulatory authority, arbitrator or arbitration to

which the Indenture Trustee, the Backup Servicer or an affiliate or an officer,

director, employer or shareholder thereof is a party, (D) in any preliminary

or final offering circular, registration statement or contract or other

document pertaining to the transactions contemplated herein approved in advance

by the Issuer or (E) to any affiliate, independent or internal auditor,

agent, employee or attorney of the Indenture Trustee or the Backup Servicer

having a need to know the same; provided,  that, the Indenture

Trustee or the Backup Servicer advises such recipient of the confidential

nature of the information being disclosed, or (iii) any other disclosure

authorized by the Issuer.

 

Section 11.18                     [Reserved].

 

Section 11.19                     Communication by Note Owners

With Other Note Owners.

 

Note

Owners may communicate with other Note Owners with respect to their rights

under this Indenture or the Notes pursuant to Section 312(b) of the

TIA.  Every Note Owner, by receiving and

holding the same, agrees with the Issuer and the Indenture Trustee that none of

the Issuer and the Indenture Trustee nor any agent of the Issuer and the

Indenture Trustee shall be deemed to be in violation of any existing law, or

any law hereafter enacted which does not specifically refer to Section 312

of the TIA, by reason of the disclosure of any such information as to the names

and addresses of the Note Owners in accordance with Section 312 of the

TIA, regardless of the source from which such information was derived, and that

the Indenture Trustee shall not be held accountable by reason of mailing any

material pursuant to a request made under Section 312(b) of the TIA.

 

The provisions of TIA §§310

through 317 that impose duties on any person (including the provisions

automatically deemed included herein unless expressly excluded by this

Indenture) are a part of and govern this Indenture, whether or not physically

contained herein.

 

Section 11.20                     Disclaimer and Subordination.

 

Each Noteholder by accepting a

Note and each Swap Counterparty by accepting the benefits of this Indenture

acknowledges and agrees that this Indenture and the Notes represent a debt

obligation of the Issuer only and do not represent an interest in any assets

(other than the Indenture Collateral) of the Trust Depositor (including by

virtue of any deficiency claim in respect of obligations not paid or otherwise

satisfied from the Indenture Collateral and proceeds thereof).  In furtherance of and not in derogation of

the foregoing, each Noteholder by accepting a Note and each Swap Counterparty

by accepting the benefits of this Indenture acknowledges and agrees that it

shall have no right, title and interest in or to any assets (or interests

therein)

 

80

 

(other than the Indenture Collateral) conveyed or

purported to be conveyed by the Trust Depositor to another securitization trust

(i.e., other than the Issuer) or other Person or Persons in connection

therewith (whether by way of sale, capital contribution or by virtue of the

granting of a lien) (“Other Assets”). 

To the extent that, notwithstanding the agreements and provisions

contained in the preceding sentences of this Section 11.20, any

Noteholder or Swap Counterparty either (i) asserts an interest in or claim

to, or benefit from, Other Assets, whether asserted against or through the

Trust Depositor or any other Person owned by the Trust Depositor, or

(ii) is deemed to have any such interest, claim or benefit in or from

Other Assets, whether by operation of law, legal process, pursuant to

applicable provisions of any applicable insolvency laws or otherwise (including

without limitation by virtue of Section 1111(b) of the federal Bankruptcy Code

or any successor provision having similar effect under the Bankruptcy Code),

and whether deemed asserted against or through the Trust Depositor or any other

Person owned by the Trust Depositor, then each Noteholder by accepting a Note

and each Swap Counterparty by accepting the benefits of this Indenture further

acknowledges and agrees that any such interest, claim or benefit in or from

Other Assets is and shall be expressly subordinated to the indefeasible payment

in full of all obligations and liabilities of the Trust Depositor which, under

the terms of the relevant documents relating to the securitization of such

Other Assets, are entitled to be paid from, entitled to the benefits of, or

otherwise secured by such Other Assets (whether or not any such entitlement or

security interest is legally perfected or otherwise entitled to a priority of

distribution or application under applicable law, including any applicable

insolvency laws, and whether asserted against the Trust Depositor or any other

Person owned by the Trust Depositor), including, without limitation, the

payment of post–petition interest on such other obligations and

liabilities.  This subordination

agreement shall be deemed a subordination agreement within the meaning of

Section 510(a) of the Bankruptcy Code. 

Nothing in this Section 11.20 shall in any way affect the rights

of any Swap Counterparty against the Swap Guarantor as provided in this Article

XIV of the Transfer and Servicing Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

81

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture

to be duly executed and delivered as of the day and year first above written.

 

 

	

   

  	

  ACAS BUSINESS LOAN TRUST 2002–1

  
	

   

  	

   

  
	

   

  	

  By:

  	

  FIRST UNION TRUST COMPANY,

  
	

   

  	

   

  	

  NATIONAL ASSOCIATION, not in

  its

  
	

   

  	

   

  	

  individual capacity but solely

  on behalf of

  
	

   

  	

   

  	

  the Issuer as Owner Trustee

  under the Trust

  
	

   

  	

   

  	

  Agreement

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  WELLS FARGO BANK MINNESOTA,

  
	

   

  	

  NATIONAL ASSOCIATION, not in its individual

  
	

   

  	

  capacity but solely as

  Indenture Trustee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
									

 

S-1

 

STATE OF NEW

YORK            )

                                                     )

ss

COUNTY OF NEW

YORK        )

 

	

  On March

             , 2002,

  before me, 

  
	

   

  	

  {Here insert name and title of

  notary}

  

 

personally appeared [                        ]

 

{   }         personally known

to me, or

 

{   }                           proved to me on the basis of

satisfactory evidence to be the person(s) whose name(s) is/are subscribed to

the within instrument,

 

and acknowledged to me that he/she/they executed

the same in his/her/their authorized capacity(ties), and that by his/her/their

signature(s) on the instrument the person(s), or the entity upon behalf of

which such person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	

  Signature

  	

   

  	

  {Seal}

  

 

 

STATE OF

DELAWARE        )

                                                  )

ss

COUNTY

OF                           )

 

 

	

  On March

             , 2002,

  before me, 

  
	

   

  	

  {Here insert name and title of

  notary}

  

 

personally appeared [                                     ]

 

{   }         personally known

to me, or

 

{   }                           proved to me on the basis of

satisfactory evidence to be the person(s) whose name(s) is/are subscribed to

the within instrument,

 

and acknowledged to me that he/she/they executed

the same in his/her/their authorized capacity(ties), and that by his/her/their

signature(s) on the instrument the person(s), or the entity upon behalf of

which such person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	

  Signature

  	

   

  	

  {Seal}

  

 

 

EXHIBIT A–1

 

[FORM OF CLASS A NOTE]

 

ACAS BUSINESS LOAN TRUST

2002–1

 

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE

SECURITIES OR BLUE SKY LAW OF ANY STATE. 

THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE

RE–OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH

THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY

(1) (A) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)

TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL

BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS

OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS

INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS

BEING MADE IN RELIANCE ON RULE 144A, OR (B) IN CERTIFICATED FORM TO

AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF

RULE 501(a)(1)–(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR

INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT

TO (X) THE RECEIPT BY THE INDENTURE TRUSTEE OF A LETTER SUBSTANTIALLY IN

THE FORM PROVIDED IN THE INDENTURE AND (Y) THE RECEIPT BY THE INDENTURE

TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE INDENTURE TRUSTEE THAT SUCH

REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND

OTHER APPLICABLE LAWS, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH

RULE 903 OR RULE 904 OF REGULATIONS UNDER THE SECURITIES ACT,

(3) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND

IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (4) PURSUANT

TO A VALID REGISTRATION STATEMENT.  THE

PURCHASE OF THIS NOTE  WILL BE DEEMED

A REPRESENTATION BY THE ACQUIRER THAT EITHER: 

(I) IT IS NOT, AND IS NOT PURCHASING THIS NOTE FOR, ON BEHALF OF OR

WITH THE ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT

WHICH IS SUBJECT TO TITLE I OF ERISA AND/OR SECTION 4975 OF THE CODE,

OR (II) PTCE 95–60, PTCE 96–23, PTCE 91–38, PTCE 90–1,

PTCE 84–14 OR SOME OTHER PROHIBITED TRANSACTION EXEMPTION IS APPLICABLE TO

THE PURCHASE AND HOLDING OF THIS NOTE BY THE ACQUIRER.

 

[IF

HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED

REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),

TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND

ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER

NAME AS IS REQUESTED BY AN

 

A-1-1

 

AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &

CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF

DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO

ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,

HAS AN INTEREST HEREIN.]

