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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)
September 18, 1997
Advanta Mortgage Loan Trust 1997-3
(Exact name of registrant as specified in its charter)
New York 333-21265-02 pending
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
c/o Advanta Mortgage Conduit 92127
Services, Inc. (Zip Code)
Attention: Milton Riseman
16875 West Bernardo Drive
San Diego, California
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (619) 674-1800
(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 an issuance
of $2,200,000,000 in principal amount of Mortgage Loan Asset-Backed Certificates
on a delayed or continuous basis pursuant to Rule 215 under the Securities Act
of 1933, as amended (the "Act"), by the Registration Statement on Form S-3 (File
No. 333-21265) (the "Registration Statement"). Pursuant to the Registration
Statement, Advanta Mortgage Loan Trust 1997-2 (the "Registrant" or the "Trust")
issued approximately $900,000,000 in aggregate principal amount of its Mortgage
Loan Asset-Backed Certificates, Series 1997-3 (the "Certificates"), on September
18, 1997 (the "Closing Date"). 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 Statement.
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 September 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
fourteen classes, the Class A-1 Group I Certificates, the Class A-2 Group I
Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates, the Class A-5 Group I Certificates, the Class A-5 Group I
Certificates, the Class A-6 Group I Certificates, the Class A-7 Group I
Certificates, the Class A-IO Group I Certificates, the Class A-8 Group II
Certificates, the Class A-9 Group II Certificates (collectively, the "Class A
Certificates"), the Class A-1 Group I Certificates, the Class M-2 Group I
Certificates (together, the "Mezzanine Certificates"), the Class B-1 Group I
Certificates (the "Class B Certificates" and together with the Mezzanine
Certificates, the "Subordinate Certificates") and the Class R Certificates
(Residual Interest) (the "Class R Certificates"). The Class A Certificates and
the Subordinate Certificates, collectively, are the "Offered 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 Class A Certificates (other
than the Class A-8 and Class A-9 Certificates) and the Subordinate 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 Class A-8 and Class A-9 Certificates represent undivided ownership
interests in a group of adjustable 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.
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The Class A-1 Certificates have an aggregate principal amount
of $147,390,000. The Class A-2 Certificates have an aggregate principal amount
of $68,375,000. The Class A-3 Certificates have an aggregate principal amount of
$37,587,000. The Class A-4 Certificates have an aggregate principal amount of
$23,612,000. The Class A-5 Certificates have an aggregate principal amount of
$19,000,000. The Class A-6 Certificates have an aggregate principal amount of
$33,411,000. The Class A-7 Certificates have an aggregate principal amount of
$42,500,000. The Class A-8 Certificates have an aggregate principal amount of
$110,000,000. The Class A-9 Certificates have an aggregate principal amount of
$365,000,000. The Class M-1 Certificates have an aggregate principal amount of
$14,875,000. The Class M-2 Certificates have an aggregate principal amount of
$25,500,000. The Class B-1 Certificates have an aggregate principal amount of
$12,750,000. No principal payments are distributed with respect to the Class
A-IO Certificates. Interest will be distributed and calculated on the basis of a
notional principal balance ("Notional Principal Balance") of the Class A-7
Certificates.
As of the Closing Date, the Mortgage Loans had the
characteristics described in the Prospectus dated March 10, 1997 and the
Prospectus Supplement dated September 5, 1997 filed pursuant to Rule 424(b)(5)
of the Act with the Commission on September 16, 1997.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated September 5, 1997, among
Advanta Mortgage Conduit Services, Inc. and Lehman Brothers Inc., as
representative of the Underwriters (the "Representative").
4.1 Pooling and Servicing Agreement, dated as of September 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.
4.2 Master Loan Transfer Agreement, dated June 15, 1997, among
Advanta Mortgage Conduit Services, Inc., as sponsor, and Advanta National Bank,
Advanta Mortgage Corp. Midatlantic, Advanta Mortgage Corp. Midatlantic II,
Advanta Mortgage Corp. Midwest, Advanta Mortgage Corp. of New Jersey, Advanta
Mortgage Corp. Northeast, Advanta Finance Corp. (collectively, the "Affiliated
Originators") and Advanta Conduit Receivables Inc. and Bankers Trust Company of
California, N.A., as trustee.
4.3 Conveyance Agreement, dated September 18, 1997, among
Advanta Mortgage Conduit Services, Inc., the Affiliated Originators, Advanta
Finance Corp. and Bankers Trust Company of California, N.A..
4.4 Class A-8 and Class A-9 Certificate Insurance Policy,
dated September 18, 1997 and delivered by MBIA Insurance Corporation.
4.5 Advanta Mortgage Holding Company Guaranty.
10.1 Indemnification Agreement, dated September 5, 1997, among
MBIA Insurance Corporation and the Underwriters.
23.1 Consent of Coopers & Lybrand L.L.P. regarding financial
statements of MBIA Insurance Corporation and their report.
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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 1997-3
By: Advanta Mortgage Conduit Services, Inc., as
Sponsor
By:/s/ Mark T. Dunsheath
Name: Mark T. Dunsheath
Title: Vice President
Dated: September 26, 1997
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EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement, dated September 5, 1997,
among Advanta Mortgage Conduit Services, Inc. and
Lehman Brothers Inc., as representative of the
Underwriters (the "Representative").
4.1 Pooling and Servicing Agreement, dated as of
September 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.
4.2 Master Loan Transfer Agreement, dated June 15, 1997,
among Advanta Mortgage Conduit Services, Inc., as
sponsor, and Advanta National Bank, Advanta Mortgage
Corp. Midatlantic, Advanta Mortgage Corp. Midatlantic
II, Advanta Mortgage Corp. Midwest, Advanta Mortgage
Corp. of New Jersey, Advanta Mortgage Corp.
Northeast, Advanta Finance Corp. (collectively, the
"Affiliated Originators") and Advanta Conduit
Receivables Inc. and Bankers Trust Company of
California, N.A., as trustee.
4.3 Conveyance Agreement, dated September 18, 1997, among
Advanta Mortgage Conduit Services, Inc., the
Affiliated Originators, Advanta Finance Corp. and
Bankers Trust Company of California, N.A..
4.4 Class A-8 and Class A-9 Certificate Insurance Policy,
dated September 18, 1997 and delivered by MBIA
Insurance Corporation.
4.5 Advanta Mortgage Holding Company Guaranty
10.1 Indemnification Agreement, dated September 5, 1997,
among MBIA Insurance Corporation and the
Underwriters.
23.1 Consent of Coopers & Lybrand L.L.P. regarding
financial statements of MBIA Insurance Corporation
and their report.
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EXHIBIT 1.1
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ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Mortgage Loan Asset-Backed Certificates,
Series 1997-3
UNDERWRITING AGREEMENT
September 5, 1997
LEHMAN BROTHERS INC.
As Representative of the Underwriters
named in Schedule I
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Advanta Mortgage Conduit Services, Inc. (the "Company") has
authorized the issuance and sale of Mortgage Loan Asset-Backed Certificates,
Series 1997-3, (the "Certificates") consisting of (i) the Class A-1 Fixed Rate
Group Certificates, the Class A-2 Fixed Rate Group Certificates, the Class A-3
Fixed Rate Group Certificates, the Class A-4 Fixed Rate Group Certificates, the
Class A-5 Fixed Rate Group Certificates, the Class A-6 Fixed Rate Group
Certificates, the Class A-7 Fixed Rate Group Certificates, the Class A-IO Fixed
Rate Group Certificates, the Class A-8 Adjustable Rate Group Certificates and
the Class A-9 Adjustable Rate Group Certificates (collectively, the "Class A
Certificates"), (ii) the Class M-1 Certificates (the "Class M-1 Certificates"),
(iii) the Class M-2 Certificates (the "Class M-2 Certificates", and collectively
with the Class M-1 Certificates, the "Mezzanine Certificates"), (iv) the Class
B-1 Certificates (the "Class B Certificates" and collectively with the Mezzanine
Certificates, the "Subordinate Certificates") and (v) 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 1997-3 (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 the Closing Date
(as defined herein), an aggregate principal balance of approximately
$900,000,000. The certificates are to be issued under a pooling and servicing
agreement, to be dated as of September 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").
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On or prior to the date of issuance of the Certificates, the
Company will obtain a guaranty insurance policy (the "Policy") issued by MBIA
Insurance Corporation (the "Insurer") which will unconditionally and irrevocably
guarantee to the Trustee for the benefit of the holders of the Class A-8
Adjustable Rate Group Certificates and the Class A-9 Adjustable Rate Group
Certificates the amount by which the sum of the Adjustable Rate Group Interest
Distribution Amount and the related Subordination Deficit, if any, exceeds the
Group II Total Available Funds.
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.
The Company will also enter into an Indemnification Agreement
(the "Indemnification Agreement") dated as of September 1, 1997 among the
Underwriters, the Company and the Insurer, governing the liability of the
several parties with respect to the losses resulting from material misstatements
or omissions contained in the Prospectus Supplement.
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 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
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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 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
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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 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, the
Indemnification 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
Indemnification 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 Indemnification 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
Indemnification Agreement, the Purchase Agreement, this
Agreement or the Certificates.
G. This Agreement has been, and the Pooling and
Servicing Agreement, the Indemnification 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, the Indemnification
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
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is sought in a proceeding in equity or at law), and (z) with
respect to rights of indemnity under this Agreement, the
Indemnification Agreement and limitations of public policy
under applicable securities laws.
H. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, the
Indemnification 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 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, the
Indemnification 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
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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 Certificates, the
Underwriters will have good title to the Offered Certificates,
free of any Liens.
N. As of the opening of business on September 1, 1997
(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
Indemnification 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 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
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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 September 18, 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 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.
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<PAGE> 9
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 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 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
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<PAGE> 10
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
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
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<PAGE> 11
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 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, the Indemnification Agreement and the
Purchase Agreement.
2. This Agreement, the Certificates, the Pooling and
Servicing Agreement, the Indemnification 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, the
Indemnification 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, 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 Indemnification 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.
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<PAGE> 12
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, the Indemnification
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, the
Indemnification 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
Indemnification 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 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
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<PAGE> 13
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 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 received the
ratings listed on Schedule A hereto, 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.
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 Indemnification Agreement, the
Purchase Agreement and in all related agreements, as of the
date specified in such agreements, are true and correct, and
the Company
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<PAGE> 14
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, the
Indemnification 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 June 30, 1997, and no such amendment has been
authorized. No event has occurred since June 30, 1997, 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 June 30, 1997;
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, the Indemnification
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.
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<PAGE> 15
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:
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.
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
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<PAGE> 16
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. The Representative shall have received a favorable
opinion of in-house counsel to the Insurer, dated the Closing
Date and in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
1. The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State
of New York. The Insurer is validly licensed to do business in
New York and is authorized to issue the Policy and perform its
obligations under the Policy in accordance with the terms
thereof.
2. The execution and delivery by the Insurer of the
Policy, and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all
necessary corporate action on the part of the Insurer; the
Policy has been duly executed and is the valid and binding
obligation of the Insurer enforceable in accordance with its
terms except that the enforcement of the Policy may be limited
by laws relating to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of
equity.
3. The Insurer is authorized to deliver the
Indemnification Agreement, and such agreement has been duly
executed and delivered and constitute the legal, valid and
binding obligations of the Insurer enforceable in accordance
with its terms except that the enforcement of the
Indemnification Agreement may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors'
rights generally and by general principles of equity and by
public policy considerations relating to indemnification for
securities law violations.
4. No consent, approval, authorization or order of
any state or federal court or governmental agency or body is
required on the part of the Insurer, the lack of which would
adversely affect the validity or enforceability of the Policy;
to the extent required by applicable legal requirements that
would adversely affect validity or enforceability of the
Policy, the form of the Policy has been filed with, and
approved by, all governmental authorities having jurisdiction
over the Insurer in connection with the Policy.
5. The Policy is not required to be registered under
the Securities Act.
6. The information set forth in the Prospectus
Supplement under the captions "CREDIT ENHANCEMENT", "THE CLASS
A-8 AND CLASS A-9 INSURER" and "THE CLASS A-8 AND CLASS A-9
INSURANCE POLICY" insofar as such statements constitute a
description of the Policy, accurately summarizes the Policy.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Company, the
Trustee, the Insurer and public officials. Such opinion may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Insurer.
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<PAGE> 17
L. 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 Insurer's claims paying
ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the
1933 Act.
M. 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.
N. 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 December 31, 1996, of (A) the Company and
its subsidiaries or (B) the Insurer, 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.
O. The Representative shall have received from the
Insurer a certificate, signed by the president, a senior vice
president or a vice president of the Insurer, dated the
Closing Date, to the effect that the signer of such
certificate has carefully examined the Policy, the
Indemnification Agreement and the related documents and that,
to the best of his or her knowledge based on reasonable
investigation:
1. There are no actions, suits or proceedings pending
or threatened against or affecting the Insurer which, if
adversely determined, individually or in the aggregate, would
adversely affect the Insurer's performance under the Policy or
the Indemnification Agreement;
2. Each person who as an officer or representative of
the Insurer, signed or signs the Policy, the Indemnification
Agreement or any other document delivered pursuant hereto, on
the date thereof, or on the Closing Date, in connection with
the transactions described in 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;
3. The information contained in the Prospectus
Supplement under the captions "CREDIT ENHANCEMENT", "THE CLASS
A-8 and CLASS A-9 INSURER" and "THE CLASS A-8 and CLASS A-9
INSURANCE POLICY" is true and correct in all material respects
and does not omit to state a material fact with respect to the
description of the Policy or the ability of the Insurer to
meet its payment obligations under the Policy;
4. The tables regarding the Insurer's capitalization
set forth under the caption "THE CLASS A-8 and CLASS A-9
INSURER" presents fairly the capitalization of the Insurer as
of June 30, 1997;
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<PAGE> 18
5. 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 accorded the claims paying ability of the Insurer
by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the
1933 Act;
6. The audited balance sheet of the Insurer as of
December 31, 1996 and the related statement of income and
retained earnings for the fiscal year then ended, and the
accompanying footnotes, together with the related opinion of
an independent certificated public accountant, copies of which
are incorporated by reference in the Prospectus Supplement,
fairly present in all material respects the financial
condition of the Insurer as of such date and for the period
covered by such statements in accordance with generally
accepted accounting principles consistently applied; the
unaudited balance sheet of the Insurer as of June 30, 1997 and
the related statement of income and retained earnings for the
three-month period then ended, copies of which are included in
the Prospectus Supplement, fairly present in all material
respects the financial condition of the Insurer as of such
date and for the period covered by such statements in
accordance with generally accepted accounting principles
applied consistently with those principles applied in
preparing the December 31, 1996 audited statements.
7. to the best knowledge of such officer, since June
30, 1997, no material adverse change has occurred in the
financial position of the Insurer other than as set forth in
the Prospectus Supplement.
The officer of the Insurer certifying to items 5-7 shall be an
officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as appropriate,
and its bylaws, all of which are in full force and effect on the date of such
certificate.
P. 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 Servicing Agreement and the
Company shall have complied with all such requirements.
Q. 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.
R. 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.
17
<PAGE> 19
S. 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.
T. 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 and the
Insurer, 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).
U. 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.
V. 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 substance to
the Representative and counsel for the Underwriters.
W. 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.
X. The Certificates shall have received the ratings
set forth on Schedule A hereto.
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.
18
<PAGE> 20
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 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; (g) half of the costs and expenses of Dewey
Ballantine; and (h) 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
half of 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,
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 unless such untrue
statement or alleged untrue statement or omission or alleged omission was
derived from an inaccuracy or omission in the Company-Provided Information; 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
19
<PAGE> 21
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, 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 (excluding any Derived Information which is covered in paragraph (E)
below) 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
20
<PAGE> 22
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 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 a copy of
its Derived Information no later than one business day prior to the date such
information is required to be filed, pursuant to the No-Action Letters (as
defined herein), 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
21
<PAGE> 23
the Derived Information provided by such Underwriter, or arise out of or are
based upon the omission or alleged omission to state therein, when read in
conjunction with the Prospectus, 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
(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 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.
22
<PAGE> 24
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 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(W) 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 Lehman Brothers
Inc., as Representative of the
23
<PAGE> 25
Underwriters, Three World Financial Center, New York, New
York, 10285, Attention: Syndicate Registration Department
(Fax: 212-528-8822);
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
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 WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
24
<PAGE> 26
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.
25
<PAGE> 27
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:
LEHMAN BROTHERS INC.
as Representative of the Underwriters
By:
Name: Martin Harding
Title: Managing Director
[Underwriting Agreement]
<PAGE> 28
SCHEDULE A
<TABLE>
<CAPTION>
Class Required Ratings Initial Principal Coupon Purchase Price
S&P/Moody's Amount of Offered to Underwriters
Certificates Purchased disregarding
by Underwriters accrued interest
<S> <C> <C> <C> <C>
Class A-1 AAA/Aaa $147,390,000 * 100.00%
Class A-2 AAA/Aaa $68,375,000 6.61% 99.984375%
Class A-3 AAA/Aaa $37,587,000 6.69% 100%
Class A-4 AAA/Aaa $23,612,000 6.87% 99.968750%
Class A-5 AAA/Aaa $19,000,000 6.97% 99.953125%
Class A-6 AAA/Aaa $33,411,000 7.30% 99.984375%
Class A-7 AAA/Aaa $42,500,000 6.92% 99.953125%
Class A-IO AAAr/Aaa ** 5.00% NA
Class A-8 AAA/Aaa $110,000,000 * 100.00%
Class A-9 AAA/Aaa $365,000,000 * 100.00%
Class M-1 AA/Aa2 $14,875,000 7.20% 99.968750%
Class M-2 A/A2 $25,500,000 7.37% 99.968750%
Class B-1 BBB/Baa2 $12,750,000 7.72% 99.984375%
</TABLE>
*Floating
**Notional Balance
<PAGE> 29
EXHIBIT A
As of September __, 1997
Lehman Brothers Inc.
As Representative of the Underwriters
named in Schedule I
Re: Underwriting Agreement dated September ___, 1997 (the
"Underwriting Agreement") between Advanta Mortgage Conduit
Services, Inc. ("Advanta") and Lehman Brothers Inc. (the
"Representative") and Indemnification Agreement dated as of
September ___, 1997 (the "Indemnification Agreement") among
MBIA Insurance Corporation (the "Insurer"), Advanta and 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 and the Insurer 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
and the Insurer 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.
Now, therefore, the Underwriters, the Insurer 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.
<PAGE> 30
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
LEHMAN BROTHERS INC.
as Representative of the Underwriters
By:__________________________________
Name: Martin Harding
Title: Managing Director
MBIA INSURANCE CORPORATION
By:__________________________________
Name:
Title:
[AMHC Guarantee]
<PAGE> 31
SCHEDULE I
Lehman Brothers Inc.
Bear, Stearns & Co. Inc.
J.P. Morgan & Co.
