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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 31, 1997
Advanta Mortgage Loan Trust 1997-1
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(Exact name of registrant as specified in its charter)
New York 333-21265 Application Pending
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o Advanta Mortgage Conduit 92127
Services, Inc. ------------
Attention: Milton Riseman (Zip Code)
16875 West Bernardo Drive
San Diego, California
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (619) 674-1800
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No Change
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
Advanta Mortgage Conduit Services, Inc. registered issuances
of up to $1,667,644,136 principal amount of Mortgage Loan Asset-Backed
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by the Registration Statements
on Form S-3 (Registration File No. 333-21265 (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, Advanta Mortgage Loan Trust
1997-1 (the "Registrant" or the "Trust") issued approximately $550,000,000 in
aggregate principal amount of its Mortgage Loan Asset-Backed Certificates,
Series 1997-1 (the "Certificates"), on March 31, 1997. This Current Report on
Form 8-K is being filed to satisfy an undertaking to file copies of certain
agreements executed in connection with the issuance of the Certificates, the
forms of which were filed as Exhibits to the Registration Statements.
The Certificates were issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") attached hereto as
Exhibit 4.1, dated as of March 1, 1997, between Advanta Mortgage Conduit
Services, Inc. (the "Company"), Advanta Mortgage Corp. USA, in its capacity as
master servicer (the "Master Servicer") and Bankers Trust Company of California,
N.A., in its capacity as Trustee (the "Trustee"). The Certificates consist of
thirteen classes, the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6 (collectively, the "Class A Certificates"), Class M-1A, Class M-1F
(the "Class M-1 Certificates"), Class M-2A, Class M-2F (the "Class M-2
Certificates" and collectively with the Class M-1 Certificates, the "Mezzanine
Certificates"), Class B-1A, Class B-1F (the "Class B Certificates" and
collectively with the Class A Certificates and the Mezzanine Certificates, the
"Offered Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Offered Certificates and the Class R Certificates are
together referred to herein as the "Certificates." The Certificates initially
evidence, in the aggregate, 100% of the undivided beneficial ownership interests
in the Trust.
The assets of the Trust initially will include two investment
pools (each, a "Mortgage Loan Group" or "Group") of closed-end mortgage loans
(the "Mortgage Loans") secured by mortgages or deeds of trust (the "Mortgages")
on one-to-four family residential properties. The Fixed Rate Group Certificates
represent undivided ownership interests in a pool of fixed-rate Mortgage Loans
secured by Mortgages which may be either in a first or in a junior lien
position. The Adjustable Rate Group Certificates represent undivided
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ownership interests in a group of variable rate Mortgage Loans secured by
Mortgages which may be either in a first or in a junior lien position.
Interest distributions on the Offered Certificates are based
on the Certificate Principal Balance thereof and the then applicable
Pass-Through Rate thereof.
The Class A-1 Certificates have an aggregate principal amount
of $141,000,000. The Class A-2 Certificates have an aggregate principal amount
of $82,000,000. The Class A-3 Certificates have an aggregate principal amount of
$11,500,000. The Class A-4 Certificates have an aggregate principal amount of
$34,015,000. The Class A-5 Certificates have an aggregate principal amount of
$29,835,000. The Class A-6 Certificates have an aggregate principal amount of
$168,000,000. The Class M-1F Certificates have an aggregate principal amount of
$10,200,000. The Class M-2F Certificates have an aggregate principal amount of
$22,100,000. The Class B-1F Certificates have an aggregate principal amount of
$9,350,000. The Class M-1A Certificates have an aggregate principal amount of
$12,600,000. The Class M-2A Certificates have an aggregate principal amount of
$10,500,000. The Class B-1A Certificates have an aggregate principal amount of
$18,900,000.
As of the Closing Date, the Mortgage Loans possessed the
characteristics described in the Prospectus dated March 10, 1997 and the
Prospectus Supplement dated March 26, 1997 filed pursuant to Rule 424(b)(2) of
the Act on April 2, 1997.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated March 26, 1997
between Advanta Mortgage Conduit Services, Inc. and Morgan, Stanley & Co.
Incorporated, as representative of the Underwriters (the "Representative").
4.1 Pooling and Servicing Agreement, dated as of March 1,
1997, between Advanta Mortgage Conduit Services, Inc., as sponsor, Advanta
Mortgage Corp. USA, as master servicer, and Bankers Trust Company of California,
N.A., as Trustee.
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4.2 Master Loan Transfer Agreement, dated as of
February 15, 1995, between Advanta Mortgage Conduit
Services, Inc., as sponsor, Advanta National Bank, USA,
Advanta Mortgage Corp. Midatlantic, Advanta Mortgage Corp.
Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta
Mortgage Corp. of New Jersey, Advanta Mortgage Corp.
Northeast and Advanta Mortgage Corp. USA (collectively, the
"Affiliated Originators"), and Bankers Trust Company, as trustee.
4.3 Conveyance Agreement dated as of March 31,
1997 between the Affiliated Originators and Advanta Mortgage
Conduit Services, Inc.
4.4 Advanta Mortgage Holding Company Guaranty.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ADVANTA MORTGAGE LOAN TRUST 1997-1
By: Advanta Mortgage Conduit Services,
Inc., as Sponsor
By: /s/ Mark T. Dunsheath
-------------------------------------
Name: Mark T. Dunsheath
Title: Vice President
Dated: April 3, 1997
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated March
26, 1997 between Advanta Mortgage
Conduit Services, Inc. and Morgan,
Stanley & Co. Incorporated.
4.1 Pooling and Servicing Agreement, dated
as of March 1, 1997, between Advanta
Mortgage Conduit Services, Inc., as
sponsor, Advanta Mortgage Corp. USA,
as master servicer, Bankers Trust
Company of California, N.A., as
Trustee.
4.2 Master Loan Transfer Agreement, dated
as of February 15, 1995, between
Advanta Mortgage Conduit Services,
Inc., as sponsor, Advanta National
Bank, USA, Advanta Mortgage Corp.
Midatlantic, Advanta Mortgage Corp.
Midatlantic II, Advanta Mortgage Corp.
Midwest, Advanta Mortgage Corp. of New
Jersey, Advanta Mortgage Corp.
Northeast and Advanta Mortgage Corp.
USA (collectively, the "Affiliated
Originators"), and Bankers Trust
Company, as trustee.
4.3 Conveyance Agreement dated as of March
31, 1997 between the Affiliated
Originators and Advanta Mortgage
Conduit Services, Inc.
4.4 Advanta Mortgage Holding Company
Guaranty.
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Exhibit 1.1
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ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Mortgage Loan Asset-Backed Certificates,
Series 1997-1, Class A Certificates
UNDERWRITING AGREEMENT
March 26, 1997
MORGAN STANLEY & CO. INCORPORATED
As Representative of the Underwriters
named in Schedule I
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Advanta Mortgage Conduit Services, Inc. (the "Company") has
authorized the issuance and sale of Mortgage Loan Asset-Backed Certificates,
Series 1997-1, (the "Certificates") consisting of (i) the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates and the Class A-6 Adjustable Rate
Certificates (collectively, the "Class A Certificates"), (ii) the Class M-1F
Certificates and the Class M-1A Adjustable Rate Certificates (collectively, the
"Class M-1 Certificates"), (iii) the Class M-2F Certificates and the Class M-2A
Adjustable Rate Certificates (collectively, the "M-2 Certificates", and
collectively with the Class M-1 Certificates, the "Mezzanine Certificates"),
(iv) the Class B-1F Certificates and the Class B-1A Adjustable Rate Certificates
(collectively, the "Class B Certificates" and collectively with the Mezzanine
Certificates, the "Subordinate Certificates"), (v) the Class C Certificates and
(vi) the residual class with respect to each REMIC held by the Trust (the "Class
R Certificates"). Only the Class A Certificates and the Subordinate Certificates
(collectively, the "Offered Certificates") are being offered. The Certificates
will be issued by the Advanta Mortgage Loan Trust 1997-1 (the "Trust"), and will
evidence in the aggregate the entire beneficial interest in a trust estate (the
"Trust Estate") consisting primarily of two segregated pools (the "Mortgage
Pools") of closed-end mortgage loans (the "Mortgage Loans"), and certain related
property. The Mortgage Loans shall have, as of the opening of business on March
1, 1997 (the "Cut-Off Date"), an aggregate principal balance of approximately
$550,000,000. The certificates are to be issued under a pooling and servicing
agreement, to be dated as of
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March 1, 1997 (the "Pooling and Servicing Agreement"), among the Company, as
sponsor, Advanta Mortgage Corp. USA, as master servicer, and Bankers Trust
Company of California, N.A., as trustee (the "Trustee").
Only the Offered Certificates are being purchased by the
Underwriters.
The Certificates are more fully described in a Registration
Statement which the Company has furnished to the Underwriters. Capitalized terms
used but not defined herein shall have the meanings given to them in the Pooling
and Servicing Agreement.
Simultaneously with the execution of the Pooling and Servicing
Agreement, the Company will enter into a conveyance agreement pursuant to the
Master Loan Transfer Agreement dated as of February 15, 1995 among the Trustee,
and the Affiliated Originators named thereon (together, the "Purchase
Agreement"), pursuant to which the Affiliated Originators will transfer to the
Company all of their right, title and interest in and to the Mortgage Loans as
of the Closing Date.
SECTION I. Representations and Warranties of the
Company. The Company represents and warrants to, and agrees
with the Underwriters that:
A. Registration Statements on Form S-3, as amended by
Post-Effective Amendments thereto, have (i) been prepared by
the Company in conformity with the requirements of the
Securities Act of 1933 (the "Securities Act") and the rules
and regulations (the "Rules and Regulations") of the United
States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities
Act. Copies of such Registration Statements have been
delivered by the Company to the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of
which such Registration Statements, or the most recent
post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such Registration Statements, or
amendments thereof, including a preliminary prospectus
supplement which, as completed, is proposed to be used in
connection with the sale of the Offered Certificates and any
prospectus filed with the Commission by the Company with the
consent of the Underwriters pursuant to
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Rule 424(a) of the Rules and Regulations; "Registration
Statement" means such registration statements, as amended by
all Post-Effective Amendments thereto heretofore filed with
the Commission, at the Effective Time, including any documents
incorporated by reference therein at such time; and
"Prospectus" means such final prospectus, as first
supplemented by a prospectus supplement (the "Prospectus
Supplement") relating to the Offered Certificates, as first
filed with the Commission pursuant to paragraph (1) or (4) of
Rule 424(b) of the Rules and Regulations. Reference made
herein to any Preliminary Prospectus or to the Prospectus
shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be,
and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of
such Preliminary Prospectus or the Prospectus, as the case may
be, and incorporated by reference in such Preliminary
Prospectus or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall
be deemed to include any report of the Company filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act after the Effective Time that is incorporated by reference
in the Registration Statement. The Commission has not issued
any order preventing or suspending the use of any Preliminary
Prospectus. There are no contracts or documents of the Company
which are required to be filed as exhibits to the Registration
Statement pursuant to the Securities Act or the Rules and
Regulations which have not been so filed or incorporated by
reference therein on or prior to the Effective Date of the
Registration Statements. The conditions for use of Form S-3,
as set forth in the General Instructions thereto, have been
satisfied.
To the extent that any Underwriter (i) has provided
to the Company Collateral term sheets (as hereinafter defined)
that such Underwriter has provided to a prospective investor,
the Company has filed such Collateral term sheets as an
exhibit to a report on Form 8-K within two business days of
its receipt thereof, or (ii) has provided to the Company
Structural term sheets or Computational Materials (each as
defined below) that such
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Underwriter has provided to a prospective investor, the
Company will file or cause to be filed with the Commission a
report on Form 8-K containing such Structural term sheet and
Computational Materials, as soon as reasonably practicable
after the date of this Agreement, but in any event, not later
than the date on which the Prospectus is filed with the
Commission pursuant to Rule 424 of the Rules and Regulations.
B. The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they
become effective or are filed with the Commission, as the case
may be, conform in all respects to the requirements of the
Securities Act and the Rules and Regulations. The Registration
Statement, as of the Effective Date thereof and of any
amendment thereto, did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus as of its date, and as amended or
supplemented as of the Closing Date (as hereinafter defined)
does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to
information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity
with written information furnished to the Company in writing
by the Underwriters expressly for use therein.
C. The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
any further documents so filed and incorporated by reference
in the Prospectus, when such documents become effective or are
filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities
Act
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or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
D. Since the respective dates as of which information
is given in the Prospectus, there has not been any material
adverse change in the general affairs, management, financial
condition, or results of operations of the Company, otherwise
than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, is duly qualified
to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to
own or hold its properties, to conduct the business in which
it is engaged and to enter into and perform its obligations
under this Agreement, the Pooling and Servicing Agreement and
the Purchase Agreement, and to cause the Certificates to be
issued.
F. There are no actions, proceedings or
investigations pending before or threatened by any court,
administrative agency or other tribunal to which the Company
is a party or of which any of its properties is the subject
(a) which if determined adversely to the Company would have a
material adverse effect on the business or financial condition
of the Company, (b) which asserts the invalidity of this
Agreement, the Pooling and Servicing Agreement, the Purchase
Agreement, or the Certificates, (c) which seeks to prevent the
issuance of the Certificates or the consummation by the
Company of any of the transactions contemplated by the Pooling
and Servicing Agreement, the Purchase Agreement or this
Agreement, as the case may be, or (d) which might materially
and adversely affect the performance by the Company of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, the Purchase Agreement, this
Agreement or the Certificates.
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G. This Agreement has been, and the Pooling and
Servicing Agreement and the Purchase Agreement when executed
and delivered as contemplated hereby and thereby will have
been, duly authorized, executed and delivered by the Company,
and this Agreement constitutes, and the Pooling and Servicing
Agreement and the Purchase Agreement when executed and
delivered as contemplated herein, will constitute, legal,
valid and binding instruments enforceable against the Company
in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting
creditors' rights generally, (y) general principles of equity
(regardless of whether enforcement is sought in a proceeding
in equity or at law), and (z) with respect to rights of
indemnity under this Agreement and limitations of public
policy under applicable securities laws.
H. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement and the
Purchase Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby, and the issuance
and delivery of the Certificates do not and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party, by which the
Company is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the
articles of incorporation or by-laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its properties or assets.
I. Arthur Andersen LLP are independent public
accountants with respect to the Company as required
by the Securities Act and the Rules and Regulations.
J. The direction by the Company to the Trustee to
execute, authenticate, issue and deliver the Certificates has
been duly authorized by the Company, and assuming the Trustee
has been duly authorized to do so, when executed,
authenticated, issued and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the
Certificates will be validly issued and outstanding
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and will be entitled to the benefits provided by
the Pooling and Servicing Agreement.
K. No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States is required
for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation
by the Company of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement and the
Purchase Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be
required under State securities or Blue Sky laws in connection
with the purchase and distribution of the Offered Certificates
by the Underwriters or as have been obtained.
L. The Company possesses all material licenses,
certificates, authorities or permits issued by the appropriate
State, Federal or foreign regulatory agencies or bodies
necessary to conduct the business now conducted by it and as
described in the Prospectus, and the Company has not received
notice of any proceedings relating to the revocation or
modification of any such license, certificate, authority or
permit which if decided adversely to the Company would, singly
or in the aggregate, materially and adversely affect the
conduct of its business, operations or financial condition.
M. At the time of execution and delivery of the
Pooling and Servicing Agreement, the Company will: (i) have
good title to the interest in the Mortgage Loans conveyed by
the Affiliated Originators, free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other
security interest (collectively, "Liens"); (ii) not have
assigned to any person any of its right, title or interest in
the Mortgage Loans, in the Purchase Agreement, in the Pooling
and Servicing Agreement or in the Offered Certificates being
issued pursuant thereto; and (iii) have the power and
authority to sell its interest in the Mortgage Loans to the
Trustee and to sell the Offered Certificates to the
Underwriters. Upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Trustee will have
acquired beneficial ownership of all of the Company's right,
title and interest in and to the Mortgage Loans. Upon delivery
to the Underwriters of the Offered
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Certificates, the Underwriters will have good title to the
Offered Certificates, free of any Liens.
N. As of the Cut-Off Date, each of the Mortgage Loans
will meet the eligibility criteria described in the Prospectus
and will conform to the descriptions thereof contained in the
Prospectus.
O. Neither the Company nor the Trust created by the
Pooling and Servicing Agreement is an "investment company"
within the meaning of such term under the Investment Company
Act of 1940 (the "1940 Act") and the rules and regulations of
the Commission thereunder.
P. At the Closing Date, the Certificates and
the Pooling and Servicing Agreement will conform in
all material respects to the descriptions thereof
contained in the Prospectus.
Q. At the Closing Date, the Offered Certificates
shall have been rated in the highest rating category by at
least two nationally recognized rating agencies.
R. Any taxes, fees and other governmental
charges in connection with the execution, delivery
and issuance of this Agreement, the Pooling and
Servicing Agreement, the Purchase Agreement and the
Certificates have been paid or will be paid at or
prior to the Closing Date.
S. At the Closing Date, each of the
representations and warranties of the Company set
forth in the Pooling and Servicing Agreement will
be true and correct in all material respects.
Any certificate signed by an officer of the Company and
delivered to the Representative or counsel for the Underwriters in connection
with an offering of the Offered Certificates shall be deemed, and shall state
that it is, a representation and warranty as to the matters covered thereby to
each person to whom the representations and warranties in this Section I are
made.
SECTION II. Purchase and Sale. The commitment of the
Underwriters to purchase the Offered Certificates pursuant to this Agreement
shall be deemed to have been made on the basis of the representations and
warranties herein contained and shall be subject to the terms and conditions
herein set forth. The Company agrees to instruct the Trustee to issue and agrees
to sell to the Underwriters, and the Underwriters agree (except as provided in
Sections X and XI hereof) to
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purchase from the Company the aggregate initial principal amounts of Offered
Certificates set forth on Schedule A, at the purchase price or prices set forth
in Schedule A.
The obligations of the Underwriters hereunder to purchase the
Offered Certificates of each Class shall be several and not joint. Each
Underwriter's obligation shall be to purchase the aggregate principal amount of
Offered Certificates of the related Class as is indicated with respect to each
Underwriter under the caption "Underwriting" in the Prospectus. The right of the
Company and a non-defaulting Underwriter shall be as set forth in Section XIII
hereof.
SECTION III. Delivery and Payment. Delivery of and payment for the Offered
Certificates to be purchased by the Underwriters shall be made at the offices of
Dewey Ballantine, 1301 Sixth Avenue, New York, New York 10019, or at such other
place as shall be agreed upon by the Representative and the Company at 10:00
A.M. New York City time on March 31, 1997 or at such other time or date as shall
be agreed upon in writing by the Representative and the Company (such date being
referred to as the "Closing Date"). Payment shall be made to the Company by wire
transfer of same day funds payable to the account of the Company. Delivery of
the Offered Certificates shall be made to the Representative for the accounts of
the Underwriters against payment of the purchase price thereof. The Offered
Certificates shall be in such denominations and registered in such names as the
Representative may request in writing at least two business days prior to the
Closing Date. The Offered Certificates will be made available for examination by
the Representative no later than 2:00 p.m. New York City time on the first
business day prior to the Closing Date.
SECTION IV. Offering by the Underwriters. It is
understood that, subject to the terms and conditions hereof,
the Underwriters proposes to offer the Offered Certificates
for sale to the public as set forth in the Prospectus.
SECTION V. Covenants of the Company. The Company
agrees as follows:
A. To prepare the Prospectus in a form approved by
the Representative and to file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement; to
make no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the
Closing Date except as permitted herein; to advise the
Representative, promptly after it receives notice thereof, of
the
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time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed and to furnish the
Representative with copies thereof; to file promptly all
reports and any definitive proxy or information statements
required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and, for so long
as the delivery of a prospectus is required in connection with
the offering or sale of the Offered Certificates, to promptly
advise the Representative of its receipt of notice of the
issuance by the Commission of any stop order or of: (i) any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus; (ii) the suspension of the
qualification of the Offered Certificates for offering or sale
in any jurisdiction; (iii) the initiation of or threat of any
proceeding for any such purpose; (iv) any request by the
Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional
information. In the event of the issuance of any stop order or
of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any
such qualification, the Company promptly shall use its best
efforts to obtain the withdrawal of such order or suspension.
B. To furnish promptly to the Representative and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and of each
amendment thereto filed with the Commission, including all
consents and exhibits filed therewith.
C. To deliver promptly to the Representative such
number of the following documents as the Representative shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) each
Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus; and (iii) any document incorporated
by reference in the Prospectus (including exhibits thereto).
If the delivery of a prospectus is required at any time prior
to the expiration of nine months after the Effective Time in
connection with the offering or sale of the Offered
Certificates, and if at such time any events shall
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have occurred as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act,
the Company shall notify the Representative and, upon the
Representative's request, shall file such document and prepare
and furnish without charge to the Underwriters and to any
dealer in securities as many copies as the Representative may
from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case
any of the Underwriters are required to deliver a Prospectus
in connection with sales of any of the Offered Certificates at
any time nine months or more after the Effective Time, upon
the request of the Representative but at the expense of such
Underwriter, the Company shall prepare and deliver to such
Underwriter as many copies as such Underwriter may reasonably
request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Securities Act.
D. To file promptly with the Commission any amendment
to the Registration Statement or the Prospectus or any
supplement to the Prospectus that may, in the judgment of the
Company or the Representative, be required by the Securities
Act or requested by the Commission.
E. Prior to filing with the Commission any (i)
Preliminary Prospectus, (ii) amendment to the Registration
Statement or supplement to the Prospectus, or document
incorporated by reference in the Prospectus, or (iii)
Prospectus pursuant to Rule 424 of the Rules and Regulations,
to furnish a copy thereof to the Representative and counsel
for the Underwriters and obtain the consent of the
Representative to the filing.
F. To make generally available to holders of
the Offered Certificates as soon as practicable,
but in any event not later than 90 days after the
close of the period covered thereby, a statement of
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earnings of the Trust (which need not be audited) complying
with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule
158) and covering a period of at least twelve consecutive
months beginning not later than the first day of the first
fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperation with the
Representative, to qualify the Offered Certificates for
offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the
Representative may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be
required for the distribution of the Offered Certificates. The
Company will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in
which the Offered Certificates have been so qualified.
H. Not, without the Representative's prior written
consent, to publicly offer or sell or contract to sell any
mortgage pass-through securities, collateralized mortgage
obligations or other similar securities representing interests
in or secured by other mortgage-related assets originated or
owned by the Company for a period of 5 business days following
the commencement of the offering of the Offered Certificates
to the public.
I. So long as the Offered Certificates shall be
outstanding, to deliver to the Representative as soon as such
statements are furnished to the Trustee: (i) the annual
statement as to compliance delivered to the Trustee pursuant
to Section 8.16 of the Pooling and Servicing Agreement; (ii)
the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Section 8.17
of the Pooling and Servicing Agreement; and (iii) the Monthly
Statement furnished to the Certificateholders pursuant to
Section 7.8 of the Pooling and Servicing Agreement.
J. To apply the net proceeds from the sale of
the Offered Certificates in the manner set forth in
the Prospectus.
SECTION VI. Conditions to the Underwriters'
Obligations. The obligations of the Underwriters to purchase
the Offered Certificates pursuant to this Agreement are
subject to: (i) the accuracy on and as of the Closing Date of
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the representations and warranties on the part of the Company herein contained;
(ii) the performance by the Company of all of their respective obligations
hereunder; and (iii) the following conditions as of the Closing Date:
A. The Representative shall have received
confirmation of the effectiveness of the Registration
Statement. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission. Any request of the
Commission for inclusion of additional information in the
Registration Statement or the Prospectus shall have been
complied with.
B. None of the Underwriters shall have discovered and
disclosed to the Company on or prior to the Closing Date that
the Registration Statement or the Prospectus or any amendment
or supplement thereto contains an untrue statement of a fact
or omits to state a fact which, in the opinion of Dewey
Ballantine, counsel for the Underwriters, is material and is
required to be stated therein or is necessary to make the
statements therein not misleading.
C. All corporate proceedings and other legal matters
relating to the authorization, form and validity of this
Agreement, the Pooling and Servicing Agreement, the Purchase
Agreement, the Indemnification Agreement, the Offered
Certificates, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be satisfactory in all
respects to counsel for the Underwriters, and the Company
shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to
pass upon such matters.
D. The Representative shall have received the
favorable opinion of Dewey Ballantine, special counsel to the
Company with respect to the following items, dated the Closing
Date, to the effect that:
1. The Company has been duly organized and
is validly existing as a corporation in good
standing under the laws of the State of Delaware,
and is qualified to do business in each state
necessary to enable it to perform its obligations
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as Sponsor under the Pooling and Servicing Agreement. The
Company has the requisite power and authority to execute and
deliver, engage in the transactions contemplated by, and
perform and observe the conditions of, this Agreement, the
Pooling and Servicing Agreement and the Purchase Agreement.
2. This Agreement, the Certificates, the Pooling and
Servicing Agreement and the Purchase Agreement have been duly
and validly authorized, executed and delivered by the Company,
all requisite corporate action having been taken with respect
thereto, and each (other than the Certificates) constitutes
the valid, legal and binding agreement of the Company.
3. Neither the transfer of the Mortgage Loans to the
Trust, the issuance or sale of the Certificates nor the
execution, delivery or performance by the Company of the
Pooling and Servicing Agreement, this Agreement or the
Purchase Agreement (A) conflicts or will conflict with or
results or will result in a breach of, or constitutes or will
constitute a default under, (i) any term or provision of the
certificate of incorporation or bylaws of the Company; (ii)
any term or provision of any material agreement, contract,
instrument or indenture, to which the Company is a party or is
bound and known to such counsel; or (iii) any order, judgment,
writ, injunction or decree of any court or governmental agency
or body or other tribunal having jurisdiction over the Company
and known to such counsel; or (B) results in, or will result
in the creation or imposition of any lien, charge or
encumbrance upon the Trust Estate or upon the Certificates,
except as otherwise contemplated by the Pooling and Servicing
Agreement.
4. The endorsement and delivery of each Note, and the
preparation, delivery and recording of an Assignment with
respect to each Mortgage is sufficient to fully transfer to
the Trustee for the benefit of the Owners all right, title and
interest of the Company in the Note and Mortgage, as
noteholder and mortgagee or assignee thereof, subject to any
exceptions set forth in such opinion, and will be sufficient
to permit the Trustee to avail itself of all protection
available under applicable law against the claims of any
present or future creditors of the Company and to prevent any
other sale, transfer, assignment,
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pledge or other encumbrance of the Mortgage Loans
by the Company from being enforceable.
5. No consent, approval, authorization or order of,
registration or filing with, or notice to, courts,
governmental agency or body or other tribunal is required
under the laws of the State of New York, for the execution,
delivery and performance of the Pooling and Servicing
Agreement, this Agreement, the Purchase Agreement or the
offer, issuance, sale or delivery of the Certificates or the
consummation of any other transaction contemplated thereby by
the Company, except such which have been obtained.
6. There are no actions, proceedings or
investigations, to such counsel's knowledge, pending or
threatened against the Company before any court, governmental
agency or body or other tribunal (i) asserting the invalidity
of the Pooling and Servicing Agreement, this Agreement, the
Purchase Agreement or the Certificates, (ii) seeking to
prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by the Pooling and
Servicing Agreement or this Agreement, (iii) which would
materially and adversely affect the performance by the Company
of obligations under, or the validity or enforceability of,
the Pooling and Servicing Agreement, the Certificates, the
Purchase Agreement or this Agreement or (iv) that would
adversely affect the status of the Trust Estate as a "real
estate mortgage investment conduit" ("REMIC") as such term is
defined in the Internal Revenue Code of 1986, as amended.
7. To the best of the knowledge of such counsel, the
Commission has not issued any stop order suspending the
effectiveness of the Registration Statement or any order
directed to any prospectus relating to the Certificates
(including the Prospectus), and has not initiated or
threatened any proceeding for that purpose.
8. The Registration Statement and the Prospectus
(other than the financial and statistical data included
therein, as to which such counsel need express no opinion),
including the Incorporated Documents, as of the date on which
the Registration Statement was declared effective and as of
the date hereof, comply as to form in all material respects
with the requirements of the 1933 Act and the rules and
regulations thereunder and
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the Exchange Act and the rules and regulations thereunder, and
such counsel does not know of any amendment to the
Registration Statement required to be filed, or of any
contracts, indentures or other documents of a character
required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration
Statement which has not been filed or described as required.
9. Neither the qualification of the Pooling and
Servicing Agreement under the Trust Indenture Act of 1939 nor
the registration of the Trust created by such Agreement under
the Investment Company Act of 1940 is presently required.
10. The statements in the Prospectus set forth under
the captions "DESCRIPTION OF THE SECURITIES," "THE POOLING AND
SERVICING AGREEMENT" and the statements in the Prospectus
Supplement set forth under the caption "DESCRIPTION OF THE
CERTIFICATES," to the extent such statements purport to
summarize certain provisions of the Certificates or of the
Pooling and Servicing Agreement, are fair and accurate in all
material respects.
11. The statements in the Prospectus and Prospectus
Supplement set forth under the captions "ERISA
CONSIDERATIONS," "CERTAIN FEDERAL INCOME TAX CONSEQUENCES,"
and the statements in the Prospectus set forth under the
caption "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS AND
RELATED MATTERS," to the extent that they constitute matters
of federal, New York or California law, or federal, New York
or California legal conclusions provide a fair and accurate
summary of such law or conclusions.
12. Assuming that (a) the Trustee causes the Trust
created under the Pooling and Servicing Agreement to elect, as
the Trustee has covenanted to do in the Pooling and Servicing
Agreement, to be treated as a REMIC and (b) the parties to the
Pooling and Servicing Agreement comply with the terms thereof,
the Trust will be treated as a REMIC, the Offered Certificates
issued pursuant to the Pooling and Servicing Agreement will be
treated as the "regular interests" in the REMIC and the Class
R Certificates issued pursuant to the Pooling and Servicing
Agreement will be treated as the sole "residual interest" in
the REMIC. The Trust will not be subject to tax upon its
income or assets by any taxing authority of the State of New
York or New York City or of the State of California (except
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<PAGE>
that no opinion need be expressed with respect to
any minimum tax).
13. Such opinion shall also relate to
comparable matters with respect to the Affiliated
Originators and Advanta Mortgage Holding Company.
14. No information has come to such counsel's
attention which causes them to believe that the Prospectus
(other than the financial statement and other financial and
statistical data contained therein, as to which such counsel
need express no opinion), as of the date thereof, contained
any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
15. Such other matters as the Representative
may reasonably request.
In rendering its opinions, the counsel described above may
rely, as to matters of fact, on certificates of responsible officers of the
Company, the Trustee and public officials. Such opinions may also assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Company.
E. The Representative shall have received letters,
including bring-down letters, from Arthur Andersen LLP, dated
on or before the Closing Date, in form and substance
satisfactory to the Representative and counsel for the
Underwriters, to the effect that they have performed certain
specified procedures requested by the Representative with
respect to the information set forth in the Prospectus and
certain matters relating to the Company.
F. The Offered Certificates shall have been rated in
the highest rating category by Standard & Poor's Ratings Group
and by Moody's Investors Service, Inc., and such ratings shall
not have been rescinded or downgraded. The Representative and
counsel for the Underwriters shall have received copies of any
opinions of counsel supplied to the rating organizations
relating to any matters with respect to the Certificates. Any
such opinions shall be dated the Closing Date and addressed to
the Underwriters or accompanied by reliance letters to the
Underwriters or shall state that the Underwriters may rely
upon them.
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G. The Representative shall have received from the
Company a certificate, signed by the president, a senior vice
president or a vice president of the Company, dated the
Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement,
the Pooling and Servicing Agreement and this Agreement and
that, to the best of his or her knowledge based upon
reasonable investigation:
1. the representations and warranties of the Company
in this Agreement, as of the Closing Date, and in the Pooling
and Servicing Agreement, the Purchase Agreement and in all
related agreements, as of the date specified in such
agreements, are true and correct, and the Company has complied
with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing Date;
2. there are no actions, suits or proceedings
pending, or to the best of such officer's knowledge,
threatened against or affecting the Company which if adversely
determined, individually or in the aggregate, would be
reasonably likely to adversely affect the Company's
obligations under the Pooling and Servicing Agreement, this
Agreement or the Purchase Agreement in any material way; and
no merger, liquidation, dissolution or bankruptcy of the
Company is pending or contemplated;
3. the information contained in the Registration
Statement and the Prospectus relating to the Company, the
Mortgage Loans or the servicing procedures of it or its
affiliates or subservicer is true and accurate in all material
respects and nothing has come to his or her attention that
would lead such officer to believe that the Registration
Statement or Prospectus includes any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein not misleading;
4. the information set forth in the Schedule of
Mortgage Loans required to be furnished pursuant to the
Pooling and Servicing Agreement is true and correct in all
material respects;
5. there has been no amendment or other document
filed affecting the articles of incorporation or bylaws of the
Company since September 30, 1996, and no such amendment has
been authorized. No event has occurred since September
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<PAGE>
30, 1996, which has affected the good standing of
the Company under the laws of the State of
Delaware;
6. there has not occurred any material adverse
change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or
in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from September 30, 1996;
7. on or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended
or potential downgrading or (B) any review or possible changes
in rating the direction of which has not been indicated, in
the rating, if any, accorded the Company or in any rating
accorded any securities of the Company, if any, by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of the 1933 Act; and
8. each person who, as an officer or representative
of the Company, signed or signs the Registration Statement,
the Pooling and Servicing Agreement, this Agreement, or any
other document delivered pursuant hereto, on the date of such
execution, or on the Closing Date, as the case may be, in
connection with the transactions described in the Pooling and
Servicing Agreement, the Indemnification Agreement, the
Purchase Agreement and this Agreement was, at the respective
times of such signing and delivery, and is now, duly elected
or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing
on such documents are their genuine signatures.
The Company shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as appropriate,
and bylaws which are in full force and effect on the date of such certificate
and a certified true copy of the resolutions of its Board of Directors with
respect to the transactions contemplated herein.
H. The Representative shall have received a
favorable opinion of counsel to the Trustee, dated
the Closing Date and in form and substance
satisfactory to the Representative, to the effect
that:
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1. the Trustee is a national banking association duly
organized, validly existing and in good standing under the
laws of the United States and has the power and authority to
enter into and to take all actions required of it under the
Pooling and Servicing Agreement;
2. the Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and the
Pooling and Servicing Agreement constitutes the legal, valid
and binding obligation of the Trustee, enforceable against the
Trustee in accordance with its terms, except as enforceability
thereof may be limited by (A) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement
of creditors' rights generally, as such laws would apply in
the event of a bankruptcy, insolvency or reorganization or
similar occurrence affecting the Trustee, and (B) general
principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other
action by any governmental agency or body or other tribunal is
required on the part of the Trustee in connection with its
execution and delivery of the Pooling and Servicing Agreement
or the performance of its obligations thereunder;
4. the Certificates have been duly executed,
authenticated and delivered by the Trustee; and
5. the execution and delivery of, and performance by
the Trustee of its obligations under, the Pooling and
Servicing Agreement do not conflict with or result in a
violation of any statute or regulation applicable to the
Trustee, or the charter or bylaws of the Trustee, or to the
best knowledge of such counsel, any governmental authority
having jurisdiction over the Trustee or the terms of any
indenture or other agreement or instrument to which the
Trustee is a party or by which it is bound.
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Company, the
Trustee and public officials. Such opinion may also assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Trustee.
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<PAGE>
I. The Representative shall have received from the
Trustee a certificate, signed by the President, a senior vice
president or a vice president of the Trustee, dated the
Closing Date, to the effect that each person who, as an
officer or representative of the Trustee, signed or signs the
Certificates, the Pooling and Servicing Agreement or any other
document delivered pursuant hereto, on the date hereof or on
the Closing Date, in connection with the transactions
described in the Pooling and Servicing Agreement was, at the
respective times of such signing and delivery, and is now,
duly elected or appointed, qualified and acting as such
officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures.
J. The Policy relating to the Certificates shall have
been duly executed and issued at or prior to the Closing Date
and shall conform in all material respects to the description
thereof in the Prospectus.
K. On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended
or potential downgrading or (B) any review or possible changes
in rating the direction of which has not been indicated, in
the rating, if any, accorded the Company or in any rating
accorded any securities of the Company, if any, by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of the 1933 Act.
L. There has not occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations, since September 30, 1996, of the Company and its
subsidiaries, that is in the Representative's judgment
material and adverse and that makes it in the Representative's
judgment impracticable to market the Offered Certificates on
the terms and in the manner contemplated in the Prospectus.
M. The Representative shall have received from Dewey
Ballantine, special counsel to the Company, a survey in form
and substance satisfactory to the Representative, indicating
the requirements of applicable local law which must be
complied with in order to transfer and service the Mortgage
Loans pursuant to the Pooling and
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<PAGE>
Servicing Agreement and the Company shall have complied with
all such requirements.
N. The Representative shall have received from Dewey
Ballantine, special counsel to the Underwriters, such opinion
or opinions, dated the Closing Date, with respect to the
issuance and sale of the Certificates, the Prospectus and such
other related matters as the Representative shall reasonably
require.
O. The Representative and counsel for the
Underwriters shall have received copies of any opinions of
counsel to the Company supplied to the Trustee relating to
matters with respect to the Certificates. Any such opinions
shall be dated the Closing Date and addressed to the
Underwriters or accompanied by reliance letters to the
Underwriters or shall state the Underwriters may rely thereon.
P. The Representative shall have received such
further information, certificates and documents as the
Representative may reasonably have requested not fewer than
three (3) full business days prior to the Closing Date.
Q. There shall have been executed and delivered by
Advanta Mortgage Holding Company, the corporate parent of the
Company ("AMHC"), a letter agreement with the Trustee,
pursuant to which AMHC agrees to become jointly and severally
liable with the Company and Advanta Mortgage Corp. USA for the
payment of the Joint and Several Obligations (as defined in
such letter agreement).
R. There shall have been executed and
delivered by AMHC, the corporate parent of the
Company, a letter agreement with the Underwriters
substantially in the form of Exhibit A hereto.
S. Prior to the Closing Date, counsel for the
Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the
Offered Certificates as herein contemplated and related
proceedings or in order to evidence the accuracy and
completeness of any of the representations and warranties, or
the fulfillment of any of the conditions, herein contained,
and all proceedings taken by the Company in connection with
the issuance and sale of the Certificates as herein
contemplated shall be satisfactory in form and
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<PAGE>
substance to the Representative and counsel for the
Underwriters.
T. Subsequent to the execution and delivery of this
Agreement none of the following shall have occurred: (i)
trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the over-the-counter
market shall have been suspended or minimum prices shall have
been established on either of such exchanges or such market by
the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction; (ii) a
banking moratorium shall have been declared by Federal or
state authorities; (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation of
hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the
United States; or (iv) there shall have occurred such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets of the United States shall
be such) as to make it, in the judgment of the Representative,
impractical or inadvisable to proceed with the public offering
or delivery of the Certificates on the terms and in the manner
contemplated in the Prospectus.