 

[IF REGULATION S GLOBAL NOTE] [THIS NOTE

HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND PRIOR TO

THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE

OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD,

PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON

EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

SECURITIES ACT.]

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH

HEREIN.  ACCORDINGLY, THE OUTSTANDING

PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON

THE FACE HEREOF.

 

A-1-2

 

	

  REGISTERED

  	

  $

  	

   

  

 

No. A–

 

SEE REVERSE FOR CERTAIN

DEFINITIONS

 

[CUSIP

NO.                       ]

[Reg S ISIN

NO.                  ]

[Reg S CUSIP

No.                       ]

[Common Code No.

012753667]

 

ACAS Business Loan Trust 2002–1, a business trust

organized and existing under the laws of the State of Delaware (herein referred

to as the “Issuer”), for value received, hereby promises to pay to

                                              ,

or registered assigns, the principal sum of

                                        

DOLLARS payable on each Payment Date in an amount equal to the result obtained

by multiplying (i) a fraction the numerator of which is the initial

principal balance of this Class A Note and the denominator of which is the

Initial Class A Principal Balance by (ii) the aggregate amount, if

any, payable from the Note Distribution Account in respect of principal on the

Class A Notes; provided,  however, that the

entire unpaid principal amount of this Class A Note shall be due and payable on

the earlier of the Class A Maturity Date and the Redemption Date, if any,

pursuant to Section 10.01 of the Indenture.

 

The principal of and interest on this Class A

Note are payable in such coin or currency of the United States as at the time

of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect

to this Class A Note shall be applied first to interest due and payable on

this Class A Note as provided above and then to the unpaid principal of

this Class A Note.

 

Reference is made to the further provisions of this

Class A Note set forth on the reverse hereof, which shall have the same

effect as though fully set forth on the face of this Class A Note.

 

Unless the certificate of authentication hereon has

been executed by the Indenture Trustee whose name appears below by manual

signature, this Class A Note shall not be entitled to any benefit under

the Indenture referred to on the reverse hereof, or be valid or obligatory for

any purpose.

 

A-1-3

 

IN WITNESS WHEREOF, the Issuer has caused this

instrument to be signed, manually or in facsimile, by its Responsible Officer

as of the date set forth below.

 

Date:  March 15, 2002

 

	

   

  	

  ACAS

  BUSINESS LOAN TRUST 2002–1

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  FIRST UNION TRUST COMPANY,

  
	

   

  	

   

  	

  NATIONAL ASSOCIATION, not in its

  
	

   

  	

   

  	

  individual capacity but solely as Owner

  
	

   

  	

   

  	

  Trustee under the Trust Agreement

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Authorized Signatory

  	

   

  
						

 

 

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

 

This is one of the Class A Notes of ACAS Business

Loan Trust 2002–1 designated above and referred to in the within–mentioned

Indenture.

 

 

	

  Date:  March

  15, 2002

  	

   

  
	

   

  	

  WELLS

  FARGO BANK MINNESOTA,

  
	

   

  	

  NATIONAL

  ASSOCIATION, not in its individual

  
	

   

  	

  capacity but solely as Indenture Trustee,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Authorized Signatory

  	

   

  
					

 

A-1-4

 

[REVERSE OF NOTE]

 

This Class A Note is one of a duly authorized

issue of Class A Notes of the Issuer, designated as its ACAS Business Loan

Trust Notes, Series 2002–1, Class A (herein called the “Class A

Notes”), all issued under an Indenture, dated as of March 15, 2002 (such indenture, as supplemented or amended, is

herein called the “Indenture”), between the Issuer and Wells Fargo Bank

Minnesota, National Association, as indenture trustee (the “Indenture

Trustee”, which term includes any successor Indenture Trustee under the

Indenture), to which Indenture and all indentures supplemental thereto

reference is hereby made for a statement of the respective rights and

obligations thereunder of the Issuer, the Indenture Trustee and the Holders of

the Class A Notes.  The

Class A Notes are subject to all terms of the Indenture.  All terms used in this Class A Note

that are defined in the Indenture, as supplemented or amended, shall have the

meanings assigned to them in or pursuant to the Indenture, as so supplemented

or amended.

 

As described above, the entire unpaid principal amount

of this Class A Note shall be due and payable on the earlier of the Class

A Maturity Date and the Redemption Date, if any, pursuant to Section 10.01

of the Indenture.  Notwithstanding the

foregoing, the entire unpaid principal amount of the Class A Notes shall

be due and payable on the date on which an Event of Default shall have occurred

and be continuing and the Indenture Trustee, or the Required Holders have

declared the Class A Notes to be immediately due and payable in the manner

provided in Section 5.02 of the Indenture.  All principal payments on the Class A

Notes shall be made pro rata to the Class A Noteholders entitled thereto.

 

Each Class A Noteholder or Class A Note Owner,

by acceptance of a Class A Note or, in the case of a Class A Note

Owner, a beneficial interest in a Class A Note covenants and agrees that

no recourse may be taken, directly or indirectly, with respect to the

obligations of the Issuer under the Indenture on the Class A Notes or

under any certificate or other writing delivered in connection therewith,

against the Trust Depositor, the Servicer, the Indenture Trustee or the Owner

Trustee in its individual capacity or any of their Affiliates.

 

On each Payment Date, commencing March 20, 2002, the

Indenture Trustee or Paying Agent shall distribute to the Person in whose name

this Class A Note is registered at the close of business on the Record

Date an amount equal to the product of the Percentage Interest of the

Class A Notes evidenced by this Class A Note and the amount required

to be distributed to Holders of Class A Notes on such Payment Date

pursuant to Section 8.02 of the Indenture.

 

During each Interest Accrual Period, this Class A

Note will bear interest at the Class A Interest Rate.

 

Distributions on this Class A Note will be made

by the Indenture Trustee or Paying Agent by check mailed to the address of the

Person entitled thereto as such name and address shall appear on the Note

Register or, upon written request to the Indenture Trustee, by wire transfer of

immediately available funds to the account of the Person entitled thereto as

shall appear on the Note Register without the presentation or surrender of this

Note or the making of

 

A-1-5

 

any notation thereon, at a bank or other entity having appropriate

facilities therefor, and, in the case of wire transfers, at the expense of such

Person unless such Person shall own of record Class A Notes which have

Initial Class A Principal Balances aggregating at least $1,000,000.

 

Notwithstanding the above, the final distribution on

this Class A Note will be made after due notice by the Indenture Trustee

of the pendency of such distribution and only upon presentation and surrender

of this Class A Note at the office or agency maintained for that purpose

by the Note Registrar in New York, New York.

 

As provided in the Indenture and the Transfer and

Servicing Agreement, deposits and withdrawals from the Note Distribution

Account, the Principal Collection Account, the Interest Collection Account and

the Reserve Fund may be made by the Indenture Trustee from time to time for

purposes other than distributions to Class A Noteholders, such purposes

including reimbursement to the Servicer of advances made, or certain expenses

incurred, by it, and investment in Eligible Investments.

 

As provided in the Indenture and subject to certain

limitations therein set forth, the transfer of this Class A Note is

registrable in the Note Register upon surrender of this Class A Note for

registration of transfer at the offices or agencies maintained by the Note

Registrar in New York, New York, duly endorsed by, or accompanied by a written

instrument of transfer in form satisfactory to, the Indenture Trustee, duly

executed by the holder hereof or such holder’s attorney duly authorized in

writing, and thereupon one or more new Class A Notes in authorized

denominations evidencing the same aggregate undivided Percentage Interest will

be issued to the designated transferee or transferees.

 

The Class A Note is issuable only as a registered

Class A Note.  As provided in the

Indenture and subject to certain limitations therein set forth, the

Class A Note is exchangeable for a new Class A Note evidencing the

same undivided ownership interest, as requested by the holder surrendering the

same.

 

No service charge will be made for any such

registration of transfer or exchange, but the Note Registrar may require

payment of a sum sufficient to cover any tax or other governmental charge

payable in connection therewith.

 

The Servicer, the Trust Depositor, the Indenture

Trustee and the Note Registrar, and any agent of any of the foregoing, may

treat the person in whose name this Class A Note is registered as the owner

hereof for all purposes, and none of the foregoing shall be affected by notice

to the contrary.

 

The obligations and responsibilities created by the

Indenture shall terminate upon the payment to Class A Noteholders of all

amounts required to be paid to them pursuant to the Indenture and the Transfer

and Servicing Agreement and the disposition of all property held as part of the

Indenture Collateral.