Morgan Stanley & Co. Incorporated
Prudential Securities Incorporated
<PAGE> 1
EXHIBIT 4.1
<PAGE> 2
POOLING AND SERVICING AGREEMENT
Relating to
ADVANTA MORTGAGE LOAN TRUST
1997-3
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 September 1, 1997
<PAGE> 3
TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties ................................................................ 1
Recitals ............................................................... 1
ARTICLE I DEFINITIONS: RULES OF CONSTRUCTION ........................... 2
SECTION 1.1. DEFINITIONS ............................................ 2
Accepted Servicing Practices ..................................... 2
Account .......................................................... 2
Accrual Period ................................................... 2
Advanta Mortgage Files ........................................... 2
Advanta Servicing Fee ............................................ 2
Affiliated Originators ........................................... 2
Aggregate Certificate Principal Balance .......................... 3
Agreement ........................................................ 3
AMHC ............................................................. 3
Appraised Value .................................................. 3
Authorized Officer ............................................... 3
Balloon Loan ..................................................... 3
Bulk Acquisition Loan ............................................ 3
Business Day ..................................................... 3
Certificate ...................................................... 3
Certificate Account .............................................. 3
Certificate Insurance Policy ..................................... 3
Certificate Principal Balance .................................... 3
Class ............................................................ 4
Class A Certificate .............................................. 4
Class A Certificate Principal Balance ............................ 4
Class A Current Interest ......................................... 4
Class A Distribution Amount ...................................... 5
Class A Interest Carry Forward Amount ............................ 5
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 ....................................... 6
Class A-3 Distribution Amount .................................... 6
Class A-3 Interest Carry Forward Amount .......................... 7
<PAGE> 4
Page
Class A-3 Pass-Through Rate ........................................... 7
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 ......................................... 7
Class A-4 Interest Carry Forward Amount ............................... 7
Class A-4 Pass-Through Rate ........................................... 7
Class A-5 Certificate ................................................. 7
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 ............................... 8
Class A-5 Pass-Through Rate ........................................... 8
Class A-3 Certificate ................................................. 8
Class A-3 Certificate Principal Balance ............................... 8
Class A-3 Certificate Termination Date ................................ 8
Class A-3 Current Interest ............................................ 8
Class A-3 Distribution Amount ......................................... 8
Class A-3 Interest Carry Forward Amount ............................... 9
Class A-3 Certificate ................................................. 9
Class A-3 Certificate Principal Balance ............................... 9
Class A-3 Certificate Termination Date ................................ 9
Class A-3 Current Interest ............................................ 9
Class A-3 Distribution Amount ......................................... 9
Class A-3 Interest Carry Forward Amount ............................... 9
Class A-5 Lockout Distribution Amount ................................. 9
Class A-5 Lockout Percentage .......................................... 10
Class A-5 Lockout Pro Rata Distribution Amount ........................ 10
Class A-6 Certificate ................................................. 10
Class A-6 Certificate Principal Balance ............................... 10
Class A-6 Certificate Termination Date ................................ 10
Class A-6 Current Interest ............................................ 10
Class A-6 Distribution Amount ......................................... 10
Class A-6 Distribution Amount ......................................... 10
Full Interest Distribution Amount ..................................... 10
Class A-6 Interest Carry Forward Amount ............................... 11
Class A-8 Interest Distribution Amount ................................ 11
Class A-8 Interest Shortfall .......................................... 11
Class A-6 Pass-Through Rate ........................................... 11
Class A-8 Principal Distribution Amount ............................... 11
Class A-8 and A-9 Applied Realizd Loss Amount ......................... 11
Class A-8 and Class A-9 Certificate Insurer ........................... 11
Class A-8 and Class A-9 Certificate Insurer ........................... 11
Class A-6 Certificate ................................................. 12
Class A-6 Certificate Principal Balance ............................... 12
Class A-6 Certificate Termination Date ................................ 12
Class A-6 Current Interest ............................................ 12
Class A-6 Distribution Amount ......................................... 12
Formula Rate .......................................................... 12
Class A-6 Distribution Amount ......................................... 12
Class A-6 Interest Carry Forward Amount ............................... 12
Class A-9 Interest Distribution Amount ................................ 12
ii
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Page
Class A-9 Interest Shortfall .......................................... 12
Class A-6 Pass-Through Rate ........................................... 12
Class A-9 Principal Distribution Amount ............................... 13
Class A-IO Certificate ................................................ 13
Class A-IO Notional Certificate Principal Balance ..................... 13
Class A-IO Current Interest ........................................... 13
Class A-IO Distribution Amount ........................................ 13
Class A-IO Interest Carry Forward Amount .............................. 13
Class A-IO Pass-Through Rate .......................................... 13
Class B-1 Applied Realized Loss Amount ................................ 13
Class B-1 Certificate ................................................. 13
Class B-1 Certificate Principal Balance ............................... 13
Class B-1 Certificate Termination Date ................................ 14
Class B-1 Current Interest ............................................ 14
Class B-1 Distribution Amount ......................................... 14
Class B-1 Interest Carry Forward Amount ............................... 14
Class B-1 Pass-Through Rate ........................................... 14
Class B-1 Principal Distribution Amount ............................... 14
Class B-1 Realized Loss Amortization Amount ........................... 14
Class M-1 Applied Realized Loss Amount ................................ 14
Class M-1 Certificate ................................................. 15
Class M-1 Certificate Principal Balance ............................... 15
Class M-1 Certificate Termination Date ................................ 15
Class M-1 Current Interest ............................................ 15
Class M-1 Distribution Amount ......................................... 15
Class M-1 Interest Carry Forward Amount ............................... 15
Class M-1 Pass-Through Rate ........................................... 15
Class M-1 Principal Distribution Amount ............................... 15
Class M-1 Realized Loss Amortization Amount ........................... 15
Class M-2 Applied Realized Loss Amount ................................ 15
Class M-2 Certificate ................................................. 16
Class M-2 Certificate Principal Balance ............................... 16
Class M-2 Certificate Termination Date ................................ 16
Class M-2 Current Interest ............................................ 16
Class M-2 Distribution Amount ......................................... 16
Class M-2 Interest Carry Forward Amount ............................... 16
Class M-2 Pass-Through Rate ........................................... 16
Class M-2 Principal Distribution Amount ............................... 16
Class M-2 Realized Loss Amortization Amount ........................... 17
Class R Certificate ................................................... 17
Clean-Up Call Date .................................................... 17
Code .................................................................. 17
Combined Loan-to-Value Ratio .......................................... 17
Commitment ............................................................ 17
Compensating Interest ................................................. 17
Conduit Acquisition Trust ............................................. 17
Conduit Mortgage Files ................................................ 17
Control Party ......................................................... 17
Coupon Rate ........................................................... 17
Current Interest ...................................................... 17
Cut-Off Date .......................................................... 18
Date-of-Payment Loan .................................................. 18
Delinquency Advance ................................................... 18
Delinquent ............................................................ 18
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Page
Delivery Order ........................................................ 18
Depository ............................................................ 18
Designated Depository Institution ..................................... 18
Designated Residual Owner ............................................. 19
Determination Date .................................................... 19
Direct Participant" or "DTC Participant ............................... 19
Disqualified Organization ............................................. 19
Document Delivery Requirements ........................................ 19
Eligible Investments .................................................. 19
Event of Default ...................................................... 19
FDIC .................................................................. 19
File .................................................................. 19
Final Determination ................................................... 19
First Mortgage Loan ................................................... 19
FNMA .................................................................. 19
Formula Interest Shortfall ............................................ 19
Freddie Mac ........................................................... 20
Gross Margin .......................................................... 20
Group ................................................................. 20
Group I ............................................................... 20
Group I Applied Realized Loss Amount .................................. 20
Group I Available Funds Cap Rate ...................................... 20
Group I Certificates .................................................. 20
Group I Class A Principal Distribution Amount ......................... 20
Group I Class A-1 Available Funds Cap Rate ............................ 21
Group I Cumulative Realized Losses .................................... 21
Group I Extra Principal Distribution Amount ........................... 21
Group I Interest Amount Available ..................................... 21
Group I Interest Remittance Amount .................................... 21
Group I Monthly Excess Cashflow Amount ................................ 21
Group I Monthly Excess Interest Amount ................................ 21
Group I Monthly Remittance Amount ..................................... 21
Group I Net Weighted Average Coupon Rate .............................. 21
Group I Overcollateralization Amount .................................. 22
Group I Overcollateralization Deficiency .............................. 22
Group I Overcollateralization Release Amount .......................... 22
Group I Principal Distribution Amount ................................. 22
Group I Principal Remittance Amount ................................... 22
Group I Senior Enhancement Percentage ................................. 22
Group I Senior Specified Enhancement Percentage ....................... 23
Group I Stepdown Date ................................................. 23
Group I Targeted Overcollateralization Amount ......................... 23
Group I Trigger Event ................................................. 23
Group II .............................................................. 23
Group II Applied Realized Loss Amount ................................. 23
Group II Available Funds .............................................. 23
Group II Available Funds Cap Rate ..................................... 23
Group II Certificate Principal Balance ................................ 23
Group II Certificates ................................................. 24
Group II Cumulative Realized Losses ................................... 24
Group II Deficiency Amount ............................................ 24
Group II Extra Principal Distribution Amount .......................... 24
Group II Insured Distribution Amount .................................. 24
Group II Insured Payment .............................................. 24
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Page
Group II Interest Amount Available .................................... 24
Group II Interest Remittance Amount ................................... 24
Group II Monthly Excess Cashflow Amount ............................... 24
Group II Monthly Excess Interest Amount ............................... 24
Group II Monthly Remittance Amount .................................... 24
Group II Net Weighted Average Coupon Rate ............................. 25
Group II Overcollateralization Amount ................................. 25
Group II Overcollateralization Deficiency ............................. 25
Group II Overcollateralization Release Amount ......................... 25
Group II Preference Amount ............................................ 25
Group II Principal Distribution Amount ................................ 25
Group II Principal Remittance Amount .................................. 25
Group II Reimbursement Amount ......................................... 26
Group II Stepdown Date ................................................ 26
Group II Targeted Overcollateralization Amount ........................ 26
Group II Total Available Funds ........................................ 26
Indemnification Agreement ............................................. 26
Index ................................................................. 26
Indirect Participant .................................................. 26
Insurance Agreement ................................................... 26
Insurance Policy ...................................................... 26
Interest Advance ...................................................... 26
Interest Determination Date ........................................... 26
Interest Rate Adjustment Date ......................................... 26
IO Period ............................................................. 27
Late Payment Rate ..................................................... 27
LIBOR ................................................................. 27
Liquidated Loan ....................................................... 27
Liquidation Expenses .................................................. 27
Liquidation Proceeds .................................................. 27
Loan Balance .......................................................... 28
Loan Purchase Price ................................................... 28
London Business Day ................................................... 28
Lower-Tier A-1 Monthly Interest ....................................... 28
Lower-Tier A-1 Pass-Through Rate ...................................... 28
Lower-Tier A-2 Monthly Interest ....................................... 28
Lower-Tier A-2 Pass-Through Rate ...................................... 28
Lower-Tier A-3 Monthly Interest ....................................... 28
Lower-Tier A-3 Pass-Through Rate ...................................... 28
Lower-Tier A-4 Monthly Interest ....................................... 29
Lower-Tier A-4 Pass-Through Rate ...................................... 29
Lower-Tier A-5 Monthly Interest ....................................... 29
Lower-Tier A-5/A-7IO Pass-Through Rate ................................ 29
Lower-Tier A-6 Monthly Interest ....................................... 29
Lower-Tier A-6 Pass-Through Rate ...................................... 29
Lower-Tier A-7IO Monthly Interest ..................................... 29
Lower-Tier A-7/A-IO Pass-Through Rate ................................. 29
Lower-Tier A-8 Monthly Interest ....................................... 29
Lower-Tier A-8 Pass-Through Rate ...................................... 29
Lower-Tier A-9 Monthly Interest ....................................... 29
Lower-Tier A-9 Pass-Through Rate ...................................... 29
Lower-Tier A-IO Monthly Interest ...................................... 30
Lower-Tier B-1 Monthly Interest ....................................... 30
Lower-Tier B-1 Pass-Through Rate ...................................... 30
v
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Page
Lower-Tier Balance .................................................... 30
Lower-Tier Group I Distribution Amount ................................ 30
Lower-Tier Group II Distribution Amount ............................... 30
Lower-Tier Interest A-1 ............................................... 30
Lower-Tier Interest A-2 ............................................... 30
Lower-Tier Interest A-3 ............................................... 30
Lower-Tier Interest A-4 ............................................... 31
Lower-Tier Interest A-5 ............................................... 31
Lower-Tier Interest A-6 ............................................... 31
Lower-Tier Interest A-7 ............................................... 31
Lower-Tier Interest A-8 ............................................... 31
Lower-Tier Interest A-9 ............................................... 31
Lower-Tier Interest B-1 ............................................... 31
Lower-Tier Interest M-1 ............................................... 31
Lower-Tier Interest M-2 ............................................... 31
Lower-Tier Interest A-1 Termination Date .............................. 31
Lower-Tier Interest A-2 Termination Date .............................. 31
Lower-Tier Interest A-3 Termination Date .............................. 31
Lower-Tier Interest A-4 Termination Date .............................. 31
Lower-Tier Interest A-5 Termination Date .............................. 31
Lower-Tier Interest A-6 Termination Date .............................. 31
Lower-Tier Interest A-8 Termination Date .............................. 32
Lower-Tier Interest A-9 Termination Date .............................. 32
Lower-Tier Interest B-1 Termination Date .............................. 32
Lower-Tier Interest M-1 Termination Date .............................. 32
Lower-Tier Interest M-2 Termination Date .............................. 32
Lower-Tier M-1 Monthly Interest ....................................... 32
Lower-Tier M-1 Pass-Through Rate ...................................... 32
Lower-Tier M-2 Monthly Interest ....................................... 32
Lower-Tier M-2 Pass-Through Rate ...................................... 32
Lower-Tier Pass-Through Rate .......................................... 32
Lower-Tier REMIC ...................................................... 32
Lower-Tier REMIC Residual Class ....................................... 32
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
Mortgagor ............................................................. 34
Net Available Distribution Amount ..................................... 34
Net Liquidation Proceeds .............................................. 34
Nonrecoverable Advances ............................................... 34
Note .................................................................. 34
Offered Certificates .................................................. 34
Officer's Certificate ................................................. 34
Operative Documents ................................................... 34
Original Pool Balance ................................................. 34
Original Principal Amount ............................................. 34
Originator ............................................................ 34
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Page
Outstanding ........................................................... 35
Overcollateralization Release Amount .................................. 35
Owner ................................................................. 35
Pass-Through Rate ..................................................... 35
Payment Date .......................................................... 35
Percentage Interest ................................................... 35
Person ................................................................ 35
Pool Cumulative Realized Losses ....................................... 35
Pool Delinquency Rate ................................................. 35
Pool Principal Balance ................................................ 36
Pool Rolling Six Month Delinquency Rate ............................... 36
Premium Amount ........................................................ 36
Premium Percentage .................................................... 36
Prepaid Installment ................................................... 36
Prepayment ............................................................ 36
Preservation Expenses ................................................. 36
Principal and Interest Account ........................................ 36
Principal Remittance Amount ........................................... 36
Prohibited Transaction ................................................ 36
Property .............................................................. 36
Purchase Option Period ................................................ 36
Qualified Liquidation ................................................. 37
Qualified Mortgage .................................................... 37
Qualified Replacement Mortgage ........................................ 37
Realized Loss ......................................................... 37
Record Date ........................................................... 37
Reference Banks ....................................................... 37
Register .............................................................. 38
Registrar ............................................................. 38
Registration Statement ................................................ 38
REMIC ................................................................. 38
REMIC Provisions ...................................................... 38
REMIC Trust ........................................................... 38
Remittance Date ....................................................... 38
Remittance Period ..................................................... 38
REO Property .......................................................... 38
Replacement Cut-Off Date .............................................. 38
Representation Letter ................................................. 38
Representative ........................................................ 38
Schedules of Mortgage Loans ........................................... 39
Second Mortgage Loan .................................................. 39
Securities Act ........................................................ 39
Senior Lien ........................................................... 39
Servicer Affiliate .................................................... 39
Servicing Advance ..................................................... 39
Servicing Fee ......................................................... 39
Sponsor ............................................................... 39
Standard & Poor's ..................................................... 39
Startup Day ........................................................... 39
Subordinate Certificates .............................................. 39
Substitution Amount ................................................... 39
Sub-Servicer .......................................................... 40
Sub-Servicing Agreement ............................................... 40
Supplemental Interest Payment Account ................................. 40
vii
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Page
Supplemental Interest Payment Amount Available ................... 40
Supplemental Interest Trust ...................................... 40
Tax Matters Person ............................................... 40
Tax Matters Person Residual Interest ............................. 40
Termination Notice ............................................... 40
Termination Price ................................................ 40
Third Mortgage Loan .............................................. 40
Transaction Documents ............................................ 40
Trust ............................................................ 40
Trust Estate ..................................................... 40
Trustee .......................................................... 41
Trustee's Fees ................................................... 41
Unaffiliated Originator Loan ..................................... 41
Unaffiliated Originators ......................................... 41
Uncertificated Interest .......................................... 41
Underwriters...................................................... 41
Unpaid Realized Loss Amount ...................................... 41
Upper-Tier Group I Distribution Account .......................... 41
Upper-Tier Group II Distribution Account ......................... 41
Upper-Tier REMIC ................................................. 41
Section 1.2. Use of Words and Phrases ............................... 41
Section 1.3. Captions; Table of Contents ............................ 42
Section 1.4. Opinions ............................................... 42
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST ................. 42
Section 2.1. Establishment of the Trust.............................. 42
Section 2.2. Office ................................................. 42
Section 2.3. Purposes and Powers .................................... 42
Section 2.4. Appointment of the Trustee; Declaration of Trust ....... 42
Section 2.5. Expenses of the Trust .................................. 43
Section 2.6. Ownership of the Trust ................................. 43
Section 2.7. Situs of the Trust ..................................... 43
Section 2.8. Miscellaneous REMIC Provisions ......................... 43
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND
THE MASTER SERVICER; COVENANT OF SPONSOR TO CONVEY MORTGAGE LOANS ...... 46
Section 3.1. Representations and Warranties of the Sponsor .......... 46
Section 3.2. Representations and Warranties of the Master Servicer . 48
Section 3.3. Representations and Warranties of the Sponsor with
Respect to the Mortgage Loans .......................... 50
Section 3.4. Covenants of Sponsor to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations .... 51
Section 3.5. Conveyance of the Mortgage Loans ....................... 53
Section 3.6. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee ............... 55
Section 3.7. Cooperation Procedures ................................. 56
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES ........................... 56
Section 4.1. Issuance of Certificates ............................... 56
Section 4.2. Sale of Certificates ................................... 56
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS ....................... 57
Section 5.1. Terms .................................................. 57
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Page
Section 5.2. Forms ................................................... 57
Section 5.3. Execution, Authentication and Delivery .................. 58
Section 5.4. Registration and Transfer of Certificates ............... 58
Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates ....... 60
Section 5.6. Persons Deemed Owners ................................... 60
Section 5.7. Cancellation ............................................ 61
Section 5.8. Limitation on Transfer of Ownership Rights .............. 61
Section 5.9. Assignment of Rights .................................... 62
ARTICLE VI COVENANTS .................................................... 62
Section 6.1. Distributions ........................................... 62
Section 6.2. Money for Distributions to be Held in Trust; Withholding 62
Section 6.3. Protection of Trust Estate .............................. 63
Section 6.4. Performance of Obligations .............................. 64
Section 6.5. Negative Covenants ...................................... 64
Section 6.6. No Other Powers ......................................... 64
Section 6.7. Limitation of Suits ..................................... 64
Section 6.8. Unconditional Rights of Owners to Receive Distributions . 65
Section 6.9. Rights and Remedies Cumulative .......................... 65
Section 6.10. Delay or Omission Not Waiver ........................... 66
Section 6.11. Control by Owners ...................................... 66
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES ........................ 66
Section 7.1. Collection of Money ..................................... 66
Section 7.2. Establishment of Certificate Account .................... 67
Section 7.3. The Certificate Insurance Policy ........................ 67
Section 7.4. Reserved ................................................ 68
Section 7.5. Flow of Funds ........................................... 68
Section 7.6. Investment of Accounts .................................. 74
Section 7.7. Eligible Investments .................................... 75
Section 7.8. Reports by Trustee ...................................... 76
Section 7.9. Additional Reports by Trustee ........................... 80
Section 7.10. Supplemental Interest Payment Account, Supplement
Interest Payments and Class R Distribution Account ..... 80
ARTICLE VIII SERVICING AND ADMINISTRATION OF MORTGAGE LOANS ............. 81
Section 8.1. Master Servicer and Sub-Servicers ....................... 81
Section 8.2. Collection of Certain Mortgage Loan Payments ............ 83
Section 8.3. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers ....................................... 84
Section 8.4. Successor Sub-Servicers ................................. 84
Section 8.5. Liability of Master Servicer ............................ 84
Section 8.6. No Contractual Relationship Between Sub-Servicer and
Trustee or the Owners ................................... 84
Section 8.7. Assumption or Termination of Sub-Servicing Agreement by
Trustee ................................................. 84
Section 8.8. Principal and Interest Account .......................... 85
Section 8.9. Delinquency Advances, Compensating Interest and
Servicing Advances ...................................... 86
Section 8.10. Purchase of Mortgage Loans ............................. 87
Section 8.11. Maintenance of Insurance ............................... 87
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements ............................................. 88
Section 8.13. Realization Upon Defaulted Mortgage Loans .............. 89
Section 8.14. Trustee to Cooperate; Release of Files ................. 91
Section 8.15. Servicing Compensation ................................. 92
Section 8.16. Annual Statement as to Compliance ...................... 92
Section 8.17. Annual Independent Certified Public Accountants' Reports 92
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Page
Section 8.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans ............................. 93
Section 8.19. Assignment of Agreement .................................. 93
Section 8.20. Removal of Master Servicer; Resignation of Master Servicer 93
Section 8.21. Inspections by the Class A-8 and Class A-9 Certificate
Insurer and the Trustee; Errors and Omissions Insurance .. 97
Section 8.22. Merger, Conversion, Consolidation or Succession to
Business of Master Servicer .............................. 97
Section 8.23. Notices of Material Events ............................... 98
ARTICLE IX TERMINATION OF TRUST ........................................... 98
Section 9.1. Termination of Trust ...................................... 98
Section 9.2. Termination Upon Option of Master Servicer ................ 99
Section 9.3. Termination Upon Loss of REMIC Status ..................... 100
Section 9.4. Disposition of Proceeds ................................... 101
Section 9.5. Netting of Amounts ........................................ 101
ARTICLE X THE TRUSTEE ..................................................... 101
Section 10.1. Certain Duties and Responsibilities ...................... 101
Section 10.2. Removal of Trustee for Cause ............................. 103
Section 10.3. Certain Rights of the Trustee ............................ 104
Section 10.4. Not Responsible for Recitals or Issuance of Certificates . 105
Section 10.5. May Hold Certificates .................................... 105
Section 10.6. Money Held in Trust ...................................... 105
Section 10.7. No Lien for Fees ......................................... 105
Section 10.8. Corporate Trustee Required; Eligibility .................. 105
Section 10.9. Resignation and Removal; Appointment of Successor ........ 105
Section 10.10. Acceptance of Appointment by Successor Trustee .......... 107
Section 10.11. Merger, Conversion, Consolidation or Succession to
Business of the Trustee ................................. 107
Section 10.12. Reporting; Withholding .................................. 108
Section 10.13. Liability of the Trustee ................................ 108
Section 10.14. Appointment of Co-Trustee or Separate Trustee ........... 108
ARTICLE XI MISCELLANEOUS .................................................. 110
Section 11.1. Compliance Certificates and Opinions ..................... 110
Section 11.2. Form of Documents Delivered to the Trustee ............... 110
Section 11.3. Acts of Owners ........................................... 111
Section 11.4. Notices, etc. to Trustee ................................. 111
Section 11.5. Notices and Reports to Owners; Waiver of Notices ......... 111
Section 11.6. Rules by Trustee and Sponsor ............................. 112
Section 11.7. Successors and Assigns ................................... 112
Section 11.8. Severability ............................................. 112
Section 11.9. Benefits of Agreement .................................... 112
Section 11.10. Legal Holidays .......................................... 112
Section 11.11. Governing Law ........................................... 113
Section 11.12. Counterparts ............................................ 113
Section 11.13. Usury ................................................... 113
Section 11.14. Amendment ............................................... 113
Section 11.15. REMIC Status; Taxes ..................................... 114
Section 11.16. Additional Limitation on Action and Imposition of Tax ... 115
Section 11.17. Appointment of Tax Matters Person ....................... 116
Section 11.18. The Class A-8 and Class A-9 Certificate Insurer ......... 116
Section 11.19. Maintenance of Records .................................. 117
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Page
Section 11.20. Notices ................................................. 117
SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Certificates
EXHIBIT B -- Contents of Mortgage Loan File
EXHIBIT C -- Form of Certificate Re: Mortgage Loans Prepaid in full After
the Cut-Off Date
EXHIBIT D -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT E -- Form of Certification
EXHIBIT F -- Form of Delivery Order
EXHIBIT G -- Form of Class R Tax Matters Transfer Certificate
EXHIBIT H -- Power of Attorney
EXHIBIT I -- Form of Monthly Report
EXHIBIT J -- Form of Master Servicer's Trust Receipt
xi
<PAGE> 14
POOLING AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE
LOAN TRUST 1997-3, dated as of September 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 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;
WHEREAS, Bankers Trust Company of California, N.A. is willing
to serve in the capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Class A-8 and Class
A-9 Certificate Insurer") is intended to be a third party beneficiary of this
Agreement and is hereby recognized by the parties hereto to be a third-party
beneficiary of this Agreement.
