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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)
November 2, 1998
Advanta Mortgage Loan Trust 1998-4A
Advanta Mortgage Loan Trust 1998-4B
Advanta Mortgage Loan Trust 1998-4C
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(Exact name of registrant as specified in its charter)
33-52531-02
33-52531-03
Delaware 33-52531-04 Applied For
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(State of Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
Attention: President 19477
Welsh & McKean Roads (Zip Code)
Spring House, Pennsylvania
(Address of Principal Executive Offices)
Registrant's telephone number, including area code
(215) 657-4000
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No change
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
Advanta Mortgage Conduit Services, Inc. (the "Registrant") registered an
issuance of $3,595,000,000 in principal amount of Mortgage Loan Asset-Backed
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by the Registration Statement
on Form S-3 (File No. 333-52351) (the "Registration Statement").
Pursuant to the Registration Statement, (i) Advanta Mortgage Loan Trust
1998-4A ("Trust A") issued approximately $650,000,000 in aggregate principal
amount of its Class A Floating Rate Mortgage Backed Notes (the "Class A Notes"),
on November 17, 1998 (the "Closing Date"), (ii) Advanta Mortgage Loan Trust
1998-4B ("Trust B") issued approximately $350,000,000 in aggregate principal
amount of its Class B Floating Rate Mortgage Backed Notes (the "Class B Notes"),
on the Closing Date and (iii) Advanta Mortgage Loan Trust 1998-4C ("Trust C,"
and together with Trust A and Trust B, the "Trusts") issued approximately
$100,000,000 in aggregate principal amount of its Class C Floating Rate Mortgage
Backed Notes (the "Class C Notes," and together with the Class A Notes and the
Class B Notes, the "Notes"), on 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 Notes, the forms of which were filed as Exhibits to the Registration
Statement.
The Class A Notes were issued pursuant to an Indenture (the "Class A
Indenture") attached hereto as Exhibit 4.1.1, dated as of November 1, 1998,
between Trust A and Bankers Trust Company of California, N.A., in its capacity
as Indenture Trustee (the "Indenture Trustee"). The Class B Notes were issued
pursuant to an Indenture (the "Class B Indenture") attached hereto as Exhibit
4.1.2, dated as of November 1, 1998, between Trust B and the Indenture Trustee.
The Class C Notes were issued pursuant to an Indenture (the "Class C Indenture")
attached hereto as Exhibit 4.1.3, dated as of November 1, 1998, between Trust C
and the Indenture Trustee.
The Class A Notes, the Class B Notes and the Class C Notes evidence
indebtedness of Trust A, Trust B and Trust C, respectively. Also issued, but not
offered, by each of the Trusts are Certificates ("Certificates") evidencing the
ownership interest in such Trust. The Certificates will initially be retained by
Advanta Mortgage Holding Trust 1998-4.
The primary assets of each of the Trusts is pool of closed-end mortgage
loans ("Mortgage Loans") secured by mortgages on one- to- four family
residential properties to be conveyed to each of the Trusts on the Closing Date.
As of the Closing Date, the Mortgage Loans had the characteristics described in
the Prospectus dated September 15, 1998 and the Prospectus Supplement dated
November 2, 1998 filed pursuant to Rule 424(b)(5) of the Act with the
Commission.
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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 November 2, 1998, among
the Registrant and Morgan Stanley & Co. Incorporated as Underwriter.
4.1.1 Trust A Indenture, dated as of November 1, 1998,
between Advanta Mortgage Loan Trust 1998-4A and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.1.2 Trust B Indenture, dated as of November 1, 1998,
between Advanta Mortgage Loan Trust 1998-4B and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.1.3 Trust C Indenture, dated as of November 1, 1998,
between Advanta Mortgage Loan Trust 1998-4C and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.2.1 Holding Trust Trust Agreement, dated as of November 1,
1998, between Advanta Mortgage Conduit Services, Inc., as Sponsor, and
Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta
Holding Trust.
4.2.2 Trust A Trust Agreement, dated as of November 1, 1998,
between Advanta Mortgage Conduit Services, Inc., as Sponsor, and Wilmington
Trust Company, as Owner Trustee, relating to the formation of Trust A.
4.2.3 Trust B Trust Agreement, dated as of November 1, 1998,
between Advanta Mortgage Conduit Services, Inc., as Sponsor, and Wilmington
Trust Company, as Owner Trustee, relating to the formation of Trust B.
4.2.4 Trust C Trust Agreement, dated as of November 1, 1998,
between Advanta Mortgage Conduit Services, Inc., as Sponsor, and Wilmington
Trust Company, as Owner Trustee, relating to the formation of Trust C.
4.3.1 Sale and Servicing Agreement, dated as of November 1,
1998, among Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Trust A, as Issuer, and Bankers Trust
Company of California, N.A., as Indenture Trustee.
4.3.2 Sale and Servicing Agreement, dated as of November 1,
1998, among Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Trust B, as Issuer, and Bankers Trust
Company of California, N.A., as Indenture Trustee.
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4.3.3 Sale and Servicing Agreement, dated as of November 1, 1998,
among Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta Mortgage
Corp. USA, as Master Servicer, Trust C, as Issuer, and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.4 Note Guaranty Insurance Policies, each dated November 2,
1998, and issued and delivered by Ambac Assurance Corporation.
4.5.1 Conveyance Agreement, dated November 24, 1998, among Advanta
Mortgage Conduit Services, Inc., the Affiliated Originators, Advanta Conduit
Receivables, Inc. and Bankers Trust Company of California, N.A.
4.5.2 Conveyance Agreement, dated November 24, 1998, among Advanta
Mortgage Conduit Services, Inc., the Affiliated Originators, Advanta Conduit
Receivables, Inc. and Bankers Trust Company of California, N.A.
4.5.3 Conveyance Agreement, dated November 24, 1998, among Advanta
Mortgage Conduit Services, Inc., the Affiliated Originators, Advanta Conduit
Receivables, Inc. and Bankers Trust Company of California, N.A.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated
as of November 24, 1998.
10.1 Master Loan Transfer Agreement, dated June 15, 1997, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, 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. and Advanta Mortgage Corp. USA
(collectively, the "Affiliated Originators"), Advanta Conduit Receivables Inc.
and Bankers Trust Company of California, N.A., as Trustee.
10.2 Indemnification Agreement, dated September 25, 1998, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta National Bank and
Advanta Finance Corp., as Originators, Bear, Stearns & Co. Inc., as Underwriter,
and MBIA Insurance Corporation, as Insurer.
23.1 Consent of KPMG Peat Marwick LLP regarding financial
statements of Ambac Assurance Corporation and their report.*
* Previously filed on Form 8-K filed with the Securities and
Exchange Commission on November 24, 1998.
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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 thereunto duly authorized.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor and on behalf of Advanta Mortgage Loan Trust
1998-4A, Advanta Mortgage Loan Trust 1998-4B, Advanta
Mortgage Loan Trust 1998-4C and Advanta Mortgage
Loan Trust 1998-4 Registrants
By: /s/ Mark Dunsheath
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Name: Mark Dunsheath
Title: Vice President
Dated: December 21, 1998
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated November 2, 1998, among the
Registrant and Morgan Stanley & Co. Incorporated as
Underwriter.
4.1.1 Trust A Indenture, dated as of November 1, 1998, between Advanta
Mortgage Loan Trust 1998-4A and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.1.2 Trust B Indenture, dated as of November 1, 1998, between Advanta
Mortgage Loan Trust 1998-4B and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.1.3 Trust C Indenture, dated as of November 1, 1998, between Advanta
Mortgage Loan Trust 1998-4C and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.2.1 Holding Trust Trust Agreement, dated as of November 1, 1998,
between Advanta Mortgage Conduit Services, Inc., as Sponsor, and
Wilmington Trust Company, as Owner Trustee, relating to the
formation of Advanta Holding Trust.
4.2.2 Trust A Trust Agreement, dated as of November 1, 1998, between
Advanta Mortgage Conduit Services, Inc., as Sponsor, and
Wilmington Trust Company, as Owner Trustee, relating to the
formation of Trust A.
4.2.3 Trust B Trust Agreement, dated as of November 1, 1998, between
Advanta Mortgage Conduit Services, Inc., as Sponsor, and
Wilmington Trust Company, as Owner Trustee, relating to the
formation of Trust B.
4.2.4 Trust C Trust Agreement, dated as of November 1, 1998, between
Advanta Mortgage Conduit Services, Inc., as Sponsor, and
Wilmington Trust Company, as Owner Trustee, relating to the
formation of Trust C.
4.3.1 Sale and Servicing Agreement, dated as of November 1, 1998, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Trust A, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee.
4.3.2 Sale and Servicing Agreement, dated as of November 1, 1998, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Trust B, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee.
4.3.3 Sale and Servicing Agreement, dated as of November 1, 1998, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Trust C, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee.
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4.4 Note Guaranty Insurance Policies, each dated November 2, 1998 and
issued and delivered by Ambac Assurance Corporation.
4.5.1 Conveyance Agreement, dated November 24, 1998, among Advanta
Mortgage Conduit Services, Inc., the Affiliated Originators,
Advanta Conduit Receivables, Inc. and Bankers Trust Company of
California, N.A.
4.5.2 Conveyance Agreement, dated November 24, 1998, among Advanta
Mortgage Conduit Services, Inc., the Affiliated Originators,
Advanta Conduit Receivables, Inc. and Bankers Trust Company of
California, N.A.
4.5.3 Conveyance Agreement, dated November 24, 1998, among Advanta
Mortgage Conduit Services, Inc., the Affiliated Originators,
Advanta Conduit Receivables, Inc. and Bankers Trust Company of
California, N.A.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as
of November 24, 1998.
10.1 Master Loan Transfer Agreement, dated June 15, 1997, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, 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. and Advanta Mortgage Corp. USA
(collectively, the "Affiliated Originators"), Advanta Conduit
Receivables Inc. and Bankers Trust Company of California, N.A.,
as Trustee.
10.2 Indemnification Agreement, dated September 25, 1998, among
Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
National Bank and Advanta Finance Corp., as Originators, Bear,
Stearns & Co. Inc., as Underwriter, and MBIA Insurance
Corporation, as Insurer.
23.1 Consent of KPMG Peat Marwick LLP regarding financial statements
of Ambac Assurance Corporation and their report.*
* Previously filed on form 8-K filed with the Securities and
Exchange Commission on November 24, 1998.
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Exhibit 1.1
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Mortgage Loan Asset-Backed Notes,
Series 1998-4
UNDERWRITING AGREEMENT
November 2, 1998
MORGAN STANLEY & CO. INCORPORATED
As Underwriter
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Advanta Mortgage Conduit Services, Inc. (the "Company") has authorized the
issuance and sale of Mortgage Loan Asset-Backed Notes, Series 1998-4, consisting
of (i) the Advanta Mortgage Loan Trust 1998-4 A Class A Mortgage Backed Notes
(the "Class A Notes"), (ii) the Advanta Mortgage Loan Trust 1998-4 B Class B
Mortgage Backed Notes (the "Class B Notes"), (iii) the Advanta Mortgage Loan
Trust 1998-4 C Class C Mortgage Backed Notes (the "Class C Notes," and together
with the Class A Notes and the Class B Notes, the "Notes") and (iv) the equity
class with respect to each Trust (the "Residual Certificates"). Only the Class A
Notes, the Class B Notes and the Class C Notes (collectively, the "Underwritten
Notes") are being offered hereby.
The Class A Notes will be issued by Advanta Mortgage Loan Trust 1998-4 A
("Trust A"). The Class B Notes will be issued by Advanta Mortgage Loan Trust
1998-4 B ("Trust B"). The Class C Notes will be issued by Advanta Mortgage Loan
Trust 1998-4 C ("Trust C"). Each of Trust A, Trust B and Trust C is referred to
herein as a "Trust or "Trusts". The Trusts are each separate business trusts
established under Delaware law pursuant to separate Trust Agreement, each dated
as of November 2, 1998 (the "Trust Agreements"), between the Company and
Wilmington Trust Company, a Delaware banking corporation, as owner Trustee.
Each class of Notes will evidence in the aggregate the obligations of the
respective Trust issuing such class of Notes. The trust estate (the "Trust
Estate") of each Trust will consist primarily of a pool (the "Mortgage Pools")
of closed-end mortgage loans (the "Mortgage Loans"), and certain related
property. The Mortgage Loans owned by Trust A shall have, as of November 24,
1998 (the "Closing Date"), an aggregate principal balances of approximately
$461,929,124. The Mortgage Loans owned by Trust B shall have, as of November 24,
1998 (the "Closing Date"), an aggregate principal balances of approximately
$213,198,103. The Mortgage Loans owned by Trust C shall have, as of November 24,
1998 (the "Closing Date"), an aggregate principal balances of approximately
$102,472,109. In addition, following the Closing Date, the Trust Estates of
Trust A and Trust B will each contain certain monies on deposit which may be
used to acquire from the Sponsor after the Closing Date additional Mortgage Loan
meeting certain qualifications.
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Each class of Notes is to be issued under a separate Indenture with
respect to each Trust, to be dated as of November 1, 1998 (an "Indenture"),
between such Trust and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee"). Each Trust, the Indenture Trustee, the
Company and Advanta Mortgage Corp. USA will also enter into a separate Sale and
Servicing Agreement, each to be dated as of November 1, 1998 (the "Sale and
Servicing Agreements").
On or prior to the date of issuance of Notes, the Trusts will obtain a
guaranty insurance policy (the "Policies") issued by AMBAC Assurance Corporation
(the "Insurer") which will unconditionally and irrevocably guarantee to the
Trustee for such Trust, for the benefit of the holders of the Notes issued by
such Trust, the amount by which the Insured Distribution Amount (as defined in
such Trust's respective Indenture) for each of the Notes exceeds the Available
Funds Amount (as defined in such Trust's respective Indenture) for each such
group.
The Notes are more fully described in a Registration Statement (as defined
hereinafter) which the Company has furnished to the Underwriter. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indentures.
Simultaneously with the execution of the Indentures, the Company will
enter into a conveyance agreement pursuant to the Master Loan Transfer Agreement
dated as of June 27, 1997 among the Indenture Trustee, the Affiliate and the
Affiliated Originators (as defined therein) named thereon (together, the
"Purchase Agreement"), pursuant to which the Affiliated Originators will
transfer to the Company all of their right, title and interest in and to the
Mortgage Loans as of the Closing Date.
Section I. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with the Underwriter 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 Underwriter. 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 Underwritten Notes and any prospectus filed with the
Commission by the Company with the consent of the Underwriter pursuant to
Rule 424(a) of
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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
Underwritten Notes, as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations.
Reference made herein to any Preliminary Prospectus or to the Prospectus
shall be deemed to refer to and include any documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of such Preliminary Prospectus or the Prospectus, as
the case may be, and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any document filed under the Securities Exchange Act of 1934 (the
"Exchange Act") after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be deemed
to include any report of the Company filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective Time that
is incorporated by reference in the Registration Statement. The Commission
has not issued any order preventing or suspending the use of any
Preliminary Prospectus. There are no contracts or documents of the Company
which are required to be filed as exhibits to the Registration Statement
pursuant to the Securities Act or the Rules and Regulations which have not
been so filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statements. The conditions for use of
Form S-3, as set forth in the General Instructions thereto, have been
satisfied.
To the extent that the Underwriter (i) has provided to the Company
Collateral term sheets (as hereinafter defined) that the 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 the
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
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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 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 Underwriter expressly for use
therein.
C. The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Securities Act
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 Indentures, the Sale and
Servicing Agreements and the Purchase Agreement, and to cause the
Underwritten Notes to be issued.
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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
Indentures, the Sale and Servicing Agreements, the Purchase Agreement, or
the Underwritten Notes, (c) which seeks to prevent the issuance of the
Underwritten Notes or the consummation by the Company of any of the
transactions contemplated by the Indentures, the Purchase Agreement, the
Trust Agreements 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 Indentures,
the Sale and Servicing Agreements, the Purchase Agreement, this Agreement
or the Underwritten Notes.
G. This Agreement has been, and the Indentures, the Sale and
Servicing Agreements 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 Indentures, the Sale and Servicing Agreements and the
Purchase Agreement when executed and delivered as contemplated herein,
will constitute, legal, valid and binding instruments enforceable against
the Company in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally,
(y) general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law), and (z) with respect to
rights of indemnity under this Agreement and limitations of public policy
under applicable securities laws.
H. The execution, delivery and performance of this Agreement, the
Indentures, the Sale and Servicing Agreements and the Purchase Agreement
by the Company and the consummation of the transactions contemplated
hereby and thereby, and the issuance and delivery of the Underwritten
Notes 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.
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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 Indenture Trustee to execute,
authenticate, issue and deliver the Underwritten Notes has been duly
authorized by the Company, and assuming the Indenture Trustee has been
duly authorized to do so, when executed, authenticated, issued and
delivered by the Indenture Trustee in accordance with the Indentures, the
Underwritten Notes will be validly issued and outstanding and will be
entitled to the benefits provided by the Indentures.
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 Underwritten Notes and
the sale of the Underwritten Notes to the Underwriter, or the consummation
by the Company of the other transactions contemplated by this Agreement,
the Indentures, the Sale and Servicing Agreements 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 Underwritten
Notes by the Underwriter 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 Indentures and the
Sale and Servicing Agreements, the Company will: (i) have good title to
the interest in the Mortgage Loans conveyed by the Affiliated Originators,
free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse
claim or other security interest (collectively, "Liens"); (ii) not have
assigned to any person any of its right, title or interest in the Mortgage
Loans, in the Purchase Agreement, in the Indentures, the Sale and
Servicing Agreements or in the Underwritten Notes being issued pursuant
thereto; (iii) have the power and authority to sell its interest in the
Mortgage Loans to the Trusts; and (iv) the Trusts have the power to assign
or pledge the Mortgage Loans to the Indenture Trustee and to sell the
Underwritten Notes to the Underwriter. Upon execution and delivery of the
Indentures and the Sale and Servicing Agreements by the Indenture Trustee,
the Indenture Trustee will have acquired beneficial ownership of
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all of the Company's right, title and interest in and to the Mortgage
Loans. Upon delivery to the Underwriter of the Underwritten Notes, the
Underwriter will have good title to the Underwritten Notes, free of any
Liens.
N. As of the opening of business on November 1, 1998 (the "Statistic
Calculation 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 Trusts are "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 Underwritten Notes, the Sale and
Servicing Agreements and the Indentures will conform in all material
respects to the descriptions thereof contained in the Prospectus.
Q. At the Closing Date, the Underwritten Notes 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 Indentures,
the Sale and Servicing Agreements, the Purchase Agreement and the
Underwritten Notes 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 Sale and Servicing Agreements and the
Indentures will be true and correct in all material respects.
Any certificate signed by an officer of the Company and delivered to the
Underwriter or counsel for the Underwriter in connection with an offering of the
Underwritten Notes 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 Underwriter to
purchase the Underwritten Notes 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 Indenture Trustee to issue and agrees to sell to
the Underwriter, and the Underwriter agrees (except as provided in Sections X
and XI hereof) to purchase from the Company the aggregate initial principal
amounts of Underwritten Notes set forth on Schedule A, at the purchase price or
prices set forth in Schedule A.
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Section III. Delivery and Payment. Delivery of and payment for the
Underwritten Notes to be purchased by the Underwriter shall be made at the
offices of Dewey Ballantine LLP, 1301 Sixth Avenue, New York, New York 10019, or
at such other place as shall be agreed upon by the Underwriter and the Company
at 10:00 A.M. New York City time on November 24, 1998 or at such other time or
date as shall be agreed upon in writing by the Underwriter and the Company.
Payment shall be made to the Company by wire transfer of same day funds payable
to the account of the Company. Delivery of the Underwritten Notes shall be made
to the Underwriter against payment of the purchase price thereof. The
Underwritten Notes shall be in such denominations and registered in such names
as the Underwriter may request in writing at least two business days prior to
the Closing Date. The Underwritten Notes will be made available for examination
by the Underwriter 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 Underwriter. It is understood that, subject to
the terms and conditions hereof, the Underwriter proposes to offer the
Underwritten Notes 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 Underwriter
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 Underwriter, 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 Underwriter 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 Underwritten Notes, to promptly advise the Underwriter 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 Underwritten Notes 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
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<PAGE> 9
qualification, the Company promptly shall use its best efforts to obtain
the withdrawal of such order or suspension.
B. To furnish promptly to the Underwriter and to counsel for the
Underwriter a true and correct copy of the Registration Statement as
originally filed with the Commission, and of each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriter such number of the
following documents as the Underwriter shall reasonably request: (i) true
and correct 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 Underwritten Notes, 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 Underwriter and, upon the Underwriter's
request, shall file such document and prepare and furnish without charge
to the Underwriter and to any dealer in securities as many copies as the
Underwriter 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 Underwriter
are required to deliver a Prospectus in connection with sales of any of
the Underwritten Notes at any time nine months or more after the Effective
Time, upon the request of the Underwriter but at the expense of the
Underwriter, the Company shall prepare and deliver to the Underwriter as
many copies as the 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 Underwriter, 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
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<PAGE> 10
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 Underwriter and counsel for the Underwriter
and obtain the consent of the Underwriter to the filing.
F. To make generally available to holders of the Underwritten Notes
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 Underwriter, to
qualify the Underwritten Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United
States as the Underwriter 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 Underwritten Notes. 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 Underwritten Notes have been so
qualified.
H. Not, without the Underwriter'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 Underwritten Notes to
the public.
I. So long as the Underwritten Notes shall be outstanding, to
deliver to the Underwriter as soon as such statements are furnished to the
Indenture Trustee: (i) the annual statement as to compliance delivered to
the Indenture Trustee pursuant to Section 3.9 of the Indentures; (ii) the
annual statement of a firm of independent public accountants furnished to
the Indenture Trustee pursuant to the Indentures; and (iii) the Monthly
Statement furnished to the Noteholders pursuant to the Indentures.
J. To apply the net proceeds from the sale of the Underwritten Notes
in the manner set forth in the Prospectus.
Section VI. Conditions to the Underwriter' Obligations. The obligations of
the Underwriter to purchase the Underwritten Notes 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
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<PAGE> 11
performance by the Company of all of their respective obligations hereunder;
and (iii) the following conditions as of the Closing Date:
A. The Underwriter 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 Underwriter 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 LLP, counsel for the Underwriter, 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 Indentures, the
Purchase Agreement, the Sale and Servicing Agreements, the Underwritten
Notes, 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
Underwriter, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
D. The Underwriter shall have received the favorable opinion of
Dewey Ballantine LLP, 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 Sale and Servicing
Agreements. 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 Sale and Servicing
Agreements, the Indentures and the Purchase Agreement.
2. This Agreement, the Notes, the Sale and Servicing Agreements, the
Indentures 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
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<PAGE> 12
(other than the Notes) constitutes the valid, legal and binding agreement
of the Company.
3. Neither the transfer of the Mortgage Loans to each Trust, the
issuance or sale of the Notes nor the execution, delivery or performance
by the Company of the Sale and Servicing Agreements, the Indentures, this
Agreement or the Purchase Agreement (A) conflicts or will conflict with or
results or will result in a breach of, or constitutes or will constitute a
default under, (i) any term or provision of the certificate of
incorporation or bylaws of the Company; (ii) any term or provision of any
material agreement, contract, instrument or indenture, to which the
Company is a party or is bound and known to such counsel; or (iii) any
order, judgment, writ, injunction or decree of any court or governmental
agency or body or other tribunal having jurisdiction over the Company and
known to such counsel; or (B) results in, or will result in the creation
or imposition of any lien, charge or encumbrance upon a Trust Estate or
upon the Notes, except as otherwise contemplated by the Indentures.
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 Indenture 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
Indenture 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 Sale and Servicing Agreements,
the Indentures, this Agreement, the Purchase Agreement or the offer,
issuance, sale or delivery of the Notes or the consummation of any other
transaction contemplated thereby by the Company, except such which have
been obtained.
6. There are no actions, proceedings or investigations, to such
counsel's knowledge, pending or threatened against the Company before any
court, governmental agency or body or other tribunal (i) asserting the
invalidity of the Sale and Servicing Agreements, the Indentures, this
Agreement, the Purchase Agreement or the Notes, (ii) seeking to prevent
the issuance of the Notes or the consummation of any of the transactions
contemplated by the Sale and Servicing Agreements, the Indentures or this
Agreement or (iii) which would materially and adversely affect the
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<PAGE> 13
performance by the Company of obligations under, or the validity or
enforceability of, the Indentures, the Sale and Servicing Agreements, the
Notes, the Purchase Agreement or this Agreement.
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 Notes
(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. The Indentures are required to be qualified under the Trust
Indenture Act of 1939. The registration of the Trusts under the Investment
Company Act of 1940 is not presently required.
10. The statements in the Prospectus and the Prospectus Supplement
set forth under the captions "DESCRIPTION OF THE NOTES," "THE SALE AND
SERVICING AGREEMENTS" and the statements in the Prospectus Supplement set
forth under the caption "DESCRIPTION OF THE NOTES," to the extent such
statements purport to summarize certain provisions of the Notes or of the
Indentures, 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 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. Such opinion shall also relate to comparable matters with
respect to the Affiliated Originators and Advanta Mortgage Holding
Company.
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<PAGE> 14
13. No information has come to such counsel's attention which causes
them to believe that the Prospectus (other than the financial statements
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.
14. Such other matters as the Underwriter 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
Indenture 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 Underwriter 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 Underwriter and counsel for the
Underwriter, to the effect that they have performed certain specified
procedures requested by the Underwriter with respect to the information
set forth in the Prospectus and certain matters relating to the Company.
F. The Underwritten Notes shall have received the ratings listed on
Schedule A hereto, and such ratings shall not have been rescinded or
downgraded. The Underwriter and counsel for the Underwriter shall have
received copies of any opinions of counsel supplied to the rating
organizations relating to any matters with respect to the Notes. Any such
opinions shall be dated the Closing Date and addressed to the Underwriter
or accompanied by reliance letters to the Underwriter or shall state that
the Underwriter may rely upon them.
G. The Underwriter 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 Sale and Servicing Agreements, the Indentures 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 Sale and Servicing
Agreements, the Indentures, the Purchase Agreement and in all related
agreements, as of the date specified in such agreements, are true and
correct, and the Company has complied with all the agreements and
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<PAGE> 15
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 Indentures, the Sale and Servicing Agreements, 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 Indentures is true and correct in
all material respects;
5. there has been no amendment or other document filed affecting the
articles of incorporation or bylaws of the Company since September 30,
1998, and no such amendment has been authorized. No event has occurred
since September 30, 1998, which has affected the good standing of the
Company under the laws of the State of Delaware;
6. there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
September 30, 1998;
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 Indentures, the Sale and
Servicing Agreements, this Agreement, or any other document delivered
pursuant hereto, on the date of such execution, or on the Closing
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<PAGE> 16
Date, as the case may be, in connection with the transactions described in
the Indentures, the Purchase Agreement and this Agreement was, at the
respective times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
The Company shall attach to such certificate a true and correct copy of
its certificate or articles of incorporation, as appropriate, and bylaws which
are in full force and effect on the date of such certificate and a certified
true copy of the resolutions of its Board of Directors with respect to the
transactions contemplated herein.
H. The Underwriter shall have received a favorable opinion of
counsel to the Indenture Trustee, dated the Closing Date and in form and
substance satisfactory to the Underwriter, to the effect that:
1. the Indenture 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 Indentures;
2. the Indentures have been duly authorized, executed and delivered
by the Indenture Trustee and the Indentures constitute the legal, valid
and binding obligation of the Indenture Trustee, enforceable against the
Indenture 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 Indenture
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 Indenture Trustee in connection with its execution and delivery of the
Indentures or the performance of its obligations thereunder;
4. the Notes have been duly executed, authenticated and delivered by
the Indenture Trustee; and
5. the execution and delivery of, and performance by the Indenture
Trustee of its obligations under, the Indentures do not conflict with or
result in a violation of any statute or regulation applicable to the
Indenture Trustee, or the charter or bylaws of the Indenture Trustee, or
to the best knowledge of such counsel, any governmental authority having
jurisdiction over the Indenture Trustee or the terms of any indenture or
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<PAGE> 17
other agreement or instrument to which the Indenture 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 Indenture 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 Indenture Trustee.
I. The Underwriter shall have received from the Indenture Trustee a
certificate, signed by the President, a senior vice president or a vice
president of the Indenture Trustee, dated the Closing Date, to the effect
that each person who, as an officer or representative of the Indenture
Trustee, signed or signs the Notes, the Indentures or any other document
delivered pursuant hereto, on the date hereof or on the Closing Date, in
connection with the transactions described in each of the Indentures was,
at the respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures.
J. The Policies relating to the Underwritten Notes 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 Underwriter 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 Underwriter, to the effect that:
1. The Insurer is a stock insurance corporation, duly incorporated
and validly existing under the laws of the State of Wisconsin. The Insurer
is validly licensed to do business in New York and is authorized to issue
the Policies and perform its obligations under the Policies in accordance
with the terms thereof.
2. The execution and delivery by the Insurer of the Policies, and of
that certain Indemnification Agreement, dated November 2, 1998 (the
"Indemnification Agreement"), between the Insurer and the Underwriter, and
that certain Insurance and Indemnification Agreement (the "Insurance
Agreement"), dated as of November 1, 1998, by and among the Insurer, the
Company, the Indenture Trustee and the Trusts, are within the corporate
power of the Insurer and have been authorized by all necessary corporate
action on the part of the Insurer; the Policies have been duly executed
and are valid and binding obligation of the Insurer enforceable in
accordance with their terms except that the enforcement of the Policies
may be limited by laws relating to bankruptcy, insolvency, reorganization,
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<PAGE> 18
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
constitutes 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 Policies; to the extent required by applicable legal
requirements that would adversely affect validity or enforceability of the
Policies, the form of the Policies have been filed with, and approved by,
all governmental authorities having jurisdiction over the Insurer in
connection with the Policies.
5. The Policies are not required to be registered under the
Securities Act.
6. The information set forth under the caption "THE INSURANCE
POLICIES" and "THE INSURER" in the Prospectus and the Prospectus
Supplement forming a part of the Registration Statement, insofar as such
statements constitute a description of the Policies, accurately summarizes
the Policies.
In rendering this opinion, such counsel may rely, as to matters of fact,
on certificates of responsible officers of the Company, the Indenture 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.