If any condition specified in this Section VI shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representative by notice to the Company at any time at or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION VII. Payment of Expenses. The Company agrees to pay:
(a) the costs incident to the authorization, issuance, sale and delivery of the
Offered Certificates and any taxes payable in connection therewith; (b) the
costs incident to the preparation, printing and filing under the Securities Act
of the Registration Statement and any amendments and exhibits thereto; (c) the
costs of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in each
case, exhibits), the Preliminary Prospectus, the Prospectus and any amendment or
supplement to
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<PAGE>
the Prospectus or any document incorporated by reference therein, all as
provided in this Agreement; (d) the costs of reproducing and distributing this
Agreement; (e) the fees and expenses of qualifying the Offered Certificates
under the securities laws of the several jurisdictions as provided in Section
V(G) hereof and of preparing, printing and distributing a Blue Sky Memorandum
and a Legal Investment Survey (including related fees and expenses of counsel to
the Underwriters); (f) any fees charged by securities rating services for rating
the Offered Certificates; and (g) all other costs and expenses incident to the
performance of the obligations of the Company; provided that, except as provided
in this Section VII, the Underwriters shall pay their own costs and expenses,
including the costs and expenses of Dewey Ballantine, any transfer taxes on the
Offered Certificates which they may sell and the expenses of advertising any
offering of the Offered Certificates made by the Underwriters.
If this Agreement is terminated by the Representative, in
accordance with the provisions of Section VI or Section X, the Company shall
reimburse the Underwriters for their respective reasonable out-of-pocket
expenses, including fees and disbursements of Dewey Ballantine, counsel for the
Underwriters.
SECTION VIII. Indemnification and Contribution. A.
The Company agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Securities Act from and against any and all loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Offered Certificates), to which such Underwriter or
any such controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus or (iv) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
shall reimburse such Underwriter and each such controlling person promptly upon
demand for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided,
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<PAGE>
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Prospectus or the
Registration Statement in reliance upon and in conformity with written
information (including any Derived Information) furnished to the Company through
the Representative specifically for inclusion therein; and provided further that
as to any Preliminary Prospectus this indemnity shall not inure to the benefit
of any Underwriter or any controlling person on account of any loss, claim,
damage, liability or action arising from the sale of the Offered Certificates to
any person by such Underwriter if such Underwriter failed to send or give a copy
of the Prospectus, as amended or supplemented, to that person within the time
required by the Securities Act, and the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact in the Preliminary Prospectus was corrected in the Prospectus,
unless such failure resulted from non-compliance by the Company with Section
V(C). For purposes of the last proviso to the immediately preceding sentence,
the term "Prospectus" shall not be deemed to include the documents incorporated
therein by reference, and none of the Underwriters shall be obligated to send or
give any supplement or amendment to any document incorporated therein by
reference to any person other than a person to whom such Underwriter had
delivered such incorporated document or documents in response to a written
request therefor. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Underwriters or any
controlling person of such Underwriter.
B. Each Underwriter agrees severally, and not jointly to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
against any and all loss, claim, damage or liability, or any action in respect
thereof, to which the Company or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or (iv)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein,
25
<PAGE>
in the light of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Underwriter specifically for inclusion therein, and shall reimburse the
Company and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Company or any director, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or any such
director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this
Section VIII of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section VIII, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section VIII except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Section
VIII.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section VIII for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different
26
<PAGE>
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel; or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to local counsel) at any time for all
such indemnified parties, which firm shall be designated in writing by the
Underwriters, if the indemnified parties under this Section VIII consist of the
Underwriters or any of their controlling persons, or by the Company, if the
indemnified parties under this Section VIII consist of the Company or any of the
Company's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity
agreements contained in Section VIII(A) and (B), shall use its best efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
D. Each Underwriter agrees to deliver to the
Company no later than the date on which the
Prospectus Supplement is required to be filed
pursuant to Rule 424 with a copy of its Derived
27
<PAGE>
Information (defined below) for filing with the Commission on
Form 8-K.
E. Each Underwriter agrees, assuming all
Company-Provided Information (defined below) is accurate and
complete in all material respects, to severally and not
jointly indemnify and hold harmless the Company, each of the
Company's officers and directors and each person who controls
the Company within the meaning of Section 15 of the Securities
Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Derived Information
provided by such Underwriter, or arise out of or are based
upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other
expenses reasonably incurred by him, her or it in connection
with investigating or defending or preparing to defend any
such loss, claim, damage, liability or action as such expenses
are incurred. The obligations of each of the Underwriters
under this Section VIII(E) shall be in addition to any
liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII(C) shall be
equally applicable to this Section VIII(E).
F. For purposes of this Section VIII, the term
"Derived Information" means such portion, if any, of the
information delivered to the Company pursuant to Section
VIII(D) for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus
without taking into account information
incorporated therein by reference;
(ii) does not constitute Company-Provided
Information; and
28
<PAGE>
(iii) is of the type of information
defined as Collateral term sheets, Structural
term sheets or Computational Materials (as such
terms are interpreted in the No-Action Letters).
"Company-Provided Information" means any computer tape
furnished to the Underwriters by the Company concerning the
Mortgage Loans comprising the Trust.
The terms "Collateral term sheet" and "Structural
term sheet" shall have the respective meanings assigned to
them in the February 13, 1995 letter (the "PSA Letter") of
Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's
response thereto, were publicly available February 17, 1995).
The term "Collateral term sheet" as used herein includes any
subsequent Collateral term sheet that reflects a substantive
change in the information presented. The term "Computational
Materials" has the meaning assigned to it in the May 17, 1994
letter (the "Kidder letter" and together with the PSA Letter,
the "No-Action Letters") of Brown & Wood on behalf of Kidder,
Peabody & Co., Inc. (which letter, and the SEC staff's
response thereto, were publicly available May 20, 1994).
G. If the indemnification provided for in this
Section VIII shall for any reason be unavailable to or
insufficient to hold harmless an indemnified party under
Section VIII(A) or (B) in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering
of the Offered Certificates or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under
Section VIII(C), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the
one hand and the Underwriters on the other with respect to
29
<PAGE>
the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations.
The relative benefits of the Underwriters and the Company
shall be deemed to be in such proportion so that the
Underwriters are responsible for that portion represented by
the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the public offering
price appearing on the cover page of the Prospectus.
The relative fault of the Underwriters and the Company shall
be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information
supplied by the Company or by one of the Underwriters, the
intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such
statement or omission and other equitable considerations.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section
VIII(G) were to be determined by pro rata allocation or by any
other method of allocation which does not take into account
the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section VIII(G) shall be
deemed to include, for purposes of this Section VIII(G), any
legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or
defending any such action or claim.
In no case shall any Underwriter be responsible for any amount
in excess of the underwriting discount applicable to the
Certificates purchased by such Underwriter hereunder. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
H. The Underwriters severally confirm that
the information set forth (i) in the Prospectus
Supplement relating to market making and (ii) in
30
<PAGE>
the fourth paragraph under the caption "Underwriting" in the
Prospectus Supplement, together with the Derived Information,
is correct and constitutes the only information furnished in
writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and
the Prospectus.
SECTION IX. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of officers of the Company submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriters or controlling
persons thereof, or by or on behalf of the Company and shall survive delivery of
any Offered Certificates to the Underwriters.
SECTION X. Termination of Agreement. The Representative may
terminate this Agreement immediately upon notice to the Company, at any time at
or prior to the Closing Date if any of the events or conditions described in
Section VI(Y) of this Agreement shall occur and be continuing. In the event of
any such termination, the covenant set forth in Section V(G), the provisions of
Section VII, the indemnity agreement set forth in Section VIII, and the
provisions of Sections IX and XIII shall remain in effect.
SECTION XI. Notices. All statements, requests,
notices and agreements hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered
or sent by mail, telex or facsimile transmission to
Morgan Stanley & Co. Incorporated, as
Representative of the Underwriters, 1585 Broadway,
New York, New York, 10036, Attention: General
Counsel (Fax: 212-761-0782);
B. if to the Company, shall be delivered or
sent by mail, telex or facsimile transmission to
Advanta Mortgage Conduit Services, Inc. 16875 West
Bernardo Drive, San Diego, California 92127
Attention: General Counsel (Fax: 619-674-3592).
SECTION XII. Persons Entitled to the Benefit of this
Agreement. This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Company, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those
persons, except that the representations, warranties, indemnities and agreements
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control the Underwriters within the meaning of
31
<PAGE>
Section 15 of the Securities Act, and for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section XII, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
SECTION XIII. Default by One of the Underwriters. If one of
the Underwriters shall fail on the Closing Date to purchase the Offered
Certificates which it is obligated to purchase hereunder (the "Defaulted
Certificates"), the remaining Underwriters (the "Non-Defaulting Underwriter"),
shall have the right, but not the obligation within one (1) Business Day
thereafter, to make arrangements to purchase all, but not less than all, of the
Defaulted Certificates upon the terms herein set forth; if, however, the
Non-Defaulting Underwriter shall not have completed such arrangements within
such one (1) Business Day period, then this Agreement shall terminate without
liability on the part of the Non-Defaulting Underwriter.
No action taken pursuant to this Section XIII shall relieve
the defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting Underwriter or the
Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
SECTION XIV. Survival. The respective indemnities,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement, or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Certificates and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
SECTION XV. Definition of the Term "Business Day".
For purposes of this Agreement, "Business Day" means any day
on which the New York Stock Exchange, Inc. is open for
trading.
SECTION XVI. GOVERNING LAW. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE
32
<PAGE>
WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION XVII. Counterparts. This Agreement may be
executed in counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
SECTION XVIII. Headings. The headings herein are
inserted for convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
SECTION XIX. Representations of Underwriters. The
Representative will act for the several Underwriters in connection with the
transactions contemplated by this Agreement, and any action under this Agreement
taken by the Representative will be binding upon all of the Underwriters.
33
<PAGE>
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
ADVANTA MORTGAGE CONDUIT
SERVICES INC.
By:______________________
Name: Mark T. Dunsheath
Title: Vice President
CONFIRMED AND ACCEPTED, as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
as Representative of the Underwriters
By:______________________
Name:
Title:
[Underwriting Agreement]
<PAGE>
================================================================================
SCHEDULE A
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Purchase Price
Initial Principal Amount to Underwriters
of Offered Certificates disregarding
Class Purchased by Underwriters accrued interest
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Class A-1 $141,000,000 99.9219%
- -----------------------------------------------------------------------------------------------
Class A-2 $82,000,000 99.8906%
- -----------------------------------------------------------------------------------------------
Class A-3 $11,500,000 99.9219%
- -----------------------------------------------------------------------------------------------
Class A-4 $34,015,000 99.8438%
- -----------------------------------------------------------------------------------------------
Class A-5 $29,835,000 99.9063%
- -----------------------------------------------------------------------------------------------
Class A-6 $168,000,000 100.0000%
- -----------------------------------------------------------------------------------------------
Class M-1F $10,200,000 99.8125%
- -----------------------------------------------------------------------------------------------
Class M-1A $22,100,000 100.0000%
- -----------------------------------------------------------------------------------------------
Class M-2F $9,350,000 99.8281%
- -----------------------------------------------------------------------------------------------
Class M-2A $12,600,000 100.0000%
- -----------------------------------------------------------------------------------------------
Class B-1F $10,500,000 99.9688%
- -----------------------------------------------------------------------------------------------
Class B-1A $18,900,000 100.000%
===============================================================================================
35
<PAGE>
EXHIBIT A
As of March 26, 1997
Morgan Stanley & Co. Incorporated
As Representative of the Underwriters
named in Schedule I
1585 Broadway
New York, New York 10036
Re: Underwriting Agreement dated March 26, 1997 (the
"Underwriting Agreement") between Advanta
Mortgage Conduit Services, Inc. ("Advanta") and
Morgan Stanley & Co. Incorporated (the
"Representative")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement and the Indemnification
Agreement (together, the "Designated Agreements"), Advanta has undertaken
certain financial obligations with respect to the indemnification of the
Underwriters with respect to the Registration Statement, the Prospectus and the
Prospectus Supplement described in the Designated Agreements. Any financial
obligations of Advanta under the Designated Agreements, whether or not
specifically enumerated in this paragraph, are hereinafter referred to as the
"Joint and Several Obligations"; provided, however, that "Joint and Several
Obligations" shall mean only the financial obligations of Advanta under the
Designated Agreements (including the payment of money damages for a breach of
any of Advanta's obligations under the Designated Agreements, whether financial
or otherwise) but shall not include any obligations not relating to the payment
of money.
As a condition of their respective executions of the
Underwriting Agreement and of the Indemnification Agreement, the Underwriters
have required the undersigned, Advanta Mortgage Holding Company ("AMHC"), the
parent corporation of Advanta, to acknowledge its joint-and-several liability
with Advanta for the payment of the Joint and Several Obligations under the
Designated Agreements.
<PAGE>
Now, therefore, the Underwriters and AMHC do hereby agree
that:
(i) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with
Advanta to the Underwriters for the payment of the
Joint and Several Obligations under the Underwriting
Agreement.
(ii) AMHC may honor its obligations hereunder either by
direct payment of any Joint and Several Obligations
or by causing any Joint and Several Obligations to be
paid to the Underwriters by Advanta or another
affiliate of AMHC.
2
<PAGE>
Capitalized terms used herein and not defined herein shall
have their respective meanings as set forth in the Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING COMPANY
By:_______________________________
Name: Mark T. Dunsheath
Title: Vice President
MORGAN STANLEY & CO. INCORPORATED
as Representative of the Underwriters
By:__________________________________
Name:
Title:
[AMHC Guarantee]
<PAGE>
SCHEDULE I
Morgan Stanley & Co. Incorporated
Lehman Brothers
Prudential Securities Incorporated
Salomon Brothers Inc.
</TABLE>
<PAGE>
Exhibit 4.1
<PAGE>
POOLING AND SERVICING AGREEMENT
Relating to
ADVANTA MORTGAGE LOAN TRUST
1997-1
Among
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
Dated as of March 1, 1997
<PAGE>
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<CAPTION>
Page
<S> <C>
Parties............................................................................................... 1
Recitals.............................................................................................. 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION...................................................... 2
1.1. Definitions............................................................................. 2
Accepted Servicing Practices.................................................. 2
Account....................................................................... 2
Accrual Period................................................................ 2
Advanta Mortgage Files........................................................ 2
Advanta Servicing Fee......................................................... 2
Affiliated Originators........................................................ 3
Aggregate Certificate Principal Balance....................................... 3
Agreement..................................................................... 3
AMHC.......................................................................... 3
Appraised Value............................................................... 3
Authorized Officer............................................................ 3
Balloon Loan.................................................................. 3
Bulk Acquisition Loan......................................................... 3
Business Day.................................................................. 4
Certificate................................................................... 4
Certificate Account........................................................... 4
Certificate Principal Balance................................................. 4
Class......................................................................... 4
Class A Certificate........................................................... 4
Class A Certificate Principal Balance......................................... 4
Class A Distribution Amount................................................... 4
Class A-1 Certificate......................................................... 5
Class A-1 Certificate Principal Balance....................................... 5
Class A-1 Certificate Termination Date........................................ 5
Class A-1 Current Interest.................................................... 5
Class A-1 Distribution Amount................................................. 5
Class A-1 Interest Carry Forward Amount....................................... 5
Class A-1 Pass-Through Rate................................................... 5
Class A-2 Certificate......................................................... 5
Class A-2 Certificate Principal Balance....................................... 6
Class A-2 Certificate Termination Date........................................ 6
Class A-2 Current Interest.................................................... 6
Class A-2 Distribution Amount................................................. 6
Class A-2 Interest Carry Forward Amount....................................... 6
Class A-2 Pass-Through Rate................................................... 6
Class A-3 Certificate......................................................... 6
Class A-3 Certificate Principal Balance....................................... 6
Class A-3 Certificate Termination Date........................................ 6
Class A-3 Current Interest.................................................... 7
Class A-3 Distribution Amount................................................. 7
Class A-3 Interest Carry Forward Amount....................................... 7
Class A-3 Pass-Through Rate................................................... 7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Class A-4 Certificate......................................................... 7
Class A-4 Certificate Principal Balance....................................... 7
Class A-4 Certificate Termination Date........................................ 7
Class A-4 Current Interest.................................................... 7
Class A-4 Distribution Amount................................................. 8
Class A-4 Interest Carry Forward Amount....................................... 8
Class A-4 Pass-Through Rate................................................... 8
Class A-5 Certificate......................................................... 8
Class A-5 Certificate Principal Balance....................................... 8
Class A-5 Certificate Termination Date........................................ 8
Class A-5 Current Interest.................................................... 8
Class A-5 Distribution Amount................................................. 8
Class A-5 Interest Carry Forward Amount....................................... 9
Class A-5 Lockout Distribution Amount......................................... 9
Class A-5 Lockout Percentage.................................................. 9
Class A-5 Lockout Pro Rata Distribution Amount................................ 9
Class A-5 Pass-Through Rate................................................... 9
Class A-6 Certificate......................................................... 9
Class A-6 Certificate Principal Balance....................................... 9
Class A-6 Certificate Termination Date........................................ 10
Class A-6 Current Interest.................................................... 10
Class A-6 Distribution Amount................................................. 10
Class A-6 Interest Carry Forward Amount....................................... 10
Class A-6 Pass-Through Rate................................................... 10
Class B Certificates.......................................................... 10
Class B-1A Applied Realized Loss Amount....................................... 10
Class B-1A Certificate........................................................ 11
Class B-1A Certificate Principal Balance...................................... 11
Class B-1A Certificate Termination Date....................................... 11
Class B-1A Distribution Amount................................................ 11
Class B-1A Interest Carry Forward Amount...................................... 11
Class B-1A Pass-Through Rate.................................................. 11
Class B-1A Principal Distribution Amount...................................... 12
Class B-1F Applied Realized Loss Amount....................................... 12
Class B-1F Certificate........................................................ 12
Class B-1F Certificate Principal Balance...................................... 12
Class B-1F Certificate Termination Date....................................... 12
Class B-1F Current Interest................................................... 12
Class B-1F Distribution Amount................................................ 13
Class B-1F Interest Carry Forward Amount...................................... 13
Class B-1F Pass-Through Rate.................................................. 13
Class B-1F Principal Distribution Amount...................................... 13
Class B-1F Realized Loss Amortization Amount.................................. 13
Class M-1 Certificate......................................................... 13
Class M-1A Applied Realized Loss Amount....................................... 14
Class M-1A Certificate........................................................ 14
Class M-1A Certificate Principal Balance...................................... 14
Class M-1A Certificate Termination Date....................................... 14
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Class M-1A Current Interest................................................... 14
Class M-1A Distribution Amount................................................ 14
Class M-1A Pass-Through Rate.................................................. 15
Class M-1A Principal Distribution Amount...................................... 15
Class M-1A Realized Loss Amortization Amount.................................. 15
Class M-1F Applied Realized Loss Amount....................................... 15
Class M-1F Certificate........................................................ 15
Class M-1F Certificate Principal Balance...................................... 15
Class M-1F Certificate Termination Date....................................... 16
Class M-1F Current Interest................................................... 16
Class M-1F Distribution Amount................................................ 16
Class M-1F Interest Carry Forward Amount...................................... 16
Class M-1F Pass-Through Rate.................................................. 16
Class M-1F Principal Distribution Amount...................................... 16
Class M-1F Realized Loss Amortization Amount.................................. 16
Class M-2 Certificate......................................................... 16
Class M-2A Applied Realized Loss Amount....................................... 17
Class M-2A Certificate........................................................ 17
Class M-2A Certificate Principal Balance...................................... 17
Class M-2A Certificate Termination Date....................................... 17
Class M-2A Current Interest................................................... 17
Class M-2A Distribution Amount................................................ 17
Class M-2A Interest Carry Forward Amount...................................... 17
Class M-2A Pass-Through Rate.................................................. 18
Class M-2A Principal Distribution Amount...................................... 18
Class M-2A Realized Loss Amortization Amount.................................. 18
Class M-2F Applied Realized Loss Amount....................................... 18
Class M-2F Certificate........................................................ 18
Class M-2F Certificate Principal Balance...................................... 18
Class M-2F Certificate Termination Date....................................... 19
Class M-2F Current Interest................................................... 19
Class M-2F Distribution Amount................................................ 19
Class M-2F Interest Carry Forward Amount...................................... 19
Class M-2F Pass-Through Rate.................................................. 19
Class M-2F Principal Distribution Amount...................................... 19
Class M-2F Realized Loss Amortization Amount.................................. 20
Class R Certificate........................................................... 20
Clean-Up Call Date............................................................ 20
Code.......................................................................... 20
Combined Loan-to-Value Ratio.................................................. 20
Compensating Interest......................................................... 20
Conduit Acquisition Trust..................................................... 20
Coupon Rate................................................................... 21
Current Interest.............................................................. 21
Cut-Off Date.................................................................. 21
Date-of-Payment Loan.......................................................... 21
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Delinquency Advance........................................................... 21
Delinquent.................................................................... 21
Delivery Order................................................................ 21
Depository.................................................................... 21
Designated Depository Institution............................................. 21
Determination Date............................................................ 22
Direct Participant or DTC Participant......................................... 22
Disqualified Organization..................................................... 22
Document Delivery Requirements................................................ 22
Eligible Investments.......................................................... 22
Event of Default.............................................................. 23
FDIC.......................................................................... 23
File.......................................................................... 23
Final Determination........................................................... 23
First Mortgage Loan........................................................... 23
Fitch......................................................................... 23
FNMA.......................................................................... 23
Formula Certificates.......................................................... 23
Formula Rate.................................................................. 23
Freddie Mac................................................................... 23
Gross Margin.................................................................. 23
Group I....................................................................... 24
Group I Applied Realized Loss Amount.......................................... 24
Group I Certificates.......................................................... 24
Group I Class A Principal Distribution Amount................................. 24
Group I Cumulative Realized Losses............................................ 24
Group I Extra Principal Distribution Amount................................... 24
Group I Interest Remittance Amount............................................ 25
Group I Monthly Excess Cashflow Amount........................................ 25
Group I Monthly Excess Interest Amount........................................ 25
Group I Monthly Remittance Amount............................................. 25
Group I Principal Remittance Amount........................................... 25
Group I Overcollateralization Amount.......................................... 25
Group I Overcollateralization Deficiency...................................... 26
Group I Overcollateralization Release Amount.................................. 26
Group I Principal Distribution Amount......................................... 26
Group I Senior Enhancement Percentage......................................... 26
Group I Senior Specified Enhancement Percentage............................... 26
Group I Stepdown Date......................................................... 26
Group I Targeted Overcollateralization Amount................................. 26
Group I Trigger Event......................................................... 27
Group II...................................................................... 27
Group II Applied Realized Loss Amount......................................... 27
Group II Available Escalation Amount.......................................... 27
Group II Available Funds Cap Rate............................................. 28
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Group II Capped Certificates.................................................. 28
Group II Certificates......................................................... 28
Group II Class A Principal Distribution Amount................................ 28
Group II Cumulative Realized Losses........................................... 28
Group II Extra Principal Distribution Amount.................................. 28
Group II Interest Amount Available............................................ 28
Group II Interest Remittance Amount........................................... 28
Group II Monthly Excess Cashflow Amount....................................... 29
Group II Monthly Excess Interest Amount....................................... 29
Group II Monthly Remittance Amount............................................ 29
Group II Overcollateralization Amount......................................... 29
Group II Overcollateralization Deficiency..................................... 29
Group II Overcollateralization Release Amount................................. 29
Group II Principal Distribution Amount........................................ 29
Group II Principal Remittance Amount.......................................... 30
Group II Senior Enhancement Percentage........................................ 30
Group II Senior Specified Enhancement Percentage.............................. 30
Group II Targeted Overcollateralization Amount................................ 30
Group II Trigger Event........................................................ 30
Group II Weighted Average Pass-Through Rate................................... 30
Index......................................................................... 31
Indirect Participant.......................................................... 31
Insurance Policy.............................................................. 31
Interest Advance.............................................................. 31
Interest Determination Date................................................... 31
Interest Rate Adjustment Date................................................. 31
LIBOR......................................................................... 31
Liquidated Loan............................................................... 32
Liquidation Expenses.......................................................... 32
Liquidation Proceeds.......................................................... 32
Loan Balance.................................................................. 32
Loan Purchase Price........................................................... 32
London Business Day........................................................... 33
Master Servicer............................................................... 33
Master Servicer's Trust Receipt............................................... 33
Master Servicing Fee.......................................................... 33
Master Transfer Agreement..................................................... 33
Mezzanine Certificates........................................................ 33
Monthly Remittance Amount..................................................... 33
Moody's....................................................................... 33
Mortgage...................................................................... 33
Mortgage Loan Group........................................................... 33
Mortgage Loans................................................................ 33
</TABLE>
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Mortgagor..................................................................... 34
Net Liquidation Proceeds...................................................... 34
Nonrecoverable Advances....................................................... 34
Note.......................................................................... 34
Offered Certificates.......................................................... 34
Officer's Certificate......................................................... 34
Operative Documents........................................................... 34
Original Aggregate Loan Balance............................................... 35
Original Certificate Principal Balance........................................ 35
Original Principal Amount..................................................... 35
Originator.................................................................... 35
Outstanding................................................................... 35
Overcollateralization Release Amount.......................................... 35
Owner......................................................................... 35
Pass-Through Rate............................................................. 36
Payment Date.................................................................. 36
Percentage Interest........................................................... 36
Person........................................................................ 36
Pool Cumulative Realized Losses............................................... 36
Pool Delinquency Rate......................................................... 36
Pool Principal Balance........................................................ 36
Pool Rolling Three Month Delinquency Rate..................................... 36
Prepaid Installment........................................................... 36
Prepayment.................................................................... 36
Preservation Expenses......................................................... 37
Principal and Interest Account................................................ 37
Principal Remittance Amount................................................... 37
Prohibited Transaction........................................................ 37
Property...................................................................... 37
Purchase Option Period........................................................ 37
Qualified Liquidation......................................................... 37
Qualified Mortgage............................................................ 37
Qualified Replacement Mortgage................................................ 37
Realized Loss................................................................. 38
Record Date................................................................... 38
Reference Banks............................................................... 38
Register...................................................................... 39
Registrar..................................................................... 39
Registration Statement........................................................ 39
REMIC......................................................................... 39
REMIC Provisions.............................................................. 39
REMIC Trust................................................................... 39
Remittance Date............................................................... 39
Remittance Period............................................................. 39
REO Property.................................................................. 39
Replacement Cut-Off Date...................................................... 39
Representation Letter......................................................... 40
Reserve Interest Rate......................................................... 40
Schedules of Mortgage Loans................................................... 40
</TABLE>
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Second Mortgage Loan.......................................................... 40
Securities Act................................................................ 40
Senior Lien................................................................... 40
Servicer Affiliate............................................................ 40
Servicing Advance............................................................. 40
Servicing Fee................................................................. 41
Sponsor....................................................................... 41
Startup Day................................................................... 41
Step-up Payment Date.......................................................... 41
Substitution Amount........................................................... 41
Sub-Servicer.................................................................. 41
Sub-Servicing Agreement....................................................... 41
Supplemental Interest Payment Account......................................... 41
Supplemental Interest Payment Amount Available................................ 41
Supplemental Interest Trust................................................... 41
Tax Matters Person............................................................ 41
Termination Notice............................................................ 42
Termination Price............................................................. 42
Transaction Documents......................................................... 42
Trust......................................................................... 42
Trust Estate.................................................................. 42
Trustee....................................................................... 42
Trustee's Fees................................................................ 42
Unaffiliated Originator Loan.................................................. 42
Unaffiliated Originators...................................................... 43
Underwriters.................................................................. 43
Unpaid Realized Loss Amount................................................... 43
1.2. Use of Words and Phrases................................................................ 43
1.3. Captions; Table of Contents............................................................. 43
1.4. Opinions .............................................................................. 43
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST............................................. 44
2.1. Establishment of the Trust.............................................................. 44
2.2. Office.................................................................................. 44
2.3. Purposes and Powers..................................................................... 44
2.4. Appointment of the Trustee; Declaration of Trust........................................ 44
2.5. Expenses of the Trust................................................................... 44
2.6. Ownership of the Trust.................................................................. 45
2.7. Situs of the Trust...................................................................... 45
2.8. Miscellaneous REMIC Provisions.......................................................... 45
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER;
COVENANT OF SPONSOR TO CONVEY MORTGAGE LOANS......................................... 46
3.1. Representations and Warranties of the Sponsor........................................... 46
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3.2. Representations and Warranties of the Master Servicer................................... 48
3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage Loans........ 52
3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In
Certain Situations.................................................................... 53
3.5. Conveyance of the Mortgage Loans........................................................ 55
3.6. Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification by
Trustee............................................................................... 58
3.7. Cooperation Procedures.................................................................. 59
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES....................................................... 60
4.1. Issuance of Certificates................................................................ 60
4.2. Sale of Certificates.................................................................... 60
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS.................................................. 60
5.1. Terms................................................................................... 60
5.2. Forms................................................................................... 61
5.3. Execution, Authentication and Delivery.................................................. 61
5.4. Registration and Transfer of Certificates............................................... 61
5.5. Mutilated, Destroyed, Lost or Stolen Certificates....................................... 64
5.6. Persons Deemed Owners................................................................... 65
5.7. Cancellation............................................................................ 65
5.8. Limitation on Transfer of Ownership Rights.............................................. 65
5.9. Assignment of Rights.................................................................... 66
ARTICLE VI COVENANTS............................................................................... 67
6.1. Distributions........................................................................... 67
6.2. Money for Distributions to be Held in Trust; Withholding................................ 67
6.3. Protection of Trust Estate.............................................................. 68
6.4. Performance of Obligations.............................................................. 69
6.5. Negative Covenants...................................................................... 69
6.6. No Other Powers......................................................................... 70
6.7. Limitation of Suits..................................................................... 70
6.8. Unconditional Rights of Owners to Receive Distributions................................. 71
6.9. Rights and Remedies Cumulative.......................................................... 71
6.10. Delay or Omission Not Waiver........................................................... 71
6.11. Control by Owners...................................................................... 71
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES................................................... 72
7.1. Collection of Money..................................................................... 72
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7.2. Establishment of Certificate Account.................................................... 72
7.3. Reserved .............................................................................. 72
7.4. Reserved .............................................................................. 72
7.5. Flow of Funds........................................................................... 72
7.6. Investment of Accounts.................................................................. 83
7.7. Eligible Investments.................................................................... 84
7.8. Reports by Trustee...................................................................... 86
7.9. Additional Reports by Trustee........................................................... 89
7.10. Supplemental Interest Payment Account, Supplement Interest Payments and Class R
Distribution Account.................................................................. 90
ARTICLE VIII SERVICING AND ADMINISTRATION OF MORTGAGE LOANS.......................................... 91
8.1. Master Servicer and Sub-Servicers....................................................... 91
8.2. Collection of Certain Mortgage Loan Payments............................................ 93
8.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers...................... 94
8.4. Successor Sub-Servicers................................................................. 94
8.5. Liability of Master Servicer............................................................ 94
8.6. No Contractual Relationship Between Sub-Servicer and Trustee or the Owners.............. 95
8.7. Assumption or Termination of Sub-Servicing Agreement by Trustee......................... 95
8.8. Principal and Interest Account.......................................................... 95
8.9. Delinquency Advances, Compensating Interest and Servicing Advances...................... 97
8.10. Purchase of Mortgage Loans............................................................. 99
8.11. Maintenance of Insurance............................................................... 99
8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements............................100
8.13. Realization Upon Defaulted Mortgage Loans..............................................101
8.14. Trustee to Cooperate; Release of Files.................................................103
8.15. Servicing Compensation.................................................................105
8.16. Annual Statement as to Compliance......................................................105
8.17. Annual Independent Certified Public Accountants' Reports...............................105
8.18. Access to Certain Documentation and Information Regarding the Mortgage Loans...........105
8.19. Assignment of Agreement................................................................106
8.20. Removal of Master Servicer; Resignation of Master Servicer.............................106
8.21. Inspections by Trustee; Errors and Omissions Insurance.................................111
8.22. Merger, Conversion, Consolidation or Succession to Business of Master
Servicer.............................................................................112
8.23. Notices of Material Events.............................................................112
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ARTICLE IX TERMINATION OF TRUST....................................................................113
9.1. Termination of Trust....................................................................113
9.2. Termination Upon Option of Master Servicer..............................................114
9.3. Termination Upon Loss of REMIC Status...................................................114
9.4. Disposition of Proceeds.................................................................116
9.5. Netting of Amounts......................................................................116
ARTICLE X THE TRUSTEE............................................................................116
10.1. Certain Duties and Responsibilities....................................................116
10.2. Removal of Trustee for Cause...........................................................118
10.3. Certain Rights of the Trustee..........................................................120
10.4. Not Responsible for Recitals or Issuance of Certificates...............................121
10.5. May Hold Certificates..................................................................121
10.6. Money Held in Trust....................................................................121
10.7. No Lien for Fees.......................................................................121
10.8. Corporate Trustee Required; Eligibility................................................121
10.9. Resignation and Removal; Appointment of Successor......................................122
10.10. Acceptance of Appointment by Successor Trustee........................................124
10.11. Merger, Conversion, Consolidation or Succession to Business of the Trustee............124
10.12. Reporting; Withholding................................................................125
10.13. Liability of the Trustee..............................................................125
10.14. Appointment of Co-Trustee or Separate Trustee.........................................125
ARTICLE XI MISCELLANEOUS..........................................................................127
11.1. Compliance Certificates and Opinions...................................................127
11.2. Form of Documents Delivered to the Trustee.............................................128
11.3. Acts of Owners.........................................................................129
11.4. Notices, etc. to Trustee...............................................................129
11.5. Notices and Reports to Owners; Waiver of Notices.......................................130
11.6. Rules by Trustee and Sponsor...........................................................130
11.7. Successors and Assigns.................................................................130
11.8. Severability...........................................................................131
11.9. Benefits of Agreement..................................................................131
11.10. Legal Holidays........................................................................131
11.11. Governing Law.........................................................................131
11.12. Counterparts..........................................................................131
11.13. Usury.................................................................................131
11.14. Amendment.............................................................................132
11.15. REMIC Status; Taxes...................................................................133
11.16. Additional Limitation on Action and Imposition of Tax.................................135
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11.17. Appointment of Tax Matters Person.....................................................136
11.18. Maintenance of Records................................................................136
11.19. Notices ..............................................................................136
</TABLE>
SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Certificates
EXHIBIT B -- Contents of Mortgage Loan File
EXHIBIT C -- Form of Class RS Certificates
EXHIBIT D -- Form of Certificate Re: Mortgage Loans
Prepaid in full After the Cut-Off Date
EXHIBIT E -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT F -- Form of Certification
EXHIBIT G -- Form of Delivery Order
EXHIBIT H -- Form of Class RS Tax Matters Transfer
Certificate
EXHIBIT I -- Power of Attorney
EXHIBIT J -- Form of Monthly Report
EXHIBIT K -- Form of Master Servicer's Trust Receipt
xi
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE
LOAN TRUST 1997-1, dated as of March 1, 1997, by and among ADVANTA MORTGAGE
CONDUIT SERVICES, INC., a Delaware corporation, in its capacity as Sponsor of
the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware corporation,
in its capacity as master servicer (the "Master Servicer"), and BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association, in its capacity as
trustee (the "Trustee").
WHEREAS, the Sponsor wishes to establish a trust and two
subtrusts, and to provide for the allocation and sale of the beneficial
interests therein and the maintenance and distribution of the trust estate;
WHEREAS, the Master Servicer has agreed to service the
Mortgage Loans, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done; and
WHEREAS, Bankers Trust Company of California, N.A.
is willing to serve in the capacity of Trustee hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Sponsor, the Master Servicer and the
Trustee hereby agree as follows:
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this
Agreement, the following terms shall have the meanings set forth below, unless
the context clearly indicates otherwise:
"Accepted Servicing Practices": The Master Servicer's normal
servicing practices in servicing and administering mortgage loans for its own
account, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Properties are located and will give due consideration to the
Certificateholders' reliance on the Master Servicer.
"Account": Any account established in accordance
with Sections 7.2, 8.8 or 7.10 hereof each of which shall be established at a
Designated Depository Institution.
"Accrual Period": With respect to the Group I Certificates and
any Payment Date, the calendar month immediately preceding the month in which
the Payment Date occurs; provided, that in the case of the initial Payment Date
the Accrual Period shall be the period from March 1, 1997 through and including
March 31, 1997. A "calendar month" shall be deemed to be 30 days. With respect
to the Group II Certificates and any Payment Date, the period commencing on the
immediately preceding Payment Date (or the Closing Date in the case of the first
Payment Date) to and including the day prior to the current Payment Date. All
calculations of interest on the Group I Certificates will be made on the basis
of a 360-day year assumed to consist of twelve 30-day months and calculations of
interest on the Group II Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and in a year of 360 days.
"Advanta Mortgage Files": For any Mortgage Loan
identified on the related Schedule of Mortgage Loans with an "A" code, the items
listed as (a), (b), (c), (d) and (f) on Exhibit B hereto.
"Advanta Servicing Fee": With respect to any Mortgage Loan
that is not an Unaffiliated Originator Loan, an amount retained by the Master
Servicer or by any successor thereto as compensation for servicing and
administration duties relating to such Mortgage Loan pursuant to Section 8.15
hereof and equal to 0.50% per annum of the then outstanding Loan Balance of such
Mortgage Loan as of the opening of business on the first day of each calendar
month payable on a monthly basis.
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"Affiliated Originators": Advanta Mortgage Corp.
USA, a Delaware corporation, Advanta Mortgage Corp. Midatlantic, a Pennsylvania
corporation, Advanta Mortgage Corp. Midatlantic II, a Pennsylvania corporation,
Advanta Mortgage Corp. Midwest, a Pennsylvania corporation, Advanta Mortgage
Corp. of New Jersey, a New Jersey corporation, Advanta Mortgage Corp. Northeast,
a New York corporation, Advanta National Bank USA, a national banking
association, Advanta Finance Corp., a Nevada corporation, and Advanta Mortgage
Corp. of New Jersey II, a New Jersey corporation.
"Aggregate Certificate Principal Balance": As of
any date of determination thereof, the sum of the then outstanding Certificate
Principal Balance of the Class A Certificates, the Mezzanine Certificates and
the Class B Certificates.
"Agreement": This Pooling and Servicing Agreement,
as it may be amended from time to time, and including the Exhibits hereto.
"AMHC": Advanta Mortgage Holding Company, a
Delaware corporation and the corporate parent of Advanta Mortgage Corp. USA, and
the indirect corporate parent of Advanta Mortgage Conduit Services, Inc.
"Appraised Value": The appraised value of any Property based
upon the appraisal or other valuation made at the time of the origination of the
related Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Trustee,
the Sponsor and the Master Servicer, initially including those individuals whose
names appear on the lists of Authorized Officers delivered on the Startup Day.
"Balloon Loan": Any Mortgage Loan which has an
amortization schedule which extends beyond its maturity date, resulting in a
relatively large unamortized principal balance due in a single payment at
maturity.
"Bulk Acquisition Loan": Any Mortgage Loan purchased by the
Sponsor or by an Affiliated Originator from another, unaffiliated Originator as
part of a bulk portfolio acquisition; such Mortgage Loans shall be identified on
the related Schedule of Mortgage Loans with a "B" code.
3
<PAGE>
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York, the
State of California or in the city in which the principal corporate trust office
of the Trustee is located, are authorized or obligated by law or executive order
to be closed.
"Certificate": Any one of the Class A Certificates,
Mezzanine Certificates, Class B Certificates, or Class R Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The Certificate Account
established in accordance with Section 7.2 hereof and maintained by the Trustee.