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:
<PAGE> 15
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, 7.10 or 8.8 hereof each of which shall be established at a Designated
Depository Institution.
"Accrual Period": With respect to the Group I Certificates
except the Class A-1 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 September 18, 1997 through and including September 30, 1997. A "calendar
month" shall be deemed to be 30 days. With respect to the Group II Certificates
and the Class A-1 Certificates and any Payment Date, the period commencing on
the immediately preceding Payment Date (or the Startup Day 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 except the Class A-1
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
and the Class A-1 Certificates will be made on the basis of the actual number of
days elapsed in the related Accrual Period 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.
"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, a national banking association,
Advanta Finance Corp., a Nevada corporation.
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<PAGE> 16
"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 (other than the Class A-IO 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.
"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 Insurance Policy": The certificate guaranty
insurance policy dated September 18, 1997 issued by the Class A-8 and Class A-9
Certificate Insurer to the Trustee for the benefit of the Owners of the Class
A-8 Certificates and the Owners of the Class A-9 Certificates.
"Certificate Principal Balance": As of the Startup Day as to
each of the following Classes of Certificates, the Certificate Principal
Balances thereof, as follows:
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<PAGE> 17
<TABLE>
<S> <C>
Class A-1 Certificates = $ 147,390,000
Class A-2 Certificates = $ 68,375,000
Class A-3 Certificates = $ 37,587,000
Class A-4 Certificates = $ 23,612,000
Class A-5 Certificates = $ 19,000,000
Class A-6 Certificates = $ 33,411,000
Class A-7 Certificates = $ 42,500,000
Class A-8 Certificates = $ 110,000,000
Class A-9 Certificates = $ 365,000,000
Class M-1 Certificates = $ 14,875,000
Class M-2 Certificates = $ 25,500,000
Class B-1 Certificates = $ 12,750,000
</TABLE>
As of any Payment Date with respect to the Class A-1, A-2, A-3, A-4, A-5, A-6,
A-7, A-8, A-9, M-1, M-2 and B-1 Certificates, the Class A-1 Certificate
Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3
Certificate Principal Balance, the Class A-4 Certificate Principal Balance, the
Class A-5 Certificate Principal Balance, the Class A-6 Certificate Principal
Balance, the Class A-7 Certificate Principal Balance, the Class A-8 Certificate
Principal Balance, the Class A-9 Certificate Principal Balance, the Class M-1
Certificate Principal Balance, the Class M-2 Certificate Principal Balance, and
the Class B-1 Certificate Principal Balance, respectively, as of such Payment
Date. The Class A-IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"Civil Relief Act": The Soldiers and Sailors' Civil Relief Act
of 1940, as amended from time to time.
"Civil Relief Act Shortfalls": Interest shortfalls resulting
from the application of the Civil Relief Act.
"Class": Any Class of the Class A Certificates, either Class
of the Mezzanine Certificates, the Class B 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, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates or Class A-IO 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 Current Interest": With respect to any Payment Date,
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 A-7 Current Interest, the
Class A-8 Current Interest, the Class A-9 Current Interest or the Class A-IO
Current Interest.
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<PAGE> 18
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount, the Class A-8
Distribution Amount, the Class A-9 Distribution Amount, and the Class A-IO
Distribution Amount.
"Class A Interest Carry Forward Amount": With respect to any Payment
Date, the Class A-1 Interest Carry Forward Amount, the Class A-2 Interest Carry
Forward Amount, the Class A-3 Interest Carry Forward Amount, the Class A-4
Interest Carry Forward Amount, the Class A-5 Interest Carry Forward Amount, the
Class A-6 Interest Carry Forward Amount, the Class A-7 Interest Carry Forward
Amount, the Class A-8 Interest Carry Forward Amount, the Class A-9 Interest
Carry Forward Amount or the Class A-IO Interest Carry Forward 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(d) 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, if any 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": For any Payment Date, the lesser of
(i) LIBOR plus 0.09% per annum and (ii) the Group I Class A-1 Available Funds
Cap Rate for such Payment Date.
"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,
5
<PAGE> 19
authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein.
"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(d) 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, if any, 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": With respect to any Payment Date,
6.61% 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.
"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, if any,
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<PAGE> 20
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,
6.69% per annum.
"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(d) 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 Interest, (y) the Class A-4 Interest Carry
Forward Amount, if any, 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,
6.87% per annum.
"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,
7
<PAGE> 21
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 (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry
Forward Amount, if any, 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.
"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 Pass-Through Rate": With respect to any Payment Date,
6.97% per annum.
"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 amounts actually distributed with respect to the
Class A-6 Certificates pursuant to Section 7.5(d) 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, if any,
8
<PAGE> 22
and (z) the Group I 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": With respect to any Payment Date, the
lesser of (x) 7.30% per annum and (y) the Group I Available Funds Cap Rate for
such Payment Date.
"Class A-7 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-7 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 A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed with respect to the
Class A-7 Certificates pursuant to Section 7.5(d) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A-7 Certificate Termination Date": The Payment Date on which
the Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate.
"Class A-7 Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class A-7 Current Interest, (x) the Class A-7 Interest Carry
Forward Amount, if any, (y) the Class A-7 Lockout Distribution Amount payable to
the Owners of the Class A-7 Certificates pursuant to Section 7.5(d), and (z) the
Group I Class A Principal Distribution Amount payable to the Owners of Class A-7
Certificates pursuant to Section 7.5 hereof.
"Class A-7 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-7 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-7 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-7 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"Class A-7 Lockout Distribution Amount": With respect to any Payment
Date, the product of (i) the applicable Class A-7 Lockout Percentage for such
Payment Date and (ii) the Class A-7 Lockout Pro Rata Distribution Amount for
such Payment Date; provided, that in no event shall the Class A-7 Lockout
Distribution Amount exceed the Group I Class A Principal Distribution Amount for
the related Payment Date.
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<PAGE> 23
"Class A-7 Lockout Percentage": For each Payment Date, the
percentage set forth below:
CLASS A-7
PAYMENT DATES LOCKOUT PERCENTAGE
- --------------------------- ------------------
October 1997-September 2000 0%
October 2000-September 2002 45%
October 2002-September 2003 80%
October 2003-September 2004 100%
October 2004 and thereafter 300%
"Class A-7 Lockout Pro Rata Distribution Amount": With respect to
any Payment Date, an amount equal to the product of (x) a fraction, the
numerator of which is the Class A-7 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 Group I Class A Principal Distribution Amount for
such Payment Date.
"Class A-7 Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) 6.92% per annum and (y) the Group I Available Funds Cap Rate for
such Payment Date.
"Class A-8 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-8 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 A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed with respect to the
Class A-8 Certificates pursuant to Section 7.5(e) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A-8 Certificate Termination Date": The Payment Date on which
the Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-8 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-8 Pass-Through Rate.
"Class A-8 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-8 Current Interest, (y) the Class A-8 Interest Carry
Forward Amount, if any, and (z) the Group II Class A Principal Distribution
Amount payable to the Owners of Class A-8 Certificates pursuant to Section 7.5
hereof.
"Class A-8 Formula Rate": With respect to any Payment Date and the
Class A-8 Certificates, the rate determined in accordance with clause (i) of the
definition of the "Class A-8 Pass-Through Rate."
"Class A-8 Full Interest Distribution Amount": With respect to the
Class A-8 Certificates and any Payment Date, the interest due with respect to
the Class A-8 Certificates, calculated using the Class A-8 Formula Rate with
respect thereto.
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<PAGE> 24
"Class A-8 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-8 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-8 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-8 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
"Class A-8 Interest Distribution Amount": With respect to the Class
A-8 Certificates for any Payment Date, the sum of (x) the Class A-8 Current
Interest and (y) the Class A-8 Interest Carry Forward Amount.
"Class A-8 Interest Shortfall": As defined in Section 7.10(b)
hereof.
"Class A-8 Pass-Through Rate": For any Payment Date, the lesser of
(i) LIBOR plus 0.13% per annum and (ii) the Group II Available Funds Cap Rate
for such Payment Date.
"Class A-8 Principal Distribution Amount": With respect to the Class
A-8 Certificates (a) for any Payment Date prior to the date on which the Class
A-8 Certificate Principal Balance has been reduced to zero, an amount equal to
the product of (x) 34.305977% and (y) the Group II Principal Distribution Amount
and (b) thereafter, zero.
"Class A-8 and A-9 Applied Realized Loss Amount": The Group II
Applied Realized Loss Amount.
"Class A-8 and Class A-9 Certificate Insurer" means MBIA Insurance
Corporation, a New York stock insurance company.
"Class A-8 and Class A-9 Certificate Insurer Default" means, any one
of the following events shall have occurred and be continuing:
(a) The Class A-8 and Class A-9 Certificate Insurer shall have
failed to make a payment required under the Certificate Insurance Policy;
(b) The Class A-8 and Class A-9 Certificate Insurer shall have (i)
filed a petition or commenced any case or proceeding under any provision or
chapter of the United States Bankruptcy Code or any other similar Federal or
state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its creditors,
or (iii) had an order for relief entered against it under the United States
Bankruptcy Code or any other similar Federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance, or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Class A-8 and Class A-9 Certificate Insurer or for all
or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Class A-8 and Class
A-9 Certificate Insurer (or the taking of possession of all or any material
portion of the property of the Class A-8 and Class A-9 Certificate Insurer).
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<PAGE> 25
"Class A-9 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-9 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 A-9 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-9 Certificates less any amounts actually distributed with respect to the
Class A-9 Certificates pursuant to Section 7.5(e) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A-9 Certificate Termination Date": The Payment Date on which
the Class A-9 Certificate Principal Balance is reduced to zero.
"Class A-9 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-9 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-9 Pass-Through Rate.
"Class A-9 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-9 Current Interest, (y) the Class A-9 Interest Carry
Forward Amount, if any, and (z) the Group II Class A Principal Distribution
Amount payable to the Owners of Class A-9 Certificates pursuant to Section 7.5
hereof.
"Class A-9 Formula Rate": With respect to any Payment Date and the
Class A-9 Certificates, the rate determined in accordance with clause (i) of the
definition of "Class A-9 Pass Through Rate".
"Class A-9 Full Interest Distribution Amount": With respect to the
Class A-9 Certificates and any Payment Date, the interest due with respect to
the Class A-9 Certificates, calculated using the Class A-9 Formula Rate with
respect thereto.
"Class A-9 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-9 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-9 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-9 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-9
Pass-Through Rate.
"Class A-9 Interest Distribution Amount": With respect to the Class
A-9 Certificates for any Payment Date, the sum of (x) the Class A-9 Current
Interest and (y) the Class A-9 Interest Carry Forward Amount.
"Class A-9 Interest Shortfall": As defined in Section 7.10(b)
hereof.
"Class A-9 Pass-Through Rate": For any Payment Date, the lesser of
(i) LIBOR plus (a) in any month up to and including the month in which the
Clean-Up Call Date occurs 0.23% per annum and (b) in any month thereafter, 0.46%
per annum and (ii) the Group II Available Funds Cap Rate for such Payment Date.
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"Class A-9 Principal Distribution Amount": With respect to the Class
A-9 Certificates (a) for any Payment Date, prior to the date on which the Class
A-8 Certificates have been reduced to zero, an amount equal to the product of
(x) 65.69403% and (y) the Group II Principal Distribution Amount and (b)
thereafter, 100% of the Group II Principal Distribution Amount.
"Class A-IO Certificate": Any one of the Certificates designated on
the face thereof as a Class A-IO 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 A-IO Notional Certificate Principal Balance": With respect to
any date on or prior to the 30th Payment Date, the Class A-7 Certificate
Principal Balance as of such date. With respect to any date after the 30th
Payment Date, zero.
"Class A-IO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-IO Notional Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-IO Pass-Through Rate.
"Class A-IO Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-IO Current Interest and (y) the Class A-IO Interest
Carry Forward Amount.
"Class A-IO 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-IO Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-IO 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-IO Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
A-IO Pass-Through Rate.
"Class A-IO Pass-Through Rate": 5.00% per annum.
"Class B-1 Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class B-1 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-1 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-1 Certificate": Any one of the Certificates designated on
the face thereof as a Class B-1 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 B-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1 Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1 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-1 Applied Realized Loss Amounts on all prior Payment
Dates.
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"Class B-1 Certificate Termination Date": The Payment Date on which
the Class B-1 Certificate Principal Balance is reduced to zero.
"Class B-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1 Pass-Through Rate.
"Class B-1 Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class B-1 Current Interest, (x) the Class B-1 Principal
Distribution Amount, if any, (y) the Class B-1 Interest Carry Forward Amount, if
any, and (z) the Class B-1 Realized Loss Amortization Amount, if any.
"Class B-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 B-1 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class B-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 B-1 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class B-1
Pass-Through Rate.
"Class B-1 Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) 7.72% per annum and (y) the Group I Available Funds Cap Rate for
such Payment Date.
"Class B-1 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 with respect 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-1 Certificate Principal Balance (after taking
into account the payment of the Class M-1 Principal Distribution Amount on such
Payment Date), (iii) the Class M-2 Principal Certificate Principal Balance
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Payment Date) and (iv) the Class B-1 Certificate Principal
Balance immediately prior to such Payment Date over (y) the product of (i) 95%
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-1 Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount with respect to the
Class B-1 Certificates 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-1 Realized Loss Amortization Amount,
the Class M-2 Realized Loss Amortization Amount, the Class M-1 Interest Carry
Forward Amount, the Class M-2 Interest Carry Forward Amount and the Class B-1
Interest Carry Forward Amount in each case for such Payment Date.
"Class M-1 Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class M-1 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-1 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-2 Applied Realized Loss Amount and the Class B-1 Applied Realized Loss
Amount, in each case as of such Payment Date.
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"Class M-1 Certificate": Any one of the Certificates designated on
the face thereof as a Class M-1 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-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1 Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-1 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-1 Applied Realized Loss Amounts on all prior
Payment Dates.
"Class M-1 Certificate Termination Date": The Payment Date on which
the Class M-1 Certificate Principal Balance is reduced to zero.
"Class M-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1 Pass-Through Rate.
"Class M-1 Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class M-1 Current Interest, (x) the Class M-1 Principal
Distribution Amount, if any, (y) the Class M-1 Interest Carry Forward Amount, if
any, and (z) the Class M-1 Realized Loss Amortization Amount, if any.
"Class M-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 M-1 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class M-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 M-1 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class M-1
Pass-Through Rate.
"Class M-1 Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) 7.20% per annum and (y) the Group I Available Funds Cap Rate for
such Payment Date.
"Class M-1 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) and (ii) the Class M-1 Certificate Principal Balance immediately
prior to such Payment Date over (y) the product of (i) 77% 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-1 Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount with respect to the
Class M-1 Certificates 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-1 Interest Carry Forward Amount,
in each case for such Payment Date.
"Class M-2 Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class M-2 Certificate Principal Balance (after taking into
account the
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<PAGE> 29
distribution of the Group I Principal Distribution Amount on such Payment Date,
but prior to the application of the Class M-2 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-1 Applied
Realized Loss Amount as of such Payment Date.
"Class M-2 Certificate": Any one of the Certificates designated on
the face thereof as a Class M-2 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.
"Class M-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2 Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2 Certificates, pursuant to Section 7.5 hereof on all
prior Payment Dates and (y) the aggregate, cumulative amount of Class M-2
Applied Realized Loss Amounts on all prior Payment Dates.
"Class M-2 Certificate Termination Date": The Payment Date on which
the Class M-2 Certificate Principal Balance is reduced to zero.
"Class M-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2 Pass-Through Rate.
"Class M-2 Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class M-2 Current Interest, (x) the Class M-2 Principal
Distribution Amount, if any, (y) the Class M-2 Interest Carry Forward Amount, if
any, and (z) the Class M-2 Realized Loss Amortization Amount, if any.
"Class M-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 M-2 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class M-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 M-2 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class M-2
Pass-Through Rate.
"Class M-2 Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) 7.37% per annum and (y) the Group I Available Funds Cap Rate for
such Payment Date.
"Class M-2 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-1 Certificate Principal Balance (after taking
into account the payment of the Class M-1 Principal Distribution Amount on such
Payment Date) and (iii) the Class M-2 Certificate Principal Balance immediately
prior to such Payment Date over (y) the product of (i) 89% 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-2 Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount with respect to the
Class M-2 Certificates 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-1 Realized Loss Amortization Amount,
the Class M-1 Interest Carry Forward Amount and the Class M-2 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-14, 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.
"Commitment": The Commitment to Issue a Certificate Guaranty
Insurance Policy dated September 18, 1997 and issued by the Class A-8 and Class
A-9 Certificate Insurer.
"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 May 1, 1997 among the Sponsor, Bankers Trust
Company of California, N.A., as trustee, Advanta Mortgage Corp. USA, as the
master servicer, and the "Borrowers" named therein.
"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.
"Control Party": Until the last sentence of Section 11.18 hereof is
applicable and so long as no Class A-8 and Class A-9 Certificate Insurer Default
has occurred and is continuing, the Class A-8 and Class A-9 Certificate Insurer,
and thereafter, the Trustee.
"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
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Current Interest, the Class A-5 Current Interest, the Class A-6 Current
Interest, the Class A-7 Current Interest, the Class A-8 Current Interest, the
Class A-9 Current Interest, the Class A-IO Current Interest, the Class M-1
Current Interest, the Class M-2 Current Interest and the Class B-1 Current
Interest.
"Cut-Off Date": The opening of business September 1, 1997.
"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.
"Deficiency Amount": The excess, if any, of the Required
Distributions over the Net Available Distribution Amount.