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 Securities 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
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<PAGE> 19
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 Securities 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, 1997, of (A) the
Company and its subsidiaries or (B) the Insurer, that is in the
Underwriter's judgment material and adverse and that makes it in the
Underwriter's judgment impracticable to market the Underwritten Notes on
the terms and in the manner contemplated in the Prospectus.
O. The Underwriter 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 Policies, the
Indemnification Agreement, the Insurance 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 Policies, the Insurance Agreement or the
Indemnification Agreement;
2. Each person who as an officer or representative of the Insurer,
signed or signs the Policies, 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 "THE INSURANCE POLICY" and "THE INSURER" is true and correct in
all material respects and does not omit to state a material fact with
respect to the description of the Policies or the ability of the Insurer
to meet its payment obligations under the Policies;
4. The tables regarding the Insurer's capitalization set forth in
the Prospectus Supplement under the heading "THE INSURANCE POLICY" and
"THE INSURER" presents fairly the capitalization of the Insurer as of
September 30, 1998;
19
<PAGE> 20
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 Securities Act;
6. The audited balance sheet of the Insurer as of December 31, 1997
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 September 30, 1998 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, 1997 audited statements.
7. To the best knowledge of such officer, since September 30, 1998,
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 Underwriter shall have received from Dewey Ballantine LLP,
special counsel to the Company, a survey in form and substance
satisfactory to the Underwriter, indicating the requirements of applicable
local law which must be complied with in order to transfer and service the
Mortgage Loans pursuant to the Sale and Servicing Agreements and the
Indentures and the Company shall have complied with all such requirements.
Q. The Underwriter shall have received from Dewey Ballantine LLP,
special counsel to the Underwriter, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes, the
20
<PAGE> 21
Prospectus and such other related matters as the Underwriter shall
reasonably require.
R. The Underwriter and counsel for the Underwriter shall have
received copies of any opinions of counsel to the Company supplied to the
Indenture Trustee relating to matters with respect to the Notes. Any such
opinions shall be dated the Closing Date and addressed to the Underwriter
or accompanied by reliance letters to the Underwriter or shall state the
Underwriter may rely thereon.
S. The Underwriter shall have received such further information,
certificates and documents as the Underwriter may reasonably have
requested not fewer than three (3) full business days prior to the Closing
Date.
T. Prior to the Closing Date, counsel for the Underwriter 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 Underwritten Notes 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 Notes as herein contemplated
shall be satisfactory in form and substance to the Underwriter and counsel
for the Underwriter.
U. 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 Underwriter,
impractical or inadvisable to proceed with the public offering or delivery
of the Notes on the terms and in the manner contemplated in the
Prospectus.
V. The Notes shall have received the ratings set forth on Schedule A
hereto.
21
<PAGE> 22
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 Underwriter 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 Underwriter.
Section VII. Payment of Expenses. The Company agrees to pay: (a) the costs
incident to the authorization, issuance, sale and delivery of the Underwritten
Notes 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 Underwritten Notes
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 Underwriter); (f) any fees charged by securities rating services for rating
the Underwritten Notes; and (g) all other costs and expenses incident to the
performance of the obligations of the Company; provided that, except as provided
in this Section VII, the Underwriter shall pay their own costs and expenses,
including the costs and expenses of Dewey Ballantine LLP, any transfer taxes on
the Underwritten Notes which they may sell and the expenses of advertising any
offering of the Underwritten Notes made by the Underwriter.
If this Agreement is terminated by the Underwriter, in accordance with the
provisions of Section VI or Section X, the Company shall reimburse the
Underwriter for their respective reasonable out-of-pocket expenses, including
fees and disbursements of Dewey Ballantine LLP, counsel for the Underwriter.
Section VIII. Indemnification and Contribution.
A. The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the 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 Underwritten Notes), to
which the 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
22
<PAGE> 23
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 the Underwriter and each such controlling
person promptly upon demand for any legal or other expenses reasonably
incurred by the 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 (as defined herein)) furnished to the Company by or on behalf
of the Underwriter specifically for inclusion therein; and provided,
further, that as to any Preliminary Prospectus this indemnity shall not
inure to the benefit of the Underwriter or any controlling person on
account of any loss, claim, damage, liability or action arising from the
sale of the Underwritten Notes to any person by or on behalf of the
Underwriter if the 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 Underwriter 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 the 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 the Underwriter or any
controlling person of the Underwriter.
B. The Underwriter agrees 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
23
<PAGE> 24
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 (including any Derived Information (as defined herein))
furnished to the Company by or on behalf of the 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 the Underwriter may otherwise have to the Company or
any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this
Section VIII of notice of any claim or the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section VIII, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify an indemnifying
party shall not relieve it from any liability which it may have under this
Section VIII except to the extent it has been materially prejudiced by
such failure, and provided, further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section VIII.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section VIII for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
24
<PAGE> 25
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 Underwriter, if the indemnified
parties under this Section VIII consist of the Underwriter 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. The Underwriter agrees to deliver to the Company, no later than
the date on which the Prospectus Supplement is required to be filed
pursuant to Rule 424, a copy of its Derived Information (defined below)
for filing with the Commission on Form 8-K.
E. The Underwriter agrees, assuming all Company-Provided Information
(defined below) is accurate and complete in all material
25
<PAGE> 26
respects, to severally and not jointly indemnify and hold harmless the
Company, each of the Company's officers and directors and each person who
controls the Company within the meaning of Section 15 of the Securities
Act against any and all losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement of a material fact contained in the Derived Information provided
by the Underwriter, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by him, her or it in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability
or action as such expenses are incurred. The obligations of each of the
Underwriter under this Section VIII(E) shall be in addition to any
liability which the 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
Underwriter 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
26
<PAGE> 27
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 Underwriter on the other from the offering of the Underwritten
Notes 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 Underwriter 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.
The relative benefits of the Underwriter and the Company shall be deemed
to be in such proportion so that the Underwriter 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 Underwriter 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 Underwriter, 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 Underwriter 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 the Underwriter be responsible for any amount in excess
of the underwriting discount applicable to the Underwritten Notes purchased by
the Underwriter hereunder. No person guilty of fraudulent misrepresentation
(within the
27
<PAGE> 28
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 Underwriter 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 Underwriter 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 Underwriter or controlling
persons thereof, or by or on behalf of the Company and shall survive delivery of
any Underwritten Notes to the Underwriter.
Section X. Termination of Agreement. The Underwriter 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 Underwriter, shall be delivered or sent by mail, telex
or facsimile transmission to Morgan Stanley & Co. Incorporated, as
Underwriter, 1585 Broadway, New York, New York, 10036, Attention: General
Counsel (Fax: 212-761-0782);
B. if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to Advanta Mortgage Conduit Services, Inc., Welsh
and McKean Roads, Spring House, PA 19477 Attention: General Counsel (Fax:
215-323-5915).
Section XII. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriter 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 Underwriter 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
28
<PAGE> 29
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. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriter 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 Underwritten Notes
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 XIV. 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 XV. 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.
Section XVI. 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 XVII. 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.
29
<PAGE> 30
If the foregoing correctly sets forth the agreement between the Company
and the Underwriter, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
ADVANTA MORTGAGE CONDUIT
SERVICES INC.
By: /s/ Mark Dunsheath
-----------------------------
Name: Mark Dunsheath
Title: Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
as Underwriter
By: /s/ Val Kay
-----------------------------
Name: Val Kay
Title: Vice President
[Underwriting Agreement]
30
<PAGE> 31
SCHEDULE A
<TABLE>
<CAPTION>
INITIAL PRINCIPAL
AMOUNT OF PURCHASE PRICE TO
UNDERWRITTEN NOTES UNDERWRITER
REQUIRED RATINGS PURCHASED BY DISREGARDING
CLASS S&P/MOODY'S UNDERWRITER COUPON ACCRUED INTEREST
- ------- ---------------- ------------------ -------- -----------------
<S> <C> <C> <C> <C>
Class A AAA /Aaa $ 650,000,000 Floating 99.80%
Class B AAA /Aaa 350,000,000 Floating 100.00%
Class C AAA /Aaa 100,000,000 Floating 99.85%
Total........... $ 1,100,000,000
</TABLE>
Floating
<PAGE> 1
Exhibit 4.1.1
ADVANTA MORTGAGE LOAN TRUST 1998-4A
Mortgage Backed Notes, Series 1998-4, Class A
INDENTURE
Dated as of November 1, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
<PAGE> 2
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. Definitions and Incorporation by Reference
SECTION 1.1. Definitions....................................................................... 2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act............................. 25
SECTION 1.3. Rules of Construction............................................................. 25
SECTION 1.4. Action by or Consent of Noteholders............................................... 26
SECTION 1.5. Conflict with TIA................................................................. 26
ARTICLE II. The Class A Notes
SECTION 2.1. Form.............................................................................. 26
SECTION 2.2. Execution, Authentication and Delivery............................................ 26
SECTION 2.3. Registration; Registration of Transfer and Exchange............................... 27
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Class A Notes................................ 28
SECTION 2.5. Persons Deemed Owners............................................................. 29
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest............................. 29
SECTION 2.7. Cancellation...................................................................... 30
SECTION 2.8. Release of Collateral............................................................. 31
SECTION 2.9. Book-Entry Class A Notes.......................................................... 31
SECTION 2.10. Notices to Clearing Agency........................................................ 32
SECTION 2.11. Definitive Notes.................................................................. 32
ARTICLE III. Covenants
SECTION 3.1. Payment of Principal and Interest................................................. 32
SECTION 3.2. Maintenance of Office or Agency................................................... 33
SECTION 3.3. Money for Payments to be Held in Trust............................................ 33
SECTION 3.4. Existence......................................................................... 34
SECTION 3.5. Protection of Trust Estate........................................................ 34
SECTION 3.6. Opinions as to Trust Estate....................................................... 35
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans........................... 35
SECTION 3.8. Negative Covenants................................................................ 36
SECTION 3.9. Annual Statement as to Compliance................................................. 37
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets................................... 37
SECTION 3.11. No Other Business................................................................. 37
SECTION 3.12. No Borrowing...................................................................... 37
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities................................. 38
SECTION 3.14. Capital Expenditures.............................................................. 38
SECTION 3.15. Compliance with Laws.............................................................. 38
SECTION 3.16. Restricted Payments............................................................... 38
SECTION 3.17. Notice of Event of Defaults and Events of Servicing Termination................... 38
SECTION 3.18. Further Instruments and Acts...................................................... 38
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 3.19. Amendments of Trust A Sale and Servicing Agreement and Trust A Trust
Agreement....................................................................... 39
SECTION 3.20. Income Tax Characterization....................................................... 39
ARTICLE IV. Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture........................................... 39
SECTION 4.2. Application of Trust Money........................................................ 40
SECTION 4.3. Repayment of Monies Held by Note Paying Agent..................................... 40
ARTICLE V. Remedies
SECTION 5.1. Rights Upon an Event of Default................................................... 40
SECTION 5.2. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee......... 41
SECTION 5.3. Remedies.......................................................................... 42
SECTION 5.4. Indenture Trustee May File Proofs of Claim........................................ 42
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession of Class A Notes.......... 43
SECTION 5.6. Application of Money Collected.................................................... 43
SECTION 5.7. Limitation of Suits............................................................... 44
SECTION 5.8. Unconditional Rights of Class A Noteholders to Receive Principal and
Interest........................................................................ 45
SECTION 5.9. Restoration of Rights and Remedies................................................ 45
SECTION 5.10. Rights and Remedies Cumulative.................................................... 45
SECTION 5.11. Delay or Omission Not a Waiver.................................................... 45
SECTION 5.12. Control by Noteholders............................................................ 45
SECTION 5.13. Undertaking for Costs............................................................. 46
SECTION 5.14. Waiver of Stay or Extension Laws.................................................. 46
SECTION 5.15. Action on Class A Notes........................................................... 46
SECTION 5.16. Performance and Enforcement of Certain Obligations................................ 46
SECTION 5.17. Subrogation....................................................................... 47
SECTION 5.18. Preference Claims................................................................. 47
SECTION 5.19. Waiver of Past Defaults........................................................... 48
ARTICLE VI. The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee....................................................... 48
SECTION 6.2. Rights of Indenture Trustee....................................................... 50
SECTION 6.3. Individual Rights of Indenture Trustee............................................ 51
SECTION 6.4. Indenture Trustee's Disclaimer.................................................... 51
SECTION 6.5. Notice of Defaults................................................................ 51
SECTION 6.6. Reports by Indenture Trustee to Holders........................................... 52
SECTION 6.7. Compensation and Indemnity........................................................ 52
SECTION 6.8. Replacement of Indenture Trustee.................................................. 52
SECTION 6.9. Successor Indenture Trustee by Merger............................................. 54
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee................. 54
SECTION 6.11. Eligibility: Disqualification..................................................... 56
</TABLE>
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<TABLE>
<S> <C>
SECTION 6.12. Preferential Collection of Claims Against Issuer.................................. 56
SECTION 6.13. Appointment and Powers............................................................ 56
SECTION 6.14. Performance of Duties............................................................. 56
SECTION 6.15. Limitation on Liability........................................................... 57
SECTION 6.16. Reliance Upon Documents........................................................... 57
SECTION 6.17. Representations and Warranties of the Indenture Trustee........................... 57
SECTION 6.18. Waiver of Setoffs................................................................. 57
SECTION 6.19. Control by the Control Party...................................................... 58
SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession of Class A Notes.......... 58
SECTION 6.21. Suits for Enforcement............................................................. 58
SECTION 6.22. Mortgagor Claims.................................................................. 58
ARTICLE VII. Noteholders' Lists and Reports
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and Addresses of Noteholders......... 59
SECTION 7.2. Preservation of Information; Communications to Noteholders........................ 59
SECTION 7.3. Reports by Issuer................................................................. 59
SECTION 7.4. Reports by Indenture Trustee...................................................... 60
ARTICLE VIII. Payments and Statements to CLASS a Noteholders and TRUST A Certificateholders;
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money............................................................... 60
SECTION 8.2. Release of Trust Estate........................................................... 61
SECTION 8.3. Establishment of Accounts......................................................... 61
SECTION 8.4. The Trust A Note Policy........................................................... 61
SECTION 8.5. Trust C Reserve Account........................................................... 62
SECTION 8.6. Pre-Funding Account and Capitalized Interest Account.............................. 63
SECTION 8.7. Flow of Funds..................................................................... 64
SECTION 8.8. Investment of Accounts............................................................ 68
SECTION 8.9. Eligible Investments.............................................................. 68
SECTION 8.10. Reports by Indenture Trustee...................................................... 70
SECTION 8.11. Additional Reports by Indenture Trustee........................................... 73
SECTION 8.12. Opinion of Counsel................................................................ 73
ARTICLE IX. Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders............................ 74
SECTION 9.2. Supplemental Indentures with Consent of Noteholders............................... 75
SECTION 9.3. Execution of Supplemental Indentures.............................................. 76
SECTION 9.4. Effect of Supplemental Indenture.................................................. 76
SECTION 9.5. Conformity With Trust Indenture Act............................................... 77
SECTION 9.6. Reference in Class A Notes to Supplemental Indentures............................. 77
SECTION 9.7. Amendment......................................................................... 77
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ARTICLE X. Redemption of Class A Notes
SECTION 10.1. Redemption........................................................................ 78
SECTION 10.2. Surrender of Class A Notes........................................................ 79
SECTION 10.3. Form of Redemption Notice......................................................... 80
SECTION 10.4. Class A Notes Payable on Redemption Date.......................................... 80
ARTICLE XI. Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc......................................... 80
SECTION 11.2. Form of Documents Delivered to Indenture Trustee.................................. 81
SECTION 11.3. Acts of Noteholders............................................................... 82
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating Agencies.................... 82
SECTION 11.5. Notices to Noteholders; Waiver.................................................... 84
SECTION 11.6. Alternate Payment and Notice Provisions........................................... 84
SECTION 11.7. Conflict with Trust Indenture Act................................................. 84
SECTION 11.8. Effect of Headings and Table of Contents.......................................... 85
SECTION 11.9. Successors and Assigns............................................................ 85
SECTION 11.10. Separability...................................................................... 85
SECTION 11.11. Benefits of Indenture............................................................. 85
SECTION 11.12. Legal Holidays.................................................................... 85
SECTION 11.13. GOVERNING LAW..................................................................... 85
SECTION 11.14. Counterparts...................................................................... 85
SECTION 11.15. Recording of Indenture............................................................ 85
SECTION 11.16. Trust Obligation.................................................................. 86
SECTION 11.17. No Petition....................................................................... 86
SECTION 11.18. Inspection........................................................................ 86
SECTION 11.19. Limitation of Liability........................................................... 86
ARTICLE XII. EventS of default
SECTION 12.1. Events of Default................................................................. 87
</TABLE>
EXHIBITS
Exhibit A -- Form of Class A Note
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INDENTURE dated as of November 1, 1998, between ADVANTA MORTGAGE LOAN
TRUST 1998-4A, a Delaware business trust (the "Issuer"), and BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association, as Indenture
Trustee (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Mortgage Backed
Notes Series 1998-4, Class A (the "Class A Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Class A Notes, the Issuer has agreed to
pledge the Collateral (as defined herein) to the Indenture Trustee on behalf of
the Class A Noteholders.
Ambac Assurance Corporation (the "Note Insurer") has issued and
delivered a financial guaranty insurance policy, dated as of the Closing Date,
pursuant to which the Note Insurer guarantees the Trust A Insured Payments (as
defined herein).
As an inducement to the Note Insurer to issue and deliver the Trust A
Note Policy, the Issuer and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of November 24, 1998 (as amended
from time to time, the "Insurance Agreement"), among the Note Insurer, Issuer,
Trust B, Trust C, Advanta Mortgage Conduit Services, Inc. and the Indenture
Trustee.
As an additional inducement to the Note Insurer to issue the Trust A
Note Policy, and as security for the performance by the Issuer of the Note
Insurer Issuer Secured Obligations and as security for the performance by the
Issuer of the Indenture Trustee Issuer Secured Obligations, the Issuer has
agreed to grant and assign the Collateral (as defined below) to the Indenture
Trustee for the benefit of the Issuer Secured Parties, as their respective
interests may appear.
<PAGE> 7
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
for the benefit of the Issuer Secured Parties all of the Issuer's right, title
and interest in and to (i) certain fixed rate mortgage loans (the "Mortgage
Loans") made or to be made and conveyed to the Issuer under certain mortgage
notes ("Notes"); (ii) collections in respect of the Mortgage Loans with due
dates on or after the Cut-Off Date and each Subsequent Cut-Off Date, as
applicable, including eligible investments as from time to time may be held by
the Indenture Trustee in the Trust A Note Account and by the Master Servicer in
the related Trust A Principal and Interest Account (except as otherwise provided
in the Trust A Sale and Servicing Agreement but excluding any premium recapture,
each to be created pursuant to the Trust A Sale and Servicing Agreement, (iii)
property, the ownership of which has been effected on behalf of Trust A, as a
result of foreclosure or acceptance by the Master Servicer of a deed in lieu of
foreclosure and that has not been withdrawn from Trust A; (iv) rights of the
Sponsor or any Affiliated Originators under Insurance Policies relating to the
Mortgage Loans; (v) the Trust A Note Policy; (vi) Net Liquidation Proceeds with
respect to any Liquidated Mortgage Loan; (vii) amounts on deposit in the Trust A
Pre-Funding Account and the Trust A Capitalized Interest Account; (viii) all
rights of the Issuer under the Trust A Sale and Servicing Agreement; and (ix)
any and all proceeds of the foregoing (the foregoing, collectively, the
"Collateral").
The foregoing Grant is made in trust to the Indenture Trustee, for the
benefit first, of the Class A Noteholders, and second, for the benefit of the
Note Insurer. The Indenture Trustee hereby acknowledges such Grant, accepts the
trust under this Indenture in accordance with the provisions of this Indenture
and agrees to perform the duties required of it by this Indenture to the best of
its ability to the end that the interests of such parties, recognizing the
priorities of their respective interests, may be adequately and effectively
protected.
ARTICLE I.
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture. In addition, other capitalized terms used herein and not defined
herein shall have their respective meanings as set forth in the Trust A Sale and
Servicing Agreement.
"Account": Any account established in accordance with Section 8.3
hereof or Section 4.8 of the Trust A Sale and Servicing Agreement.
"Act" has the meaning specified in Section 11.3(a) hereof.
"Affiliate" means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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<PAGE> 8
"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 Newspapers": Any of the following, The Wall Street Journal,
the New York Times, the Washington Post, the Los Angeles Times or such other
newspaper determined by the Indenture Trustee in its sole judgment.
"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 Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Available Reserve Amount": As defined in Section 8.5(a) hereof.
"Benefit Plan": As defined in Section 2.3 hereof.
"Book Entry Class A Notes": A beneficial interest in the Class A Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.9 hereof.
"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
Indenture Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Civil Relief Act": The Soldiers and Sailors' Civil Relief Act of 1940,
as amended from time to time.
"Class A Available Funds Cap Current Amount": With respect to any
Payment Date, the sum of (i) the excess of (x) the Class A Interest Distribution
Amount due on such Payment Date, calculated using the Class A Note Formula Rate
over (y) the Class A Interest Distribution Amount due on such Payment Date,
calculated using the Class A Available Funds Cap Rate and (ii) the Class A
Available Funds Cap Carry-Forward Amount.
"Class A Available Funds Cap Carry-Forward Amount:" With respect to any
Payment Date, the amount, if any, by which (x) the Class A Available Funds Cap
Current Amount payable as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made to the Class A Noteholders on such
immediately preceding Payment Date on account of the Class A Available Funds Cap
Carry-Forward Amount.
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<PAGE> 9
"Class A Available Funds Cap Rate": As 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 Trust A for the
related Remittance Period, minus (ii) the aggregate of the Servicing Fee, the
Indenture Trustee's Fee, the Owner Trustee's Fee and the Trust A Premium Amount
on such Payment Date, minus (iii) commencing on the seventh Payment Date
following the Closing Date, an amount equal to 0.75% per annum times the
aggregate Loan Balances of the Mortgage Loans in Trust A as of the beginning of
such related Remittance Period divided by (b) the aggregate Loan Balances of the
Mortgage Loans in Trust A as of the beginning of such related Remittance Period
calculated on the basis of a 360-day year and the actual number of days elapsed.
"Class A Deficiency Amount": (a) For any Payment Date, any shortfalls
in the Trust A Total Available Funds to pay the sum of (i) the Class A Interest
Distribution Amount (excluding any Class A Available Funds Cap Current Amounts,
Class A Available Funds Cap Carry Forward Amounts, and any Relief Act
Shortfalls), and (ii) the Trust A Overcollateralization Deficit and (b) on the
Class A Final Scheduled Payment Date, any shortfall in the Trust A Total
Available Funds to pay the outstanding Class A Note Principal Balance.
"Class A Final Scheduled Payment Date": The Payment Date in November
2028 whereby the Class A Noteholders will be entitled to receive a payment of
principal in an amount equal to the outstanding Class A Note Principal Balance.
"Class A Interest Carry-Forward Amount": With respect to any Payment
Date, the amount, if any, by which (x) the Class A Interest Distribution Amount
as of the immediately preceding Payment Date exceeded (y) the amount of the
actual distribution made to the Class A Noteholders on such immediately
preceding Payment Date on account of the Class A Interest Distribution Amount.
"Class A Interest Distribution Amount": With respect to any Payment
Date, the sum of (i) the product of (x) the Class A Note Interest Rate
applicable to such Payment Date and (y) the Class A Principal Balance
immediately prior to such Payment Date and (z) the actual number of days elapsed
during the related Interest Accrual Period divided by 360, provided that such
amount will be reduced by any Relief Act Shortfalls relating to Trust A during
the related Remittance Period and (ii) the Class A Interest Carry Forward
Amount.
"Class A Note": As defined in the recitals hereto.
"Class A Note Formula Capped Rate": With respect to any Payment Date,
the lesser of (i) the Class A Note Formula Rate for such Payment Date and (ii)
6.75%.
"Class A Note Formula Rate": With respect to the first Interest Accrual
Period, LIBOR plus 0.70%. For any subsequent Interest Accrual Period, (x) with
respect to any Interest Accrual Period which occurs on or prior to the Initial
Redemption Date, LIBOR plus 0.70% per annum and (y) for any Interest Accrual
Period thereafter, LIBOR plus 1.40% per annum.
"Class A Noteholder": The Person in whose name a Class A Note is
registered on the Note Register.
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<PAGE> 10
"Class A Note Interest Rate": As to any Payment Date, the lesser of (i)
the Class A Note Formula Rate and (ii) the Class A Available Funds Cap Rate.
"Class A Note Principal Balance": As defined in the Trust A Sale and
Servicing Agreement.
"Class A Principal Distribution Amount": With respect to the Class A
Notes for any Payment Date, the lesser of:
(i) the excess of (a) the sum, as of such Payment Date, of (x)
the Trust A Total Available Funds and (y) any Insured Payment over (b)
the Class A Interest Distribution Amount; and
(ii) the sum, without duplication, of:
(a) the principal actually collected by the Master Servicer
with respect to the Mortgage Loans in Trust A during the related Remittance
Period,
(b) the Loan Balance of each Mortgage Loan in Trust A that
either was repurchased by an Originator or by the Sponsor or purchased by the
Master Servicer or any Sub-Servicer on the related Remittance Date, to the
extent such Loan Balance is actually received by the Indenture Trustee,
(c) any Substitution Amounts delivered by the Sponsor or an
Originator on the related Remittance Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Amounts are actually received by
the Indenture Trustee,
(d) all Net Liquidation Proceeds actually collected by the
Master Servicer with respect to the Mortgage Loans during the related Remittance
Period (to the extent such Net Liquidation Proceeds relate to principal),
(e) the proceeds received by the Indenture Trustee of any
termination of Trust A (to the extent such proceeds relate to principal),
minus
(f) the amount of any Trust A Overcollateralization Reduction
Amount for such Payment Date.
"Class B Interest Distribution Amount": As defined in the Trust B
Indenture.
"Class B Notes": The Mortgage Backed Notes, Series 1998-4, Class B,
issued by Trust B pursuant to the Trust B Indenture.
"Class C Interest Distribution Amount": As defined in the Trust C
Indenture.
"Class C Notes": The Mortgage Backed Notes, Series 1998-4, Class C
issued by Trust C pursuant to the Trust C Indenture.
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<PAGE> 11
"Clearing Agency" An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date": November 24, 1998.
"Code": The Internal Revenue Code of 1986, as amended and any successor
statute.
"Collateral": As defined in the Recitals hereof.
"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 Loan Balance, as of origination of the Second Mortgage Loan
or Third Mortgage Loan, as appropriate, of the Senior Lien note(s) relating to
such Second Mortgage Loan or Third Mortgage Loan, as appropriate, and (ii) the
Original Principal Amount of the Note relating to such Second Mortgage Loan or
Third Mortgage Loan, as appropriate, divided by (b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) of the Trust A
Sale and Servicing Agreement.
"Conduit Acquisition Trust": As defined in the Trust A Sale and
Servicing Agreement.
"Control Party": As defined in the Trust A Sale and Servicing
Agreement.
"Corporate Trust Office": As of the Closing Date, the Indenture
Trustee's office at 3 Park Plaza, 16th Floor, Irvine, California 92614.
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Initial Mortgage Loans are
transferred and assigned to the Trust, the opening of business, November 1,
1998.
"Definitive Notes": Class A Notes issued in definitive form without
coupons.
"Delinquency Advances": As defined in Section 4.9(a) of the Trust A
Sale and Servicing Agreement.
"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
6
<PAGE> 12
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 E
of the Trust A Sale and Servicing Agreement and required to be delivered by the
Issuer pursuant to Section 2.2 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 or A or better by Standard & Poor's and in the
highest short-term rating category for Moody's, and Standard & Poor's unless
otherwise approved in writing by the Note Insurer, Moody's and Standard &
Poor'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 Note Insurer, Moody's and
Standard & Poor's and, in each case acting or designated by the Master Servicer
as the depository institution for the Trust A Principal and Interest Account;
provided, however, that any such institution or association shall have combined
capital, surplus and undivided profits of at least $100,000,000. Notwithstanding
the foregoing, an Account may be held by an institution otherwise meeting the
preceding requirements except that the only applicable rating requirement shall
be that the unsecured and uncollateralized debt obligations thereof shall be
rated Baa3 or better by Moody's or BBB or better by Standard & Poor's if such
institution has trust powers and the Trust A Principal and Interest Account is
held by such institution in its corporate trust department.
"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date or such earlier day as shall be agreed to by
the Note Insurer and Indenture Trustee.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds the Class A Notes
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.
"Eligible Investments": Those investments so designated pursuant to
Section 8.9 hereof.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
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<PAGE> 13
"Event of Default": As defined in Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fannie Mae": 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.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"First Mortgage Loan": A Mortgage Loan which constitutes a first
priority mortgage lien with respect to any Mortgaged 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.
"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.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, Class A Notes or other instruments, or for the
deferred purchase price of property or services (including trade obligations);
(b) obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
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<PAGE> 14
"Indemnification Agreement": The Indemnification Agreement dated as of
November 24, 1998 between the Note Insurer and the Underwriter.
"Indenture Trustee": Bankers Trust Company of California, N.A., located
on the date of execution of this Agreement at 3 Park Plaza, 16th Floor, Irvine,
California 92614, not in its individual capacity but solely as Indenture Trustee
under this Agreement, and any successor hereunder.
"Indenture Trustee Issuer Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to the Indenture Trustee for
the benefit of the Noteholders under this Indenture or the Class A Notes.
"Indenture Trustee's Fees": With respect to any Payment Date, the
product of (x) one-twelfth of 0.007% and (y) the aggregate Loan Balance of the
Mortgage Loan as of the beginning of the related Remittance Period.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Class A Notes, the Sponsor and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Sponsor
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Sponsor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, Indenture
Trustee, partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, prepared
by an Independent appraiser or other expert appointed pursuant to an Issuer
Order and approved by the Indenture Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Indirect Participant" shall mean any financial institution for whom
any Direct Participant holds an interest in the Class A Notes.
"Initial Cut-Off Date": With respect to the Initial Mortgage Loans, the
opening of business on November 1, 1998.
"Initial Mortgage Loans": Mortgage Loans delivered by the Sponsor on
the Closing Date.