 

A-1-6

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE (1)

 

The following exchanges of a part of this Global Note

for an interest in another Global Note or for an Individual Note, or exchanges

of a part of another Global Note or Individual Note for an interest in this

Global Note, have been made:

 

	

  Date of

  Exchange

  	

   

  	

  Amount of

  decrease in

  Principal Amount

  of this Global

  Note

  	

   

  	

  Amount of

  increase in

  Principal Amount

  of this Global

  Note

  	

   

  	

  Principal

  Amount

  of this Global

  Note following

  such decrease

  (or increase)

  	

   

  	

  Signature

  of

  Responsible

  Officer of Note

  Registrar

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

(1)           This

should be included only if the Note is issued in global form.

 

A-1-7

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of

assignee

 

FOR VALUE RECEIVED, the

undersigned hereby sells, assigns and transfers unto

 

 

(name and address

of assignee)

 

the within Note and all rights thereunder, and hereby irrevocably

constitutes and appoints

                               ,

attorney, to transfer said Note on the books kept for registration thereof,

with full power of substitution in the premises.

 

	

  Dated:  

  	

   

  	

   

  	

   

  	

  (2)

  	

   

  
	

   

  	

   

  
	

  Signature Guaranteed:

  

 

(2)           NOTE: The signature

to this assignment must correspond with the name of the registered owner as it

appears on the face of the within Note in every particular, without alteration,

enlargement or any change whatsoever.

 

A-1-8

 

EXHIBIT A–2

 

[FORM OF CLASS B NOTE]

 

ACAS BUSINESS LOAN TRUST

2002–1

 

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR

UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE,

AGREES THAT THIS NOTE MAY BE RE–OFFERED, RESOLD, PLEDGED OR OTHERWISE

TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE

LAWS AND ONLY (1) (A) PURSUANT TO RULE 144A UNDER THE SECURITIES

ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER REASONABLY BELIEVES

IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 44A (A “QIB”),

PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,

WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR

OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (B) IN

CERTIFICATED FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING

OF RULE 501(a)(1)–(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR

INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT

TO (X) THE RECEIPT BY THE INDENTURE TRUSTEE OF A LETTER SUBSTANTIALLY IN

THE FORM PROVIDED IN THE INDENTURE AND (Y) THE RECEIPT BY THE INDENTURE

TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE INDENTURE TRUSTEE THAT SUCH

REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT

AND OTHER APPLICABLE LAWS, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE

WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,

(3) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND

IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (4) PURSUANT

TO A VALID REGISTRATION STATEMENT.  THE

PURCHASE OF THIS NOTE  WILL BE DEEMED

A REPRESENTATION BY THE ACQUIRER THAT EITHER: 

(I) IT IS NOT, AND IS NOT PURCHASING THIS NOTE FOR, ON BEHALF OF OR

WITH THE ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT

WHICH IS SUBJECT TO TITLE I OF ERISA AND/OR SECTION 4975 OF THE CODE,

OR (II) PTCE 95–60, PTCE 96–23, PTCE 91–38, PTCE 90–1,

PTCE 84–14 OR SOME OTHER PROHIBITED TRANSACTION EXEMPTION IS APPLICABLE TO

THE PURCHASE AND HOLDING OF THIS NOTE BY THE ACQUIRER.

 

[IF

HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED

REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),

TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,

AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH

OTHER NAME AS IS REQUESTED BY AN

 

A-2-1

 

AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &

CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF

DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO

ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,

HAS AN INTEREST HEREIN.]

 

[IF REGULATION S GLOBAL NOTE]   [THIS NOTE HAS NOT BEEN AND WILL NOT BE

REGISTERED UNDER THE SECURITIES ACT AND PRIOR TO THE DATE THAT IS 40 DAYS

AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND THE ORIGINAL ISSUE DATE

OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE

UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE

REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS

AS SET FORTH HEREIN.  ACCORDINGLY, THE

OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE

AMOUNT SHOWN ON THE FACE HEREOF.

 

THE RIGHTS OF THE HOLDER OF THIS CLASS B NOTE TO

RECEIVE INTEREST ARE SUBORDINATED TO THE RIGHTS OF THE HOLDERS OF THE

CLASS A NOTES TO RECEIVE INTEREST AND THE RIGHTS OF THE HOLDERS OF THIS

CLASS B NOTE TO RECEIVE PRINCIPAL ARE SUBORDINATED TO THE RIGHTS OF THE

HOLDERS OF THE CLASS A NOTES TO RECEIVE PRINCIPAL AND INTEREST.

 

A-2-2

 

	

  REGISTERED

  	

  $

  	

   

  

 

No. B–

 

SEE REVERSE FOR CERTAIN DEFINITIONS

 

[CUSIP NO.

                      ]

[Reg S ISIN

NO.                 ]

[Reg S CUSIP

No.                 ]

[Common Code No. 012753691]

 

ACAS Business Loan Trust 2002–1, a business trust

organized and existing under the laws of the State of Delaware (herein referred

to as the “Issuer”), for value received, hereby promises to pay

to                                              ,

or registered assigns, the principal sum of

                                     DOLLARS

payable on each Payment Date in an amount equal to the result obtained by

multiplying (i) a fraction the numerator of which is the initial principal

balance of this Class B Note and the denominator of which is the Initial

Class B Principal Balance by (ii) the aggregate amount, if any,

payable from the Note Distribution Account in respect of principal on the

Class B Notes; provided,  however, that the

entire unpaid principal amount of this Class B Note shall be due and payable on

the earlier of the Class B Maturity Date and the Redemption Date, if any,

pursuant to Section 10.01 of the Indenture.

 

The principal of and interest on this Class B

Note are payable in such coin or currency of the United States as at the time

of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect

to this Class B Note shall be applied first to interest due and payable on

this Class B Note as provided above and then to the unpaid principal of

this Class B Note.

 

Reference is made to the further provisions of this

Class B Note set forth on the reverse hereof, which shall have the same

effect as though fully set forth on the face of this Class B Note.

 

Unless the Class B Note of authentication hereon

has been executed by the Indenture Trustee whose name appears below by manual

signature, this Class B Note shall not be entitled to any benefit under

the Indenture referred to on the reverse hereof, or be valid or obligatory for

any purpose.

 

A-2-3

 

IN WITNESS WHEREOF, the Issuer has caused this

instrument to be signed, manually or in facsimile, by its Responsible Officer

as of the date set forth below.

 

	

  Date:  March

  15, 2002

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  ACAS

  BUSINESS LOAN TRUST 2002–1

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  FIRST UNION TRUST COMPANY,

  
	

   

  	

   

  	

  NATIONAL ASSOCIATION, not in its

  
	

   

  	

   

  	

  individual capacity but solely as Owner

  
	

   

  	

   

  	

  Trustee under the Trust Agreement

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Authorized Signatory

  	

   

  
							

 

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

 

This is one of the Class B Notes of ACAS Business Loan

Trust 2002–1 designated above and referred to in the within–mentioned

Indenture.

 

Date:  March 15, 2002

 

	

   

  	

  WELLS

  FARGO BANK MINNESOTA,

  
	

   

  	

  NATIONAL

  ASSOCIATION, not in its individual

  
	

   

  	

  capacity but solely as Indenture Trustee,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Authorized

  Signatory

  	

   

  	 

						

 

A-2-4

 

[REVERSE OF NOTE]

 

This Class B Note is one of a duly authorized

issue of Class B Notes of the Issuer, designated as its ACAS Business Loan

Trust Notes, Series 2002–1, Class B (herein called the “Class B

Notes”), all issued under an Indenture, dated as of March 15, 2002 (such indenture, as supplemented or amended, is

herein called the “Indenture”), between the Issuer and Wells Fargo Bank

Minnesota, National Association, as indenture trustee (the “Indenture

Trustee”, which term includes any successor Indenture Trustee under the

Indenture), to which Indenture and all indentures supplemental thereto reference

is hereby made for a statement of the respective rights and obligations

thereunder of the Issuer, the Indenture Trustee and the Holders of the

Class B Notes.  The Class B

Notes are subject to all terms of the Indenture.  All terms used in this Class B Note that are defined in the

Indenture, as supplemented or amended, shall have the meanings assigned to them

in or pursuant to the Indenture, as so supplemented or amended.

 

As described above, the entire unpaid principal amount

of this Class B Note shall be due and payable on the earlier of the Class

B Maturity Date and the Redemption Date, if any, pursuant to Section 10.01

of the Indenture.  Notwithstanding the

foregoing, the entire unpaid principal amount of the Class B Notes shall

be due and payable on the date on which an Event of Default shall have occurred

and be continuing and the Indenture Trustee, or the Required Holders have

declared the Class B Notes to be immediately due and payable in the manner

provided in Section 5.02 of the Indenture.  All principal payments on the Class B

Notes shall be made pro rata to the Class B Noteholders entitled thereto.