"Delinquency Advance": As defined in Section 8.9(a) hereof.
"Delinquency Loss Factor": The sum of (a) the product of (x) the
aggregate principal balance of all Mortgage Loans 30-59 days delinquent and (y)
10.75%, (b) the product of (x) the aggregate principal balance of all Mortgage
Loans 60-89 days delinquent and (y) 21.50% and (c) the product of (x) the
aggregate principal balance of all Mortgage Loans 90 or more days delinquent and
(y) 43.0%.
"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 F 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 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 and Moody's 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
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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 Conduit Receivables, Inc.
"Determination Date": As to each Payment Date, the third Business
Day preceding such Payment Date or such earlier day as shall be agreed to by the
Class A-8 and Class A-9 Certificate Insurer and 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.
"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.
"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 Interest Shortfall": As defined in Section 7.10(b) hereof.
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"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": The sum of (i) Class A-8 Full
Interest Distribution Amount and (ii) the Class A-9 Full Interest Distribution
Amount.
"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": Group I or Group II.
"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.
"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 Date 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 Applied
Realized Loss Amounts shall be applied against the Certificate Principal
Balances of the Class B-1, Class M-2 and Class M-1 Certificates as provided
herein; no Group I Applied Realized Loss Amounts shall be applied against the
Certificate Principal Balance of any Class A Certificates relating to Group I
except if any balance is outstanding on the last Payment Date.
"Group I Available Funds Cap Rate": With respect to any Payment
Date, an 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 the Current Interest payable to the
Owners of the Class A-IO Certificates on such Payment Date, divided by (b) the
Loan Balances of the Mortgage Loans in Group I as of the beginning of the prior
Remittance Period, 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-8 Certificates and the Class A-9 Certificates), the Class M-1
Certificates, the Class M-2 Certificates and the Class B-1 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 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% 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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"Group I Class A-1 Available Funds Cap Rate": With respect to any
Payment Date, an 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 the Current Interest
payable to the Owners of the Class A-IO Certificates on such Payment Date,
divided by (b) the Loan Balances of the Mortgage Loans in Group I as of the
beginning of the prior Remittance Period, calculated on the basis of a 360 day
year and the actual number of days elapsed.
"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.
"Group I Interest Amount Available": As of any Payment Date, the
Group I Interest Remittance Amount less the portion of the Trustee's Fees
related to Group I.
"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 (less the Servicing Fee with respect to such Mortgage Loans), (ii) all
Delinquency Advances made by the Master Servicer on such Remittance Date with
respect to Group I, (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) and (iv) the portion of the Substitution
Amount relating to interest on the Mortgage Loans in Group I.
"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 Amount Available
for the related Remittance Period 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 Net Weighted Average Coupon Rate": With respect to any
Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans in
Group I (weighted by the Loan Balances of the Mortgage Loans in Group I), less
the sum of (A) 0.50% per annum, (B) the Trustee's Fees related to Group I, and
(C) (i) with respect to the first Payment Date during the IO Period, .04999% per
annum and (ii) thereafter, an amount equal to the product of (a) 0.05 and (b) a
fraction, the numerator of which is the Class A-7 Certificate Principal Balance
as of the Startup Day and the denominator of which is the Group I Original Pool
Balance.
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"Group I Original Pool Balance": $425,023,000.15.
"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).
"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 over (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
Group I Trigger Event is not in effect, the Group I Overcollateralization
Release Amount, if any and (ii) the Group I Extra Principal Distribution Amount,
if any.
"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
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 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 Monthly Remittance Date, (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) and (v) the proceeds of any liquidation of the Trust
Estate related to Group I.
"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.
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"Group I Senior Specified Enhancement Percentage": On any date of
determination thereof means 30%.
"Group I Stepdown Date": The latest to occur of (x) the Payment Date
in October 2000, (y) the first date on which principal equal to 50% of the
aggregate Principal Balance of the Mortgage Loans in Group I as of the Cut-Off
Date has been received by the Trust and (z) the first Payment Date on which the
Group I Senior Enhancement Percentage equals 30%.
"Group I Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group I Stepdown Date, $10,625,000 and (y) on or after the
Group I Stepdown Date, the greater of (i) (a) if no Group I Trigger Event is in
effect, 5.00% of the aggregate outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period or (b) if a Group I
Trigger Event is in effect, 2.50% of the Original Pool Balance in each case as
of the last day of the related Remittance Period and (ii) $2,125,000.
"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 Available Funds": As defined in Section 7.3(a) hereof.
"Group II Available Funds Cap Rate": With respect to any Payment
Date, an 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, the Premium Amount, and the Servicing Fee for Group II with
respect to such Payment Date and minus (iii) commencing on the 7th Payment Date
following the Startup Day an amount equal to 0.50% per annum times the aggregate
Principal Balance of the Mortgage Loans in Group II as of the beginning of such
related Remittance Period, divided by (b) the aggregate Loan Balances of the
Mortgage Loans in Group II as of the beginning of prior Remittance Period,
calculated on the basis of a 360-day year and the actual number of days elapsed.
"Group II Certificate Principal Balance": With respect to any
Payment Date, the sum of (i) the Class A-8 Certificate Principal Balance as of
such Payment Date and the Class A-9 Certificate Principal Balance as of such
Payment Date.
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"Group II Certificates": The Class A-8 Certificates and the Class
A-9 Certificates.
"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 Deficiency Amount": As defined in Section 7.3(b).
"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 Insured Distribution Amount": As to the Group II
Certificates and any Payment Date, the sum of (x) the sum of the Group II
Interest Distribution Amount for such Payment Date and (y) the Group II Applied
Realized Loss Amount, if any, as of such Payment Date.
"Group II Insured Payment": An amount equal to the sum of (i) as of
each Payment Date, the Group II Deficiency Amount and (ii) any unpaid Group II
Preference Amount.
"Group II Interest Amount Available": As of any Payment Date, the
Group II Interest Remittance Amount less the portion of the Trustee's Fees
related to Group II and the Premium Amount for such Payment Date.
"Group II Interest Distribution Amount": As of any Payment Date the
sum of (i) the Class A-8 Interest Distribution Amount for such Payment Date and
(ii) the Class A-9 Interest Distribution Amount for such Payment Date.
"Group II 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 II (less the Servicing Fee with respect to such Mortgage Loans), (ii)
all Delinquency Advances made by the Master Servicer on such Remittance Date
with respect to Group II, (iii) all Compensating Interest paid by the Master
Servicer on such Remittance Date with respect to Group II, net of amounts
allowed to be retained pursuant to Section 8.8(c) and (iv) the portion of the
Substitution 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 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.
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"Group II Net Weighted Average Coupon Rate": With respect to any
Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans in
Group II (weighted by the Loan Balances of the Mortgage Loans in Group II), less
0.50% per annum.
"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 Preference Amount": Any amounts paid by the Class A-8 and
Class A-9 Certificate Insurer with respect to the Class A-8 Certificates or the
Class A-9 Certificates that are voided pursuant to a final, nonappealable order
under the Bankruptcy Code in an insolvency proceeding.
"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, the Group II
Overcollateralization Release Amount, if any, (ii) the Group II Extra Principal
Distribution Amount, if any and (iii) the principal portion of any Group II
Insured Payment made by the Class A-8 and Class A-9 Certificate Insurer.
"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 Sponsor 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, (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) and (v) the
proceeds of any liquidation of the Trust Estate related to Group II.
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"Group II Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all Group II Insured Payments previously received by the Trustee not
previously repaid to the Class A-8 and Class A-9 Certificate Insurer pursuant to
Sections 7.5(g)(2) and 7.5(g)(4) hereof plus (ii) interest accrued on each such
Group II Insured Payment not previously repaid calculated from the date the
Trustee received the related Group II Insured Payment at the Class A-8
Pass-Through Rate or Class A-9 Pass-Through Rate applicable to such date and
(y)(i) any amounts then due and owing to the Class A-8 and Class A-9 Certificate
Insurer relating to the Class A-8 Certificates or the Class A-9 Certificates
under the Insurance Agreement plus (ii) interest on such amounts at the Late
Payment Rate. The Class A-8 and Class A-9 Certificate Insurer shall notify the
Trustee and the Sponsor of the amount of any Group II Reimbursement Amount.
"Group II Stepdown Date": The later to occur of (x) the 30th Payment
Date from the Startup Day and (y) the date on which principal received on the
Group II Certificates is equal to 50% of the aggregate principal balance of the
Mortgage Loans in Group II as of the Startup Day has been received by the Trust.
"Group II Targeted Overcollateralization Amount": As defined in the
Insurance Agreement.
"Group II Total Available Funds": As defined in Section 7.3(a)
hereof.
"Indemnification Agreement": The Indemnification Agreement dated as
of September 5, 1997 among the Class A-8 and Class A-9 Certificate Insurer and
the Representative as may be amended from time to time.
"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 Agreement": The Insurance and Indemnity Agreement dated
as of September 18, 1997 between the Sponsor and the Class A-8 and Class A-9
Certificate Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, title or primary mortgage insurance
policy relating to a Mortgage Loan.
"Insured Payment": The Group II Insured Payment.
"Interest Advance": As defined in Section 7.10(b) hereof.
"Interest Determination Date": With respect to any Accrual Period
for the Group II Certificates and the Class A-1 Certificates, the second London
Business Day preceding the first day of such Accrual Period.
"Interest Rate Adjustment Date": The date on which an adjustment to
the Coupon Rate on a Mortgage Note becomes effective.
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"IO Period": The period from the Startup Day through and including
the 30th Payment Date.
"Late Payment Rate": For any Payment Date, means the lesser of (a)
the greater of (x) the per annum rate of interest publicly announced from time
to time by Citibank, N.A. as its prime or base lending rate (any change in such
rate of interest to be effective on the date such change is announced by
Citibank, N.A.), plus 2% per annum and (y) the then applicable highest rate of
interest on the Certificates and (b) the maximum rate permissible under
applicable usury or similar laws limiting interest rates. The Late Payment Rate
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days.
"LIBOR": With respect to any Accrual Period for the Group II
Certificates and the Class A-1 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
Telerate Page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date. On each Interest Determination Date, LIBOR for the related
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
Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest 1/100,000 of 1% (0.0000001)
with five one-millionths of a percentage point rounded upward, of all such
quotations).
(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 arithmetic mean, rounded upward, if
necessary, to the nearest 1/100,000 of 1% (0.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per
annum rates that one or more leading banks in New York City, selected by
the Indenture Trustee, are quoting as of approximately 11:00 a.m., New
York City time, on such LIBOR Determination Date to leading European Banks
for United States dollar deposits for the Index Maturity; provided, that
if the banks selected as aforesaid are not quoting as mentioned in this
sentence, LIBOR in effect for the applicable Interest Period will be LIBOR
in effect for the previous Interest Period.
"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.
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"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 Remittance Amounts 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 Startup Day 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 Group II Reimbursement Amount relating to such Mortgage Loan
relating to Group II.
"London Business Day": A day on which banks are open for dealing in
foreign currency, and exchange in London and New York City.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
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"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7/A-IO Pass-Through Rate": For any Payment Date during
the I-O Period, the sum of (i) the Group I Net Weighted Average Coupon Rate and
(ii) 5.00% per annum. For any Payment Date thereafter, the Group I Net Weighted
Average Coupon Rate.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
"Lower-Tier A-9 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-9 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-9 Pass-Through Rate.
"Lower-Tier A-9 Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
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"Lower-Tier A-IO Monthly Interest": With respect to any Payment
Date, the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-IO immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-IO Pass-Through Rate.
"Lower-Tier B-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier B-1 Pass-Through Rate.
"Lower-Tier B-1 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and
any Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payment
Dates pursuant to Section 7.5(d) or (e).
"Lower-Tier Group I Distribution Amount": With respect to any
Payment Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2
Monthly Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4
Monthly Interest, the Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6
Monthly Interest, the Lower-Tier A-7 Monthly Interest, the Lower-Tier B-1
Monthly Interest, the Lower-Tier M-1 Monthly Interest, the Lower-Tier M-2
Monthly Interest, the Group I Class A Principal Distribution Amount, the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount
and the Class B-1 Principal Distribution Amount. Such Group I Class A Principal
Distribution Amount is allocated as follows: (a) to the Lower-Tier Interest A-7
an amount equal to the Class A-7 Lockout Distribution Amount and (b) the
remainder as follows, as a distribution on the Lower-Tier Interest A-1 until the
Lower-Tier Interest A-1 Termination Date, the Class A-1 Distribution Amount; as
a distribution on the Lower-Tier Interest A-2 until the Lower-Tier Interest A-2
Termination Date, the Class A-2 Distribution Amount; as a distribution on the
Lower-Tier Interest A-3 until the Lower-Tier Interest A-3 Termination Date, the
Class A-3 Distribution Amount; as a distribution on the Lower-Tier Interest A-4
until the Lower-Tier Interest A-4 Termination Date, the Class A-4 Distribution
Amount; as a distribution on the Lower-Tier Interest A-5 until the Lower-Tier
Interest A-5 Termination Date and as a distribution on the Lower-Tier Interest
A-6 until the Lower-Tier Interest A-6 Termination Date.
"Lower-Tier Group II Distribution Amount": With respect to any
Payment Date, the sum of the Lower-Tier A-8 Monthly Interest, the Lower Tier A-9
Monthly Interest and the Group II Principal Remittance Amount.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
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"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08 hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08 hereof.
"Lower-Tier Interest A-9": The interest of that name established
pursuant to Section 2.09 hereof.
"Lower-Tier Interest B-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-1 on such
Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-2 on such
Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-3 on such
Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-4 on such
Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-5 on such
Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-6 on such
Payment Date.
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"Lower-Tier Interest A-7 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-7 on such
Payment Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero
through the distribution made in respect of Lower-Tier A-8 on such Payment Date.
"Lower-Tier Interest A-9 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-9 is reduced to zero
through the distribution made in respect of Lower-Tier A-9 on such Payment Date.
"Lower-Tier Interest B-1 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest B-1 is reduced to zero
through the distribution made in respect of Lower-Tier Interest B-1 on such
Payment Date.
"Lower-Tier Interest M-1 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest M-1 is reduced to zero
through the distribution made in respect of Lower-Tier Interest M-1 on such
Payment Date.
"Lower-Tier Interest M-2 Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest M-2 is reduced to zero
through the distribution made in respect of Lower-Tier Interest M-2 on such
Payment Date.
"Lower-Tier M-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1 Pass-Through Rate.
"Lower-Tier M-1 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier M-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2 Pass-Through Rate.
"Lower-Tier M-2 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier Pass-Through Rate": As to each of the respective
Lower-Tier Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in
Section 2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Group I Distribution Account and the
Upper-Tier Group II Distribution Account which are assets of the Upper-Tier
REMIC.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable
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only in Percentage Interest of 100% to Advanta Conduit Receivables, Inc. as Tax
Matters Person. Such interests shall be non-transferable, except that Advanta
Conduit Receivables, Inc. may assign such interest to another person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof. The Lower-Tier REMIC Residual Class is entitled only to any
amounts at any time held in the Certificate Account and not required to be paid
to the Upper-Tier REMIC, which is expected to be zero at all times during the
term of this Agreement.
"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 J 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 calendar
month preceding such Payment Date.
"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 June
15, 1997 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 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
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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 Available Distribution Amount": The Group II Total Available
Funds.
"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 no later than 1 Business Day
prior to the related Determination Date to the Class A-8 and Class A-9
Certificate Insurer and 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, the Certificate Insurance policy, the Insurance Agreement,
the Indemnification Agreement and Certificates.
"Original Pool Balance": $900,000,030.20.
"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, or 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 National Bank and Advanta Finance Corp.
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"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
Overcollateralization Release Amount.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.6.
"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 or if the 25th day is not a
Business Day, then the next succeeding Business 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 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 in the related
Group 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
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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 Six Month Delinquency Rate": As of any Payment Date
commencing with the seventh Payment Date, the fraction, expressed as a
percentage, equal to the average of the Pool Delinquency Rates for each of the
six immediately preceding Remittance Periods with respect to the Mortgage Loans.
"Premium Amount": As to any Payment Date, the product of (x)
one-twelfth of the Premium Percentage and (y) the Group II Certificate Principal
Balance on such Payment Date (after taking into account any distributions of the
Group II Principal Distribution Amount on such Payment Date).
"Premium Percentage": As defined in the Commitment.
"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 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.
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"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, 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 February 28, 2027, (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 Class A-8 and Class A-9 Certificate
Insurer and 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 Class
A-8 and Class A-9 Certificate Insurer may allow the foregoing tests to be met on
a weighted average basis with respect to the Mortgage Loans in Group II only or
other aggregate basis acceptable to the Class A-8 and Class A-9 Certificate
Insurer, as evidenced by a written consent delivered to the Trustee by the Class
A-8 and Class A-9 Certificate Insurer, 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
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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 Telerate Page 3750 on the relevant Interest
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 immediately 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 month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter" The 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.
"Representative": Lehman Brothers, Inc., as representative of the
Underwriters.
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"Required Distributions": The Group II Insured Distribution Amount.
"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.
"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 Control Party in writing.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"Standard & Poor's": Standard & Poor's Ratings Group, a division of
The McGraw Hill Companies.
"Startup Day": September 18, 1997.
"Subordinate Certificates": The Class M-1 Certificates, the Class
M-2 Certificates and the Class B-1 Certificates.
"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.
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"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 1997-3 created pursuant to Section 7.10(a) hereof.
"Tax Matters Person": The Tax Matters Person appointed pursuant to
Section 11.17 hereof.
"Tax Matters Person Residual Interest": The 100% interest in the
Class R Certificates and the Lower-Tier REMIC Residual Class, each of which
shall be issued to and held by Advanta Conduit Receivables, Inc. throughout the
term hereof unless another Person shall accept an assignment of such interest
and the designation of Tax Matters Person pursuant to Section 11.17 hereof.
"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.
"Total Expected Losses": The sum of (a) the aggregate Pool
Cumulative Realized Losses and (b) the Delinquency Loss Factor.
"Transaction Documents": Collectively this Agreement, the Insurance
Agreement, the Underwriting Agreement relating to the Offered Certificates, the
Master Transfer Agreements, any Sub-Servicing Agreement, the Indemnification
Agreement, the Registration Statement relating to the Offered Certificates and
the Certificates.
"Trust": Advanta Mortgage Loan Trust 1997-3, 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
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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, (vi) the rights of the Trustee under the Certificate
Insurance Policy, and (vii) 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 0.00875% 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.
"Unaffiliated Originators": Any Originator who is not affiliated
with the Sponsor.
"Uncertificated Interest": As defined in Section 2.8(b) hereof.
"Underwriters": Lehman Brothers Inc., Bear, Stearns & Co. Inc., J.P.
Morgan Securities, Inc., Morgan Stanley & Co. Incorporated 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 the related Applied Realized Loss Amounts with respect to
such Class for all prior Payment Dates over (y) the aggregate, cumulative amount
of the related Realized Loss Amortization Amounts with respect to such Class for
all prior Payment Dates.
"Upper-Tier Group I Distribution Account": The Upper-Tier Group I
Distribution Account established pursuant to Section 7.2 hereof.
"Upper-Tier Group II Distribution Account": The Upper-Tier Group II
Distribution Account established pursuant to Section 7.2 hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Offered Certificates. The assets of the Upper-Tier
REMIC shall include the Upper-Tier Group I Distribution Account, the Upper-Tier
Group II Distribution Account and the right to receive the distributions
deposited therein with respect to each Lower-Tier Interest.
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.
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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.
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 1997-3". 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, the Owners and the
Class A-8 and Class A-9 Certificate Insurer.
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 and the Class A-8 and Class A-9 Certificate Insurer, as their interests
may appear.
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SECTION 2.5. EXPENSES OF THE TRUST. Any 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 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 beneficial
ownership interest in the Lower-Tier REMIC shall be evidenced by the interests
having the characteristics and terms as follows:
<TABLE>
<CAPTION>
LOWER-TIER
PASS-
CLASS DESIGNATION INITIAL LOWER- THROUGH FINAL SCHEDULED
TIER BALANCE RATE PAYMENT DATES
- ---------------------------- -------------- ---------- ------------------
<S> <C> <C> <C>
Lower-Tier Interest A-1 $147,390,000 (1) July 25, 2010
Lower-Tier Interest A-2 68,375,000 (6.61%) April 25, 2012
Lower-Tier Interest A-3 37,587,000 (6.69%) March 25, 2017
Lower-Tier Interest A-4 23,612,000 (6.87%) September 25, 2021
Lower-Tier Interest A-5 19,000,000 (6.97%) April 25,2024
Lower-Tier Interest A-6 33,411,000 (2) October 25, 2028
Lower-Tier Interest A-7/A-IO 42,500,000 (3) October 25, 2028
Lower-Tier Interest A-8 110,000,000 (4) November 25, 2023
Lower-Tier Interest A-9 365,000,000 (4) October 25, 2028
Lower-Tier Interest M-1 14,875,000 (5) October 25, 2028
Lower-Tier Interest M-2 25,500,000 (6) October 25, 2028
Lower-Tier Interest B-1 12,750,000 (7) October 25, 2028
Lower-Tier REMIC Residual (4) (8) October 25, 2028
Class
</TABLE>
(1) On any Payment Date, Libor plus .09%, subject to a cap of the Group I Net
Weighted Average Coupon Rate.