"Certificate Principal Balance": As of the Startup
Day as to each of the following Classes of Certificates, the Certificate
Principal Balances thereof, as follows:
<TABLE>
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Class A-1 Certificates = $141,000,000
Class A-2 Certificates = $82,000,000
Class A-3 Certificates = $11,500,000
Class A-4 Certificates = $34,015,000
Class A-5 Certificates = $29,835,000
Class A-6 Certificates = $168,000,000
Class M-1F Certificates = $10,200,000
Class M-1A Certificates = $22,100,000
Class M-2F Certificates = $9,350,000
Class M-2A Certificates = $12,600,000
Class B-1F Certificates = $10,500,000
Class B-1A Certificates = $18,900,000
</TABLE>
"Class": Any Class of the Class A Certificates, any
Class of the Mezzanine Certificates, either Class of the Class B Certificates,
the Class C Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates or Class A-6 Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less any amounts actually distributed on such Class A
Certificates with respect to the Class A Principal Distribution Amount pursuant
to Section 7.5(d) hereof with respect to principal thereon on all prior Payment
Dates.
"Class A Distribution Amount": The sum of the Class
A-1 Distribution Amount, the Class A-2 Distribution Amount,
4
<PAGE>
the Class A-3 Distribution Amount, the Class A-4 Distribution Amount, the Class
A-5 Distribution Amount and the Class A-6 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-1 Certificate, substantially in the
form annexed hereto as Exhibit A-1, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to the
Class A-1 Certificates pursuant to Section 7.5 hereof with respect to principal
thereon on all prior Payment Dates.
"Class A-1 Certificate Termination Date": The Payment Date on
which the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A- 1 Pass-Through Rate.
"Class A-1 Distribution Amount": With respect to any Payment
Date, the sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest
Carry Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of Class A-1 Certificates pursuant to Section 7.5 hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-1 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-1 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-1 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": 6.85% per annum.
"Class A-2 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Certificate, substantially in the
form annexed hereto as Exhibit A-2, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
5
<PAGE>
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed with respect to the
Class A-2 Certificates pursuant to Section 7.5 hereof with respect to principal
thereon on all prior Payment Dates.
"Class A-2 Certificate Termination Date": The
Payment Date on which the Class A-2 Certificate Principal Balance is reduced to
zero.
"Class A-2 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A- 2 Pass-Through Rate.
"Class A-2 Distribution Amount": With respect to any Payment
Date, the sum of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest
Carry Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of Class A-2 Certificates pursuant to Section 7.5 hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-2 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-2 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-2 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-2
Pass-Through Rate.
"Class A-2 Pass-Through Rate": 7.10% per annum.
"Class A-3 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-3 Certificate, substantially in the
form annexed hereto as Exhibit A-3, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed with respect to the
Class A-3 Certificates pursuant to Section 7.5(d) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A-3 Certificate Termination Date": The
Payment Date on which the Class A-3 Certificate Principal Balance is reduced to
zero.
6
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"Class A-3 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-3 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A- 3 Pass-Through Rate.
"Class A-3 Distribution Amount": With respect to any Payment
Date, the sum of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest
Carry Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of Class A-3 Certificates pursuant to Section 7.5 hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-3 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-3 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-3 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": With respect to any Payment
Date, the lesser of (x) 7.40% per annum and (y) the Group I Available Funds Cap
Rate for such Payment Date.
"Class A-4 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-4 Certificate, substantially in the
form annexed hereto as Exhibit A-4, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed with respect to the
Class A-4 Certificates pursuant to Section 7.5 hereof with respect to principal
thereon on all prior Payment Dates.
"Class A-4 Certificate Termination Date": The
Payment Date on which the Class A-4 Certificate Principal Balance is reduced to
zero.
"Class A-4 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-4 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A- 4 Pass-Through Rate.
"Class A-4 Distribution Amount": With respect to
any Payment Date, the sum of (x) the Class A-4 Current
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Interest, (y) the Class A-4 Interest Carry Forward Amount and (z) the Group I
Class A Principal Distribution Amount payable to the Owners of Class A-4
Certificates pursuant to Section 7.5 hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-4 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-4 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-4 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": With respect to any Payment
Date, the lesser of (x) 7.65% per annum and (y) the Group I Available Funds Cap
Rate for such Payment Date.
"Class A-5 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-5 Certificate, substantially in the
form annexed hereto as Exhibit A-5, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed with respect to the
Class A-5 Certificates pursuant to Section 7.5(d) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A-5 Certificate Termination Date": The
Payment Date on which the Class A-5 Certificate Principal Balance is reduced to
zero.
"Class A-5 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-5 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A- 5 Pass-Through Rate.
"Class A-5 Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class A-5 Current Interest, (x) the Class A-5 Interest
Carry Forward Amount, (y) the Class A-5 Lockout Distribution Amount payable to
the Owners of the Class A-5 Certificates pursuant to Section 7.5(c) and (z) the
Group I Class A Principal Distribution Amount payable to the Owners of Class A-5
Certificates pursuant to Section 7.5 hereof.
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"Class A-5 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-5 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-5 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-5 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Lockout Distribution Amount": For any Payment Date,
the product of (i) the applicable Class A-5 Lockout Percentage for such Payment
Date and (ii) the Class A- 5 Lockout Pro Rata Distribution Amount for such
Payment Date; provided, that in no event shall the Class A-5 Lockout
Distribution Amount exceed the Group I Principal Amount for the related payment
Date.
"Class A-5 Lockout Percentage": For each Payment Date, the
percentage set forth below:
Class A-5
Payment Dates Lockout Percentage
-------------------------------- ---------------------------
April 1997-March 2000 0%
April 2000-March 2002 45%
April 2002-March 2003 80%
April 2003-March 2004 100%
April 2004 and thereafter 300%
"Class A-5 Lockout Pro Rata Distribution Amount": For any
Payment Date, an amount equal to the product of (x) a fraction, the numerator of
which is the Class A-5 Certificate Principal Balance immediately prior to such
Payment Date and the denominator of which is the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to such Payment Date and
(y) the Class A Principal Distribution Amount for such Payment Date.
"Class A-5 Pass-Through Rate": With respect to any Payment
Date, the lesser of (x) 7.35% per annum and (y) the Group I Available Funds Cap
Rate for such Payment Date.
"Class A-6 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-6 Certificate, substantially in the
form annexed hereto as Exhibit A-6, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of
any time of determination, the Certificate Principal Balance
as of the Startup Day of all Class A-6 Certificates less any
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amounts actually distributed with respect to the Class A-6 Certificates pursuant
to Section 7.5 hereof with respect to principal thereon on all prior Payment
Dates.
"Class A-6 Certificate Termination Date": The
Payment Date on which the Class A-6 Certificate Principal Balance is reduced to
zero.
"Class A-6 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-6 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-6 Pass-Through Rate.
"Class A-6 Distribution Amount": With respect to any Payment
Date, the sum of (x) the Class A-6 Current Interest, (y) the Class A-6 Interest
Carry Forward Amount and (z) the Group II Class A Principal Distribution Amount
payable to the Owners of Class A-6 Certificates pursuant to Section 7.5 hereof.
"Class A-6 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-6 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-6 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-6 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Pass-Through Rate": For any Payment Date in any
month up to and including the month in which the CleanUp Call Date occurs, the
lesser of (i) LIBOR plus 0.20% per annum and (ii) the Group II Available Funds
Cap Rate for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.40% per annum and
(ii) the Group II Available Funds Cap Rate.
"Class B Certificates": Any of the Class B-1F Certificates or
Class B-1A Certificates.
"Class B-1A Applied Realized Loss Amount": As to any Payment
Date, the lesser of (x) the Class B-1A Certificate Principal Balance (after
taking into account the distribution of the Group II Principal Distribution
Amount on such Payment Date, but prior to the application of the Class B-1A
Applied Realized Loss Amount, if any, on such Payment Date) and (y) the Group II
Applied Realized Loss Amount as of such Payment Date.
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"Class B-1A Certificate": Any of the Certificates designated
on the face thereof as a Class B-1A Certificate, substantially in the form
annexed hereto as Exhibit A-7, authenticated and delivered ;by the Trustee,
representing the right to distributions as set forth herein.
"Class B-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1A Certificates pursuant to Section 7.5 hereof with
respect to principal on all prior Payment Dates and (y) the aggregate,
cumulative amount of the Class B-1A Applied Realized Loss Amounts on all prior
Payment Dates.
"Class B-1A Certificate Termination Date": The
Payment Date on which the Class B-1A Certificate Principal Balance is reduced to
zero.
"Class B-1A Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class B-1A Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class B-1A Pass-Through Rate.
"Class B-1A Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class B-1A Current Interest, (x) the Class B-1A
Principal Distribution Amount, if any, (y) the Class B-1A Interest Carry Forward
Amount, if any, and (z) the Class B-1A Realized Loss Amortization Amount, if
any.
"Class B-1A Interest Carry Forward Amount": With
respect to any Payment Date, the sum of (x) the amount, if any, by which (i) the
sum of (A) the Class B-1A Current Interest as of the immediately preceding
Payment Date and (B) any unpaid Class B-1A Interest Carry Forward Amount from
all previous Payment Dates exceeds (ii) the amount of the actual distribution
with respect to interest made to the Owners of the Class B-1A Certificates on
such immediately preceding Payment Date and (y) 30 days' interest on such amount
at the Class B-1A Pass-Through Rate.
"Class B-1A Pass-Through Rate": For any Payment Date in any
month up to and including the month in which the Clean-Up Call Date occurs, the
lesser of (i) LIBOR plus 0.95% per annum and (ii) the Group II Available Funds
Cap Date for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 1.425% per annum and
(ii) the Group II Available Funds Cap Rate.
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<PAGE>
"Class B-1A Principal Distribution Amount": As of any Payment
Date on or after the Group II Stepdown Date and as long as a Group II Trigger
Event is not in effect, the excess of (x) the aggregate Certificate Principal
Balance of the Group II Certificates (after taking into account the payment of
the Group II Class A Principal Distribution Amount, the Class M-1A Principal
Distribution Amount and the Class M-2A Principal Distribution Amount on such
Payment Date) over (y) the product of (i) 92.0% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period.
"Class B-1A Realized Loss Amortization Amount": As
of any Payment Date, the lesser of (x) the Class B-1A Unpaid Realized Loss
Amount as of such Payment Date and (y) the excess of (i) the Group II Monthly
Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the Class M-1A Realized Loss Amortization Amount, the Class
M-2A Realized Loss Amortization Amount, the Class M-1A Interest Carry Forward
Amount, the Class M-2A Interest Carry Forward Amount and the Class B-1A Interest
Carry Forward Amount in each case for such Payment Date.
"Class B-1F Applied Realized Loss Amount": As to any Payment
Date, the lesser of (x) the Class B-1F Certificate Principal Balance (after
taking into account the distribution of the Group I Principal Distribution
Amount on such Payment Date, but prior to the application of the Class B-1F
Applied Realized Loss Amount, if any, on such Payment Date) and (y) the Group I
Applied Realized Loss Amount as of such Payment Date.
"Class B-1F Certificate": Any one of the Certificates
designated on the face thereof as a Class B-1F Certificate, substantially in the
form annexed hereto as Exhibit A-8, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class B-1F Certificate Principal Balance": As of
any time of determination, the Certificate Principal Balance as of the Startup
Day of all Class B-1F Certificates less the sum of (x) any amounts actually
distributed to the Owners of the Class B-1F Certificates pursuant to Section 7.5
hereof with respect to principal on all prior Payment Dates and (y) the
aggregate, cumulative amount of the Class B-1F Applied Realized Loss Amounts on
all prior Payment Dates.
"Class B-1F Certificate Termination Date": The
Payment Date on which the Class B-1F Certificate Principal Balance is reduced to
zero.
"Class B-1F Current Interest": With respect to any
Payment Date, the amount of interest accrued on the Class B-1F
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Certificate Principal Balance immediately prior to such Payment Date during the
related Accrual Period at the Class B-1F Pass-Through Rate.
"Class B-1F Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class B-1F Current Interest, (x) the Class B-1F
Principal Distribution Amount, if any, (y) the Class B-1F Interest Carry Forward
Amount, if any, and (z) the Class B-1F Realized Loss Amortization Amount, if
any.
"Class B-1F Interest Carry Forward Amount": With
respect to any Payment Date, the sum of (x) the amount, if any, by which (i) the
sum of (A) the Class B-1F Current Interest as of the immediately preceding
Payment Date and (B) any unpaid Class B-1F Interest Carry Forward Amount from
all previous Payment Dates exceeds (ii) the amount of the actual distribution
with respect to interest made to the Owners of the Class B-1F Certificates on
such immediately preceding Payment Date and (y) 30 days' interest on such amount
at the Class B-1F Pass-Through Rate.
"Class B-1F Pass-Through Rate": With respect to any
Payment Date, the lesser of (x) 8.15% per annum and (y) the
Group I Available Funds Cap Rate for such Payment Date.
"Class B-1F Principal Distribution Amount": As of any Payment
Date on or after the Group I Stepdown Date and as long as a Group I Trigger
Event is not in effect, the excess of (x) the aggregate Certificate Principal
Balance of the Group I Certificates (after taking into account the payment of
the Group I Class A Principal Distribution Amount, the Class M-1F Principal
Distribution Amount and the Class M-2F Principal Distribution Amount on such
Payment Date) over (y) the product of (i) 94.7% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period.
"Class B-1F Realized Loss Amortization Amount": As
of any Payment Date, the lesser of (x) the Class B-1F Unpaid Realized Loss
Amount as of such Payment Date and (y) the excess of (i) the Group I Monthly
Excess Cashflow Amount over (ii) the sum of the Group I Extra Principal
Distribution Amount, the Class M-1F Realized Loss Amortization Amount, the Class
M-2F Realized Loss Amortization Amount, the Class M-1F Interest Carry Forward
Amount, the Class M-2F Interest Carry Forward Amount and the Class B-1F Interest
Carry Forward Amount in each case for such Payment Date.
"Class M-1 Certificate": Any one of the Class M-1F
Certificates or the Class M-1A Certificates.
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<PAGE>
"Class M-1A Applied Realized Loss Amount": As to any Payment
Date, the lesser of (x) the Class M-1A Certificate Principal Balance (after
taking into account the distribution of the Group II Principal Distribution
Amount on such Payment Date, but prior to the application of the Class M-1A
Applied Realized Loss Amount, if any, on such Payment Date) and (y) the excess
of (i) the Group II Applied Realized Loss Amount as of such Payment Date over
(ii) the sum of the Class M-2A Applied Realized Loss Amount and the Class B-1A
Applied Realized Loss Amount, in each case as of such Payment Date.
"Class M-1A Certificate": Any one of the Certificates
designated on the face thereof as a Class M-1A Certificate, substantially in the
form annexed hereto as Exhibit A-9, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class M-1A Certificate Principal Balance": As of
any time of determination, the Certificate Principal Balance as of the Startup
Day of all Class M-1A Certificates less the sum of (x) any amounts of actually
distributed to the Owners of the Class M-IA Certificates pursuant to Section 7.5
hereof with respect to principal on all prior Payment Dates and (y) the
aggregate, cumulative amount of Class M-1A Applied Realized Loss Amounts on all
prior Payment Dates.
"Class M-1A Certificate Termination Date": The Payment Date
on which the Class M-1A Certificate Principal Balance is reduced to zero.
"Class M-1A Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class M-1A Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class M-1A Pass-Through Rate.
"Class M-1A Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class M-1A Current Interest, (x) the Class M-1A
Principal Distribution Amount, if any, (y) the Class M-1A Interest Carry Forward
Amount and (z) the Class M-1A Realized Loss Amortization Amount.
"Class M-1A Interest Carry Forward Amount": With respect to
any Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-1A Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class M-1A Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class M-1A Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
M-1A Pass-Through Rate.
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<PAGE>
"Class M-1A Pass-Through Rate": For any Payment Date in any
month up to and including the month in which the Clan-Up Call Date occurs, the
lesser of (i) LIBOR plus 0.36% per annum and (ii) the Group II Available Funds
Cap Rate for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.54% per annum and
(ii) the Group II Available Funds Cap Rate.
"Class M-1A Principal Distribution Amount": As of any Payment
Date on or after the Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-6 Certificate
Principal Balance (after taking into account the payment of the Group II Class A
Principal Distribution Amount on such Payment Date) and (ii) the Class M-1A
Certificate Principal Balance immediately prior to such Payment Date over (y)
the product of (i) 64.0% and (ii) the outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period.
"Class M-1A Realized Loss Amortization Amount": As of any
Payment Date, the lesser of (x) the Class M-1A Unpaid Realized Loss Amount as of
such Payment Date and (y) the excess of (i) the Group II Monthly Excess Cashflow
Amount over (ii) the sum of the Group II Extra Principal Distribution Amount and
the Class M-1A Interest Carry Forward Amount, in each case for such Payment
Date.
"Class M-1F Applied Realized Loss Amount": As to any Payment
Date, the lesser of (x) the Class M-1F Certificate Principal Balance (after
taking into account the distribution of the Group I Principal Distribution
Amount on such Payment Date, but prior to the application of the Class M-1F
Applied Realized Loss Amount, if any, on such Payment Date) and (y) the excess
of (i) the Group I Applied Realized Loss Amount as of such Payment Date over
(ii) the sum of the Class M-2F Applied Realized Loss Amount and the Class B-1F
Applied Realized Loss Amount, in each case as of such Payment Date.
"Class M-1F Certificate": Any one of the Certificates
designated on the face thereof as a Class M-1F Certificate, substantially in the
form annexed hereto as Exhibit A-10, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class M-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-1F Certificates pursuant to Section 7.5 hereof with
respect to the principal on all prior Payment Dates and (y) the aggregate
cumulative amount of Class M-1F Applied Realized Loss Amounts on all prior
Payment Dates.
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<PAGE>
"Class M-1F Certificate Termination Date": The Payment Date
on which the Class M-1F Certificate Principal Balance is reduced to zero.
"Class M-1F Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class M-1F Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class M-1F Pass-Through Rate.
"Class M-1F Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class M-1F Current Interest, (x) the Class M-1F
Principal Distribution Amount, if any, (y) the Class M-1F Interest Carry Forward
Amount and (z) the Class M-1F Realized Loss Amortization Amount.
"Class M-1F Interest Carry Forward Amount": With respect to
any Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-1F Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class M-1F Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class M-1A Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
M-1F Pass-Through Rate.
"Class M-1F Pass-Through Rate": With respect to any Payment
Date, the lesser of (x) 8.15% per annum and (y) the Group I Available Funds Cap
Rate for such Payment Date.
"Class M-1F Principal Distribution Amount": As of any Payment
Date on or after the Stepdown Date and as long as a Group I Trigger Event is not
in effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date) and (ii) the Class M-1F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of (i) 7.62% and (ii) the
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period.
"Class M-1F Realized Loss Amortization Amount": As of any
Payment Date, the lesser of (x) the Class M-1F Unpaid Realized Loss Amount as of
such Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount and
the Class M-IF Interest Carry Forward Amount, in each case for such Payment
Date.
"Class M-2 Certificate": Any one of the Class M-2F
Certificates or the Class M-2A Certificates.
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"Class M-2A Applied Realized Loss Amount": As to any Payment
Date, the lesser of (x) the Class M-2A Certificate Principal Balance (after
taking into account the distribution of the Group II Principal Distribution
Amount on such Payment Date, but prior to the application of the Class M-2A
Applied Realized Loss Amount, if any, on such Payment Date) and (y) the excess
of (i) the Group II Applied Realized Loss Amount as of such Payment Date over
(ii) the Class B-1A Applied Realized Loss Amount as of such Payment Date.
"Class M-2A Certificate": Any one of the Certificates
designated on the face thereof as a Class M-2A Certificate, substantially in the
form annexed hereto as Exhibit A-11, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class M-2A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2A Certificates pursuant, to Section 7.5 hereof with
respect to principal on all prior Payment Dates and (y) the aggregate,
cumulative amount of Class M-2A Applied Realized Loss Amounts on all prior
Payment Dates.
"Class M-2A Certificate Termination Date": The Payment Date
on which the Class M-2A Certificate Principal Balance is reduced to zero.
"Class M-2A Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class M-2A Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class M-2A Pass-Through Rate.
"Class M-2A Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class M-2A Current Interest, (x) the Class M-2A
Principal Distribution Amount, if any, (y) the Class M-2A Interest Carry Forward
Amount, if any, and (z) the Class M-2A Realized Loss Amortization Amount.
"Class M-2A Interest Carry Forward Amount": With respect to
any Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-2A Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class M-2A Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class M-2A Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
M-2A Pass-Through Rate.
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"Class M-2A Pass-Through Rate": For any Payment Date in any
month up to and including the month in which the Clean-Up Call Date occurs, the
lesser of (i) LIBOR plus 0.53% per annum and (ii) the Group II Available Funds
Cap Rate for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.795% per annum and
(ii) the Group II Available Funds Cap Rate.
"Class M-2A Principal Distribution Amount": As of any Payment
Date on or after the Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-6 Certificate
Principal Balance (after taking into account the payment of the Group II Class A
Principal Distribution Amount on such Payment Date), (ii) the Class M-1A
Certificate Principal Balance (after taking into account the payment of the
Class M-1A Principal Distribution Amount on such Payment Date) and (iii) the
Class-M2A Certificate Principal Balance immediately prior to such Payment Date
over (y) the lesser of (i) 74.0% and (ii) the outstanding Loan Balance of the
Mortgage Loans in Group II as of the last day of the related Remittance Period.
"Class M-2A Realized Loss Amortization Amount": As of any
Payment Date, the lesser of (x) the Class M-2A Unpaid Realized Loss Amount as of
such Payment Date and (y) the excess of (i) the Group II Monthly Excess Cashflow
Amount over (ii) the sum of the Group II Extra Principal Distribution Amount,
the Class M-1A Realized Loss Amortization Amount, the Class M-1 Interest Carry
Forward Amount and the Class M-2A Interest Carry Forward Amount, in each case
for such Payment Date.
"Class M-2F Applied Realized Loss Amount": As to any Payment
Date, the lesser of (x) the Class M-2A Certificate Principal Balance (after
taking into account the distribution of the Group I Principal Distribution
Amount on such Payment Date, but prior to the application of the Class M-2F
Applied Realized Loss Amount, if any, on such Payment Date) and (y) the excess
of (i) the Group I Applied Realized Loss Amount as of such Payment Date over
(ii) the Class B-1F Applied Realized Loss Amount as of such Payment Date.
"Class M-2F Certificate": Any one of the Certificates
designated on the face thereof as a Class M-2F Certificate, substantially in the
form annexed hereto as Exhibit A-12, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class M-2F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2F Certificates less the sum of (x) any amounts actually distributed to
the Owners of
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the Class M-2F Certificates, pursuant to Section 7.5 hereof on all prior Payment
Dates and (y) the aggregate, cumulative amount of Class M-2F Applied Realized
Loss Amounts on all prior Payment Dates.
"Class M-2F Certificate Termination Date": The Payment Date
on which the Class M-2F Certificate Principal Balance is reduced to zero.
"Class M-2F Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class M-2F Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class M-2F Pass-Through Rate.
"Class M-2F Distribution Amount": With respect to any Payment
Date, the sum of (w) the Class M-2F Current Interest, (x) the Class M-2F
Principal Distribution Amount, if any, (y) the Class M-2F Interest Carry Forward
Amount, if any, and (z) the Class M-2F Realized Loss Amortization Amount, if
any.
"Class M-2F Interest Carry Forward Amount": With respect to
any Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-2F Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class M-2F Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class M-2F Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
M-2F Pass-Through Rate.
"Class M-2F Pass-Through Rate": With respect to any Payment
Date, the lesser of (x) 7.80% per annum and (y) the Group I Available Funds Cap
Rate for such Payment Date .
"Class M-2F Principal Distribution Amount": As of any Payment
Date on or after the Group I Stepdown Date and as long as a Group I Trigger
Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates related to Group I
(after taking into account the payment of the Group I Class A Principal
Distribution Amount on such Payment Date), (ii) the Class M-1F Certificate
Principal Balance (after taking into account the payment of the Class M-1F
Principal Distribution Amount on such Payment Date) and (iii) the Class-M-2F
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser of (i) 89.2% and (ii) the outstanding Loan Balance of the Mortgage
Loans in Group I as of the last day of the related Remittance Period.
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"Class M-2F Realized Loss Amortization Amount": As of any
Payment Date, the lesser of (x) the Class M-2F Unpaid Realized Loss Amount as of
such Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount, the
Class M-1F Realized Loss Amortization Amount, the Class M-1 Interest Carry
Forward Amount and the Class M-2F Interest Carry Forward Amount, in each case
for such Payment Date.
"Class R Certificate": Any one of the Certificates designated
on the face thereof as a Class R Certificate, substantially in the form annexed
hereto as Exhibit A-13, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Upper-Tier REMIC for the purposes
of the REMIC Provisions.
"Clean-Up Call Date": The first Remittance Date following the
date on which the aggregate Loan Balances of all Mortgage Loans has declined to
10% or less of the aggregate principal balance of the Mortgage Loans as of the
Startup Day.
"Code": The Internal Revenue Code of 1986, as
amended and any successor statute.
"Combined Loan-to-Value Ratio": With respect to any First
Mortgage Loan, the percentage equal to the Original Principal Amount of the
related Note divided by the Appraised Value of the related Property and with
respect to any Second Mortgage Loan or Third Mortgage Loan, the percentage equal
to (a) the sum of (i) the remaining principal balance, as of origination of the
Second Mortgage Loan or Third Mortgage Loan, as appropriate, of the Senior Lien
note(s) relating to such Second Mortgage Loan or Third Mortgage Loan, as
appropriate, and (ii) the Original Principal Amount of the Note relating to such
Second Mortgage Loan or Third Mortgage Loan, as appropriate, divided by (b) the
Appraised Value.
"Compensating Interest": As defined in Section 8.9(b) hereof.
"Conduit Acquisition Trust": The trust described in the
Pooling and Servicing Agreement dated as of February 15, 1995 among the Sponsor,
Bankers Trust Company of California, N.A., as trustee, and Advanta Mortgage
Corp. USA, as the master servicer.
"Conduit Mortgage Files": For any Mortgage Loan identified on
the related Schedule of Mortgage Loans with a "B" or a "C" code, the items
listed on Exhibit B hereto.
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"Coupon Rate": The rate of interest borne by each Note.
"Current Interest": With respect to any Payment Date, the sum
of the Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class M-1F Current Interest, the
Class M-1A Current Interest, the Class M-2F Current Interest, the Class M-2A
Current Interest, the Class B-1F Current Interest and the Class B-1A Current
Interest.
"Cut-Off Date": The opening of business March 1, 1996.
"Date-of-Payment Loan": Any Mortgage Loan as to which,
pursuant to the Note relating thereto, interest is computed and charged to the
Mortgagor at the Coupon Rate on the outstanding principal balance of such Note
based on the number of days elapsed between receipt of the Mortgagor's last
payment through receipt of the Mortgagor's most current payment.
"Delinquency Advance": As defined in Section 8.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as
Exhibit G hereto and delivered by the Sponsor to the Trustee on the Startup Day
pursuant to Section 4.1 hereof.
"Depository": The Depository Trust Company, 7 Hanover Square,
New York, New York 10004 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each
Account, an institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the long-term deposits of
which shall be rated A2 or better by Moody's and in the highest short-term
rating category for Moody's, unless otherwise approved in writing by the Trustee
and Moody's, and which is any of the
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following: (i) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Trustee, Moody's and Fitch and, in each case acting or designated
by the Master Servicer as the depository institution for the Principal and
Interest Account; provided, however, that any such institution or association
shall have combined capital, surplus and undivided profits of at least
$100,000,000. Notwithstanding the foregoing, an Account may be held by an
institution otherwise meeting the preceding requirements except that the only
applicable rating requirement shall be that the unsecured and uncollateralized
debt obligations thereof shall be rated Baa3 or better by Moody's if such
institution has trust powers and the Principal and Interest Account is held by
such institution in its corporate trust department.
"Designated Residual Owner": Advanta Mortgage Corp.
USA.
"Determination Date": As to each Payment Date, the third
Business Day preceding such Payment Date or such earlier day as shall be agreed
by the Trustee.
"Direct Participant" or "DTC Participant" means any
broker-dealer, bank or other financial institution for which the Depository
holds Offered Certificates from time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization"
shall have the meaning set forth from time to time in the definition thereof at
Section 860E(e)(5) of the Code (or any successor statute thereto) and applicable
to the Trust.
"Document Delivery Requirements": The Sponsor's obligations to
deliver certain legal documents, to prepare and record certain Mortgage
assignments or to deliver certain opinions relating to Mortgage assignments, in
each case with respect to the Mortgage Loans and as set forth in Section 3.5
hereof.
"Eligible Investments": Those investments so designated
pursuant to Section 7.7 hereof.
"Event of Default": Any event described in clauses (a) or (b)
of Section 8.20 hereof.
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"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"File": The documents delivered to the Trustee pursuant to
Section 3.5 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Mortgage File pursuant to this Agreement.
"Final Determination": As defined in Section 9.3(a) hereof.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
"Fitch": Fitch Investors Service, L.P.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"Formula Certificates": With respect to any Payment Date,
each Class of Group II Certificates that has a Formula Rate greater than the
Group II Weighted Average Pass-Through Rate.
"Formula Rate": With respect to any Payment Date and a Class
of Group II Certificates, the rate determined in accordance with clause (i) of
the definition of "Pass Through Rate" for such Class.
"Freddie Mac": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"Full Interest Distribution Amount": With respect to any
Class of Group II Certificates and any Payment Date, the interest due with
respect to such Class, calculated using the Formula Rate with respect to such
Class.
"Gross Margin": With respect to each Mortgage Loan with an
adjustable rate, the fixed percentage amount set forth in the related Mortgage
Note which amount is added to the Index in accordance with the terms of the
related Mortgage Note to determine, on each Interest Rate Adjustment Date, the
Coupon Rate for such Mortgage Loan, subject to any maximum.
"Group I": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to Group I, including
any Qualified Replacement Mortgages delivered in replacement thereof.
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"Group I Applied Realized Loss Amount": As of any Payment
Date, the excess of (x) the aggregate Certificate Principal Balance of the Group
I Certificates on such Payment Date, after taking into account the distribution
of the Group I Principal Distribution Amount on such Payment Dare but prior to
the application of the Group I Applied Realized Loss Amount, if any, on such
Payment Date over (y) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group I as of the last day of the related Remittance Period.
"Group I Available Funds Cap Rate": With respect to any
Payment Date, on amount, expressed as a per annum rate, equal to (a)(i) the
aggregate amount of interest due and collected (or advanced) on all of the
Mortgage Loans in Group I for the related Remittance Period minus (ii) the
aggregate of the Trustee's Fee and the Servicing Fee for Group I with respect to
such Payment Date and minus ((iii) an amount equal to 0.50% per annum times the
aggregate Principal Balance of the Mortgage Loans on Group I as of the beginning
of such related Remittance Period, divided by (b) the aggregate Certificate
Principal Balance of the Group I Certificates immediately prior to such Payment
Date, calculated on the basis of a 360-day year consisting of twelve 30-day
months.
"Group I Certificates": The Class A Certificates (other than
the Class A-6 Certificates), the Class M-1F Certificates, the Class M-2F
Certificates and the Class B-1F Certificates.
"Group I Class A Principal Distribution Amount": As of any
Payment Date (a) prior to the Group I Stepdown Date or with respect to which a
Group I Trigger Event is in effect, 100% of the Group I Principal Distribution
Amount and (b) on or after the Group I Stepdown Date or as to which a Group I
Class A Trigger Event is not in effect, the excess of (x) the aggregate
Certificate Principal Balance of the Group I Class A Certificates immediately
prior to such Payment Date over (y) the product of (i) 70.2% and (ii) the
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period.
"Group I Cumulative Realized Losses": As of any date of
determination, the aggregate amount of Realized Losses with respect to the
Mortgage Loans in Group I since the Cut-Off Date.
"Group I Extra Principal Distribution Amount": As of any
Payment Date, the lesser of (x) the Group I Monthly Excess Interest Amount for
such Payment date and (y) the Group I Overcollateralization Deficiency for such
Payment Date.
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"Group I Interest Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) all interest collected by the Master
Servicer during the related Remittance Period with respect to the Mortgage Loans
in Group I, (ii) all Delinquency Advances made by the Master Servicer on such
Remittance Date with respect to Group I and (iii) all Compensating Interest paid
by the Master Servicer on such Remittance Date with respect to Group I, net of
amounts allowed to be retained pursuant to Section 8.8(c).
"Group I Monthly Excess Cashflow Amount": For any Payment
Date, the sum of (x) the Group I Monthly Excess Interest Amount and (y) the
Group I Overcollateralization Release Amount for such Payment Date.
"Group I Monthly Excess Interest Amount": With respect to any
Payment Date, the excess, if any, of (i) the Group I Interest Remittance Amount
over (ii) the Current Interest on the Group I Certificates on such Payment Date.
"Group I Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group I Interest Remittance Amount for such Remittance
Date and (ii) the Group I Principal Remittance Amount for such Remittance Date.
"Group I Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the principal actually collected by
the Master Servicer with respect to Mortgage Loans in Group I during the related
Remittance Period, (ii) the Loan Balance of each such Mortgage Loan in Group I
that either was repurchased by an Originator or by the Sponsor or purchased by
the Master Servicer on such Remittance Date, to the extent such Loan Balance was
actually deposited in the Principal and Interest Account, (iii) any Substitution
Amounts delivered by the Sponsor in connection with a substitution of a Mortgage
Loan in Group I, to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on such Remittance Date, and (iv) all Net
Liquidation Proceeds actually collected by the Master Servicer with respect to
such Mortgage Loans in Group I during the related Remittance Period (to the
extent such Liquidation Proceeds related to principal) net of amounts allowed to
be retained pursuant to Section 8.8(c).
"Group I Overcollateralization Amount": As of any Payment
Date, the difference between (x) the Loan Balance of the Mortgage Loans in Group
I as of the last day of the immediately preceding Remittance Period and (y) the
aggregate Certificate Principal Balance of the Group I Certificates (after
taking into account all distributions of principal on such Group I Certificates
as of such Payment Date).
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"Group I Overcollateralization Deficiency": As of any Payment
Date, the excess, if any, of (x) the Group I Targeted Overcollateralization
Amount for such Payment Date over (y) the Group I Overcollateralization Amount
for such Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group I Certificates resulting from the distribution of the Group I
Principal Remittance Amount (but not the Group I Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group I
Applied Realized Loss Amount on such Payment Date.
"Group I Overcollateralization Release Amount": As of any
Payment Date, the lesser of (x) the Group I Principal Remittance Amount for such
Payment Date and (y) the excess of (i) the Group I Overcollateralization Amount
for such Payment Date, assuming that 100% of the Group I Principal Remittance
Amount is applied on such Payment Date to the payment of principal on the Group
I Certificates and (ii) the Group I Targeted Overcollateralization Amount for
such Payment Date.
"Group I Principal Distribution Amount": As of any Payment
Date, the sum of (i) the Group I Principal Remittance Amount minus, for Payment
Dates occurring on and after the Group I Stepdown Date and with respect to which
a Trigger Event is not existing, the Group I Overcollateralization Release
Amount, if any and (ii) the Group I Extra Principal Distribution Amount, if any.
"Group I Senior Enhancement Percentage": For any Payment Date,
the percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group I and (ii)
the Group I Overcollateralization Amount, in each case after taking into account
the distribution of the Group I Principal Distribution Amount on such Payment
Date by (y) the Loan Balance of the Mortgage Loans in Group I as of the last day
of the related Remittance Period.
"Group I Senior Specified Enhancement Percentage":
On any date of determination thereof means 29.80%.
"Group I Stepdown Date": The later to occur of (x) the Payment
Date in April 2000 and (y) the first date on which principal equal to
$170,000,014 has been received by the Trust with respect to Group I.
"Group I Targeted Overcollateralization Amount": On
any Payment Date (x) prior to the Group I Stepdown Date,
$9,010,000 and (y) on or after the Group I Stepdown Date, the
greater of (x) 5.30% of the aggregate outstanding Loan Balance
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of the Mortgage Loans in Group I as of the last day of the related Remittance
Period and (y) $1,700,000.
"Group I Trigger Event": A Group I Trigger Event has occurred
with respect to a Payment Date if the percentage obtained by dividing (x) the
amount of 60+ Day Delinquent Loans in Group I by (y) the aggregate outstanding
Loan Balance of the Mortgage Loans in Group I as of the last day of the
immediately preceding Remittance Period exceeds 50% of the Group I Senior
Enhancement Percentage as of the last day of the immediately preceding
Remittance Period.
"Group II": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to Group II,
including any Qualified Replacement Mortgages delivered in replacement thereof.
"Group II Applied Realized Loss Amount": As of any Payment
Date, the excess of (x) the aggregate Certificate Principal Balance of the Group
II Certificates on such Payment Date, after taking into account the distribution
of the Group II Principal Distribution Amount on such Payment Date but prior to
the application of the Group II Applied Realized Loss Amount, if any, on such
Payment Date over (y) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period.
"Group II Unadjusted Available Funds Cap Rate": With respect
to any Payment Date, on amount, expressed as a per annum rate, equal to (a)(i)
the aggregate amount of interest due and collected (or advanced) on all of the
Mortgage Loans in Group II for the related Remittance Period minus (ii) the
aggregate of the Trustee's Fee and the Servicing Fee for Group II with respect
to such Payment Date and minus ((iii) an amount equal to 0.75% per annum times
the aggregate Principal Balance of the Mortgage Loans on Group II as of the
beginning of such related Remittance Period, divided by (b) the aggregate
Certificate Principal Balance of the Group II Certificates immediately prior to
such Payment Date, calculated on the basis of a 360-day year consisting of
twelve 30-day months.
"Group II Available Escalation Amount": With respect to any
Payment Date, an amount (but not less than zero) equal to the sum of, with
respect to each Class of Formula Certificates product of (i) a rate equal to the
Group II Unadjusted Available Funds Cap Rate minus the Formula Rate for such
Class of Formula Certificates and (ii) the Certificate Principal Balances of
such Class.
"Group II Available Funds Cap Rate": With respect to Group
II, on any Payment Date, a rate equal to the Group II Unadjusted Available Funds
Cap Rate and the percentage
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equivalent of a fraction, the numerator of which is the Group II Available
Escalation Amount and the denominator of which is the sum of the Certificate
Principal Balances for each Class of Group II Capped Certificates.
"Group II Capped Certificates": With respect to any Payment
Date, each class of Offered Certificates that has a Formula Rate greater than
the Unadjusted Available Funds Cap Rate for such Payment Date.
"Group II Certificates": The Class A-6 Certificates, the
Class M-1A Certificates, the Class M-2A Certificates and the Class B-1A
Certificates.
"Group II Class A Principal Distribution Amount": As of any
Payment Date (a) prior to the Group II Stepdown Date or with respect to which a
Group II Trigger Event is in effect, 100% of the Group II Principal Distribution
Amount and (b) on or after the Group II Stepdown Date or as to which a Group II
Trigger Event is not in effect, the excess of (x) the aggregate Certificate
Principal Balance of the Group II Class A Certificates immediately prior to such
Payment Date over (y) the product of (i) 52.0% and (ii) the outstanding Loan
Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period.
"Group II Cumulative Realized Losses": As of any date of
determination, the aggregate amount of Realized Losses with respect to the
Mortgage Loans in Group II since the Cut-Off Date.
"Group II Extra Principal Distribution Amount": As of any
Payment Date, the lesser of (x) the Group II Monthly Excess Interest Amount for
such Payment Date and (y) the Group II Overcollateralization Deficiency for such
Payment Date.