 

Each Class B Noteholder or Class B Note

Owner, by acceptance of a Class B Note or, in the case of a Class B

Note Owner, a beneficial interest in a Class B Note covenants and agrees

that no recourse may be taken, directly or indirectly, with respect to the

obligations of the Issuer under the Indenture on the Class B Notes or

under any certificate or other writing delivered in connection therewith,

against the Trust Depositor, the Servicer, the Indenture Trustee or the Owner

Trustee in its individual capacity or any of their Affiliates.

 

On each Payment Date, commencing March 20, 2002, the

Indenture Trustee or Paying Agent shall distribute to the Person in whose name

this Class B Note is registered at the close of business on the Record

Date an amount equal to the product of the Percentage Interest of the

Class B Notes evidenced by this Class B Note and the amount required

to be distributed to Holders of Class B Notes on such Payment Date

pursuant to Section 8.02 of the Indenture.

 

During each Interest

Accrual Period, this Class B Note will bear interest at the Class B

Interest Rate.

 

Distributions on this Class B Note will be made

by the Indenture Trustee or Paying Agent by check mailed to the address of the

Person entitled thereto as such name and address shall appear on the Note

Register or, upon written request to the Indenture Trustee, by wire transfer of

immediately available funds to the account of the Person entitled thereto as

shall appear on the Note Register without the presentation or surrender of this

Note or the making of any notation thereon, at a bank or other entity having

appropriate facilities therefor, and, in the case of wire

 

A-2-5

 

transfers, at the expense of such Person unless such Person shall own

of record Class B Notes which have Initial Class B Principal Balances

aggregating at least $1,000,000.

 

Notwithstanding the

above, the final distribution on this Class B Note will be made after due

notice by the Indenture Trustee of the pendency of such distribution and only

upon presentation and surrender of this Class B Note at the office or

agency maintained for that purpose by the Note Registrar in New York, New York.

 

As provided in the Indenture and the Transfer and

Servicing Agreement, deposits and withdrawals from the Note Distribution

Account, the Principal Collection Account, the Interest Collection Account and

the Reverse Fund may be made by the Indenture Trustee from time to time for

purposes other than distributions to Class B Noteholders, such purposes

including reimbursement to the Servicer of advances made, or certain expenses

incurred, by it, and investment in Eligible Investments.

 

As provided in the Indenture and subject to certain

limitations therein set forth, the transfer of this Class B Note is

registrable in the Note Register upon surrender of this Class B Note for

registration of transfer at the offices or agencies maintained by the Note

Registrar in New York, New York, duly endorsed by, or accompanied by a written

instrument of transfer in form satisfactory to, the Indenture Trustee, duly

executed by the holder hereof or such holder’s attorney duly authorized in writing,

and thereupon one or more new Class B Notes in authorized denominations

evidencing the same aggregate undivided Percentage Interest will be issued to

the designated transferee or transferees.

 

The Class B Note is issuable only as a registered

Class B Note.  As provided in the

Indenture and subject to certain limitations therein set forth, the

Class B Note is exchangeable for a new Class B Note evidencing the

same undivided ownership interest, as requested by the holder surrendering the

same.

 

No service charge will be made for any such

registration of transfer or exchange, but the Note Registrar may require

payment of a sum sufficient to cover any tax or other governmental charge

payable in connection therewith.

 

The Servicer, the Seller, the Indenture Trustee and

the Note Registrar, and any agent of any of the foregoing, may treat the person

in whose name this Class B Note is registered as the owner hereof for all

purposes, and none of the foregoing shall be affected by notice to the

contrary.

 

The obligations and responsibilities created by the

Indenture shall terminate upon the payment to Class B Noteholders of all

amounts required to be paid to them pursuant to the Indenture and the Transfer

and Servicing Agreement and the disposition of all property held as part of the

Indenture Collateral.  

 

A-2-6

 

SCHEDULE OF EXCHANGES OF INTERESTS IN

THE GLOBAL NOTE (3)

 

The following exchanges of a part of this Global Note

for an interest in another Global Note or for an Individual Note, or exchanges

of a part of another Global Note or Individual Note for an interest in this

Global Note, have been made:

 

	

  Date of

  Exchange

  	

   

  	

  Amount of

  decrease in

  Principal Amount

  of this Global

  Note

  	

   

  	

  Amount of

  increase in

  Principal Amount

  of this Global

  Note

  	

   

  	

  Principal

  Amount

  of this Global

  Note following

  such decrease

  (or increase)

  	

   

  	

  Signature

  of

  Responsible

  Officer of Note

  Registrar

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

(3)           This should be included only if the Note is issued in

global form.

 

A-2-7

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of

assignee

 

FOR VALUE RECEIVED, the

undersigned hereby sells, assigns and transfers unto

 

 

(name and address

of assignee)

 

the within Note and all rights thereunder, and hereby irrevocably

constitutes and appoints                          ,

attorney, to transfer said Note on the books kept for registration thereof,

with full power of substitution in the premises.

 

	

  Dated:

  	

   

  	

   

  	

   

  	

  (4)

  

 

Signature Guaranteed:

 

4.             NOTE: The signature

to this assignment must correspond with the name of the registered owner as it

appears on the face of the within Note in every particular, without alteration,

enlargement or any change whatesoever.

 

A-2-8

 

EXHIBIT A–3

 

[FORM OF CLASS C NOTE]

 

ACAS BUSINESS LOAN TRUST

2002–1

 

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR

UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE,

AGREES THAT THIS NOTE MAY BE RE–OFFERED, RESOLD, PLEDGED OR OTHERWISE

TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE

LAWS AND ONLY (1) (A) PURSUANT TO RULE 144A UNDER THE SECURITIES

ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER REASONABLY BELIEVES

IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”),

PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,

WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR

OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (B) IN

CERTIFICATED FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING

OF RULE 501(a)(1)–(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR

INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT

TO (X) THE RECEIPT BY THE INDENTURE TRUSTEE OF A LETTER SUBSTANTIALLY IN

THE FORM PROVIDED IN THE INDENTURE AND (Y) THE RECEIPT BY THE INDENTURE

TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE INDENTURE TRUSTEE THAT SUCH REOFFER,

RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER

APPLICABLE LAWS, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH

RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,

(3) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND

IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (4) PURSUANT

TO A VALID REGISTRATION STATEMENT.  THE

PURCHASE OF THIS NOTE  WILL BE DEEMED

A REPRESENTATION BY THE ACQUIRER THAT IT IS NOT, AND IS NOT PURCHASING THIS

NOTE FOR, ON BEHALF OF OR WITH THE ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER

RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF ERISA AND/OR

SECTION 4975 OF THE CODE.

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS

AS SET FORTH HEREIN.  ACCORDINGLY, THE

OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE

AMOUNT SHOWN ON THE FACE HEREOF.

 

THE RIGHTS OF THE HOLDER OF THIS CLASS C NOTE TO

RECEIVE INTEREST ARE SUBORDINATED TO THE RIGHTS OF THE HOLDERS OF THE

CLASS A NOTES AND THE CLASS B NOTES TO RECEIVE INTEREST AND THE 

 

A-3-1

 

RIGHTS OF THE HOLDERS OF THIS CLASS C NOTE TO RECEIVE PRINCIPAL

ARE SUBORDINATED TO THE RIGHTS OF THE HOLDERS OF THE CLASS A NOTES AND

CLASS B NOTES TO RECEIVE PRINCIPAL AND INTEREST.

 

THIS CLASS C NOTE MAY NOT BE TRANSFERRED DIRECTLY

OR INDIRECTLY TO (1) EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS,

INDIVIDUAL RETIREMENT ACCOUNTS OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF

THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR

SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR

(2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL ACCOUNTS) WHOSE

UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH PLAN’S ARRANGEMENTS

OR ACCOUNT’S INVESTMENT IN SUCH ENTITIES.  FURTHER,

THIS NOTE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE MEANING

OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

NO TRANSFER, SALE, PLEDGE OR OTHER DISPOSITION OF ONE

OR MORE CLASS C NOTES (A “TRANSFER”) SHALL BE MADE UNLESS

(1) SIMULTANEOUSLY WITH THE TRANSFER (1) A PROPORTIONATE AMOUNT OF

TRUST CERTIFICATES ARE TRANSFERRED SO THAT THE RATIO OF THE PERCENTAGE INTEREST

OF THE TRUST CERTIFICATES SO TRANSFERRED TO ALL TRUST CERTIFICATES AND THE

RATIO OF THE PERCENTAGE INTEREST OF THE CLASS C NOTES SO TRANSFERRED TO

THE PERCENTAGE INTEREST OF ALL CLASS C NOTES ARE EQUAL, (2) THE

TRANSFERS OF THE TRUST CERTIFICATES AND CLASS B NOTES REFERRED TO HEREIN

ARE MADE TO THE SAME PERSON AND (3) THE PERCENTAGE INTEREST OF THE TRUST

CERTIFICATES AND CLASS C NOTES, RESPECTIVELY, SO TRANSFERRED IS NO LESS THAN

TEN (10%) PERCENT.