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(2) On any Payment Date, the Group I Net Weighted Average Coupon Rate, subject
to a cap of 7.30%.
(3) On any Payment Date, the Lower Tier A-7/A-IO Pass-Through Rate.
(4) On any Payment Date, the Group II Net Weighted Average Coupon Rate.
(5) On any Payment Date, the Group I Net Weighted Average Coupon Rate, subject
to a cap of 7.20%.
(6) On any Payment Date, the Group I Net Weighted Average Coupon Rate, subject
to a cap of 7.37%.
(7) On any Payment Date, the Group I Net Weighted Average Coupon Rate, subject
to a cap of 7.72%.
(8) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier
Balance or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interests A-1, A-2, A-3, A-4, A-5, A-6, A-7/A-IO,
A-8, A-9, M-1, M-2 and B-1 Certificates shall be issued as non-certificated
interests. The Lower-Tier REMIC Residual Class shall be issued from the
Lower-Tier REMIC as a non-certificated interest.
(c) The Sponsor hereby designates Lower-Tier Interest A-1,
Lower-Tier Interest A-2, Lower-Tier Interest A-3, Lower-Tier Interest A-4,
Lower-Tier Interest A-5, Lower-Tier Interest A-6, Lower-Tier Interest A-7/A-IO,
Lower Tier Interest A-8, Lower-Tier Interest A-9, Lower-Tier Interest M-1,
Lower-Tier Interest M-2, Lower-Tier Interest B-1, as "regular interests" and the
Lower-Tier REMIC Residual Class As the single class of "residual interests" in
the Lower-Tier REMIC for purposes of the REMIC Provisions.
(d) The Sponsor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class
A-IO, Class M-1, Class M-2 and Class B-1 Certificates as "regular interests,"
and the Class R Certificates as the single class of "residual interests" in the
Upper-Tier REMIC for purposes of the REMIC Provisions. The Sponsor hereby
designates the Lower-Tier Interest A-1, the Lower-Tier Interest A-2, the
Lower-Tier Interest A-3, the Lower-Tier Interest A-4, the Lower-Tier Interest
A-5, the Lower-Tier Interest A-6, the Lower-Tier Interest A-7/A-IO, the
Lower-Tier Interest A-8, the Lower-Tier Interest A-9, Lower-Tier Interest M-1,
Lower-Tier Interest M-2, Lower-Tier Interest B-1, the Upper-Tier Group I
Distribution Account and the Upper-Tier Group II Distribution Account as the
only assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interests in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. 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 such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the
Trustee to the Owners of the Class R Certificates shall be treated as
distributions by the Upper-Tier REMIC and amounts, if any, distributed on the
Lower-Tier REMIC Residual Class, if any, shall be
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<PAGE> 58
treated as distributions by the Lower-Tier REMIC. It is expected that there
shall not be any distributions to the Lower-Tier REMIC Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
(k) The final scheduled Payment Date for any Class of Certificates
is hereby established as follows:
CLASS FINAL SCHEDULE PAYMENT DATE
Class A-1 Certificates 7/25/2010
Class A-2 Certificates 4/25/2012
Class A-3 Certificates 3/25/2017
Class A-4 Certificates 9/25/2021
Class A-5 Certificates 9/25/2024
Class A-6 Certificates 10/25/2028
Class A-7 Certificates 10/25/2028
Class A-8 Certificates 11/25/2023
Class A-9 Certificates 10/25/2028
Class A-IO Certificates 3/25/2000
Class M-1 Certificates 10/25/2028
Class M-2 Certificates 10/25/2028
Class B-1 Certificates 10/25/2028
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, the Class A-8
and Class A-9 Certificate Insurer 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.
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(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 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,
the Class A-8 and Class A-9 Certificate Insurer and to the Owners as of the
Startup Day that:
(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
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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 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.
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(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.
(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, the Class A-8 and Class A-9 Certificate Insurer 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 or of the Class A-8 and Class A-9 Certificate Insurer, 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 respects and, upon the Master
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee or the Class A-8 and Class A-9 Certificate Insurer pursuant to
Section 8.20 hereof; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Class A-8 and Class A-9
Certificate Insurer and the Trustee that it is diligently pursuing remedial
action, then the cure period may be extended with the written approval of the
Class A-8 and Class A-9 Certificate Insurer and the Trustee.
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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 Class A-8
and Class A-9 Certificate Insurer relies and 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 or as of the date
upon which any Qualified Replacement Mortgage is added to the Trust, but shall
survive the sale, transfer, and assignment of the Mortgage Loans to the Trustee:
(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 set forth
in Section 3.5 (including all material documents related thereto) with
respect to each Mortgage Loan 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 7.0% per annum;
(v) As of the Cut-Off Date, no more than 0.48% of the Original
Pool Balance of the Mortgage Loans are 30-59 days Delinquent and no
Mortgage Loan is 60 or more days' Delinquent;
(vi) As of the Startup Day, no more than 1.58% of the Original
Pool Balance of the Mortgage Loans is secured by Properties located within
any single zip code area, and no more than 9.60% of the Original Pool
Balance of the Mortgage Loans consists of Date-of-Payment Loans;
(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 6.50%
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 and the Class A-8 and Class A-9 Certificate Insurer
(so long as a Class A-8 and Class A-9 Certificate Insurer Default had not
occurred and is continuing) all of its right, title and
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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 and the Class
A-8 and Class A-9 Certificate Insurer. Upon the discovery by the Sponsor, the
Master Servicer, the Class A-8 and Class A-9 Certificate Insurer 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 or of the Class A-8 and Class A-9
Certificate Insurer 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, the Class A-8 and Class A-9
Certificate Insurer, 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 representations and warranties materially and adversely
affect the interests of the Owners or of the Class A-8 and Class A-9 Certificate
Insurer, 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 or
of the Class A-8 and Class A-9 Certificate Insurer 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 from the
Class A-8 and Class A-9 Certificate Insurer or such time as a breach of any
representation and warranty materially and adversely affects the interests of
the Owners or of the Class A-8 and Class A-9 Certificate Insurer 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
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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 and the Class A-8 and Class A-9 Certificate Insurer 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, (ii) the delivery
of such opinion or (iii) at the direction of the Control Party. 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 and has not been remedied shall constitute the
sole remedy available to the Owners, the Trustee and the Class A-8 and Class A-9
Certificate Insurer.
(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, the Class A-8 and Class A-9 Certificate Insurer, 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 or the Class A-8 and Class A-9
Certificate Insurer 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 and any other assets
included or to be included in the Trust for the benefit of Owners and the Class
A-8 and Class A-9 Certificate Insurer. 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.
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(b) The Sponsor agrees to take or cause to be taken such actions and
execute such documents (including, without limitation, the filing of all
necessary continuation statements for the UCC-1 financing statements filed in
the State of New York (which shall have been filed within 90 days of the Closing
Day) describing the Mortgage Loans and naming the Conduit Acquisition Trust as
debtor and the Trustee as the secured party and any amendments to UCC-1
financing statements required to reflect a change in the name or corporate
structure of the debtor or the filing of any additional UCC-1 financing
statements due to a change in the principal officer of the debtor (within 90
days of any event necessitating such filing) as are necessary to perfect and
protect the Certificateholders' and the Class A-8 and Class A-9 Certificate
Insurer's interests in each Mortgage Loan and the proceeds thereof.
(c) 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 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 only if the Trustee, the Class A-8 and Class A-9 Certificate
Insurer and each Rating Agency has received an Opinion of Counsel,
satisfactory in form and substance to the Class A-8 and Class A-9
Certificate Insurer and 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 H, authorizing the Master Servicer on behalf of the
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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.
(d) 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 C.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
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(k) 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 Control Party, Standard & Poor's and Moody's, then any of
the Document Delivery Requirements described above may be waived by an
instrument signed by the Control Party, Standard & Poor's, 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 Control Party, Moody's and Standard
& Poor's 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 D 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 and the Class A-8 and Class A-9
Certificate Insurer. 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, the Class A-8 and Class A-9 Certificate Insurer
and the Master Servicer a Certification in the form attached as Exhibit E
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 Trustee shall promptly so notify the Sponsor
and the Class A-8 and Class A-9 Certificate Insurer. 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 or of
the Class A-8 and Class A-9 Certificate Insurer, 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 and the Class A-8 and Class A-9
Certificate Insurer 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
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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 Control Party.
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 and to the Class A-8 and Class A-9 Certificate Insurer 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.
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 F 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 Representative, 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 Representative 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 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
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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 and except for the rights of the Trustee with respect to
the Certificate Insurance Policy). 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 and
monies in the supplemental Interest Payment Account, except as otherwise
provided herein, from earnings on monies and the proceeds of property held as a
part of the Trust Estate and, with respect to the Class A-8 Certificates and the
Class A-9 Certificates upon the occurrence of certain events, from Group II
Insured Payments. 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 and, with
respect to the Class A-8 Certificates and the Class A-9 Certificates, (i) the
Group II Insured Payments, pro rata in accordance with such Owner's Percentage
Interest and (ii) certain amounts payable from the Supplemental Interest Payment
Account.
(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 Delivery Order, 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
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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. The Owners and the Class A-8 and
Class A-9 Certificate Insurer 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) 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) 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) 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) 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) 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 Aggregate
Certificate Principal Balance. Upon initial issuance, the ownership of each such
Offered Certificate shall be registered in the Register in the name of 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, the Class A-8 and
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Class A-9 Certificate Insurer 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,
the Class A-8 and Class A-9 Certificate Insurer 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) the event that (i) the Depository or the Sponsor advises the
Trustee and the Class A-8 and Class A-9 Certificate Insurer 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 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, the Class A-8 and
Class A-9 Certificate Insurer, 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.
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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 any of Standard & Poor's, 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.
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 or assignment of an interest in the Lower-Tier REMIC
Residual Class (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or
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otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a Class R
Certificate or assignment of an interest in the Lower-Tier REMIC Residual Class
(whether pursuant to a purchase, a transfer resulting from a default under a
secured lending 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 Certificate or
Lower-Tier REMIC Residual Class. Furthermore, in no event shall the Trustee
accept surrender for transfer, registration of transfer, or register the
transfer, of any Class R Certificate nor authenticate and make available any new
Class R Certificate unless the Trustee has received an affidavit from the
proposed transferee in the form attached hereto as Exhibit I. 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 5.08(b). The Lower-Tier
REMIC Residual Class is not transferable except that the Owner of the Tax
Matters Person Residual Interest in the Lower-Tier REMIC may assign its interest
to another Person who accepts such assignment and the designation as Tax Matters
Person pursuant to Section 11.17 hereof.
(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 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.
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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 or, with respect to the Class A-8
Certificates and the Class A-9 Certificates, from Group II Insured Payments
shall be made by and on behalf of the Trustee, and no amounts so withdrawn from
the Certificate Account for payments of the Certificates and no Group II Insured
Payment 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 first, to the Class A-8
and Class A-9 Certificate Insurer on account of any Group II Reimbursement
Amount, and second 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, or in the case of the Class
A-8 Certificates and the Class A-9 Certificates, the Class A-8 and Class A-9
Certificate Insurer for payment thereof (but only to the extent of the amounts
so paid to the Class A-8 and Class A-9 Certificate Insurer or 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 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 Class A-8 and Class A-9 Certificate Insurer or the Owners of the Class R
Certificates as provided above. 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).
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SECTION 6.3. PROTECTION OF TRUST ESTATE. (a) The Trustee will hold
the Trust Estate in trust for the benefit of the Owners and the Class A-8 and
Class A-9 Certificate Insurer as their interests may appear, and, upon request
of the Class A-8 and Class A-9 Certificate Insurer, or with the Consent of the
Class A-8 and Class A-9 Certificate Insurer, 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 Class
A-8 and Class A-9 Certificate Insurer or 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 and of the Class A-8 and
Class A-9 Certificate Insurer 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 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. (a) The Trustee will not
take any action that would release the Sponsor or the Class A-8 and Class A-9
Certificate Insurer 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.
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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 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 the Certificate Insurance Policy 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;
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(5) as long as any Class A-8 Certificates, Class A-9
Certificates, or any Group II Reimbursement Amount are outstanding,
the Class A-8 and Class A-9 Certificate Insurer consented in writing
thereto; and
(6) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Class
A-8 and Class A-9 Certificate Insurer or 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 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 at the
direction of the Class A-8 and Class A-9 Certificate Insurer, 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, the Class A-8 and Class A-9 Certificate Insurer 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,
the Class A-8 and Class A-9 Certificate Insurer 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, the Class A-8 and Class A-9 Certificate
Insurer or to the Owners may be exercised from time to time, and as often as may
be deemed expedient, by the Trustee, the Class A-8 and Class A-9 Certificate
Insurer or by the Owners, as the case may be.
SECTION 6.11. CONTROL BY OWNERS. The Class A-8 and Class A-9
Certificate Insurer (so long as a Class A-8 and Class A-9 Insurer Default has
not occurred and is continuing)
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or the Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding, with the consent of the Control Party
(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 Control Party (which may not be unreasonably withheld) may direct the time,
method and place of conducting any proceeding for any remedy available to the
Control Party with respect to the Certificates or exercising any trust or power
conferred on the Control Party 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 Control Party 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; provided, further, that
in the event that any directions provided by the Trustee and the
Class A-8 and Class A-9 Certificate Insurer conflict with each
other, the Class A-8 and Class A-9 Certificate Insurer's direction
shall prevail.
So long as a Class A-8 and Class A-9 Certificate Insurer Default has
not occurred and is continuing, the Class A-8 and Class A-9 Certificate Insurer
shall act as the Control Party until all Group II Reimbursement Amounts have
been paid.
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, the Upper-Tier Group I
Distribution Account and the Upper Tier Group II Distribution Account each of
which is to be held by the Trustee in the name of the Trust for the benefit of
the Owners of the Certificates and the Class A-8 and Class A-9 Certificate
Insurer, as their interests may appear.
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SECTION 7.3. THE CERTIFICATE INSURANCE POLICY. (a) With respect to
the Group II Certificates only, on each Determination Date the Trustee shall
determine with respect to the immediately following Payment Date: the Group II
Monthly Remittance Amount on deposit in the Certificate Account on such Payment
Date (disregarding the amounts of any Group II Insured Payment) and equal to the
sum of (x) such amounts excluding the amount of any Group II Monthly Excess
Cashflow amounts included in such amounts and excluding an amount equal to the
Premium Amount together with any Trustee's Fees described in 7.5(c)(i) for the
related Payment Date, plus (y) any amounts of Group II Monthly Excess Cashflow
to be applied on such Payment Date and any amounts available from Group I
Monthly Excess Cashflow pursuant to Section 7.5(f)(9); the amounts described in
the preceding clause (x) with respect to each Group II and Payment Date, after
taking into account the portion of the Group II Principal Distribution Amount to
be actually distributed on such Payment Date and without regard to any Group II
Insured Payment to be made with respect to such Payment Date, are the "Group II
Available Funds"; the sum of the amounts described in the preceding clauses (x)
and (y) are the "Group II Total Available Funds".
(b) If the Group II Insured Distribution Amount for any, Payment
Date exceeds the Group II Total Available Funds for such Payment Date (after
taking into account the portion of the Group II Principal Distribution Amount to
be actually distributed on such Payment Date without regard to any Group II
Insured Payment to be made with respect to such Payment Date) (such amount being
a "Group II Deficiency Amount"), the Trustee shall complete a Notice in the form
of Exhibit A to the Certificate Insurance Policy and submit such notice to the
Class A-8 and Class A-9 Certificate Insurer no later than 12:00 noon New York
City time on the third Business Day preceding such Payment Date as a claim for a
Group II Insured Payment in an amount equal to such Group II Deficiency Amount.
Upon receipt of Group II Insured Payments from the Class A-8 and Class A-9
Certificate Insurer under the Certificate Insurance Policy, the Trustee shall
deposit such Group II Insured Payments in the Certificate Account.
(c) The Trustee shall distribute all Group II Insured Payments
received, or the proceeds thereof, in accordance with Section 7.5(c) to the
Owners of the Class A-8 Certificates and the Class A-9 Certificates.
(d) The Trustee shall (i) receive Group II Insured Payments as
attorney-in-fact of each Owner of the Class A-8 Certificates and the Class A-9
Certificates of the related Class receiving any Group II Insured Payment from
the Class A-8 and Class A-9 Certificate Insurer and (ii) disburse such Group II
Insured Payment to the Owners of the Class A-8 Certificates and the Class A-9
Certificates as set forth in Section 7.5(c). The Class A-8 and Class A-9
Certificate Insurer shall be entitled to receive the related Group II
Reimbursement Amount pursuant to Sections 7.5(g)(2) and (4) hereof with respect
to each Group II Insured Payment made by the Class A-8 and Class A-9 Certificate
Insurer. The Trustee hereby agrees on behalf of each Owner of Class A-8
Certificates and Class A-9 Certificates and the Trust for the benefit of the
Certificate Insurer that it recognizes that to the extent the Class A-8 and
Class A-9 Certificate Insurer makes Group II Insured Payments, either directly
or indirectly (as by paying through the Trustee), to the Owners of such Class
A-8 Certificates and the Class A-9 Certificates, the Class A-8 and Class A-9
Certificate Insurer will be entitled to receive the Group II Reimbursement
Amount pursuant to Sections 7.5(g)(2) and (4) hereof.
(e) The Trustee shall receive, as attorney-in-fact of each Owner of
a Class A-8 Certificate and Class A-9 Certificate, any Group II Insured Payment
from the Class A-8 and
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Class A-9 Certificate Insurer and disburse the same to each Owner of a Class A-8
Certificate and Class A-9 Certificate in accordance with the provisions of
Section 7.3. Group II Insured Payments disbursed by the Trustee from proceeds of
the Certificate Insurance Policy shall not be considered payment by the Trust
Fund nor shall such payments discharge the obligation of the Trust Fund with
respect to the Class A-8 Certificate and Class A-9 Certificate, and the Class
A-8 and Class A-9 Certificate Insurer shall become the owner of such unpaid
amounts due from the Trust Fund in respect of the Class A-8 Certificates and the
Class A-9 Certificates. The Trustee hereby agrees on behalf of each Owner of a
Class A-8 Certificate and Class A-9 Certificate for the benefit of the Class A-8
and Class A-9 Certificate Insurer that it recognizes that to the extent the
Class A-8 and Class A-9 Certificate Insurer makes any Group II Insured Payment,
either directly or indirectly (as by paying through the Trustee), to the Class
A-8 Certificateholders or the Class A-9 Certificateholder, the Class A-8 and
Class A-9 Certificate Insurer will be subrogated to the rights of the Class A-8
Certificateholder and the Class A-9 Certificateholder with respect to such Group
II Insured Payment, shall be deemed to the extent of payments so made to be a
registered Class A-8 Certificateholder and Class A-9 Certificateholder and shall
receive all future distributions until all such Group II Insured Payments by the
Class A-8 and Class A-9 Certificate Insurer, together with interest thereon at
the interest rate borne by the Class A-8 Certificates and Class A-9 Certificates
applicable of such date (including any interest on such amounts at the Late
Payment Rate), have been fully reimbursed. To evidence such subrogation, the
Trustee shall, or shall cause the Certificate Registrar to, note the Class A-8
and Class A-9 Certificate Insurer's rights as subrogee on the registration books
maintained by the Trustee or the Certificate Registrar upon receipt from the
Class A-8 and Class A-9 Certificate Insurer of proof of payment of any Group II
Insured Payment. The effect of the foregoing provisions is that, to the extent
of Group II Insured Payments made by it, the Class A-8 and Class A-9 Certificate
Insurer shall be paid before payment of the balance of the distributions are
made to the other Owners of the Class A-8 Certificates and Class A-9
Certificates.
SECTION 7.4. RESERVED.
SECTION 7.5. FLOW OF FUNDS.
(a) (i) 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 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.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group I Distribution Amount from the Certificate Account to the
Upper-Tier Group I Distribution Account.
(iii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group II Distribution Amount from the Certificate Account to
the Upper-Tier Group II Distribution Account.