"Group II Interest Amount Available": As of any Payment Date,
the Group II Interest Remittance Amount less the portion of the Trustee Fee
related to Group II.
"Group II Interest Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) all interest due during the related
Remittance Period with respect to the Mortgage Loans in Group II (less the
Servicing Fee with respect to such Mortgage Loans), (ii) all Compensating
Interest paid by the Master Servicer on such Remittance Date with respect to
Mortgage Loans in Group II and (iii) the portion of the Subscription Amount
relating to interest on the Mortgage Loans in Group II.
"Group II Monthly Excess Cashflow Amount": For any Payment
Date, the sum of (x) the Group II Monthly Excess
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Interest Amount and (y) the Group II Overcollateralization Release Amount for
such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to
any Payment Date, the excess, if any, of (i) the Group II Interest Amount
Available for the related Remittance Period over (ii) the Current Interest on
the Group II Certificates on such Payment Date.
"Group II Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group II Interest Remittance Amount for such Remittance
Date and (ii) the Group II Principal Remittance Amount for such Remittance Date.
"Group II Overcollateralization Amount": As of any Payment
Date, the difference between (x) the Loan Balance of the Mortgage Loans in Group
II as of the last day of the immediately preceding Remittance Period and (y) the
aggregate Certificate Principal Balance of the Group II Certificates (after
taking into account all distributions of principal on such Group II Certificates
as of such Payment Date).
"Group II Overcollateralization Deficiency": As of any
Payment Date, the excess, if any, of (x) the Group II Targeted
Overcollateralization Amount for such Payment Date over (y) the Group II
Overcollateralization Amount for such Payment Date, calculated for this purpose
after taking into account the reduction on such Payment Date of the aggregate
Certificate Principal Balance of the Group II Certificate resulting from the
distribution of the Group II Principal Remittance Amount (but not the Group II
Extra Principal Distribution Amount) on such Payment Date, but prior to taking
into account any Group II Applied Realized Loss Amount on such Payment Date.
"Group II Overcollateralization Release Amount": As of any
Payment Date, the lesser of (x) the Group II Principal Remittance Amount for
such Payment Date and (y) the excess of (i) the Group II Overcollateralization
Amount for such Payment Date, assuming that 100% of the Group II Principal
Remittance Amount is applied on such Payment Date to the payment of principal on
the Group II Certificates and (ii) the Group II Targeted Overcollateralization
Amount for such Payment Date.
"Group II Principal Distribution Amount": As of any Payment
Date, the sum of (i) the Group II Principal Remittance Amount (minus), for
Payment Dates occurring on and after the Group II Stepdown Date and with respect
to which a Trigger Event is not existing, the Group II Overcollateralization
Release Amount, if any) and (ii) the Group II Extra Principal Distribution
Amount, if any.
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"Group II Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Master Servicer with respect to Mortgage Loans in Group II
during the related Remittance Period, (ii) the Loan Balance of each Mortgage
Loan in Group II that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such Loan Balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered by the Seller in connection with a substitution of a
Mortgage Loan in Group II to the extent such Substitution Amounts were actually
deposited in the Principal and Interest Account on or prior to such Monthly
Remittance Date, and (iv) all Net Liquidation Proceeds actually collected by the
Master Servicer with respect to the Mortgage Loans in Group II during the
related Remittance Period (to the extent such Net Liquidation Proceeds related
to principal).
"Group II Senior Enhancement Percentage": For any Payment
Date, the percentage obtained by dividing (x) the sum of (i) the aggregate
Certificate Principal Balance of the Subordinate Certificates relating to Group
II and (ii) the Group II Overcollateralization Amount, in each case after taking
into account the distribution of the Group II Principal Distribution Amount on
such Payment Date by (y) the Loan Balance of the Mortgage Loans in Group II as
of the last day of the related Remittance Period.
"Group II Senior Specified Enhancement Percentage:" On any
date of determination thereof means 48%.
"Group II Stepdown Date": The later to occur of (x) the
Payment Date in April 2000 and (y) the first date on which principal equal to
$105,525,021 has been received by the Trust with respect to Group II.
"Group II Targeted Overcollateralization Amount": On any
Payment Date (x) prior to the Group II Stepdown Date, $8,400,000 and (y) on or
after the Group II Stepdown Date, the greater of (x) 8.0% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (y) $1,050,000.
"Group II Trigger Event": A Group II Trigger Event has
occurred with respect to a Payment Date if the percentage obtained by dividing
(x) the amount of 60+ Day Delinquent Loans in Group II by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the immediately preceding Remittance Period exceeds 40% of the Group II Senior
Enhancement Percentage.
"Group II Weighted Average Pass-Through Rate": As to any
Payment Date, the weighted average of the Class A-7
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Pass-Through Rate, the Class M-1A Pass-Through Rate, the Class M-2A Pass-Through
Rate and the Class B-1A Pass-Through Rate weighted by the respective Certificate
Principal Balance of the related Class as of such Payment Date before taking
into account any distributions to be made on such Payment Date.
"Index": With respect to any adjustable rate Mortgage Note,
the applicable index set forth therein.
"Indirect Participant" shall mean any financial institution
for whom any Direct Participant holds an interest in a Class A Certificate.
"Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan.
"Interest Advance": As defined in Section 7.10(b) hereof.
"Interest Determination Date": With respect to any Interest
Accrual Period for the Group I and Group II Certificates, the second London
Business Day preceding the first day of such Interest Accrual Period.
"Interest Rate Adjustment Date": The date on which an
adjustment to the Coupon Rate on a Mortgage Note becomes effective.
"LIBOR": With respect to any Interest Accrual Period for the
Group I Certificates and Group II Certificates, the rate determined by the
Trustee on the related Interest Determination Date on the basis of the offered
rates of the Reference Banks for one-month U.S. dollar deposits, as such rates
appear on the Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on such
Interest Determination Date. On each Interest Determination Date, LIBOR for the
related Interest Accrual Period will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the
related Interest Accrual Period shall be the higher of (i)
LIBOR as determined on the previous Interest Determination
Date and (ii) the Reserve Interest Rate.
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"Liquidated Loan": As defined in Section 8.13(b) hereof. A
Mortgage Loan which is purchased from the Trust pursuant to Section 3.3, 3.4,
3.6(b) or 8.10 hereof is not a "Liquidated Loan".
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Master Servicer or any Sub-servicer pursuant to Section 8.9 with respect to the
related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan,
any amounts (including the proceeds of any Insurance Policy) recovered by the
Master Servicer in connection with such Liquidated Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof as of the Cut-Off Date, less any related
Principal Remittance Amounts relating to such Mortgage Loan included in previous
related Monthly Remittances that were transferred by the Master Servicer or any
Sub-servicer to the Trustee for deposit in the related Certificate Account;
provided, however, (x) that the Loan Balance for any Mortgage Loan which has
become a Liquidated Loan shall be zero as of the first day of the Remittance
Period following the Remittance Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter and (y) the Loan Balance "as of the
Cut-Off Date" for any Mortgage Loan originated during the period from the
Cut-Off Date to the Closing Date shall be the Original Loan Balance thereof.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Section 3.3, 3.4,
3.6(b) or 8.10 hereof, an amount equal to the Loan Balance of such Mortgage Loan
as of the date of purchase, plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the preceding Remittance Period computed
at the Coupon Rate less the Servicing Fee (expressed as an annual percentage
rate), if any, together with, without duplication, the aggregate amount of (i)
all delinquent interest, all Delinquency Advances and Servicing Advances
theretofore made with respect to such Mortgage Loan and not subsequently
recovered from the related Mortgage Loan, (ii) all Delinquency Advances which
the Master Servicer or any Sub-servicer has theretofore failed to remit with
respect to such Mortgage Loan and (iii) any Reimbursement Amount relating to
such Mortgage Loan.
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"London Business Day": A day on which banks are open for
dealing in foreign currency, and exchange in London and New York City.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer's Trust Receipt": The Master Servicer's
trust receipt in the form set forth as Exhibit K hereto.
"Master Servicing Fee": As to any Payment Date the product of
(x) one-twelfth of 0.50% and (y) the aggregate Loan Balances of the Unaffiliated
Originator Loans as of the opening of business on the first day of the preceding
calendar month.
"Master Transfer Agreement": Any one of the Master Loan
Transfer Agreements among the Sponsor and/or the Conduit Acquisition Trust, the
Trustee and one or more Originators. For purposes of this Agreement the Master
Loan Transfer Agreements are (x) the Master Loan Transfer Agreement dated as of
February 15, 1995 among the Sponsor, the Trustee and the Affiliated Originators
named therein and (y) any similar agreement with an Unaffiliated Originator
designated as a "Master Transfer Agreement" together, in either case, with any
related Conveyance Agreements (as defined therein).
"Mezzanine Certificates": Collectively, the Class M-1
Certificates and the Class M-2 Certificates.
"Monthly Remittance Amount": With respect to Group I, the
Group I Monthly Remittance Amount, and with respect to Group II, the Group II
Monthly Remittance Amount.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second or third lien on an estate in fee simple interest in
real property securing a Note.
"Mortgage Loan Group": Either Group I or Group II. References
herein to the related Class of Class A Certificates, when used with respect to a
Mortgage Loan Group, shall mean (A) in the case of Group I, the Group I
Certificates, and (B) in the case of Group II, the Group II Certificates.
"Mortgage Loans": Such of the mortgage loans transferred and
assigned to the Trust pursuant to Section 3.5(a) hereof, together with any
Qualified Replacement
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Mortgages substituted therefor in accordance with this Agreement, as from time
to time are held as a part of the Trust Estate, the Mortgage Loans originally so
held being identified in the Schedule of Mortgage Loans. The term "Mortgage
Loan" includes the terms "First Mortgage Loan", "Second Mortgage Loan" and
"Third Mortgage Loan". The term "Mortgage Loan" includes any Mortgage Loan which
is Delinquent, which relates to a foreclosure or which relates to a Property
which is REO Property prior to such Property's disposition by the Trust. Any
mortgage loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust by the Sponsor, in
fact was not transferred and assigned to the Trust for any reason whatsoever
shall nevertheless be considered a "Mortgage Loan" for all purposes of this
Agreement. The term "Mortgage Loan" includes the term "Bulk Acquisition Loan".
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Delinquency Advance or Servicing Advance previously made and not
reimbursed pursuant to Sections 7.5 or 8.9, or (b) a Delinquency Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Master
Servicer, as evidenced by an Officer's Certificate delivered to the Trustee
would not be ultimately recoverable pursuant to Sections 7.5 or 8.9.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Offered Certificates": Collectively, the Class A
Certificates, the Mezzanine Certificates and the Subordinate Certificates.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Trustee.
"Operative Documents": Collectively, this Agreement, the
Master Transfer Agreements, and Certificates.
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"Original Aggregate Loan Balance": $551,050,070.92
"Original Certificate Principal Balance": As of the Startup
Day and as to each Class of Class A Certificates, the original Certificate
Principal Balances thereof, are as follows:
"Original Principal Amount": With respect to each Note, the
principal amount of such Note or the mortgage note relating to a Senior Lien, as
the case may be, on the date of origination thereof.
"Originator": Any entity from which the Sponsor has purchased
Mortgage Loans. The Originators are Advanta Mortgage Corp. USA, Advanta
Mortgage Corp. Midatlantic, Advanta Mortgage Corp. Midatlantic II, Advanta
Mortgage Corp. Midwest, Advanta Mortgage Corp. of New Jersey, Advanta Mortgage
Corp. of New Jersey II, Advanta Mortgage Corp. Northeast, Advanta National Bank
USA and Advanta Finance Corp.
"Outstanding": With respect to all Certificates of a Class,
as of any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Certificates or portions thereof for which full
and final payment money in the necessary amount has been theretofore
deposited with the Trustee in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of
which other Certificates have been executed and delivered pursuant to
this Agreement, unless proof satisfactory to the Trustee is presented
that any such Certificates are held by a bona fide purchaser; and
(iv) Certificates alleged to have been destroyed,
lost or stolen for which replacement Certificates have been issued as
provided for in Section 5.5 hereof.
"Overcollateralization Release Amount": For any Payment Date,
the sum of the Group I Overcollateralization Release Amount and the Group II
Overcollaterization Release Amount.
"Owner": The Person in whose name a Certificate is registered
in the Register, to the extent described in Section 5.6.
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"Pass-Through Rate". As to the each Class of Certificates,
the related Pass-Through Rate.
"Payment Date": Any date on which the Trustee is required to
make distributions to the Owners, which shall be the 25th day of each month,
commencing in the month following the Startup Day.
"Percentage Interest": As to any Offered Certificate, that
percentage, expressed as a fraction, the numerator of which is the Certificate
Principal Balance of such Certificate as of the Cut-Off Date and the denominator
of which is the Original Certificate Principal Balance of all Certificates of
the same Class; and as to any Class R Certificate, that Percentage Interest set
forth on such Class R Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any
period, the sum of all Realized Losses with respect to the Mortgage Loans
experienced during such period.
"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate
principal balances of all Mortgage Loans 90 or more days Delinquent (including
all foreclosures and REO Properties) as of the close of business on the last
day of such Remittance Period over (y) the Pool Principal Balance as of the
close of business on the last day of such Remittance Period.
"Pool Principal Balance": The aggregate principal balances
of all Mortgage Loans.
"Pool Rolling Three Month Delinquency Rate": As of any
Payment Date, the fraction, expressed as a percentage, equal to the average of
the Pool Delinquency Rates for each of the three (or one and two, in the case
of the first and second Payment Dates) immediately preceding Remittance
Periods.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan
which is received by the Master Servicer in
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advance of the scheduled due date for the payment of such principal (other than
the principal portion of any Prepaid Installment), and the proceeds of any
Insurance Policy which are to be applied as a payment of principal on the
related Mortgage Loan shall be deemed to be Prepayments for all purposes of this
Agreement.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-servicer in connection with a foreclosed Mortgage Loan
prior to the liquidation thereof, including, without limitation, expenditures
for real estate property taxes, hazard insurance premiums, property restoration
or preservation.
"Principal and Interest Account": Collectively, each
principal and interest account created by the Master Servicer or any
Sub-servicer pursuant to Section 8.8(a) hereof, or pursuant to any
Sub-Servicing Agreement.
"Principal Remittance Amount": As applicable, the Group I
Principal Remittance Amount or the Group II Principal Remittance Amount.
"Prohibited Transaction": "Prohibited transaction" shall
have the meaning set forth from time to time in the definition thereof at
Section 860F(a)(2) of the Code (or any successor statute thereto) and
applicable to the Trust.
"Property": The underlying property securing a Mortgage
Loan.
"Purchase Option Period": As defined in Section 9.3(b)
hereof.
"Qualified Liquidation": "Qualified liquidation" shall have
the meaning set forth from time to time in the definition thereof at Section
860F(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust and the Tax Estates.
"Qualified Mortgage": "Qualified mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto) and applicable to the
Trust and the Mortgage Loan Groups.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 3.3, 3.4 or 3.6(b) hereof, which (i) bears a
variable rate of interest if the Mortgage Loan to be substituted for is in Group
II or bears a fixed rate of interest if the Mortgage Loan to be substituted for
is in Group I, (ii) has a Coupon Rate at least equal to the Coupon Rate of the
Mortgage Loan being replaced, (which,
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in the case of a Mortgage Loan in Group II, shall mean a Mortgage Loan having
the same interest rate index, a margin over such index and a maximum interest
rate at least equal to those applicable to the Mortgage Loan being replaced),
(iii) is of the same or better property type and the same or better occupancy
status as the replaced Mortgage Loan, (iv) shall be of the same or better credit
quality classification (determined in accordance with the Originators' credit
underwriting guidelines) as the Mortgage Loan being replaced, (v) shall mature
no later than November 25, 2026, (vi) has a Combined Loan-to-Value Ratio as of
the Cut-Off Date no higher than the Combined Loan-to-Value Ratio of the replaced
Mortgage Loan at such time, (vii) has a Loan Balance as of the related
Replacement Cut-Off Date equal to or less than the Loan Balance of the replaced
Mortgage Loan as of such Replacement Cut-Off Date, (viii) satisfies all of the
representations and warranties set forth in Section 3.3 and the criteria set
forth from time to time in the definition thereof at Section 860G(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust, all as
evidenced by an Officer's Certificate of the Sponsor delivered to the Trustee
prior to any such substitution and (ix) is a valid First Mortgage Loan if the
Mortgage Loan to be substituted for is a valid First Mortgage Loan or, Second
Mortgage Loan if the Mortgage Loan to be substituted for is a Second Mortgage
Loan, or Third Mortgage Loan if the Mortgage Loan to be substituted for is a
Third Mortgage Loan. In the event that one or more mortgage loans are proposed
to be substituted for one or more mortgage loans, the foregoing tests may be met
on a weighted average basis, except that the requirement of clauses (vi) and
(viii) hereof must be satisfied as to each Qualified Replacement Mortgage.
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which the Loan Balance thereof as of the date of liquidation is in
excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, the last
day of the calendar month immediately preceding the calendar month in which
such Payment Date occurs or, if such day is not a Business Day, the next
preceding Business Day.
"Reference Banks": Bankers Trust Company, Barclay's Bank PLC,
The Bank or Tokyo and National Westminster Bank PLC; provided that if any of
the foregoing banks are not suitable to serve as a Reference Bank, then any
leading banks selected by the Trustee which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the
control of or under common control with the Sponsor or any affiliate thereof,
(iii) whose quotations appear on the Reuters Screen LIBOR Page on the relevant
Interest
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Determination Date and (iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Trustee in
accordance with Section 5.4 hereof, in which the names of the Owners are set
forth.
"Registrar": The Trustee, acting in its capacity as Trustee
appointed pursuant to Section 5.4 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by
the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus and Prospectus Supplement
relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
"REMIC Trust": The segregated pool of assets consisting of
the Trust Estate, except for the Supplemental Interest Trust and the
Supplemental Interest Payment Account.
"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the Principal and Interest Account to
the Trustee, which shall be no later than the 18th day of each month, or, if
such day is not a Business Day, the next preceding Business Day, commencing in
the month following the month in which the Startup Day occurs.
"Remittance Period": The period (inclusive) beginning on the
first day of the calendar month immediately preceding the month in which a
Remittance Date occurs and ending on the last day of such immediately preceding
calendar month.
"REO Property": A Property acquired by the Master Servicer or
any Sub-servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar
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month in which such Qualified Replacement Mortgage is conveyed
to the Trust.
"Representation Letter" shall mean letters to, or agreements
with, the Depository to effectuate a book entry system with respect to the
Offered Certificates registered in the Register under the nominee name of the
Depository.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which three New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which three
New York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Schedules of Mortgage Loans": The Schedules of Mortgage
Loans, attached hereto as Schedule I. Such Schedules shall also contain one of
the following codes for each Mortgage Loan: "B" if such Mortgage Loan is a Bulk
Acquisition Loan, "C" if such Mortgage Loan is an Unaffiliated Originator Loan
or "A" for all other Mortgage Loans. The information contained on each Mortgage
Loan Schedule shall be delivered to the Trustee on a computer readable magnetic
tape or disk.
"Second Mortgage Loan": A Mortgage Loan which constitutes a
second priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first priority
lien; and with respect to any Third Mortgage Loan, the mortgage loans relating
to the corresponding Property having first and second priority liens.
"Servicer Affiliate": A Person (i) controlling, controlled
by or under common control with the Master Servicer and (ii) which is qualified
to service residential mortgage loans.
"Servicing Advance": As defined in Section 8.9(c) and
Section 8.13 hereof.
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"Servicing Fee": With respect to any Mortgage Loan which is an
Unaffiliated Originator Loan, the sum of any servicing fee relating to such
Unaffiliated Originator Loan and the Master Servicing Fee. With respect to any
Mortgage Loan other than an Unaffiliated Originator Loan, the Advanta Servicing
Fee. The Sponsor shall inform the Trustee as to the level of any servicing fee
relating to an Unaffiliated Originator Loan, which shall not be in excess of
0.50% per month, unless otherwise approved by the Trustee in writing.
"Sponsor": Advanta Mortgage Conduit Services, Inc.,
a Delaware corporation.
"Startup Day": March 31, 1997.
"Step-up Payment Date": The second Payment Date
which follows the Clean-up Call Date.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such difference together with
accrued and unpaid interest on such amount calculated at the Coupon Rate net of
the Servicing Fee of the Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master
Servicer has entered into a Sub-Servicing Agreement and who
satisfies any requirements set forth in Section 8.3 hereof in
respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the
Master Servicer and any Sub-Servicer relating to servicing and/or
administration of certain Mortgage Loans as permitted by Section 8.3.
"Supplemental Interest Payment Account": The Supplemental
Interest Payment Account established in accordance with Section 7.10(a) hereof
and maintained by the Trustee.
"Supplemental Interest Payment Amount Available": As defined
in Section 7.10(b) hereof.
"Supplemental Interest Trust": The Advanta Supplemental
Interest Trust 1997-1 created pursuant to Section 7.10(a) hereof.
"Tax Matters Person": The Tax Matters Person appointed
pursuant to Section 11.17 hereof.
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"Termination Notice": As defined in Section 9.3(b) hereof.
"Termination Price": As defined in Section 9.2(a) hereof.
"Third Mortgage Loan": A Mortgage Loan which constitutes a
third priority mortgage lien with respect to the related Property.
"Transaction Documents": Collectively this Agreement, the
Underwriting Agreement relating to the Offered Certificates, the Master
Transfer Agreements, any Sub- Servicing Agreement, the Registration Statement
relating to the Offered Certificates and the Certificates.
"Trust": Advanta Mortgage Loan Trust 1997-1, the trust
created under this Agreement.
"Trust Estate": Collectively, all money, instruments and
other property, to the extent such money, instruments and other property are
subject or intended to be held in trust, and in the subtrusts, for the benefit
of the Owners, including all proceeds thereof, including, without limitation,
(i) the Mortgage Loans, (ii) such amounts, including Eligible Investments, as
from time to time may be held in all Accounts, (iii) any Property, the
ownership of which has been effected on behalf of the Trust as a result of
foreclosure or acceptance by the Master Servicer of a deed in lieu of
foreclosure and that has not been withdrawn from the Trust, (iv) any Insurance
Policies relating to the Mortgage Loans and any rights of the Sponsor under any
Insurance Policies, (v) Net Liquidation Proceeds with respect to any Liquidated
Loan, and (vi) the rights of the Sponsor against any Originator pursuant to the
related Master Transfer Agreement.
"Trustee": Bankers Trust Company of California, N.A.,
located on the date of execution of this Agreement at Bankers Trust Company, 3
Park Plaza, Irvine, California 92614, a national banking association, not in
its individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee's Fees": With respect to any Payment Date and
Mortgage Loan Group, the Product of (x) one-twelfth of .00875% and (y) the
aggregate Loan Balance of the Mortgage Loan in the related Mortgage Loan Group
as of the beginning of the related Remittance Period.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased
by the Sponsor from an Unaffiliated Originator and sold to the Trust by the
Sponsor.
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"Unaffiliated Originators": Any Originator (x) not
affiliated with the Sponsor and (y) approved in writing by the Trustee.
"Uncertificated Interest": As defined in Section 2.8(b)
hereof.
"Underwriters": Morgan Stanley & Co. Incorporated, Bear,
Stearns & Co. Inc., Lehman Brothers Inc. and Prudential Securities
Incorporated.
"Unpaid Realized Loss Amount" For any Class of the
Subordinate Certificates and as to any Payment Date, the excess of (x) the
aggregate cumulative amount of related Applied Realized Loss Amounts with
respect to such Class for all prior Payment Dates over (y) the aggregate,
cumulative amount of related Realized Loss Amortization Amounts with respect to
such Class for all prior Payment Dates.
Section 1.2. Use of Words and Phrases. "Herein", "hereby",
"hereunder", "hereof", "hereinbefore", "hereinafter" and other equivalent words
refer to this Agreement as a whole and not solely to the particular section of
this Agreement in which any such word is used. The definitions set forth in
Section 1.1 hereof include both the singular and the plural. Whenever used in
this Agreement, any pronoun shall be deemed to include both singular and plural
and to cover all genders.
Section 1.3. Captions; Table of Contents. The captions or
headings in this Agreement and the Table of Contents are for convenience only
and in no way define, limit or describe the scope and intent of any provisions
of this Agreement.
Section 1.4. Opinions. Each opinion with respect to the
validity, binding nature and enforceability of documents or Certificates may be
qualified to the extent that the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law) and may
state that no opinion is expressed on the availability of the remedy of
specific enforcement, injunctive relief or any other equitable remedy. Any
opinion required to be furnished by any Person hereunder must be delivered by
counsel upon whose opinion the addressee of such opinion may reasonably rely,
and such opinion may state that it is given in reasonable reliance upon an
opinion of another, a copy of which must be attached, concerning the laws of a
foreign jurisdiction.
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.1. Establishment of the Trust. The parties hereto do
hereby create and establish, pursuant to the laws of the State of New York and
this Agreement, the Trust, which, for convenience, shall be known as "Advanta
Mortgage Loan Trust 1997-1". Each Mortgage Loan Group shall constitute a
sub-trust of the Trust.
Section 2.2. Office. The office of the Trust shall be in care
of the Trustee, addressed to Bankers Trust Company of California, N.A., Three
Park Plaza, Irvine, California 92614, or at such other address as the Trustee
may designate by notice to the Sponsor, the Master Servicer and the Owners.
Section 2.3. Purposes and Powers. The purpose of the Trust is
to engage in the following activities, and only such activities: (i) the
issuance of the Certificates and the acquiring, owning and holding of Mortgage
Loans and the Trust Estate in connection therewith; (ii) activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith, including the investment of monies in accordance
with this Agreement; and (iii) such other activities as may be required in
connection with conservation of the Trust Estate and distributions to the
Owners; provided, however, that nothing contained herein shall permit the
Trustee to take any action which would result in the loss of REMIC status for
the REMIC Trust.
Section 2.4. Appointment of the Trustee; Declaration of Trust.
The Sponsor hereby appoints the Trustee as trustee of the Trust effective as of
the Startup Day, to have all the rights, powers and duties set forth herein. The
Trustee hereby acknowledges and accepts such appointment, represents and
warrants its eligibility as of the Startup Day to serve as Trustee pursuant to
Section 10.8 hereof and declares that it will hold the Trust Estate in trust
upon and subject to the conditions set forth herein for the benefit of the
Owners.
Section 2.5. Expenses of the Trust. The expenses of the Trust,
including the annual fees of the Trustee, and any other expenses of the Trust
that have been reviewed and approved by the Sponsor (which approval shall not be
unreasonably withheld), including the reasonable expenses of the Trustee shall
be paid by the Sponsor to the Trustee or to such other Person to whom such
amounts may be due. Failure by the Sponsor to pay any such fees or other
expenses shall not relieve the Trustee of its obligations hereunder. The Trustee
hereby covenants with the Owners that every material contract
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or other material agreement entered into by the Trustee on behalf of the Trust
shall expressly state therein that no Owner shall be personally liable in
connection with such contract or agreement.
Section 2.6. Ownership of the Trust. On the Startup Day the
ownership interests in the Trust and the subtrusts shall be transferred as set
forth in Section 4.2 hereof, such transfer to be evidenced by sale of the
Certificates as described therein. Thereafter, transfer of any ownership
interest shall be governed by Sections 5.4 and 5.8 hereof.
Section 2.7. Situs of the Trust. It is the intention of the
parties hereto that the Trust constitute a trust under the laws of the State of
New York. The Trust will be created in, and all Accounts maintained by the
Trustee on behalf of the Trust will be located in, the State of New York. The
Trust will not have any employees and will not have any real or personal
property (other than property acquired pursuant to Section 8.13 hereof) located
in any state other than in the State of New York and payments will be received
by the Trust only in the State of New York and payments from the Trust will be
made only from the State of New York. The Trust's only office will be at the
office of the Trustee as set forth in Section 2.2 hereof.
Section 2.8. Miscellaneous REMIC Provisions. (a) The REMIC
Trust shall elect to be treated as a REMIC under Section 860D of the Code, as
described in Section 11.15. Any inconsistencies or ambiguities in this Agreement
or in the administration of the Trust shall be resolved in a manner that
preserves the validity of the election of the REMIC Trust to be treated as a
REMIC.
(b) The Startup Day is hereby designated as the "startup day"
of the REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The final scheduled Payment Date for any Class of
Certificates is hereby established as follows:
Class
Class A-1 Certificates 5/25/2012
Class A-2 Certificates 4/25/2020
Class A-3 Certificates 5/25/2022
Class A-4 Certificates 5/25/2027
Class A-5 Certificates 5/25/2027
Class A-6 Certificates 5/25/2027
Class M-1F Certificates 5/25/2027
Class M-1A Certificates 5/25/2027
Class M-2F Certificates 5/25/2027
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Class M-2A Certificates 5/25/2027
Class B-1F Certificates 5/25/2027
Class B-1A Certificates 5/25/2027
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER;
COVENANT OF SPONSOR TO CONVEY MORTGAGE LOANS
Section 3.1. Representations and Warranties of the Sponsor.
The Sponsor hereby represents, warrants and covenants to the Trustee, and to the
Owners as of the Startup Day that:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased
by it make such qualification necessary. The Sponsor has all requisite
corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and
its performance and compliance with the terms of this Agreement and of
the other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the Sponsor
and will not violate the Sponsor's Articles of Incorporation or Bylaws
or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to
which the Sponsor is a party or by which the Sponsor is bound, or
violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over
the Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Sponsor is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Sponsor, enforceable against
it in accordance with the terms hereof and thereof, except as the
enforcement hereof and thereof may
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be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
and by general principles of equity (whether considered in a proceeding
or action in equity or at law).
(d) The Sponsor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Sponsor or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a
party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or that would
materially and adversely affect the condition (financial or otherwise)
or operations of the Sponsor or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a
party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Sponsor
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report
not misleading.
(g) The statements contained in the Registration Statement
which describe the Sponsor or matters or activities for which the
Sponsor is responsible in accordance with the Operative Documents or
which are attributed to the Sponsor therein are true and correct in all
material respects, and the Registration Statement does not contain any
untrue statement of a material fact with respect to the Sponsor or omit
to state a material fact required to be stated therein or necessary in
order to make the statements contained therein with respect to the
Sponsor not misleading. To the best of the Sponsor's knowledge and
belief, the Registration Statement does not contain any untrue
statement of a material fact required to be stated therein or omit to
state any material fact required to be stated therein or necessary to
make the statements contained therein not misleading.
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(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Sponsor makes no such representation or warranty), that are
necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Sponsor of the
Operative Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the
date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative
Documents on the part of the Sponsor and the performance by the Sponsor
of its obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(i) The transactions contemplated by this Agreement
are in the ordinary course of business of the Sponsor.
(j) The Sponsor received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the
Mortgage Loans evidenced by the Certificates.
(k) The Sponsor did not sell any interest in any Mortgage Loan
evidenced by the Certificates with any intent to hinder, delay or
defraud any of its respective creditors.
(l) The Sponsor is solvent and the Sponsor will not be
rendered insolvent as a result of the sale of the Mortgage Loans to the
Trust or the sale of the Certificates.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Trustee.
Section 3.2. Representations and Warranties of the Master
Servicer. The Master Servicer hereby represents, warrants and covenants to the
Trustee, and to the Owners as of the Startup Day that:
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(a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, is, and each Sub-Servicer is, in compliance with the laws of
each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing
as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such
qualification necessary. The Master Servicer and each Sub-servicer has
all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its
obligations under this Agreement and the other Operative Documents to
which it is a party. The Master Servicer has, on a consolidated basis
with its parent, AMHC, equity of at least $5,000,000, as determined in
accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement and the other Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of
the Master Servicer and will not violate the Master Servicer's Articles
of Incorporation or Bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which the Master Servicer is a party or by which
the Master Servicer is bound or violate any statute or any order, rule
or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Master Servicer or any of its
properties.
(c) This Agreement and the other Operative Documents to which
the Master Servicer is a party, assuming due authorization, execution
and delivery by the other parties hereto and thereto, each constitutes
a valid, legal and binding obligation of the Master Servicer,
enforceable against it in accordance with the terms hereof, except as
the enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or
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governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Master
Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
litigation might have consequences that would prohibit its entering
into this Agreement or any other Operative Document to which it is a
party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Master Servicer or its
properties or might have consequences that would materially and
adversely affect its performance hereunder and under the other
Operative Documents to which the Master Servicer is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master
Servicer contains any untrue statement of a material fact or omits to
state any material fact necessary to make the certificate, statement or
report not misleading.
(g) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which
the Master Servicer is responsible in accordance with the Operative
Documents or which are attributed to the Master Servicer therein are
true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with
respect to the Master Servicer or omit to state a material fact
required to be stated therein or necessary to make the statements
contained therein with respect to the Master Servicer not misleading.
To the best of the Master Servicer's knowledge and belief, the
Registration Statement does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements contained therein not
misleading.
(h) The Servicing Fee is a "current (normal) servicing fee
rate" as that term is used in Statement of Financial Accounting
Standards No. 65 issued by the Financial Accounting Standards Board.
Neither the Master Servicer nor any affiliate thereof will report on
any financial statements any part of the Servicing Fee as an adjustment
to the sales price of the Mortgage Loans.
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(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Master Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and
delivery by the Master Servicer of the Operative Documents to which it
is a party, have been duly taken, given or obtained, as the case may
be, are in full force and effect on the date hereof, are not subject to
any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be
taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Master
Servicer and the performance by the Master Servicer of its obligations
under this Agreement and such of the other Operative Documents to which
it is a party.
(j) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in all
material respects, legal, proper, prudent and customary in the mortgage
loan servicing business.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.
(l) The terms of each existing Sub-Servicing Agreement and
each designated Sub-servicer are acceptable to the Master Servicer and
any new Sub-Servicing Agreements or Sub-servicers will comply with the
provisions of Section 8.3.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2 shall survive delivery of the Mortgage
Loans to the Trustee.
Upon discovery by any of the Originators, the Master Servicer,
the Sponsor, any Sub-Servicer, or the Trustee of a breach of any of the
representations and warranties set forth in this Section 3.2 which materially
and adversely affects the interests of the Owners the party discovering such
breach shall give prompt written notice to the other parties. Within 30 days of
its discovery or its receipt of notice of breach, the Master Servicer shall cure
such breach in all material
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respects and, upon the Master Servicer's continued failure to cure such breach,
may thereafter be removed by the Trustee pursuant to Section 8.20 hereof;
provided, however, that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Trustee that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of the Trustee.
Section 3.3. Representations and Warranties of the Sponsor
with Respect to the Mortgage Loans.
(a) The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Trustee relies in accepting the
Mortgage Loans in trust and executing and authenticating the Certificates. Such
representations and warranties speak as of the Startup Day, but shall survive
the sale, transfer, and assignment of the Mortgage Loans to the Trustee:
(i) The information with respect to each Mortgage Loan
(including any Unaffiliated Originator Loans) set forth in the
Schedules of Mortgage Loans is true and correct as of the Startup Day
Date;
(ii) All of the original or certified documentation set
forth in Section 3.5 (including all material documents related thereto)
with respect to each Mortgage Loan (including any Unaffiliated
Originator Loans) has been or will be delivered to the Trustee on the
Startup Day, or as otherwise provided in Section 3.5;
(iii) Except for any Unaffiliated Originator Loans being
serviced by a servicer other than the Master Servicer, each Mortgage
Loan is being serviced by the Master Servicer or a Person controlling,
controlled by or under common control with the Master Servicer and
qualified to service mortgage loans;
(iv) The Note related to each Mortgage Loan in Group I
bears a Coupon Rate of at least 6.875% per annum;
(v) As of the Cut-Off Date, no more than 4.00% of the
Original Aggregate Loan Balance of the Mortgage Loans are 30-89 days
Delinquent, and no Mortgage Loan is 90 or more days' Delinquent;
(vi) As of the Startup Day no more than 0.50% of the
Original Aggregate Loan Balance of the Mortgage Loans is secured by
Properties located within any single zip code area, and no more than
14.25% of the Original Aggregate Loan Balance of the Mortgage Loans
consists of Date-of-Payment Loans;
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(vii) Each Mortgage Loan conforms, and all such Mortgage
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Registration Statement;
(viii) Except for the Bulk Acquisition Loans and any
Unaffiliated Originator Loans, as of the Cut-Off Date, no more than
2.30% of the Loan Balance of the Mortgage Loans relates to Mortgage
Loans originated under the Originators' non-income verification program
for self-employed borrowers; and
(ix) The credit underwriting guidelines applicable to
each Mortgage Loan conform in all material respects to the description
thereof set forth in the Prospectus.
(b) The Sponsor hereby assigns to the Trustee for the benefit
of the Owners of the Certificates all of its right, title and interest in
respect of each Master Transfer Agreement applicable to the related Mortgage
Loan. Insofar as such Master Transfer Agreement provides for representations
and warranties made by the related Originator in respect of a Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer or by the Trustee on behalf of the Owners. Upon the discovery by the
Sponsor, the Master Servicer, or the Trustee of a breach of any of the
representations and warranties made in a Master Transfer Agreement in respect
of any Mortgage Loan which materially and adversely affects the interests of
the Owners in such Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties. The Master Servicer shall promptly
notify the related Originator of such breach and request that such Originator
cure such breach or take the actions described in Section 3.4(b) hereof within
the time periods required thereby, and if such Originator does not cure such
breach in all material respects, the Sponsor shall cure such breach or take
such actions. The obligations of the Sponsor or Master Servicer, as the case
may be, set forth herein with respect to any Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole obligations of
the Master Servicer and of the Sponsor in respect of such breach.
Section 3.4. Covenants of Sponsor to Take Certain Actions
with Respect to the Mortgage Loans In Certain Situations. (a) With the provisos
and limitations as to remedies set forth in this Section 3.4, upon the
discovery by any Originator, the Sponsor, the Master Servicer, any Sub-Servicer
or the Trustee that the representations and warranties set forth in Section 3.3
of this Agreement or in the Master Transfer Agreement were untrue in any
material respect as of the Startup Day and such breaches of the
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representations and warranties materially and adversely affect the interests of
the Owners or of the party discovering such breach shall give prompt written
notice to the other parties.
The Sponsor acknowledges that a breach of any representation
or warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan, (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Property or (z) set forth in
clause (viii) of Section 3.3 above constitutes breach of a representation or
warranty which "materially and adversely affects the interests of the Owners in
such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery, its
receipt of notice of breach from any one of the other parties hereto or such
time as a breach of any representation and warranty materially and adversely
affects the interests of the Owners as set forth above, the Sponsor hereby
covenants and warrants that it shall promptly cure such breach in all material
respects or it shall (or shall cause an affiliate of the Sponsor to or an
Originator to), subject to the further requirements of this paragraph, on the
second Remittance Date next succeeding such discovery, receipt of notice or such
other time (i) substitute in lieu of each Mortgage Loan in the related Mortgage
Loan Group which has given rise to the requirement for action by the Sponsor a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, together with the aggregate amount of all Delinquency Advances and
Servicing Advances theretofore made with respect to such Mortgage Loan, to the
Master Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Mortgage Loan from the REMIC Trust at a purchase price equal to
the Loan Purchase Price thereof, which purchase price shall be delivered to the
Master Servicer for deposit in the Principal and Interest Account. In connection
with any such proposed purchase or substitution, the Sponsor at its expense,
shall cause to be delivered to the Trustee an opinion of counsel experienced in
federal income tax matters stating whether or not such a proposed purchase or
substitution would constitute a Prohibited Transaction for the REMIC Trust or
would jeopardize the status of the REMIC Trust as a REMIC, and the Sponsor shall
only be required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the REMIC Trust or would not jeopardize
the status of the REMIC Trust as a REMIC. Any required purchase or substitution,
if delayed by the absence of such opinion shall nonetheless occur if so directed
by the Trustee upon the earlier of (i) the occurrence of a default or imminent
default with respect to the Mortgage Loan or (ii) the delivery of such opinion.