 

A-3-2

 

	

  REGISTERED

  	

   

  	

  $

  	

                                           

  

 

No. C–

 

SEE

REVERSE FOR CERTAIN DEFINITIONS

 

ACAS Business Loan Trust 2002–1, a business trust

organized and existing under the laws of the State of Delaware (herein referred

to as the “Issuer”), for value received, hereby promises to pay to

                                         ,

or registered assigns, the principal sum of

                                   DOLLARS

payable on each Payment Date in an amount equal to the result obtained by

multiplying (i) a fraction the numerator of which is the initial principal

balance of this Class C Note and the denominator of which is the Initial

Class C Principal Balance by (ii) the aggregate amount, if any,

payable from the Note Distribution Account in respect of principal on the Class C

Notes; provided,

however,

that the entire unpaid principal amount of this Class C Note shall be due and

payable on the earlier of the Class C Maturity Date and the Redemption Date, if

any, pursuant to Section 10.01 of the Indenture.

 

Distributions on this Class C Note are payable in

such coin or currency of the United States as at the time of payment is legal

tender for payment of public and private debts.

 

Reference is made to the further provisions of this

Class C Note set forth on the reverse hereof, which shall have the same

effect as though fully set forth on the face of this Class C Note.

 

Unless the Class C Note of authentication hereon

has been executed by the Indenture Trustee whose name appears below by manual

signature, this Class C Note shall not be entitled to any benefit under

the Indenture referred to on the reverse hereof, or be valid or obligatory for

any purpose.

 

A-3-3

 

IN WITNESS WHEREOF, the Issuer has caused this

instrument to be signed, manually or in facsimile, by its Responsible Officer

as of the date set forth below.

 

Date:  March 15, 2002

 

	

   

  	

  ACAS

  BUSINESS LOAN TRUST 2002–1

  
	

   

  	

   

  
	

   

  	

  By:

  	

  FIRST UNION TRUST COMPANY,

  NATIONAL ASSOCIATION, not in its

  individual capacity but solely as Owner

  Trustee under the Trust Agreement

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

  Authorized

  Signatory

  

 

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

 

This is one of the Class C Notes of ACAS Business Loan

Trust 2002–1 designated above and referred to in the within–mentioned

Indenture.

 

Date: March 15, 2002

 

	

   

  	

  WELLS

  FARGO BANK MINNESOTA,

  
	

   

  	

  NATIONAL

  ASSOCIATION, not in its individual

  capacity but solely as Indenture Trustee,

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Authorized

  Signatory

  

 

A-3-4

 

[REVERSE OF NOTE]

 

This Class C Note is one of a duly authorized

issue of Class C Notes of the Issuer, designated as its ACAS Business Loan

Trust Notes, Series 2002–1, Class C (herein called the “Class C

Notes”), all issued under an Indenture, dated as of March 15, 2002 (such indenture, as supplemented or amended, is

herein called the “Indenture”), between the Issuer and Wells Fargo Bank

Minnesota, National Association, as indenture trustee (the “Indenture

Trustee”, which term includes any successor Indenture Trustee under the

Indenture), to which Indenture and all indentures supplemental thereto

reference is hereby made for a statement of the respective rights and

obligations thereunder of the Issuer, the Indenture Trustee and the Holders of

the Class C Notes.  The

Class C Notes are subject to all terms of the Indenture.  All terms used in this Class C Note

that are defined in the Indenture, as supplemented or amended, shall have the

meanings assigned to them in or pursuant to the Indenture, as so supplemented

or amended.

 

As described above, the entire unpaid principal amount

of this Class C Note shall be due and payable on the earlier of the Class

C Maturity Date and the Redemption Date, if any, pursuant to Section 10.01

of the Indenture.  Notwithstanding the

foregoing, the entire unpaid principal amount of the Class C Notes shall

be due and payable on the date on which an Event of Default shall have occurred

and be continuing and the Indenture Trustee, or the Required Holders have

declared the Class C Notes to be immediately due and payable in the manner

provided in Section 5.02 of the Indenture.  All principal payments on the Class C

Notes shall be made pro rata to the Class C Noteholders entitled thereto.

 

Each Class C Noteholder or Class C Note

Owner, by acceptance of a Class C Note or, in the case of a Class C

Note Owner, a beneficial interest in a Class C Note covenants and agrees

that no recourse may be taken, directly or indirectly, with respect to the

obligations of the Issuer under the Indenture on the Class C Notes or

under any certificate or other writing delivered in connection therewith,

against the Trust Depositor, the Servicer, the Indenture Trustee or the Owner

Trustee in its individual capacity or any of their Affiliates.

 

On each Payment Date, commencing March 20, 2002, the

Indenture Trustee or Paying Agent shall distribute to the Person in whose name

this Class C Note is registered at the close of business on the Record

Date (or, in the case of the first Payment Date, to the Person in whose name

this Class C Note is registered on the Closing Date) (the “Record Date”)

an amount equal to the product of the Percentage Interest of the Class B

Notes evidenced by this Class C Note and the amount required to be

distributed to Holders of Class B Notes on such Payment Date pursuant to Section 8.02

of the Indenture.

 

During each Interest Accrual Period, the Class C

Note will receive interest in an amount equal to the Class C Interest

Amount.

 

Distributions on this Class C Note will be made

by the Indenture Trustee or Paying Agent by check mailed to the address of the

Person entitled thereto as such name and address shall appear on the Note

Register or, upon written request to the Indenture Trustee, by wire transfer of

immediately available funds to the account of the Person entitled thereto as shall

appear on the

 

A-3-5

 

Note Register without the presentation or surrender of this Note or the

making of any notation thereon, at a bank or other entity having appropriate

facilities therefor, and, in the case of wire transfers, at the expense of such

Person unless such Person shall own of record Class C Notes which have

Initial Class C Principal Balances aggregating at least $1,000,000.

 

Notwithstanding the above, the final distribution on

this Class C Note will be made after due notice by the Indenture Trustee

of the pendency of such distribution and only upon presentation and surrender

of this Class C Note at the office or agency maintained for that purpose

by the Note Registrar in New York, New York.

 

As provided in the Indenture and the Transfer and

Servicing Agreement, deposits and withdrawals from the Note Distribution

Account, the Principal Collection Account, the Interest Collection Account and

the Reserve Fund Account may be made by the Indenture Trustee from time to time

for purposes other than distributions to Class C Noteholders, such

purposes including reimbursement to the Servicer of advances made, or certain

expenses incurred, by it, and investment in Eligible Investments.

 

As provided in the Indenture and subject to certain

limitations therein set forth, the transfer of this Class C Note is

registrable in the Note Register upon surrender of this Class C Note for

registration of transfer at the offices or agencies maintained by the Note

Registrar in New York, New York, duly endorsed by, or accompanied by a written

instrument of transfer in form satisfactory to, the Indenture Trustee, duly

executed by the holder hereof or such holder’s attorney duly authorized in

writing, and thereupon one or more new Class C Notes in authorized

denominations evidencing the same aggregate undivided Percentage Interest will

be issued to the designated transferee or transferees.

 

The Class C Note is issuable only as a registered

Class C Note.  As provided in the

Indenture and subject to certain limitations therein set forth, the

Class C Note is exchangeable for a new Class C Note evidencing the

same undivided ownership interest, as requested by the holder surrendering the

same.

 

No service charge will be made for any such

registration of transfer or exchange, but the Note Registrar may require

payment of a sum sufficient to cover any tax or other governmental charge

payable in connection therewith.

 

The Servicer, the Seller, the Indenture Trustee and

the Note Registrar, and any agent of any of the foregoing, may treat the person

in whose name this Class C Note is registered as the owner hereof for all

purposes, and none of the foregoing shall be affected by notice to the

contrary.

 

The obligations and responsibilities created by the

Indenture shall terminate upon the payment to Class C Noteholders of all

amounts required to be paid to them pursuant to the Indenture and the Transfer

and Servicing Agreement and the disposition of all property held as part of the

Indenture Collateral.