(b) With respect to the Upper-Tier Group I Distribution 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:
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(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 Group I 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 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 Amount
Available remaining, to the Owners of the Class M-1 Certificates, the
Class M-1 Current Interest;
(iv) Fourth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class M-2 Certificates, the
Class M-2 Current Interest;
(v) Fifth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class B-1 Certificates, the
Class B-1 Current Interest; and
(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 Upper Tier Group II Distribution 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 Class A-8 and Class A-9 Certificate
Insurer, the Premium Amount;
(iii) Third, to the Owners of the Class A-8 Certificates, the
Class A-8 Interest Distribution Amount and to the Owners of the Class A-9
Certificates, the Class A-9 Interest Distribution Amount; and
(iv) Fourth, the Group II Monthly Excess Interest Amount shall
be applied or distributed as provided in subsection (g) of this Section
7.5.
(d) With respect to the Upper Tier Group I Distribution Account, 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
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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 I Trigger Event is in effect, Owners of the
Class A Certificates (other than the Class A-IO 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-7 Certificates, the Class A-7 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; sixth, to the Owners of the Class
A-6 Certificates, until the Class A-6 Certificate Principal Balance is
reduced to zero; seventh, to the Owners of the Class A-7 Certificates,
until the Class A-7 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 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-7
Certificates, in an amount equal to the Class A-7 Lockout Distribution
Amount and (II) the remainder paid to the Owners of the Class A
Certificates (other than the Class A-IO 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; sixth, to the Owners of
the Class A-6 Certificates, until the Class A-6 Certificate Principal
Balance is reduced to zero; seventh, to the Owners of the Class A-7
Certificates, until the Class A-7 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 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.
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(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-1 Principal Distribution Amount shall be distributed
to the Owners of the Class M-1 Certificates, until the Class M-1
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 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-1
Certificates in clause (B) above and (y) the Class M-2 Principal
Distribution Amount shall be distributed to the Owners of the Class M-2
Certificates, until the Class M-2 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-1
Certificates pursuant to clause (B) above and the amount distributed to
the Owners of the Class M-2 Certificates pursuant to clause (C) above and
(y) the Class B-1 Principal Distribution Amount shall be delivered to the
Owners of the Class B-1 Certificates, until the Class B-1 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 (y) and the
positive difference, if any, of (i) $2,125,000 minus (ii) the Group I
Targeted Overcollateralization Amount (disregarding clause (ii) of the
definition of Group I Targeted Overcollateralization Amount) for such
Payment Date shall be applied as a payment of principal with respect to
the Subordinate Certificates in reverse order of seniority (i.e., first to
the Class B-1 Certificates, second to the related Class M-2 Certificates,
third to the related Class M-1 Certificates and fourth to the Group I
Class A Certificates (other than the Class A-IO Certificates)) until their
respective Certificate Principal Balances have been reduced to zero; and
(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.
(iii) Notwithstanding the foregoing, (x) in the event that the
Certificate Principal Balance of all of the Class A Certificates relating
to Group I 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 and the Group I Overcollateralization Amount
is zero, any amounts of
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principal payable to the Owners of the Group I Class A Certificates on
such Payment Date shall be distributed pro rata and not sequentially.
(e) With respect to the Upper-Tier Group II Distribution Account, on
each Payment Date, the Trustee shall make the following disbursements in the
following amounts:
(i) to the Class A-8 Certificates, the Class A-8
Principal Distribution Amount;
(ii) to the Class A-9 Certificates, the Class A-9
Principal Distribution Amount
provided, however, that on any Payment Date on which the Group II
Overcollateralization Amounts is zero, any amounts of principal payable to the
Owners of the Group II Certificates on such Payment Date shall be distributed
pro rata and not in accordance with the allocations set forth in the foregoing
clauses (e)(i) and (ii).
(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 any remaining Class A Interest Carry Forward
Amount, if any, with respect to Group I;
(2) to fund the Group I Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class M-1 Interest Carry Forward Amount,
if any;
(4) to fund the Class M-1 Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class M-2 Interest Carry Forward Amount,
if any;
(6) to fund the Class M-2 Realized Loss Amortization
Amount for such Payment Date;
(7) to fund the Class B-1 Interest Carry Forward Amount,
if any;
(8) to fund the Class B-1 Realized Loss Amortization
Amount for such Payment Date;
(9) to fund any amounts listed in clauses (1) and (2) 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.
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(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 any remaining Class A Interest Carry Forward
Amount, if any, with respect to Group II;
(2) to the Class A-8 and Class A-9 Certificate Insurer
in respect of any Group II Reimbursement Amount, an amount not in
excess of the excess of (x) the Group II Monthly Excess Cash Flow
Amount for such Payment Date minus the amount described in clause
(1) above over (b) the Group II Applied Realized Loss Amount, if
any, as of such Payment Date (and prior to taking into account the
payment of any Group II Extra Principal Distribution Amount for such
Payment Date);
(3) to fund the Group II Extra Principal Distribution
Amount for such Payment Date;
(4) to reimburse the Class A-8 and Class A-9 Certificate
Insurer, for any remaining Group II Reimbursement Amount;
(5) as provided in Section 7.5(h) hereof.
(h) (i) On any Payment Date, any Group I Monthly Excess Cashflow
Amount remaining after the application of Section 7.5(f)(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 (including Nonrecoverable Advances); and
(2) to fund a distribution to the Owners of the Class R
Certificates.
(ii) On any Payment Date, any Group II Monthly Excess Cashflow
Amount remaining after the application of Section 7.5(g)(1)-(4) shall be
distributed as follows:
(1) to the Master Servicer to the extent of any
unreimbursed or unrecoverable Delinquency Advances or Servicing
Advances (including Nonrecoverable Advances); and
(2) to the Supplemental Interest Payment Account, the
Supplemental Interest Amount then due to the Owners of the Class A-8
Certificates or the Class A-9 Certificates or otherwise to fund a
distribution to the Owners of the Class R Certificates.
(iii) 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:
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(1) to the Class B-1 Certificates until the
Class B-1 Certificate Principal Balance is reduced to zero;
(2) to the Class M-2 Certificates until the
Class M-2 Certificate Principal Balance is reduced to zero;
and
(3) to the Class M-1 Certificates until the Class M-1
Certificate Principal Balance is reduced to zero.
(i) [reserved].
(j) 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.
(k) 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 and the Class
A-8 and Class A-9 Certificate Insurer, 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 Control Party 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
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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 or the Control Party, as the case may
be, 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 or the Control Party, as the case may
be, 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.
(b) Federal Housing Administration debentures and rated Aa2 or
higher by Moody's and AA or better by Standard & Poor's.
(c) Freddie Mac senior debt obligations and rated Aa2 or higher by
Moody's and AA or better by Standard & Poor's.
(d) Federal Home Loan Banks' consolidated senior debt obligations
and rated Aa2 or higher by Moody's and AA or better by Standard & Poor'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 A-1 or better by Standard & Poor's and P-1 by Moody's.
(g) Investment agreements approved by the Control Party provided:
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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 Standard & Poor's, 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 and the Class A-8 and Class A-9 Certificate
Insurer receive 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 A-1 or better by Standard & Poor's and P-1 or better by Moody's.
(i) Investments in money market funds rated AAAm or AAAM-G by
Standard & Poor's and Aaa or P-1 by Moody's.
(j) Investments approved in writing by the Control Party and
acceptable to Moody's and Standard & Poor's;
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 the Class A-8
and Class A-9 Certificate Insurer, to each Underwriter, to the Sponsor, to
Standard & Poor's, and to Moody's a written report in substantially the form set
forth as Exhibit I hereto with respect to each Mortgage Loan Group, as such form
may be revised by the Trustee, the Master Servicer, Moody's and Standard &
Poor's from time to time, but in every case setting forth the information
requested on Exhibit I 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;
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(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 (other than the Class A-IO Certificates) and the
Class A-IO Notional Principal Balance of the Class A-IO Certificates as of
such Payment Date, together with the principal amount of such Class of
Offered Certificates (other than the Class A-IO 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) with respect to the Group II Certificates, the amount of
any Group II Insured Payment included in the amounts distributed in
respect of the Group II Certificates;
(vii) 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;
(viii) information furnished by the Sponsor pursuant to
Section 6049(d)(7)(C) of the Code and the regulations promulgated
thereunder to assist the Owners in computing their market discount;
(ix) the total of any Substitution Amounts and any
Loan Purchase Price amounts included in such distribution;
(x) the weighted average Coupon Rate of the Mortgage Loans
with respect to each Group;
(xi) whether a Group I Trigger Event has occurred;
(xii) the amount of any Supplemental Interest
Payment, Group I Extra Principal Distribution Amount or any Group
II Extra Principal Distribution Amount;
(xiii) the Group I Senior Enhancement Percentage;
(xiv) the Group I Overcollateralization Amount, the Group II
Overcollateralization Amount after giving effect to any payment of
principal on such Payment Date;
(xv) 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;
(xvi) the aggregate Loan Balances of all Mortgage Loans in
each Mortgage Loan Group that were repurchased during the related
Remittance Period and any repurchases pursuant to Section 8.10;
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(xvii) the amounts, if any, of any Realized Losses in each
Mortgage Loan Group for the related Remittance Period;
(xviii) the Pool Rolling Six-Month Delinquency Rate and the
Pool Cumulative Realized Losses (x) as a percentage of the average Pool
Principal Balance as of the close of business on the last day of each of
the twelve preceding Remittance Periods and (y) as a percentage of the
Original Pool Balance; and
(xix) a number with respect to each Class (the "Pool Factor"
for such Class) computed by dividing the Certificate Principal Balance for
such Class (after giving effect to any distribution of principal to be
made on such Payment Date) by the Certificate Principal Balance for such
Class on the Startup Day.
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 the Class A-8 and Class A-9 Certificate Insurer, to each
Underwriter, to the Master Servicer, to the Sponsor, to Standard & Poor's, 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 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
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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
(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, excluding any information relating to the fees or amounts due to the
Class A-8 and Class A-9 Certificate Insurer, contained in reports provided to
the Class A-8 and Class A-9 Certificate Insurer or the Trustee by the Master
Servicer hereunder and, 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.
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SECTION 7.9. ADDITIONAL REPORTS BY TRUSTEE. (a) The Trustee shall
report to the Sponsor, the Class A-8 and Class A-9 Certificate Insurer 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, the Master
Servicer or the Class A-8 and Class A-9 Certificate Insurer may from time to
time request. Without limiting the generality of the foregoing, the Trustee
shall, at the request of the Sponsor, the Master Servicer or the Class A-8 and
Class A-9 Certificate Insurer, transmit promptly to the Sponsor, the Class A-8
and Class A-9 Certificate Insurer 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, the Class A-8 and Class A-9
Certificate Insurer and the Master Servicer if any such receipts have not been
received by the Trustee.
(b) The Trustee shall immediately report to the Class A-8 and Class
A-9 Certificate Insurer, 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
1997-3" (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.
None of the assets of the Supplemental Interest Trust shall be considered assets
of the REMIC, and any amounts transferred from the REMIC to the Supplemental
Interest Trust shall be treated as distributions with respect to the Class R
Certificates.
(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 Full Interest
Distribution Amount over (ii) the sum of the Class A-8 Current Interest and the
Class A-9 Current Interest over (y) the Supplemental Interest Payment Amount
Available as of such Payment Date (the "Formula Interest Shortfall"), the
Trustee shall demand that the Designated Residual Owner fund the 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 (i) to the Owners of the Class A-8
Certificates which are not receiving the Class A-8 Full Interest Distribution
Amount with respect to such Class on such Distribution Date the amount by which
such Class A-8 Full Interest Distribution Amount exceeds the Class A-8 Current
Interest on such Payment Date (the "Class A-8 Interest Shortfall") and (ii) to
the Owners of the Class A-9 Certificates which are not receiving the Class A-9
Full Interest Distribution Amount with respect to such Class on such
Distribution Date the amount by which such Class A-9 Full Interest Distribution
Amount exceeds the Class A-9 Current Interest
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on such Payment Date (the "Class A-9 Interest Shortfall.") To the extent that
the Supplemental Interest Payment Amount Available is less than the Formula
Interest Shortfall, the Supplemental Interest Payment Amount Available shall be
applied on a pro-rata basis (x) to the Class A-8 Certificates, an amount equal
to the product of (a) a fraction, the numerator of which is the Class A-8
Interest Shortfall and the denominator of which is the Formula Interest
Shortfall and (b) the Supplemental Interest Payment Amount Available and (y) to
the Class A-9 Certificates, an amount equal to the product of (a) a fraction,
the numerator of which is the Class A-9 Interest Shortfall and the denominator
of which is the Formula Interest Shortfall and (b) the Supplemental Interest
Payment Amount Available.
(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 on behalf of the Trustee and the Class A-8
and Class A-9 Certificate Insurer and with reasonable care, and using that
degree of skill and attention that the Master 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 and the Class A-8 and
Class A-9 Certificate Insurer, as applicable, 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, the Class A-8
and Class A-9 Certificate Insurer 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, the timing of receipt of any payments required
hereby or the interests of the Class A-8 and Class A-9 Certificate Insurer 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.
(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, the Class A-8 and Class A-9 Certificate Insurer and
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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 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 Class A-8 and Class A-9 Certificate Insurer and the Trustee of the
appointment of any Sub-Servicer and shall furnish to the Class A-8 and Class A-9
Certificate Insurer and the Trustee a copy of the Subservicing Agreement. For
purposes of this Agreement, the Master shall be deemed to have received payments
on Mortgage
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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-Servicers 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. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master 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 Class A-8
and Class A-9 Certificate Insurer, 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 and the Class A-8 and
Class A-9 Certificate Insurer, as their interests may appear, and maintain at
one or more Designated Depository Institutions the Principal and Interest
Account.
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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 Account on a daily basis (but no later than the first
Business Day after receipt).
On the Startup Day and each day thereafter, as applicable, 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
and the Class A-8 and Class A-9 Certificate Insurer. 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;
(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
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(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.
The Class A-8 and Class A-9 Certificate Insurer shall have the right to
request this computer tape upon providing 3 Business Days written notice
to the Master Servicer.
(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 for deposit in the Certificate Account
pursuant to Section 7.5 of this Agreement, (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 Class A-8 and Class A-9 Certificate
Insurer, the Trustee, Moody's and Standard & Poor's, then the requirement to
maintain the Principal and Interest Account may be waived by an instrument
signed by the Class A-8 and Class A-9 Certificate Insurer, Standard & Poor's,
Trustee, 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 Class A-8 and Class A-9 Certificate Insurer, the Trustee, Moody's and
Standard & Poor's 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
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
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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) 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.
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.
Notwithstanding the foregoing, the Master Servicer may not purchase any such
Mortgage Loan unless the Master Servicer has delivered to the Trustee an opinion
of counsel experienced in federal income tax matters acceptable to the Trustee
to the effect that such a purchase would not constitute a Prohibited Transaction
for the Trust or otherwise subject the Trust to tax and would not jeopardize the
status of either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC.
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
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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 (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Master Servicer
shall indemnify the Trust and the Class A-8 and Class A-9 Certificate Insurer
out of the Master Servicer's own funds for any loss to the Trust and the Class
A-8 and Class A-9 Certificate Insurer 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 or the Class A-8 and Class A-9 Certificate
Insurer, the Master Servicer shall cause to be delivered to the Trustee and the
Class A-8 and Class A-9 Certificate Insurer, 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 or of the Class A-8 and Class A-9 Certificate Insurer. 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 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 Control Party. The Mortgage Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this Agreement. The Master Servicer shall
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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 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(c) 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, the Class A-8 and Class A-9
Certificate Insurer 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 Trust or any REMIC
therein as defined in Section 860F of the Code or cause either the Lower-Tier
REMIC or the Upper-Tier REMIC to fail to qualify as a REMIC under the REMIC
Provisions at any time that any Certificates are outstanding. Notwithstanding
the generality of the foregoing provisions, the Master Servicer shall manage,
conserve, protect and operate each REO Property for the Owners and the Class A-8
and Class A-9 Certificate Insurer 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 Lower-Tier REMIC or the Upper Tier
REMIC 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
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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 REO Property in determining whether to foreclose upon or
otherwise comparably convert the ownership of such REO Property. With respect to
any Mortgage Loan secured by a mixed use REO Property, the Master Servicer
shall, prior to foreclosing upon or otherwise comparably effecting the ownership
in the name of the Master Servicer on behalf of the Trust, either (x) perform a
"phase one environmental study" of such REO Property or (y) repurchase such REO
Property at the Loan Purchase Price.
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" and shall promptly deliver to the Class A-8 and Class
A-9 Certificate Insurer a related liquidation report with respect to such
Liquidated Loan.
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
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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 the Master Servicer shall not
have received and not returned at any one time more than 10% of 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
the Class A-8 and Class A-9 Certificate Insurer, Moody's and Standard & Poor's
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
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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 Master Servicer remits to the Trustee Master
Servicer's Trust Receipts pursuant to clauses (ii) or (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, the Class A-8 and
Class A-9 Certificate Insurer, Standard & Poor's, and Moody's, on or before the
last day of March of each year, commencing in 1998, 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 1998,
the Master Servicer, at its own expense, shall cause to be delivered to the
Trustee, the Class A-8 and Class A-9 Certificate Insurer, Standard & Poor's and
Moody's a letter or letters of a firm of independent, nationally recognized
certified public accountants reasonably acceptable to the Control Party 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 Class A-8 and Class A-9 Certificate Insurer, the FDIC and the supervisory
agents and examiners of each of the foregoing access to the documentation
regarding the Mortgage Loans required by
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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. The Class A-8 and Class A-9 Certificate Insurer
may request a copy of this computer tape upon 3 Business Days prior written
notice to the Master Servicer.
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 and the Class A-8
and Class A-9 Certificate Insurer, 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, the Class A-8 and Class A-9 Certificate Insurer and Moody's.
SECTION 8.20. REMOVAL OF MASTER SERVICER; RESIGNATION OF MASTER
SERVICER. (a) The Trustee, with the consent of the Class A-8 and Class A-9
Certificate Insurer (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;
(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
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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 or the Class A-8 and
Class A-9 Certificate Insurer of said failure; provided, however, that if
the Master Servicer can demonstrate to the reasonable satisfaction of the
Control Party that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the Control
Party; 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 or the Class
A-8 and Class A-9 Certificate Insurer 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 Control Party that it is diligently
pursuing remedial action, then the cure period may be extended with the
written approval of the Control Party.
(b) The Control Party also may remove the Master Servicer upon the
occurrence of any of the following events:
(i) a Group II Total Available Funds Shortfall; provided,
however, that the Class A-8 and Class A-9 Certificate Insurer shall have
no right to remove the Master Servicer under this clause (i) if the Master
Servicer can demonstrate to the reasonable satisfaction of the Class A-8
and Class A-9 Certificate Insurer that such event was due to circumstances
beyond the control of the Master Servicer; or
(ii) the failure by the Master Servicer to make any required
Servicing Advance; or
(iii) the failure by the Master Servicer to perform any one or
more of its obligations hereunder or under the Insurance Agreement, which
failure materially and adversely affects the interests of the Class A-8
and Class A-9 Certificate Insurer and the Trustee; or
(iv) the failure by the Master Servicer to make any required
Delinquency Advance or to pay any Compensating Interest; or
(v) (a) if on any Payment Date of the first sixty Payment
Dates after the Startup Day the aggregate Total Expected Losses for all
prior Remittance Periods since the Startup Day exceed 7.0% of the Original
Pool Balance and (b) if on any Payment Date thereafter the Total Expected
Losses for all prior Remittance Periods since the Startup Day exceed 9.0%
of the Original Pool Balance;
provided, however, with respect to clauses (iv), (v), (vi) and (vii), if the
Master Servicer can demonstrate to the reasonable satisfaction of the Control
Party that any such event was due to
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circumstances beyond the control of the Master Servicer, such event shall not be
considered an event of termination of the Master Servicer;
provided, however, that (x) prior to any removal of the Master Servicer by the
Control Party pursuant to clauses (i) or (ii) of this Section 8.20(b), the
Master Servicer shall first have been given by the Control Party and by
registered or certified mail, notice of the occurrence of one or more of the
events set forth in clauses (i), (ii) or (iii) above and the Master Servicer
shall not have remedied, or shall not have taken actions satisfactory to the
Control Party to remedy, such event or events within 30 days (60 days with
respect to clause (iii)) after the Master Servicer's receipt of such notice
(provided, however, that if the Master Servicer can demonstrate to the
reasonable satisfaction of the Control Party that it is diligently pursuing
remedial action, then the cure period in each case may be extended with the
written approval of the Control Party) 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 Class A-8
and Class A-9 Certificate Insurer or of the Trustee) at 4 p.m. on the second
Business Day following the day on which the Trustee or the Class A-8 and Class
A-9 Certificate Insurer 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 Master Servicer, the Trustee
shall so notify in writing an Authorized Officer of the Master Servicer and the
Class A-8 and Class A-9 Certificate Insurer 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 and the Class A-8 and Class A-9 Certificate Insurer.
(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.