It is understood and agreed that the obligation of the Sponsor to cure the
defect, or substitute for, or purchase any Mortgage Loan as to which a
representation or warranty is untrue in any material respect
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and has not been remedied shall constitute the sole remedy available to the
Owners or the Trustee.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator or by the Sponsor (or by an affiliate of the Sponsor,
as the case may be) to the Trust pursuant to Section 3.3, Section 3.4 or Section
3.6 hereof, the related Originator and the Sponsor shall be obligated to take
the actions described in Section 3.4(b) with respect to such Qualified
Replacement Mortgage upon the discovery by any of the Owners, the Sponsor, the
Master Servicer, any Sub-Servicer or the Trustee that the representations and
warranties set forth in the related Master Transfer Agreement or in Section 3.3
above are untrue in any material respect on the date such Qualified Replacement
Mortgage is conveyed to the Trust such that the interests of the Owners in the
related Qualified Replacement Mortgage are materially and adversely affected;
provided, however, that for the purposes of this subsection (c) the
representations and warranties in the related Master Transfer Agreement or as
set forth in Section 3.3 above referring to items "as of the Cut-Off Date" or
"as of the Startup Day" shall be deemed to refer to such items as of the date
such Qualified Replacement Mortgage is conveyed to the Trust.
(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgage Loans) to the Trustee.
Section 3.5. Conveyance of the Mortgage Loans. (a) The
Sponsor, concurrently with the execution and delivery hereof, and on behalf of
the Conduit Acquisition Trust, hereby transfers, sells, assigns, sets over and
otherwise conveys without recourse, to the Trustee, all right, title and
interest of the Conduit Acquisition Trust in and to each Mortgage Loan listed
on the Schedule of Mortgage Loans delivered by the Sponsor on the Startup Day,
all its right, title and interest in and to principal collected and interest
accruing on each such Mortgage Loan on and after the Cut-Off Date and all its
right, title and interest in and to all Insurance Policies. The transfer by the
Conduit Acquisition Trust of the Mortgage Loans set forth on the Schedule of
Mortgage Loans to the Trustee is absolute and is intended by the Owners and all
parties hereto to be treated as a sale by the Conduit Acquisition Trust.
(b) In connection with the transfer and assignment
of the Mortgage Loans, the Sponsor agrees to:
(i) cause to be delivered, on the Startup Day, without
recourse, to the Trustee the items listed in the definitions of
"Advanta Mortgage Files" and "Conduit
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Mortgage Files," as appropriate; provided that the assignments of
mortgage listed in clause (e) of Exhibit B hereto shall be delivered to
the Trustee with respect to the Designated Advanta Mortgage Files
within 75 Business Days of the Startup Day.
(ii) cause, within 75 Business Days following the Startup Day
the assignments of Mortgage to be submitted for recording in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from the
related Originator to the Trustee; provided, however, that, for
administrative convenience and facilitation of servicing and to reduce
closing costs, assignments of mortgage shall not be required to be
submitted for recording with respect to any Mortgage Loan which relates
to an Advanta Mortgage File, unless the Trustee and each Rating Agency
has received an Opinion of Counsel, satisfactory in form to each Rating
Agency, to the effect that the recordation of such assignments in any
specific jurisdiction is not necessary to protect the Trustee's
interest in the related Mortgage.
All recording required pursuant to this Section 3.5 shall be
accomplished at the expense of the Originators or of the Sponsor.
Notwithstanding anything to the contrary contained in this Section 3.5, in those
instances where the public recording office retains the original Mortgage, the
assignment of a Mortgage or the intervening assignments of the Mortgage after it
has been recorded, the Sponsor shall be deemed to have satisfied its obligations
hereunder upon delivery to the Trustee of a copy of such Mortgage, such
assignment or assignments of Mortgage certified by the public recording office
to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Trustee
shall be kept in the related file.
Such assignments of mortgage shall, in addition to the
requirements specified in Exhibit B, be in recordable form. On or before the
Startup Day, the Sponsor shall deliver to the Trustee original executed powers
of attorney, from the current recordholders of the related Mortgage
substantially in the form of Exhibit I, authorizing the Master Servicer on
behalf of the Trustee to record the assignments of mortgage as provided in
clause (ii) above. Pursuant to such power of attorney, the Trustee also may
execute a new assignment of mortgage for any Mortgage Loan if the original
assignment of mortgage delivered by the Sponsor to the Trustee is not in
recordable form at such time as the assignment of mortgage is to be recorded by
the Trustee.
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(c) In the case of Mortgage Loans which have been prepaid in
full on or after the Cut-Off Date and prior to the Startup Day, the Sponsor, in
lieu of the foregoing, will deliver within 15 Business Days after the Startup
Day, to the Trustee a certification of an Authorized Officer in the form set
forth in Exhibit D.
(d) The Sponsor (or the Conduit Acquisition Trust or an
affiliate of the Sponsor) shall transfer, sell, assign, set over and otherwise
convey without recourse, to the Trustee all right, title and interest of the
Sponsor (or the Conduit Acquisition Trust or of such affiliate) in and to any
Qualified Replacement Mortgage delivered to the Trustee pursuant to Section 3.3,
Section 3.4 or Section 3.6 hereof and all its right, title and interest to
principal collected and interest accruing on such Qualified Replacement Mortgage
on and after the applicable Replacement Cut-Off Date; provided, however, that
the Sponsor (or the Conduit Acquisition or such affiliate) shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Trustee will transfer, sell, assign, set over and otherwise convey without
recourse, on the Sponsor's order, all of its right, title and interest in and to
such released Mortgage Loan and all the Trust's right, title and interest to
principal collected and interest accruing on such released Mortgage Loan on and
after the applicable Replacement Cut-Off Date; provided, however, that the Trust
shall reserve and retain all right, title and interest in and to payments of
principal collected and interest accruing on such released Mortgage Loan prior
to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Trustee on behalf of the Trust, the
Sponsor agrees to cause to be delivered to the Trustee the items described in
Section 3.5(b) on the date of such transfer and assignment or, if a later
delivery time is permitted by Section 3.5(b), then no later than such later
delivery time.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Trustee
shall deliver on the date of conveyance of such Qualified Replacement Mortgage
and on the order of the Sponsor (i) the original Note, or the certified copy,
relating thereto, endorsed without recourse, to the Sponsor and (ii) such other
documents as constituted the File with respect thereto.
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(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Sponsor shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
(i) The Sponsor shall cause to be reflected on the records of
the Conduit Acquisition Trust that the Mortgage Loans have been sold to the
Trust.
(j) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Sponsor or of the Sponsor's ultimate corporate parent
are satisfactory to the Trustee, Moody's and Fitch, then any of the Document
Delivery Requirements described above may be waived by an instrument signed by
the Trustee, Fitch and Moody's (or any documents theretofore delivered to the
Trustee returned to the Sponsor) on such terms and subject to such conditions as
the Trustee, Moody's and Fitch may permit.
Section 3.6. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee. (a) The Trustee agrees to execute and
deliver on the Startup Day an acknowledgment of receipt of the Notes delivered
by the Sponsor in the form attached as Exhibit E hereto, and declares that it
will hold such documents and any amendments, replacement or supplements thereto,
as well as any other assets included in the definition of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee further agrees to
review any other documents delivered by the Sponsor within 90 days after the
Startup Day (or within 90 days with respect to any Qualified Replacement
Mortgage after the assignment thereof) and to deliver to the Sponsor and the
Master Servicer a Certification in the form attached as Exhibit F hereto. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face, nor shall the Trustee
be under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
(b) If the Trustee during such 90-day period finds any
document constituting a part of a File which is not properly executed, has not
been received within the specified period, or is unrelated to the Mortgage Loans
identified in the Schedules of Mortgage Loans, or that any Mortgage Loan does
not conform in a material respect to the description thereof as set forth in the
Schedules of Mortgage Loans, the
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Trustee shall promptly so notify the Sponsor. In performing any such review, the
Trustee may conclusively rely on the Sponsor as to the purported genuineness of
any such document and any signature thereon. The Sponsor agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File of which it is so notified by the Trustee. If, however, within 60 days
after the Trustee's notice to it respecting such defect the Sponsor has not
remedied or caused to be remedied the defect and the defect materially and
adversely affects the interest in the related Mortgage Loan of the Owners, the
Sponsor will (or will cause the related Originator or an affiliate of the
Sponsor to) on the next succeeding Remittance Date (i) substitute in lieu of
such Mortgage Loan a Qualified Replacement Mortgage and, deliver the
Substitution Amount applicable thereto to the Master Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Master Servicer for deposit in the Principal and Interest
Account. In connection with any such proposed purchase or substitution the
Sponsor shall cause at the Sponsor's expense to be delivered to the Trustee an
opinion of counsel experienced in federal income tax matters stating whether or
not such a proposed purchase or substitution would constitute a Prohibited
Transaction for the REMIC Trust or would jeopardize the status of the REMIC
Trust as a REMIC, and the Sponsor shall only be required to take either such
action to the extent such action would not constitute a Prohibited Transaction
for the REMIC Trust or would not jeopardize the status of the REMIC Trust as a
REMIC. Any required purchase or substitution, if delayed by the absence of such
opinion shall nonetheless occur upon the earlier of (i) the occurrence of a
default or imminent default with respect to the Mortgage Loan or (ii) the
delivery of such opinion or (iii) at the direction of the Trustee.
Section 3.7. Cooperation Procedures. (a) The Sponsor shall, in
connection with the delivery of each Qualified Replacement Mortgage to the
Trustee, provide the Trustee with the information set forth in the Schedules of
Mortgage Loans with respect to such Qualified Replacement Mortgage.
(b) The Sponsor, the Master Servicer and the Trustee covenant
to provide each other with all data and information required to be provided by
them hereunder at the times required hereunder, and additionally covenant
reasonably to cooperate with each other in providing any additional information
required by any of them in connection with their respective duties hereunder.
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.1. Issuance of Certificates. On the Startup Day,
upon the Trustee's receipt from the Sponsor of an executed Delivery Order in the
form set forth as Exhibit G hereto, the Trustee shall execute, authenticate and
deliver the Certificates on behalf of the Trust in accordance with the
directions set forth in such Delivery Order.
Section 4.2. Sale of Certificates. At 11 a.m. New York City
time on the Startup Date, at the offices of Dewey Ballantine, 1301 Sixth Avenue,
New York, New York, the Sponsor will sell and convey the Mortgage Loans and the
money, instruments and other property related thereto to the Trustee, and the
Trustee will (i) deliver to the Underwriter, the Offered Certificates with an
aggregate Percentage Interest in each Class equal to 100%, registered in the
name of Cede & Co. or in such other names as the Underwriter shall direct,
against payment of the purchase price thereof by wire transfer of immediately
available funds to the Trustee and (ii) deliver to the Sponsor, the Class R
Certificates, with an aggregate Percentage Interest equal to 100%, registered as
the Sponsor shall request. Upon receipt of the proceeds of the sale of the
Certificates, the Trustee shall, from the proceeds of the sale of the
Certificates, pay other fees and expenses identified by the Sponsor, and (b) pay
to the Sponsor the balance after deducting such amounts.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.1. Terms. (a) The Certificates are pass-through
securities having the rights described therein and herein. Notwithstanding
references herein or therein with respect to the Certificates as to "principal"
and "interest" no debt of any Person is represented thereby, nor are the
Certificates or the underlying Notes guaranteed by any Person (except that the
Notes may be recourse to the Mortgagors thereof to the extent permitted by law.
Distributions on the Certificates are payable solely from payments received on
or with respect to the Mortgage Loans (other than the Servicing Fees), monies in
the Principal and Interest Account, except as otherwise provided herein, from
earnings on monies and the proceeds of property held as a part of the Trust
Estate. Each Certificate entitles the Owner thereof to receive monthly, on each
Payment Date, in order of priority of distributions with respect to such Class
of Certificates, a specified portion of such payments with respect to the
Mortgage Loans in the related Mortgage Loan Group.
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(b) Each Owner is required, and hereby agrees, to return to
the Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.2. Forms. The Certificates shall be in substantially
the forms set forth in Exhibit A hereof with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement or as may in the Sponsor's judgment be necessary, appropriate or
convenient to comply, or facilitate compliance, with applicable laws, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
applicable securities laws or as may, consistently herewith, be determined by
the Authorized Officer of the Sponsor executing such Certificates, as evidenced
by his execution thereof.
Section 5.3. Execution, Authentication and Delivery. Each
Certificate shall be executed on behalf of the Trust, by the manual signature of
one of the Trustee's Authorized Officers and shall be authenticated by the
manual signature of one of the Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who
were at any time the proper officers of the Trustee shall, upon proper
authentication by the Trustee, bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day
and delivered at the Closing to the parties specified in Section 4.2 hereof.
No Certificate shall be valid until executed and authenticated
as set forth above.
Section 5.4. Registration and Transfer of Certificates. (a)
The Trustee, as registrar, shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby appointed registrar for the
purpose of registering Certificates and transfers of Certificates as herein
provided.
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The Owners shall have the right to inspect the Register at all reasonable times
and to obtain copies thereof.
(b) Subject to the provisions of Section 5.8 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class
owned by such Owner may be exchanged for other Certificates authorized of like
Class, tenor and a like aggregate original principal amount and bearing numbers
not contemporaneously outstanding, upon surrender of the Certificates to be
exchanged at the office designated as the location of the Register. Whenever any
Certificate is so surrendered for exchange, the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer
or exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered
so as to participate in a global book-entry system with the Depository, as set
forth herein. Each Class of Offered Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Offered Certificate with a denomination equal to the Original
Aggregate Loan Balance. Upon initial issuance, the ownership of each such
Offered Certificate shall be registered in the Register in the name of
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Cede & Co., or any successor thereto, as nominee for the Depository.
The Sponsor and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to Offered Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the Sponsor,
the Master Servicer and the Trustee shall have no responsibility or obligation
to Direct or Indirect Participants or beneficial owners for which the Depository
holds Offered Certificates from time to time as a Depository. Without limiting
the immediately preceding sentence, the Sponsor, the Master Servicer and the
Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Offered Certificate as shown in the Register,
of any notice with respect to the Offered Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the 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 interest by the mailing of checks or drafts to the
registered Owners of Offered Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Sponsor
advises the 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 Offered Certificates and the Sponsor or the Trustee is unable to
locate a qualified successor or (ii) the Sponsor at its sole option elects to
terminate the book-entry system through the Depository, the Offered Certificates
shall no longer be restricted to being registered in the Register in the name of
Cede & Co. (or a successor nominee) as nominee of the Depository. At that time,
the Sponsor may determine that the
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Offered Certificates shall be registered in the name of and deposited with a
successor depository operating a global book-entry system, as may be acceptable
to the Sponsor, or such depository's agent or designee but, if the Sponsor does
not select such alternative global book-entry system, then the Offered
Certificates may be registered in whatever name or names registered Owners of
Offered Certificates transferring Offered Certificates shall designate, in
accordance with the provisions hereof; provided, that the cost of any such
re-registration shall be paid by the Sponsor.
(i) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Offered Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Offered Certificates as the case may be and all notices with
respect to such Offered Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(j) Neither the Sponsor, the Master Servicer nor the Trustee
will have any liability for any actions taken by DTC or its nominee, Euroclear
or CEDEL, including, without limitation, actions for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
Offered Certificates held by Euroclear, CEDEL or Cede & Co., as nominee for DTC,
or for maintaining supervising or reviewing any records relating to such
beneficial ownership interests.
Section 5.5. Mutilated, Destroyed, Lost or Stolen
Certificates. If (i) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in the
case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee harmless (provided, that with respect to an
Owner which is an insurance company, a letter of indemnity furnished by it shall
be sufficient for this purpose; provided, that such insurance company possesses
at least an investment grade rating from either Fitch or Moody's), then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
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Upon the issuance of any new Certificate under this Section,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto; any other
expenses in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in
exchange for or in lieu of any mutilated, destroyed, lost or stolen Certificate
shall constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately with
any and all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section 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 Certificates.
Section 5.6. Persons Deemed Owners. The Trustee and any agent
of the Trustee may treat the Person in whose name any Certificate is registered
as the Owner of such Certificate for the purpose of receiving distributions with
respect to such Certificate and for all other purposes whatsoever, and neither
the Trustee nor any agent of the Trustee shall be affected by notice to the
contrary.
Section 5.7. Cancellation. All Certificates surrendered for
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. No Certificate shall be authenticated in lieu of or in exchange for any
Certificate cancelled as provided in this Section, except as expressly permitted
by this Agreement. All cancelled Certificates may be held by the Trustee in
accordance with its standard retention policy.
Section 5.8. Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of any Offered Certificate
shall be made to the Sponsor, any Originator or any of their respective
affiliates.
(b) No sale or other transfer of record or beneficial
ownership of a Class R Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise) shall
be made to a Disqualified Organization or agent of a Disqualified Organization.
The transfer, sale or other disposition of a Class R Certificate (whether
pursuant to a purchase, a transfer resulting from a default under a secured
lending
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agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificates. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificates nor authenticate and make
available any Class R Certificates unless the Trustee has received an affidavit
from the proposed transferee in the form attached hereto as Exhibit H. Each
holder of a Class R Certificate, by his acceptance thereof, shall be deemed for
all purposes to have consented to the provisions of this Section 5.8(b).
(c) No other sale or other transfer of record or beneficial
ownership of a Class R Certificate shall be made unless such transfer is exempt
from the registration requirements of the Securities Act of 1933, as amended,
and any applicable state securities laws or is made in accordance with said Act
and laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee or the Sponsor shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the Sponsor that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which opinion of counsel shall not be an expense
of the Trustee or the Sponsor, and (ii) the Trustee shall require the Transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to the Sponsor certifying to the Trustee and the Sponsor the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee or the Sponsor. The Owner of a Class R Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
the Sponsor 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. No Class R
Certificate shall be acquired by or transferred to (i) an employee benefit plan
(as defined in section 3(3) of the Employee Retirement Security Act of 1974, as
amended ("ERISA")) subject to the provisions of Title I of ERISA, (ii) a plan
described in section 4975(e)(1) of the Internal Revenue Code of 1986, or (iii)
an entity whose underlying assets are deemed to be assets of a plan described in
(i) or (ii) above by reason of such plan's investment in the entity. Any Class R
Certificate transferred shall (x) certify that it is not any of the above and
(y) deliver an opinion of counsel to that effect.
Section 5.9. Assignment of Rights. An Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute
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a transfer of an ownership interest sufficient to render the transferee an Owner
of the Trust without compliance with the provisions of Section 5.4 and Section
5.8 hereof.
ARTICLE VI
COVENANTS
Section 6.1. Distributions. The Trustee will duly and
punctually pay distributions with respect to the Certificates in accordance with
the terms of the Certificates and this Agreement. Such distributions shall be
made (i) by check mailed on each Payment Date or (ii) if requested by any Owner,
to such Owner by wire transfer to an account within the United States designated
no later than five Business Days prior to the related Record Date, made on each
Payment Date, in each case to each Owner of record on the immediately preceding
Record Date; provided, however, that an Owner of a Offered Certificate shall
only be entitled to payment by wire transfer if such Owner owns Offered
Certificates in the aggregate denomination of at least $5,000,000.
Section 6.2. Money for Distributions to be Held in Trust;
Withholding. (a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account pursuant to Section 7.5 hereof shall be made by and on behalf of the
Trustee, and no amounts so withdrawn from the Certificate Account for payments
of the Certificates shall be paid over to the Trustee except as provided in this
Section.
(b) The Trustee on behalf of the Trust shall comply with all
requirements of the Code and applicable state and local law with respect to the
withholding from any distributions made by it to any Owner of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
(c) Any money held by the Trustee in trust for the payment of
any amount due with respect to any Offered Certificate and remaining unclaimed
by the Owner of such Offered Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid to the Owners of the
Class R Certificates; and the Owner of such Offered Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class R Certificates), and all liability of the
Trustee with respect to such trust money shall thereupon cease; provided,
however, that the Trustee, before being required to make any such
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payment, shall at the expense of the Sponsor cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Owners of the Class R Certificates. The
Trustee shall, at the direction of the Sponsor, also adopt and employ, at the
expense of the Sponsor, any other reasonable means of notification of such
payment (including but not limited to mailing notice of such payment to Owners
whose right to or interest in monies due and payable but not claimed is
determinable from the Register at the last address of record for each such
Owner).
Section 6.3. Protection of Trust Estate. (a) The Trustee
will hold the Trust Estate in trust for the benefit of the Owners as their
interests may appear, and, at the request and expense of the Sponsor, will from
time to time execute and deliver all such supplements and amendments hereto
pursuant to Section 11.14 hereof and all instruments of further assurance and
other instruments, and will take such other action upon such request as it
deems reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any
portion of the Trust Estate;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this
Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Sponsor to take any action pursuant to this Section 6.3 to the other party.
(b) The Trustee shall have the power to enforce, and shall
enforce the obligations of the other parties to this Agreement by action, suit
or proceeding at law or equity, and shall also have the power to enjoin, by
action or suit in equity, any acts or occurrences which may be unlawful or in
violation of the rights of the Owners; provided, however, that nothing in this
Section shall require any action by the Trustee unless the Trustee shall first
(i) have been furnished indemnity satisfactory to it and (ii) when required by
this
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Agreement, have been requested to take such action by a majority of the
Percentage Interests represented by the affected Class or Classes of Offered
Certificates then Outstanding or, if there are no longer any affected Offered
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties.
Section 6.4. Performance of Obligations. The Trustee will not
take any action that would release the Sponsor from any of their respective
covenants or obligations under any instrument or document relating to the Trust
Estate or the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in
performing its duties hereunder.
Section 6.5. Negative Covenants. The Trustee will not, to
the extent within the control of the Trustee, take any of the following
actions:
(i) sell, transfer, exchange or otherwise dispose
of any of the Trust Estate except as expressly permitted
by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty on behalf of the
Trust any indebtedness of any Person except pursuant to
this Agreement;
(iv) dissolve or liquidate the Trust Estate in
whole or in part, except pursuant to Article IX hereof;
or
(v) (A) impair the validity or effectiveness of this
Agreement, or release any Person from any covenants or obligations with
respect to the Trust or to the Certificates under this Agreement,
except as may be
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expressly permitted hereby or (B) create or extend any lien, charge,
adverse claim, security interest, mortgage or other encumbrance to or
upon the Trust Estate or any part thereof or any interest therein or
the proceeds thereof.
Section 6.6. No Other Powers. The Trustee will not, to the
extent within the control of the Trustee, permit the Trust to engage in any
business activity or transaction other than those activities permitted by
Section 2.3 hereof.
Section 6.7. Limitation of Suits. No Owner shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Agreement or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(1) such Owner has previously given written notice to
the Sponsor and the Trustee of such Owner's
intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by the affected Class or
Classes of Certificates then Outstanding or, if
there are no affected Classes of Offered
Certificates then Outstanding, by such percentage
of the Percentage Interests represented by the
Class R Certificates, shall have made written
request to the Trustee to institute such proceeding
in respect of such Event of Default;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed
to institute such proceeding;
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day
period by the Owners of a majority of the
Percentage Interests represented by the Offered
Certificates or, if there are no Offered
Certificates then Outstanding, by such majority of
the Percentage Interests represented by the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of
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the same Class or to obtain or to seek to obtain priority or preference over any
other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Owners, each
representing less than a majority of the applicable Class of Certificates, the
Trustee shall act in its discretion, notwithstanding any other provision of this
Agreement.
Section 6.8. Unconditional Rights of Owners to Receive
Distributions. Notwithstanding any other provision in this Agreement, the Owner
of any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.9. Rights and Remedies Cumulative. Except as
otherwise provided herein, no right or remedy herein conferred upon or reserved
to the Trustee or to the Owners 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. Except as otherwise
provided herein, 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 6.10. Delay or Omission Not Waiver. No delay of the
Trustee or any Owner of any Certificate to exercise any right or remedy under
this Agreement to any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee or to
the Owners may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Owners, as the case may be.
Section 6.11. Control by Owners. The Owners of a majority of
the Percentage Interests represented by the Offered Certificates then
Outstanding, with the consent of the Trustee (which may not be unreasonably
withheld) or, if there are no longer any Offered Certificates then Outstanding,
by such majority of the Percentage Interests represented by the Class R
Certificates then Outstanding, with the consent of the Trustee (which may not be
unreasonably withheld) may direct the time, method and place of conducting any
proceeding for
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any remedy available to the Trustee with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates or the Trust Estate, including, but not limited to, those powers
set forth in Section 6.3 and Section 8.20 hereof; provided that:
(1) such direction shall not be in conflict with any
rule of law or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, which is not inconsistent with such direction;
provided, however, that the Trustee need not take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.1. Collection of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including all payments due on the Mortgage Loans in accordance
with the respective terms and conditions of such Mortgage Loans and required to
be paid over to the Trustee by the Master Servicer or by any Sub-Servicer. The
Trustee shall hold all such money and property received by it, other than
pursuant to or as contemplated by Section 6.2(b) hereof, as part of the Trust
Estate and shall apply it as provided in this Agreement.
Section 7.2. Establishment of Certificate Account. The Sponsor
shall cause to be established, and the Trustee shall maintain, at the corporate
trust office of the Trustee, a Certificate Account, to be held by the Trustee in
the name of the Trust for the benefit of the Owners of the Certificates.
Section 7.3. Reserved.
Section 7.4. Reserved.
Section 7.5. Flow of Funds.
(a) The Trustee shall deposit to the Certificate Account with
respect to each Mortgage Loan Group, without duplication, upon receipt, the
proceeds of any liquidation of
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the assets of the Trust, all remittances made to the Trustee pursuant to Section
8.08(d)(ii) and the Monthly Remittance Amount remitted by the Master Servicer.
(b) With respect to the Certificate Account on each Payment
Date, the Trustee shall make the following disbursements from the Group I
Interest Remittance Amount transferred thereto pursuant to subsection (a), in
the following order of priority, and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the
Trustee's Fee relating to Group I;
(ii) Second, to the Owners of the Class A
Certificates related to Group I, the
related Class A Current Interest plus the
related Class A Interest Carry Forward
Amount with respect to each such Class of
Class A Certificates without any priority
among such Class A Certificates; provided,
that if the Interest Amount Available is
not sufficient to make a full distribution
of interest with respect to all Classes of
the Class A Certificates related to Group
I, the Group I Interest Remittance Amount
Available will be distributed among the
outstanding Classes of Class A
Certificates related to Group I pro rata
based on the aggregate amount of interest
due on each such Class, and the amount of
the shortfall will be carried forward;
(iii) Third, to the extent of the Group I Interest
Remittance Amount then remaining, to the
Owners of the Class M-1F Certificates, the
Class M-1F Current Interest;
(iv) Fourth, to the extent of the Group I Interest
Remittance Amount then remaining, to the
Owners of the Class M-2F Certificates, the
Class M-2F Current Interest;
(v) Fifth, to the extent of the Group I Interest
Remittance Amount then remaining, to the
Owners of the Class B-1F Certificates, the
Class B-1F Current Interest; and
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(vi) Sixth, the Group I Monthly Excess Interest
Amount shall be applied or distributed as
provided in subsection (f) of this Section
7.5.
(c) With respect to the Certificate Account on each Payment
Date, the Trustee shall make the following disbursements from the Group II
Interest Remittance Amount transferred thereto pursuant to subsection (a), in
the following order of priority, and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the
Trustee's Fee relating to Group II;
(ii) Second, to the Owners of the Class A-6
Certificates, the Class A-6 Current
Interest plus the Class A-6 Interest Carry
Forward Amount;
(iii) Third, to the extent of the Group II Interest
Amount Available then remaining, to the Owners
of the Class M-1A Certificates, the Class M-1A
Current Interest;
(iv) Fourth, to the extent of the Group II Interest
Amount Available then remaining, to the Owners
of the Class M-2A Certificates, the Class M-2A
Current Interest;
(v) Fifth, to the extent of the Group II Interest
Amount Available then remaining, to the Owners
of the Class B-1A Certificates, the Class B-1A
Current Interest; and
(vi) Sixth, the Group II Monthly Excess Interest
Amount shall be applied or distributed as
provided in subsection (f) of this Section
7.5.
(d) With respect to Group I, on each Payment Date, the Trustee
shall make the following disbursements from amounts relating to principal
transferred to the Certificate Account pursuant to subsection (a), in the
following order of priority, and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
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(i) On each Payment Date (a) before the
Stepdown Date or (b) with respect to which
a Group I Trigger Event is in effect,
Owners of the Class A Certificates related
to Group I will be entitled to receive
payment of 100% of the Group I Principal
Distribution Amount as follows: (I) to
the Owners of the Class A-5 Certificates,
the Class A-5 Lockout Distribution Amount
and (II) to the Owners of the Class A
Certificates related to Group I, as
follows: first, to the Owners of the
Class A-1 Certificates, until the Class A-
1 Certificate Principal Balance is reduced
to zero; second, to the Owners of the
Class A-2 Certificates, until the Class A-
2 Certificate Principal Balance is reduced
to zero; third, to the Owners of the Class
A-3 Certificates, until the Class A-3
Certificate Principal Balance is reduced
to zero; fourth, to the Owners of the
Class A-4 Certificates, until the Class A-
4 Certificate Principal Balance is reduced
to zero; fifth, to the Owners of the Class
A-5 Certificates, until the Class A-5
Certificate Principal Balance is reduced
to zero; provided, however, that on any
Payment Date on which the sum of the
Certificate Principal Balance of the
Subordinate Certificates related to Group
I and the Group I Overcollateralization
Amount is zero, any amounts of principal
payable to the Owners of the Class A
Certificates related to Group I on such
Payment Date shall be distributed pro rata
and not sequentially.
(ii) On each Payment Date (a) on or after the
Group I Stepdown Date and (b) as long as a
Group I Trigger Event is not in effect,
the Owners of the Group I Certificates
will be entitled to receive payments of
principal, in the order of priority, in
the amounts set forth below and to the
extent of the Group I Principal
Distribution Amount as follows:
(A) First, the lesser of (x) the Group I
Principal Distribution Amount and
(y) the Group I Class A Principal
Distribution Amount shall be
distributed (I) to the Owners of the
Class A-5 Certificates, in an amount
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equal to the Class A-5 Lockout
Distribution Amount and (II) the
remainder paid to the Owners of the
Class A Certificates related to
Group I as follows: first, to the
Owners of the Class A-l
Certificates, until the Class A-1
Certificate Principal Balance is
reduced to zero; second, to the
Owners of the Class A-2
Certificates, until the Class A-2
Certificate Principal Balance is
reduced to zero; third, to the
Owners of the Class A-3
Certificates, until the Class A-3
Certificate Principal Balance is
reduced to zero; fourth, to the
Owners of the Class A-4
Certificates, until the Class A-4
Certificate Principal Balance is
reduced to zero; fifth, to the
Owners of the Class A-5
Certificates, until the Class A-5
Certificate Principal Balance is
reduced to zero; provided, however,
that on any Payment Date on which
the sum of the Certificate Principal
Balance of the Subordinate
Certificates related to Group I and
the Group I Overcollateralization
Amount is zero, any amounts of
principal payable to the Owners of
the Class A Certificates related to
Group I on such Payment Date shall
be distributed pro rata and not
sequentially.
(B) Second, the lesser of (x) the excess
of (i) the Group I Principal
Distribution Amount over (ii) the
amount distributed to the Owners of
the Class A Certificates related to
Group I in clause (A) above and (y)
the Class M-1F Principal
Distribution Amount shall be
distributed to the Owners of the
Class M-1F Certificates, until the
Class M-1F Certificate Principal
Balance has been reduced to zero;
(C) Third, the lesser of (x) the excess
of (i) the Group I Principal
Distribution Amount over (ii) the
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sum of the amount distributed to the
Owners of the Class A Certificates
related to Group I in clause (A)
above and the amount distributed to
the Owners of the Class M-1F
Certificates in clause (B) above and
(y) the Class M-2F Principal
Distribution Amount shall be
distributed to the Owners of the
Class M-2F Certificates, until the
Class M-2F Certificate Principal
Balance has been reduced to zero;
(D) Fourth, the lesser of (x) the excess
of (i) the Group I Principal
Distribution Amount over (ii) the
sum of the amount distributed to the
Owners of the Class A Certificates
related to Group I pursuant to
clause (A) above, the amount
distributed to the Owners of the
Class M-1F Certificates pursuant to
clause (B) above and the amount
distributed to the Owners of the
Class M-2F Certificates pursuant to
clause (C) above and (y) the Class
B-1F Principal Distribution Amount
shall be delivered to the Owners of
the Class B-1F Certificates, until
the Class B-1F Certificate Principal
Balance has been reduced to zero;
(E) Fifth, the lesser of (x) any amount
of the Group I Principal
Distribution Amount remaining after
making all of the distributions in
clauses (A), (B), (C) and (D) above
and (b) and positive difference, if
any, of (i) $1,700,000 minus
(ii) the Target Overcollateraliza-
tion Amount for Group I for such
Payment Date shall be applied as a
payment of principal with respect to
the Group I Subordinate Certificates
in reverse order of seniority (i.e.,
first to the Class B-1F
Certificates, second to the related
Class M-2F Certificates, third to
the related Class M-1F Certificates
and fourth to the Group I Class A
Certificates) until their respective
Certificate Principal Balances have
been reduced to zero; and
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(F) Sixth, any portion of the Group I
Principal Distribution Amount
remaining after making all of the
distributions in clauses (A), (B),
(C), (D) and (E) above shall be
distributed as provided in
subsection (f) of this Section 7.5.
(e) With respect to Group II, on each Payment Date, the
Trustee shall make the following disbursements from amounts relating to
principal transferred to the Certificate Account pursuant to subsection (a), in
the following order of priority and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
(i) On each Payment Date (a) before the Stepdown
Date or (b) with respect to which a Group II
Trigger Event is in effect, Owners of the
Class A-6 Certificates will be entitled to
receive payment of 100% of the Group II
Principal Distribution Amount.
(ii) On each Payment Date (a) on or after the
Group II Stepdown Date and (b) as long as
a Group II Trigger Event is not in
effect, the Owners of the Group II
Certificates will be entitled to receive
payments of principal, in the order of
priority, in the amounts set forth below
and to the extent of the Group II
Principal Distribution Amount as follows:
(A) First, the lesser of (x) the Group
II Principal Distribution Amount and
(y) the Group II Class A Principal
Distribution Amount shall be
distributed To the Owners of the
Class A-6 Certificates.
(B) Second, the lesser of (x) the excess
of (i) the Group II Principal
Distribution Amount over (ii) the
amount distributed to the Owners of
the Class A-6 Certificates in clause
(A) above and (y) the Class M-1A
Principal Distribution Amount shall
be distributed to the Owners of the
Class M-1A Certificates, until the
Class M-1A Certificate Principal
Balance has been reduced to zero;
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(C) Third, the lesser of (x) the excess
of (i) the Group II Principal
Distribution Amount over (ii) the
sum of the amount distributed to the
Owners of the Class A-6 Certificates
in clause (A) above and the amount
distributed to the Owners of the
Class M-1A Certificates in clause-
(B) above and (y) the Class M-2A
Principal Distribution Amount shall
be distributed to the Owners of the
Class M-2A Certificates until the
Class M-2A Certificate Principal
Balance has been reduced to zero;
(D) Fourth, the lesser of (x) the excess
of (i) the Group II Principal
Distribution Amount over (ii) the
sum of the amount distributed to the
Owners of the Class A-6 Certificates
pursuant to clause (A) above, the
amount distributed to the Owners of
the Class M-1A Certificates pursuant
to clause (B) above and the amount
distributed to the Owners of the
Class M-2A Certificates pursuant to
clause (C) above and (y) the Class
B-1A Principal Distribution Amount
shall be delivered to the Owners of
the Class B-1A Certificates, until
the Class B-1A Certificate Principal
Balance has been reduced to zero;
(E) Fifth, the lesser of (x) any amount
of the Group II Principal
Distribution Amount remaining after
making all of the distributions in
clauses (A), (B), (C) and (D) above
and (b) and positive difference, if
any, if (i) $1,050,000 minus
(ii) the Target Overcollateraliza-
tion Amount for Group II for such
Payment Date shall be applied as a
payment of principal with respect to
the Group II Subordinate
Certificates in reverse order of
seniority (i.e., first to the
Class B-1A Certificates, second to
the related Class M-2A Certificates,
third to the related Class M-1A
Certificates and fourth to the
Group II Class A Certificates) until
their respective Certificate
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Principal Balances have been reduced
to zero; and
(F) Sixth, any portion of the Group II
Principal Distribution Amount
remaining after making all of the
distributions in clauses (A), (B),
(C), (D) and (E) above shall be
distributed as provided in
subsection (g) of this Section 7.5.
(iii) Notwithstanding the foregoing, (x) in the
event that the Certificate Principal
Balance of all of the Class A Certificates
relating to a Group have been reduced to
zero, all amounts of principal that would
have been distributed to such Class A
Certificates will be distributed to the
related Subordinate Certificates of such
Group sequentially in the following order:
Class M-1, Class M-2 and Class B.
Similarly, if the Certificate Principal
Balance of the Class M-1 Certificates has
been reduced to zero, all amounts of
principal that would have been distributed
to such Class M-1 Certificates will be
distributed to the related Class M-2 and
Class B Certificates in that order.
Finally, if the Certificate Principal
Balance of the Class M-2 Certificates has
been reduced to zero, all amounts of
principal that would have been distributed
on such Class M-2 Certificates will be
distributed to the related Class B; and
(y) on any Payment Date on which the sum
of the Certificate Principal Balance of
the Subordinate Certificates related to
the Group I and the Group I Over-
collateralization Amount is zero, any
amounts of principal payable to the Owners
of the Group Class A Certificates on such
Payment Date shall be distributed pro rata
and not sequentially.
(f) On any Payment Date, the Group I Monthly Excess Cashflow
Amount is required to be applied in the following order of priority on such
Payment Date:
(1) to fund the Class A Interest Carry
Forward Amount, if any, with respect to
Group I;
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(2) to fund the Group I Extra Principal
Distribution Amount for such Payment
Date;
(3) to fund the Class M-1F Interest Carry
Forward Amount, if any;
(4) to fund the Class M-1F Realized Loss
Amortization Amount for such Payment
Date;
(5) to fund the Class M-2F Interest Carry
Forward Amount, if any;
(6) to fund the Class M-2F Realized Loss
Amortization Amount for such Payment
Date;
(7) to fund the Class B-1F Interest Carry
Forward Amount, if any;
(8) to fund the Class B-1F Realized Loss
Amortization Amount for such Payment
Date;
(9) to fund any amounts listed in clauses (1)
through (8) of Section 7.5(g) to the extent
such amounts have not been funded in full
through the application of Group II Monthly
Excess Cashflow Amounts; and
(10) as provided in Section 7.5(h) hereof.