 

A-3-6

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of

assignee

 

FOR VALUE RECEIVED, the

undersigned hereby sells, assigns and transfers unto

 

 

(name and address

of assignee)

 

the within Note and all rights thereunder, and hereby irrevocably

constitutes and

appoints                                  ,

attorney, to transfer said Note on the books kept for registration thereof,

with full power of substitution in the premises.

 

	

  Dated:

  	

   

  	

   

  	

   

  	

  (5)

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Signature Guaranteed:

  

 

(5)           NOTE: The signature

to this assignment must correspond with the name of the registered owner as it

appears on the face of the within Note in every particular, without alteration,

enlargement or any change whatsoever.

 

A-3-7

 

EXHIBIT B

 

LIST OF

LOANS

 

See Exhibit G of the

Transfer and Servicing Agreement.

 

B-1

 

EXHIBIT C

 

WIRING INSTRUCTIONS FORM

 

, 2002

 

[Paying Agent]

[Trustee]

 

 

 

Re:          ACAS Business Loan

Trust Notes, Series 2002–1, [Class A] [Class B]

 

Dear Sir:

 

In connection with the sale of the above–captioned Note

by                                                         to                                                         ,

(“Transferee”) you, as Paying Agent, are instructed to make all

remittances to Transferee as Noteholder as

of                          ,        

by wire transfer.  For such wire

transfer, the wiring instructions are as follows:

 

 

 

	

   

  	

   

  	

   

  
	

   

  	

  Transferee

  	

   

  

 

Noteholder’s mailing address:

 

Name:

 

Address:

 

C-1

 

EXHIBIT D–1

 

FORM

OF TRANSFEREE LETTER

 

American Capital Strategies, Ltd.,

  as the Servicer

2 Bethesda Metro Center

14th Floor

Bethesda, Maryland 20814

Attention:  [                                                    ]

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

                                       ,

20         

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class A,

Class B and Class C Notes

 

Ladies and Gentlemen:

 

In connection with our acquisition of the

above–captioned Notes, we certify that (a) we understand that the Notes

are not being registered under the Securities Act of 1933, as amended (the “Act”),

or any state securities laws and are being transferred to us in a transaction

that is exempt from the registration requirements of the Act and any such laws,

(b) we are an institutional “Accredited Investor,” as defined in the

Indenture pursuant to which the Notes were issued (the “Indenture”), and

have such knowledge and experience in financial and business matters that we

are capable of evaluating the merits and risks of investments in the Notes,

(c) we have had the opportunity to ask questions of and receive answers

from the Originator and the Servicer concerning the purchase of the Notes and all

matters relating thereto or any additional information deemed necessary to our

decision to purchase the Notes, (d) we are acquiring the Notes for

investment for our own account and not with a view to any distribution of such

Notes (but without prejudice to our right at all times to sell or otherwise

dispose of the Notes in accordance with clause (f) below),

(e) we have not offered or sold any Notes to, or solicited offers to buy

any Notes from, any person, or otherwise approached or negotiated with any person

with respect thereto, or taken any other action which would result in a

violation of Section 5 of the Act, (f) we will not sell, transfer or

otherwise dispose of any Notes unless (1) such sale, transfer or other

disposition is made pursuant to an effective registration statement under the

Act or is exempt from such registration requirements, and if requested, we will

at our expense provide an opinion of counsel satisfactory to the addressees of

this certificate that such sale, transfer or other disposition may be made

pursuant to an exemption from the Act, (2) the purchaser or transferee of

such Note has executed and delivered to you a certificate to

 

D-1-1

 

substantially the same effect as this certificate if required by the

Indenture, and (3) the purchaser or transferee has otherwise complied with

any conditions for transfer set forth in the Indenture, (g) the purchaser

is not acquiring a Note, directly or indirectly, for or on behalf of an

employee benefit plan or other retirement arrangement subject to the Employee

Retirement Income Security Act of 1974, as amended, and/or Section 4975 of

the Internal Revenue Code of 1986, as amended, or any entity, the assets of

which would be deemed plan assets under the Department of Labor regulations set

forth at 29 C.F.R. §2510.3–101; unless the purchaser is acquiring a

Class A or Class B Note and Prohibited Transaction Class Exemption (“PTCE”) 84–14,

PTCE 90–1, PTCE 91–38, PTCE 95–60 or PTCE 92–23 or some

other applicable prohibited transaction exemption is applicable to the

acquisition and holdings of such Class A or Class B Note, (h) if

the purchaser is acquiring a Class C Note, the purchaser is a U.S. Person,

as such term is defined in Section 7701(a)(30) of  the Internal Revenue Code of 1986, as

amended, and (i) if the purchaser is acquiring a Class C Note, the

purchase also is acquiring Trust Certificates such that the ratio and the

Percentage Interest of the Trust Certificates being acquired to all Trust Certificates

and the ratio and the Percentage Interest of the Class C Notes being acquired

to all Class C Notes are equal.

 

	

   

  	

  Very truly yours,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  Print Name of Transferee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Responsible

  Officer

  

 

D-1-2

 

EXHIBIT D–2

 

FORM

OF RULE 144A CERTIFICATION

 

American Capital Strategies, Ltd.,

  as the Servicer

2 Bethesda Metro Center

14th Floor

Bethesda, Maryland 20814

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

                                    ,

20        

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class A,

Class B and Class C Notes

 

Ladies and Gentlemen:

 

In connection with our acquisition of the above Notes

we certify that (a) we understand that the Notes are not being registered

under the Securities Act of 1933, as amended (the “Act”), or any state

securities laws and are being transferred to us in a transaction that is exempt

from the registration requirements of the Act and any such laws, (b) we

have had the opportunity to ask questions of and receive answers from

Originator and the Servicer concerning the purchase of the Notes and all

matters relating thereto or any additional information deemed necessary to our

decision to purchase the Notes, (c) we have not, nor has anyone acting on

our behalf offered, transferred, pledged, sold or otherwise disposed of the

Notes, any interest in the Notes or any other similar security to, or solicited

any offer to buy or accept a transfer, pledge or other disposition of the

Notes, any interest in the Notes or any other similar security from, or

otherwise approached or negotiated with respect to the Notes, any interest in

the Notes or any other similar security with, any person in any manner, or made

any general solicitation by means of general advertising or in any other

manner, or taken any other action, that would constitute a distribution of the

Notes under the Act or that would render the disposition of the Notes a

violation of Section 5 of the Act or require registration pursuant

thereto, nor will act, nor has authorized or will authorize any person to act,

in such manner with respect to the Notes, (d) we are a “qualified

institutional buyer” as that term is defined in Rule 144A under the Act

and have completed the form of certification to that effect attached hereto as

Annex 1, (e) we are not acquiring a Note, directly or indirectly, for

or on behalf of an employee benefit plan or other retirement arrangement

subject to the Employee Retirement Income Security Act of 1974, as amended,

and/or Section 4975 of the Internal Revenue Code of 1986, as amended, or

any entity, the assets of which would be deemed plan assets under the

Department of Labor regulations set forth at

 

D-2-1

 

29 C.F.R. §2510.3–101; unless we are acquiring a Class A

Note or Class B Note and Prohibited Transaction Class Exemption (“PTCE”) 84–14,

PTCE 90–1, PTCE 91–38, PTCE 95–60 or PTCE 92–23 or some

other applicable prohibited transaction exemption is applicable to the

acquisition and holdings of such Class A Note or Class B Note,

(f) if we are acquiring a Class C Note, we are a U.S. Person, as such

term is defined in Section 7701(a)(30) of the Internal Revenue Code of

1986, as amended, and (g) if the purchaser is acquiring a Class C Note, we

also are acquiring Trust Certificates such that the ratio and the Percentage Interest

of the Trust Certificates being acquired to all Trust Certificates and the

ratio and the Percentage Interest of the Class C Notes being acquired to all

Class C Notes are equal.  We are aware

that the sale to us is being made in reliance on Rule 144A.  We are acquiring the Notes for our own

account or for resale pursuant to Rule 144A and further, understand that

such Notes may be resold, pledged or transferred only (i) to a person

reasonably believed to be a qualified institutional buyer that purchases for

its own account or for the account of a qualified institutional buyer to whom

notice is given that the resale, pledge or transfer is being made in reliance

on Rule 144A, or (ii) pursuant to another exemption from registration

under the Act.