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(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 $10,000,000, as determined in accordance
with generally accepted accounting principles, and acceptable to the Class A-8
and Class A-9 Certificate Insurer 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
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
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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
Master 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 Standard and & Poor's of the
transfer of the servicing to the successor.
(l) The Trustee shall give notice to the Class A-8 and Class A-9
Certificate Insurer, Moody's, Standard & Poor's 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 THE CLASS A-8 AND CLASS A-9 CERTIFICATE
INSURER AND THE TRUSTEE; ERRORS AND OMISSIONS INSURANCE. (a) At any reasonable
time and from time to time upon reasonable notice, the Class A-8 and Class A-9
Certificate Insurer, 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.
(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).
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SECTION 8.23. NOTICES OF MATERIAL EVENTS. The Master Servicer shall
give prompt notice to the Class A-8 and Class A-9 Certificate Insurer, the
Trustee, Moody's and Standard & Poor's 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 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 from amounts other than those
available under the Certificate Insurance Policy 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 Lower-Tier REMIC and the
Upper-Tier REMIC to adopt a plan of complete liquidation with respect to each of
the Mortgage Loan Groups as contemplated by Section 860F(a)(4) of the Code and
(y) provide to the Trustee an
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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.
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 (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, (x) the related
Group II Reimbursement Amount, if any, and (y) 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. Notwithstanding
the foregoing, the Master Servicer or its affiliate may not terminate the Trust
pursuant to this Section 9.2 if termination would result in a draw on the
Certificate Insurance Policy.
(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.
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
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any appeal is taken, following a final determination of such appeal from which
no further 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 Class A-8 and Class A-9 Certificate
Insurer, 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 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
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
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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 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.
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(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) his 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 the Class A-8 and Class A-9 Certificate Insurer or of the
Owners of a majority in Percentage Interest of the Certificates of the
affected Class or Classes and the Class A-8 and Class A-9 Certificate
Insurer relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement 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 August 28, 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):
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(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 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, the Class A-8 and
Class A-9 Certificate Insurer 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
sequestrator 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 the Class A-8 and Class A-9 Certificate
Insurer and Moody's and Standard & Poor's 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 (i) the Class A-8 and Class A-9
Certificate Insurer or (ii) with the prior written consent (which shall not be
unreasonably withheld) of the Class A-8 and Class A-9 Certificate Insurer (x)
the Sponsor 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,
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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, the Class A-8 and Class
A-9 Certificate Insurer 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 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
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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 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 Class A-8 and Class A-9 Certificate
Insurer or, if the last sentence of Section 11.18 hereof is applicable, the
Sponsor and having (x) long-term, unsecured debt rated at least A-1 by Moody's
(or such lower rating as may be acceptable to Moody's) and (y) a short-term
deposit rating of at least A-1 from Standard & Poor's (or such lower rating as
may be acceptable to Standard & Poor'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 (with the consent of the Class A-8 and Class A-9
Certificate Insurer) (which consent shall not be unreasonably withheld) or of
the Class A-8 and Class A-9 Certificate Insurer, 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 the Class
A-8 and Class A-9 Certificate Insurer and the Owners at their addresses
appearing on the Register. A copy of such notice shall be sent by the resigning
Trustee to Moody's and Standard & Poor's. Upon receiving notice of resignation,
the
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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 or by the Class A-8 and Class A-9 Certificate Insurer, the Class A-8
and Class A-9 Certificate Insurer or the Sponsor (with the written consent of
the Class A-8 and Class A-9 Certificate Insurer) 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
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, with the prior written consent of
the Class A-8 and Class A-9 Certificate Insurer, 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 and to the Class A-8 and Class A-9
Certificate Insurer, 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 Class
A-8 and Class A-9 Certificate Insurer or, if the last sentence of Section 11.18
hereof is applicable, the Sponsor may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by the Class A-8 and Class
A-9 Certificate Insurer and the Sponsor duly authorized, one complete set of
which instruments shall be delivered to the Sponsor, one complete set to the
Class A-8 and Class A-9 Certificate Insurer, 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 acceptable to the Class
A-8 and Class A-9 Certificate Insurer. 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.
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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 Class
A-8 and Class A-9 Certificate Insurer and 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.
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, Standard & Poor's and the
Class A-8 and Class A-9 Certificate Insurer. 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 Certificates so executed with the same
effect as if such successor Trustee had itself executed such Certificates.
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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 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
and the Class A-8 and Class A-9 Certificate Insurer 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 with
the consent of the Class A-8 and Class A-9 Certificate Insurer. 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.
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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.
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, the Sponsor and the Class A-8 and
Class A-9 Certificate Insurer 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, the Class A-8 and Class A-9 Certificate
Insurer or the Owners to the
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Trustee to take any action under any provision of this Agreement, the Sponsor,
the Class A-8 and Class A-9 Certificate Insurer 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:
(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 and/or the Class A-8 and Class A-9
Certificate Insurer. 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, the Class A-8 and Class
A-9 Certificate Insurer or by the Sponsor shall be sufficient for every purpose
hereunder if 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
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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.
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, the Class A-8 and Class A-9 Certificate Insurer 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 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
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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 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. The Trustee, the Sponsor and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Class A-8 and Class A-9 Certificate Insurer but 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, with the prior written consent of the Class A-8
and Class A-9 Certificate Insurer but 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 definitions of
"Group I Targeted Overcollateralization Amount" and "Group II Targeted
Overcollateralization Amount"; provided, however, that no such change shall
affect the weighted average life of the related Class of Offered Certificates
(assuming an appropriate prepayment
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speed as determined by the Representative) by more than five percent, as
determined by the Representative.
(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 the Class A-8 and Class A-9 Certificate Insurer and
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 and to the Class A-8 and Class A-9 Certificate
Insurer to the effect that such amendment would not adversely affect the status
of the REMIC Trust as a REMIC. Neither such opinion of counsel nor any expense
of any such proposed amendment shall be at the Trustee's expense.
(e) The Class A-8 and Class A-9 Certificate Insurer, the
Owners, Moody's and Standard & Poor's 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. 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 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,
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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 receiving a written request from the Trustee 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).
(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 the prior written consent
of the Class A-8 and Class A-9 Certificate Insurer and 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. Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained, and delivered to the Class A-8 and
Class A-9 Certificate Insurer, an opinion of counsel experienced in federal
income tax matters (which opinion shall be at the expense of the Sponsor) 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.
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(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).
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. THE CLASS A-8 AND CLASS A-9 CERTIFICATE
INSURER. The Class A-8 and Class A-9 Certificate Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Class A-8 and Class
A-9 Certificate Insurer shall be suspended during any period in which the Class
A-8 and Class A-9 Certificate Insurer is in default in its payment obligations
under the Certificate Insurance Policy, except with respect to amendments to
this Agreement pursuant to Section 11.14. During the continuance of a Class A-8
and Class A-9 Certificate Insurer Default, the Class A-8 and Class A-9
Certificate Insurer's rights hereunder shall vest in the Trustee on behalf of
the Owners of the Group II Certificates and shall be exercisable by the Owners
of at least a majority in Percentage Interest of the Group II Certificates then
Outstanding or, if there are no Group II Certificates then Outstanding and the
Certificate Insurance Policy has expired or a Class A-8 and Class A-9
Certificate Insurer Default has occurred and is continuing, by at least a
majority of the Subordinate Certificates then Outstanding or if there are no
Group II Certificates or Subordinate Certificates outstanding and any and all
amounts due and owing the Class A-8 and Class A-9 Certificate Insurer under the
Insurance Agreement have been paid in full, and the Certificate Insurance Policy
has expired or is unavailable due to a Class A-8 and Class A-9 Certificate
Insurer Default, by at least a majority of the Class R Certificates then
Outstanding. At such time as the Group II Certificates are no longer Outstanding
hereunder and the Class A-8 and Class A-9 Certificate Insurer has been
reimbursed for all Group II Reimbursement Amounts to which it is entitled
hereunder and the Certificate Insurance Policy has expired, the Class A-8 and
Class A-9 Certificate Insurer's rights hereunder shall terminate.
SECTION 11.19. 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.
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SECTION 11.20. 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 1997-3
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 Servicer : Advanta Mortgage Corp. USA
16875 West Bernardo Drive
San Diego, California 92127
Tel: (619) 674-3317
Fax: (619) 674-3592
The Certificate MBIA Insurance Corporation
Insurer: 113 King Street
Armonk, New York 10504
Attention: Insured Portfolio
Management - SF (Advanta Mortgage
Loan Trust Series 97-3)
Telecopy No.: (914) 765-3919
Confirmation: (914) 765-3111
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Mortgage Monitoring
Department
Standard & Poor's: Standard & Poor's Ratings Group
26 Broadway
15th Floor
New York, New York 10004
Attention: Surveillance Dept.
Underwriters: Lehman Brothers, Inc.
as Representative of the
Underwriters
3 World Financial Center
200 Vesey Street
New York, New York 10285
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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:________________________________________
[POOLING AND SERVICING AGREEMENT]
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STATE OF CALIFORNIA )
: ss.:
COUNTY OF )
On the ____ day of _________, 1997, before me personally came
___________ to me known, who, being by me duly sworn did depose and say that
his/her office is located at Three Park Plaza, Irvine, California 92714; that
s/he is ________________ of Bankers Trust Company of California, N.A., the
national banking corporation described in and that executed the above instrument
as Trustee; and that s/he signed his/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> 1
EXHIBIT 4.2
<PAGE> 2
EXHIBIT 4.2
EXECUTION COPY
- -------------------------------------------------------------------------------
MASTER LOAN TRANSFER AGREEMENT
Dated as of June 15, 1997
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
ADVANTA NATIONAL BANK
ADVANTA FINANCE CORP.,
as Affiliated Originators
ADVANTA CONDUIT RECEIVABLES, INC.
as an Affiliate
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
and
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor
- -------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <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..................................................................... 18
Section 14. Further Assurances.......................................................... 18
Section 15. The Certificate Insurer..................................................... 18
Section 16. Maintenance of Records...................................................... 18
</TABLE>
i
<PAGE> 4
THIS MASTER LOAN TRANSFER AGREEMENT, dated as of June 15,
1997, 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 Advanta National Bank, each a
seller (each an "Affiliated Originator" and collectively, the "Affiliated
Originators"), Advanta Conduit Receivables, Inc. (the "Affiliate"), 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.
<PAGE> 5
Bulk Acquisition Loan: Any Mortgage Loan purchased by an
Affiliated Originator from another Originator (other than any other Affiliated
Originator) as part of a bulk portfolio acquisition.
Conduit Acquisition P&S: The Pooling and Servicing Agreement
dated as of May 1, 1997 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 Cut-Off 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.
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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.
Trustee: Bankers Trust Company of California, N.A., located on
the date of execution of this Agreement at 3 Park
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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. 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 either (i) a 360-day year comprised of twelve 30-day
months or (ii) a 360-day year and the actual number of days elapsed in the
applicable interest period, as required by the related Note.
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 Advanta 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 performance and compliance with the
terms of this Agreement and the Conveyance Agreements to which it is a
party have been
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<PAGE> 8
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 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
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<PAGE> 9
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 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)
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<PAGE> 10
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 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,
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<PAGE> 11
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, 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.
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<PAGE> 12
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 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.
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(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 manufactured homes which
qualify as eligible for inclusion in a REMIC, 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 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;
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(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 related Mortgage Loan as the holder of a valid
first, second or third 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
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(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 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, (which may be a blanket policy of the type described in the
related Advanta Pooling Agreement) a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable carrier is in
effect with respect to such Property in an amount representing
coverage, and which provides for a recovery by the Master Servicer 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 (iii) 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;
(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
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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;
(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
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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 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 and each
Third Mortgage Loan, either (A) no consent for such Mortgage Loan was
required by the holder of the related Senior Lien (and, in the case of
a Third Mortgage Loan, the holder of the related second lien) prior to
the
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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 or a Third
Mortgage Loan is at least twelve months prior to the 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) 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
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(xxxviii) 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 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
16
<PAGE> 20
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: Treasurer
Telecopy: (215) 283-4745
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.
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.
17
<PAGE> 21
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
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.
18
<PAGE> 22
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 FINANCE CORP.
ADVANTA NATIONAL BANK
The Sellers
and
ADVANTA CONDUIT RECEIVABLES, INC.
An Affiliate
By:__________________________________________
Name: Mark Dunsheath
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee and not in its
individual capacity
By:__________________________________________
Name:
Title:
ADVANTA MORTGAGE CONDUIT SERVICES,
INC. as Sponsor
By:__________________________________________
Name: Mark Dunsheath
Title: Vice President
19
<PAGE> 23
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 Finance Corp. and Advanta National Bank, as Affiliated Originators,
Advanta Conduit Receivables, Inc., as an Affiliate, and Advanta Mortgage Conduit
Services, Inc., as Sponsor, pursuant to the Master Loan Transfer Agreement dated
as of June 15, 1997 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, the
Affiliate 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, the Affiliate 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> 24
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> 25
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 NATIONAL BANK,
as Affiliated Originators
and
ADVANTA CONDUIT RECEIVABLES, INC.
as an Affiliate
By:__________________________________________
Mark Dunsheath
Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC.
as Sponsor
By:__________________________________________
Mark Dunsheath
Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:__________________________________________
Name:
Title:
ADVANTA FINANCE CORP.
By:__________________________________________
Name:
Title:
A-3
<PAGE> 26
EXHIBIT B
AUTHORIZED REPRESENTATIVES
Reference is hereby made to the Master Loan Transfer
Agreement, dated as of June 15, 1997 (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 Finance Corp. and Advanta
National Bank, as Affiliated Originators, Advanta Conduit Receivables, Inc., as
an Affiliate, Advanta Mortgage Conduit Services, Inc., as Sponsor and Bankers
Trust Company of California, N.A., as Trustee:
The following are the Affiliated Originators' Authorized
Representatives for purposes of the Agreement:
<TABLE>
<CAPTION>
Name Title
<S> <C>
[Annette Aguirre] [Senior Vice President, General Counsel and
Secretary]
[Mark Dunsheath] [Treasurer]
</TABLE>
The following are the Sponsor's Authorized Representatives for
purposes of the Agreement:
<TABLE>
<CAPTION>
Name Title
<S> <C>
[Annette Aguirre] [Senior Vice President, General Counsel and
Secretary]
[Mark Dunsheath] [Treasurer]
</TABLE>
B-1
<PAGE> 1
EXHIBIT 4.3
<PAGE> 2
EXECUTION COPY
CONVEYANCE AGREEMENT
Advanta Mortgage Corp. USA ("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 Finance Corp. and Advanta National Bank, as Affiliated Originators,
Advanta Conduit Receivables, Inc., as an Affiliate, Advanta Mortgage Conduit
Services, Inc. as Sponsor (the "Sponsor"), pursuant to the Master Loan Transfer
Agreement dated as of June 15, 1997 (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, the Affiliate and the Sponsor of those
Mortgage Loans listed on the Schedule of Mortgage Loans (the "Transferred
Mortgage Loans") (attached as Schedule I to the Pooling and Servicing Agreement
dated as of September 1, 1997, among the Sponsor, USA and Bankers Trust Company
of California, N.A., as Trustee) from the Conduit Acquisition Trust to the
Advanta Mortgage Loan Trust 1997-3 (the "Trust").
Conveyance of Transferred Mortgage Loans. Each Affiliated
Originator, the Affiliate 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:
(i) to convey to Advanta Conduit Receivables, Inc., 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;
and (ii) to convey, from Advanta Conduit Receivables, Inc. 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 Advanta Conduit Receivables, Inc. 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, N.A.,
in its capacity as Trustee (the "Trustee") such original Mortgage or mortgage
assignment with evidence of recording indicated thereon upon receipt thereof
from the public recording official.
<PAGE> 3
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.
The 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 September 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 September 1, 1997 by and among the
Sponsor, USA and the Trustee.
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Mortgage Transfer Agreement.
<PAGE> 4
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 NATIONAL BANK,
as Affiliated Originators
and
ADVANTA CONDUIT RECEIVABLES, INC.,
as an Affiliate
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: ______________________________________________
Name:
Title:
ADVANTA FINANCE CORP.
By: ______________________________________________
Name:
Title:
Dated: September 18, 1997
<PAGE> 1
EXHIBIT 4.4
<PAGE> 2
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: $475,000,000 Advanta Mortgage Loan POLICY NUMBER: 24814
Asset-Backed Certificates, Series 1997-3,
consisting of $110,000,000 Adjustable Rate
Class A-8 Group II Certificates and $365,000,000
Adjustable Rate Class A-9 Group II Certificates
MBIA Insurance Corporation (the "Certificate Insurer"), in
consideration of the payment of the premium and subject to the terms of this
Certificate Guaranty Insurance Policy (this "Policy"), hereby unconditionally
and irrevocably guarantees to any Owner that an amount equal to each full and
complete Insured Payment will be received by Bankers Trust Company of
California, N.A. or its successors, as trustee for the Owners (the "Trustee"),
on behalf of the Owners from the Certificate Insurer, for distribution by the
Trustee to each Owner of each Owner's proportionate share of the Insured
Payment. The Certificate Insurer's obligations hereunder with respect to a
particular Insured Payment shall be discharged to the extent funds equal to the
applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in this Policy and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Certificate Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust or the Trustee
for withholding taxes, if any (including interest and penalties in respect of
any such liability). This Policy does not cover, and Insured Payments do not
include, Civil Relief Act Shortfalls.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such a preference payment, (ii) an opinion of counsel satisfactory
to the Certificate Insurer that such order is final and not subject to appeal,
(iii) an assignment in such form as is reasonably required by the Certificate
Insurer, irrevocably assigning to the Certificate Insurer all rights and claims
of the Owner relating to or arising under the Obligations against the debtor
which made such preference payment or otherwise with respect to such preference
payment and (iv) appropriate instruments to effect the appointment of the
Certificate Insurer as agent for such Owner in any legal proceeding related to
such preference payment, such instruments being in a form satisfactory to the
Certificate Insurer, provided that if such documents are received after 12:00
noon New York City time on such Business Day, they will be deemed to be received
on the following Business Day. Such payments shall be disbursed to the
<PAGE> 3
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Certificate Insurer will pay any other amount payable hereunder no
later than 12:00 noon New York City time on the later of the Payment Date on
which the related Deficiency Amount is due or the third Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A., as Fiscal Agent for the Certificate Insurer or any successor
fiscal agent appointed by the Certificate Insurer (the "Fiscal Agent") of a
Notice (as described below); provided that if such Notice is received after
12:00 noon New York City time on such Business Day, it will be deemed to be
received on the following Business Day. If any such Notice received by the
Fiscal Agent is not in proper form or is otherwise insufficient for the purpose
of making claim hereunder it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Certificate Insurer or the
Fiscal Agent, as the case may be, shall promptly so advise the Trustee and the
Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Certificate Insurer only and the
Fiscal Agent shall in no event be liable to Owners for any acts of the Fiscal
Agent or any failure of the Certificate Insurer to deposit or cause to be
deposited, sufficient funds to make payments due under this Policy.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Pooling and Servicing Agreement, dated as of
September 1, 1997, among Advanta Mortgage Corp. USA, as Master Servicer, Advanta
Mortgage Conduit Services, Inc., as Sponsor, and the Trustee, as trustee,
without regard to any amendment or supplement thereto.
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which the Certificate Insurer or banking institutions in the State
of New York 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.
"Deficiency Amount" means the excess, if any, of Required Distributions
over the Net Available Distribution Amount.
"Insured Payment" means (i) as of any Payment Date, any Deficiency
Amount and (ii) any Preference Amount.
<PAGE> 4
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by fax substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing on
the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on the
applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Required Distributions" means, as of any Payment Date, the sum of (i)
the Class A-8 Current Interest and the Class A-9 Current Interest plus any Class
A-8 and Class A-9 Interest Carry Forward Amounts and (ii) any Class A-8 and
Class A-9 Applied Realized Loss Amounts.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Certificate Insurer.
Any notice hereunder or service of process on the Fiscal Agent of the
Certificate Insurer may be made at the address listed below for the Fiscal Agent
of the Certificate Insurer or such other address as the Certificate Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
<PAGE> 5
IN WITNESS WHEREOF, the Certificate Insurer has caused this Policy to
be executed and attested this 18th day of September 1997.
MBIA INSURANCE CORPORATION
________________________________________
President
Attest: ________________________________________
Assistant Secretary
<PAGE> 6
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: 24814
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 24814
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Certificate Insurer"), with reference to Certificate Guaranty Insurance Policy
Number: 24814 (the "Policy") issued by the Certificate Insurer in respect of the
$475,000,000 Advanta Mortgage Loan Asset-Backed Certificates, Series 1997-3,
consisting of $110,000,000 Adjustable Rate Class A-8 Group II Certificates and
$365,000,000 Adjustable Rate Class A-9 Rate Group II Certificates (the
"Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of September 1, 1997 among Advanta Mortgage Corp.