(g) On any Payment Date, the Group II Monthly Excess Cashflow
Amount is required to be applied in the following order of priority on such
Payment Date:
(1) to fund the Class A-6 Interest Carry
Forward Amount, if any;
(2) to fund the Group II Extra Principal
Distribution Amount for such Payment
Date;
(3) to fund the Class M-1A Interest Carry
Forward Amount, if any;
(4) to fund the Class M-1A Realized Loss
Amortization Amount for such Payment
Date;
(5) to fund the Class M-2A Interest Carry
Forward Amount, if any;
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(6) to fund the Class M-2A Realized Loss
Amortization Amount for such Payment
Date;
(7) to fund the Class B-1A Interest Carry
Forward Amount, if any;
(8) To fund the Class B-1A Realized Loss
Amortization Amount for such Payment
Date;
(9) to fund any amounts listed in clauses (1)
through (8) of Section 7.5(f) to the extent
such amounts have not been funded in full
through the application of Group I Monthly
Excess Cashflow Amounts; and
(10) as provided in Section 7.5(h) hereof.
(h) On any Payment Date, any Group I Monthly Excess Cashflow
Amount remaining after the application of Section 7.5(f)(1)-(9) and any Group
II Monthly Excess Cashflow Amount remaining after the application of Section
7.5(g)(1)-(9) shall be distributed as follows:
(1) to the Master Servicer to the extent of
any unreimbursed or unrecoverable
Delinquency Advances or Servicing Advances;
(2) to the Supplemental Interest Payment
Account, the remainder.
(i) On each Payment Date, the Trustee shall allocate the
excess of the Group I Certificate Principal Balance over the Loan Balance of the
Mortgage Loans in Group I to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group I in the following order of priority:
(i) to the Class B-1F Certificates until the
Class B-1F Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2F Certificates until the
Class M-2F Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1F Certificates until the
Class M-1F Certificate Principal Balance is reduced to zero.
(j) On each Payment Date, the Trustee shall allocate the
excess of the Group II Certificate Principal Balance over the Loan Balance of
the Mortgage Loans in Group
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II to reduce the Certificate Principal Balances of the Subordinate Certificates
related to Group II in the following order of priority:
(i) to the Class B-1A Certificates until the
Class B-1A Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2A Certificates until the
Class M-2A Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1A Certificates until the
Class M-1A Certificate Principal Balance is reduced to zero.
(k) Notwithstanding anything above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Certificates on account of
principal pursuant to clauses (d) and (e) shall not exceed the original
Certificate Principal Balance of the related Certificates.
(l) The rights of the Owners to receive distributions from the
proceeds of the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class R Certificates to receive distributions in
respect of the Class R Certificates, and all ownership interests of the Owners
of the Class R Certificates in and to such distributions, shall be subject and
subordinate to the preferential rights of the holders of the Offered
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class R Certificates in
amounts deposited in the Accounts from time to time shall not vest unless and
until such amounts are distributed in respect of the Class R Certificates in
accordance with the terms of this Agreement. Notwithstanding anything contained
in this Agreement to the contrary, the Owners of the Class R Certificates shall
not be required to refund any amount properly distributed on the Class R
Certificates pursuant to this Section 7.5.
Section 7.6. Investment of Accounts. (a) So long as no event
described in Sections 8.20(a) or (b) hereof shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of the Accounts held by the Trustee shall be invested and reinvested by the
Trustee in the name of the Trustee for the benefit of the Owners, as their
interests may appear, as directed in writing by the Master Servicer, in one or
more Eligible Investments bearing interest or sold at a discount. During the
continuance of an event described in Sections 8.20(a) or (b) hereof and
following any removal of the Master Servicer, the
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Trustee shall direct such investments. No investment in any Account shall mature
later than the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any
Account held by the Trustee and sufficient uninvested funds are not available to
make such disbursement, the Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. No
investments will be liquidated prior to maturity unless the proceeds thereof are
needed for disbursement.
(c) Subject to Section 10.1 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall hold funds in the Accounts held by the
Trustee uninvested upon the occurrence of either of the following events:
(i) the Master Servicer shall have failed to give
investment directions to the Trustee within ten days after
receipt of a written request for such directions from the
Trustee; or
(ii) the Master Servicer shall have failed to give
investment directions to the Trustee during the ten-day period
described in clause (i) preceding, by 11:15 a.m. New York time
(or such other time as may be agreed by the Master Servicer and
the Trustee) on any Business Day (any such investment by the
Trustee pursuant to this clause (ii) to mature on the next
Business Day after the date of such investment).
(e) For purposes of investment, the Trustee shall aggregate
all amounts on deposit in the Accounts. All income or other gain from
investments in the Accounts shall be deposited, pro rata, in the Accounts
immediately on receipt, and any loss resulting from such investments shall be
charged, pro rata, to the Accounts.
Section 7.7. Eligible Investments. The following
are Eligible Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States fully and
unconditionally guaranteed, the timely payment or the guarantee of which
constitutes a full faith and credit obligation of the United States.
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(b) Federal Housing Administration debentures and
rated Aa2 or higher by Moody's.
(c) Freddie Mac senior debt obligations and rated
Aa2 or higher by Moody's.
(d) Federal Home Loan Banks' consolidated senior debt
obligations and rated Aa2 or higher by Moody's.
(e) FNMA senior debt obligations and rated Aa2 or
higher by Moody's.
(f) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not more than
365 days) of any domestic bank, the short-term debt obligations of which have
been rated P-1 by Moody's.
(g) Investment agreements approved by the Trustee
provided:
1. The agreement is with a bank or insurance company which has
an unsecured, uninsured and unguaranteed obligation (or
claims-paying ability) rated Aa2 or better by Moody's and AA or
better by Fitch, and
2. Monies invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid
on any future deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company
or bank.
(h) Commercial paper (having original maturities of not more
than 365 days) rated P-1 or better by Moody's.
(i) Investments in money market funds rated Aaa or
P-1 by Moody's.
(j) Investments approved in writing by the Trustee
and acceptable to Moody's and Fitch;
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provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity.
Section 7.8. Reports by Trustee. (a) On each Payment Date the
Trustee shall provide to each Owner, to the Master Servicer, to each
Underwriter, to the Sponsor, to Fitch and to Moody's a written report in
substantially the form set forth as Exhibit J hereto with respect to each
Mortgage Loan Group, as such form may be revised by the Trustee, the Master
Servicer, Moody's and Fitch from time to time, but in every case setting forth
the information requested on Exhibit J hereto and the following information:
(i) the amount of the distribution with respect
to the related Class of Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other unscheduled recoveries of principal included
therein and separately identifying any Subordination Increase Amounts;
(iii) the amount of such distributions allocable to
interest;
(iv) the Interest Carry Forward Amount for each
Class;
(v) the Certificate Principal Balance for each Class of
Offered Certificates as of such Payment Date, together with the
principal amount of such Class of Offered Certificates (based on a
Certificate in an original principal amount of $1,000) then
outstanding, in each case after giving effect to any payment of
principal on such Payment Date;
(vi) the aggregate Loan Balance of all Mortgage Loans
after giving effect to any payment of principal on such Payment Date
both in the aggregate and in each of the Mortgage Loan Groups;
(vii) information furnished by the Sponsor pursuant
to Section 6049(d)(7)(C) of the Code and the regulations
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promulgated thereunder to assist the Owners in computing
their market discount;
(viii) the total of any Substitution Amounts and any
Loan Purchase Price amounts included in such
distribution;
(ix) the weighted average Coupon Rate of the
Mortgage Loans with respect to each Group;
(x) whether a Group I Trigger Event or a Group II
Trigger Event has occurred;
(xi) the amount of any Group I Extra Principal
Distribution Amount or any Group II Extra Principal Distribution
Amount;
(xii) the Group I Senior Enhancement Percentage and
the Group II Senior Enhancement Percentage;
(xiii) the Group I Overcollateralization Amount, the Group
II Overcollateralization Amount and the Certificate Principal Balance
of each Class of the Offered Certificates then outstanding after giving
effect to any payment of principal on such Payment Date;
(xiv) the amount of any Group I or Group II Applied
Realized Loss Amount, Group I or Group II Realized Loss Amortization
Amount and Unpaid Realized Loss Amount for each Class as of the close
of such Payment Date; and
(xv) the aggregate Loan Balances of all Mortgage Loans
in each Mortgage Loan Group that were repurchased during the related
Remittance Period.
Items (i) through (iii) above shall, with respect to each
Class of Offered Certificates, be presented on the basis of a Certificate having
a $1,000 denomination. In addition, by January 31 of each calendar year
following any year during which the Certificates are outstanding, the Trustee
shall furnish a report to each Owner of record at any time during each calendar
year as to the aggregate of amounts reported pursuant to (i), (ii) and (iii)
with respect to the Certificates for such calendar year.
(b) In addition, on each Payment Date the Trustee will
distribute to each Owner, to each Underwriter, to the Master Servicer, to the
Sponsor, to Fitch and to Moody's, together with the information described in
Subsection (a) preceding, the following information with respect to each
Mortgage Loan Group as of the close of business on the last Business Day of the
prior calendar month, which is hereby required to be prepared by the Master
Servicer and furnished
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to the Trustee for such purpose on or prior to the related Remittance Date:
(i) the total number of Mortgage Loans in each Mortgage
Loan Group and the aggregate Loan Balances thereof, together with the
number, aggregate principal balances of such Mortgage Loans in such
Mortgage Loan Group and the percentage (based on the aggregate Loan
Balances of the Mortgage Loans in such Mortgage Loan Group) of the
aggregate Loan Balances of such Mortgage Loans to the aggregate Loan
Balance of all Mortgage Loans in the related Mortgage Loan Group (a)
30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more
days Delinquent;
(ii) the number, aggregate Loan Balances of all Mortgage
Loans in each Mortgage Loan Group and percentage (based on the
aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) of the aggregate Loan Balances of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans in the related Mortgage
Loan Group in foreclosure proceedings (and whether any such Mortgage
Loans are also included in any of the statistics described in the
foregoing clause (i));
(iii) the number, aggregate Loan Balances of all Mortgage
Loans in each Mortgage Loan Group and percentage (based on the
aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) of the aggregate Loan Balances of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans in the related Mortgage
Loan Group relating to Mortgagors in bankruptcy proceedings (and
whether any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (i));
(iv) the number, aggregate Loan Balances of all Mortgage
Loans in each Mortgage Loan Group and percentage (based on the
aggregate Loan Balances of the Mortgage Loans in such Mortgage Loan
Group) of the aggregate Loan Balances of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans in the related Mortgage
Loan Group relating to REO Properties (and whether any such Mortgage
Loans are also included in any of the statistics described in the
foregoing clause (i));
(v) the loan number of the related Mortgage Loan
and the book value of any REO Property in each Mortgage
Loan Group;
(vi) the amount of Group I Cumulative Realized
Losses and Group II Cumulative Realized Losses; and
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(vii) the aggregate Loan Balance of 60+ Day Delinquent
Mortgage Loans with respect to each Group.
(c) The foregoing reports shall be sent be to an Owner only
insofar as such Owner owns a Certificate with respect to the related Mortgage
Loan Group.
(d) The Sponsor and the Master Servicer, on behalf of
Certificateholders and the Trust (the "Trust Parties") hereby authorize the
Trustee to include the loan level information with respect to the Mortgage Loans
if so directed by an Authorized Officer of the Sponsor in writing to the
Trustee, the monthly report to the Owners prepared by the Trustee (the
"Information") on The Bloomberg, an on-line computer based on-line information
network maintained by Bloomberg L.P. ("Bloomberg") or on any other on-line
computer based on-line information network or service ("Information Network"),
or in other electronic or print information services deemed acceptable by the
Sponsor or the Master Servicer as designated in writing to the Trustee by an
Authorized Officer of the Master Servicer. The Trust Parties agree not to
commence any actions or proceedings, or otherwise assert any claims, against the
Trustee or its affiliates or any of the Trustee's or its affiliates' respective
agents, representatives, directors, officers or employees (collectively, the
"Designated Parties"), arising out of, or related to or in connection with the
dissemination and/or use of any Information by the Trustee, including, but not
limited to, claims based on allegations of inaccurate or incomplete information
by the Trustee to Bloomberg or to any Information Network or otherwise (other
than in connection with the Trustee's negligence or willful misconduct). The
Trust Parties waive their rights to assert any such claims against the
Designated Parties and fully and finally release the Designated Parties from any
and all such claims, demands, obligations, actions and liabilities (other than
in connection with such Designated Parties' negligence or willful misconduct).
The Trustee makes no representations or warranties, expressed or implied, of any
kind whatsoever with respect to the accuracy, adequacy, timeliness,
completeness, merchantability or fitness for any particular purpose of any
Information in any form or manner. The authorizations, covenants and obligations
of the Trust Parties under this section shall be irrevocable and shall survive
the termination of this Agreement.
Section 7.9. Additional Reports by Trustee. (a) The Trustee
shall report to the Sponsor and the Master Servicer with respect to the amount
then held in each Account (including investment earnings accrued or scheduled to
accrue) held by the Trustee and the identity of the investments included
therein, as the Sponsor or the Master Servicer may from time to time request.
Without limiting the generality of
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the foregoing, the Trustee shall, at the request of the Sponsor or the Master
Servicer, transmit promptly to the Sponsor and the Master Servicer copies of all
accounting of receipts in respect of the Mortgage Loans furnished to it by the
Master Servicer and shall notify the Sponsor and the Master Servicer if any such
receipts have not been received by the Trustee.
(b) The Trustee shall immediately report to the Sponsor and
Master Servicer with respect to its actual knowledge, without independent
investigation, of any breach of any of the representations or warranties
relating to individual Mortgage Loans set forth in any Master Transfer Agreement
or in Section 3.3(a) hereof.
Section 7.10. Supplemental Interest Payment Account,
Supplement Interest Payments and Class R Distribution Account.
(a) The parties hereto do hereby create and establish a
trust, the "Advanta Supplemental Interest Trust 1997-1" (the "Supplemental
Interest Trust"). The Supplemental Interest Trust shall hold a trust account,
the "Supplemental Interest Payment Account" to be held by the Trustee in its
name on behalf of the Supplemental Interest Trust.
(b) The amount, if any, on deposit in the Supplemental
Interest Payment Account on any Payment Date is the "Supplemental Interest
Payment Amount Available" on such Payment Date.
If, on any Determination Date the Trustee determines that the
Supplemental Interest Payment Amount Available to be available on the next
Payment Date is less than the excess of (x) the excess of (i) the Group I Full
Interest Distribution Amount over (ii) the Group I Interest Distribution Amount
over (y) the Supplemental Interest Payment Amount Available as of such Payment
Date (the "Group I Formula Interest Shortfall"), the Trustee shall demand that
the Designated Residual Owner fund the Group I Formula Interest Shortfall on the
related Payment Date.
The amount so funded by the Designated Residual Owner on any
such Payment Date is the "Interest Advance" for such Payment Date.
On each Payment Date, the Trustee shall withdraw from the
Supplemental Interest Payment Account and pay to the Owners of each Class of
Group II Certificates which are not receiving the Full Interest Distribution
Amount with respect to such Class on such Distribution Date the amount by which
such Full Interest Distribution Amount exceeds the related Interest Distribution
Amount.
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(c) Any portion of the Supplemental Interest Payment Amount
Available after application of clause (b) above shall be applied in the
following order of priority:
(i) first, to the Designated Residual Owner,
as reimbursement for unpaid Interest Advances, together with interest
thereon, with the earliest Interest Advances being deemed to be paid
first;
(ii) second, to the owners of the Class R Certificates
the remainder pro rata in accordance with their Percentage Interests.
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.1. Master Servicer and Sub-Servicers. (a) Acting
directly or through one or more Sub-Servicers as provided in Section 8.3, the
Master Servicer, as master servicer, shall service and administer the Mortgage
Loans in accordance with this Agreement and with reasonable care, and using that
degree of skill and attention that the Master Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable.
(b) The duties of the Master Servicer shall include collecting
and posting of all payments, responding to inquiries of Mortgagors or by
federal, state or local government authorities with respect to the Mortgage
Loans, investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections and
furnishing monthly and annual statements to the Trustee with respect to
distributions, paying Compensating Interest and making Delinquency Advances and
Servicing Advances pursuant hereto. The Master Servicer shall follow its
customary standards, policies and procedures in performing its duties as Master
Servicer. The Master Servicer shall cooperate with the Trustee and furnish to
the Trustee with reasonable promptness information in its possession as may be
necessary or appropriate to enable the Trustee to perform its tax reporting
duties hereunder. The Trustee shall furnish the Master Servicer or any
Sub-servicer with any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer or any Sub-servicer to carry out its
servicing and administrative duties hereunder.
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(c) Without limiting the generality of the foregoing, the
Master Servicer (i) shall continue, and is hereby authorized and empowered by
the Trustee, to execute and deliver, on behalf of itself, the Owners and the
Trustee or any of them, any and all instruments of satisfaction or cancellation,
or of full release or discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the related Properties; (ii)
may consent to any modification of the terms of any Note not expressly
prohibited hereby if the effect of any such modification (x) will not be to
affect materially and adversely the security afforded by the related Property or
the timing of receipt of any payments required hereby and (y) will not cause the
REMIC Trust to fail to qualify as a REMIC.
(d) The Master Servicer shall have the right using that degree
of skill and attention that the Master Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, to approve
applications of Mortgagors for consent to (i) partial releases of Mortgages,
(ii) alterations to Properties and (iii) removal, demolition or division of
Properties. No application for approval shall be considered by the Master
Servicer unless: (x) the provisions of the related Note and Mortgage have been
complied with; (y) the Combined Loan-to-Value Ratio (which may, for this
purpose, be determined at the time of any such action in a manner reasonably
acceptable to the Trustee) and the Mortgagor's debt-to-income ratio after any
release does not exceed the Combined Loan-to-Value Ratio and debt-to-income
ratio applicable to such Mortgage Loan at origination and (z) the lien priority
of the related Mortgage is not adversely affected; provided, however, that the
foregoing requirements (x), (y) and (z) shall not apply to any such situation
described in this paragraph if such situation results from any condemnation or
easement activity by a governmental entity.
(e) The parties intend that the REMIC Trust shall constitute,
and that the affairs of REMIC Trust shall be conducted so as to qualify it as a
REMIC. In furtherance of such intention, the Master Servicer covenants and
agrees that it shall act as agent (and the Master Servicer is hereby appointed
to act as agent) on behalf of the REMIC Trust and that in such capacity it
shall: (i) use its best efforts to conduct the affairs of the REMIC Trust at all
times that any Class of Certificates are outstanding so as to maintain the
status of the REMIC Trust as a REMIC under the REMIC Provisions; (ii) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of REMIC Trust or that would subject
the Trust to tax and (iii) exercise reasonable care not to allow the REMIC Trust
to receive income from the performance of services or from assets not permitted
under the REMIC Provisions to be held by a REMIC.
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(f) The Master Servicer may, and is hereby authorized to,
perform any of its servicing responsibilities with respect to all or certain of
the Mortgage Loans through a Sub-Servicer as it may from time to time designate,
but no such designation of a Sub-Servicer shall serve to release the Master
Servicer from any of its obligations under this Agreement. Such Sub-Servicer
shall have all the rights and powers of the Master Servicer with respect to such
Mortgage Loans under this Agreement.
(g) Without limiting the generality of the foregoing, but
subject to Sections 8.13 and 8.14, the Master Servicer in its own name or in the
name of a Sub-Servicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Trustee to execute and deliver, and may
be authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Mortgage Loans and with
respect to the Properties, (ii) and to institute foreclosure proceedings or
obtain a deed in lieu of foreclosure so as to effect ownership of any Property
on behalf of the Trustee, and (iii) to hold title to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Trustee; provided,
however, that Section 8.14(a) shall constitute a power of attorney from the
Trustee to the Master Servicer or any Sub-servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Mortgage Loan paid in full (or with respect to which payment in full has been
escrowed). Subject to Sections 8.13 and 8.14, the Trustee shall furnish the
Master Servicer and any Sub-servicer with any powers of attorney and other
documents as the Master Servicer or such Sub-Servicer shall reasonably request
to enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
(h) The Master Servicer shall give prompt notice to the
Trustee of any action, of which the Master Servicer has actual knowledge, to (i)
assert a claim against the Trust or (ii) assert jurisdiction over the Trust.
(i) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Property shall be recoverable by the Master Servicer or
such Sub-Servicer to the extent described in Section 8.9(c) and in Section
7.5(h)(1) hereof.
Section 8.2. Collection of Certain Mortgage Loan
Payments. (a) The Master Servicer shall, to the extent such
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procedures shall be consistent with this Agreement and the terms and provisions
of any applicable Insurance Policies, follow Accepted Servicing Practices.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or other fees which may be
collected in the ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a Mortgagor's
financial condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan; provided, however, the
Master Servicer shall not reschedule the payment of delinquent payments more
than one time in any twelve consecutive months with respect to any Mortgagor.
(b) The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Note.
Section 8.3. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers. The Master Servicer may enter into Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with any institution
which is in compliance with the laws of each state necessary to enable it to
perform its obligations under such Sub-Servicing Agreement. The Master Servicer
shall give notice to the Trustee of the appointment of any Sub-Servicer and
shall furnish to the Trustee a copy of the Subservicing Agreement. For purposes
of this Agreement, the Master Servicer shall be deemed to have received payments
on Mortgage Loans when any Sub-Servicer has received such payments. Any such
Sub-Servicing Agreement shall be consistent with and not violate the provisions
of this Agreement.
Section 8.4. Successor Sub-Servicers. The Master Servicer may
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement and to either itself directly service
the related Mortgage Loans itself or enter into a Sub-Servicing Agreement with a
successor Sub-Servicer that qualifies under Section 8.3.
Section 8.5. Liability of Master Servicer. The Master Servicer
shall not be relieved of its obligations under this Agreement notwithstanding
any Sub-Servicing Agreement or any of the provisions of this Agreement relating
to agreements or arrangements between the Master Servicer and a Sub-Servicer or
otherwise, and the Master Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Mortgage Loans.
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The Master Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer and
nothing contained in such Sub-Servicing Agreement shall be deemed to limit or
modify this Agreement. The Trust shall not indemnify the Master Servicer for any
losses due to the Master Servicer's negligence.
Section 8.6. No Contractual Relationship Between Sub-Servicer
and Trustee or the Owners. Any Sub-Servicing Agreement and any other
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
shall be deemed to be between the Sub-Servicer and the Master Servicer alone and
the Trustee and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 8.7.
Section 8.7. Assumption or Termination of Sub-Servicing
Agreement by Trustee. In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Master
Servicer hereunder by the Trustee pursuant to Section 8.20, it is understood and
agreed that the Master Servicer's rights and obligations under any Sub-Servicing
Agreement then in force between the Master Servicer and a Sub-Servicer may be
assumed or terminated by the Trustee at its option. Any termination fee due
under any such sub-servicing agreement shall be paid by the preceding Master
Servicer but in no event shall the Trustee be liable for any such fee.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party, without the payment of any fee by the Trustee, notwithstanding
any contrary provision in any Sub-Servicing Agreement.
Section 8.8. Principal and Interest Account.
(a) The Master Servicer and/or each Sub-servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Owners of the Certificates as their interests may appear, and maintain at one or
more Designated Depository Institutions the Principal and Interest Account.
Subject to Subsections (c) and (e) below, the Master Servicer
and any Sub-servicer shall deposit all receipts related to the Mortgage Loans to
the Principal and Interest
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Account on a daily basis (but no later than the first Business Day after
receipt).
On the Startup Day the Sponsor and/or the Master Servicer
shall deposit to the Principal and Interest Account all receipts related to the
Mortgage Loans which relate to or are received on or after the Cut-Off Date.
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments. The Principal and Interest Account shall be held in trust
in the name of the Trust and for the benefit of the Owners of the Certificates.
Any investment earnings on funds held in the Principal and Interest Account
shall be for the account of the Master Servicer and may only be withdrawn from
the Principal and Interest Account by the Master Servicer immediately following
the remittance of the Monthly Remittance Amounts by the Master Servicer. Any
references herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings. Any investment losses
are at the expense of the Master Servicer and shall be replaced on or prior to
the Remittance Date.
(c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal and interest
collections on the Mortgage Loans received on or after the Cut-Off Date
including any Prepaid Installments, Prepayments and Net Liquidation Proceeds,
all Loan Purchase Prices and Substitution Amounts received or paid by the Master
Servicer with respect to the Mortgage Loans, other recoveries or amounts related
to the Mortgage Loans received by the Master Servicer, Compensating Interest and
Delinquency Advances together with any amounts which are reimbursable from the
Principal and Interest Account, but net of (i) the Servicing Fee with respect to
each Mortgage Loan and other servicing compensation to the Master Servicer as
permitted by Section 8.15 hereof, (ii) principal (including Prepayments)
collected on the related Mortgage Loans prior to the Cut-Off Date, (iii)
interest accruing on the related Mortgage Loans prior to the Cut-Off Date and
(iv) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed
the Loan Balance of the related Mortgage Loan.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee
of the Monthly Remittance Amounts due on the
Remittance Date;
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(B) to reimburse itself pursuant to Section 8.9(a)
hereof for unreimbursed Delinquency Advances
and Servicing Advances and Nonrecoverable
Advances;
(C) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
(D) to withdraw amounts that have been deposited
to the Principal and Interest Account in
error; and
(E) to clear and terminate the Principal and Interest
Account following the termination of the Trust Estate
pursuant to Article X.
(ii) On the tenth day of each month, the Master Servicer
shall send to the Trustee a report, in the form of a computer tape, detailing
the payments on the Mortgage Loans during the prior Remittance Period. Such tape
shall be in the form and have the specifications as may be agreed to between the
Master Servicer and the Trustee from time to time.
(iii) On each Remittance Date the Master Servicer shall remit
to the Trustee by wire transfer, or otherwise make funds available in
immediately available funds, (x) for Group I, the Group I Interest Remittance
Amount and the Group I Principal Remittance Amount and (y) for Group II, the
Group II Interest Remittance Amount and the Group II Principal Remittance
Amount.
(e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are satisfactory to the Trustee, Moody's and Fitch, then the
requirement to maintain the Principal and Interest Account may be waived by an
instrument signed by the Trustee, Fitch and Moody's, and the Master Servicer may
be allowed to co-mingle with its general funds the amounts otherwise required to
be deposited to the Principal and Interest Account, on such terms and subject to
such conditions as the Trustee, Moody's and Fitch may permit.
Section 8.9. Delinquency Advances, Compensating Interest and
Servicing Advances. (a) The Master Servicer is required, not later than each
Remittance Date, to deposit into the Principal and Interest Account an amount
equal to the sum of the interest portions (net of the Servicing Fees) due, but
not collected, with respect to Delinquent Mortgage Loans during the prior
Remittance Period, but only if, in its good faith business judgment, the Master
Servicer reasonably believes that such amount will ultimately be recovered from
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the related Mortgage Loan. Such amounts are "Delinquency Advances".
The Master Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date and to reimburse itself for any
Delinquency Advances paid from the Master Servicer's own funds, from collections
on the related Mortgage Loan. The Master Servicer may use funds deposited to the
Principal and Interest Account subsequent to the related Remittance Period and
shall deposit into the Principal and Interest Account with respect thereto (i)
late collections from the Mortgagor whose Delinquency gave rise to the shortfall
which resulted in such Delinquency Advance and (ii) Net Liquidation Proceeds
recovered on account of the related Mortgage Loan to the extent of the amount of
aggregate Delinquency Advances related thereto or (iii) from its own funds. If
not therefore recovered from the related Mortgagor or the related Net
Liquidation Proceeds, Delinquency Advances constituting Nonrecoverable Advances
shall be recoverable pursuant to Section 7.5(h)(1) hereof.
(b) On or prior to each Remittance Date, the Master Servicer
shall deposit in the Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of reimbursement therefor, an amount equal to
the difference between (x) 30 days' interest at the Mortgage Loan's Coupon Rate
(less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the
first day of the related Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) paid by the Mortgagor with
respect to the Mortgage Loan during such Remittance Period (any such amount paid
by the Master Servicer, "Compensating Interest"). The Master Servicer shall in
no event be required to pay Compensating Interest with respect to any Remittance
Period in an amount in excess of the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance Period.
(c) The Master Servicer will pay all "out-of-pocket" costs and
expenses incurred in the performance of its servicing obligations, including,
but not limited to, the cost of (i) Preservation Expenses, (ii) any enforcement
or judicial proceedings, including foreclosures, and (iii) the management and
liquidation of REO Property, but is only required to pay such costs and expenses
to the extent the Master Servicer reasonably believes such costs and expenses
will increase Net Liquidation Proceeds on the related Mortgage Loan. Each such
amount so paid will constitute a "Servicing Advance". The Master Servicer may
recover Servicing Advances (x) from the Mortgagors to the extent permitted by
the Mortgage Loans, from Liquidation Proceeds realized upon the liquidation of
the related Mortgage Loan and (y) as provided in Section 7.5(h)(1)
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hereof. In no case may the Master Servicer recover Servicing Advances from
principal and interest payments on any Mortgage Loan or from any amounts
relating to any other Mortgage Loan except as provided pursuant to Section
7.5(h)(1) hereof.
(d) On the Remittance Date in April 1997, the Master Servicer
shall make two special, non-recoverable advances, one with respect to Group I
and one with respect to Group II equal to one-month's interest, calculated at
the weighted average Pass-Through Rate (applicable to the April, 1997 Payment
Date) for the classes of Offered Certificates related to such Group, with
respect to all Mortgage Loans not having a payment due during March, 1997; the
amounts of such advances shall be included in the related Interest Remittance
Amount.
Section 8.10. Purchase of Mortgage Loans. The Master Servicer
may, but is not obligated to, purchase for its own account any Mortgage Loan
which becomes Delinquent, in whole or in part, as to four consecutive monthly
installments or any Mortgage Loan as to which enforcement proceedings have been
brought by the Master Servicer or by any Sub-servicer pursuant to Section 8.13.
Any such Loan so purchased shall be purchased by the Master Servicer on a
Remittance Date at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the Principal and Interest Account.
Section 8.11. Maintenance of Insurance. (a) The Master
Servicer shall cause to be maintained with respect to each Mortgage Loan a
hazard insurance policy with a generally acceptable carrier that provides for
fire and extended coverage, and which provides for a recovery by the Master
Servicer on behalf of the Trust of insurance proceeds relating to such Mortgage
Loan in an amount not less than the least of (i) the outstanding principal
balance of the Mortgage Loan, (ii) the minimum amount required to compensate
for damage or loss on a replacement cost basis and (iii) the full insurable
value of the premises.
(b) If the Mortgage Loan at the time of origination relates to
a Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Master Servicer
will cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Trust of insurance proceeds relating to such Mortgage Loan of not less than
the least of (i) the outstanding principal balance of the Mortgage Loan, (ii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis and
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(iii) the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973. The Master Servicer shall indemnify the Trust out of the
Master Servicer's own funds for any loss to the Trust resulting from the Master
Servicer's failure to maintain the insurance required by this Section.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire, flood and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy names the
Master Servicer as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Mortgage Loans without co-insurance,
and otherwise complies with the requirements of this Section 8.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 8.11, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Property a policy complying with the preceding
paragraphs of this Section 8.11, and there shall have been a loss which would
have been covered by such policy, deposit in the Principal and Interest Account
from the Master Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with the preceding
paragraphs of this Section 8.11 and the amount paid under such blanket policy.
Upon the request of the Trustee, the Master Servicer shall cause to be delivered
to the Trustee, a certified true copy of such policy.
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause contained
in the related Mortgage or Note; provided, however, that the Master Servicer
shall not exercise any such right if (i) the "due-on-sale" clause, in the
reasonable belief of the Master Servicer, is not enforceable under applicable
law or (ii) the Master Servicer reasonably believes that to permit an assumption
of the Mortgage Loan would not materially and adversely affect the interest of
the Owners. In such event, the Master Servicer shall enter into an assumption
and modification agreement with the person to whom such property has been or is
about to be conveyed, pursuant to which such person becomes liable under the
Note and, unless prohibited by applicable law or the Mortgage Documents, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Master Servicer is authorized to enter into a substitution
of liability agreement with such
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person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as Mortgagor and becomes liable under the Note;
provided, however, that to the extent any such substitution of liability
agreement would be delivered by the Master Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Master Servicer
shall, prior to executing and delivering such agreement, obtain the prior
written consent of the Trustee. The Mortgage Loan, as assumed, shall conform in
all respects to the requirements, representations and warranties of this
Agreement. The Master Servicer shall notify the Trustee that any such assumption
or substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related File and which shall, for all purposes, be
considered a part of such File to the same extent as all other documents and
instruments constituting a part thereof. The Master Servicer shall be
responsible for recording or causing the recordation any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Mortgage Loan shall not
be changed but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Master
Servicer or the Sub-Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 8.13. Realization Upon Defaulted Mortgage Loans. (a)
The Master Servicer shall foreclose upon or otherwise comparably effect the
ownership on behalf of the Trust of Properties relating to defaulted Mortgage
Loans as to which no satisfactory arrangements can be made for collection of
Delinquent payments and which the Master Servicer has not purchased pursuant to
Section 8.10. In connection with such foreclosure or other conversion, the
Master Servicer shall exercise such of the rights and powers vested in it
hereunder, and use the same degree of care and skill in their exercise or use,
as prudent mortgage lenders would exercise or use under the circumstances in the
conduct of their own affairs, including, but not limited to, advancing funds for
the payment
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of taxes, amounts due with respect to Senior Liens, and insurance premiums. Any
amounts so advanced shall constitute "Servicing Advances" within the meaning of
Section 8.9(b) hereof. The Master Servicer shall sell any REO Property within 23
months of its acquisition by the Trust, unless the Master Servicer obtains for
the Trustee an opinion of counsel experienced in federal income tax matters,
addressed to the Trustee and the Master Servicer, to the effect that the holding
by the Trust of such REO Property for any greater period will not result in the
imposition of taxes on "Prohibited Transactions" of the REMIC Trust as defined
in Section 860F of the Code or cause the Trust to fail to qualify as a REMIC
under the REMIC Provisions at any time that any Certificates are outstanding, in
which case the Master Servicer shall sell any REO Property by the end of any
extended period specified in any such opinion.
Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Owners solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Owners, rent the same, or
any part thereof, as the Master Servicer deems to be in the best interest of the
Owners for the period prior to the sale of such REO Property. The Master
Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Property in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Property.
(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall
become a "Liquidated Loan".
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Section 8.14. Trustee to Cooperate; Release of Files. (a) Upon
the payment in full of any Mortgage Loan (including the repurchase of any
Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure or
otherwise), or the receipt by the Master Servicer or any Sub-servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Master Servicer or any Sub-servicer shall deliver to the
Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Trustee shall promptly release the related File,
in trust to (i) the Master Servicer, (ii) an escrow agent or (iii) any employee,
agent or attorney of the Trustee, in each case pending its release by the Master
Servicer, such escrow agent or such employee, agent or attorney of the Trustee,
as the case may be. Upon any such payment in full, or the receipt of such
notification that such funds have been placed in escrow, the Master Servicer or
any Sub-servicer is authorized to give, as attorney-in-fact for the Trustee and
the mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the case may be, the Master Servicer or any Sub-servicer may prepare and submit
to the Trustee, a satisfaction (or assignment without recourse, if requested by
the Person or Persons entitled thereto) in form for execution by the Trustee
with all requisite information completed by the Master Servicer or any
Sub-servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Insurance Policy, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related File is released to an escrow agent or
an employee, agent or attorney of the Trustee), upon request of the Master
Servicer or any Sub-servicer and delivery to the Trustee of a Master Servicer's
Trust Receipt, release the related File to the Master Servicer and shall execute
such documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Master Servicer; provided that there shall not be released and
unreturned at any one time more than 10% of
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the entire number of Files. The Trustee shall complete in the name of the
Trustee any endorsement in blank on any Note prior to releasing such Note to the
Master Servicer or any Sub-servicer. Such receipt shall obligate the Master
Servicer or any Sub-servicer to return the File to the Trustee when the need
therefor by the Master Servicer or any Sub-servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of the
liquidation information, in physical or electronic form, the Master Servicer's
Trust Receipt shall be released by the Trustee to the Master Servicer or any
Sub-servicer.
(c) No costs associated with the procedures described in this
Section 8.14 shall be an expense of the Trust.
(d) The provisions set forth in Subsections (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be given by
Moody's and Fitch pursuant to Section 3.5(j) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to
the Trustee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Master Servicer and the Trustee shall mutually agree. The Trustee shall
promptly release the related File(s) within five (5) to seven (7) business days
of receipt of a properly completed Master Servicer's Trust Receipt pursuant to
clauses (i), (ii) or (iii) above or such shorter period as may be agreed upon by
the Master Servicer and the Trustee. Receipt of a Master Servicer's Trust
Receipt pursuant to clauses (i), (ii) or (iii) above shall be authorization to
the Trustee to release such Files, provided the Trustee has determined that such
Master Servicer's Trust Receipt has been executed, with respect to clauses (i)
or (ii) above, or approved, with respect to clause (iii) above, by an Authorized
Officer of the Master Servicer or any Sub-servicer, and so long as the Trustee
complies with its duties and obligations under this Agreement. If the Trustee is
unable to release the Files within the time frames previously specified, the
Trustee shall immediately notify the Master Servicer or any Sub-servicer
indicating the reason for such delay, but in no event shall such notification be
later than five business days after receipt of a Master Servicer's Trust
Receipt. If the Master Servicer is required to pay penalties or damages due
solely to the Trustee's negligent failure to release the related File or the
Trustee's negligent failure to execute and release documents in a timely manner,
the Trustee shall be liable for such penalties or damages.
On each day that the Servicer remits to the Trustee Master Servicer's
Trust Receipts pursuant to clauses (ii) or
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(iii) above, the Master Servicer or any Sub-servicer shall also submit to the
Trustee a summary of the total amount of such Master Servicer's Trust Receipts
requested on such day by the same method as described in such clauses (ii) or
(iii) above.
Section 8.15. Servicing Compensation. As compensation for its
activities hereunder, the Master Servicer shall be entitled to retain the amount
of the Servicing Fee with respect to each Mortgage Loan. Additional servicing
compensation in the form of prepayment charges, release fees, bad check charges,
assumption fees, late payment charges, or any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Principal and Interest
Account pursuant to Section 8.8(c)(v) and similar items may, to the extent
collected from Mortgagors, be retained by the Master Servicer.
Section 8.16. Annual Statement as to Compliance. The Master
Servicer, at its own expense, will deliver to the Trustee, Fitch and Moody's, on
or before the last day of March of each year, commencing in 1997, an Officer's
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Master Servicer during such preceding calendar year and of
performance under this Agreement has been made under such officers' supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Master Servicer has fulfilled all its obligations under this Agreement for such
year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Master Servicer to
remedy such defaults.
Section 8.17. Annual Independent Certified Public Accountants'
Reports. On or before the last day of March of each year, commencing in 1997,
the Master Servicer, at its own expense, shall cause to be delivered to the
Trustee, Fitch and Moody's a letter or letters of a firm of independent,
nationally recognized certified public accountants reasonably acceptable to the
Trustee stating that such firm has, with respect to the Master Servicer's
overall servicing operations (i) performed applicable tests in accordance with
the compliance testing procedures as set forth in Appendix 3 of the Audit Guide
for Audits of HUD Approved Nonsupervised Mortgagees or (ii) examined such
operations in accordance with the requirements of the Uniform Single Audit
Program for Mortgage Bankers, and in either case stating such firm's conclusions
relating thereto.
Section 8.18. Access to Certain Documentation and
Information Regarding the Mortgage Loans. The Master Servicer shall provide to
the Trustee, the FDIC and the supervisory
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agents and examiners of each of the foregoing access to the documentation
regarding the Mortgage Loans required by applicable state and federal
regulations, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Master Servicer
designated by it.