 

	

   

  	

  Very truly yours,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  Print Name of Transferee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Responsible

  Officer

  

 

D-2-2

 

ANNEX

1 TO EXHIBIT D–2

 

[FORM OF CERTIFICATION]

 

[Date]

 

American Capital Strategies, Ltd.,

  as the Servicer

2 Bethesda Metro Center

14th Floor

Bethesda, Maryland  20814

Attention:  Chief Financial

Officer and General Counsel

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class A,

Class B and Class C Notes

 

Ladies and Gentlemen:

 

In connection with our

purchase of the Notes, the undersigned certifies to each of the parties to whom

this letter is addressed that it is a qualified institutional buyer (as defined

in Rule 144A under the Securities Act of 1933, as amended (the “Act”))

as follows:

 

1.                                       It

owns and/or invests on a discretionary basis eligible securities (excluding

affiliate’s securities, bank deposit notes and CD’s, loan participations,

repurchase agreements, securities owned but subject to a repurchase agreement

and currency, interest rate and commodity swaps), as described below:

 

Amount: 

$                                      ;

and

 

2.                                       The

dollar amount set forth above is:

 

a.             greater

than $3 million and the undersigned is one of the following entities:

 

(1)                                  o           an insurance company as defined in

Section 2(13) of the Act;* or

 

*              A purchase by an insurance

company for one or more of its separate accounts, as defined by section

2(a)(37) of the Investment Company Act of 1940, which are neither registered

nor required to be registered thereunder, shall be deemed to be a purchase for

the account of such insurance company.

 

D-2-1

 

(2)                                  o           an investment company registered

under the Investment Company Act or any business development company as defined

in Section 2(a)(48) of the Investment Company Act of 1940 or as defined in

Section 202(a)(22) of the Investment Advisers Act of 1940; or

 

(3)                                  o           a Small Business Investment Company

licensed by the U.S. Small Business Administration under Section 301(c)

or (d) of the Small Business Investment Act of 1958; or

 

(4)                                  o           a plan (i) established and

maintained by a state, its political subdivisions, or any agency or

instrumentality of a state or its political subdivisions, the laws of which

permit the purchase of securities of this type, for the benefit of its employees

and (ii) the governing investment guidelines of which permit the purchase

of securities of this type; or

 

(5)                                  o           a corporation (other than a U.S.

bank, savings and loan association or equivalent foreign institution),

partnership, Massachusetts or similar business trust, or an organization

described in Section 501(c)(3) of the Internal Revenue Code; or

 

(6)                                  o           a U.S. bank, savings and loan

association or equivalent foreign institution, which has an audited net worth

of at least $25 million as demonstrated in its latest annual financial

statements as of a date not more than 16 months preceding the date of sale

in the case of a U.S. institution or 18 months in the case of a foreign

institution; or

 

(7)                                  o           an investment adviser registered

under the Investment Advisers Act; or

 

b.              o           greater than $10 million, and

the undersigned is a broker–dealer registered with the SEC; or

 

c.               o           less than $10 million, and the

undersigned is a broker–dealer registered with the SEC and will only purchase

Rule 144A securities in riskless principal transactions (as defined in

Rule 144A); or

 

d.              o           less than $100 million, and the

undersigned is an investment company registered under the Investment Company

Act of 1940, which, together with one or more registered investment companies

having the same or an affiliated investment adviser, owns at least

$100 million of eligible securities; or

 

e.               o           less than $100 million, and the

undersigned is an entity, all the equity owners of which are qualified

institutional buyers.

 

D-2-2

 

The undersigned further certifies that it is

purchasing Notes for its own account or for the account of others that

independently qualify as “Qualified Institutional Buyers” as defined in

Rule 144A.  It is aware that the

sale of the Notes is being made in reliance on its continued compliance with

Rule 144A.  It is aware that the

transferor may rely on the exemption from the provisions of Section 5 of

the Act provided by Rule 144A.  The

undersigned understands that the Notes may be resold, pledged or transferred

only to a person reasonably believed to be a Qualified Institutional Buyer that

purchases for its own account or for the account of a Qualified Institutional

Buyer to whom notice is given that the resale, pledge or transfer is being made

in reliance in Rule 144A.

 

The undersigned agrees that if at some time before the

expiration of the holding period described in Rule 144 it wishes to

dispose of or exchange any of the Notes, it will not transfer or exchange any

of the Notes to a Qualified Institutional Buyer without first obtaining a

letter in the form hereof from the transferee and delivering such certificate

to the addressees hereof.

 

IN WITNESS WHEREOF, this document has been executed by

the undersigned who is duly authorized to do so on behalf of the undersigned

Qualified Institutional Buyer on

the                 day

of                                     ,         .

 

	

   

  	

  Name of Institution

  
	

   

  	

  Signature

  
	

   

  	

  Name

  
	

   

  	

  Title**

  

 

**           Must be President,

Chief Financial Officer, or other executive officer.

 

D-2-3

 

EXHIBIT E

 

FORM OF TRANSFER CERTIFICATE FOR RULE

144A GLOBAL NOTE TO

REGULATION S GLOBAL NOTE DURING RESTRICTED PERIOD

 

(Pursuant to Section 4.02(j)(i) of the Indenture)

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class [A], [B], [C]

 

Ladies and Gentlemen:

 

Reference is hereby made

to the Indenture, dated as of March 15,

2002 (the “Agreement”), between ACAS Business Loan Trust 2002–1,

as the issuer (the “Issuer”), and Wells Fargo Bank Minnesota, National

Association, as the indenture trustee (the “Trustee”).  Capitalized terms used but not defined

herein shall have the meanings given to them in the Agreement.

 

This letter relates to

US $[                        ]

aggregate current principal amount of Class         Notes

(the “Notes”) which are held in the form of the Rule 144A Global

Note (CUSIP

No.                        )

with the Depository in the name of [insert name of transferor] (the “Transferor”).  The Transferor has requested a transfer of

such beneficial interest for an interest in the Regulation S Global Note

(CUSIP

No.                       )

to be held with [Euroclear] [Clearstream] (Common Code

No                       )

through the Depository.

 

In connection with such

request and in respect of such Notes, the Transferor does hereby certify that

such transfer has been effected in accordance with the transfer restrictions

set forth in the Agreement and pursuant to and in accordance with

Regulation S under the Securities Act of 1933, as amended (the “Securities

Act”), and accordingly the Transferor does hereby certify that:

 

(1)                                  the

offer of the Notes was not made to a person in the United States,

 

(2)                                  [at the time

the buy order was originated, the transferee was outside the United States or

the Transferor and any person acting on its behalf reasonably believed that the

transferee was outside the United States] [the transaction was executed in, on

or through the facilities of a designated offshore securities market and

neither the transferor nor any person acting on its behalf knows that the

transaction was pre–arranged with a buyer in the United States],

 

E-1

 

(3)                                  the

transferee is not a U.S. Person within the meaning of Rule 902(o) of

Regulation S nor a Person acting for the account or benefit of a U.S.

Person,

 

(4)                                  no

directed selling efforts have been made in contravention of the requirements of

Rule 903(b) or Rule 904(b) of Regulation S, as applicable,

 

(5)                                  the

transaction is not part of a plan or scheme to evade the registration

requirements of the Securities Act, and

 

(6)                                  upon

completion of the transaction, the beneficial interest being transferred as

described above will be held with the Depository through [Euroclear] [Clearstream].

 

This certificate and the

statements contained herein are made for your benefit and the benefit of the

Trustee and the Issuer.

 

	

   

  	

  [Insert Name of Transferor]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

   

  
					

 

E-2

 

EXHIBIT

F

 

FORM OF TRANSFER CERTIFICATE FOR RULE

144A GLOBAL NOTE TO

REGULATION S GLOBAL NOTE AFTER RESTRICTED PERIOD

 

(Pursuant to

Section 4.02(j)(ii) of the Indenture)

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class [A], [B], [C]

 

Ladies and Gentlemen:

 

Reference is hereby made

to the Indenture, dated as of March 15,

2002 (the “Agreement”), between ACAS Business Loan

Trust 2002–1, as the issuer (the “Issuer”), and Wells Fargo Bank

Minnesota, National Association, as the indenture trustee (the “Trustee”).  Capitalized terms used but not defined herein

shall have the meanings given to them in the Agreement.

 

This letter relates to

US $[                       ]

aggregate current principal amount of

Class           Notes (the “Notes”)

which are held in the form of the Rule 144A Global Note (CUSIP

No.                      )

with the Depository in the name of [insert name of transferor] (the “Transferor”).  The Transferor has requested a transfer of

such beneficial interest in the Notes for an interest in the Regulation S

Global Note (Common Code No.              ).