"Initial Redemption Date": The first date on which the Trust A
Certificateholder is eligible to exercise its right of optional redemption of
the Class A Notes pursuant to Section 10.1(b) herein.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as
of November 24, 1998 among the Sponsor, the Master Servicer, the Issuer, Trust
B, Trust C, the Indenture Trustee and the Note Insurer, as it may be amended
from time to time.
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"Insurance Policy": Any hazard, title or primary mortgage insurance
policy relating to a Mortgage Loan.
"Insurance Proceeds": Proceeds paid by any insurer (other than the Note
Insurer) pursuant to any Insurance Policy covering a Mortgage Loan, or amounts
required to be paid by the Master Servicer pursuant to the last sentence of the
first paragraph of Section 4.11(b) of the Trust A Sale and Servicing Agreement,
or the penultimate sentence of Section 4.11(c) of the Trust A Sale and Servicing
Agreement, net of any component thereof (i) covering any expenses incurred by or
on behalf of the Master Servicer in connection with obtaining such proceeds,
(ii) that is applied to the restoration or repair of the related Mortgaged
Property, (iii) released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures, or (iv) required to be paid to any
holder of a mortgage senior to such Mortgage Loan.
"Interest Accrual Period": With respect to any Payment Date, the period
commencing on the immediately preceding Payment Date (or the Closing Date in the
case of the first Payment Date) to and including the day prior to the current
Payment Date. All calculations of interest on the Class A Notes will be made on
the basis of the actual number of days elapsed in the related Interest Accrual
Period in a year of 360 days.
"Interest Determination Date": With respect to any Interest Accrual
Period for the Class A Notes, the second London Business Day preceding the first
day of such Interest Accrual Period.
"Interest Remittance Amount": As of any Remittance Date, the sum,
without duplication, of (i) all interest collected (or advanced) by the Master
Servicer during the related Remittance Period with respect to the Mortgage Loans
(net of the Servicing Fee), except that with respect to Prepaid Installments,
interest shall be remitted in the related Remittance Period and (ii) all Net
Liquidation Proceeds actually collected by the Master Servicer with respect to
the Mortgage Loans during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to interest).
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Class A Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Issuer Secured Obligations" means the Note Insurer Issuer Secured
Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee in respect
of the Indenture Trustee Issuer Secured Obligations and the Note Insurer in
respect of the Note Insurer Issuer Secured Obligations.
"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
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change is announced by Citibank), plus 2% per annum and (y) the then applicable
highest rate of interest on the Class A Notes 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 Interest Accrual Period for the Class A
Notes, the rate determined by the Indenture 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 Screen Page
3750 (or any successor service thereto), as of 11:00 a.m. (London time) on such
Interest Determination Date. On each Interest Determination Date, LIBOR for the
related Interest Accrual Period will be established by the Indenture Trustee as
follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple
of 1/16%.
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined
on the previous Interest Determination Date and (ii) the Reserve
Interest Rate.
"Liquidated Mortgage Loan": As defined in the Trust A Sale and
Servicing Agreement.
"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 4.9 of the Trust A Sale and
Servicing Agreement with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan,
any amounts (including the proceeds of any Insurance Policy but excluding any
amounts drawn on the Trust A Note Policy) recovered by the Master Servicer in
connection with such Liquidated Mortgage Loan, whether through Indenture
Trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the outstanding
principal balance thereof as of the Cut-Off Date or Subsequent Cut-Off-Date, as
the case may be, less any related Principal Remittance Amounts relating to such
Mortgage Loan included in previous related Trust A Monthly Remittance Amounts
that were transferred by the Master Servicer or any Sub-servicer to the
Indenture Trustee for deposit in the related Trust A Note 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
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during the period from the Cut-Off Date to the Closing Date shall be the
original Loan Balance thereof.
"London Business Day": A day on which banks are open for dealing in
foreign currency, and exchange in London and New York City.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation,
and its permitted successors and assigns.
"Master Servicer 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.
"Master Transfer Agreement": Any one of the Master Loan Transfer
Agreements among the Sponsor and/or the Conduit Acquisition Trust, the Indenture
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).
"Minimum Monthly Payment": With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in that
month.
"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 Files": As defined in the Trust A Sale and Servicing
Agreement.
"Mortgage Loans": As defined in the Trust A Sale and Servicing
Agreement.
"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.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Note Insurer": Ambac Assurance Corporation or any successor thereto,
as issuer of the Trust A Note Policy.
"Note Insurer Default": Any one of the following events shall have
occurred and be continuing:
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(a) The Note Insurer shall have failed to make a payment
required under the Note Policy;
(b) The Note 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, the Wisconsin Department of Insurance, or other competent
regulatory authority shall have entered a final and nonappealable
order, judgment or decree (i) appointing a custodian, Indenture
Trustee, agent or receiver for the Note Insurer or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, Indenture Trustee, agent or receiver of the
Note Insurer (or the taking of possession of all or any material
portion of the property of the Note Insurer).
"Note Insurer Issuer Secured Obligations": All amounts and obligations
which the Issuer may at any time owe to or on behalf of the Note Insurer under
this Indenture, the Insurance Agreement or any other Operative Document.
"Note Owner": With respect to a Book-Entry Note, the person who is the
owner of such Book-Entry Note or following the issuance of definitive Class A
Notes, the registered owner of the Class A Notes.
"Note Paying Agent": The Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make payments to and distributions from
the Note Account, including payment of principal of or interest on the Class A
Notes on behalf of the Issuer.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.3.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA Section 314,
and delivered to the Indenture Trustee.
"Operative Documents": With respect to each of Trust A, Trust B and
Trust C, collectively, the Indenture, the Trust Agreement, the Sale and
Servicing Agreement, the Subsequent Transfer Agreements, the Note Policy and the
Notes relating to such Trust, the Indemnification Agreement and the Insurance
Agreement.
"Opinion of Counsel": One or more opinions of counsel who may, except
as otherwise expressly provided in this Indenture, be employees of or counsel to
the Issuer and, if addressed to the Note Insurer, satisfactory to the Note
Insurer, and which shall comply with any
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applicable requirements of Section 11.1, and if addressed to the Note Insurer,
satisfactory to the Note Insurer.
"Original Class A Note Principal Balance": $650,000,000.
"Original Principal Amount": With respect to each Note, the principal
amount of such Note relating to a Senior Lien on the date of origination
thereof.
"Originator": Any entity from which the Sponsor has purchased (or, in
the case of Subsequent Mortgage Loans, will purchase) 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.
"Outstanding": With respect to all Class A Notes, as of any date of
determination, all such Class A Notes theretofore executed and delivered
hereunder except:
(i) Class A Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Class A Notes or portions thereof for which full and
final payment money in the necessary amount has been theretofore
deposited with the Indenture Trustee in trust for the Class A
Noteholders;
(iii) Class A Notes in exchange for or in lieu of which other
Class A Notes have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Indenture Trustee is
presented that any such Class A Notes are held by a bona fide
purchaser; and
(iv) Class A Notes alleged to have been destroyed, lost or
stolen for which replacement Class A Notes have been issued as provided
for in Section 2.4 hereof.
"Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee's Fee": A fee which is separately agreed to in writing
between the Sponsor and the Owner Trustee.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Class A Noteholders, which shall be the 25th day of
each month, commencing in the month following the Closing Date or, if such day
is not a Business Day, then on the succeeding Business Day.
"Percentage Interest": As to any Class A Note that percentage,
expressed as a fraction, the numerator of which is the Class A Note Principal
Balance of such Class A Note as of the related Cut-Off Date and the denominator
of which is the Original Class A Note Principal
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Balance of all Class A Notes; and as to any Trust A Certificate, that Percentage
Interest set forth on such Trust A Certificate.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period, the sum
of all Realized Losses with respect to the Mortgage Loans experienced during
such period.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate Loan Balances of
all Mortgage Loans 90 or more days Delinquent (including all foreclosures and
REO Properties) as of the close of business on the last day of such Remittance
Period over (y) the Trust A Pool Principal Balance as of the close of business
on the last day of such Remittance Period.
"Pool Factor": A seven-digit decimal which the Indenture Trustee shall
compute monthly expressing the Class A Note Principal Balance as of each Payment
Date (after giving effect to any distribution of principal on such Payment Date)
as a proportion of the Original Class A Note Principal Balance. On the Closing
Date, the Pool Factor will be 1.0000000. Thereafter, the Pool Factor shall
decline to reflect reductions in the related Class A Principal Balance resulting
from distributions of principal to the Class A Notes.
"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.
"Predecessor Note": With respect to any particular Note, every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note authenticated
and delivered under Section 2.4 in lieu of a mutilated, lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
"Preference Amount": As defined in the Trust A Note Policy.
"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 in full 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.
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"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 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 Trust A during the related Remittance
Period, (ii) the Loan Balance of each such Mortgage Loan that either was
repurchased by an Originator or by the Sponsor or purchased by the Master
Servicer or any Sub-Servicer on such Remittance Date, to the extent such Loan
Balance was actually deposited in the Trust A Principal and Interest Account,
(iii) any Substitution Amounts delivered by the Sponsor or an Originator in
connection with a substitution of a Mortgage Loan, to the extent such
Substitution Amounts were actually deposited in the Trust A Principal and
Interest Account on such Remittance Date, (iv) all Net Liquidation Proceeds
actually collected by the Master Servicer with respect to such Mortgage Loans
during the related Remittance Period (to the extent such Liquidation Proceeds
related to principal) net of amounts allowed to be retained pursuant to Section
4.8(c) of the Trust A Sale and Servicing Agreement, (v) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
principal).
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998 naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated
November 2, 1998, describing the Class A Notes issued by the Trust.
"Rating Agency": Moody's and Standard & Poor's. If such agency or a
successor is no longer in existence, "Rating Agency" shall be such statistical
credit rating agency, or other comparable Person, designated by the Sponsor and
the Note Insurer, notice of which designation shall be given to the Indenture
Trustee. References herein to the highest short term unsecured rating category
of a Rating Agency shall means A-1 or better in the case of Standard & Poor's
and P-1 or better in the case of Moody's, and in the case of any other Rating
Agency shall mean the ratings such other Rating Agency deems equivalent to the
foregoing ratings. References herein to the highest long-term rating category of
a Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa" in
the case of Moody's, and in the case of any other Rating Agency, the rating such
other Rating Agency deems equivalent to the foregoing ratings.
"Realized Loss": As to any Liquidated Mortgage 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.
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"Record Date": With respect to each Payment Date, the business day
immediately preceding the Payment Date occurs; provided, that if the Class A
Notes revert to Definitive Notes, the Record Date with respect to each Payment
Date thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such payment date occurs.
"Redemption Date": In the case of a redemption of the Class A Notes
pursuant to Section 10.1, the Payment Date specified by the Master Servicer or
the Issuer pursuant to Section 10.2(a).
"Redemption Price": In the case of a redemption of the Class A Notes
pursuant to Section 10.1, an amount equal to the unpaid principal amount of the
then outstanding principal amount of each class of Class A Notes being redeemed
plus accrued and unpaid interest thereon to but excluding the Redemption Date.
"Reference Banks": Chase Manhattan Bank, Deutsche Morgan Grenfell, Fuji
Bank, Merita Bank, Lloyds, Sumitomo Bank, Barclay's Bank PLC, National
Westminster Bank PLC, Abbey, Westpac, Hambros, Commerzbank AG, Citibank, United
Bank of Switzerland AG, BTM, and Royal Bank of Scotland; provided that if any of
the foregoing banks are not suitable to serve as a Reference Bank, then any
leading banks selected by the Indenture Trustee which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market (i)
with an established place of business in London, (ii) not controlling, under the
control of or under common control with the Sponsor or any affiliate thereof,
(iii) whose quotations appear on the Telerate Screen Page 3750 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Indenture Trustee.
"Registration Statement": The Registration Statement filed by the
Sponsor with the Securities and Exchange Commission, including all amendments
thereto and including the Prospectus and the Prospectus Supplement relating to
the Class A Notes constituting a part thereof.
"Relief Act Shortfall": With respect to any Remittance Period, for any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended Remittance Period as a result of
the application of the Civil Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (ii) the sum of (a) one month's interest on the Loan
Balance of such Mortgage Loan at the rate equal to the sum of the Class A Note
Interest Rate, the rate at which the Indenture Trustee's Fee is calculated and
the Trust A Premium Percentage, plus (b) the aggregate Servicing Fee for such
Mortgage Loan payable to the Master Servicer in such calendar month.
"Remittance Date": Any date on which the Master Servicer is required to
remit monies on deposit in the Trust A Principal and Interest Account to the
Indenture Trustee, which shall be the 18th day or, if such day is not a Business
Day, the next preceding Business Day, of each month, commencing in the month
following the month in which the Closing Date occurs.
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"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
"REO Property": A Mortgaged 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": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Notes registered
in the Register under the nominee name of the Depository.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Indenture Trustee determines to be either (i)
the arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of 1/16%) of the one-month U.S. dollar lending rates which three New York City
banks selected by the Indenture Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate
which three New York City banks selected by the Indenture Trustee are quoting on
such Interest Determination Date to leading European banks.
"Schedules of Mortgage Loans": The Schedules of Mortgage Loans,
attached hereto as Schedule I as they may be further supplemented in connection
with Subsequent Transfers. Such Schedules shall also contain one of the
following codes for each Mortgage Loan or Subsequent Mortgage 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 Indenture 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 Mortgaged 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.
"Servicing Advance": As defined in the Trust A Sale and Servicing
Agreement.
"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 Indenture Trustee as
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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 Rating Group, a division of The
McGraw Hill Companies.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage
Loan, the opening of business on the first day of the calendar month in which
the related Subsequent Transfer Date occurs.
"Subsequent Mortgage Loans" As defined in the Trust A Sale and
Servicing Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Indenture Trustee and the
Sponsor substantially in the form of Exhibit L of the Trust A Sale and Servicing
Agreement, by which Subsequent Mortgage Loans are assigned to the Trust.
"Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement, which must, with respect to any Payment Date, be a date
occurring during the calendar month in which such Payment Date occurs, at least
five Business Days prior to the Remittance Date occurring in such month.
"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.
"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.
"Telerate Screen Page 3750": The display designated on page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks)
"Termination Date" means the latest of (i) the termination of the Note
Policy and the return of the Note Policy to the Note Insurer for cancellation,
(ii) the date on which the Note Insurer shall have received payment and
performance of all Note Insurer Issuer Secured Obligations and (iii) the date on
which the Indenture Trustee shall have received payment and performance of all
Indenture Trustee Issuer Secured Obligations.
"Third Mortgage Loan": A Mortgage Loan which constitutes a third
priority mortgage lien with respect to the related Property.
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"Trust": Advanta Mortgage Loan Trust 1998-4A.
"Trust A Accelerated Principal Payments": With respect to any Payment
Date, a payment received as a payment of principal by the Class A Noteholders
for the purpose of increasing the Trust A Overcollateralization Amount to the
Trust A Specified Overcollateralization Amount applicable to such Payment Date,
and to be paid from amounts remaining in the Trust A Note Account on such
Payment Date, after deduction of the amounts described in clauses (i) through
(viii) of Section 8.7(b) hereof (the "Remaining Cashflow") on such Payment Date
and equal to the lesser of (x) the amount of such Remaining Cashflow and (y) the
Trust A Overcollateralization Deficiency Amount.
"Trust A Aggregate Reserve Contribution Amount": The sum of all amounts
contributed to the Trust C Reserve Account from Trust A pursuant to Section
8.7(b)(xii) hereof.
"Trust A Available Crossover Amounts": On any determination date, the
amounts in the Trust A Note Account available for distribution after the payment
of amounts described in clauses (i) through (ix) of Section 8.7(b) hereof for
the related Payment Date.
"Trust A Capitalized Interest Account": The capitalized interest
account established in accordance with Section 8.3 hereof and maintained by the
Indenture Trustee.
"Trust A Capitalized Interest Account Deposit": $1,229,018.05.
"Trust A Capitalized Interest Amount": With respect to any
Determination Date, the amount on deposit in the Trust A Capitalized Interest
Account.
"Trust A Capitalized Interest Requirement": As to any Payment Date
occurring during the Trust A Pre-Funding Period, the difference, if any, between
(x) the interest due on the portion of the Class A Notes represented by the
Trust A Pre-Funding Amount plus the related portion of the Trust A Premium
Amount on such Payment Date and (y) any Trust A Pre-Funding Earnings to be
transferred to the Trust A Note Account on such Payment Date pursuant to Section
8.6(c) hereof.
"Trust A Certificate": As defined in the Trust A Trust Agreement.
"Trust A Certificateholders": The holders of the Trust A Certificates
issued pursuant to the Trust A Trust Agreement.
"Trust A Excess Overcollateralization Amount": With respect to any
Payment Date, the amount by which (x) the Trust A Overcollateralization Amount
after taking into account the payment of the Class A Principal Distribution
Amount on such Payment Date exceeds (y) the Trust A Specified
Overcollateralization Amount for such Payment Date.
"Trust A Full Deficiency Amount": As defined in Section 8.5(b) herein.
"Trust A Indenture" means this Indenture as amended and supplemented
from time to time.
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"Trust A Insured Payment": As of any Payment Date, (i) any Class A
Deficiency Amount and (ii) any Preference Amount.
"Trust A Monthly Remittance Amounts": With respect to any Remittance
Date, the sum of (i) the Interest Remittance Amount with respect to such
Remittance Date and (ii) the Principal Remittance Amount with respect to such
Remittance Date.
"Trust A Note Account": The Trust A Note Account established in
accordance with Section 8.3 hereof and maintained by the Indenture Trustee.
"Trust A Note Policy": The financial guaranty insurance policy dated
November 24, 1998, issued by the Note Insurer to the Indenture Trustee for the
benefit of the Class A Noteholders.
"Trust A Original Pre-Funded Amount": The amount deposited in the Trust
A Pre-Funding Account on the Closing Date, from the proceeds of the sale of the
Class A Notes, which amount is $197,969,353.51.
"Trust A Overcollateralization Amount": With respect to any Payment
Date, the excess, if any, of (x) the Trust A Pool Principal Balance as of such
Payment Date over (y) the Class A Note Principal Balance as of such Payment Date
(after taking into account reductions therein on such Payment Date).
"Trust A Overcollateralization Deficiency Amount": With respect to any
Payment Date, the difference, if any, between (i) the Trust A Specified
Overcollateralization Amount applicable to such Payment Date and (ii) the Trust
A Overcollateralization Amount applicable to such Payment Date.
"Trust A Overcollateralization Deficit": With respect to any Payment
Date, the amount, if any, by which (i) the aggregate Class A Note Principal
Balance, after taking into account the payment to the Class A Noteholders of all
principal from sources other than the Trust A Note Policy on such Payment Date,
exceeds (ii) the sum of (x) the Trust A Pool Principal Balance as of the end of
the applicable Remittance Period and (y) the amounts of deposit in the Trust A
Pre-Funding Account.
"Trust A Overcollateralization Increase Amount": With respect to any
Payment Date, the lesser of (i) the Trust A Overcollateralization Deficiency
Amount as of such Payment Date (after taking into account the payment of the
Class A Principal Distribution Amount on such Payment Date (except for any Trust
A Overcollateralization Increase Amount) and (ii) the amount of Trust A Total
Available Funds remaining to be allocated for such purpose pursuant to Section
8.7(b)(ix) hereof on such Payment Date.
"Trust A Overcollateralization Reduction Amount": With respect to any
Payment Date, the lesser of (x) the Trust A Excess Overcollateralization Amount
for such Payment Date and (y) the Principal Remittance Amount for the prior
Remittance Period.
"Trust A Overfunded Interest Amount": With respect to each Subsequent
Transfer Date occurring in December, 1998, the difference between (i)
one-month's interest on
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the aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the
Trust on such Subsequent Transfer Date, calculated at 2.50% and (ii) one-month's
interest on the aggregate Loan Balances of the Subsequent Mortgage Loans
acquired by the Trust on such Subsequent Transfer Date, calculated at the rate
at which Pre-Funding Account moneys are invested as of such Subsequent Transfer
Date.
"Trust A Pool Principal Balance": The aggregate Loan Balances of all
Mortgage Loans.
"Trust A Preference Amount": Any amount previously distributed to Class
A Noteholder that is recoverable and sought to be recovered as a voidable
preference by a Indenture 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.
"Trust A Pre-Funded Amount": As defined in the Trust A Sale and
Servicing Agreement.
"Trust A Pre-Funding Account": The Trust A Pre-Funding Account
established in accordance with Section 8.3 hereof and maintained by the
Indenture Trustee.
"Trust A Pre-Funding Earnings": As defined in the Trust A Sale and
Servicing Agreement.
"Trust A Pre-Funding Period": As defined in the Trust A Sale and
Servicing Agreement.
"Trust A Premium Amount": As to any Payment Date, the product of (x)
one-twelfth of the Trust A Premium Percentage and (y) the Class A Note Principal
Balance on such Payment Date (before taking into account any distributions of
the Trust A Scheduled Principal Distribution Amount to be made on such Payment
Date).
"Trust A Premium Percentage": As defined in the Insurance Agreement.
"Trust A Principal and Interest Account": Collectively, each principal
and interest account created by the Master Servicer or any Sub-Servicer pursuant
to Section 4.8(a) of the Trust A Sale and Servicing Agreement.
"Trust A Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all payments made pursuant to the Note Policy previously received by the
Indenture Trustee and all Preference Amounts previously paid to the Indenture
Trustee by the Note Insurer and in each case not previously repaid to the Note
Insurer pursuant to Section 8.7(b)(viii) hereof plus (ii) interest accrued on
each such payment made pursuant to the Note Policy not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related payment made pursuant to the Note Policy and (y)(i) any amounts then
due and owing to the Note Insurer under the Insurance Agreement plus (ii)
interest on such amounts at the Late Payment Rate. The Note Insurer shall notify
the Indenture Trustee and the Sponsor of the amount of any Trust A Reimbursement
Amount.
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"Trust A Sale and Servicing Agreement": The Trust A Sale and Servicing
Agreement dated as of November 1, 1998, among the Issuer, the Sponsor, the
Master Servicer and the Indenture Trustee, as the same may be amended or
supplemented from time to time.
"Trust A Scheduled Principal Distribution Amount": With respect to the
Class A Notes for any Payment Date, an amount equal to the lesser of (x) the
Class A Principal Distribution Amount as of such Payment Date and (y) the Class
A Note Principal Balance as of such Payment Date.
"Trust A Specified Overcollateralization Amount": As defined in the
Insurance Agreement.
"Trust A Total Available Funds": As defined in Section 8.7(a) hereof.
"Trust Agreement": The Trust Agreement dated as of November 1, 1998
between the Issuer and the Sponsor.
"Trust B": Advanta Mortgage Loan Trust 1998-4B, the Trust created
pursuant to the Trust B Trust Agreement.
"Trust B Aggregate Reserve Contribution Amount": The sum of all amounts
contributed to the Trust C Reserve Account from Trust B pursuant to Section
8.7(b)(xii) of the Trust B Indenture.
"Trust B Available Crossover Amounts": As defined in the Trust B
Indenture.
"Trust B Available Funds Cap Current Deficiency Amount": As defined in
Section 8.7(b)(xv) hereof.
"Trust B Available Funds Cap Carry-Forward Deficiency Amount": As
defined in Section 8.7(b)(xvi) hereof.
"Trust B Full Deficiency Amount": As defined in the Trust B Indenture.
"Trust B Indenture": The Indenture relating to Trust B, dated as of
November 1, 1998 between Trust B and the Indenture Trustee, as amended and
supplemented from time to time.
"Trust B Note Account": The Trust B Note Account established in
accordance with Section 8.3 of the Trust B Indenture.
"Trust B Overcollateralization Deficit": As defined in the Trust B
Indenture.
"Trust B Total Available Funds": As defined in the Trust B Indenture.
"Trust B Trust Agreement": The Trust Agreement dated November 1, 1998
between the Sponsor and the Owner Trustee relating to Trust B.
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"Trust C": Advanta Mortgage Loan Trust 1998-4C, the trust created
pursuant to the Trust C Trust Agreement.
"Trust C Available Crossover Amounts": As defined in the Trust C
Indenture.
"Trust C Available Funds Cap Carry-Forward Deficiency Amount": As
defined in Section 8.7(b)(xvi) hereof.
"Trust C Available Funds Cap Current Deficiency Amounts": As defined in
Section 8.7(b)(xv) hereof.
"Trust C Indenture": The Indenture relating to Trust C, dated as of
November 1, 1998 between Trust C and the Indenture Trustee as amended and
supplemented from time to time.
"Trust C Note Account:" The Trust C Note Account established in
accordance with Section 8.3 of the Trust C Indenture.
"Trust C O/C Surplus Amount": As defined in Section 8.5(c) hereof.
"Trust C Overcollateralization Amount:" As defined in the Trust C
Indenture.
"Trust C Overcollateralization Deficit": As defined in the Trust C
Indenture.
"Trust C Reserve Account:" The reserve account established pursuant to
the Trust C Indenture.
"Trust C Reserve Account Deposit:" With respect to the Payment Date,
the amount required to be deposited in the Trust C Reserve Account for the
purpose of increasing the Trust C Overcollateralization Amount to the Trust C
Specified Overcollateralization Amount applicable to such Payment Date.
"Trust C Specified Overcollateralization Amount": As defined in the
Trust C Indenture.
"Trust C Total Available Funds": As defined in the Trust C Indenture.
"Trust C Trust Agreement": The Trust Agreement dated November 1, 1998
between the Sponsor and the Owner Trustee relating to Trust C.
"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
Class A Noteholders and the Note Insurer, including all proceeds thereof
including, without limitation, (i) the Initial Mortgage Loans, Qualified
Replacement Mortgages and Subsequent Mortgage Loans, (ii) such amounts,
including Eligible Investments, as from time to time may be held in all Accounts
(except as otherwise provided herein), (iii) any Mortgaged Property, the Class A
Noteholdership of which has been effected on behalf of the Trust as a result of
foreclosure or acceptance by the Master Servicer or any Sub-
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Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust, (iv) any Insurance Policies relating to the Mortgage Loans and any
rights of the Trust and the Originators under any Insurance Policies, (v) Net
Liquidation Proceeds with respect to any Liquidated Mortgage Loan, (vi) the
Insurance Policies, (vii) such amounts held in the Capitalized Interest Account,
and (viii) such amounts held in the Pre-Funding Account, the Trust A Principal
and Interest Account and the Note Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"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.
"Underwriter": Morgan Stanley & Co. Incorporated.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Trust A Sale and Servicing Agreement
or the Trust Agreement.
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Class A Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional Indenture Trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by the TIA,
or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Class A Noteholders, such provision shall be deemed to refer to the Class A
Noteholder of record as of the Record Date immediately preceding the date on
which such action is to be taken, or consent given, by Class A Noteholders.
Solely for the purposes of any action to be taken, or consented to, by Class A
Noteholders, any Class A Note registered in the name of Advanta Mortgage Conduit
Services, Inc. or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Indenture Trustee or the Owner Trustee is entitled to rely upon any such action
or consent, only Class A Notes which the Owner Trustee or the Indenture Trustee,
respectively, knows to be so owned shall be so disregarded.
SECTION 1.5. Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be part of and govern this Indenture, the latter provision shall control
and all provisions required by the TIA are hereby incorporated by reference. If
any provision of this Indenture modifies or excludes any provision of the TIA
that may be so modified or excluded, the latter provisions shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
ARTICLE II.
The Class A Notes
SECTION 2.1. Form. The Class A Notes, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Class A Notes, as evidenced by their execution of the
Class A Notes. Any portion of the text of any Class A Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Class A Note.
Each Class A Note shall be dated the date of its authentication. The
terms of the Class A Note set forth in Exhibit A are part of the terms of this
Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Class A Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Class A Notes may be original or
facsimile.
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Class A Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Class A Notes
or did not hold such offices at the date of such Class A Notes.
The Indenture Trustee, upon receipt of a written Delivery Order from
the Issuer, shall authenticate and deliver Class A Notes for original issue in
an aggregate principal amount of $650,000,000. The Class A Notes outstanding at
any time may not exceed such amounts except as provided in Section 2.6.
Each Class A Note shall be dated the date of its authentication. The
Class A Notes shall be issuable as registered Class A Notes in the minimum
denomination of $1000 and in integral multiples of $1,000 in excess thereof.
No Class A Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears attached to such
Class A Note a certificate of authentication substantially in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized signatories, and such certificate attached to any Class A Note
shall be conclusive evidence, and the only evidence, that such Class A Note has
been duly authenticated and delivered hereunder. Subject to Section 2.11, the
Class A Notes shall be Book-Entry Class A Notes.
SECTION 2.3. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Class A Notes and the registration of transfers of Class A
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Class A Notes and transfers of Class A Notes as herein provided.
Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Class A Notes and
the principal amounts and number of such Class A Notes.
Upon surrender for registration or transfer of any Class A Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, and
if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute or cause the Indenture Trustee to authenticate one or more new Class A
Notes, in any authorized denominations, of the same class and a like aggregate
principal amount. A Class A Noteholder may also obtain from the Indenture
Trustee, in the name of the designated transferee or transferees one or more new
Class A Notes, in any authorized denominations, of the same class and a like
aggregate principal
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amount. Such requirements shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance by the Issuer with Section 8-401 of the UCC.
At the option of the Holder, Class A Notes may be exchanged for other
Class A Notes in any authorized denominations, of the same class and a like
aggregate principal amount, upon surrender of the Class A Notes to be exchanged
at such office or agency. Whenever any Class A Notes are so surrendered for
exchange, and if the requirements of Section 8-401(1) of the UCC are met, the
Issuer shall execute and upon its request the Indenture Trustee shall
authenticate the Class A Notes which the Noteholder making the exchange is
entitled to receive. Such requirements shall not be deemed to create a duty in
the Indenture Trustee to monitor the compliance by the Issuer with Section 8-401
of the UCC.
All Class A Notes issued upon any registration of transfer or exchange
of Class A Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Class
A Notes surrendered upon such registration of transfer or exchange.
Every Class A Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibit A, duly executed
by the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar all in accordance with the Exchange Act, and
(ii) accompanied by such other documents as the Note Registrar may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Class A Notes, but the Note Registrar 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
Class A Notes, other than exchanges pursuant to Section 2.4 or 9.6 not involving
any transfer.