Upon any change in the format of the computer tape maintained
by the Master Servicer in respect of the Mortgage Loans, the Master Servicer
shall deliver a copy of such computer tape to the Trustee and in addition shall
provide a copy of such computer tape to the Trustee at such other times as the
Trustee may reasonably request.
Section 8.19. Assignment of Agreement. The Master Servicer may
not assign its obligations under this Agreement, in whole or in part, unless it
shall have first obtained the written consent of the Trustee, which such consent
shall not be unreasonably withheld; provided, however, that any assignee must
meet the eligibility requirements set forth in Section 8.20(g) hereof for a
successor servicer. Notice of any such assignment shall be given by the Master
Servicer to the Trustee and Moody's.
Section 8.20. Removal of Master Servicer; Resignation of
Master Servicer. (a) The Trustee (or the Owners pursuant to Section 6.11
hereof) may remove the Master Servicer upon the occurrence of any of the
following events:
(i) The Master Servicer shall fail to deliver to the
Trustee any proceeds or required payment, which failure continues
unremedied for five Business Days following written notice to an
Authorized Officer of the Master Servicer from the Trustee or from any
Owner.
(ii) The Master Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing;
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(iii) If without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or similar
entity with respect to the Master Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Master Servicer in good faith, the same shall (A)
result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of seventy-five (75) consecutive days; or
(iv) The Master Servicer shall fail to perform any one or
more of its obligations hereunder other than the obligations
contemplated by Subsection 8.20(i) above, and shall continue in default
thereof for a period of sixty (60) days after notice by the Trustee of
said failure; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Trustee that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Trustee; or
(v) The Master Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.2
which materially and adversely affects the interests of the Owners for
a period of thirty (30) days after the Master Servicer's discovery or
receipt of notice thereof; provided, however, that if the Master
Servicer can demonstrate to the reasonable satisfaction of the Trustee
that it is diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Trustee.
(b) The Trustee also may remove the Master Servicer
upon the occurrence of any of the following events:
(i) the failure by the Master Servicer to make
any required Servicing Advance; or
(ii) the failure by the Master Servicer to perform any one or
more of its obligations hereunder, which failure materially and
adversely affects the interests of the Trustee; or
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(iii) the failure by the Master Servicer to make
any required Delinquency Advance or to pay any
Compensating Interest; or
(iv) if on any Payment Date the Pool Rolling
Three-Month Delinquency Rate exceeds 7%;
(v) if on any Payment Date occurring in September of any
year, commencing in September 1997, the aggregate Pool Cumulative
Realized Losses over the prior twelve month period exceed 3% of the
average Pool Principal Balance as of the close of business on the last
day of each of the twelve preceding Remittance Periods; or
(vi) (a) if on any Payment Date of the first sixty Payment Dates
after the Startup Day the aggregate Pool Cumulative Realized Losses for
all prior Remittance Periods since the Startup Day exceed 8% of the
Original Aggregate Loan Balance and (b) if on any Payment Date
thereafter the aggregate Pool Cumulative Realized Losses for all prior
Remittance Periods since the Startup Day exceed 12.5% of the Original
Aggregate Loan Balance;
provided, however, with respect to clauses (iv), (v) and (vi), if the Servicer
can demonstrate to the reasonable satisfaction of the Trustee that any such
event was due to circumstances beyond the control of the Servicer, such event
shall not be considered an event of termination of the Servicer;
provided, however, that (x) prior to any removal of the Master Servicer by the
Trustee pursuant to clauses (i) or (ii) of this Section 8.20(b), the Master
Servicer shall first have been given by the Trustee and by registered or
certified mail, notice of the occurrence of one or more of the events set forth
in clauses (i) or (ii) above and the Master Servicer shall not have remedied, or
shall not have taken actions satisfactory to the Trustee to remedy, such event
or events within 30 days (60 days with respect to clause (ii)) after the Master
Servicer's receipt of such notice (provided, however, that if the Master
Servicer can demonstrate to the reasonable satisfaction of the Trustee that it
is diligently pursuing remedial action, then the cure period in each case may be
extended with the written approval of the Trustee) and (y) in the event of the
refusal or inability of the Master Servicer to make any required Delinquency
Advance or to pay any Compensating Interest or Monthly Remittance, such removal
shall be effective (without the requirement of any action on the part of the
Trustee) at 4 p.m. on the second Business Day following the day on which the
Trustee notifies an Authorized Officer of the Master Servicer that a required
Delinquency Advance has not been received by the Trustee. Upon the Trustee's
determination that a required Delinquency Advance or payment of Compensating
Interest has not been made by the
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Master Servicer, the Trustee shall so notify in writing an Authorized Officer of
the Master Servicer as soon as is reasonably practical.
(c) The Master Servicer shall not resign from the obligations
and duties hereby imposed on it, except upon determination that its duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it,
the other activities of the Master Servicer so causing such a conflict being of
a type and nature carried on by the Master Servicer at the date of this
Agreement. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an opinion of counsel to such effect which shall
be delivered to the Trustee.
(d) No removal or resignation of the Master Servicer shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities and obligations in accordance with this
Section. If no successor servicer is available, the Trustee shall act as
successor servicer and perform all of the obligations of this Section,
including, without limitation, making Delinquency Advances and paying
Compensating Interest; provided, however, that the Trustee will not be obligated
to act as successor servicer if it is legally unable to perform its duties
hereunder.
(e) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Master Servicer has
maintained for the Mortgage Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Master Servicer's possession.
(f) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Trustee and remitted
directly and immediately to the Trustee or the successor Master Servicer.
(g) Upon removal or resignation of the Master Servicer, the
Trustee (x) may solicit bids for a successor servicer as described below, and
(y) pending the appointment of a successor Master Servicer as a result of
soliciting such bids, shall serve as Master Servicer. The Trustee shall, if it
is unable to obtain a qualifying bid and is prevented by law from acting as
Master Servicer, appoint, or petition a court of competent jurisdiction to
appoint, any housing and home finance institution, bank or mortgage servicing
institution which has shareholders' equity of not less than
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$10,000,000, as determined in accordance with generally accepted accounting
principles as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder. The compensation of any successor servicer (including,
without limitation, the Trustee) so appointed shall be the aggregate Servicing
Fees, together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided in Sections 8.8 and 8.15;
provided, however, that if the Trustee acts as successor Master Servicer then
the Sponsor agrees to pay to the Trustee at such time that the Trustee becomes
such successor Master Servicer a fee of twenty-five dollars ($25.00) for each
Mortgage Loan then included in the Trust Estate. The Trustee shall be obligated
to serve as successor Master Servicer whether or not the $25.00 fee described in
the preceding sentence is paid by the Sponsor, but shall in any event be
entitled to receive, and to enforce payment of, such fee from the Sponsor.
(h) In the event the Trustee solicits bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Master Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.8 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid. The Trustee shall
deduct from any sum received by the Trustee from the successor to the Master
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities hereunder. After such deductions, the
remainder of such sum shall be paid by the Trustee to the Master Servicer at the
time of such sale, transfer and assignment to the Master Servicer's successor.
(i) The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Trustee and any
successor Master Servicer in effecting the termination of the Master Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Trustee or such successor Master Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Master Servicer's
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functions hereunder and shall promptly also transfer to the Trustee or such
successor Master Servicer, as applicable, all amounts which then have been or
should have been deposited in the Principal and Interest Account by the Master
Servicer or which are thereafter received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor Master Servicer shall be held liable
by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Master
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Master Servicer or (iii) any breaches of a predecessor Servicer.
(j) The Trustee or any other successor Master Servicer, upon
assuming the duties of Master Servicer hereunder, shall immediately make all
Delinquency Advances and pay all Compensating Interest which the Master Servicer
has theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Master Servicer, the Trustee
shall only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (j)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the related Mortgage Loans.
(k) The Master Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to Moody's and Fitch of the transfer of
the servicing to the successor.
(l) The Trustee shall give notice to Moody's and Fitch and to
the Owners of the occurrence of any event specified in Section 8.20(a) of which
the Trustee has knowledge.
(m) Notwithstanding anything herein to the contrary, upon
termination of the Master Servicer hereunder, any liabilities of the Master
Servicer which accrued prior to such termination shall survive such termination.
Section 8.21. Inspections by Trustee; Errors and Omissions
Insurance. (a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, or any agents or representatives thereof may inspect the
Master Servicer's servicing operations and discuss the servicing operations of
the Master Servicer with any of its officers or directors. The costs and
expenses incurred by the Master Servicer or its agents or representatives in
connection with any such examinations or discussions shall be paid by the Master
Servicer.
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(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.
Section 8.22. Merger, Conversion, Consolidation or Succession
to Business of Master Servicer. Any corporation into which the Master Servicer
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer shall be a party, or any corporation succeeding to all or
substantially all of the business of the Master Servicer, shall be the successor
of the Master Servicer hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto provided that such
corporation meets the qualifications set forth in Section 8.20(g).
Section 8.23. Notices of Material Events. The Master Servicer
shall give prompt notice to the Trustee, Moody's and Fitch of the occurrence of
any of the following events:
(a) Any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in the occurrence of a
default by the Sponsor, any Originator or the Master Servicer under any
Transaction Document or would constitute a material breach of a representation,
warranty or covenant under any Transaction Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Sponsor, the Master Servicer or AMHC in any federal, state or local court or
before any governmental body or agency, or before any arbitration board, or any
such proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any the Sponsor's, the
Master Servicer's or AMHC's ability to perform its obligations under any
Transaction Document;
(c) The commencement of any proceedings by or against the
Sponsor, the Master Servicer or AMHC under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official shall have been, or may be, appointed or requested for the
Sponsor, the Master Servicer or AMHC; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any of the Sponsor's the Master Servicer's
or the AMHC's business
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that the Sponsor, the Master Servicer or AMHC is to cease and desist, or to
undertake any practice, program, procedure or policy employed by the Sponsor,
the Master Servicer or AMHC in the conduct of the business of any of them, and
such cessation or undertaking will materially adversely affect the conduct of
the Sponsor's, the Master Servicer's or AMHC's business or its ability to
perform under the Transaction Documents or materially adversely affect the
financial affairs of the Sponsor, the Master Servicer or AMHC.
ARTICLE IX
TERMINATION OF TRUST
Section 9.1. Termination of Trust. The Trust created hereunder
and all obligations created by this Agreement will terminate upon the earlier of
(i) the payment to the Owners of all Certificates of all amounts held by the
Trustee and required to be paid to such Owners pursuant to this Agreement upon
the later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate or (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate, (ii) at any time when a Qualified Liquidation of
the REMIC Trust is effected as described below or (iii) as described in Section
9.2 or 9.3 hereof. To effect a termination of this Agreement pursuant to clause
(ii) above, the Owners of all Certificates then Outstanding shall (x)
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation with respect to the REMIC Trust, as contemplated by Section
860F(a)(4) of the Code and (y) provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust
Estate, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates based on their interests in
the Trust, each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of twenty-one
(21) years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the United Kingdom, living
on the date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.5.
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Section 9.2. Termination Upon Option of Master Servicer. (a)
On any Remittance Date on or after the Clean-Up Call Date, the Master Servicer
acting directly or through one or more affiliates may determine to purchase and
may cause the purchase from the Trust of all (but not fewer than all) Mortgage
Loans in the Trust Estate and all property theretofore acquired in respect of
any such Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise
then remaining in the Trust Estate at a price equal to the sum of (v) the
greater of (i) 100% of the aggregate Loan Balances of the related Mortgage Loans
as of the day of purchase minus (a) the amount actually remitted by the Master
Servicer representing the related Monthly Principal Remittance Amount on such
Remittance Date for the related Remittance Period and (b) any unreimbursed
Delinquency Advances, Servicing Advances and Nonrecoverable Advances and (ii)
the fair market value of such Mortgage Loans net of the Servicing Fee and any
amounts due to the Master Servicer (disregarding accrued interest), (w) the
amount of any difference between the related Monthly Interest Remittance Amount
actually remitted by the Master Servicer on such Remittance Date and the related
Monthly Interest Remittance Amount due on such Remittance Date and (x) the
aggregate amount of any Delinquency Advances and Servicing Advances remaining
unreimbursed, together with any accrued and unpaid Servicing Fees, as of such
Remittance Date (such amount, the "Termination Price"). In connection with such
purchase, the Master Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) In connection with any such purchase, the Master Servicer
shall provide to the Trustee an opinion of counsel experienced in federal income
tax matters to the effect that such purchase constitutes a Qualified Liquidation
of the REMIC Trust.
(c) Promptly following any such purchase, the Trustee will
release the Files to the Master Servicer, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
(d) If the Master Servicer does not exercise its option
pursuant to this Section 9.2 with respect to the Trust Estate, then the Trustee
may do so on the same terms.
Section 9.3. Termination Upon Loss of REMIC Status. (a)
Following a (x) final determination by the Internal Revenue Service, or by a
court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or (y) if any appeal is taken,
following a final determination of such appeal from which no further
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appeal can be taken, to the effect that the REMIC Trust does not and will no
longer qualify as a "REMIC" pursuant to Section 860D of the Code (the "Final
Determination") or (z) following the delivery of an opinion of counsel ("REMIC
Opinion") to the effect that the effect of the Final Determination is to
increase substantially the probability that the REMIC Trust will no longer
qualify as a "REMIC" pursuant to Section 860D of the Code, on any Remittance
Date on or after the date which is 30 calendar days following such Final
Determination, the Owners of a majority in Percentage Interest represented by
the Offered Certificates then Outstanding may direct the Trustee to adopt a plan
of complete liquidation with respect to the Trust Estate. In connection with
such purchase, the Master Servicer shall remit to the Trustee all amounts then
on deposit in the Principal and Interest Account for deposit in the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) Upon receipt of such direction from the Owners of such
Offered Certificates or such notice from the Trustee shall notify the holders of
the Class R Certificates of such election to liquidate or such determination to
purchase, as the case may be, (the "Termination Notice"). The Owner of a
majority of the Percentage Interest of the Class R Certificates then Outstanding
may, on any Remittance Date, within 60 days from the date of receipt of the
Termination Notice (the "Purchase Option Period"), at their option, purchase
from the Trust all (but not fewer than all) Mortgage Loans in the Trust Estate,
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a purchase price equal to the Termination Price.
(c) If, during the Purchase Option Period, the Owners of the
Class R Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period (i)
in the event that the Owners of the Offered Certificates have given the Trustee
the direction described in clause (a)(i) above, the Trustee shall sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust
Estate, such that, if so directed, the liquidation of the Trust Estate, the
distribution of the proceeds of such liquidation occur no later than the close
of the 60th day, or such later day as the Owners of the Offered Certificates
shall permit or direct in writing, after the expiration of the Purchase Option
Period.
(d) Following a Final Determination, the Owners of a majority
of the Percentage Interest of the Class R Certificates then Outstanding may, at
their option on any Remittance Date and upon delivery to the Owners of the
Offered
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Certificates and the Trustee of an opinion of counsel experienced in federal
income tax matters selected by the Owners of such Class R Certificates which
opinion shall be reasonably satisfactory in form and substance to a majority of
the Percentage Interests represented by the Offered Certificates then
Outstanding and the Trustee, to the effect that the effect of the Final
Determination is to increase substantially the probability that the gross income
of the REMIC Trust will be subject to federal taxation, purchase from the Trust
all (but not fewer than all) Mortgage Loans in the Trust Estate, and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Mortgage Loan then remaining in the Trust Estate at
a purchase price equal to the Termination Price. In connection with such
purchase, the Master Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase. The foregoing opinion shall be deemed satisfactory unless the
Owners of a majority of the Percentage Interest represented by the Offered
Certificates then Outstanding or the Trustee give the Owners of a majority of
the Percentage Interest of the Class R Certificates notice that such opinion is
not satisfactory within thirty days after receipt of such opinion.
Section 9.4. Disposition of Proceeds. The Trustee shall, upon
receipt thereof, deposit the proceeds of any liquidation of the Trust Estate
pursuant to this Article IX to the Certificate Account; provided, however, that
any amounts representing Servicing Fees, unreimbursed Delinquency Advances or
unreimbursed Servicing Advances theretofore funded by the Master Servicer from
the Master Servicer's own funds shall be paid by the Trustee to the Master
Servicer.
Section 9.5. Netting of Amounts. If any Person paying the
Termination Price would receive a portion of the amount so paid, such Person may
net any such amount against the Termination Price otherwise payable.
ARTICLE X
THE TRUSTEE
Section 10.1. Certain Duties and Responsibilities.
(a) The Trustee (i) undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (ii) in the absence of bad faith on its part, may conclusively rely, as to
the truth of the statements and the correctness of the
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opinions expressed therein, upon certificates or opinions furnished pursuant to
and conforming to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) Notwithstanding the appointment of the Master Servicer
hereunder, the Trustee is hereby empowered to perform the duties of the Master
Servicer hereunder whether following the failure of the Master Servicer to
perform, pursuant to Section 8.20 hereof or otherwise. Specifically, and not in
limitation of the foregoing, the Trustee shall have the power:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter
into assumption and substitution agreements as
permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction
pursuant to Section 8.14;
(v) to make Delinquency Advances and Servicing
Advances and to pay Compensating Interest, and
(vi) to enforce the Mortgage Loans.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to
limit the effect of subsection (a) of this
Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by an Authorized Officer,
unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by
it in good faith in accordance with the
direction of Owners of a majority in
Percentage Interest of the Certificates of the
affected Class or Classes relating to the
time, method and place of conducting any
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proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such
Certificates.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
(e) No provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any 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 for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Trustee
shall not be answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken. The Trustee shall receive from the Sponsor
promptly upon demand therefor, reimbursement of expenses as are described in the
fee quote letter, dated March 3, 1997 and executed by the Sponsor.
Section 10.2. Removal of Trustee for Cause. (a) The Trustee
may be removed pursuant to paragraph (b) hereof upon the occurrence of any of
the following events (whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
thereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; or
(2) the Trustee shall fail in the performance of, or
breach, any covenant or agreement of the Trustee in
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this Agreement, or if any representation or warranty of the
Trustee made in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith
shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days
after there shall have been given, by registered or certified
mail, to the Trustee by the Sponsor or by the Owners of at
least 25% of the aggregate Percentage Interests represented by
the Offered Certificates then Outstanding, or, if there are no
Offered Certificates then Outstanding, by such Percentage
Interests represented by any Class B Certificates, a written
notice specifying such failure or breach and requiring it to
be remedied; or
(3) a decree or order of a court or agency or
supervisory authority having jurisdiction for the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation
of its affairs, shall have been entered against the
Trustee, and such decree or order shall have
remained in force undischarged or unstayed for a
period of 75 days; or
(4) a conservator or receiver or liquidator or seques-
trator or custodian of the property of the Trustee
is appointed in any insolvency, readjustment of
debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Trustee
or relating to all or substantially all of its
property; or
(5) the Trustee shall become insolvent (however
insolvency is evidenced), generally fail to pay its
debts as they come due, file or consent to the
filing of a petition to take advantage of any
applicable insolvency or reorganization statute,
make an assignment for the benefit of its
creditors, voluntarily suspend payment of its
obligations, or take corporate action for the
purpose of any of the foregoing.
The Sponsor shall give to Moody's and Fitch notice of the
occurrence of any such event of which the Sponsor is aware.
(b) If any event described in Paragraph (a) occurs
and is continuing, then and in every such case (x) the Sponsor
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or (y) the Owners of a majority of the Percentage Interests represented by the
Offered Certificates, or, if there are no Offered Certificates then Outstanding,
by such Percentage Interest represented by any Class of Class R Certificates
then Outstanding may, whether or not the Trustee resigns pursuant to Section
10.9 hereof, immediately, concurrently with the giving of notice to the Trustee,
and without delaying the 30 days required for notice therein, appoint a
successor Trustee pursuant to the terms of Section 10.9 hereof.
Section 10.3. Certain Rights of the Trustee. Except as
otherwise provided in Section 10.1 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Sponsor or the
Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate;
(d) the Trustee may consult with counsel, and the written
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request
or direction of any of the Owners pursuant to this Agreement, unless
such Owners shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note or other paper or document, but the Trustee
in its
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discretion may make such further inquiry or investigation
into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed and supervised with due care by it hereunder; and
(h) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized by the Authorized Officer of any Person or within its rights
or powers under this Agreement other than as to validity and
sufficiency of its authentication of the Certificates.
Section 10.4. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, except any
such recitals relating to the Trustee, shall be taken as the statements of the
Sponsor and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this
Agreement or of the Certificates other than as to validity and sufficiency of
its authentication of the Certificates.
Section 10.5. May Hold Certificates. The Trustee or any agent
of the Trust, in its individual or any other capacity, may become an Owner or
pledgee of Certificates and may otherwise deal with the Trust with the same
rights it would have if it were not Trustee or such agent.
Section 10.6. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other trust funds except to the
extent required herein or required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Sponsor and except to the extent of income or other gain on
investments which are deposits in or certificates of deposit of the Trustee in
its commercial capacity and income or other gain actually received by the
Trustee on Eligible Investments.
Section 10.7. No Lien for Fees. The Trustee shall have no lien
on the Trust Estate for the payment of any fees and expenses.
Section 10.8. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a corporation or
association organized and doing business under the laws of the United States of
America or of any State authorized under such laws to exercise
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corporate trust powers, having a combined capital and surplus of at least
$100,000,000, subject to supervision or examination by the United States of
America or any such State having a rating or ratings acceptable to the Sponsor
and having long-term, unsecured debt rated at least A2 by Moody's (or such lower
rating as may be acceptable to Moody's). If such Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall, upon
the request of the Sponsor, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.9. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice of resignation to the
Sponsor and by mailing notice of resignation by first-class mail, postage
prepaid, to Owners at their addresses appearing on the Register. A copy of such
notice shall be sent by the resigning Trustee to Moody's and Fitch. Upon
receiving notice of resignation, the Sponsor shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, executed on behalf of
the Trust by an Authorized Officer of the Sponsor, one copy of which instrument
shall be delivered to the Trustee so resigning and one copy to the successor
trustee or trustees. If no successor trustee shall have been appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(c) If at any time the Trustee shall cease to be eligible
under Section 10.8 hereof and shall fail to resign after written request
therefor by the Sponsor, the Sponsor may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed on behalf of the
Trust by an Authorized Officer of the Sponsor, one copy of which
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instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(d) The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or, if there are no Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by Class R Certificates then Outstanding may at any time remove the
Trustee and appoint a successor trustee by delivering to the Trustee to be
removed, to the successor trustee so appointed, to the Sponsor, copies of the
record of the act taken by the Owners, as provided for in Section 11.3 hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement or becomes ineligible to serve as Trustee, the
Sponsor may remove the Trustee and appoint a successor trustee by written
instrument, in triplicate, signed by the Sponsor duly authorized, one complete
set of which instruments shall be delivered to the Sponsor, one complete set to
the Trustee so removed and one complete set to the successor Trustee so
appointed.
(f) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Trustee
for any cause, the Sponsor shall promptly appoint a successor Trustee. If within
one year after such resignation, removal or incapability or the occurrence of
such vacancy, a successor Trustee shall be appointed by act of the Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding or, if there are no Offered Certificates then Outstanding, by
such majority of the Percentage Interest of the Class R Certificates delivered
to the Sponsor and the retiring Trustee, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Sponsor. If no
successor Trustee shall have been so appointed by the Sponsor or the Owners and
shall have accepted appointment in the manner hereinafter provided, any Owner
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
(g) The Sponsor shall give notice of any removal of the
Trustee by mailing notice of such event by first-class mail, postage prepaid, to
the Owners as their names and addresses appear in the Register. Each notice
shall include the name of the successor Trustee and the address of its corporate
trust office.
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Section 10.10. Acceptance of Appointment by Successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Sponsor on behalf of the Trust and to its predecessor Trustee an
instrument accepting such appointment hereunder and stating its eligibility to
serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Sponsor or the successor Trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such Trustee so ceasing to
act hereunder. Upon request of any such successor Trustee, the Sponsor on behalf
of the Trust shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Sponsor shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Sponsor shall send a copy of such notice to Moody's and Fitch. If
the Sponsor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and eligible under
this Article X.
Section 10.11. Merger, Conversion, Consolidation or Succession
to Business of the Trustee. Any corporation or association into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation or association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
association succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation or
association shall be otherwise qualified and eligible under this Article X. In
case any Certificates have been executed, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such Trustee
may adopt such execution and deliver the
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Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. Reporting; Withholding. The Trustee shall
timely provide to the Owners the Internal Revenue Service's Form 1099 and any
other statement required by applicable Treasury regulations as determined by the
Sponsor, and shall withhold, as required by applicable law, federal, state or
local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
Section 10.13. Liability of the Trustee. The Trustee shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Trustee herein. Neither the Trustee nor any
of the directors, officers, employees or agents of the Trustee shall be under
any liability on any Certificate or otherwise to any Account, the Sponsor, the
Master Servicer or any Owner for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Trustee
or any such Person against any liability which would otherwise be imposed by
reason of negligent action, negligent failure to act or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. Subject to the foregoing sentence, the Trustee shall not be
liable for losses on investments of amounts in any Account (except for any
losses on obligations on which the bank serving as Trustee is the obligor). In
addition, the Sponsor and Master Servicer covenant and agree to indemnify the
Trustee, and its officers, directors, employees and agents including, without
limitation, when the Trustee is acting as Master Servicer, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses (including
legal fees and expenses) other than those resulting from the negligence or bad
faith of the Trustee. The indemnification provided in this Section 10.13 shall
survive the termination of this Agreement or the resignation or removal of the
Trustee hereunder. The Trustee and any director, officer, employee or agent of
the Trustee may rely and shall be protected in acting or refraining from acting
in good faith on any certificate, notice or other document of any kind prima
facie properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder.
Section 10.14. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of
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the Trust Estate or Property may at the time be located, the Master Servicer and
the Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Trustee to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. If the Master Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case any event indicated in Sections 8.20(a) or 8.20(b) shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-Trustee or separate Trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 10.8 and no
notice to Owner of the appointment of any co-Trustee or separate Trustee shall
be required under Section 10.8.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the 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
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held
personally liable by reason of any act or omission of any
other co-Trustee hereunder; and
(iii) The Master Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate Trustee or
co-Trustee.
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Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this Agreement and
the conditions of this Section 10.14. Each separate Trustee and co-Trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Master Servicer.
Any separate Trustee or co-Trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate Trustee
or co-Trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
The Trustee shall give to Moody's and the Sponsor notice of
the appointment of any Co-Trustee or separate Trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Compliance Certificates and Opinions. Upon any
application or request by the Sponsor or the Owners to the Trustee to take any
action under any provision of this Agreement, the Sponsor or the Owners, as the
case may be, shall furnish to the Trustee a certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of any documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
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(a) a statement that each individual signing such
certificate or opinion has read such covenant or
condition and the definitions herein relating thereto;
(b) 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; and
(c) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been
complied with.
Section 11.2. Form of Documents Delivered to the Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Trustee or any opinion of counsel may be based,
insofar as it relates to factual matter upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or 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. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
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. Any opinion of counsel may be based on the written opinion of
other counsel, in which event such opinion of counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
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Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.
Section 11.3. Acts of Owners. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Owners may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Owners in person or by an agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Sponsor. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "act" of the Owners 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 Agreement and conclusive in favor of the
Trustee and the Trust, 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 by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved
by the Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate shall bind the
Owner of every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.4. Notices, etc. to Trustee. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Owners or other
documents provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with the Trustee by any Owner or by the Sponsor shall be
sufficient for every purpose hereunder if
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made, given, furnished or filed in writing to or with and received by the
Trustee at its corporate trust office as set forth in Section 2.2 hereof.
Section 11.5. Notices and Reports to Owners; Waiver of
Notices. Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided.
Where this Agreement 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 Owners shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such 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 Owners when such notice is required
to be given pursuant to any provision of this Agreement, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency
that rated any Certificates, failure to give such notice shall not affect any
other rights or obligations created hereunder.
Section 11.6. Rules by Trustee and Sponsor. The Trustee may
make reasonable rules for any meeting of Owners. The Sponsor may make reasonable
rules and set reasonable requirements for its functions.
Section 11.7. Successors and Assigns. All covenants and
agreements in this Agreement by any party hereto shall bind its successors and
assigns, whether so expressed or not.
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Section 11.8. Severability. In case any provision in this
Agreement or in the Certificates 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 11.9. Benefits of Agreement. Nothing in this Agreement
or in the Certificates, expressed or implied, shall give to any Person, other
than the Owners and the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 11.10. Legal Holidays. In any case where the date of
any Payment Date, any other date on which any distribution to any Owner is
proposed to be paid, or any date on which a notice is required to be sent to any
Person pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing 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 or mailed on
the nominal date of any such Remittance Date, such Payment Date, or such other
date for the payment of any distribution to any Owner or the mailing of such
notice, as the case may be, and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 11.11. Governing Law. In view of the fact that Owners
are expected to reside in many states and outside the United States and the
desire to establish with certainty that this Agreement will be governed by and
construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions of
the type contemplated herein, this Agreement and each Certificate shall be
construed in accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein.
Section 11.12. Counterparts. This instrument may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.13. Usury. The amount of interest payable or paid
on any Certificate under the terms of this Agreement shall be limited to an
amount which shall not exceed the maximum nonusurious rate of interest allowed
by the applicable laws of the State of New York or any applicable law of the
United States permitting a higher maximum nonusurious
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rate that preempts such applicable New York laws, which could lawfully be
contracted for, charged or received (the "Highest Lawful Rate"). In the event
any payment of interest on any Certificate exceeds the Highest Lawful Rate, the
Trust stipulates that such excess amount will be deemed to have been paid to the
Owner of such Certificate as a result of an error on the part of the Trustee
acting on behalf of the Trust and the Owner receiving such excess payment shall
promptly, upon discovery of such error or upon notice thereof from the Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Owner, apply the excess to the payment of principal of such Certificate, if
any, remaining unpaid. In addition, all sums paid or agreed to be paid to the
Trustee for the benefit of Owners of Certificates for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Certificates.
Section 11.14. Amendment. (a) The Trustee, the Sponsor and the
Master Servicer, may at any time and from time to time, without the giving of
notice to or the receipt of the consent of the Owners, amend this Agreement, and
the Trustee shall consent to such amendment, for the purpose of (i) curing any
ambiguity, or correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof, or to add provisions hereto which
are not inconsistent with the provisions hereof, (ii) upon receipt of an opinion
of counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the REMIC Trust or upon the transferor of a
Class R Certificate as a result of the ownership of any Class R Certificate by a
Disqualified Organization, removing the restriction on transfer set forth in
Section 5.8(b) hereof or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder; provided, however, that any
such action shall not, as evidenced by an opinion of counsel delivered to the
Trustee, materially and adversely affect the interests of any Owner (without its
written consent).
(b) The Trustee, the Sponsor and the Master Servicer may, at
any time and from time to time without the giving of notice to or the receipt of
the consent of the Owners, amend this Agreement, and the Trustee shall consent
to such amendment, for the purpose of changing the definition of "Specified
Subordinated Amount" with respect to any Mortgage Loan Group; provided, however,
that no such change shall affect the weighted average life of the related Class
of Offered Certificates (assuming an appropriate prepayment speed as determined
by the Underwriter) by more than five percent, as determined by the Underwriter.
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(c) This Agreement may also be amended by the Trustee, the
Sponsor, and the Master Servicer at any time and from time to time, with the
prior written approval of not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, for the
purpose of adding any provisions or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any manner the rights of the
Owners hereunder; provided, however, that no such amendment shall (a) change in
any manner the amount of, or change the timing of, payments which are required
to be distributed to any Owner without the consent of the Owner of such
Certificate, (b) reduce the aforesaid percentages of Percentage Interests which
are required to consent to any such amendments or (c) result in a down-rating or
withdrawal of any ratings then assigned to the Offered Certificates, without the
consent of the Owners of all Certificates of the Class or Classes affected then
Outstanding.
(d) Each proposed amendment to this Agreement shall be
accompanied by an opinion of counsel nationally recognized in federal income tax
matters addressed to the Trustee to the effect that such amendment would not
adversely affect the status of the REMIC Trust as a REMIC.
(e) The Owners, Moody's and Fitch shall be provided with
copies of any amendments to this Agreement, together with copies of any opinions
or other documents or instruments executed in connection therewith.
Section 11.15. REMIC Status; Taxes. (a) The Tax Matters Person
shall prepare and file or cause to be filed with the Internal Revenue Service
Federal tax or information returns with respect to the REMIC Trust and the
Certificates containing such information and at the times and in such manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to Owners such statements or information at the times and in such manner
as may be required thereby. For this purpose, the Tax Matters Person may, but
need not, rely on any proposed regulations of the United States Department of
the Treasury. The Tax Matters Person shall indicate the election to treat the
REMIC Trust as a REMIC (which election shall apply to the taxable period ending
December 31, 1996 and each calendar year thereafter) in such manner as the Code
or applicable Treasury regulations may prescribe. The Trustee, as Tax Matters
Person appointed pursuant to Section 11.17 hereof shall sign all tax information
returns filed pursuant to this Section 11.15. The Tax Matters Person shall
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Disqualified Organization, or an agent of a
Disqualified Organization, or a pass-through entity in which a Disqualified
Organization is the record holder of an
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interest. The Tax Matters Person shall provide the Trustee with copies of any
Federal tax or information returns filed, or caused to be filed, by the Tax
Matters Person with respect to the REMIC Trust or the Certificates.
(b) The Tax Matters Person shall timely file all reports
required to be filed by the Trust with any federal, state or local governmental
authority having jurisdiction over the Trust, including other reports that must
be filed with the Owners, such as the Internal Revenue Service's Form 1066 and
Schedule Q and the form required under Section 6050K of the Code, if applicable
to REMICs. Furthermore, the Tax Matters Person shall report to Owners, if
required, with respect to the allocation of expenses pursuant to Section 212 of
the Code in accordance with the specific instructions to the Tax Matters Person
by the Sponsor with respect to such allocation of expenses. The Tax Matters
Person shall collect any forms or reports from the Owners determined by the
Sponsor to be required under applicable federal, state and local tax laws.
(c) The Tax Matters Person shall provide to the Internal
Revenue Service and to persons described in Section 860E(e)(3) and (6) of the
Code the information described in Proposed Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto. Such information will
be provided in the manner described in Proposed Treasury Regulation Section
1.860E(2)(a)(5), or any successor regulation thereto.
(d) The Sponsor covenants and agrees that within ten Business
Days after the Startup Day it shall provide to the Trustee any information
necessary to enable the Trustee to meet its obligations under subsections (b)
and (c) above.
(e) The Trustee, the Sponsor and the Master Servicer each
covenants and agrees for the benefit of the Owners (i) to take no action which
would result in the termination of "REMIC" status for the REMIC Trust, (ii) not
to engage in any "prohibited transaction", as such term is defined in Section
860F(a)(2) of the Code and (iii) not to engage in any other action which may
result in the imposition on the REMIC Trust of any other taxes under the Code.
(f) The REMIC Trust shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(g) Except as otherwise permitted by Section 7.6(b), no
Eligible Investment shall be sold prior to its stated maturity (unless sold
pursuant to a plan of liquidation in accordance with Article IX hereof).
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(h) Neither the Sponsor nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, which fee or other compensation is
paid from the Trust Estate, other than as expressly contemplated by this
Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the
Trustee or the Sponsor may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received an opinion of counsel
experienced in federal income tax matters to the effect that such transaction
does not result in a tax imposed on the Trustee or cause a termination of REMIC
status for the REMIC Trust; provided, however, that such transaction is
otherwise permitted under this Agreement.
Section 11.16. Additional Limitation on Action and Imposition
of Tax. (a) Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters to the effect that such transaction does not result
in a tax imposed on the Trust or cause a termination of REMIC status for the
REMIC Trust, (i) sell any assets in the Trust Estate, (ii) accept any
contribution of assets after the Startup Day or (iii) agree to any modification
of this Agreement.
(b) In the event that any tax is imposed on "prohibited
transactions" of the REMIC Trust as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" as defined in Section 860G(c) of
the Code, on any contribution to the REMIC Trust after the Startup Day pursuant
to Section 860G(d) of the Code, or any other tax (other than any minimum tax
imposed by Sections 23151(a) or 23153(a) of the California Revenue and Taxation
Code) is imposed, such tax shall be paid by (i) the Trustee, if such tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Agreement, (ii) the Master Servicer, if such tax arises out of or results
from a breach by the Master Servicer of any of its obligations under this
Agreement, or otherwise (iii) the Owners of the Class R Certificates in
proportion to their Percentage Interests. To the extent such tax is chargeable
against the Owners of the Class R Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Owners of the Class R Certificates on any
Payment Date sufficient funds to reimburse the Trustee for the payment of such
tax (to the extent that the Trustee has not been previously reimbursed or
indemnified therefor).
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Section 11.17. Appointment of Tax Matters Person. The Owners
of the Class R Certificates hereby appoint the Trustee as their agent to act as
the Tax Matters Person for REMIC Trust for all purposes of the Code and such Tax
Matters Person will perform, or cause to be performed, such duties and take, or
cause to be taken, such actions as are required to be performed or taken by the
Tax Matters Person under the Code.
Section 11.18. Maintenance of Records. Each Originator and
Owner of a Class R Certificate shall each continuously keep an original executed
counterpart of this Agreement in its official records.
Section 11.19. Notices. All notices hereunder shall be
given as follows, until any superseding instructions are given to all other
Persons listed below:
The Trustee: Bankers Trust Company
of California, N.A.
3 Park Plaza
Irvine, CA 92614
Attention: Advanta 1997-1
Tel: (714) 253-7575
Fax: (714) 253-7577
The Sponsor: Advanta Mortgage Conduit
Services Inc.
16875 West Bernardo Drive
San Diego, California 92127
Tel: (619) 674-3317
Attention:
The Master Advanta Mortgage Corp. USA
Servicer: 16875 West Bernardo Drive
San Diego, California 92127
Tel: (619) 674-3317
Fax: (619) 674-3592
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Mortgage
Monitoring
Department
Fitch: Fitch Investors Service, L.P.