 

In connection with such

request, and in respect of such Notes, the Transferor does hereby certify that

such transfer has been effected in accordance with the transfer restrictions

set forth in the Agreement and, (i) with respect to transfers made in

reliance on Regulation S under the Securities Act of 1933, as amended (the

“Securities Act”), the Transferor does hereby certify that:

 

(1)                                  the

offer of the Notes was not made to a person in the United States;

 

(2)                                  [at the time

the buy order was originated, the transferee was outside the United States or

the Transferor and any person acting on its behalf reasonably believed that the

transferee was outside the United States] [the transaction was executed in, on

or through the facilities of a designated offshore securities market and

neither the Transferor

F-1

 

nor any person acting on its behalf

knows that the transaction was pre–arranged

with a buyer in the United States];

 

(3)                                  no

directed selling efforts have been made in contravention of the requirements of

Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and

 

(4)                                  the

transaction is not part of a plan or scheme to evade the registration

requirements of the Securities Act,

 

or (ii) with respect

to transfers made in reliance on Rule 144 under the Securities Act, the

Transferor does hereby certify that the Notes that are being transferred are

not “restricted securities” as defined in Rule 144 under the Securities

Act.

 

This certificate and the

statements contained herein are made for your benefit and the benefit of the

Trustee and the Servicer.

 

	

   

  	

  [Insert Name of Transferor]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

   

  
					

 

F-2

 

EXHIBIT G

 

FORM OF TRANSFER CERTIFICATE

REGULATION S GLOBAL NOTE

TO RULE 144A GLOBAL NOTE DURING RESTRICTED PERIOD

 

(Pursuant to

Section 4.02(j)(iii)(3)(i) of the Indenture)

 

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class [A], [B], [C]

 

Ladies and Gentlemen:

 

Reference is hereby made to the Indenture, dated as of

March 15, 2002 (the “Agreement”),

between ACAS Business Loan Trust 2002–1, as the issuer (the “Issuer”),

and Wells Fargo Bank Minnesota, National Association, as the indenture trustee

(the “Trustee”).  Capitalized

terms used but not defined herein shall have the meanings given to them in the

Agreement.

 

This letter relates to US

$[                     ]

aggregate current principal amount of

Class          Notes (the “Notes”)

which are held in the form of the Regulation S Global Note (CUSIP

No.             )

with [Euroclear]

[Clearstream] (Common Code

No.              )

through the Depository in the name of [insert name of transferor] (the “Transferor”).  The Transferor has requested a transfer of

such beneficial interest in the Notes for an interest in the

Regulation 144A Global Note (CUSIP

No.                    ).

 

In connection with such

request, and in respect of such Notes, the Transferor does hereby certify that

such Notes are being transferred in accordance with (i) the transfer

restrictions set forth in the Agreement and (ii) Rule 144A under the

Securities Act to a transferee that the Transferor reasonably believes is

purchasing the Notes for its own account with respect to which the transferee

exercises sole investment discretion and the transferee and any such account is

a “qualified institutional buyer” within the meaning of Rule 144A, in each

case in a transaction meeting the requirements of Rule 144A and in

accordance with any applicable securities laws of any state of the United States

or any jurisdiction.

 

G-1

 

This certificate

and the statements contained herein are made for your benefit and the benefit

of the Trustee, the Issuer and placement agent of the offering of the Notes.

 

	

   

  	

  [Insert Name of Transferor]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

   

  
					

 

G-2

 

EXHIBIT H

 

FORM OF TRANSFER CERTIFICATE FOR REGULATION S

GLOBAL NOTE DURING RESTRICTED PERIOD

 

(Pursuant to

Section 4.02(l)(iv)(3) of the Indenture)

 

 

Wells Fargo Bank Minnesota, National Association,

  as the Indenture Trustee

Sixth and Marquette Avenue, MAC N9311–161

Minneapolis, Minnesota  55479

Attention:  Corporate Trust

Services/Asset Backed Administration

 

Re:                               ACAS

Business Loan Trust Notes, Series 2002–1

Class [A], [B], [C]

 

Ladies and Gentlemen:

 

This certificate is delivered pursuant to Section 4.02

of the Indenture, dated as of March 15,

2002 (the “Agreement”), between ACAS Business Loan

Trust 2002–1, as the issuer (the “Issuer”), and Wells Fargo Bank

Minnesota, National Association, as the indenture trustee (the “Trustee”),

in connection with the transfer by the undersigned (the “Transferor”)

to                        

(the “Transferee”) of

$                                       

current principal amount of

Class            Notes,

in fully registered form (each, an “Individual Note”), or a beneficial

interest of such aggregate current principal amount in the Regulation S

Global Note (the “Global Note”) maintained by The Depository Trust

Company or its successor as Depository under the Agreement (such transferred

interest, in either form, being the “Transferred Interest”).

 

In connection with such

transfer, the Transferor does hereby certify that such transfer has been

effected in accordance with the transfer restrictions set forth in the

Agreement and the Notes and (i) with respect to transfers made in

accordance with Regulation S (“Regulation S”) promulgated

under the Securities Act of 1933, as amended (the “Securities Act”), the

Transferor does hereby certify that:

 

(1)                                  the

offer of the Transferred Interest was not made to a person in the United

States;

 

(2)                                  [at the time

the buy order was originated, the Transferee was outside the United States or

the Transferor and any person acting on its behalf reasonably believed that the

Transferee was outside the United States] [the transaction was executed in, on

or through the facilities of a designated offshore securities market and

neither the undersigned nor any person acting on its behalf knows that the

transaction was pre–arranged with a buyer in the United States];

 

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(3)                                  the

transferee is not a U.S. Person within the meaning of Rule 902(o) of

Regulation S nor a person acting for the account or benefit of a U.S.

Person, and upon completion of the transaction, the Transferred Interest will

be held with the Depository through [Euroclear] [Clearstream];

 

(4)                                  no

directed selling efforts have been made in contravention of the requirements of

Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and

 

(5)                                  the

transaction is not part of a plan or scheme to evade the registration

requirements of the Securities Act.

 

or (ii) with respect

to transfers made in reliance on Rule 144 under the Securities Act, the

Transferor does hereby certify that the Trust Certificates that are being

transferred are not “restricted securities” as defined in Rule 144 under

the Securities Act.

 

This certificate and the

statements contained herein are made for your benefit and the benefit of the

Trustee and the Issuer.

 

	

   

  	

  [Name of Transferor]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

   

  
					

 

H-2

 

EXHIBIT I

 

FORM

OF INVESTOR CERTIFICATION

 

Date:

 

Wells Fargo Bank Minnesota,

    National

Association

Sixth Street and Marquette Avenue

MAC N9311–161

Minneapolis, Minnesota  55479

 

Attention:              Corporate

Trust Services–Asset–Backed Administration

ACAS Business Loan Trust

Notes, Series 2002–1

Class A, Class B and

Class C Notes

 

In accordance with Section 7.04 of the

Indenture, dated as of March 15, 2002

(the “Agreement”), by and between ACAS Business Loan Trust 2002–1, as

the issuer, and Wells Fargo Bank Minnesota, National Association, as the

indenture trustee (the “Indenture Trustee”), with respect to the

above–captioned Notes (the “Notes”), the undersigned hereby certifies

and agrees as follows:

 

1.             The

undersigned is a beneficial owner of

$                     in

principal balance of the Class          

Notes.

 

2.             The

undersigned is requesting a password pursuant to Section 3.29 of

the Agreement for access to certain information (the “Information”) on

the Indenture Trustee’s website.

 

3.             In

consideration of the Indenture Trustee’s disclosure to the undersigned of the

Information, or the password in connection therewith, the undersigned will keep

the Information confidential (except from such outside persons as are assisting

it in connection with the related Notes, from its accountants and attorneys,

and otherwise from such governmental or banking authorities or agencies to

which the undersigned is subject), and such Information will not, without the

prior written consent of the Indenture Trustee, be otherwise disclosed by the

undersigned or by its officers, directors, partners, employees, agents or

representatives (collectively, the “Representatives”) in any manner

whatsoever, in whole or in part.

 

4.             The

undersigned shall be fully liable for any breach of this agreement by itself or

any of its Representatives and shall indemnify the Indenture Trustee for any

loss, liability or expense incurred thereby with respect to any such breach by

the undersigned or any of its Representatives.

 

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5.             Capitalized

terms used by not defined herein shall have the respective meanings assigned

thereto in the Agreement.

 

IN WITNESS WHEREOF, the undersigned has caused its

name to be signed hereby by its duly authorized officer, as of the day and year

written above.

 

	

   

  	

   

  
	

   

  	

  Beneficial Owner

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

  Company:

  	

   

  
	

   

  	

  Phone:

  	

   

  
						

 

I-2

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