The Note Registrar shall not register the transfer of any Class A Note
(other than the transfer of a Class A Note to the nominee of the Depository)
unless the transferee has executed and delivered to the Indenture Trustee a
certification to the effect that either (i) the transferee is not (A) an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title I of ERISA or (B) a plan (as defined in Section
4975(e)(1) of the Code) that is subject to Section 4975 of the Code (each of the
foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the
assets of a Benefit Plan, or (ii) that the transferee's acquisition and
continued holding of the Class A Note will be covered by a U.S. Department of
Labor Prohibited Transaction Class Exemption. Each transferee of a beneficial
interest in a Book-Entry Note shall be deemed to make one of the foregoing
representations.
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Class A Notes. If (i)
any mutilated Class A Note is surrendered to the Note Registrar, or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Class A Note, and (ii) there is delivered to the Indenture Trustee
and the Note Insurer such security or indemnity as may be required by it to hold
the Issuer, the Indenture Trustee and the Note Insurer harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has
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been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the UCC are met, the Indenture Trustee shall execute and
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Class A Note, a replacement Note (such requirement
shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Issuer with Section 8-405); provided, however, that if any
such destroyed, lost or stolen Class A Note, but not a mutilated Note, shall
have become or within seven days shall be due and payable, or shall have been
called for redemption, the Indenture Trustee may, instead of issuing a
replacement Class A Note pay such destroyed, lost or stolen Note when so due or
payable or upon the Redemption Date without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, the Indenture Trustee and the Note
Insurer shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Note from such Person to whom such replacement Note was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Class A Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Class A Notes duly issued hereunder.
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 Class A Notes.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Class A Note, the Issuer, the Indenture Trustee
and the Note Insurer and any agent of the Issuer, the Indenture Trustee and the
Note Insurer may treat the Person in whose name any Class A Note is registered
(as of the related Record Date) as the owner of such Class A Note for the
purpose of receiving payments of principal of and interest, if any on such Class
A Note and for all other purposes whatsoever, whether or not such Class A Note
be overdue, and none of the Issuer, the Note Insurer, the Indenture Trustee nor
any agent of the Issuer, the Note Insurer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.
(a) The Class A Notes shall accrue interest as provided herein, and
such amount shall be due and payable on each Payment Date as specified herein.
Any installment of
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interest or principal, if any, payable on any Note which is punctually paid or
duly provided for by the Issuer on the applicable Payment Date shall be paid to
the Person in whose name such Note (or one or more Predecessor Class A Notes) is
registered on the Record Date, by check mailed first-class, postage prepaid, to
such Person's address as it appears on the Note Register on such Record Date,
except that, unless Class A Notes have been issued pursuant to Section 2.11,
with respect to Class A Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment will be made by wire transfer in immediately available funds to the
account designated by such nominee and except for the final installment of
principal payable with respect to such Note on a Payment Date or on the Final
Scheduled Payment Date (and except for the Redemption Price for any Note called
for redemption pursuant to Section 10.1(a)) which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.3.
(b) Upon written notice from the Issuer, the Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of business on
the Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final Payment
Date and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Class A Notes shall be mailed to Noteholders
as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Class A
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the Late Payment Rate to the extent lawful.
The Issuer may pay such defaulted interest to the Persons who are Noteholders on
a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the special record date, the payment date and the
amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and interest
on the Class A Notes has been paid in full and the Class A Notes have been
surrendered to the Indenture Trustee, the Indenture Trustee shall, upon written
notice from the Master Servicer of the amounts, if any, that the Note Insurer
has paid in respect of the Class A Notes under the Note Policy or otherwise
which has not been reimbursed to it, deliver such surrendered Class A Notes to
the Note Insurer to the extent not previously cancelled or destroyed.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all Class A Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.6(d), the Issuer may at any time deliver to the Indenture
Trustee for cancellation any Class A Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Class A Notes so delivered shall be promptly canceled by the Indenture
Trustee. No Class A Notes shall be authenticated in lieu of or in exchange for
any Class A Notes canceled as provided in
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this Section, except as expressly permitted by this Indenture. Subject to
Section 2.6(d), all canceled Class A Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Class A Notes have not been previously disposed of by the Indenture
Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee shall, on or
after the Termination Date, release any remaining portion of the Trust Estate
from the lien created by this Indenture and deposit in the Trust A Note Account
any funds then on deposit in any other Account. Except as otherwise set forth in
the Trust A Sale and Servicing Agreement, the Indenture Trustee shall release
property from the lien created by this Indenture pursuant to this Section 2.8
only upon receipt of an Issuer Request by it accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting
the applicable requirements of Section 11.1 or as provided in Section 4.14 of
the Trust A Sale and Servicing Agreement.
SECTION 2.9. Book-Entry Class A Notes. The Class A Notes, upon original
issuance, will be issued in the form of typewritten Class A Notes representing
the Book-Entry Class A Notes, to be delivered to The Depository Trust Company or
its custodian, the initial Clearing Agency, by, or on behalf of, the Issuer.
Such Class A Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Note
Owner will receive a Definitive Note representing such Note Owner's interest in
such Note, except as provided in Section 2.11. Unless and until definitive,
fully registered Class A Notes have been issued to Note Owners pursuant to
Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Class A Notes and the giving of instructions or directions hereunder)
as the sole Holder of the Class A Notes, and shall have no obligation
to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until Class A Notes are
issued pursuant to Section 2.11, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the Class A Notes
to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Class A Notes
evidencing a specified percentage of the Outstanding Amount of the
Class A Notes, the Clearing Agency shall be deemed to
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represent such percentage only to the extent that it has received
instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Class A Notes and has
delivered such instructions to the Indenture Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Indenture Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Class A Notes shall have been issued to Note Owners pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Class A Notes to the Clearing
Agency, and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Sponsor advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Class A
Notes, and the Sponsor is unable to locate a qualified successor, (ii) the
Sponsor at its option advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of a Event of Default, Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Class A Notes
advise the Indenture Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Class A Note or Class A
Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Notes as Class A Noteholders.
ARTICLE III.
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Class A Notes in
accordance with the terms of the Class A Notes and this Indenture. Without
limiting the foregoing, the Issuer will cause to be distributed all amounts on
deposit in the Trust A Note Account on a Payment Date deposited therein pursuant
to the Trust A Sale and Servicing Agreement for the benefit of the Class A Class
A Notes, to Class A Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
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SECTION 3.2. Maintenance of Office or Agency. The Issuer will maintain
an office or agency where Class A Notes may be surrendered for registration,
transfer or exchange of the Class A Notes, and where notices and demands to or
upon the Issuer in respect of the Class A Notes and this Indenture may be
served. The Issuer hereby initially appoints the Indenture Trustee to serve as
its agent for the foregoing purposes. The Issuer will give prompt written notice
to the Indenture Trustee of the location, and of any change in the location, of
any such office or agency. If at any time the Issuer shall fail to maintain any
such office or agency or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Indenture Trustee's offices maintained at 123 Washington Street, NY, NY
10006 and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. The Issuer will
cause each Note Paying Agent other than the Indenture Trustee to execute and
deliver to the Indenture Trustee and the Note Insurer an instrument in which
such Note Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject to
the provisions of this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Class A Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee written notice of any default
by the Issuer (or any other obligor upon the Class A Notes) of which it
has actual knowledge in the making of any payment required to be made
with respect to the Class A Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the
payment of Class A Notes if at any time it ceases to meet the standards
required to be met by a Note Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Class A Notes of
any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to
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the Indenture Trustee, such Note Paying Agent shall be released from all further
liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Indenture Trustee or any Note Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer on Issuer Request, and shall be deposited
by the Indenture Trustee in the Trust A Note Account; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the Issuer
for payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee or such Note Paying Agent
with respect to such trust money shall thereupon cease.
SECTION 3.4. Existence. Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Trust Estate, the Class A Notes, and each other instrument or agreement included
in the Trust Estate.
SECTION 3.5. Protection of Trust Estate. The Issuer intends the
security interest granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Indenture Trustee, for the benefit of the Issuer Secured Parties, a first
lien on and a first priority, perfected security interest in the Trust Estate.
The Issuer will from time to time prepare (or shall cause to be prepared),
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Indenture Trustee for the benefit
of the Issuer Secured Parties created by this Indenture or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee in such Trust Estate against the claims
of all persons and parties; and
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(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section;
provided that, such designation shall not be deemed to create a duty in the
Indenture Trustee or the Indenture Trustee to monitor the compliance of the
Issuer with respect to its duties under this Section 3.5 or the adequacy of any
financing statement, continuation statement or other instrument prepared by the
Issuer.
SECTION 3.6. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Note Insurer an Opinion of Counsel stating that, in the opinion
of such counsel, such actions have been taken with respect to the recording and
filing of this Indenture, any indentures supplemental hereto, and any other
requisite documents, and with respect to the execution and filing of any
financing statements and continuation statements, as are necessary to perfect
and make effective the first priority lien and security interest in favor of the
Indenture Trustee, for the benefit of the Issuer Secured Parties, created by
this Indenture.
(b) Within 90 days after the beginning of each calendar year, beginning
with the first calendar year beginning more than six months after the Closing
Date, the Issuer shall furnish to the Indenture Trustee and the Note Insurer, an
Opinion of Counsel either stating that, in the opinion of such counsel, such
actions have been taken with respect to the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as are necessary to maintain
the lien and security interest created by this Indenture and reciting the
details of such action or stating that in the opinion of such counsel, no such
action is necessary to maintain such lien and security interest. Such Opinion of
Counsel shall also describe the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Operative Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the Note
Insurer to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee and
the Note Insurer in an Officer's Certificate of the
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Issuer shall be deemed to be action taken by the Issuer. Initially, the Issuer
has contracted with the Master Servicer to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Operative Documents
and in the instruments and agreements included in the Trust Estate, including,
but not limited, to preparing (or causing to be prepared) and filing (or causing
to be filed) all UCC financing statements and continuation statements required
to be filed by the terms of this Indenture and the Trust A Sale and Servicing
Agreement in accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Issuer shall not
waive, amend, modify, supplement or terminate any Operative Document or any
provision thereof without the consent of the Indenture Trustee, the Note Insurer
or the Holders of at least a majority of the Outstanding Amount of the Class A
Notes.
(d) If an Authorized Officer of the Owner Trustee shall have actual
knowledge of the occurrence of an Event of Servicer Termination under the Trust
A Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Note Insurer and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If an Event of Servicer Termination shall
arise from the failure of the Master Servicer to perform any of its duties or
obligations under the Trust A Sale and Servicing Agreement with respect to the
Mortgage Loans, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Master Servicer or the Sponsor of their respective duties
under the Operative Documents (x) without the prior consent of the Note Insurer
or (y) if the effect thereof would adversely affect the Holders of the Class A
Notes.
SECTION 3.8. Negative Covenants. So long as any Class A Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Operative Documents, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, including those included
in the Trust Estate, without the consent of the Note Insurer (which
consent may not be unreasonably withheld; provided, that if an Note
Insurer Default has occurred and is continuing, the Noteholders
representing 51% of the Noteholders may direct the Indenture Trustee to
sell or dispose of the Trust Estate if the Indenture Trustee receives
the Redemption Price, as described in Section 10.1.
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Class A Notes (other
than amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Noteholder by reason of
the payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be
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amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Class A Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than the lien
of this Indenture) to be created on or extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens
and other liens that arise by operation of law, in each case on a
Mortgaged Property and arising solely as a result of an action or
omission of the related Mortgagor), (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in
the Trust Estate or (D) amend, modify or fail to comply with the
provisions of the Operative Documents without the prior written consent
of the Note Insurer, which consent may not be unreasonably withheld.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will deliver
to the Indenture Trustee and the Note Insurer, within 90 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year ended December
31, 1999), and otherwise in compliance with the requirements of TIA Section
314(a)(4) an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets.
(a) The Issuer shall not consolidate or merge with or into any other
Person.
(b) Except as otherwise provided in the Trust A Sale and Servicing
Agreement, the Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person.
SECTION 3.11. No Other Business. The Issuer shall not engage in any
business other than purchasing, owning, selling and managing the Mortgage Loans
and other assets in the manner contemplated by this Indenture and the Operative
Documents and activities incidental thereto.
SECTION 3.12. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Class A Notes, (ii) obligations owing from time
to time to the Note Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Operative Documents. The proceeds
of the Class A Notes shall be used exclusively to fund the
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Issuer's purchase of the Mortgage Loans and the other assets specified in the
Trust A Sale and Servicing Agreement, to fund the Pre-Funding Account and the
Capitalized Interest Account and to pay the Issuer's organizational,
transactional and start-up expenses.
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Trust A Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.14. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.15. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Class A Notes, this Indenture or
any Operative Document.
SECTION 3.16. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Master Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Master Servicer, the Owner Trustee, the Indenture Trustee and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Trust A Sale and Servicing Agreement, this Indenture, or
Trust Agreement. The Issuer will not, directly or indirectly, make payments to
or distributions from the Note Account except in accordance with this Indenture
and the Operative Documents.
SECTION 3.17. Notice of Event of Defaults and Events of Servicing
Termination. Upon a Responsible Officer of the Owner Trustee having actual
knowledge thereof, the Issuer agrees to give the Indenture Trustee, the Note
Insurer and the Rating Agencies prompt written notice of each Event of Default
hereunder or Event of Servicer Termination under the Trust A Sale and Servicing
Agreement.
SECTION 3.18. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
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SECTION 3.19. Amendments of Trust A Sale and Servicing Agreement and
Trust A Trust Agreement. The Issuer shall not agree to any amendment to Section
9.01 of the Trust A Sale and Servicing Agreement or Section 11.1 of the Trust A
Trust Agreement to eliminate the requirements thereunder that the Indenture
Trustee, the Note Insurer or the Holders of the Class A Notes consent to
amendments thereto as provided therein.
SECTION 3.20. Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Class A Notes as indebtedness of the Sponsor and hereby
instructs the Indenture Trustee to treat the Class A Notes as indebtedness of
the Sponsor for federal and state tax reporting purposes.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon payment in
full of the Class A Notes, this Indenture shall cease to be of further effect
with respect to the Class A Notes except as to (i) rights of registration of
transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen
Class A Notes, (iii) rights of Class A Noteholders to receive payments of
principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10,
3.12, and 3.19, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vi) the
rights of Class A Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of them,
and the Indenture Trustee, on written demand in the form of an Issuer Order and
at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Class A Notes,
when
(A) either
(1) all Class A Notes theretofore authenticated and delivered
(other than (i) Class A Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.4 and (ii)
Class A Notes for which payment money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 3.3) have been delivered to the Indenture Trustee for
cancellation and the Note Policy has terminated and been returned to
the Note Insurer for cancellation and all amounts owing to the Note
Insurer have been paid in full; or
(2) all Class A Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Trust A
Final Scheduled Payment Date within one year, or
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(iii) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer,
and in the case of (i), (ii) or (iii) above, the Issuer, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Class A Notes not theretofore delivered to the Indenture Trustee for
cancellation when due on the Final Scheduled Payment Date or Redemption
Date (if the Class A Notes shall have been called for redemption
pursuant to Section 10.1(a) or (b)), as the case may be;
(B) the Issuer has paid or caused to be paid all Note Insurer Issuer
Secured Obligations and all Indenture Trustee Issuer Secured Obligations; and
(C) the Issuer has delivered to the Indenture Trustee and the Note
Insurer an Officer's Certificate, an Opinion of Counsel and if required by the
TIA, the Indenture Trustee or the Note Insurer an Independent Certificate from a
firm of certified public accountants, each meeting the applicable requirements
of Section 11.1(a) and each stating that all conditions precedent herein
provided relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.2. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Class A Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Class A
Notes for the payment or redemption of which such monies have been deposited
with the Indenture Trustee, of all sums due and to become due thereon for
principal and interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Class A Notes, all monies then held by any Note Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Class A Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee
to be held and applied according to Section 3.3 and thereupon such Note Paying
Agent shall be released from all further liability with respect to such monies.
ARTICLE V.
REMEDIES
SECTION 5.1. Rights Upon an Event of Default. If an Event of Default as
described in Article XII shall have occurred and be continuing, but with the
consent of the Note Insurer in the absence of a Note Insurer Default, the
Indenture Trustee may, and on request of the Note Insurer or the Holders of
Class A Notes representing not less than 51% of the Outstanding Amount of the
Class A Notes (with the consent of the Note Insurer), shall, declare all the
Class A
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Notes to be immediately due and payable by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Class A Noteholders), and upon
any such declaration such Class A Notes, in an amount equal to the Outstanding
Amount of the Class A Notes, together with accrued and unpaid interest thereon
to the date of such acceleration, shall become immediately due and payable, all
subject to the prior written consent of the Note Insurer in the absence of a
Note Insurer Default.
At any time after such a declaration of acceleration of maturity of the
Class A Notes has been made and before a judgment or decree for payment of the
money due has been obtained by the Indenture Trustee as hereinafter in this
Article; provided the Note Insurer or the Holders of Class A Notes representing
more than 50% of the Outstanding Amount of the Class A Notes, with the prior
written consent of the Note Insurer, by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
(1) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A) all payments of principal of, and interest on, all Class A
Notes and all other amounts that would then be due hereunder or upon
such Class A Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel; and
(2) all Events of Default with respect to the Class A Notes, other than
the nonpayment of the principal of Class A Notes that have become due solely by
such acceleration, have been cured or waived as provided in Section 5.19.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.2. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. Subject to the following sentence, if an Event of Default
with respect to the Class A Notes occurs and is continuing, the Indenture
Trustee may, with the prior written consent of the Note Insurer and shall, at
the direction of the Note Insurer, proceed to protect and enforce its rights and
the rights of the Class A Noteholders and the Note Insurer by any Proceedings
the Indenture Trustee deems appropriate to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or enforce any
other proper remedy. Any proceedings brought by the Indenture Trustee on behalf
of the Class A Noteholders and the Note Insurer or any Class A Noteholder
against the Issuer shall be limited to the preservation, enforcement and
foreclosure of the liens, assignments, rights and security interests under the
Indenture and no attachment, execution or other unit or process shall be sought,
issued or levied upon any assets, properties or funds of the Issuer, other than
the Trust Estate relative to the Class A Notes in respect of which such Event of
Default has occurred. If there is a foreclosure of any such liens, assignments,
rights and security interests under this Indenture, by private power of sale or
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otherwise, no judgment for any deficiency upon the indebtedness represented by
the Class A Notes may be sought or obtained by the Indenture Trustee or any
Class A Noteholder against the Issuer. The Indenture Trustee shall be entitled
to recover the costs and expenses expended by it pursuant to this Article V
including reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
SECTION 5.3. Remedies. (a) If an Event of Default with respect to the
Class A Notes shall have occurred and be continuing and the Class A Notes have
been declared due and payable and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee, at the direction of the Note
Insurer may, for the benefit of the Class A Noteholders and the Note Insurer, do
one or more of the following:
(i) institute Proceedings for the collection of all amounts
then payable on the Class A Notes, or under this Indenture, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer moneys adjudged due, subject in all cases to the
provisions of Sections 3.1 and 5.3;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) institute Proceedings from time to time for the complete
or partial foreclosure of this Trust A Indenture with respect to the
Trust Estate;
(iv) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee or
the Holders of the Class A Notes and the Note Insurer hereunder; and
(v) refrain from selling the Trust Estate and apply all
related Trust A Monthly Remittance Amounts pursuant to Section 5.6.
SECTION 5.4. Indenture Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Issuer or any other obligor upon any of the Class A Notes or the property
of the Issuer or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether the Class A Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Issuer for the payment of
any overdue principal or interest) shall, at the direction of the Note Insurer,
be entitled and empowered, by intervention in such Proceeding or otherwise to:
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Class A Notes and file
such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel) and of the Class A
Noteholders and the Note Insurer allowed in such Proceeding, and
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(ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
receiver, assignee, Indenture Trustee, liquidator, or sequestrator (or
other similar official) in any such Proceeding is hereby authorized by
each Class A Noteholder and the Note Insurer to make such payments to
the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of such payments directly to the Class A
Noteholders and the Note Insurer, to pay to the Indenture Trustee any
amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or consent to or accept or adopt on behalf of any Class A Noteholder
or the Note Insurer any plan of reorganization, arrangement, adjustment or
composition affecting any of the Class A Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Class A Noteholder or the Note Insurer in any such
Proceeding. Any plan of reorganization, arrangement, adjustment or composition
relative to the Issuer or any other obligor upon any of the Class A Notes or the
property of the Issuer or of such obligor or their creditors and affecting the
Class A Notes or the rights of the Note Insurer under this Indenture or the
Insurance Agreement must be acceptable to the Note Insurer and, as long as no
Note Insurer Default exists and is continuing, the Note Insurer shall be
entitled to exercise the voting rights of the Holders of the Class A Notes
regarding such plan, reorganization, arrangement, adjustment or composition.
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession of
Class A Notes. All rights of action and claims under this Indenture or any of
the Class A Notes may be prosecuted and enforced by the Indenture Trustee
without the possession of any of the Class A Notes or the production thereof in
any Proceeding relating thereto, and any such Proceeding instituted by the
Indenture Trustee, at the direction of the Note Insurer, shall be brought in its
own name as Indenture Trustee of an express trust, and any recovery of judgment
shall be for the ratable benefit of the Holders of the Class A Notes and the
Note Insurer in respect of which such judgment has been recovered after payment
of amounts required to be paid pursuant to clause (i) Section 5.6.
SECTION 5.6. Application of Money Collected. If the Class A Notes have
been declared due and payable following an Event of Default with respect to the
Class A Notes and such declaration and its consequences have not been rescinded
and annulled, any money collected by the Indenture Trustee with respect to the
Class A Notes pursuant to this Article or otherwise and any other monies that
may then be held or thereafter received by the Indenture Trustee as security for
the Class A Notes shall be applied in the following order, at the date or dates
fixed by the Indenture Trustee and, in case of the payment of the entire amount
due on account of principal of, and interest on, the Class A Notes, upon
presentation and surrender thereof:
(i) first, to the Indenture Trustee any unpaid Indenture
Trustee's Fees related to the Class A Notes then due and any other
amounts payable and due to the Indenture Trustee under this Indenture,
including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article;
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(ii) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees related to the Mortgage Loans
then due and, upon the final liquidation of the related Mortgage Loan
or the final liquidation of the Trust Estate related to the Mortgage
Loans, Servicing Advances and Delinquency Advances, including
Nonrecoverable Advances related to the Mortgage Loans previously made
by, and not previously reimbursed or retained by, the Servicer;
(iii) third, to the payment of the Class A Interest
Distribution Amount then due and unpaid upon the Outstanding Amount of
the Class A Notes through the day preceding the date on which such
payment is made;
(iv) fourth, to the payment of the Class A Note Principal
Balance then due and unpaid upon the Outstanding Amount of the Class A
Notes;
(v) fifth, to the payment of the Note Insurer, all amounts due
pursuant to the Insurance Agreement; and
(vi) sixth, to the Trust A Certificateholders, any amount
remaining on deposit in the Trust A Note Account.
SECTION 5.7. Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee in bankruptcy, or for
any other remedy hereunder, unless:
(i) the Holders of not less than 25% of the Outstanding Amount
of the related Class A Notes have made written request to the Indenture
Trustee to institute such proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(ii) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request;
(iii) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such proceedings;
(iv) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the related Class A
Notes; and
(v) an Note Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Holders of Class A Notes shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Class A Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
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In the event the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of related Class A
Notes, each representing less than a majority of the Outstanding Amount of the
related Class A Notes, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Class A Noteholders to Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies. If the Control Party
or any Class A Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, then and in every such case the Issuer, the Note
Insurer, the Indenture Trustee and the Class A Noteholders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Note Insurer and the Class A Noteholders shall continue
as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Control Party or to the related Class A
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, Control Party or any Holder of any Note to exercise any
right or remedy accruing upon 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 V or by law to the
Indenture Trustee, the Note Insurer or to the Class A Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Class A Noteholders, as the case
may be.
SECTION 5.12. Control by Noteholders. If the Indenture Trustee is the
Control Party, the Holders of a majority of the Outstanding Amount of the
related Class A Notes, with the consent of the Note Insurer, shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee pursuant to Section 12.1 with respect
to the related Class A Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that
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(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any related Class A Noteholders not
consenting to such action.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by the Note Insurer, any Class A
Noteholder, or group of Class A Noteholders with the prior written consent of
the Note Insurer, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Class A Notes or (c) any suit instituted by any Class
A Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.15. Action on Class A Notes. The Indenture Trustee's right to
seek and recover judgment on the Class A Notes or under this Indenture shall not
be affected by the seeking, obtaining or application of any other relief under
or with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee, the Note Insurer or the Class A
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee or the Note Insurer against the Issuer or by the levy of any execution
under such judgment upon any portion of the Trust Estate or upon any of the
assets of the Issuer.
SECTION 5.16. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee (at the direction of the
Note Insurer) to do so and at the Master Servicer's expense, the Issuer agrees
to take all such lawful action as the Indenture Trustee may request to compel or
secure the performance and observance by the
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Sponsor and the Master Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Indenture Trustee, including the transmission of notices of default on
the part of the Sponsor or the Master Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Sponsor or the Master Servicer of each of their obligations under the
Sale and Servicing Agreement.
(b) If the Indenture Trustee is a Control Party and if an Event of
Default has occurred and is continuing, the Indenture Trustee may, and, at the
written direction of the Holders of 66-2/3% of the Outstanding Amount of the
related Class of Class A Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Sponsor or the Master Servicer
under or in connection with the Sale and Servicing Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Sponsor or the Master Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
SECTION 5.17. Subrogation. The Indenture Trustee shall receive as
attorney-in-fact of each Class A Noteholder any Insured Payment from the Note
Insurer pursuant to the Trust A Note Policy. Any and all Trust A Insured
Payments disbursed by the Indenture Trustee from claims made under the Trust A
Note Policy shall not be considered payment by the Trust, and shall not
discharge the obligations of the Trust with respect thereto. The Note Insurer
shall, to the extent it makes any payment with respect to any Class A Notes,
become subrogated to the rights of the recipient of such payments to the extent
of such payments. Subject to and conditioned upon any payment with respect to
any Class A Notes by or on behalf of the Note Insurer, the Indenture Trustee
shall assign to the Note Insurer all rights to the payment of interest or
principal with respect to such Class of Class A Notes which are then due for
payment to the extent of all payments made by the Note Insurer. In addition to
the rights of the Note Insurer set forth in Section 11.20 hereof, the Note
Insurer may exercise any option, vote, right, power or the like with respect to
such Class of Class A Notes to the extent that it has made payment pursuant to
the related Trust A Note Policy.
SECTION 5.18. Preference Claims. (a) In the event that the Indenture
Trustee has received a certified copy of an order of the appropriate court that
any payment on a Note has been avoided in whole or in part as a preference
payment under applicable bankruptcy law, the Indenture Trustee shall so notify
the Note Insurer, shall comply with the provisions of the related Policy to
obtain payment by the Note Insurer of such avoided payment, and shall, at the
time it provides notice to the Note Insurer, notify Holders of the Class A Notes
by mail that, in the event that any Class A Noteholder's payment is so
recoverable, such Class A Noteholder will be entitled to payment pursuant to the
terms of the related Policy. The Indenture Trustee shall furnish to the Note
Insurer at its written request, the requested records it holds in its possession
evidencing the payments of principal of and interest on Class A Notes, if any,
which have been made by the Indenture Trustee and subsequently recovered from
Class A Noteholders, and the dates on which such payments were made. Pursuant to
the terms of the related Policy, the Note Insurer will make such payment on
behalf of the Class A Noteholder to the receiver, conservator,
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debtor-in-possession or trustee in bankruptcy named in the Final Order (as
defined in the related Policy) and not to the Indenture Trustee or any Class A
Noteholder directly.
(b) The Indenture Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which the Indenture Trustee has
actual knowledge) seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the Class A
Notes. Each Holder, by its purchase of Class A Notes, and the Indenture Trustee
hereby agree that so long as an Note Insurer Default shall not have occurred and
be continuing, the Note Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedes or performance bond pending any such appeal at the expense of
the Note Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.18, the Note Insurer shall be subrogated to, and each Class A
Noteholder and the Indenture Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Indenture Trustee and each Class A
Noteholder in the conduct of any proceeding with respect to a Preference Claim,
including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION 5.19. Waiver of Past Defaults. The Note Insurer or the Holders
of Class A Notes representing more than 50% of the aggregate Class A Principal
Balance of the Outstanding Class A Notes on the applicable Record Date may on
behalf of the Holders of all the Class A Notes, and with the consent of the Note
Insurer, waive any past default hereunder and its consequences, except a default
in the payment of principal or any installment of interest on any Class A Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
ARTICLE VI.
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee.
(a) If a Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
the Operative Documents and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs; provided, however, that if the
Indenture Trustee is acting as Master Servicer, it shall use the same degree of
care and skill as is required of the Master Servicer under the Trust A Sale and
Servicing Agreement.
(b) Except during the continuance of a Event of Default:
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(i) The Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.11; and
(iv) the Indenture Trustee shall not be charged with knowledge
of any failure by the Master Servicer to comply with the obligations of
the Master Servicer referred to in clauses (i) and (ii) of Section 5.1
of the Trust A Sale and Servicing Agreement unless a Responsible
Officer of the Indenture Trustee at the Corporate Trust Office obtains
actual knowledge of such failure or occurrence or the Indenture Trustee
receives written notice of such failure or occurrence from the Master
Servicer, the Note Insurer or the Holders of Class A Notes evidencing
Voting Rights aggregating not less than 51%.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or indemnity reasonably satisfactory to it against such risk or
liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(g) The Indenture Trustee shall, upon two Business Days' prior written
notice to the Indenture Trustee, permit any representative of the Note Insurer,
during the Indenture Trustee's normal business hours, to examine all books of
account, records, reports and other
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papers of the Indenture Trustee relating to the Class A Notes, to make copies
and extracts therefrom and to discuss the Indenture Trustee's affairs and
actions, as such affairs and actions relate to the Indenture Trustee's duties
with respect to the Class A Notes, with the Indenture Trustee's officers and
employees responsible for carrying out the Indenture Trustee's duties with
respect to the Class A Notes.
(h) The Indenture Trustee shall, and hereby agrees that it will,
perform all of the obligations and duties required of it under the Trust A Sale
and Servicing Agreement.
(i) The Indenture Trustee shall, and hereby agrees that it will, hold
the Note Policy in trust, and will hold any proceeds of any claim on the Note
Policy in trust solely for the use and benefit of the Noteholders.