One State Street
New York, New York 10004
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Underwriters: Morgan Stanley & Co. Incorporated
Representative of the
Underwriters
1585 Broadway
New York, New York 10036
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<PAGE>
IN WITNESS WHEREOF, the Sponsor, the Master Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
as Sponsor
By:_____________________________
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By:_____________________________
Mark T. Dunsheath
Vice President
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_____________________________
Erin Deegan
Assistant Vice President
[Pooling and Servicing Agreement]
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ____________)
On the ____ day of _________, 1997, before me personally came
Erin Deegan to me known, who, being by me duly sworn did depose and say that her
office is located at Three Park Plaza, Irvine, California 92714; that she is an
Assistant Vice President of Bankers Trust Company of California, N.A., the
national banking corporation described in and that executed the above instrument
as Trustee; and that she signed her name thereto under authority granted by the
Board of Directors of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
Notary Public
<PAGE>
Exhibit 4.2
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
MASTER LOAN TRANSFER AGREEMENT
Dated as of February 15, 1995
by and among
ADVANTA MORTGAGE CORP. USA
ADVANTA MORTGAGE CORP. MIDATLANTIC
ADVANTA MORTGAGE CORP. MIDATLANTIC II
ADVANTA MORTGAGE CORP. MIDWEST
ADVANTA MORTGAGE CORP. OF NEW JERSEY
ADVANTA MORTGAGE CORP. NORTHEAST
COLONIAL NATIONAL BANK USA
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA FINANCE CORP.,
as Affiliated Originators,
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
and
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Definitions................................................................. 1
Section 2. Interest Calculations....................................................... 4
Section 3. Transfers of Mortgage Loans................................................. 4
Section 4. Representations, Warranties and Covenants Regarding the Affiliated
Originators and the Sponsor................................................. 4
Section 5. Representations and Warranties of the Affiliated Originators Regarding
the Mortgage Loans.......................................................... 9
Section 6. Authorized Representatives.................................................. 16
Section 7. Notices..................................................................... 16
Section 8. Governing Law............................................................... 17
Section 9. Assignment.................................................................. 17
Section 10. Counterparts................................................................ 17
Section 11. Amendment................................................................... 17
Section 12. Severability of Provisions.................................................. 17
Section 13. No Agency; No Partnership or Joint Venture.................................. 17
Section 14. Further Assurances.......................................................... 18
Section 15. The Certificate Insurer..................................................... 18
Section 16. Maintenance of Records...................................................... 18
</TABLE>
i
<PAGE>
THIS MASTER LOAN TRANSFER AGREEMENT, dated as of February 15,
1995, between Advanta Mortgage Corp. USA, Advanta Mortgage Corp. Midatlantic,
Advanta Mortgage Corp. Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta
Mortgage Corp. of New Jersey, Advanta Mortgage Corp. Northeast, Advanta Mortgage
Conduit Services, Inc., Advanta Finance Corp. and Colonial National Bank USA,
each a seller (each an "Affiliated Originator" and collectively, the "Affiliated
Originators"), Bankers Trust Company of California, N.A., as trustee ("Trustee")
and Advanta Mortgage Conduit Services, Inc., as sponsor ("Sponsor");
I. BACKGROUND
A. Each Affiliated Originator is an originator or purchaser of mortgage
loans which such Affiliated Originator may, from time to time, convey to the
Conduit Acquisition Trust, or cause the Conduit Acquisition Trust to acquire;
B. The Affiliated Originators and the Sponsor expect, from time to
time, to cause that such mortgage loans to be conveyed to an Advanta Trust in
connection with a securitization transaction sponsored by the Sponsor.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein contained, the parties hereto hereby agree as follows:
Section 1. Definitions. Whenever used in this Agreement or in
any Conveyance Agreement, the following words and phrases, unless the context
otherwise requires, shall have the meanings specified in this Article; provided,
however, that any capitalized terms used herein or in any conveyance Agreement
and not defined herein shall have their respective meanings as set forth in the
related Advanta Pooling Agreement.
Advanta Pooling Agreement: Any Pooling and Servicing
Agreement entered into by Advanta Mortgage Conduit Services, Inc. as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer and a trustee, as it may be
amended and supplemented from time to time by the parties thereto.
Advanta Trust: A securitization trust created by the Sponsor
into which Mortgage Loans described in this Agreement and the Conveyance
Agreements are deposited.
Agreement: This Master Loan Transfer Agreement as it may be
amended from time to time, including the exhibits and supplements hereto.
Bulk Acquisition Loan: Any Mortgage Loan purchased by an
Affiliated Originator from another
<PAGE>
Originator (other than any other Affiliated Originator) as part of a bulk
portfolio acquisition.
Conduit Acquisition P&S: The Pooling and Servicers Agreement
dated as of February 15, 1995 by and between the Sponsor and the Trustee
relating to the Conduit Acquisition Trust.
Conduit Acquisition Trust: The trust created pursuant to the
Conduit Acquisition P&S.
Conveyance Agreement: Any Conveyance Agreement relating to a
Pool, in substantially the form set forth as Exhibit A hereto.
Coupon Rate: The rate of interest borne by each Note.
Cut-Off Date: With respect to any Pool, as defined in the
related Conveyance Agreement.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
File: The documents delivered to the Trustee pursuant to the
document delivery provisions of the Conduit Acquisition P&S pertaining to a
particular Mortgage Loan, together with any additional documents required to be
added to the File pursuant to the Conduit Acquisition P&S.
First Mortgage Loan: A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
FNMA: The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
Loan Balance: With respect to each Mortgage Loan, the
outstanding principal balance thereof on the related CutOff Date, less any
related Principal Remittance Amounts relating to such Mortgage Loan included in
previous related Monthly Remittance Amounts that were transferred by the Master
Servicer or any Sub-Servicer to the Trustee for deposit in the related
Certificate Account.
2
<PAGE>
Master Servicer: Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
Mortgage Loans: Each of the mortgage loans subject hereto,
together with any Qualified Replacement Mortgages substituted therefor in
accordance with the related Advanta Pooling Agreement.
Note: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
Offered Certificates: Any securities issued by an Advanta
Trust which are not retained by the Sponsor or any Originator.
Person: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
Pool: Any group of Mortgage Loans transferred to the Sponsor
pursuant to a specific Conveyance Agreement.
Property: The underlying property securing a Mortgage Loan.
Qualified Mortgage: "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto) and applicable to the
related Advanta Trust.
Schedules of Mortgage Loans: The Schedules of Mortgage Loans
required to be delivered pursuant to the related Advanta Pooling Agreement.
Second Mortgage Loan: A Mortgage Loan which constitutes a
second priority mortgage lien with respect to the related Property.
Senior Lien: With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first priority
lien; and with respect to any Third Mortgage Loan, the mortgage loans relating
to the corresponding Property having first and second priority liens.
Third Mortgage Loan: A Mortgage Loan which constitutes a
third priority mortgage lien with respect to the related Property.
3
<PAGE>
Trustee: Bankers Trust Company of California, N.A., located
on the date of execution of this Agreement at 3 Park Plaza, Irvine, California
92714, a national banking association, not in its individual capacity but
solely as Trustee, and any successor hereunder.
Unaffiliated Originator Loan: Any Mortgage Loan purchased by
an Affiliated Originator from an Unaffiliated Originator.
Unaffiliated Originators: Any Originator (x) not affiliated
with the Sponsor and (y) approved in writing by the Certificate Insurer.
Section 2. Interest Calculations. All calculations of
interest hereunder, including, without limitation, calculations of interest at
the Coupon Rate, which are made in respect of the Loan Balance of a Mortgage
Loan shall be made on a daily basis using a 360-day year comprised of twelve
30-day months.
Section 3. Transfers of Mortgage Loans. From time to time in
connection with the establishment of Advanta Trusts the Affiliated Originators
and the Sponsor, intend to transfer Mortgage Loans from the Conduit Acquisition
Trust to the related Advanta Trust. Each such transfer will be evidenced by a
Conveyance Agreement in substantially the form of Exhibit A hereto.
Section 4. Representations, Warranties and Covenants
Regarding the Affiliated Originators and the Sponsor. (a) Each Affiliated
Originator hereby represents and warrants to the Sponsor, the Trustee and their
respective successors and assigns that, as of the date hereof;
(i) Such Affiliated Originator is a corporation (or, in
the case of Colonial National Bank USA, a national banking association)
duly organized, validly existing and in good standing under the laws
governing its creation and existence and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its
business, or the properties owned or leased by it make such
qualification necessary. Such Affiliated Originator has all requisite
corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be
conducted, to enter into and discharge its obligations under this
Agreement and the Conveyance Agreements.
(ii) The execution and delivery of this
Agreement by such Affiliated Originator and its
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performance and compliance with the terms of this Agreement and the
Conveyance Agreements to which it is a party have been duly authorized
by all necessary corporate action on the part of such Affiliated
Originator and will not violate such Affiliated Originator's Articles
of Incorporation, Articles of Association or Bylaws or constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which such
Affiliated Originator or its properties is a party or by which such
Affiliated Originator is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over such Affiliated Originator or any of
its properties.
(iii) This Agreement and the Conveyance Agreements to
which such Affiliated Originator is a party, assuming due
authorization, execution and delivery by the other parties hereto and
thereto, each constitutes a valid, legal and binding obligation of such
Affiliated Originator, enforceable against it in accordance with the
terms hereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law).
(iv) Such Affiliated Originator is not in default with
respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or governmental agency, which
might have consequences that would materially and adversely affect the
condition (financial or other) or operations of such Affiliated
Originator or its properties, or might have consequences that would
materially and adversely affect its performance hereunder and under the
other Conveyance Agreements to which such Affiliated Originator is a
party, or which would draw into question the validity of this Agreement
or the Mortgage Loans taken as a whole or of any action taken or to be
taken in connection with the obligations of the Affiliated Originator
contemplated herein.
(v) No litigation is pending or, to the best of such
Affiliated Originator's knowledge, threatened against such Affiliated
Originator which litigation might have consequences that would prohibit
its entering into this Agreement or any Conveyance
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Agreements to which it is a party or that would materially and
adversely affect the condition (financial or otherwise) or operations
of such Affiliated Originator or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the Conveyance Agreements to which such Affiliated
Originator is a party.
(vi) Neither this Agreement nor any certificate of an
officer, statement furnished in writing or report delivered pursuant to
the terms hereof by such Affiliated Originator contains any untrue
statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(vii) Upon the receipt of each Mortgage Loan and other
items of the Mortgage by the Trustee under this Agreement, the related
Advanta Trust will have good and marketable title to such Mortgage Loan
and such other items of the related Trust Estate free and clear of any
lien (other than liens which will be simultaneously released).
(viii) Neither such Affiliated Originator nor any
affiliate thereof will report on any financial statement any part of
the Servicing Fee as an adjustment to the sales price of the Mortgage
Loans.
(ix) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any federal, state or other governmental
authority or agency (other than any such actions, approvals, etc.,
under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which such Affiliated Originator makes no such
representation or warranty), that are necessary or advisable in
connection with the sale of the Mortgage Loans and the execution and
delivery by such Affiliated Originator of this Agreement and the
Conveyance Agreements to which it is a party, have been duly taken,
given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the conveyance
Agreements on the part of
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such Affiliated Originator and the performance by such Affiliated
Originator of its obligations under this Agreement and such of the
Conveyance Agreements to which it is a party.
(x) The origination practices used by such Affiliated
Originator with respect to the Mortgage Loans originated by such
Affiliated Originator have been, (i) in all material respects, legal,
proper, prudent and customary in the mortgage loan lending business and
(ii) in compliance with the Servicer's underwriting criteria as
described in the Prospectus.
(xi) The transactions contemplated by this Agreement are
in the ordinary course of business of such Affiliated Originator. The
transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Servicer pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in
any applicable jurisdiction.
(xii) Such Affiliated Originator received fair
consideration and reasonably equivalent value in exchange for the sale
of the interests in the Mortgage Loans.
(xiii) Such Affiliated Originator did not sell any
interest in any Mortgage Loan with any intent to hinder, delay or
defraud any of its respective creditors.
(xiv) Such Affiliated Originator is solvent, and such
Affiliated Originator will not be rendered insolvent as a result of the
sale of the Mortgage Loans to the related Advanta Trust.
The representations and warranties set forth in this paragraph (a) shall survive
the sale and assignment of the Mortgage Loans to the Sponsor.
In addition, each Affiliated Originator hereby covenants to
perform the obligations, if any, imposed upon it by the related Advanta Pooling
Agreement.
(b) The Sponsor hereby represents and warrants to
each Affiliated Originator and the Trustee that, as of the date hereof:
(i) The Sponsor is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all licenses and qualifications necessary to carry on
its business
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as now being conducted and to perform its obligations hereunder; the
Sponsor has the power and authority to execute and deliver this
Agreement and to perform its obligations in accordance herewith; the
execution, delivery and performance of this Agreement (including any
Conveyance Agreement and any other instruments of transfer to be
delivered pursuant to this Agreement) by the Sponsor and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and do not violate
the organization documents of the Sponsor, contravene or violate any
law, regulation, rule, order, judgement or decree to which the Sponsor
or its properties are subject or contravene, violate or result in any
breach of any provision of, or constitute a default under, or result in
the imposition of any lien on any assets of the Sponsor pursuant to the
provisions of, any mortgage, indenture, contract, agreement or other
undertaking to which the Sponsor is a party or which purports to be
binding upon Sponsor or any of Sponsor's assets; this Agreement
evidences the valid and binding obligation of the Sponsor enforceable
against the Sponsor in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally or the
application of equitable principles in any proceeding, whether at law
or in equity;
(ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any federal, state or other governmental
authority or agency, that are necessary in connection with the
execution and delivery by the Sponsor of this Agreement, have been duly
taken, given or obtained, as the case may be, are in full force and
effect, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Sponsor
and the performance by the Sponsor of its obligations under this
Agreement; and
(iii) There is no action, suit, proceeding or
investigation pending or, to the best of the Sponsor's knowledge,
threatened against the Sponsor which, either in any one instance or in
the aggregate, may result in any material adverse change in the
business,
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operations, financial condition, properties or assets of the Sponsor or
in any material impairment of the right or ability of the Sponsor to
carry on its business substantially as now conducted, or in any
material liability on the part of the Sponsor or which would draw into
question the validity of this Agreement or of any action taken or to be
taken in connection with the obligations of the Sponsor contemplated
herein, or which would be likely to impair the ability of the Sponsor
to perform under the terms of this Agreement.
The representations and warranties set forth in this paragraph (b) shall survive
the sale and assignment of the Mortgage Loans to the Sponsor. Upon discovery of
a breach of any of the foregoing representations and warranties which materially
and adversely affects the interests of the Affiliated Originator, the Affiliated
Originator shall give prompt written notice to the Sponsor. Within 30 days of
its receipt of notice of breach, the Sponsor shall cure such breach in all
material respects.
Section 5. Representations and Warranties of the
Affiliated Originators Regarding the Mortgage Loans. (a) Set forth in paragraph
(b) below is a listing of representations and warranties which will be deemed to
have been made by each Affiliated Originator in connection with each conveyance
of a Pool from the Conduit Acquisition Trust to the related Advanta Trust. In
addition, a Conveyance Agreement may, with respect to the Mortgage Loans in the
related Pool, delete or modify any of such representations and warranties, or
may add additional representations and warranties ("Additional Representations
and Warranties"). The representations and warranties listed in paragraph (b)
below, together with any Additional Representations and Warranties, are the
"Representations and Warranties". Reference to the Cut-Off Date are as of the
Cut-Off Date set forth in the related Conveyance Agreement with respect to a
Mortgage Loan.
(b) With respect to each Mortgage Loan, each Affiliated
Originator hereby represents, warrants and covenants to the Sponsor and the
Trustee, as of the related Cut-Off Date, as follows, on which representations,
warranties and covenants the Trustee relies in accepting the Mortgage Loans:
(i) The information with respect to each Mortgage Loan
set forth in the Schedules of Mortgage Loans is true and correct as of
the Cut-Off Date;
(ii) All of the original or certified
documentation required to be delivered to the Trustee
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pursuant to the related Advanta Pooling Agreement (including all
material documents related thereto) with respect to each Mortgage Loan
has been or will be delivered to the Trustee in accordance with the
terms of such Advanta Pooling Agreement. Each of the documents and
instruments specified to be included therein has been duly executed and
in due and proper form, and each such document or instrument is in a
form generally acceptable to prudent mortgage lenders that regularly
originate or purchase mortgage loans comparable to the Mortgage Loans
for sale to prudent investors in the secondary market that invest in
mortgage loans such as the Mortgage Loans.
(iii) Each Mortgage Loan being transferred to the
Sponsor is a Qualified Mortgage and is a Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums and
townhouses but shall not include cooperatives;
(v) No Mortgage Loan had a Combined Loan-
to-Value Ratio in excess of 100%;
(vi) Each Mortgage is either a valid and subsisting
first, second or third lien of record on the Property (subject in the
case of any Second Mortgage Loan or Third Mortgage Loan only to a
Senior Lien on such Property) and subject in all cases to the
exceptions to title set forth in the title insurance policy, with
respect to the related Mortgage Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular
mortgage lending activities, and such other exceptions to which similar
properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage;
(vii) Immediately prior to the transfer and assignment
herein contemplated, each Affiliated Originator held good and
indefeasible title to, and was the sole owner of, each Mortgage Loan
conveyed by such Affiliated Originator subject to no liens, charges,
mortgages, encumbrances or rights of others except liens which will be
released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the
Trustee will hold good and indefeasible title to, and be the sole owner
of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of
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others except liens which will be released simultaneously with such
transfer and assignment;
(viii) As of the related Cut-Off Date, no Mortgage Loan is
30 or more days Delinquent, except for any portion of the Mortgage
Loans which the related Advanta Pooling Agreement permits to be more
than 30 days Delinquent;
(ix) There is no delinquent tax or assessment lien or
mechanic's lien on any Property, and each Property is free of
substantial damage and is in good repair;
(x) There is no valid and enforceable right of
rescission offset, defense or counterclaim to any Note or Mortgage,
including the obligation of the related Mortgagor to pay the unpaid
principal of or interest on such Note or the defense of usury, nor will
the operation of any of the terms of the Mortgage Note or the Mortgage,
or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including
the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(xi) There is no mechanics' lien or claim for work,
labor or material affecting any Property which is or may be a lien
prior to, or equal with, the lien of the related Mortgage except those
which are insured against by any title insurance policy referred to in
paragraph (xiii) below;
(xii) Each Mortgage Loan at the time it was made complied
in all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, real estate
settlement procedure, usury, equal credit opportunity, disclosure and
recording laws;
(xiii) With respect to each Mortgage Loan, a lender's
title insurance policy, issued in standard California Land Title
Association form or American Land Title Association form, or other form
acceptable in a particular jurisdiction by a title insurance company
authorized to transact business in the state in which the related
Property is situated, in an amount at least equal to the Original
Principal Amount of such Mortgage Loan insuring the mortgagee's
interest under the
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related Mortgage Loan as the holder of a valid first or second mortgage
lien of record on the real property described in the related Mortgage,
as the case may be, subject only to exceptions of the character
referred to in paragraph (vi) above, was effective on the date of the
origination of such Mortgage Loan, and, as of the Cut-Off Date such
policy will be valid and thereafter such policy shall continue in full
force and effect;
(xiv) The improvements upon each Property are covered by
a valid and existing hazard insurance policy (which may be a blanket
policy of the type described in the related Advanta Pooling Agreement)
with a generally acceptable carrier that provides for fire and extended
coverage representing coverage not less than the least of (A) the
outstanding principal balance of the related Mortgage Loan (together,
in the case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Property;
(xv) If any Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy (which may be a blanket
policy of the type described in the Advanta Pooling Agreement) in a
form meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with respect to such Property
with a generally acceptable carrier in an amount representing coverage
not less than the least of (A) the outstanding principal balance of the
related Mortgage Loan (together, in the case of a Second Mortgage Loan,
with the outstanding principal balance of the Senior Lien), (B) the
minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973;
(xvi) Each Mortgage and Note is the legal, valid and
binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether considered in a proceeding
or action in equity or at law), and all parties to each Mortgage Loan
had full legal capacity to execute all documents relating to such
Mortgage Loan and convey the estate therein purported to be conveyed;
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(xvii) Each Affiliated Originator has caused and will
cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the servicer in any Insurance
Policies applicable to any Mortgage Loans delivered by such Affiliated
Originator including, to the extent such Mortgage Loan is not covered
by a blanket policy described in the Advanta Pooling Agreement, any
necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee
and mortgagee rights in favor of the servicer;
(xviii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof for
the benefit of the applicable Affiliated Originator, subject to the
provisions of Section 3.5(b) of the Advanta Pooling Agreement, (or are
in the process of being recorded);
(xix) The terms of each Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interest of the owners and which has been delivered to the Trustee. The
substance of any such alteration or modification is reflected on the
related Schedule of Mortgage Loans and has been approved by the primary
mortgage guaranty insurer, if any;
(xx) The proceeds of each Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording
such Mortgage Loans were paid;
(xxi) Except as otherwise required by law or pursuant to
the statute under which the related Mortgage Loan was made, the related
Note is not and has not been secured by any collateral, pledged account
or other security except the lien of the corresponding Mortgage;
(xxii) No Mortgage Loan was originated under a
buydown plan;
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(xxiii) No Mortgage Loan provides for negative
amortization, has a shared appreciation feature, or other contingent
interest feature;
(xxiv) Each Property is located in the state identified in
the Schedule of Mortgage Loans and consists of one or more parcels of
real property with a residential dwelling erected thereon;
(xxv) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
related Mortgage Loan in the event the related Property is sold without
the prior consent of the mortgagee thereunder;
(xxvi) Any advances made after the date of origination of
a Mortgage Loan but prior to the Cut-Off Date, have been consolidated
with the outstanding principal amount secured by the related Mortgage,
and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Schedule of
Mortgage Loans. The consolidated principal amount does not exceed the
original principal amount of the related Mortgage Loan. No Note permits
or obligates the Master Servicer, the Sub-Servicer or the Sponsor to
make future advances to the related Mortgagor at the option of the
Mortgagor;
(xxvii) There is no proceeding pending or threatened for
the total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, earthquake or earth movement, flood, tornado or other
casualty, so as to affect adversely the value of the Property as
security for the Mortgage Loan or the use for which the premises were
intended;
(xxviii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and, if a title insurance policy exists with respect to such
Property, are stated in such title insurance policy and affirmatively
insured;
(xxix) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not limited
to certificates of occupancy and fire
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underwriting certificates, have been made or obtained from the
appropriate authorities and such Property is lawfully occupied under
the applicable law;
(xxx) With respect to each Mortgage constituting a deed
of trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named
in such Mortgage, and no fees or expenses are or will become payable by
the Sponsor or the related Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(xxxi) With respect to each Second Mortgage Loan, either
(A) no consent for such Mortgage Loan was required by the holder of the
related Senior Lien prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related File;
(xxxii) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the
benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption
available which materially interferes with the right to sell the
related Property at a trustee's sale or the right to foreclose the
related Mortgage;
(xxxiii) Except as provided by clause (viii) of this
Section, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and the applicable Affiliated
Originator has not waived any default, breach, violation or event of
acceleration;
(xxxiv) Except for any Bulk Acquisition Loan, no instrument
of release or waiver has been executed in connection with any Mortgage
Loan, and no Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement which has been approved by
the primary mortgage guaranty insurer, if any, and which has been
delivered to the Trustee;
(xxxv) Except for any Bulk Acquisition Loan, the maturity
date of each Mortgage Loan which is a Second Mortgage Loan is at least
twelve months prior to the
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maturity date of the related first mortgage loan if such first
mortgage loan provides for a balloon payment;
(xxxvi) The credit underwriting guidelines applicable to
each Mortgage Loan which is not a Bulk Acquisition Loan or an
Unaffiliated Originator Loan conform in all material respects to the
Sponsor's underwriting guidelines;
(xxxvii) The credit underwriting guidelines applicable to
each Mortgage Loan conform in all material respects to the Sponsor's
underwriting guidelines;
(xxxviii) All parties to the Note and the Mortgage had legal
capacity to execute the Note and the Mortgage and each Note and
Mortgage have been duly and properly executed by such parties; and
(xxxix) The related Affiliated Originator has no actual
knowledge that there exist on any Property any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act,
the Resource Conservation and Recovery Act of 1976, or other federal,
state or local environmental legislation.
(c) No Originator Payment Obligations. There is no
obligation on the part of the Servicer or any other party to make payments in
addition to those made by the Mortgagor except for delinquency.
The Representations and Warranties shall survive the transfer
and assignment of the Mortgage Loans to the related Advanta Trust. Upon
discovery by the Affiliated Originator or the Sponsor of a breach of any of the
Representations and Warranties, without regard to any limitation set forth in
such Representation or Warranty concerning the knowledge of the Affiliated
Originator as to the facts stated therein, which breach, in the opinion of the
Sponsor, materially and adversely affects the interests of the Sponsor, the
Owners or of the Certificate Insurer in the related Mortgage Loan or Mortgage
Loans, the party discovering such breach shall give prompt written notice to the
other party, and the related Affiliated Originator shall be required to take the
remedial actions required by the related Advanta Pooling Agreement within the
time periods required thereto. Each Affiliated Originator hereby acknowledges
that a breach of any of the Representations and Warranties listed in clauses
(iii), (x), (xvi) and (xxxviii) above a priori materially and adversely affects
the
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interests of the related Advanta Trust, the related Owners and the Certificate
Insurer.
Section 6. Authorized Representatives. The names of the
officers of the Affiliated Originators and of the Sponsor who are authorized to
give and receive notices, requests and instructions and to deliver certificates
and documents in connection with this Agreement on behalf of the Affiliated
Originator and of the Sponsor ("Authorized Representatives") are set forth on
Exhibit B. From time to time, the Affiliated Originator and the Sponsor may,
by delivering to the Trustee a revised exhibit, change the information
previously given, but the Trustee shall be entitled to rely conclusively on the
last exhibit until receipt of a superseding exhibit.
Section 7. Notices. All demands, notices and communications
relating to this Agreement shall be in writing and shall be deemed to have been
duly given when received by the other party or parties at the address shown
below, or such other address as may hereafter be furnished to the other party or
parties by like notice. Any such demand, notice or communication hereunder shall
be deemed to have been received on the date delivered to or received at the
premises of the addressee.
If to the Trustee:
Bankers Trust Company of California, N.A.
3 Park Plaza
Irvine, CA 92714
Telecopy: (714) 253-7577
Telephone: (714) 253-7575
If to the Affiliated Originators or the Sponsor:
Advanta Mortgage Corp. USA
500 Office Center Drive
Suite 400
Ft. Washington, PA 19034
Attention: Mark Casale - Vice President
Telecopy: (215) 283-4639
Telephone: (215) 283-4376
Section 8. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
without regard to conflict of laws rules applied in the State of New York.
Section 9. Assignment. No party to this Agreement may assign
its rights or delegate its obligations under this Agreement without the express
written consent of the other parties, except as otherwise set forth in this
Agreement.
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Section 10. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed to be an original, and together shall constitute and be one and the same
instrument.
Section 11. Amendment. This Agreement may be amended from time
to time by the Affiliated Originators, the Sponsor and the Trustee only by a
written instrument executed by such parties and with the prior written consent
of the Certificate Insurer.
Section 12. Severability of Provisions. If any 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.
Section 13. No Agency; No Partnership or Joint Venture.
Neither the Affiliated Originators nor the Sponsor is the agent or
representative of the other, and nothing in this Agreement shall be construed
to make either the Affiliated Originator nor the Sponsor liable to any third
party for services performed by it or for debts or claims accruing to it
against the other party. Nothing contained herein nor the acts of the parties
hereto shall be construed to create a partnership or joint venture between the
Sponsor and the Affiliated Originator.
Section 14. Further Assurances. The Affiliated Originators
and Sponsor agree to cooperate reasonably and in good faith with one another in
the performance of this Agreement.
Section 15. The Certificate Insurer. The
Certificate Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Certificate Insurer shall be suspended during any period in
which the Certificate Insurer is in default in its payment obligation's under
the related Certificate Insurance Policies. During any period of suspension,
the Certificate Insurer's rights hereunder shall vest in the Owners of the
related Offered Certificates and shall be exercisable by the owners of at least
a majority in Percentage Interest of the related Offered Certificates then
outstanding. At such time as the related Offered Certificates are no longer
Outstanding under the related Advanta Pooling Agreement and the Certificate
Insurer has been reimbursed for all Insured Payments to which it is entitled
under the related
18
<PAGE>
Advanta Pooling Agreement, the Certificate Insurer's rights hereunder shall
terminate.
Section 16. Maintenance of Records. Each Affiliated
Originator shall each continuously keep an original executed counterpart of
this Agreement in its official records.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers, all as of the day
and year first above written.
ADVANTA MORTGAGE CORP. USA
ADVANTA MORTGAGE CORP. MIDATLANTIC
ADVANTA MORTGAGE CORP. MIDATLANTIC II
ADVANTA MORTGAGE CORP. MIDWEST
ADVANTA MORTGAGE CORP. OF NEW JERSEY
ADVANTA MORTGAGE CORP. NORTHEAST
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA FINANCE CORP.
COLONIAL NATIONAL BANK USA
The Sellers
BY:___________________________________
Name: Mark Casale
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee and not in its
individual capacity
By:___________________________________
Name: Holly Holland
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC. as Sponsor
By:___________________________________
Name: Mark Casale
Title: Vice President
20
<PAGE>
EXHIBIT A
CONVEYANCE AGREEMENT
Advanta Mortgage Corp. USA, Advanta Mortgage Corp.
Midatlantic, Advanta Mortgage Corp. Midatlantic II, Advanta Mortgage Corp.
Midwest, Advanta Mortgage Corp. of New Jersey, Advanta Mortgage Corp.
Northeast, Advanta Mortgage Conduit Services, Inc., Advanta Finance Corp. and
Colonial National Bank USA, as Affiliated Originators and Advanta Mortgage
Conduit Services, Inc., as Sponsor, pursuant to the Master Loan Transfer
Agreement dated as of February 15, 1995 among themselves and Bankers Trust
Company of California, N.A. as Trustee (the "Mortgage Transfer Agreement"),
hereby confirm their understanding with respect to the conveyance by each
Affiliated Originator and the Sponsor of those Mortgage Loans listed on the
attached Schedule of Mortgage Loans (the "Transferred Mortgage Loans") from the
Conduit Acquisition Trust to the Advanta Mortgage Loan Trust - .
Conveyance of Transferred Mortgage Loans. Each Affiliated
Originator and the Sponsor, concurrently with the execution and delivery of this
Conveyance Agreement, does hereby irrevocably transfer, assign, set over and
otherwise convey, and does direct the Trustee to convey from the Conduit
Acquisition Trust to the Advanta Mortgage Loan Trust - , without recourse
(except as otherwise explicitly provided for herein) all of its right, title and
interest in and to the Transferred Mortgage Loans being conveyed by it,
including specifically, without limitation, the Mortgages (as such term is
defined in the "related Advanta Pooling Agreement"), the Files and all other
documents, materials and properties appurtenant thereto and the Notes, including
all interest and principal received by such Affiliated Originator on or with
respect to such Transferred Mortgage Loans on or after the related Cut-off Date,
together with all of its right, title and interest in and to the proceeds
received on or after the related Cut-off Date of any related insurance policies.
If an Affiliated Originator cannot deliver the original
Mortgage or mortgage assignment with evidence of recording thereon concurrently
with the execution and delivery of this Conveyance Agreement solely because of a
delay caused by the public recording office where such original Mortgage or
mortgage assignment has been delivered for recordation, such Affiliated
Originator shall promptly deliver to the Trustee such original Mortgage or
mortgage assignment with evidence of recording indicated thereon upon receipt
thereof from the public recording official.
A-1
<PAGE>
The costs relating to the delivery of the documents specified
in this Conveyance Agreement shall be borne by each Affiliated Originator.
The Affiliated Originators hereby make the Representations and
Warranties set forth in Section 5(b) of the Master Transfer Agreement with
respect to the Transferred Mortgage Loans.
The "Cut-Off Date" with respect to such Transferred Mortgage Loans shall be
, .
All terms and conditions of the Mortgage Transfer Agreement
are hereby incorporated herein, provided that in the event of any conflict the
provisions of this Conveyance Agreement shall control over the conflicting
provisions of the Mortgage Transfer Agreement.
For purposes of this Conveyance Agreement, the "related
Advanta Pooling Agreement" is the Pooling and Servicing Agreement dated as of
, relating to Advanta Mortgage Loan Trust - .
A-2
<PAGE>
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Mortgage Transfer Agreement.
ADVANTA MORTGAGE CORP. USA
ADVANTA MORTGAGE CORP. MIDATLANTIC
ADVANTA MORTGAGE CORP. MIDATLANTIC II
ADVANTA MORTGAGE CORP. MIDWEST
ADVANTA MORTGAGE CORP. OF NEW JERSEY
ADVANTA MORTGAGE CORP. NORTHEAST
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA FINANCE CORP.
COLONIAL NATIONAL BANK USA,
as Affiliated Originators
By:_____________________________
Mark Casale
Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC.
as Sponsor
By:_____________________________
Mark Casale
Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________
Holly Holland
Vice President
Dated:
A-3
<PAGE>
EXHIBIT B
AUTHORIZED REPRESENTATIVES
Reference is hereby made to the Master Loan Transfer
Agreement, dated as of February 15, 1995 (the "Agreement"), among Advanta
Mortgage Corp. USA, Advanta Mortgage Corp. Midatlantic, Advanta Mortgage Corp.
Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta Mortgage Corp. of New
Jersey, Advanta Mortgage Corp. Northeast, Advanta Mortgage Conduit Services,
Inc., Advanta Finance Corp. and Colonial National Bank USA, as Affiliated
Originators, Advanta Mortgage Conduit Services, Inc., as Sponsor and Bankers
Trust Company of California, N.A., as Trustee:
The following are the Affiliated Orginators' Authorized
Representatives for purposes of the Agreement:
Name Title
- ---- -----
Annette Aguirre Senior Vice President, General Counsel
and Secretary
Mark Casale Vice President
The following are the Sponsor's Authorized Representatives for
purposes of the Agreement:
Name Title
- ---- -----
Annette Aguirre Senior Vice President, General Counsel
and Secretary
Mark Casale Vice President
B-1
<PAGE>
Exhibit 4.3
<PAGE>
CONVEYANCE AGREEMENT
Advanta Mortgage Corp. USA, Advanta Mortgage Corp.
Midatlantic, Advanta Mortgage Corp. Midatlantic II, Advanta
Mortgage Corp. Midwest, Advanta Mortgage Corp. of New Jersey,
Advanta Mortgage Corp. Northeast, Advanta Mortgage Conduit
Services, Inc., Advanta Finance Corp., Advanta Conduit
Receivables, Inc. and Advanta National Bank USA, as Affiliated
Originators and Advanta Mortgage Conduit Services, Inc., as
Sponsor, pursuant to the Master Loan Transfer Agreement dated
as of February 15, 1995 (the "Mortgage Transfer Agreement")
among themselves and Bankers Trust Company of California, N.A.
as conduit trustee (the "Conduit Trustee"), hereby confirm
their understanding with respect to the conveyance by each
Affiliated Originator and the Sponsor of those Mortgage Loans
listed on the attached Schedule of Mortgage Loans (the
"Transferred Mortgage Loans") from the Conduit Acquisition
Trust to the Advanta Mortgage Loan Trust 1997-1 (the "Trust").
Conveyance of Transferred Mortgage Loans. Each
Affiliated Originator and the Sponsor, concurrently with the
execution and delivery of this Conveyance Agreement, does
hereby irrevocably transfer, assign, set over and otherwise
convey, and does direct the Conduit Trustee to convey:
(i) from the Conduit Acquisition Trust to the
Trust, without recourse (except as otherwise explicitly
provided for herein) all of its right, title and interest in
and to the Transferred Mortgage Loans being conveyed by it,
including specifically, without limitation, the Mortgages (as
such term is defined in the "related Advanta Pooling
Agreement"), the Files and all other documents, materials and
properties appurtenant thereto and the Notes, including all
interest and principal received by such Affiliated Originator
on or with respect to such Transferred Mortgage Loans on or
after the related Cut-off Date, together with all of its
right, title and interest in and to the proceeds received on
or after the related Cut-off Date of any related insurance
policies.
If an Affiliated Originator cannot deliver the
original Mortgage or mortgage assignment with evidence of
recording thereon concurrently with the execution and delivery
of this Conveyance Agreement solely because of a delay caused
by the public recording office where such original Mortgage or
mortgage assignment has been delivered for recordation, such
Affiliated Originator shall promptly deliver to Bankers Trust
Company of California, in its capacity as Trustee (the
"Trustee") such original Mortgage or mortgage assignment with
<PAGE>
evidence of recording indicated thereon upon receipt thereof
from the public recording official.
The costs relating to the delivery of the documents
specified in this Conveyance Agreement shall be borne by each
Affiliated Originator.
The Affiliated Originators hereby make the
Representations and Warranties set forth in Section 5(b) of
the Master Transfer Agreement with respect to the Transferred
Mortgage Loans, together with the following additional
representation and warranty:
As of the Startup Day, no Mortgagor is currently a
debtor in a case under Title 11 of the United States Code, or
any similar state insolvency proceeding.
Bankers Trust Company of California, N.A., in its
capacity as Trustee, and the Trust are intended beneficiaries
of this Agreement and of the foregoing representations,
warranties and agreements.
The "Cut-Off Date" with respect to such Transferred
Mortgage Loans shall be March 1, 1997.
All terms and conditions of the Master Transfer
Agreement are hereby incorporated herein; provided that in the
event of any conflict the provisions of this Conveyance
Agreement shall control over the conflicting provisions of the
Master Transfer Agreement.
For purposes of this Conveyance Agreement, the
"related Advanta Pooling Agreement" with respect to the
Transferred Mortgage Loans is the Pooling and Servicing
Agreement dated as of March 1, 1997 by and among the Sponsor,
Advanta Mortgage Corp. USA and Bankers Trust Company of
California, N.A.
2
<PAGE>
Terms capitalized herein and not defined herein
shall have their respective meanings as set forth in the
Mortgage Transfer Agreement.
ADVANTA MORTGAGE CORP. USA
ADVANTA MORTGAGE CORP. MIDATLANTIC
ADVANTA MORTGAGE CORP. MIDATLANTIC II
ADVANTA MORTGAGE CORP. MIDWEST
ADVANTA MORTGAGE RECEIVABLES, INC.
ADVANTA MORTGAGE CORP. OF NEW JERSEY
ADVANTA MORTGAGE CORP. NORTHEAST
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA FINANCE CORP.
ADVANTA NATIONAL BANK USA,
as Affiliated Originators
By:_____________________________
Name: Mark T. Dunsheath
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By:_____________________________
Name: Mark T. Dunsheath
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A. as Trustee
By:_____________________________
Dated: March 31, 1997
3
<PAGE>
Exhibit 4.4
<PAGE>
March 26, 1997
Morgan Stanley & Co. Incorporated
1285 Broadway
New York, New York 10285
Re: Underwriting Agreement dated March 26, 1997 (the
"Underwriting Agreement") between Advanta
Mortgage Conduit Services, Inc. ("Advanta") and
Lehman Brothers Inc. (as Representative of the
Underwriters, the "Representative")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, Advanta has undertaken
certain financial obligations with respect to the indemnification of the
Underwriter with respect to the Registration Statement, the Prospectus and the
Prospectus Supplement described in the Designated Agreements. Any financial
obligations of Advanta under the Underwriting Agreement, whether or not
specifically enumerated in this paragraph, are hereinafter referred to as the
"Joint and Several Obligations"; provided, however, that "Joint and Several
Obligations" shall mean only the financial obligations of Advanta under the
Underwriting Agreement (including the payment of money damages for a breach of
any of Advanta's obligations under the Underwriting Agreement, whether financial
or otherwise) but shall not include any obligations not relating to the payment
of money.
As a condition of their respective executions of the
Underwriting Agreement, the Underwriter has required the undersigned, Advanta
Mortgage Holding Company ("AMHC"), the parent corporation of Advanta, to
acknowledge its joint-and-several liability with Advanta for the payment of the
Joint and Several Obligations under the Underwriting Agreement.
Now, therefore, the Underwriter, the Certificate Insurer and
AMHC do hereby agree that:
(i) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with
Advanta to the Underwriter for the payment of the
Joint and Several Obligations under the Underwriting
Agreement.
(ii) AMHC may honor its obligations hereunder either
by direct payment of any Joint and Several
<PAGE>
Obligations or by causing any Joint and Several
Obligations to be paid to the Underwriter by Advanta
or another affiliate of AMHC.
Capitalized terms used herein and not defined herein shall
have their respective meanings as set forth in the Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING COMPANY
By:________________________________
Mark T. Dunsheath
Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
as Representative of the Underwriters
By:_________________________________
[AMHC Guaranty - Underwriter]
2