USA, as Master Servicer, Advanta Mortgage Conduit Services, Inc., as
Sponsor, and the Trustee, as trustee for the Owners;
(ii) the amount due under the definition of Deficiency Amount
for the Payment Date occurring on (the "Applicable Payment
Date") is $ (the "Deficiency Amount");
(iii) the amount of previously distributed payments on the
Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the
Bankruptcy Code in accordance with a final nonappealable order of a
court having competent jurisdiction is $ (the "Preference
Amount");
<PAGE> 7
(iv) the total Insured Payment due is $ , which amount
equals the sum of the Deficiency Amount and the Preference Amount;
(v) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (ii) above to be applied to the payment of the Deficiency
Amount for the Applicable Payment Date in accordance with the Agreement
and for the dollar amount of the Insured Payment set forth in (iii)
above to be applied to the payment of any Preference Amount; and
(vi) the Trustee directs that payment of the Insured Payment
be made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the day of , .
[NAME OF TRUSTEE], as Trustee
By __________________________________
Title _______________________________
<PAGE> 1
EXHIBIT 4.5
<PAGE> 2
September 18, 1997
Lehman Brothers Inc.
3 World Financial Center
200 Vessey Street
New York, New York 10285
Re: Underwriting Agreement dated September 5, 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 Representative 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 Representative 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 Representative by Advanta or another
affiliate of AMHC.
<PAGE> 3
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:
LEHMAN BROTHERS INC.
as Representative of the Underwriters
By:
----------------------------
Name:
Title:
[AMHC Guaranty -- Underwriter]
<PAGE> 1
EXHIBIT 10.1
<PAGE> 2
EXHIBIT 10.1
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Certificate Insurer
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor
and
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
INDEMNIFICATION AGREEMENT
Advanta Mortgage Loan Asset-Backed Certificates, Series 1997-3
Adjustable Rate Class A-8 Group II Certificates
Adjustable Rate Class A-9 Group II Certificates
Dated as of September 5, 1997
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions.....................................................................................1
Section 2. Representations and Warranties of the Certificate Insurer.......................................1
Section 3. Agreements, Representations and Warranties of the Underwriters..................................1
Section 4. Agreements, Representations and Warranties of the Sponsor.......................................1
Section 5. Indemnification.................................................................................1
Section 6. Notice To Be Given..............................................................................1
Section 7. Contribution....................................................................................1
Section 8. Notices.........................................................................................1
Section 9. Governing Law, Etc..............................................................................1
Section 10. Insurance Agreement; Underwriting Agreement; Pooling and Servicing Agreements...................1
Section 11. Limitations.....................................................................................1
Section 12. Counterparts....................................................................................1
</TABLE>
TESTIMONIUM ..................................................... SIGNATURE PAGE
SIGNATURES AND SEALS............................................. SIGNATURE PAGE
<PAGE> 4
INDEMNIFICATION AGREEMENT
This Agreement, dated as of September 5, 1995, is by and among MBIA
Insurance Corporation (the "Certificate Insurer"), as the Certificate Insurer
under the Certificate Guaranty Insurance Policy (the "Policy") issued in
connection with the Advanta Mortgage Loan Asset-Backed Certificates, Series
1997-3, Adjustable Rate Class A-8 Group II Certificates and Adjustable Rate
Class A-9 Group II Certificates described below, Advanta Mortgage Conduit
Services, Inc. (the "Sponsor") and Lehman Brothers Inc., as Representative of
the Underwriters (the "Representative").
Section 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings stated herein, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate.
Capitalized terms used in this Agreement but not otherwise defined herein will
have the meanings ascribed to such terms in the Pooling and Servicing Agreements
(as described below).
"Act" means the Securities Act of 1933, as amended, together with all
related rules and regulations.
"Agreement" means this Indemnification Agreement by and among the
Insurer, the Sponsor and the Underwriters.
"Class A-8 and A-9 Certificates" means the Advanta Mortgage Loan
Asset-Backed Certificates, Series 1997-3 Adjustable Rate Class A-8 Group II
Certificates and Adjustable Rate Class A-9 Group II Certificates issued pursuant
to the Pooling and Servicing Agreement.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 5 below, as the context requires.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 5 below, as the context requires.
"Insurance Agreement" means the Insurance Agreement, dated as of
September 18, 1997, by and among the Certificate Insurer, the Sponsor, the
Master Servicer, the Joint Obligor, and the Trustee.
"Insurer Party" means the Certificate Insurer and its respective
parents, subsidiaries and affiliates and any shareholder, director, officer,
employee, agent or any "controlling person" (as such term is used in the Act) of
any of the foregoing.
"Losses" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"Master Servicer" means Advanta Mortgage Corp. USA, as Master Servicer.
<PAGE> 5
"Offered Certificates" means the Advanta Mortgage Loan Asset-Backed
Certificates, Series 1997-3, Adjustable Rate Class A-1 Group I Certificates,
6.61% Class A-2 Group I Certificates, 6.69% Class A-3 Group I Certificates,
6.87% Class A-4 Group I Certificates, 6.97% Class A-5 Group I Certificates,
7.30% Class A-6 Group I Certificates, 6.92% Class A-7 Group I Certificates,
5.00% Class A-IO Group I Certificates, Adjustable Rate Class A-8 Group II
Certificates, Adjustable Rate Class A-9 Group II Certificates, 7.20% Class M-1
Group I Certificates, 7.37% Class M-2 Group I Certificates and 7.72% Class B-1
Group I Certificates issued pursuant to the Pooling and Servicing Agreement.
"Person" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization or any government or agency or political
subdivision thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of September 1, 1997 by and among the Sponsor, the Master
Servicer and the Trustee.
"Prospectus" means the form of final Prospectus included in the
Registration Statement on each date that the Registration Statement and any post
effective amendment or amendments thereto became effective.
"Prospectus Supplement" means the form of final Prospectus Supplement
dated September 5, 1997.
"Registration Statement" means the registration statement on Form S-3
of the Sponsor relating to the Offered Certificates.
"Sponsor Party" means the Sponsor, each of its parents, subsidiaries
and affiliates and any shareholder, director, officer, employee, agent or any
"controlling person" (as such term is used in the Act) of any of the foregoing.
"State Securities Law" means any state, local or foreign statute, and
any rule or regulation thereunder, regulating (i) transactions and dealings in
securities, (ii) any Person or entity engaging in such transactions or advising
with respect to securities or (iii) investment companies.
"Trustee" means Bankers Trust Company of California, N.A. or any
successor thereto.
"Underwriter Party" means each Underwriter and each of its parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Act) of any of the
foregoing.
"Underwriters" means Lehman Brothers Inc., Bear, Stearns & Co., Inc.,
J.P. Morgan Securities, Inc., Morgan Stanley and Co. Incorporated and Prudential
Securities Incorporated.
"Underwriting Agreement" means the Underwriting Agreement by and
between the Sponsor and the Representative, dated September 5, 1997.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE CERTIFICATE INSURER.
The Certificate Insurer represents and warrants to the Underwriters and the
Sponsor as follows:
2
<PAGE> 6
(a) Organization and Licensing. The Certificate Insurer is a
duly incorporated and existing New York stock insurance company
licensed to do business in the State of New York.
(b) Corporate Power. The Certificate Insurer has the corporate
power and authority to issue the Policies and to execute and deliver
this Agreement and the Insurance Agreement and to perform all of its
obligations hereunder and thereunder.
(c) Authorization; Approvals. The issuance of the Policies and
the execution, delivery and performance of this Agreement and the
Insurance Agreement have been duly authorized by all necessary
corporate proceedings. No further approvals or filings of any kind,
including, without limitation, any further approvals of or further
filings with any governmental agency or other governmental authority,
or any approval of the Insurer's board of directors or stockholders,
are necessary for the Policies, this Agreement and the Insurance
Agreement to constitute the legal, valid and binding obligations of the
Certificate Insurer.
(d) Enforceability. The Policies, when issued, and this
Agreement and the Insurance Agreement will each constitute a legal,
valid and binding obligation of the Certificate Insurer, enforceable in
accordance with its terms, subject to applicable laws affecting the
enforceability of creditors' rights generally.
(e) Financial Information. The consolidated financial
statements of the Certificate Insurer as of December 31, 1996 and
December 31, 1995 and for the three years ended December 31, 1996
incorporated by reference in the Prospectus Supplement (the
"Certificate Insurer Audited Financial Statements"), fairly present in
all material respects the financial condition of the Certificate
Insurer as of such date and for the period covered by such statements
in accordance with generally accepted accounting principles
consistently applied. The consolidated financial statements of the
Certificate Insurer and its subsidiaries for the six months ended June
30, 1997 incorporated by reference in the Prospectus Supplement (the
"Certificate Insurer Unaudited Financial Statements") fairly present in
all material respects the financial condition of the Certificate
Insurer as of such date and for the period covered by such statements
in accordance with generally accepted accounting principles applied in
a manner consistent with the accounting principles used in preparing
the Certificate Insurer Audited Financial Statements, and, since June
30, 1997, there has been no material change in such financial condition
of the Certificate Insurer which would materially and adversely affect
its ability to perform its obligations under the Policy.
(f) Certificate Insurer Information. The information in the
Prospectus Supplement as of the date hereof under the captions "THE
CLASS A-8 AND CLASS A-9 INSURER" and "THE CLASS A-8 AND CLASS A-9
INSURANCE POLICY" (the "Insurer Information") is true and correct in
all material respects and does not contain any untrue statement of a
fact that is material to the Certificate Insurer's ability to perform
its obligations under the Policies.
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Certificate Insurer's
knowledge, threatened against it at law or in equity or before or by
any court, governmental agency, board or commission or any arbitrator
3
<PAGE> 7
which, if decided adversely, would materially and adversely affect its
condition (financial or otherwise) or operations or which would
materially and adversely affect its ability to perform its obligations
under this Agreement, the Policy or the Insurance Agreement.
Section 3. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE
UNDERWRITERS. Each Underwriter represents and warrants to and agrees with the
Sponsor and the Insurer that the statements in the Prospectus Supplement made in
reliance upon and in conformity with written information relating to such
Underwriter furnished to the Sponsor specifically for use in the preparation of
the Prospectus Supplement, and acknowledged in writing as described in Section
8H of the Underwriting Agreement (referred to herein as the "Underwriter
Information"), are true and correct in all material respects.
Section 4. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE SPONSOR.
The Sponsor represents and warrants to and agrees with the Certificate Insurer
and the Underwriters as follows:
(a) Registration Statement. The information in the
Registration Statement, the Prospectus and the Prospectus Supplement,
other than the Insurer Information, is true and correct in all material
respects and does not contain any untrue statement of a fact that is
material or omit to state a fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Organization. The Sponsor is duly incorporated and
existing 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, makes
such qualification necessary.
(c) Corporate Power. The Sponsor has the corporate power and
authority to execute and deliver this Agreement, the Underwriting
Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement and to perform all of its obligations hereunder and
thereunder.
(d) Authorization; Approvals. The execution, delivery and
performance of this Agreement, the Underwriting Agreement, the Pooling
and Servicing Agreement and the Insurance Agreement by the Sponsor have
been duly authorized by all necessary corporate proceedings. No further
approvals or filings of any kind, including, without limitation, any
further approvals of or further filing with any governmental agency or
other governmental authority, or any approval of the Sponsor's board of
directors or stockholders, are necessary for this Agreement, the
Underwriting Agreement, the Pooling and Servicing Agreement and the
Insurance Agreement to constitute the legal, valid and binding
obligations of the Sponsor.
(e) Enforceability. This Agreement, the Pooling and Servicing
Agreement, the Underwriting Agreement and the Insurance Agreement will
each constitute a legal, valid and binding obligation of the Sponsor,
each enforceable in accordance with its terms, subject, as to the
enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of
creditors' rights generally applicable in the event of the bankruptcy,
insolvency or reorganization of the Sponsor and to general principles
of equity.
4
<PAGE> 8
(f) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Sponsor's knowledge,
threatened against it at law or in equity or before any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its condition
(financial or otherwise) or operations of it or would materially and
adversely affect its ability to perform its obligations under this
Agreement, the Underwriting Agreement, the Pooling and Servicing
Agreement or the Insurance Agreement.
Section 5. INDEMNIFICATION. (a) The Certificate Insurer hereby agrees,
upon the terms and subject to the conditions of this Agreement, to indemnify,
defend and hold harmless each Sponsor Party and each Underwriter Party against
any and all Losses incurred by them with respect to the offer and sale of any of
the Class A-8 and Class A-9 Certificates and resulting from the Certificate
Insurer's breach of any of its representations and warranties set forth in
Section 2 of this Agreement.
(b) Each Underwriter hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by it with respect to the
offer and sale of any of the Class A-8 and Class A-9 Certificates and resulting
from such Underwriter's breach of any of its representations and warranties set
forth in Section 3 of this Agreement.
(c) The Sponsor hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by it with respect to the
offer and sale of any of the Class A-8 and Class A-9 Certificates and resulting
from the Sponsor's breach of any of its representations and warranties set forth
in Section 4 of this Agreement.
(d) Upon the incurrence of any Losses entitled to indemnification
hereunder, the Indemnifying Party shall reimburse the Indemnified Party promptly
upon establishment by the Indemnified Party to the Indemnifying Party of the
Losses incurred.
Section 6. NOTICE TO BE GIVEN. (a) Except as provided in Section 7
below with respect to contribution, the indemnification provided herein by the
Indemnifying Party shall be the exclusive remedy of each Indemnified Party for
the Losses resulting from the Indemnifying Party's breach of a representation,
warranty or agreement hereunder; provided, however, that each Indemnified Party
shall be entitled to pursue any other remedy at law or in equity for any such
breach so long as the damages sought to be recovered shall not exceed the Losses
incurred thereby resulting from such breach.
(b) In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Indemnified Party to be
indemnified under this Agreement, such party shall give the Indemnifying Party
written or facsimile notice of such action or claim reasonably promptly after
receipt of written notice thereof.
(c) Upon request of the Indemnified Party, the Indemnifying Party shall
retain counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements
5
<PAGE> 9
of such counsel related to such proceeding. The Indemnifying Party may, at its
option, at any time upon written notice to the Indemnified Party, assume the
defense of any proceeding and may designate counsel reasonably satisfactory to
the Indemnified Party in connection therewith provided that the counsel so
designated would have no actual or potential conflict of interest in connection
with such representation. Unless it shall assume the defense of any proceeding,
the Indemnifying Party shall not be liable for any settlement of any proceeding,
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. The Indemnifying Party shall be entitled to
participate in the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, each Indemnified Party.
(d) The Indemnified Party will have the right to employ its own counsel
in any such action, but the fees and expenses of such counsel will be at the
expense of such Indemnified Party unless (1) the employment of counsel by the
Indemnified Party at the Indemnifying Party's expense has been authorized in
writing by the Indemnifying Party, (2) the Indemnifying Party has not in fact
employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action or (3) the named
parties to any such action include the Indemnifying Party on the one hand and,
on the other hand, the Indemnified Party, and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them (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 or proceeding on such Indemnified
Party's behalf), in each of which cases the reasonable fees and expenses of
counsel (including local counsel) will be at the expense of the Indemnifying
Party, and all such fees and expenses will be reimbursed promptly as they are
incurred. In the event that any expenses so paid by the Indemnifying Party are
subsequently determined to not be required to be borne by the Indemnifying Party
hereunder, the party which received such payment shall promptly refund to the
Indemnifying Party the amount so paid by such Indemnifying Party.
Notwithstanding the foregoing, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, the Indemnifying Party shall not
be liable for the fees and expenses of more than one counsel for all Seller
Parties, more than one counsel for all Underwriters Parties and more than one
counsel for all Insurer Parties, as applicable.
(e) The Indemnified Parties shall cooperate with the Indemnifying
Parties in resolving any event which would give rise to an indemnity obligation
pursuant to Section 5 hereof in the most efficient manner.
(f) No settlement of any such claim or action shall be entered into
without the consent of each Indemnified Party who is subject to such claim or
action, on the one hand, and each Indemnifying Party who is subject to such
claim or action, on the other hand; provided, however, that the consent of such
Indemnified Party shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such
Indemnified Party.
6
<PAGE> 10
(g) Any failure by an Indemnified Party to comply with the provisions
of this Section shall relieve the Indemnifying Party of liability only if such
failure is materially prejudicial to any legal pleadings, grounds, defenses or
remedies in respect thereof or the Indemnifying Party's financial liability
hereunder, and then only to the extent of such prejudice.
Section 7. CONTRIBUTION. (a) To provide for just and equitable
contribution if the indemnification provided by the Certificate Insurer is
determined to be unavailable for any Underwriter Party or Sponsor Party (other
than pursuant to Section 5 or 6 of this Agreement), the Certificate Insurer
shall contribute to the aggregate costs of liabilities arising from any breach
of a representation or warranty set forth in this Agreement on the basis of the
relative fault of all Underwriter Parties, all Sponsor Parties and all Insurer
Parties, respectively.
(b) To provide for just and equitable contribution if the
indemnification provided by the Sponsor is determined to be unavailable for any
Insurer Party (other than pursuant to Section 5 or 6 of this Agreement), the
Sponsor shall contribute to the aggregate costs of liabilities arising from any
breach of a representation or warranty set forth in this Agreement on the basis
of the relative fault of all Underwriter Parties, all Sponsor Parties and all
Insurer Parties.
(c) To provide for just and equitable contribution if the
indemnification provided by each Underwriter is determined to be unavailable for
any Insurer Party (other than pursuant to Section 5 or 6 of this Agreement),
such Underwriter shall contribute to the aggregate costs of liabilities arising
from any breach of a representation or warranty set forth in this Agreement on
the basis of the relative fault of all Underwriter Parties, all Sponsor Parties
and all Insurer Parties. In no case shall any Underwriter be responsible for any
amount in excess of the Underwriting discount applicable to the Certificates
purchased by such Underwriters pursuant to the Underwriting Agreement.
(d) The relative fault of each Indemnifying Party, on the one hand, and
of each Indemnified Party, on the other hand, shall be determined by reference
to, among other things, whether the breach of, or alleged breach of, any of its
representations and warranties set forth in Section 2, 3 or 4 of this Agreement
relates to information supplied by, or action within the control of, the
Indemnifying Party or the Indemnified Party and the Parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
breach.
(e) The Parties agree that the Certificate Insurer shall be solely
responsible for the Insurer Information and for the Insurer Financial
Statements, that each Underwriter shall be solely responsible for the
Underwriter Information provided by such Underwriter in writing for use in the
Prospectus Supplement and that the Sponsor shall be responsible for all other
information in the Registration Statement and the Prospectus Supplement.
(f) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(g) The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any
7
<PAGE> 11
Underwriter Party, any Sponsor Party or any Insurer Party, (ii) the issuance of
any Class A-8 and Class A-9 Certificates or the Policy or (iii) any termination
of this Agreement.
(h) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
Section 8. NOTICES. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Certificate Insurer: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio
Management --
Structured Finance
(1 PM-5F)
If to the Sponsor: Advanta Mortgage Conduit Services,
Inc.
16875 West Bernardo Drive
San Diego, CA 92127
Attention: General Counsel
If to the Underwriters: Lehman Brothers Inc.,
as Representative of the
Underwriters
Three World Financial Center
New York, NY 10285-1200
Attention: General Counsel
Section 9. GOVERNING LAW, ETC. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Certificate Insurer, the Sponsor
and the Representative of the Underwriters.
Section 10. INSURANCE AGREEMENT; UNDERWRITING AGREEMENT; POOLING AND
SERVICING AGREEMENTS. This Agreement in no way limits or otherwise affects the
indemnification obligations of the Sponsor under (a) the Insurance Agreement,
(b) the Underwriting Agreement or (c) the Pooling and Servicing Agreements.
Section 11. LIMITATIONS. Nothing in this Agreement shall be
construed as a representation or undertaking by the Certificate Insurer
concerning maintenance of the rating currently assigned to its claims-paying
ability by Moody's Investors Service, Inc. ("Moody's") and/or Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P") or any
other rating agency (collectively, the "Rating Agencies").
8
<PAGE> 12
Section 12. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall together constitute but one and
the same instrument.
9
<PAGE> 13
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, all as of the date first above written.
MBIA INSURANCE CORPORATION,
as Certificate Insurer
By___________________________________________
Title________________________________________
ADVANTA MORTGAGE CONDUIT
SERVICES, INC., as Sponsor
By___________________________________________
Title________________________________________
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
By___________________________________________
Title________________________________________
10
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Prospectus Supplement of
our report dated February 3, 1997, on our audits of the consolidated financial
statements of MBIA Insurance Corporation and Subsidiaries as of December 31,
1996 and 1996 and for each of the three years in the period ended December 31,
1996. We also consent to the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand
Coopers & Lybrand
September 10, 1997
New York, New York