(j) In no event shall Bankers Trust Company of California, N.A., in any
of its capacities hereunder, be deemed to have assumed any duties of the Owner
Trustee under the Delaware Business Trust Statute, common law, or the Trust
Agreement except making payments to the Trust A Certificateholders.
SECTION 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document reasonably believed
by it to be genuine and to have been signed or presented by the proper person.
The Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Class A Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Class A
Notes or the Control Party, pursuant to the provisions of this Indenture, unless
such Holders of Class A Notes or the Control Party shall have offered to
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the Indenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby; provided,
however, that the Indenture Trustee shall, upon the occurrence of a Event of
Default or Event of Servicer Termination as defined in the Trust A Sale and
Servicing Agreement (that has not been cured or waived), exercise the rights and
powers vested in it by this Indenture or the Trust A Sale and Servicing
Agreement with reasonable care and skill.
(g) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Note
Insurer or by the Holders of Class A Notes evidencing not less than 25% of the
Outstanding Amount thereof; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or the
Trust A Sale and Servicing Agreement, the Indenture Trustee may require
indemnity reasonably satisfactory to it against such cost, expense or liability
as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person making such request, or, if paid by the
Indenture Trustee shall be reimbursed by the Person making such request upon
demand.
(h) The Indenture Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions hereunder of
the Master Servicer until such time as, and only to the extent that, the
Indenture Trustee may be required to act as Master Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Class A Notes and may otherwise deal with the Issuer or its Affiliates with
the same rights it would have if it were not Indenture Trustee. Any Note Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Trust Estate or the Class A Notes, it shall not
be accountable for the Issuer's use of the proceeds from the Class A Notes, and
it shall not be responsible for any statement of the Issuer in the Indenture or
in any document issued in connection with the sale of the Class A Notes or in
the Class A Notes other than the Indenture Trustee's certificate of
authentication.
SECTION 6.5. Notice of Defaults. If an Event of Default or an Event of
Servicer Termination occurs and is continuing and if it is either known by, or
written notice of the existence thereof has been delivered to, a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder and to the Note Insurer of such event within 10 days after such
knowledge or notice occurs. Except in the case of an Event of Default in payment
of principal of or interest on any Class A Note, the Indenture Trustee may
withhold the
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notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Class A
Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. Upon written
request, the Note Paying Agent or the Master Servicer shall on behalf of the
Issuer deliver to each Noteholder such information as may be reasonably required
to enable such Holder to prepare its Federal and state income tax returns
required by law.
SECTION 6.7. Compensation and Indemnity.
(a) The Indenture Trustee shall be liable in accordance herewith only
to the extent of the obligations specifically imposed upon and undertaken by the
Indenture Trustee herein. Neither the Indenture Trustee nor any of the
directors, officers, employees or agents of the Indenture Trustee shall be under
any liability on any Note or otherwise to any Account, the Sponsor, the Issuer,
the Master Servicer or any Securityholder for any action taken or for refraining
from the taking of any action in good faith pursuant to this Indenture, or for
errors in judgment; provided, however, that this provision shall not protect the
Indenture 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 Indenture 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 Indenture Trustee is
the obligor. The indemnification provided in this Section 6.7 shall survive the
termination of this Indenture or the resignation or removal of the Indenture
Trustee hereunder. The Indenture Trustee and any director, officer, employee or
agent of the Indenture 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.
(b) The Issuer's obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture. Notwithstanding anything
else set forth in this Indenture or the Operative Documents, the Indenture
Trustee agrees that the obligations of the Issuer (but not the Master Servicer)
to the Indenture Trustee hereunder and under the Operative Documents shall be
recourse to the Trust Estate only and specifically shall not be recourse to the
assets of the Issuer or any Securityholder. In addition, the Indenture Trustee
agrees that its recourse to the Issuer, the Trust Estate, the Sponsor and
amounts held in the Accounts shall be limited to the right to receive the
distributions referred to herein.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Issuer and the Note Insurer by
written notice. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor Indenture Trustee (approved in writing by the Note
Insurer, so long as such approval is not unreasonably withheld) by written
instrument, in duplicate, one copy of such instrument shall be delivered to the
resigning Indenture Trustee (who shall deliver a copy to the Master Servicer)
and one copy to the successor Indenture Trustee; provided, however, that any
such successor Indenture Trustee shall be subject to the prior written approval
of the Master Servicer, which approval shall not be
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unreasonably withheld. The Issuer may and, at the request of the Note Insurer
shall, remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, Indenture Trustee, conservator, sequestrator (or similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or ordering the winding-up or liquidation
of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
Indenture Trustee, conservator, sequestrator (or other similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or makes any assignment for the benefit
of creditors or fails generally to pay its debts as such debts become
due or takes any corporate action in furtherance of any of the
foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the Note
Insurer. If the Issuer fails to appoint such a successor Indenture Trustee, the
Note Insurer may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, to the Note Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the retiring Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its succession
to Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Class A Notes may petition any court of
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competent jurisdiction for the appointment of a successor Indenture Trustee
acceptable to the Note Insurer.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Note Insurer.
Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to Section 6.8 and payment of all fees and expenses
owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Master Servicer's indemnity obligations under
Section 6.7 shall continue for the benefit of the retiring Indenture Trustee and
the Master Servicer shall pay any amounts owing to the Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Class A Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor Indenture Trustee, and deliver such Class A
Notes so authenticated; and in case at that time any of the Class A Notes shall
not have been authenticated, any successor to the Indenture Trustee may
authenticate such Class A Notes either in the name of any predecessor hereunder
or in the name of the successor to the Indenture Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Class A
Notes or in this Indenture provided that the certificate of the Indenture
Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Indenture Trustee
with the consent of the Note Insurer shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-Indenture
Trustee or co-Indenture Trustees, or separate Indenture Trustee or separate
Indenture Trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-Indenture Trustee or separate
Indenture Trustee hereunder shall be required to meet the terms of eligibility
as a
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successor Indenture Trustee under Section 6.11 and no notice to Noteholders
of the appointment of any co-Indenture Trustee or separate Indenture Trustee
shall be required under Section 6.8 hereof.
(b) Every separate Indenture Trustee and co-Indenture Trustee shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate Indenture Trustee or co-Indenture Trustee, but solely at the
direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally liable
by reason of any act or omission of any other Indenture Trustee
hereunder, including acts or omissions of predecessor or successor
Indenture Trustees; and
(iii) the Indenture Trustee and the Master Servicer acting
jointly may at any time accept the resignation of or remove any
separate Indenture Trustee or co-Indenture Trustee except that
following the occurrence of an Event of Servicer Termination, the
Indenture Trustee acting alone may accept the resignation of or remove
any separate Indenture Trustee or co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate Indenture
Trustees and co-Indenture Trustees, as effectively as if given to each of them.
Every instrument appointing any separate Indenture Trustee or co-Indenture
Trustee shall refer to this Agreement and the conditions of this Article VI.
Each separate Indenture Trustee and co-Indenture Trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at any
time constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, dissolve, become
insolvent, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor Indenture Trustee.
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(e) The Master Servicer shall be responsible for the fees of any
co-Indenture Trustee or separate Indenture Trustee appointed hereunder.
SECTION 6.11. Eligibility: Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. The Indenture
Trustee shall provide copies of such reports to the Note Insurer upon request.
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints Bankers
Trust Company of California, N.A. as the Indenture Trustee with respect to the
Collateral, and Bankers Trust Company of California, N.A. hereby accepts such
appointment and agrees to act as Indenture Trustee with respect to the Trust
Estate for the Issuer Secured Parties, to maintain custody and possession of
such Trust Estate (except as otherwise provided hereunder) and to perform the
other duties of the Indenture Trustee in accordance with the provisions of this
Indenture and the other Operative Documents. Each Issuer Secured Party hereby
authorizes the Indenture Trustee to take such action on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder, as the Control
Party may direct and as are specifically authorized to be exercised by the
Indenture Trustee by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The
Indenture Trustee shall act upon and in compliance with the written instructions
of the Control Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Indenture Trustee shall
not act in accordance with any instructions (i) which are not authorized by, or
in violation of the provisions of, this Indenture or (ii) for which the
Indenture Trustee has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Indenture Trustee
of its express duties hereunder, except where this Indenture provides that the
Indenture Trustee is permitted to act only following and in accordance with such
instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee shall have
no duties or responsibilities except those expressly set forth in this Indenture
and the other Operative Documents to which the Indenture Trustee is a party or
as directed by the Control Party in accordance with this Indenture. The
Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction and with the indemnification of the
Control Party. The Indenture Trustee shall, and hereby agrees that it will,
perform all of the duties and obligations required of it under the Trust A Sale
and Servicing Agreement.
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SECTION 6.15. Limitation on Liability. Neither the Indenture Trustee
nor any of its directors, officers, employees and agents shall be liable for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Indenture Trustee shall be liable for its negligence,
bad faith or willful misconduct; nor shall the Indenture Trustee be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Issuer of this Indenture or any of the Trust Estate (or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of negligence,
bad faith or willful misconduct on its part, the Indenture Trustee shall be
entitled to rely on any communication, instrument, paper or other document
reasonably believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons and shall have no liability in acting, or
omitting to act, where such action or omission to act is in reasonable reliance
upon any statement or opinion contained in any such document or instrument.
SECTION 6.17. Representations and Warranties of the Indenture Trustee.
The Indenture Trustee represents and warrants to the Issuer and to each Issuer
Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States and is duly authorized and licensed under applicable
law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite right,
power and authority to execute and deliver this Indenture and to perform all of
its duties as the Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Indenture
Trustee of this Indenture and the other Operative Documents to which it is a
party, and the performance by the Indenture Trustee of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate proceedings,
are required for the valid execution and delivery by the Indenture Trustee, or
the performance by the Indenture Trustee, of this Indenture and such other
Operative Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has duly
executed and delivered this Indenture and each other Operative Document to which
it is a party, and each of this Indenture and each such other Operative Document
constitutes the legal, valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms, except
as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby expressly
waives any and all rights of setoff that the Indenture Trustee may otherwise at
any time have under applicable law with respect to any Account and agrees that
amounts in the Accounts shall at all times be held and applied solely in
accordance with the provisions hereof.
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SECTION 6.19. Control by the Control Party. The Indenture Trustee shall
comply with notices and instructions given by the Issuer only if accompanied by
the written consent of the Control Party.
SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession
of Class A Notes. All rights of action and claims under this Agreement or the
Class A Notes may be prosecuted and enforced by the Indenture Trustee without
the possession of any of the Class A Notes or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Indenture
Trustee shall be brought in its own name or in its capacity as Indenture
Trustee. Any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursement and advances of the Indenture
Trustee, its agents and counsel, be for the ratable benefit of the Noteholders
in respect of which such judgment has been recovered.
SECTION 6.21. Suits for Enforcement. In case an Event of Servicer
Termination or other default by the Master Servicer or the Sponsor hereunder
shall occur and be continuing, the Indenture Trustee, if the Control Party (and
if not the Control Party, with the consent of the Note Insurer), may proceed to
protect and enforce its rights and the rights of the Noteholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Indenture Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Indenture Trustee and the
Noteholders.
SECTION 6.22. Mortgagor Claims. In connection with any offset defenses,
or affirmative claim for recovery, asserted in legal actions brought by
Mortgagors under one or more Mortgage Loans based upon provisions therein or
upon other rights or remedies arising from any requirements of law applicable to
the Mortgage Loans:
(a) The Indenture Trustee is the holder of the Mortgage Loans only as
Indenture Trustee on behalf of the holders of the Class A Notes, and not as a
principal or in any individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable for, or
obligated to pay Mortgagors, any affirmative claims asserted thereby, or
responsible to holders of the Class A Notes for any offset defense amounts
applied against Mortgage Loan payments, pursuant to such legal actions.
(c) The Indenture Trustee will pay, solely from available Trust money,
affirmative claims for recovery by Mortgagors only pursuant to final judicial
orders or judgments, or judicially-approved settlement agreements, resulting
from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and
judgments which require its actions or cooperation in connection with
Mortgagors' legal actions to recover affirmative claims against holders of the
Class A Notes.
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(e) The Indenture Trustee will cooperate with and assist the Master
Servicer, the Sponsor, or holders of the Class A Notes in their defense of legal
actions by Mortgagors to recover affirmative claims if such cooperation and
assistance is not contrary to the interests of the Indenture Trustee as a party
to such legal actions and if the Indenture Trustee is satisfactorily indemnified
for all liability, costs and expenses arising therefrom.
(f) The Issuer hereby agrees to cause the Master Servicer to indemnify,
hold harmless and defend the Indenture Trustee from and against any and all
liability, loss, costs and expenses of the Indenture Trustee resulting from any
affirmative claims for recovery asserted or collected by Mortgagors under the
Mortgage Loans.
ARTICLE VII.
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished. The Indenture Trustee or, if the Indenture Trustee is
not the Note Registrar, the Issuer shall furnish to the Note Insurer or the
Issuer in writing upon their written request and at such other times as the Note
Insurer or the Issuer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.1
and the names and addresses of Holders received by the Indenture Trustee in its
capacity as Note Registrar. The Indenture Trustee may destroy any list furnished
to it as provided in such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Class A Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
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(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and copies of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Issuer may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each December 31, beginning with December 31, 1999,
the Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Class A Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Class A Notes are listed on any stock
exchange.
ARTICLE VIII.
PAYMENTS AND STATEMENTS TO CLASS A
NOTEHOLDERS AND TRUST A CERTIFICATEHOLDERS;
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Trust
A Sale and Servicing Agreement including (a) all payments due on the Mortgage
Loans and required to be paid over to the Indenture Trustee by the Master
Servicer or by any Sub-Servicer and (b) Trust A Insured Payments. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture
and the Trust A Sale and Servicing
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Agreement. Except as otherwise expressly provided in this Indenture or in the
Trust A Sale and Servicing Agreement, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate proceedings.
SECTION 8.2. Release of Trust Estate.
(a) Subject to Section 8.12 and the payment of its fees and expenses
pursuant to Section 6.7, the Indenture Trustee may, and when required by the
Issuer and the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture or
the Trust A Sale and Servicing Agreement. No party relying upon an instrument
executed by the Indenture Trustee as provided in this Article VIII shall be
bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no Class A
Notes outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
and to the Note Insurer pursuant to the Insurance Agreement have been paid,
release any remaining portion of the Trust Estate that secured the Class A Notes
from the lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Accounts. The Indenture
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.2(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.3. Establishment of Accounts. The Issuer shall cause to be
established, and the Indenture Trustee shall maintain, at the corporate trust
office of the Indenture Trustee, a Trust A Note Account, a Trust A Pre-Funding
Account and a Trust A Capitalized Interest Account, each to be held by the
Indenture Trustee in the name of Trust A for the benefit of the Class A
Noteholders and the Note Insurer, as their interests may appear.
SECTION 8.4. The Trust A Note Policy.
(a) On or before each Determination Date the Indenture Trustee shall
determine with respect to the immediately following Payment Date, the Class A
Deficiency Amount, if any.
(b) If the Indenture Trustee determines pursuant to paragraph (a) above
that a Class A Deficiency Amount would exist, the Indenture Trustee shall
complete a Notice in the form of Exhibit A to the Trust A Note Policy and submit
such notice to the Note Insurer no later than 12:00 p.m., New York City time on
the third Business Day preceding such Payment Date as a claim for a payment in
an amount equal to the Class A Deficiency Amount.
(c) Upon receipt of payments made pursuant to the Trust A Note Policy
from the Note Insurer on behalf of Class A Noteholders, the Indenture Trustee
shall deposit such
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payments in the Trust A Note Account and shall distribute
such payments, or the proceeds thereof, in accordance with Section 8.7(b) hereof
to the Class A Noteholders.
(d) The Indenture Trustee shall (i) receive payments made pursuant to
the Note Policy as attorney-in-fact of each Class A Noteholder receiving any
Insured Payment from the Note Insurer and (ii) disburse such Insured Payment to
the Class A Noteholders as set forth in Section 8.7(b) hereof. The Note Insurer
shall be entitled to receive the related Trust A Reimbursement Amount pursuant
to Section 8.7(b)(viii) hereof with respect to each Insured Payment made by the
Note Insurer. The Indenture Trustee hereby agrees on behalf of each Class A
Noteholder and the Trust for the benefit of the Note Insurer that it recognizes
that to the extent the Note Insurer makes payments pursuant to the Trust A Note
Policy, either directly or indirectly (as by paying through the Indenture
Trustee), to the Class A Noteholders, the Note Insurer will be entitled to
receive such related Trust A Reimbursement Amount.
SECTION 8.5. Trust C Reserve Account.
(a) On each Payment Date the Indenture Trustee shall deposit to the
Trust C Reserve Account the amounts, if any, described in Section 8.7(b)(xii)
hereof, if necessary. The amounts on deposit in the Trust C Reserve Account on
any date of determination shall be the "Available Reserve Amounts".
(b) If, on any Payment Date, and after taking into account the
application of the Trust A Total Available Funds (but not the proceeds of any
Trust A Insured Payment) to the items listed in clauses (i) through (viii) of
Section 8.7(b) hereof on such Payment Date, the full amount of the Class A
Interest Distribution Amount (excluding any Class A Available Funds Cap Current
Amount and Class A Available Funds Cap Carry-Forward Amounts, and any related
Relief Act Shortfalls) has not been paid, and/or a Trust A Overcollateralization
Deficit would result, the Indenture Trustee with respect to Trust A shall
provide notice to the Indenture Trustee with respect to Trust C and such
Indenture Trustee shall withdraw from the Trust C Reserve Account after funding
any deficiency in (A) the Class C Interest Distribution Amount and (B) any Trust
C Overcollateralization Deficit, and deposit in the Trust A Note Account an
amount with respect to the Class A Notes equal to the lesser of (x) the product
of (I) a fraction, the numerator of which is the Trust A Full Deficiency Amount
and the denominator of which is the sum of the Trust A Full Deficiency Amount
and the Trust B Full Deficiency Amount and (II) the Available Reserve Amounts
and (y) the amount of such shortfall in the amount of the Class A Interest
Distribution Amount (excluding any Class A Available Funds Cap Current Amount
and Class A Available Funds Cap Carry-Forward Amounts, and any related Relief
Act Shortfalls) and the amount of such unpaid Trust A Overcollateralization
Deficit (the amount described in this clause (y) is the "Trust A Full Deficiency
Amount").
(c) If, on any Payment Date, (A) the sum of (x) the Trust C
Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Trust C
Overcollateralization Reduction Amount, plus (y) the Available Reserve Amounts,
after taking into account any withdrawals therefrom pursuant to clause (b) above
and any similar withdrawals as described in Section 8.5(b) of the Trust B
Indenture and in Section 8.5 of the Trust C Indenture, exceeds (B) the Trust C
Specified Overcollateralization Amount for such Payment Date (such excess being
a "Trust C O/C Surplus
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Amount"), an amount equal to the product of (I) a fraction, the numerator of
which is the Trust A Aggregate Reserve Contribution Amount and the denominator
of which is the sum of the Trust A Aggregate Reserve Contribution Amount and the
Trust B Aggregate Reserve Contribution Amount and (II) the lesser of (x) such
Trust C O/C Surplus Amount and (y) the Available Reserve Amounts shall be
released from the Trust C Reserve Account and deposited in the Trust A Note
Account for distribution to the Trust A Certificateholders.
SECTION 8.6. Pre-Funding Account and Capitalized Interest Account.
(a) On the Closing Date, the Indenture Trustee will deposit from the
proceeds of the sale of the Class A Notes, on behalf of the Class A Noteholders
and the Note Insurer, in the Trust A Pre-Funding Account, the Trust A Original
Pre-Funded Amount and in the Trust A Capitalized Interest Account, the Trust A
Capitalized Interest Account Deposit.
(b) On each Subsequent Transfer Date, the Sponsor shall instruct the
Indenture Trustee to withdraw from the Trust A Pre-Funding Account an amount
equal to 100% of the aggregate Loan Balances of the Subsequent Mortgage Loans
transferred to the Trust on such Subsequent Transfer Date and pay such amount to
or upon the order of the Sponsor upon satisfaction of the conditions set forth
in Section 2.4 of the Trust A Sale and Servicing Agreement with respect to such
transfer.
(c) On the Payment Dates occurring in December 1998 and January 1999,
the Indenture Trustee shall transfer from the Trust A Pre-Funding Account to the
Trust A Note Account, the Trust A Pre-Funding Earnings needed to pay interest on
the portion of the Class A Notes collateralized by amounts in the Trust A
Pre-Funding Account, if any, applicable to each such Payment Date. On the
Payment Dates occurring in December 1998 and January 1999, the Indenture Trustee
shall distribute directly to the holders of the Trust A Certificates the Trust A
Pre-Funding Earnings not used to pay interest on the portion of the Class A
Notes collateralized by amounts in the Trust A Pre-Funding Account, if any,
applicable to such Payment Date.
(d) On each Subsequent Transfer Date the Sponsor may instruct the
Indenture Trustee in writing to withdraw from the Trust A Capitalized Interest
Account and pay on such Subsequent Transfer Date to the holders of the Trust A
Certificates the Trust A Overfunded Interest Amount for such Subsequent Transfer
Date, as calculated by the Sponsor pursuant to Section 2.4(g) of the Trust A
Sale and Servicing Agreement.
(e) On each Payment Date occurring in December 1998 and January 1999,
the Indenture Trustee shall transfer from the Trust A Capitalized Interest
Account to the Trust A Note Account the Trust A Capitalized Interest
Requirement, if any, for such Payment Dates.
(f) On the Payment Date occurring on January 1999, any amounts
remaining in the Trust A Capitalized Interest Account after taking into account
the transfers on such Payment Date described in clause (d) above shall be paid
to the holders of the Trust A Certificates, and the Trust A Capitalized Interest
Account shall be closed.
(g) If (x) the Trust A Pre-Funded Amount has not been reduced to zero
by the Payment Date occurring in January 1999 or (y) the Trust A Pre-Funded
Amount has been reduced to $100,000 or less on any Remittance Date occurring
during the Trust A Pre-Funding
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Period, in either case after giving effect to any reductions in the Trust A
Pre-Funded Amount on or before the related such Remittance Date, the Sponsor
shall instruct the Indenture Trustee to withdraw from the Trust A Pre-Funding
Account on such Remittance Date and deposit to the Trust A Note Account the
difference, if any, between (A) the Trust A Original Pre-Funded Amount and (B)
all amounts theretofore withdrawn from the Trust A Pre-Funding Account with
respect to Subsequent Mortgage Loans.
SECTION 8.7. Flow of Funds.
(a) The Indenture Trustee shall deposit to the Trust A Note Account,
without duplication, upon receipt, (i) any payments made pursuant to the Note
Policy relating to Trust A, (ii) the proceeds of any liquidation of the assets
of Trust A, (iii) the Trust A Monthly Remittance Amount remitted by the Master
Servicer or any Sub-Servicer, together with any Substitution Amounts, and any
Loan Purchase Price amounts received by the Indenture Trustee, (iv) on the
Payment Dates occurring in December 1998 and January 1999, the Trust A
Pre-Funding Earnings transferred by the Indenture Trustee pursuant to Section
8.6(c) hereof, (v) the Trust A Capitalized Interest Requirement to be
transferred on such Payment Dates from the Trust A Capitalized Interest Account,
pursuant to Section 8.6(e) hereof and (vi) the portion of the amount, if any, to
be transferred on such Payment Date from the Trust A Pre-Funding Account,
pursuant to Section 8.6(g) hereof (collectively, the "Trust A Total Available
Funds").
(b) Subject to any superseding provisions of clause (d) below, on each
Payment Date, the Indenture Trustee shall make the following allocations,
disbursements and transfers from amounts then on deposit in the Trust A Note
Account in the following order of priority, and each such allocation, transfer
and disbursement shall be treated as having occurred only after all preceding
allocations, transfers and disbursements have occurred:
(i) first, to the Indenture Trustee, the Indenture Trustee's
Fee then due and to the Owner Trustee, the Owner Trustee's Fee then
due;
(ii) second, to the Note Insurer, the Trust A Premium Amount
then due to the Note Insurer for such Payment Date.
(iii) third, to the Master Servicer, an amount equal to any
previously unreimbursed Master Servicing Fees then due to it on account
of the Unaffiliated Originator Loans not theretofore received by the
Master Servicer pursuant to Section 4.8(c)(i) of the Trust A Sale and
Servicing Agreement, as reported by the Master Servicer to the
Indenture Trustee.
(iv) fourth, to the Class A Noteholders, the Class A Interest
Distribution Amount for such Payment Date;
(v) fifth, to the Class A Noteholders, as a distribution of
principal, the Trust A Scheduled Principal Distribution Amount for such
Payment Date;
(vi) sixth, to the Class A Noteholders, as a distribution of
principal, the related Trust A Overcollateralization Deficit for such
Payment Date;
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(vii) seventh, if such Payment Date is the last Payment Date
in the Trust A Pre-Funding Period, to the Class A Noteholders, as a
distribution of principal, any amount remaining in the Trust A
Pre-Funding Account (after taking into account all transfers of
Subsequent Mortgage Loans on or prior to such Payment Date);
(viii) eighth, to the Note Insurer, the Trust A Reimbursement
Amount, if any, then due to it;
(ix) ninth, to the Class A Noteholders, as a distribution of
principal, up to an amount equal to the Trust A Accelerated Principal
Payment;
(x) tenth, for deposit to the Trust C Note Account, for
allocation to the Class C Noteholders, an amount equal to the
deficiency in the Class C Interest Distribution Amount and any Trust C
Overcollateralization Deficit for such Payment Date, after taking into
account the allocation of 100% of Trust C Total Available Funds on such
Payment Date; provided, that if Trust B Available Crossover Amounts
exist on such Payment Date, the Indenture Trustee shall deposit into
the Trust C Note Account pursuant to this clause (x) an amount equal to
the lesser of (I) the Trust A Available Crossover Amount for such
Payment Date and (II) the product of (a) the Trust C Full Deficiency
Amount on such Payment Date and (b) a fraction, the numerator of which
is the Trust A Available Crossover Amounts on such Payment Date and the
denominator of which is the sum of the Trust A Available Crossover
Amount, and the Trust B Available Crossover Amount on such Payment
Date;
(xi) eleventh,for deposit to the Trust B Note Account, for
allocation to the Class B Noteholders, an amount equal to the
deficiency in the Class B Interest Distribution Amount and any Trust B
Overcollateralization Deficit for such Payment Date, after taking into
account the allocation of 100% of Trust B Total Available Funds on such
Payment Date; provided, that if unused Trust C Available Crossover
Amounts exist on such Payment Date, the Indenture Trustee shall deposit
into the Trust B Note Account pursuant to this clause (xi) an amount
equal to the lesser of (I) the remaining Trust A Available Crossover
Amount for such Payment Date and (II) the product of (a) the Trust B
Full Deficiency Amount on such Payment Date and (b) a fraction, the
numerator of which is such remaining Trust A Available Crossover
Amounts on such Payment Date and the denominator of which is the sum of
the unused Trust A Available Crossover Amount and the unused Trust C
Available Crossover Amount on such Payment Date;
(xii) twelfth, for deposit to the Trust C Reserve Account, an
amount equal to the excess of the Trust C Overcollateralization Amount
over the Trust C Specified Overcollateralization Amount, after taking
into account the allocation of 100% of Trust C Total Available Funds on
such Payment Date; provided, that if unused Trust B Available Crossover
Amounts exist on such Payment Date, the Indenture Trustee shall deposit
into the Trust C Reserve Account pursuant to this clause (xii) an
amount equal to the lesser of (I) the then-remaining Trust A Available
Crossover Amount for such Payment Date and (II) the product of (a) the
Trust C Reserve Account Deposit on such Payment Date and (b) a
fraction, the numerator of which is such Trust A Available Crossover
Amounts on
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such Payment Date and the denominator of which is the sum of such
then-remaining Trust A Available Crossover Amount and the remaining
Trust B Available Crossover Amount on such Payment Date;
(xiii) thirteenth, to the Class A Noteholders, to fund the
amount of any Class A Available Funds Cap Current Amount for such
Payment Date;
(xiv) fourteenth, to the Class A Noteholders, to fund the
amount of any Class A Available Funds Cap Carry Forward Amount for such
Payment Date;
(xv) fifteenth, for deposit to the Trust B Note Account and
the Trust C Note Account, to fund pro rata (calculated based on the
amount of each such Trust's Available Funds Cap Current Amount on such
Payment Date), (I) the Trust B Available Funds Cap Current Amount after
taking into account the allocation of 100% of the Trust B Total
Available Funds on such Payment Date (such amount, the "Trust B
Available Funds Cap Current Deficiency Amount") and (II) the Trust C
Available Funds Cap Current Amount, after taking into account the
allocation of 100% of the Trust C Total Available Funds on such Payment
Date (such amount, the "Trust C Available Funds Cap Current Deficiency
Amount") provided, that with respect to the foregoing clause (I), if
unused Trust C Available Crossover Amounts exist on such Payment Date,
the Indenture Trustee shall deposit into the Trust B Note Account
pursuant to this clause (xv) an amount equal to the lesser of (a) the
remaining Trust A Available Crossover Amount for such Payment Date and
(b) the product of (x) the Trust B Available Funds Cap Current
Deficiency Amount and (y) a fraction, the numerator of which is such
remaining Trust A Available Crossover Amount on such Payment Date and
the denominator of which is the sum of such remaining Trust A Available
Crossover Amount and the unused Trust C Available Crossover Amount on
such Payment Date and with respect to the foregoing clause (II), if
unused Trust B Available Crossover Amounts exist on such Payment Date,
the Indenture Trustee shall deposit into the Trust C Note Account
pursuant to this clause (xv) an amount equal to the lesser of (a) the
remaining Trust A Available Crossover Amount for such Payment Date and
(b) the product of (x) the Trust C Available Funds Cap Current
Deficiency Amount and (y) a fraction, the numerator of which is such
remaining Trust A Available Crossover Amount on such Payment Date and
the denominator of which is the sum of such remaining Trust A Available
Crossover Amount and unused Trust B Available Crossover Amount on such
Payment Date;
(xvi) sixteenth, for deposit to the Trust B Note Account and
the Trust C Note Account, to fund pro rata (calculated based on the
amount of each Trust's Available Funds Cap Carry Forward Amount on such
Payment Date), (I) the Trust B Available Funds Cap Carry Forward Amount
after taking into account the allocation of 100% of the Trust B Total
Available Funds on such Payment Date (such amount, the "Trust B
Available Funds Cap Carry-Forward Deficiency Amount") and (II) the
Trust C Available Funds Cap Carry Forward Amount, after taking into
account the allocation of 100% of the Trust C Total Available Funds on
such Payment Date (such amount, the "Trust C Available Funds Cap
Carry-Forward Deficiency Amount") provided, that with respect to the
foregoing clause (I), if unused Trust C Available Crossover Amounts
exist on such Payment Date, the Indenture Trustee shall deposit into
the Trust B Note Account
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pursuant to this clause (xvi) an amount equal to the lesser of (a) the
remaining Trust A Available Crossover Amount for such Payment Date and
(b) the product of (x) the Trust B Available Funds Cap Carry-Forward
Deficiency Amount and (y) a fraction, the numerator of which is such
remaining Trust A Available Crossover Amount on such Payment Date and
the denominator of which is the sum of the unused Trust A Available
Crossover Amount and the unused Trust C Available Crossover Amount on
such Payment Date and with respect to the foregoing clause (II), if
unused Trust B Available Crossover Amounts exist on such Payment Date,
the Indenture Trustee shall deposit into the Trust C Note Account an
amount equal to the lesser of (a) the then-remaining Trust A Available
Crossover Amount for such Payment Date and (b) the product of (x) the
Trust C Available Funds Cap Carry-Forward Deficiency Amount and (y) a
fraction, the numerator of which is such remaining Trust A Available
Crossover Amount on such Payment Date and the denominator of which is
the sum of such remaining Trust A Available Crossover Amounts and the
unused Trust B Available Crossover Amounts on such Payment Date;
(xvii) seventeenth, to the Master Servicer, to the extent of
any unreimbursed Delinquency Advances, unreimbursed Servicing Advances,
including Nonrecoverable Delinquency Advances and Nonrecoverable
Servicing Advances and accrued and unpaid Master Servicing Fees as of
such Payment Date;
(xviii) eighteenth, to the Indenture Trustee and the Owner
Trustee, to the extent of any unreimbursed expenses owed to each of
them with respect to Trust A;
(xix) nineteenth, to the Trust A Certificateholders, the sum
of (A) any Trust A Overcollateralization Reduction Amount and (B) any
funds released from the amounts on deposit in the Trust C Reserve
Account pursuant to Section 8.5(c) hereof; and
(xx) twentieth, to the Trust A Certificateholders, any amount
remaining on deposit in the Trust A Note Account.
(c) Notwithstanding the foregoing, Trust B Available Crossover Amounts
will be available to fund deficiencies in the items specified in clauses (iv)
and (vi) of this Section 8.7(b) only after it has funded the items in clauses
(iv) and (vi) of Section 8.7(b) of the Trust C Indenture first and will only be
available to fund deficiencies in the items specified in clauses (xiii) and
(xiv) of this Section 8.7(b) only after it has made the required deposit, if
any, to the Trust C Reserve Account. The Trust C Available Crossover Amounts,
however, will be available to fund the items indicated in clauses (iv), (vi),
(xiii) and (xiv) of this Section 8.7(b) on a pro-rata basis with the similar
items set forth in Section 8.7(b) of the Trust B Indenture.
(d) On any Payment Date during the continuance of any Note Insurer
Default described in clause (b) or (c) of the definition thereof:
No Trust A Premium Amount shall be paid to the Note Insurer (unless the
Note Insurer or its custodian, Indenture Trustee, agent, receiver, custodian, or
similar official continues to make payments required under the Trust A Note
Policy) and any amounts otherwise payable to the Note Insurer as Trust A Premium
Amounts shall be retained in the Trust A Note
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Account as Trust A Total Available Funds. On any Payment Date wherein such Note
Insurer Default has been cured, the Trust A Premium Amounts shall be paid to the
Note Insurer.
SECTION 8.8. Investment of Accounts.
(a) So long as no event described in Section 5.1(a) or (b) of the Trust
A Sale and Servicing Agreement shall have occurred and be continuing, and
consistent with any requirements of the Code, all or a portion of the Accounts
held by the Indenture Trustee shall be invested and reinvested by the Indenture
Trustee in the name of the Indenture Trustee for the benefit of the Class A
Noteholders and the Note Insurer, 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 Section 5.1(a) or (b) of the
Trust A Sale and Servicing Agreement and following any removal of the Master
Servicer, the Note Insurer shall direct such investments. All investment income
shall be held in the Accounts for the benefit of the Master Servicer. 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 Indenture Trustee and sufficient uninvested funds are not available to make
such disbursement, the Indenture 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) The Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in any Account held by the Indenture Trustee resulting from
any loss on any Eligible Investment included therein.
(d) The Indenture Trustee shall hold funds in the Accounts held by the
Indenture Trustee uninvested upon the occurrence of either of the following
events:
(i) the Master Servicer or the Note Insurer, as the case may
be, shall have failed to give investment directions to the Indenture
Trustee; or
(ii) the Master Servicer or the Note Insurer, as the case may
be, shall have failed to give investment directions to the Indenture
Trustee by 11:15 a.m. New York time (or such other time as may be
agreed by the Master Servicer or the Note Insurer, as the case may be,
and the Indenture Trustee) on any Business Day (any such investment by
the Indenture Trustee pursuant to this clause (ii) to mature on the
next Business Day after the date of such investment).
SECTION 8.9. Eligible Investments. The following are Eligible
Investments:
(a) Direct general obligations of the United States or the obligations
of any agency or instrumentality of the United States fully and unconditionally
guaranteed, the timely payment or the guarantee of which constitutes a full
faith and credit obligation of the United States.
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(b) Federal Housing Administration debentures and rated Aa2 or higher
by Moody's and AA or better by Standard & Poor's if applicable.
(c) Freddie Mac senior debt obligations and rated Aa2 or higher by
Moody's and AA or better by Standard & Poor's, if applicable .
(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 if
applicable.
(e) FNMA senior debt obligations and rated Aa2 or higher by Moody's and
AA or better by Standard & Poor's, if applicable.
(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 Note Insurer provided:
1. The agreement is with a bank or insurance company which has
an unsecured, uninsured and unguaranteed obligation (or claims-paying
ability) rated Aa2 or better by Moody's and AA or better by 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 Indenture Trustee and the Note 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 Certificate Insurer 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
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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 8.10. Reports by Indenture Trustee.
(a) On each Payment Date, to the extent that the related report
described in Section 4.8(d)(ii) of the Trust A Sale and Servicing Agreement has
been received by the Indenture Trustee, the Indenture Trustee shall provide to
each Class A Noteholder, to the Master Servicer, to the Note Insurer, to the
Underwriter, to the Sponsor, to Standard & Poor's and to Moody's a written
report in substantially the form set forth as Exhibit B hereto, as such form may
be revised by the Indenture 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 B hereto and the following information:
(i) the Trust A Scheduled Principal Distribution Amount;
(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;
(iii) the amount of such distributions allocable to interest;
(iv) the amount of any Class A Interest Carry Forward Amount;
(v) the amount of any Trust A Insured Payment included in the
amounts distributed to the Class A Notes on such Payment Date;
(vi) information furnished by the Sponsor pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Class A Noteholders in computing their market discount;
(vii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(viii) for Payment Dates during the Trust A Pre-Funding
Period, the remaining Trust A Pre-Funded Amount;
(ix) for the final Subsequent Transfer Date, the amount of any
remaining Trust A Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Mortgage Loans and that will be distributed to
the Class A Noteholders as principal, if any, on the immediately
following Payment Date;
(x) the amounts, if any, of any Realized Losses for the
related Remittance Period; and
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(xi) 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 Aggregate Loan Balance; and
(xii) the Class A Note Principal Balance and the Pool Factor,
each after giving effect to such distribution of principal on such
Payment Date;
(xiii) the aggregate Loan Balances of all Mortgage Loans after
giving effect to any payment of principal on such Payment Date both in
the aggregate and in each Trust.
(xiv) the weighted average Coupon Rate of the Mortgage Loans
with respect to Trust A;
(xv) the amount of any Trust A Available Funds Cap Current
Amount and Trust A Available Funds Cap Carry Forward Amount;
(xvi) the Trust A Overcollateralization Deficit; and
(xvii) the amount of the Accelerated Principal Payment, if
any, for the related Payment Date.
(xviii) the amount by aggregate principal balance of Mortgage
Loans repurchased for the previous period and the cumulative number of
Mortgage Loans repurchased to date pursuant to Section 3.3(b) of the
Trust A Sale and Servicing Agreement.
Items (i) through (iii) above shall, with respect to each Class A Note,
be presented on the basis of a Note having a $1,000 denomination. In addition,
by January 31 of each calendar year following any year during which the Class A
Notes are outstanding, the Indenture Trustee shall furnish a report to each
holder 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 Class A
Notes for such calendar year.
(b) In addition, on each Payment Date the Indenture Trustee will
distribute to each Class A Noteholder, to the Note Insurer, to the 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 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 Indenture Trustee for such purpose on or prior to
the related Remittance Date:
(i) the total number of Mortgage Loans and the Loan Balances
thereof in Trust A, together with the number, aggregate Loan Balances
of such Mortgage Loans and the percentage (based on the aggregate Loan
Balance of the Mortgage Loans) of the aggregate Loan Balance of such
Mortgage Loans to the aggregate Loan Balance of all Mortgage Loans (a)
30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more
days Delinquent;
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(ii) the number, aggregate Loan Balances of all Mortgage Loans
and percentage (based on the aggregate Loan Balance of the Mortgage
Loans) of the aggregate Loan Balance of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans 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 and percentage (based on the aggregate Loan Balance of the
Mortgage Loans) of the aggregate Loan Balance of such Mortgage Loans to
the aggregate Loan Balance of all Mortgage Loans relating to Mortgagors
in bankruptcy proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause
(i));
(iv) the number, aggregate Loan Balances of all Mortgage Loans
and percentage (based on the aggregate Loan Balance of the Mortgage
Loans) of the aggregate Loan Balance of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans relating to REO Properties
(and whether any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (i)); and
(v) the loan number of the related Mortgage Loan and the book
value of any REO Property.
(c) The foregoing reports shall be sent be to a Class A Noteholder only
insofar as such holder possesses a Class A Note.
(d) The Sponsor and the Master Servicer, on behalf of Class A
Noteholders and the Trust (the "Trust Parties") hereby authorize the Indenture
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 Note
Insurer, contained in reports provided to the Note Insurer or the Indenture
Trustee by the Master Servicer hereunder and, if so directed by an Authorized
Officer of the Sponsor in writing to the Indenture Trustee, the monthly report
in the Form of Exhibit F to the Class A Noteholders prepared by the Indenture
Trustee (the "Information") on The Bloomberg, an on-line computer based
information network maintained by Bloomberg L.P. ("Bloomberg") or on any other
on-line computer based 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 Indenture 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
Indenture Trustee or its affiliates or any of the Indenture 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 Indenture
Trustee, including, but not limited to, claims based on allegations of
inaccurate or incomplete information by the Indenture Trustee to Bloomberg or to
any Information Network or otherwise (other than in connection with the
Indenture 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
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misconduct). The Indenture Trustee makes no representations or warranties,
expressed or implied, of any kind whatsoever with respect to the accuracy,
adequacy, timeliness, completeness, merchantability or fitness for any
particular purpose of any Information in any form or manner. The authorizations,
covenants and obligations of the Trust Parties under this section shall be
irrevocable and shall survive the termination of this Agreement.
SECTION 8.11. Additional Reports by Indenture Trustee.
(a) The Indenture Trustee shall report to the Sponsor, the Master
Servicer and the Note Insurer with respect to the amount then held in each
Account (including investment earnings accrued or scheduled to accrue) held by
the Indenture Trustee and the identity of the investments included therein, as
the Sponsor, the Master Servicer or the Note Insurer may from time to time
request. Without limiting the generality of the foregoing, the Indenture Trustee
shall, at the request of the Sponsor, the Master Servicer or the Note Insurer,
transmit promptly to the Sponsor, the Master Servicer and the Note Insurer
copies of all accounting of aggregate receipts in respect of the Mortgage Loans
furnished to it by the Master Servicer pursuant to Section 4.8(d)(ii) of the
Trust A Sale and Servicing Agreement and shall notify the Sponsor, the Master
Servicer and the Note Insurer if any such receipts have not been received by the
Indenture Trustee.
(b) From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer 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
Section 3.3(a) of the Trust A Sale and Servicing Agreement. On the date that is
eighteen months after the Closing Date, the Indenture Trustee shall provide the
Note Insurer with a written report of all of such inaccuracies to such date of
which it has actual knowledge, without independent investigation, and of the
action taken by the Sponsor under Section 3.4(b) of the Trust A Sale and
Servicing Agreement with respect thereto.
SECTION 8.12. Opinion of Counsel. The Indenture Trustee shall receive
at least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.2(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require as a condition to such action, an
Opinion of Counsel, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Class A Notes or
the rights of the Class A Noteholders or the Note Insurer in contravention of
the provisions of this Indenture; provided, however, that such Opinion of
Counsel shall not be required to express an opinion as to the fair value of the
Trust Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Class A Notes but with
the consent of the Note Insurer, as evidenced to the Indenture Trustee, the
Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any
time and from time to time, may enter into one or more indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Class A Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Class A Notes, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Class A Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture Trustee with respect to
the Class A Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of the
trusts hereunder by more than one Indenture Trustee, pursuant to the
requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
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(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Class A Notes
but with the prior written consent of the Note Insurer and with prior notice to
the Rating Agencies by the Issuer, as evidenced to the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Class A Notes under this Indenture; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies, with the consent of the Note Insurer
and with the consent of the Holders of not less than a majority of the
Outstanding Class A Notes, by Act of such Holders delivered to the Issuer and
the Indenture Trustee, enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Class A Notes under this Indenture;
provided, however, that, subject to the express rights of the Note Insurer under
the Operative Documents, no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Class A Notes, or change any
place of payment where, or the coin or currency in which, any Note or
the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Class A Notes on or after the respective due
dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(iii) reduce the percentage of the Outstanding Class A Notes,
the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Class A Notes
required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 12.1;
(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the
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Operative Documents cannot be modified or waived without the consent of
the Holder of each Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation); or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein or in any of the Operative Documents, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may determine whether or not any Class A Notes
would be adversely affected by any supplemental indenture upon receipt of an
Opinion of Counsel to that effect and any such determination shall be conclusive
upon the Holders of all Class A Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Indenture Trustee shall not be liable
for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Class A Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel (and, if requested, an Officer's Certificate) stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Class A Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Class
A Notes shall thereafter be determined, exercised and enforced hereunder subject
in all respects
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to such modifications and amendments, and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6. Reference in Class A Notes to Supplemental Indentures.
Class A Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer or the Indenture Trustee shall so determine, new Class A Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Class A Notes.
SECTION 9.7. Amendment.
(a) The Indenture Trustee, the Sponsor, the Issuer and the Master
Servicer, may at any time and from time to time, with the prior written consent
of the Note Insurer but without the giving of notice to or the receipt of the
consent of the Class A Noteholders, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of 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; provided, however, that any
such action shall not, as evidenced by an opinion of counsel delivered to the
Indenture Trustee, materially and adversely affect the interests of any Owner
(without its written consent).
(b) The Indenture Trustee, the Sponsor, the Issuer and the Master
Servicer may, at any time and from time to time, with the prior written consent
of the Note Insurer but without the giving of notice to or the receipt of the
consent of the Class A Noteholders, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of changing the
definitions of "Trust A Specified Overcollateralization Amount"; provided,
however, that no such change shall affect the weighted average life of the Class
A Notes (assuming an appropriate prepayment speed as determined by the
Underwriter with respect to the Class A Notes by more than five percent, as
determined by the Underwriter).
(c) This Agreement may also be amended by the Indenture Trustee, the
Sponsor, the Issuer and the Master Servicer at any time and from time to time,
with the prior written approval of the Note Insurer and not less than a majority
of the Percentage Interest represented by the Class A Notes 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 Class A Noteholders 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 Class A
Noteholders without the consent of the Class
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A Noteholders, (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 Class A Notes,
without the consent of all Class A Noteholders then Outstanding.
ARTICLE X.
REDEMPTION OF CLASS A NOTES
SECTION 10.1. Redemption.
(a) The Class A Notes are subject to redemption following the later of
(A) the Payment Date following payment in full of all amounts owing to the Note
Insurer and (B) the earliest of (i) the transfer, under the conditions specified
in Section 10.1(b), to the Master Servicer of the Class A Noteholders' interest
in each Mortgage Loan and all property acquired in respect of any Mortgage Loan
remaining in the Trust for an amount equal to the sum of (a) the Class A Note
Principal Balance and (b) the sum of accrued and unpaid Class A Interest
Distribution Amount through the day preceding the final Payment Date, (ii) the
day following the Payment Date on which the distribution made to Class A
Noteholders has reduced the Class A Note Principal Balance to zero and no other
amounts are owed to the Class A Noteholders, (iii) the final payment or other
liquidation of the last Mortgage Loan remaining in the Trust (including, without
limitation, the disposition of the Mortgage Loan pursuant to Section 12.1
hereof) or the disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan and (iv) the Payment Date in November
2028; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the date of death of the last
surviving descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof. Upon termination in
accordance with clause (B)(i) of this Section 10.1(a), the Indenture Trustee
shall execute such documents and instruments of transfer presented by the
Sponsor, in each case without recourse, representation or warranty, and take
such other actions as the Sponsor may reasonably request to effect the transfer
of the Mortgage Loan to the Sponsor.
(b) The Class A Notes shall be subject to optional redemption by the
Trust A Certificateholder on any Payment Date after the Class A Note Principal
Balance has been reduced to an amount less than or equal to $65,000,000 (10% of
the Original Class A Note Principal Balance) and all amounts due and owing to
the Note Insurer pursuant to the Insurance Agreement have been paid. Such
transfer shall only be permitted if the Trust A Certificateholder delivers to
the Indenture Trustee an amount equal to the sum of the outstanding Class A Note
Principal Balance and accrued and unpaid interest thereon at the Class A Note
Interest Rate through the day preceding the final Payment Date plus all Trust A
Reimbursement Amounts. In connection with such purchase, the Master Servicer
shall remit to the Indenture Trustee all amounts then on deposit in the Trust A
Principal and Interest Account for deposit to the Trust A Note Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(c) Promptly following any such purchase, the Indenture Trustee will
release the Files to the Master Servicer, or otherwise upon their order, in a
manner similar to that described in Section 4.14 of the Trust A Sale and
Servicing Agreement.
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(d) Advanta National Bank may not participate in any purchase described
in this Section 10.1(b), or fund any portion of the purchase price, unless the
then-outstanding Principal Balances of the Mortgage Loans in the Trust Estate is
less than or equal to five percent of the sum of the aggregate Loan Balances of
all Mortgage Loans in the Trust Estate as of the Initial Cut-Off Date and the
Original Pre-Funded Amount.
(e) If the Class A Notes are to be redeemed pursuant to this Section
10.1(a), the Master Servicer or the Issuer shall furnish notice of such election
to the Indenture Trustee not later than 45 days prior to the Redemption Date and
the Issuer shall deposit with the Indenture Trustee in the Trust A Note Account
the Redemption Price of the Class A Notes not less than five Business Days prior
to the Redemption Date whereupon all such Class A Notes shall be due and payable
on the Redemption Date upon the furnishing of a notice complying with Section
10.2.
SECTION 10.2. Surrender of Class A Notes.
(a) Notice of any termination, specifying the Payment Date (which shall
be a date that would otherwise be a Payment Date) upon which the Noteholders may
surrender their Class A Notes to the Indenture Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Indenture Trustee
(upon receipt of written directions from the Sponsor, if the Sponsor is
exercising its right to transfer of the Mortgage Loans, given not later than the
first day of the month preceding the month of such final distribution) to the
Note Insurer and to the Master Servicer and by letter to Noteholders mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Payment Date
upon which final distribution of the Class A Notes will be made upon
presentation and surrender of Class A Notes at the office or agency of the
Indenture Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, distributions being made only upon presentation and
surrender of the Class A Notes at the office or agency of the Indenture Trustee
therein specified.
(b) Any money held by the Indenture Trustee in trust for the payment of
any amount due with respect to any Class A Note and remaining unclaimed by the
related Class A Noteholder 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 Note Insurer on account of
any Trust A Reimbursement Amounts, and second, to the Trust A
Certificateholders; and such Class A Noteholder shall thereafter, as an
unsecured general creditor, look only to the Note Insurer or the Trust A
Certificateholders for payment thereof (but only to the extent of the amounts so
paid to the Note Insurer or the Trust A Certificateholders), and all liability
of the Indenture Trustee with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee, before being required to make any
such payment, shall at the expense of the Trust 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 Note Insurer or the Trust A
Certificateholders. The Indenture Trustee shall, at the direction of the
Sponsor, also adopt and employ, at the expense of the Trust, any other
reasonable means of notification of such payment (including, but
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not limited to, mailing notice of such payment to Class A Noteholders whose
right to or interest in monies due and payable but not claimed is determinable
from the Note Register at the last address of record for each such Class A
Noteholder).
SECTION 10.3. Form of Redemption Notice. Notice of redemption supplied
to the Indenture Trustee by the Master Servicer under Section 10.1(a) shall be
given by the Indenture Trustee by facsimile or by first-class mail, postage
prepaid, transmitted or mailed prior to the applicable Redemption Date to each
Holder of Class A Notes of record, as of the close of business on the date which
is not less than 5 days prior to the applicable Redemption Date, at such
Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Class A Notes at the place
where such Class A Notes are to be surrendered for payment of the
Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.2); and
(iv) that interest on the Class A Notes shall cease to accrue
on the Redemption Date.
Notice of redemption of the Class A Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note shall not
impair or affect the validity of the redemption of any other Note.
SECTION 10.4. Class A Notes Payable on Redemption Date. The Class A
Notes to be redeemed shall, following notice of redemption as required by
Section 10.2, on the Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period after the
date to which accrued interest is calculated for purposes of calculating the
Redemption Price.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Note Insurer if the application or request is made to the
Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the
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proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
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 or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Master Servicer, the Sponsor or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Master
Servicer, the Sponsor or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
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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 Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Indenture
Trustee.
(c) The ownership of Class A Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Class A Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed first-class and shall be deemed to have been duly
given upon receipt to the Indenture
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Trustee at its Corporate Trust Office and any notice delivered by facsimile
shall be addressed to the Corporate Trust Office, telecopy number (949)
253-7577, or
(b) The Issuer by the Indenture Trustee or by any Noteholder shall be
in writing and shall be sufficient for every purpose hereunder if personally
delivered, delivered by facsimile or overnight courier or mailed first class,
and shall deemed to have been duly given upon receipt to the Issuer addressed
to: Advanta Mortgage Loan Trust 1998-4A, in care of Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-0001
Attention: Corporate Trust Administration, or at any other address previously
furnished in writing to the Indenture Trustee by Issuer. The Issuer shall
promptly transmit any notice received by it from the Class A Noteholders to the
Indenture Trustee.
(c) The Sponsor or the Master Servicer by the Indenture Trustee shall
be in writing and shall be sufficient for every purpose hereunder if personally
delivered, delivered by facsimile or overnight courier or mailed first class and
shall be deemed to have been duly given upon receipt to the Sponsor or the
Master Service addressed to:
Advanta Mortgage Conduit Services, Inc.
Welsh & McKean Roads
P.O. Box 918
Springhouse, PA 19477-0918
Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, CA 92127
or such other address previously furnished in writing to the Indenture Trustee
by Sponsor or Master Services.
(d) The Note Insurer by the Issuer or the Indenture Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by first-class
mail, personally delivered, or telecopied to the recipient as follows:
To the Note Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: ___________
Structured Finance Department - MBS
Telecopy: (212) 363-1459
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or first class or via facsimile to (i)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10004, Fax No: (212) 533-0355 and
(ii) in the case of Standard & Poor's, at the following address: Standard &
Poor's Ratings Group, 26 Broadway (15th Floor), New York, New York 10004,
Attention: Asset
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Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Class A Notes to the contrary, the
Issuer may enter into any agreement with any Holder of a Note providing for a
method of payment, or notice by the Indenture Trustee or any Note Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are
reasonable and consented to by the Indenture Trustee (which consent shall not be
unreasonably withheld). The Issuer will furnish to the Indenture Trustee a copy
of each such agreement and the Indenture Trustee will cause payments to be made
and notices to be given in accordance with such agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
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SECTION 11.8. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements in
this Indenture and the Class A Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors.
SECTION 11.10. Separability. In case any provision in this Indenture or
in the Class A Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Class A Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, the Note Insurer and the Noteholders, and any other
party secured hereunder, and any other person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Note Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such right or power hereunder), but not its duties and obligations under the
Note Policy, upon delivery of a written notice to the Indenture Trustee.
SECTION 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (except as otherwise provided
by any other provision of the Class A Notes or this Indenture) payment need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture 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 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trust or any other counsel reasonably acceptable to
the Indenture Trustee and the Note Insurer) to the effect that such recording is
necessary either for the protection of the Noteholders or any
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other person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Sponsor, any
Originator, the Master Servicer, the Owner Trustee or the Indenture Trustee on
the Class A Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Sponsor, any Originator, the Master Servicer, the Indenture Trustee
or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Sponsor, any Originator, the Master Servicer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Sponsor, any Originator, the Master Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Sponsor, or the
Issuer, or join in any institution against the Sponsor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Class A Notes,
this Indenture or any of the Operative Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or of the
Note Insurer, during the Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.
SECTION 11.19. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each
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of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties to
this Agreement and by any person claiming by, through or under them and (d)
under no circumstances shall Wilmington Trust Company be personally liable for
the payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaking by the Issuer under this Agreement or any related documents.
ARTICLE XII.
EVENTS OF DEFAULT
SECTION 12.1. Events of Default. The following shall constitute Events
of Default:
(a) failure on the part of Trust A, Trust B or Trust C (i) to make a
payment or deposit required under the related Sale and Servicing Agreement
within five Business Days after the date such payment or deposit is required to
be made or (ii) to observe or perform in any material respect any other
covenants or agreements of such Issuer set forth in the related Sale and
Servicing Agreement, which failure continues unremedied for a period of 60 days
after written notice;
(b) any representation or warranty made by the Sponsor in a Sale and
Servicing Agreement proves to have been incorrect in any material respect when
made and continues to be incorrect in any material respect for a period of 60
days after written notice and as a result of which the interests of the Holders
or the Note Insurer are materially and adversely affected; provided, however,
that a Event of Default shall not be deemed to occur if the Sponsor has
purchased or made a substitution for the related Mortgage Loan or Mortgage Loans
if applicable during such period (or within an additional 60 days with the
consent of the Indenture Trustee and the Note Insurer) in accordance with the
provisions of the related Sale and Servicing Agreement;
(c) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to the Sponsor or the Master Servicer;
(d) any of Trust A, Trust B or Trust C becomes subject to regulation by
the Securities and Exchange Commission as an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(e) the occurrence of an Event of Servicer Termination;
(f) default in the payment of any interest, principal or any
installment of principal on any Class A Note, Class B Note or Class C Note when
the same becomes due and payable, and such default continues for a period of
five days; and
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(g) on any Payment Date, the failure to pay interest at the Class A
Note Formula Capped Rate.
In the case of any event described in clause (a), (b), (e) or (g), an
Event of Default will be deemed to have occurred only if, after the applicable
grace period, if any, described herein or in the related Indenture or Sale and
Servicing Agreement either (i) the Indenture Trustee or Holders holding Class A
Notes evidencing at least 50% of the aggregate principal amount of the Class A
Notes with the consent of the Note Insurer (so long as there is no continuing
default by the Note Insurer in the performance of its obligations under the Note
Policy) or the Note Insurer (so long as there is no continuing default by the
Note Insurer in the performance of its obligations under the Note Policy), by
written notice to the Note Insurer, the Sponsor, the Rating Agencies, and the
Master Servicer (and to the Indenture Trustee, if given by the Holders or the
Note Insurer) declare that an Event of Default has occurred as of the date of
such notice. In the case of any event described in clause (c), (d) or (f), an
Event of Default will be deemed to have occurred without any notice or other
action on the part of the Indenture Trustee, the Class A Noteholders or the Note
Insurer immediately upon the occurrence of such event.
In addition to the consequences of an Event of Default discussed above,
unless otherwise instructed within 60 days by the Class A Noteholders
representing undivided interests aggregating more than 50% of the aggregate
principal amount of the Class A Notes, the Indenture Trustee will sell, dispose
of or otherwise liquidate the Trust Estate in a commercially reasonable manner
and on commercially reasonable terms. Any such sale, disposal or liquidation and
such sale, disposal or liquidation will be "servicing retained" by the Master
Servicer. The net proceeds of such sale will first (if a Note Insurer Default
shall not have occurred and be continuing) be paid to the Note Insurer to the
extent of unreimbursed draws under the Note Policy and other amounts owing to
the Note Insurer. The amount required to reduce the Class A Note Principal
Balance, together with all accrued and unpaid interest due thereon, to zero will
be distributed to the Holders of the Class A Notes; the Note Policy will
guarantee and pay in full any amount by which such remaining net proceeds are
insufficient to pay the Class A Note Principal Balance in full.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
ADVANTA MORTGAGE LOAN TRUST 1998-4A
By: WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee,
By: /s/ Emmet Harmon
--------------------------------------------
Name: Emmet Harmon
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as
Indenture Trustee,
By: /s/ Mark McNeill
--------------------------------------------
Name: Mark McNeill
Title: Assistant Secretary
<PAGE> 95
EXHIBIT A
[Form of Class A Note]
REGISTERED $650,000,000
No. A
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. _________
Unless this Class A Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
or its agent for registration of transfer, exchange or payment, and any Class A
Note issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS CLASS A NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA MORTGAGE LOAN TRUST 1998-4A
CLASS A MORTGAGE BACKED CLASS A NOTES
Advanta Mortgage Loan Trust 1998-4A, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ($650,000,000), such amount payable on
each Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $650,000,000 and the denominator of which is
$650,000,000 by (ii) the aggregate amount, if any, payable from the Trust A Note
Account in respect of principal on the Class A Notes pursuant to Section 8.7 of
the Indenture; provided, however, that the entire unpaid principal amount of
this Note shall be due and payable on the November 2028, Payment Date (the
"Final Scheduled Payment Date"). The Issuer will pay interest on this Class A
Note at the rate per annum provided in the Trust A Indenture on each Payment
Date until the principal of this Class A Note is paid or made available for
payment, on the principal amount of this Class A Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date). Interest on this Class A Note will accrue for each
Payment Date from the most recent Payment Date on which interest has been paid
to but excluding such Payment Date or, if no interest has yet been paid, from
November 24, 1998. Interest will be computed on the basis of
A-1
<PAGE> 96
the actual number of days elapsed in a 360-day year. Such principal of and
interest on this Class A Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Class A Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Class A Note shall be applied first to interest due
and payable on this Class A Note as provided above and then to the unpaid
principal of this Class A Note.
The Class A Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Ambac Assurance Corporation (the
"Note Insurer"), pursuant to which the Note Insurer has unconditionally
guaranteed payments of the Trust A Insured Payments on each Payment Date, all as
more fully set forth in the Trust A Indenture.
For purposes of federal income, state and local income and franchise
and any other income taxes, the Issuer will treat the Class A Notes as
indebtedness of the Issuer and hereby instructs the Indenture Trustee to treat
the Class A Notes as indebtedness of the Issuer for federal and state tax
reporting purposes.
Each Class A Noteholder or Note Owner, by acceptance of this Class A
Note or, in the case of a Note Owner, a beneficial interest in a Class A Note,
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee or the Indenture
Trustee on the Class A Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee, or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any owner, beneficiary, agent, officer, director or employee of the
Sponsor, any Originator, the Master Servicer, the Indenture Trustee, or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Sponsor, any Originator, the Master Servicer, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee, or the Owner Trustee in
its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Reference is made to the further provisions of this Class A Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class A Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class A
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-2
<PAGE> 97
Each Note Owner, by acceptance of a beneficial interest in a Class A
Note, shall be deemed to represent either (i) that it is not (A) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975
of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii) that its
acquisition and continued holding of a beneficial interest in the Class A Note
will be covered by a U.S. Department of Labor Prohibited Transaction Class
Exemption.
A-3
<PAGE> 98
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: November 24, 1998 ADVANTA MORTGAGE LOAN TRUST 1998-4A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By: _______________________________________
Name:
Title:
A-4
<PAGE> 99
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes designated above and referred to in
the within-mentioned Indenture.
Date: November 24, 1998 BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as
Indenture Trustee
By: ____________________________________________
Authorized Signatory
A-5
<PAGE> 100
REVERSE OF NOTE
This Class A Note is one of a duly authorized issue of Class A Notes of
the Issuer, designated as its Class A Mortgage Backed Notes (herein called the
"Class A Notes"), all issued under an Indenture dated as of November 1, 1998
(such indenture, as supplemented or amended, is herein called the "Trust A
Indenture"), between the Issuer and Bankers Trust Company of California, N.A.,
as Indenture Trustee (the "Indenture Trustee", which term includes any successor
Indenture Trustee under the Trust A Indenture), to which Trust A Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Class A Notes. The Class A Notes are subject to
all terms of the Trust A Indenture. All terms used in this Class A Note that are
defined in the Trust A Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Trust A Indenture, as so
supplemented or amended.
The Class A Notes are and will be secured by the collateral pledged as
security therefor as provided in the Trust A Indenture.
Principal of the Class A Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the twenty-fifth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing December 28, 1998. The term "Payment Date,"
shall be deemed to include the Trust A Final Scheduled Payment Date.
As described above, the entire unpaid principal amount of this Class A
Note shall be due and payable on the earlier of the Final Scheduled Payment Date
and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Class A
Notes shall be due and payable if the Sponsor or Master Servicer voluntarily
files a bankruptcy petition or goes into liquidation or any person is appointed
a receiver or bankruptcy trustee of the Sponsor or Master Servicer and the
Indenture Trustee or the Holders of the Class A Notes representing at least 50%
of the Outstanding Amount of the Class A Notes shall have the right to direct
the Indenture Trustee to sell or liquidate the Trust Estate as provided in
Section 5.1 of the Trust A Indenture. All principal payments on the Class A
Notes shall be made pro rata to the Class A Noteholders entitled thereto.
Payments of interest on this Class A Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class A Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Class A Note (or one or more
Predecessor Class A Notes) on the Note Register as of the close of business on
each Record Date, except that with respect to Class A Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Class A Note be submitted for notation of payment. Any reduction in
the principal amount of this Class A Note (or any one or more Predecessor Class
A Notes)
A-6
<PAGE> 101
effected by any payments made on any Payment Date shall be binding upon all
future Holders of this Class A Note and of any Class A Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Class A Note on a Payment Date, then the Indenture Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the Holder hereof as
of the Record Date preceding such Payment Date by notice mailed prior to such
Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Class A Note at the Indenture Trustee's
principal Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A Note Rate to the extent lawful.
As provided in the Trust A Indenture, the Class A Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture at the option of the Trust A
Certificateholders, on any Payment Date on or after the date on which the Class
A Note Principal Balance is less than or equal to 10% of the Original Class A
Note Principal Balance.
As provided in the Trust A Indenture and subject to certain limitations
set forth therein, the transfer of this Class A Note may be registered on the
Note Register upon surrender of this Class A Note for registration of transfer
at the office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar
which requirements include membership or participation in Securities Transfer
Agents Medallion Program ("Stamp") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, Stamp, all in accordance with the Exchange Act, and (ii) accompanied by
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class A Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Class A Note, but the transferor may be required to pay a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Class A Note or, in
the case of a Note Owner, a beneficial interest in a Class A Note covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Class A Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Sponsor, any Originator, the
Master Servicer, the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
owner, beneficiary, agent, officer, director or employee of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer, the
Sponsor, any Originator, the Master Servicer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Sponsor, any Originator, the Master
Servicer, the Indenture
A-7
<PAGE> 102
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Class A Noteholder or Note Owner, by acceptance of a Class A Note
or, in the case of a Note Owner, a beneficial interest in a Class A Note
covenants and agrees that by accepting the benefits of the Indenture that such
Class A Noteholder will not at any time institute against the Sponsor, or the
Issuer or join in any institution against the Sponsor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings, under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Class A Notes,
the Trust A Indenture or the Operative Documents.
Prior to the due presentment for registration of transfer of this Class
A Note, the Issuer, the Indenture Trustee and the Note Insurer and any agent of
the Issuer, the Indenture Trustee or the Note Insurer may treat the Person in
whose name this Class A Note (as of the day of determination or as of such other
date as may be specified in the Trust A Indenture) is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Indenture Trustee nor any such agent shall be affected by notice to
the contrary.
The Trust A Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Class A Notes
under the Indenture at any time by the Issuer with the consent of the Note
Insurer and of the Holders of Class A Notes representing a majority of the
Outstanding Amount of all Class A Notes at the time Outstanding. Any such
consent or waiver by the Holder of this Class A Note (or any one of more
Predecessor Class A Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Class A Note and of any Class A Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Class A
Note. The Trust A Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
Holders of the Class A Notes issued thereunder but with the consent of the Note
Insurer.
The term "Issuer" as used in this Class A Note includes any successor
to the Issuer under the Trust A Indenture.
The Class A Notes are issuable only in registered form in denominations
as provided in the Trust A Indenture, subject to certain limitations therein set
forth.
This Class A Note and the Trust A Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
A-8
<PAGE> 103
No reference herein to the Indenture and no provision of this Class A
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Class A Note at the times, place, and rate, and in the coin or currency
herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Trust A Indenture or the Operative Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Issuer, nor any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Class A Note or the Trust A
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Issuer for the sole purposes of binding
the interests of the Issuer in the assets of the Issuer. The Holder of this
Class A Note by the acceptance hereof agrees that except as expressly provided
in the Trust A Indenture or the Operative Documents, in the case of an Event of
Default under the Trust A Indenture, the Holder shall have no claim against any
of the foregoing for any deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Trust A Indenture or in this Class
A Note.
A-9
<PAGE> 104
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
_______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:___________________________ _______________________________(1)
Signature Guaranteed:
_________________________________ __________________________________
(1) NOTE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatsoever.
A-10
<PAGE> 1
EXHIBIT 4.1.2
ADVANTA MORTGAGE LOAN TRUST 1998-4B
Mortgage Backed Notes, Series 1998-4, Class B
INDENTURE
Dated as of November 1, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions....................................................................... 2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act............................. 25
SECTION 1.3. Rules of Construction............................................................. 26
SECTION 1.4. Action by or Consent of Noteholders............................................... 26
SECTION 1.5. Conflict with TIA................................................................. 26
ARTICLE II. THE CLASS B NOTES
SECTION 2.1. Form.............................................................................. 26
SECTION 2.2. Execution, Authentication and Delivery............................................ 27
SECTION 2.3. Registration; Registration of Transfer and Exchange............................... 27
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Class B Notes................................ 29
SECTION 2.5. Persons Deemed Owners............................................................. 29
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest............................. 30
SECTION 2.7. Cancellation...................................................................... 31
SECTION 2.8. Release of Collateral............................................................. 31
SECTION 2.9. Book-Entry Class B Notes.......................................................... 31
SECTION 2.10. Notices to Clearing Agency........................................................ 32
SECTION 2.11. Definitive Notes.................................................................. 32
ARTICLE III. COVENANTS
SECTION 3.1. Payment of Principal and Interest................................................. 33
SECTION 3.2. Maintenance of Office or Agency................................................... 33
SECTION 3.3. Money for Payments to be Held in Trust............................................ 33
SECTION 3.4. Existence......................................................................... 34
SECTION 3.5. Protection of Trust Estate........................................................ 34
SECTION 3.6. Opinions as to Trust Estate....................................................... 35
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans........................... 36
SECTION 3.8. Negative Covenants................................................................ 37
SECTION 3.9. Annual Statement as to Compliance................................................. 37
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets................................... 38
SECTION 3.11. No Other Business................................................................. 38
SECTION 3.12. No Borrowing...................................................................... 38
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities................................. 38
SECTION 3.14. Capital Expenditures.............................................................. 38
SECTION 3.15. Compliance with Laws.............................................................. 38
SECTION 3.16. Restricted Payments............................................................... 38
SECTION 3.17. Notice of Event of Defaults and Events of Servicing Termination................... 39
SECTION 3.18. Further Instruments and Acts...................................................... 39
</TABLE>
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<TABLE>
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SECTION 3.19. Amendments of Trust B Sale and Servicing Agreement and Trust B Trust
Bgreement....................................................................... 39
SECTION 3.20. Income Tax Characterization....................................................... 39
ARTICLE IV. SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture........................................... 39
SECTION 4.2. Application of Trust Money........................................................ 40
SECTION 4.3. Repayment of Monies Held by Note Paying Agent..................................... 40
ARTICLE V. REMEDIES
SECTION 5.1. Rights Upon an Event of Default................................................... 41
SECTION 5.2. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee......... 41
SECTION 5.3. Remedies.......................................................................... 42
SECTION 5.4. Indenture Trustee May File Proofs of Claim........................................ 42
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession of Class B Notes.......... 43
SECTION 5.6. Application of Money Collected.................................................... 44
SECTION 5.7. Limitation of Suits............................................................... 44
SECTION 5.8. Unconditional Rights of Class B Noteholders to Receive Principal and
Interest........................................................................ 45
SECTION 5.9. Restoration of Rights and Remedies................................................ 45
SECTION 5.10. Rights and Remedies Cumulative.................................................... 45
SECTION 5.11. Delay or Omission Not a Waiver.................................................... 45
SECTION 5.12. Control by Noteholders............................................................ 46
SECTION 5.13. Undertaking for Costs............................................................. 46
SECTION 5.14. Waiver of Stay or Extension Laws.................................................. 46
SECTION 5.15. Action on Class B Notes........................................................... 47
SECTION 5.16. Performance and Enforcement of Certain Obligations................................ 47
SECTION 5.17. Subrogation....................................................................... 47
SECTION 5.18. Preference Claims................................................................. 48
SECTION 5.19. Waiver of Past Defaults........................................................... 48
ARTICLE VI. THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee....................................................... 49
SECTION 6.2. Rights of Indenture Trustee....................................................... 50
SECTION 6.3. Individual Rights of Indenture Trustee............................................ 51
SECTION 6.4. Indenture Trustee's Disclaimer.................................................... 52
SECTION 6.5. Notice of Defaults................................................................ 52
SECTION 6.6. Reports by Indenture Trustee to Holders........................................... 52
SECTION 6.7. Compensation and Indemnity........................................................ 52
SECTION 6.8. Replacement of Indenture Trustee.................................................. 53
SECTION 6.9. Successor Indenture Trustee by Merger............................................. 54
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee................. 54
SECTION 6.11. Eligibility: Disqualification..................................................... 56
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6.12. Preferential Collection of Claims Against Issuer.................................. 56
SECTION 6.13. Appointment and Powers............................................................ 56
SECTION 6.14. Performance of Duties............................................................. 57
SECTION 6.15. Limitation on Liability........................................................... 57
SECTION 6.16. Reliance Upon Documents........................................................... 57
SECTION 6.17. Representations and Warranties of the Indenture Trustee........................... 57
SECTION 6.18. Waiver of Setoffs................................................................. 58
SECTION 6.19. Control by the Control Party...................................................... 58
SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession of Class B Notes.......... 58
SECTION 6.21. Suits for Enforcement............................................................. 58
SECTION 6.22. Mortgagor Claims.................................................................. 58
ARTICLE VII. NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and Addresses of Noteholders......... 59
SECTION 7.2. Preservation of Information; Communications to Noteholders........................ 59
SECTION 7.3. Reports by Issuer................................................................. 60
SECTION 7.4. Reports by Indenture Trustee...................................................... 60
ARTICLE VIII. PAYMENTS AND STATEMENTS TO CLASS A NOTEHOLDERS AND TRUST B CERTIFICATEHOLDERS;
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money............................................................... 61
SECTION 8.2. Release of Trust Estate........................................................... 61
SECTION 8.3. Establishment of Accounts......................................................... 61
SECTION 8.4. The Trust B Note Policy........................................................... 62
SECTION 8.5. Trust C Reserve Account........................................................... 62
SECTION 8.6. Pre-Funding Account and Capitalized Interest Account.............................. 63
SECTION 8.7. Flow of Funds..................................................................... 64
SECTION 8.8. Investment of Accounts............................................................ 68
SECTION 8.9. Eligible Investments.............................................................. 69
SECTION 8.10. Reports by Indenture Trustee...................................................... 70
SECTION 8.11. Additional Reports by Indenture Trustee........................................... 73
SECTION 8.12. Opinion of Counsel................................................................ 73
ARTICLE IX. SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders............................ 74
SECTION 9.2. Supplemental Indentures with Consent of Noteholders............................... 75
SECTION 9.3. Execution of Supplemental Indentures.............................................. 76
SECTION 9.4. Effect of Supplemental Indenture.................................................. 77
SECTION 9.5. Conformity With Trust Indenture Act............................................... 77
SECTION 9.6. Reference in Class B Notes to Supplemental Indentures............................. 77
SECTION 9.7. Amendment......................................................................... 77
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<TABLE>
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ARTICLE X. REDEMPTION OF CLASS B NOTES
SECTION 10.1. Redemption........................................................................ 78
SECTION 10.2. Surrender of Class B Notes........................................................ 79
SECTION 10.3. Form of Redemption Notice......................................................... 80
SECTION 10.4. Class B Notes Payable on Redemption Date.......................................... 80
ARTICLE XI. MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc......................................... 81
SECTION 11.2. Form of Documents Delivered to Indenture Trustee.................................. 81
SECTION 11.3. Acts of Noteholders............................................................... 82
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating Agencies.................... 83
SECTION 11.5. Notices to Noteholders; Waiver.................................................... 84
SECTION 11.6. Alternate Payment and Notice Provisions........................................... 84
SECTION 11.7. Conflict with Trust Indenture Act................................................. 85
SECTION 11.8. Effect of Headings and Table of Contents.......................................... 85
SECTION 11.9. Successors and Assigns............................................................ 85
SECTION 11.10. Separability...................................................................... 85
SECTION 11.11. Benefits of Indenture............................................................. 85
SECTION 11.12. Legal Holidays.................................................................... 85
SECTION 11.13. GOVERNING LAW..................................................................... 85
SECTION 11.14. Counterparts...................................................................... 86
SECTION 11.15. Recording of Indenture............................................................ 86
SECTION 11.16. Trust Obligation.................................................................. 86
SECTION 11.17. No Petition....................................................................... 86
SECTION 11.18. Inspection........................................................................ 86
SECTION 11.19. Limitation of Liability........................................................... 87
ARTICLE XII. EVENTS OF DEFAULT
SECTION 12.1. Events of Default................................................................. 87
</TABLE>
EXHIBITS
Exhibit A -- Form of Class B Note
iv
<PAGE> 6
INDENTURE dated as of November 1, 1998, between ADVANTA
MORTGAGE LOAN TRUST 1998-4B, a Delaware business trust (the "Issuer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, as
Indenture Trustee (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
Mortgage Backed Notes Series 1998-4, Class B (the "Class B Notes"):
As security for the payment and performance by the Issuer of
its obligations under this Indenture and the Class B Notes, the Issuer has
agreed to pledge the Collateral (as defined herein) to the Indenture Trustee on
behalf of the Class B Noteholders.
Ambac Assurance Corporation (the "Note Insurer") has issued
and delivered a financial guaranty insurance policy, dated as of the Closing
Date, pursuant to which the Note Insurer guarantees the Trust B Insured Payments
(as defined herein).
As an inducement to the Note Insurer to issue and deliver the
Trust B Note Policy, the Issuer and the Note Insurer have executed and delivered
the Insurance and Indemnity Agreement, dated as of November 24, 1998 (as amended
from time to time, the "Insurance Agreement"), among the Note Insurer, Issuer,
Trust A, Trust C, Advanta Mortgage Conduit Services, Inc. and the Indenture
Trustee.
As an additional inducement to the Note Insurer to issue the
Trust B Note Policy, and as security for the performance by the Issuer of the
Note Insurer Issuer Secured Obligations and as security for the performance by
the Issuer of the Indenture Trustee Issuer Secured Obligations, the Issuer has
agreed to grant and assign the Collateral (as defined below) to the Indenture
Trustee for the benefit of the Issuer Secured Parties, as their respective
interests may appear.
<PAGE> 7
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, for the benefit of the Issuer Secured Parties all of the Issuer's
right, title and interest in and to (i) certain fixed rate mortgage loans (the
"Mortgage Loans") made or to be made and conveyed to the Issuer under certain
mortgage notes ("Notes"); (ii) collections in respect of the Mortgage Loans with
due dates on or after the Cut-Off Date and each Subsequent Cut-Off Date, as
applicable, including eligible investments as from time to time may be held by
the Indenture Trustee in the Trust B Note Account and by the Master Servicer in
the related Trust B Principal and Interest Account (except as otherwise provided
in the Trust B Sale and Servicing Agreement but excluding any premium recapture,
each to be created pursuant to the Trust B Sale and Servicing Agreement, (iii)
property, the ownership of which has been effected on behalf of Trust B, as a
result of foreclosure or acceptance by the Master Servicer of a deed in lieu of
foreclosure and that has not been withdrawn from Trust B; (iv) rights of the
Sponsor or any Affiliated Originators under Insurance Policies relating to the
Mortgage Loans; (v) the Trust B Note Policy; (vi) Net Liquidation Proceeds with
respect to any Liquidated Mortgage Loan; (vii) amounts on deposit in the Trust B
Pre-Funding Account and the Trust B Capitalized Interest Account; (viii) all
rights of the Issuer under the Trust B Sale and Servicing Agreement; and (ix)
any and all proceeds of the foregoing (the foregoing, collectively, the
"Collateral").
The foregoing Grant is made in trust to the Indenture Trustee,
for the benefit first, of the Class B Noteholders, and second, for the benefit
of the Note Insurer. The Indenture Trustee hereby acknowledges such Grant,
accepts the trust under this Indenture in accordance with the provisions of this
Indenture and agrees to perform the duties required of it by this Indenture to
the best of its ability to the end that the interests of such parties,
recognizing the priorities of their respective interests, may be adequately and
effectively protected.
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions. Except as otherwise specified
herein, the following terms have the respective meanings set forth below for all
purposes of this Indenture. In addition, other capitalized terms used herein and
not defined herein shall have their respective meanings as set forth in the
Trust B Sale and Servicing Agreement.
"Account": Any account established in accordance with Section
8.3 hereof or Section 4.8 of the Trust B Sale and Servicing Agreement.
"Act" has the meaning specified in Section 11.3(a) hereof.
"Affiliate" means, with respect to any specified Person, any
other Person controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
2
<PAGE> 8
"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 Newspapers": Any of the following, The Wall Street
Journal, the New York Times, the Washington Post, the Los Angeles Times or such
other newspaper determined by the Indenture Trustee in its sole judgment.
"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 Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Available Reserve Amount": As defined in Section 8.5(a)
hereof.
"Benefit Plan": As defined in Section 2.3 hereof.
"Book Entry Class B Notes": A beneficial interest in the Class
B Notes, ownership and transfers of which shall be made through book entries by
a Clearing Agency as described in Section 2.9 hereof.
"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 Indenture Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Civil Relief Act": The Soldiers and Sailors' Civil Relief Act
of 1940, as amended from time to time.
"Class A Interest Distribution Amount": As defined in the
Trust A Indenture.
"Class A Notes": The Mortgage Backed Notes, Series 1998-4,
Class A, issued by Trust A pursuant to the Trust A Indenture.
"Class B Available Funds Cap Current Amount": With respect to
any Payment Date, the sum of (i) the excess of (x) the Class B Interest
Distribution Amount due on such Payment Date, calculated using the Class B Note
Formula Rate over (y) the Class B Interest Distribution Amount due on such
Payment Date, calculated using the Class B Available Funds Cap Rate and (ii) the
Class B Available Funds Cap Carry-Forward Amount.
"Class B Available Funds Cap Carry-Forward Amount:" With
respect to any Payment Date, the amount, if any, by which (x) the Class B
Available Funds Cap Current
3
<PAGE> 9
Amount payable as of the immediately preceding Payment Date exceeded (y) the
amount of the actual distribution made to the Class B Noteholders on such
immediately preceding Payment Date on account of the Class B Available Funds Cap
Carry-Forward Amount.
"Class B Available Funds Cap Rate": As 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 Trust B
for the related Remittance Period, minus (ii) the aggregate of the Servicing
Fee, the Indenture Trustee's Fee, the Owner Trustee's Fee and the Trust B
Premium Amount on such Payment Date, minus (iii) commencing on the seventh
Payment Date following the Closing Date, an amount equal to 0.75% per annum
times the aggregate Loan Balances of the Mortgage Loans in Trust B as of the
beginning of such related Remittance Period divided by (b) the aggregate Loan
Balances of the Mortgage Loans in Trust B as of the beginning of such related
Remittance Period calculated on the basis of a 360-day year and the actual
number of days elapsed.
"Class B Deficiency Amount": (a) For any Payment Date, any
shortfalls in the Trust B Total Available Funds to pay the sum of (i) the Class
B Interest Distribution Amount (excluding any Class B Available Funds Cap
Current Amounts, Class B Available Funds Cap Carry-Forward Amounts, and any
Relief Act Shortfalls), and (ii) the Trust B Overcollateralization Deficit and
(b) on the Class B Final Scheduled Payment Date, any shortfall in the Trust B
Total Available Funds to pay the outstanding Class B Note Principal Balance.
"Class B Final Scheduled Payment Date": The Payment Date in
November 2028 whereby the Class B Noteholders will be entitled to receive a
payment of principal in an amount equal to the outstanding Class B Note
Principal Balance.
"Class B Interest Carry-Forward Amount": With respect to any
Payment Date, the amount, if any, by which (x) the Class B Interest Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution made to the Class B Noteholders on such immediately
preceding Payment Date on account of the Class B Interest Distribution Amount.
"Class B Interest Distribution Amount": With respect to any
Payment Date, the sum of (i) the product of (x) the Class B Note Interest Rate
applicable to such Payment Date and (y) the Class A Principal Balance
immediately prior to such Payment Date and (z) the actual number of days elapsed
during the related Interest Accrual Period divided by 360, provided that such
amount will be reduced by any Relief Act Shortfalls relating to Trust B during
the related Remittance Period and (ii) the Class B Interest Carry-Forward
Amount.
"Class B Note": As defined in the recitals hereto.
"Class B Note Formula Capped Rate": With respect to any
Payment Date, the lesser of (i) the Class B Note Formula Rate for such Payment
Date and (ii) 6.75%.
"Class B Note Formula Rate": With respect to the first
Interest Accrual Period, LIBOR plus 0.70%. For any subsequent Interest Accrual
Period, (x) with respect to any Interest Accrual Period which occurs on or prior
to the Initial Redemption Date, LIBOR plus 0.70% per annum and (y) for any
Interest Accrual Period thereafter, LIBOR plus 1.40% per annum.
4
<PAGE> 10
"Class B Noteholder": The Person in whose name a Class B Note
is registered on the Note Register.
"Class B Note Interest Rate": As to any Payment Date, the
lesser of (i) the Class B Note Formula Rate and (ii) the Class B Available Funds
Cap Rate.
"Class B Note Principal Balance": As defined in the Trust B
Sale and Servicing Agreement.
"Class B Principal Distribution Amount": With respect to the
Class B Notes for any Payment Date, the lesser of:
(i) the excess of (a) the sum, as of such Payment Date, of (x)
the Trust B Total Available Funds and (y) any Insured Payment over (b)
the Class B Interest Distribution Amount; and
(ii) the sum, without duplication, of:
(a) the principal actually collected by the Master Servicer
with respect to the Mortgage Loans in Trust B during the related Remittance
Period,
(b) the Loan Balance of each Mortgage Loan in Trust B that
either was repurchased by an Originator or by the Sponsor or purchased by the
Master Servicer or any Sub-Servicer on the related Remittance Date, to the
extent such Loan Balance is actually received by the Indenture Trustee,
(c) any Substitution Amounts delivered by the Sponsor or an
Originator on the related Remittance Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Amounts are actually received by
the Indenture Trustee,
(d) all Net Liquidation Proceeds actually collected by the
Master Servicer with respect to the Mortgage Loans during the related Remittance
Period (to the extent such Net Liquidation Proceeds relate to principal),
(e) the proceeds received by the Indenture Trustee of any
termination of Trust B (to the extent such proceeds relate to principal),
minus
(f) the amount of any Trust B Overcollateralization Reduction
Amount for such Payment Date.
"Class C Interest Distribution Amount": As defined in the
Trust C Indenture.
"Class C Notes": The Mortgage Backed Note, Series 1999-4,
Class C, issued by Trust C pursuant to the Trust C Indenture.
5
<PAGE> 11
"Clearing Agency" An organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant": A broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date": November 24, 1998.
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Collateral": As defined in the Recitals hereof.
"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 Loan Balance, as of origination of the
Second Mortgage Loan or Third Mortgage Loan, as appropriate, of the Senior Lien
note(s) relating to such Second Mortgage Loan or Third Mortgage Loan, as
appropriate, and (ii) the Original Principal Amount of the Note relating to such
Second Mortgage Loan or Third Mortgage Loan, as appropriate, divided by (b) the
Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) of the
Trust B Sale and Servicing Agreement.
"Conduit Acquisition Trust": As defined in the Trust B Sale
and Servicing Agreement.
"Control Party": As defined in the Trust B Sale and Servicing
Agreement.
"Corporate Trust Office": As of the Closing Date, the
Indenture Trustee's office at 3 Park Plaza, 16th Floor, Irvine, California
92614.
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Initial Mortgage Loans
are transferred and assigned to the Trust, the opening of business, November 1,
1998.
"Definitive Notes": Class B Notes issued in definitive form
without coupons.
"Delinquency Advances": As defined in Section 4.9(a) of the
Trust B Sale and Servicing Agreement.
"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
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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 E of the Trust B Sale and Servicing Agreement and required to be
delivered by the Issuer pursuant to Section 2.2 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 or A or better by Standard & Poor's
and in the highest short-term rating category for Moody's, and Standard & Poor's
unless otherwise approved in writing by the Note Insurer, Moody's and Standard &
Poor'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 Note Insurer, Moody's and
Standard & Poor's and, in each case acting or designated by the Master Servicer
as the depository institution for the Trust B Principal and Interest Account;
provided, however, that any such institution or association shall have combined
capital, surplus and undivided profits of at least $100,000,000. Notwithstanding
the foregoing, an Account may be held by an institution otherwise meeting the
preceding requirements except that the only applicable rating requirement shall
be that the unsecured and uncollateralized debt obligations thereof shall be
rated Baa3 or better by Moody's or BBB or better by Standard & Poor's if such
institution has trust powers and the Trust B Principal and Interest Account is
held by such institution in its corporate trust department.
"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date or such earlier day as shall be
agreed to by the Note Insurer and Indenture Trustee.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds the Class B
Notes 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.
"Eligible Investments": Those investments so designated
pursuant to Section 8.9 hereof.
"ERISA" means Employee Retirement Income Security Act of 1974,
as amended.
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"Event of Default": As defined in Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fannie Mae": 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.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Mortgaged 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.
"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.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Indebtedness" means, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, Class B Notes or other instruments, or for the
deferred purchase price of property or services (including trade obligations);
(b) obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
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"Indemnification Agreement": The Indemnification Agreement
dated as of November 24, 1998 between the Note Insurer and the Underwriter.
"Indenture Trustee": Bankers Trust Company of California,
N.A., located on the date of execution of this Agreement at 3 Park Plaza, 16th
Floor, Irvine, California 92614, not in its individual capacity but solely as
Indenture Trustee under this Agreement, and any successor hereunder.
"Indenture Trustee Issuer Secured Obligations" means all
amounts and obligations which the Issuer may at any time owe to the Indenture
Trustee for the benefit of the Noteholders under this Indenture or the Class B
Notes.
"Indenture Trustee's Fees": With respect to any Payment Date,
the product of (x) one-twelfth of 0.007% and (y) the aggregate Loan Balance of
the Mortgage Loan as of the beginning of the related Remittance Period.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Class B Notes, the Sponsor and any Affiliate of any of the
foregoing persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Sponsor or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Sponsor or any Affiliate
of any of the foregoing Persons as an officer, employee, promoter, underwriter,
Indenture Trustee, partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, prepared
by an Independent appraiser or other expert appointed pursuant to an Issuer
Order and approved by the Indenture Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Indirect Participant" shall mean any financial institution
for whom any Direct Participant holds an interest in the Class B Notes.
"Initial Cut-Off Date": With respect to the Initial Mortgage
Loans, the opening of business on November 1, 1998.
"Initial Mortgage Loans": Mortgage Loans delivered by the
Sponsor on the Closing Date.
"Initial Redemption Date": The first date on which the Trust B
Certificateholder is eligible to exercise its right of optional redemption of
the Class B Notes pursuant to Section 10.1(b) herein.
"Insurance Agreement": The Insurance and Indemnity Agreement
dated as of November 24, 1998 among the Sponsor, the Master Servicer, the
Issuer, Trust A, Trust C, the Indenture Trustee and the Note Insurer, as it may
be amended from time to time.
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"Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan.
"Insurance Proceeds": Proceeds paid by any insurer (other than
the Note Insurer) pursuant to any Insurance Policy covering a Mortgage Loan, or
amounts required to be paid by the Master Servicer pursuant to the last sentence
of the first paragraph of Section 4.11(b) of the Trust B Sale and Servicing
Agreement, or the penultimate sentence of Section 4.11(c) of the Trust B Sale
and Servicing Agreement, net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures, or (iv) required to be paid to
any holder of a mortgage senior to such Mortgage Loan.
"Interest Accrual Period": With respect to any Payment Date,
the period commencing on the immediately preceding Payment Date (or the Closing
Date in the case of the first Payment Date) to and including the day prior to
the current Payment Date. All calculations of interest on the Class B Notes will
be made on the basis of the actual number of days elapsed in the related
Interest Accrual Period in a year of 360 days.
"Interest Determination Date": With respect to any Interest
Accrual Period for the Class B Notes, the second London Business Day preceding
the first day of such Interest Accrual Period.
"Interest Remittance Amount": As of any Remittance Date, the
sum, without duplication, of (i) all interest collected (or advanced) by the
Master Servicer during the related Remittance Period with respect to the
Mortgage Loans (net of the Servicing Fee), except that with respect to Prepaid
Installments, interest shall be remitted in the related Remittance Period and
(ii) all Net Liquidation Proceeds actually collected by the Master Servicer with
respect to the Mortgage Loans during the related Remittance Period (to the
extent such Net Liquidation Proceeds relate to interest).
"Issuer" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on
the Class B Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Issuer Secured Obligations" means the Note Insurer Issuer
Secured Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee
in respect of the Indenture Trustee Issuer Secured Obligations and the Note
Insurer in respect of the Note Insurer Issuer Secured Obligations.
"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
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<PAGE> 16
change is announced by Citibank), plus 2% per annum and (y) the then applicable
highest rate of interest on the Class B Notes 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 Interest Accrual Period for the
Class B Notes, the rate determined by the Indenture 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
Screen Page 3750 (or any successor service thereto), as of 11:00 a.m. (London
time) on such Interest Determination Date. On each Interest Determination Date,
LIBOR for the related Interest Accrual Period will be established by the
Indenture Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple
of 1/16%.
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined
on the previous Interest Determination Date and (ii) the Reserve
Interest Rate.
"Liquidated Mortgage Loan": As defined in the Trust B Sale and
Servicing Agreement.
"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 4.9 of the Trust B Sale
and Servicing Agreement with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan, any amounts (including the proceeds of any Insurance Policy but
excluding any amounts drawn on the Trust B Note Policy) recovered by the Master
Servicer in connection with such Liquidated Mortgage Loan, whether through
Indenture Trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof as of the Cut-Off Date or Subsequent
Cut-Off-Date, as the case may be, less any related Principal Remittance Amounts
relating to such Mortgage Loan included in previous related Trust B Monthly
Remittance Amounts that were transferred by the Master Servicer or any
Sub-servicer to the Indenture Trustee for deposit in the related Trust B Note
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
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during the period from the Cut-Off Date to the Closing Date shall be the
original Loan Balance thereof.
"London Business Day": A day on which banks are open for
dealing in foreign currency, and exchange in London and New York City.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer 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.
"Master Transfer Agreement": Any one of the Master Loan
Transfer Agreements among the Sponsor and/or the Conduit Acquisition Trust, the
Indenture 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).
"Minimum Monthly Payment": With respect to any Mortgage Loan
and any month, the minimum amount required to be paid by the related Mortgagor
in that month.
"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 Files": As defined in the Trust B Sale and Servicing
Agreement.
"Mortgage Loans": As defined in the Trust B Sale and Servicing
Agreement.
"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.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Note Insurer": Ambac Assurance Corporation or any successor
thereto, as issuer of the Trust B Note Policy.
"Note Insurer Default": Any one of the following events shall
have occurred and be continuing:
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(a) The Note Insurer shall have failed to make a payment
required under the Note Policy;
(b) The Note 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, the Wisconsin Department of Insurance, or other competent
regulatory authority shall have entered a final and nonappealable
order, judgment or decree (i) appointing a custodian, Indenture
Trustee, agent or receiver for the Note Insurer or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, Indenture Trustee, agent or receiver of the
Note Insurer (or the taking of possession of all or any material
portion of the property of the Note Insurer).
"Note Insurer Issuer Secured Obligations": All amounts and
obligations which the Issuer may at any time owe to or on behalf of the Note
Insurer under this Indenture, the Insurance Agreement or any other Operative
Document.
"Note Owner": With respect to a Book-Entry Note, the person
who is the owner of such Book-Entry Note or following the issuance of definitive
Class B Notes, the registered owner of the Class B Notes.
"Note Paying Agent": The Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make payments to and
distributions from the Note Account, including payment of principal of or
interest on the Class B Notes on behalf of the Issuer.
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.3.
"Officer's Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
Section 314, and delivered to the Indenture Trustee.
"Operative Documents": With respect to each of Trust A, Trust
B and Trust C, collectively, the Indenture, the Trust Agreement, the Sale and
Servicing Agreement, the Subsequent Transfer Agreements, the Note Policy and the
Notes relating to each such Trust and the Indemnification Agreement and the
Insurance Agreement.
"Opinion of Counsel": One or more opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and, if addressed to the Note Insurer, satisfactory to the
Note Insurer, and which shall comply with any
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applicable requirements of Section 11.1, and if addressed to the Note Insurer,
satisfactory to the Note Insurer.
"Original Class B Note Principal Balance": $350,000,000.
"Original Principal Amount": With respect to each Note, the
principal amount of such Note relating to a Senior Lien on the date of
origination thereof.
"Originator": Any entity from which the Sponsor has purchased
(or, in the case of Subsequent Mortgage Loans, will purchase) 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.
"Outstanding": With respect to all Class B Notes, as of any
date of determination, all such Class B Notes theretofore executed and delivered
hereunder except:
(i) Class B Notes theretofore cancelled by the
Indenture Trustee or delivered to the Indenture Trustee for
cancellation;
(ii) Class B Notes or portions thereof for which full
and final payment money in the necessary amount has been
theretofore deposited with the Indenture Trustee in trust for
the Class B Noteholders;
(iii) Class B Notes in exchange for or in lieu of
which other Class B Notes have been executed and delivered
pursuant to this Agreement, unless proof satisfactory to the
Indenture Trustee is presented that any such Class B Notes are
held by a bona fide purchaser; and
(iv) Class B Notes alleged to have been destroyed,
lost or stolen for which replacement Class B Notes have been
issued as provided for in Section 2.4 hereof.
"Owner Trustee": Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee's Fee": A fee which is separately agreed to in
writing between the Sponsor and the Owner Trustee.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Class B Noteholders, which shall be the
25th day of each month, commencing in the month following the Closing Date or,
if such day is not a Business Day, then on the succeeding Business Day.
"Percentage Interest": As to any Class B Note that percentage,
expressed as a fraction, the numerator of which is the Class B Note Principal
Balance of such Class B Note as of the related Cut-Off Date and the denominator
of which is the Original Class B Note Principal
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Balance of all Class B Notes; and as to any Trust B Certificate, that Percentage
Interest set forth on such Trust B Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period,
the sum of all Realized Losses with respect to the Mortgage Loans experienced
during such period.
"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate Loan
Balances of all Mortgage Loans 90 or more days Delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Trust B Pool Principal Balance as of the
close of business on the last day of such Remittance Period.
"Pool Factor": A seven-digit decimal which the Indenture
Trustee shall compute monthly expressing the Class B Note Principal Balance as
of each Payment Date (after giving effect to any distribution of principal on
such Payment Date) as a proportion of the Original Class B Note Principal
Balance. On the Closing Date, the Pool Factor will be 1.0000000. Thereafter, the
Pool Factor shall decline to reflect reductions in the related Class A Principal
Balance resulting from distributions of principal to the Class B Notes.
"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.
"Predecessor Note": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Amount": As defined in the Trust B Note Policy.
"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 in
full 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.
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"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 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 Trust B during the related Remittance
Period, (ii) the Loan Balance of each such Mortgage Loan that either was
repurchased by an Originator or by the Sponsor or purchased by the Master
Servicer or any Sub-Servicer on such Remittance Date, to the extent such Loan
Balance was actually deposited in the Trust B Principal and Interest Account,
(iii) any Substitution Amounts delivered by the Sponsor or an Originator in
connection with a substitution of a Mortgage Loan, to the extent such
Substitution Amounts were actually deposited in the Trust B Principal and
Interest Account on such Remittance Date, (iv) all Net Liquidation Proceeds
actually collected by the Master Servicer with respect to such Mortgage Loans
during the related Remittance Period (to the extent such Liquidation Proceeds
related to principal) net of amounts allowed to be retained pursuant to Section
4.8(c) of the Trust B Sale and Servicing Agreement, (v) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
principal).
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998
naming Advanta Mortgage Conduit Services, Inc. as registrant and describing
certain mortgage loan asset-backed securities to be issued from time to time as
described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement
dated November 2, 1998, describing the Class B Notes issued by the Trust.
"Rating Agency": Moody's and Standard & Poor's. If such agency
or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Sponsor and the Note Insurer, notice of which designation shall be given to the
Indenture Trustee. References herein to the highest short term unsecured rating
category of a Rating Agency shall means A-1 or better in the case of Standard &
Poor's and P-1 or better in the case of Moody's, and in the case of any other
Rating Agency shall mean the ratings such other Rating Agency deems equivalent
to the foregoing ratings. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of Standard & Poor's
and "Aaa" in the case of Moody's, and in the case of any other Rating Agency,
the rating such other Rating Agency deems equivalent to the foregoing ratings.
"Realized Loss": As to any Liquidated Mortgage 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.
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"Record Date": With respect to each Payment Date, the business
day immediately preceding the Payment Date occurs; provided, that if the Class B
Notes revert to Definitive Notes, the Record Date with respect to each Payment
Date thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such payment date occurs.
"Redemption Date": In the case of a redemption of the Class B
Notes pursuant to Section 10.1, the Payment Date specified by the Master
Servicer or the Issuer pursuant to Section 10.2(a).
"Redemption Price": In the case of a redemption of the Class B
Notes pursuant to Section 10.1, an amount equal to the unpaid principal amount
of the then outstanding principal amount of each class of Class B Notes being
redeemed plus accrued and unpaid interest thereon to but excluding the
Redemption Date.
"Reference Banks": Chase Manhattan Bank, Deutsche Morgan
Grenfell, Fuji Bank, Merita Bank, Lloyds, Sumitomo Bank, Barclay's Bank PLC,
National Westminster Bank PLC, Abbey, Westpac, Hambros, Commerzbank AG,
Citibank, United Bank of Switzerland AG, BTM, and Royal Bank of Scotland;
provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Indenture Trustee which
are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Sponsor
or any affiliate thereof, (iii) whose quotations appear on the Telerate Screen
Page 3750 on the relevant Interest Determination Date and (iv) which have been
designated as such by the Indenture Trustee.
"Registration Statement": The Registration Statement filed by
the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus and the Prospectus Supplement
relating to the Class B Notes constituting a part thereof.
"Relief Act Shortfall": With respect to any Remittance Period,
for any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Remittance Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (ii) the sum of (a) one month's interest on the Loan
Balance of such Mortgage Loan at the rate equal to the sum of the Class B Note
Interest Rate, the rate at which the Indenture Trustee's Fee is calculated and
the Trust B Premium Percentage, plus (b) the aggregate Servicing Fee for such
Mortgage Loan payable to the Master Servicer in such calendar month.
"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the Trust B Principal and Interest
Account to the Indenture Trustee, which shall be the 18th day or, if such day is
not a Business Day, the next preceding Business Day, of each month, commencing
in the month following the month in which the Closing Date occurs.
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"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged 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": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class B Notes
registered in the Register under the nominee name of the Depository.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Indenture Trustee determines to
be either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16%) of the one-month U.S. dollar lending rates which three
New York City banks selected by the Indenture Trustee are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Indenture
Trustee can determine no such arithmetic mean, the lowest one-month U.S. dollar
lending rate which three New York City banks selected by the Indenture Trustee
are quoting on such Interest Determination Date to leading European banks.
"Schedules of Mortgage Loans": The Schedules of Mortgage
Loans, attached hereto as Schedule I as they may be further supplemented in
connection with Subsequent Transfers. Such Schedules shall also contain one of
the following codes for each Mortgage Loan or Subsequent Mortgage 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 Indenture 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 Mortgaged 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.
"Servicing Advance": As defined in the Trust B Sale and
Servicing Agreement.
"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 Indenture Trustee as
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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 Rating Group, a
division of The McGraw Hill Companies.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loan, the opening of business on the first day of the calendar month in
which the related Subsequent Transfer Date occurs.
"Subsequent Mortgage Loans" As defined in the Trust B Sale and
Servicing Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Indenture
Trustee and the Sponsor substantially in the form of Exhibit L of the Trust B
Sale and Servicing Agreement, by which Subsequent Mortgage Loans are assigned to
the Trust.
"Subsequent Transfer Date": The date specified in each
Subsequent Transfer Agreement, which must, with respect to any Payment Date, be
a date occurring during the calendar month in which such Payment Date occurs, at
least five Business Days prior to the Remittance Date occurring in such month.
"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.
"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.
"Telerate Screen Page 3750": The display designated on page
3750 on the Telerate Service (or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks)
"Termination Date" means the latest of (i) the termination of
the Note Policy and the return of the Note Policy to the Note Insurer for
cancellation, (ii) the date on which the Note Insurer shall have received
payment and performance of all Note Insurer Issuer Secured Obligations and (iii)
the date on which the Indenture Trustee shall have received payment and
performance of all Indenture Trustee Issuer Secured Obligations.
"Third Mortgage Loan": A Mortgage Loan which constitutes a
third priority mortgage lien with respect to the related Property.
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"Trust": Advanta Mortgage Loan Trust 1998-4B.
"Trust A": Advanta Mortgage Loan Trust 1998-4B, the trust
created pursuant to the Trust B Trust Agreement.
"Trust A Aggregate Reserve Contribution Amount": The sum of
all amounts contributed to the Trust C Reserve Account from Trust A pursuant to
Section 8.7(b)(xii) of the Trust A Indenture.
"Trust A Available Crossover Amounts": As defined in the Trust
A Indenture.
"Trust A Available Funds Cap Current Deficiency Amount": As
defined in Section 8.7(b)(xv) hereof.
"Trust A Available Funds Cap Carry-Forward Deficiency Amount":
As defined in Section 8.7(b)(xvi) hereof.
"Trust A Full Deficiency Amount": As defined in the Trust A
Indenture.
"Trust A Indenture": The Indenture relating to Trust A, dated
as of November 1, 1998 between Trust A and the Indenture Trustee, as amended and
supplemented from time to time.
"Trust A Note Account": The Trust A Note Account established
in accordance with Section 8.3 of the Trust A Indenture.
"Trust A Overcollateralization Deficit": As defined in the
Trust A Indenture.
"Trust A Total Available Funds": As defined in the Trust A
Indenture.
"Trust A Trust Agreement": The Trust Agreement dated November
1, 1998 between the Sponsor and the Owner Trustee relating to Trust A.
"Trust B Accelerated Principal Payments": With respect to any
Payment Date, a payment received as a payment of principal by the Class B
Noteholders for the purpose of increasing the Trust B Overcollateralization
Amount to the Trust B Specified Overcollateralization Amount applicable to such
Payment Date, and to be paid from amounts remaining in the Trust B Note Account
on such Payment Date, after deduction of the amounts described in clauses (i)
through (viii) of Section 8.7(b) hereof (the "Remaining Cashflow") on such
Payment Date and equal to the lesser of (x) the amount of such Remaining
Cashflow and (y) the Trust B Overcollateralization Deficiency Amount.
"Trust B Aggregate Reserve Contribution Amount": The sum of
all amounts contributed to the Trust C Reserve Account from Trust B pursuant to
Section 8.7(b)(xii) hereof.
"Trust B Available Crossover Amounts": On any determination
date, the amounts in the Trust B Note Account available for distribution after
the payment of amounts described in clauses (i) through (ix) of Section 8.7(b)
hereof for the related Payment Date.
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"Trust B Capitalized Interest Account": The capitalized
interest account established in accordance with Section 8.3 hereof and
maintained by the Indenture Trustee.
"Trust B Capitalized Interest Account Deposit": $1,357,116.84.
"Trust B Capitalized Interest Amount": With respect to any
Determination Date, the amount on deposit in the Trust B Capitalized Interest
Account.
"Trust B Capitalized Interest Requirement": As to any Payment
occurring during the Trust B Pre-Funding Period, the difference, if any, between
(x) the interest due on the portion of the Class B Notes represented by the
Trust B Pre-Funding Amount plus the related portion of the Trust B Premium
Amount on such Payment Date and (y) any Trust B Pre-Funding Earnings to be
transferred to the Trust B Note Account on such Payment Date pursuant to Section
8.6(c) hereof.
"Trust B Certificate": As defined in the Trust B Trust
Agreement.
"Trust B Certificateholders": The holders of the Trust B
Certificates issued pursuant to the Trust B Trust Agreement.
"Trust B Excess Overcollateralization Amount": With respect to
any Payment Date, the amount by which (x) the Trust B Overcollateralization
Amount after taking into account the payment of the Class B Principal
Distribution Amount on such Payment Date exceeds (y) the Trust B Specified
Overcollateralization Amount for such Payment Date.
"Trust B Full Deficiency Amount": As defined in Section 8.5(b)
herein.
"Trust B Indenture" means this Indenture as amended and
supplemented from time to time.
"Trust B Insured Payment": As of any Payment Date, (i) any
Class B Deficiency Amount and (ii) any Preference Amount.
"Trust B Monthly Remittance Amounts": With respect to any
Remittance Date, the sum of (i) the Interest Remittance Amount with respect to
such Remittance Date and (ii) the Principal Remittance Amount with respect to
such Remittance Date.
"Trust B Note Account": The Trust B Note Account established
in accordance with Section 8.3 hereof and maintained by the Indenture Trustee.
"Trust B Note Policy": The financial guaranty insurance policy
dated November 24, 1998, issued by the Note Insurer to the Indenture Trustee for
the benefit of the Class B Noteholders.
"Trust B Original Pre-Funded Amount": The amount deposited in
the Trust B Pre-Funding Account on the Closing Date, from the proceeds of the
sale of the Class B Notes, which amount is $142,131,846.36.
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"Trust B Overcollateralization Amount": With respect to any
Payment Date, the excess, if any, of (x) the Trust B Pool Principal Balance as
of such Payment Date over (y) the Class B Note Principal Balance as of such
Payment Date (after taking into account reductions therein on such Payment
Date).
"Trust B Overcollateralization Deficiency Amount": With
respect to any Payment Date, the difference, if any, between (i) the Trust B
Specified Overcollateralization Amount applicable to such Payment Date and (ii)
the Trust B Overcollateralization Amount applicable to such Payment Date.
"Trust B Overcollateralization Deficit": With respect to any
Payment Date, the amount, if any, by which (i) the aggregate Class B Note
Principal Balance, after taking into account the payment to the Class B
Noteholders of all principal from sources other than the Trust B Note Policy on
such Payment Date, exceeds (ii) the sum of (x) the Trust B Pool Principal
Balance as of the end of the applicable Remittance Period and (y) the amounts of
deposit in the Trust B Pre-Funding Account.
"Trust B Overcollateralization Increase Amount": With respect
to any Payment Date, the lesser of (i) the Trust B Overcollateralization
Deficiency Amount as of such Payment Date (after taking into account the payment
of the Class B Principal Distribution Amount on such Payment Date (except for
any Trust B Overcollateralization Increase Amount) and (ii) the amount of Trust
B Total Available Funds remaining to be allocated for such purpose pursuant to
Section 8.7(b)(ix) hereof on such Payment Date.
"Trust B Overcollateralization Reduction Amount": With respect
to any Payment Date, the lesser of (x) the Trust B Excess Overcollateralization
Amount for such Payment Date and (y) the Principal Remittance Amount for the
prior Remittance Period.
"Trust B Overfunded Interest Amount": With respect to each
Subsequent Transfer Date occurring in December, 1998, the difference between (i)
two-month's interest on the aggregate Loan Balances of the Subsequent Mortgage
Loans acquired by the Trust on such Subsequent Transfer Date, calculated at
2.50% and (ii) two-month's interest on the aggregate Loan Balances of the
Subsequent Mortgage Loans acquired by the Trust on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funding Account moneys are invested as
of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in
January, 1998, the sum of (A) difference between (i) one-month's interest on the
aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the Trust
on such Subsequent Transfer Date, calculated at 2.50% (ii) the one-month's
interest on the aggregate Loan Balances of the Subsequent Mortgage Loans
acquired by the Trust on such Subsequent Transfer Date, calculated at the rate
at which Pre-Funding Account moneys are invested as of such Subsequent Transfer
Date plus (B) the difference between (i) one-month's interest on the aggregate
Loan Balances of the Subsequent Mortgage Loans acquired by the Trust on such
Subsequent Transfer Date, calculated at the Class B Note Interest Rate and (ii)
the Trust B Capitalized Interest Requirement as of such Subsequent Transfer
Date.
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"Trust B Pool Principal Balance": The aggregate Loan Balances
of all Mortgage Loans.
"Trust B Preference Amount": Any amount previously distributed
to Class B Noteholder that is recoverable and sought to be recovered as a
voidable preference by a Indenture 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.
"Trust B Pre-Funded Amount": As defined in the Trust B Sale
and Servicing Agreement.
"Trust B Pre-Funding Account": The Trust B Pre-Funding Account
established in accordance with Section 8.3 hereof and maintained by the
Indenture Trustee.
"Trust B Pre-Funding Earnings": As defined in the Trust B Sale
and Servicing Agreement.
"Trust B Pre-Funding Period": As defined in the Trust B Sale
and Servicing Agreement.
"Trust B Premium Amount": As to any Payment Date, the product
of (x) one-twelfth of the Trust B Premium Percentage and (y) the Class B Note
Principal Balance on such Payment Date (before taking into account any
distributions of the Trust B Scheduled Principal Distribution Amount to be made
on such Payment Date).
"Trust B Premium Percentage": As defined in the Insurance
Agreement.
"Trust B Principal and Interest Account": Collectively, each
principal and interest account created by the Master Servicer or any
Sub-Servicer pursuant to Section 4.8(a) of the Trust B Sale and Servicing
Agreement.
"Trust B Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all payments made pursuant to the Note Policy previously received
by the Indenture Trustee and all Preference Amounts previously paid to the
Indenture Trustee by the Note Insurer and in each case not previously repaid to
the Note Insurer pursuant to Section 8.7(b)(viii) hereof plus (ii) interest
accrued on each such payment made pursuant to the Note Policy not previously
repaid calculated at the Late Payment Rate from the date the Indenture Trustee
received the related payment made pursuant to the Note Policy and (y)(i) any
amounts then due and owing to the Note Insurer under the Insurance Agreement
plus (ii) interest on such amounts at the Late Payment Rate. The Note Insurer
shall notify the Indenture Trustee and the Sponsor of the amount of any Trust B
Reimbursement Amount.
"Trust B Sale and Servicing Agreement": The Trust B Sale and
Servicing Agreement dated as of November 1, 1998, among the Issuer, the Sponsor,
the Master Servicer and the Indenture Trustee, as the same may be amended or
supplemented from time to time.
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"Trust B Scheduled Principal Distribution Amount": With
respect to the Class B Notes for any Payment Date, an amount equal to the lesser
of (x) the Class B Principal Distribution Amount as of such Payment Date and (y)
the Class B Note Principal Balance as of such Payment Date.
"Trust B Specified Overcollateralization Amount": As defined
in the Insurance Agreement.
"Trust B Total Available Funds": As defined in Section 8.7(a)
hereof.
"Trust C": Advanta Mortgage Loan Trust 1998-4C, the trust
created pursuant to the Trust C Trust Agreement.
"Trust C Available Crossover Amounts": As defined in the Trust
C Indenture.
"Trust C Available Funds Cap Carry-Forward Deficiency Amount":
As defined in Section 8.7(b)(xvi) hereof.
"Trust C Available Funds Cap Current Deficiency Amounts": As
defined in Section 8.7(b)(xv) hereof.
"Trust C Indenture": The Indenture relating to Trust C, dated
as of November 1, 1998 between Trust C and the Indenture Trustee as amended and
supplemented from time to time.
"Trust C Note Account:" The Trust C Note Account established
in accordance with Section 8.3 of the Trust C Indenture.
"Trust C O/C Surplus Amount": As defined in Section 8.5(c)
hereof.
"Trust C Overcollateralization Amount:" As defined in the
Trust C Indenture.
"Trust C Overcollateralization Deficit": As defined in the
Trust C Indenture.
"Trust C Reserve Account:" The reserve account established
pursuant to the Trust C Indenture.
"Trust C Reserve Account Deposit:" With respect to the Payment
Date, the amount required to be deposited in the Trust C Reserve Account for the
purpose of increasing the Trust C Overcollateralization Amount to the Trust C
Specified Overcollateralization Amount applicable to such Payment Date.
"Trust C Specified Overcollateralization Amount": As defined
in the Trust C Indenture.
"Trust C Total Available Funds": As defined in the Trust C
Indenture.
"Trust C Trust Agreement": The Trust Agreement dated November
1, 1998 between the Sponsor and the Owner Trustee relating to Trust C.
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"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
Class B Noteholders and the Note Insurer, including all proceeds thereof
including, without limitation, (i) the Initial Mortgage Loans, Qualified
Replacement Mortgages and Subsequent Mortgage Loans, (ii) such amounts,
including Eligible Investments, as from time to time may be held in all Accounts
(except as otherwise provided herein), (iii) any Mortgaged Property, the Class B
Noteholdership of which has been effected on behalf of the Trust as a result of
foreclosure or acceptance by the Master Servicer or any Sub-Servicer of a deed
in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) any
Insurance Policies relating to the Mortgage Loans and any rights of the Trust
and the Originators under any Insurance Policies, (v) Net Liquidation Proceeds
with respect to any Liquidated Mortgage Loan, (vi) the Insurance Policies, (vii)
such amounts held in the Capitalized Interest Account, and (viii) such amounts
held in the Pre-Funding Account, the Trust B Principal and Interest Account and
the Trust B Note Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"UCC": Unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"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.
"Underwriter": Morgan Stanley & Co. Incorporated.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Trust B Sale and Servicing
Agreement or the Trust Agreement.
SECTION 1.2. Incorporation by Reference of the Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Class B Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional Indenture Trustee" means
the Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
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All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Class B Noteholders, such provision shall be deemed to refer to the Class B
Noteholder of record as of the Record Date immediately preceding the date on
which such action is to be taken, or consent given, by Class B Noteholders.
Solely for the purposes of any action to be taken, or consented to, by Class B
Noteholders, any Class B Note registered in the name of Advanta Mortgage Conduit
Services, Inc. or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Indenture Trustee or the Owner Trustee is entitled to rely upon any such action
or consent, only Class B Notes which the Owner Trustee or the Indenture Trustee,
respectively, knows to be so owned shall be so disregarded.
SECTION 1.5. Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control and all provisions required by the TIA are hereby incorporated by
reference. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provisions shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
ARTICLE II.
The Class B Notes
SECTION 2.1. Form. The Class B Notes, together with the
Indenture Trustee's certificate of authentication, shall be in substantially the
form set forth in Exhibit A, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Class B Notes, as evidenced by
their execution of the Class B Notes. Any portion of the text of any Class B
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Class B Note.
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Each Class B Note shall be dated the date of its
authentication. The terms of the Class B Note set forth in Exhibit A are part of
the terms of this Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Class
B Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Class B Notes may
be original or facsimile.
Class B Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Class B Notes
or did not hold such offices at the date of such Class B Notes.
The Indenture Trustee, upon receipt of a written Delivery
Order from the Issuer, shall authenticate and deliver Class B Notes for original
issue in an aggregate principal amount of $650,000,000. The Class B Notes
outstanding at any time may not exceed such amounts except as provided in
Section 2.6.
Each Class B Note shall be dated the date of its
authentication. The Class B Notes shall be issuable as registered Class B Notes
in the minimum denomination of $1000 and in integral multiples of $1,000 in
excess thereof.
No Class B Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears
attached to such Class B Note a certificate of authentication substantially in
the form provided for herein executed by the Indenture Trustee by the manual
signature of one of its authorized signatories, and such certificate attached to
any Class B Note shall be conclusive evidence, and the only evidence, that such
Class B Note has been duly authenticated and delivered hereunder. Subject to
Section 2.11, the Class B Notes shall be Book-Entry Class B Notes.
SECTION 2.3. Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Class B Notes and the registration of
transfers of Class B Notes. The Indenture Trustee shall be "Note Registrar" for
the purpose of registering Class B Notes and transfers of Class B Notes as
herein provided. Upon any resignation of any Note Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an appointment,
assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Class B Notes and
the principal amounts and number of such Class B Notes.
Upon surrender for registration or transfer of any Class B
Note at the office or agency of the Issuer to be maintained as provided in
Section 3.2, and if the requirements of
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Section 8-401(1) of the UCC are met, the Issuer shall execute or cause the
Indenture Trustee to authenticate one or more new Class B Notes, in any
authorized denominations, of the same class and a like aggregate principal
amount. A Class B Noteholder may also obtain from the Indenture Trustee, in the
name of the designated transferee or transferees one or more new Class B Notes,
in any authorized denominations, of the same class and a like aggregate
principal amount. Such requirements shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance by the Issuer with Section 8-401 of
the UCC.
At the option of the Holder, Class B Notes may be exchanged
for other Class B Notes in any authorized denominations, of the same class and a
like aggregate principal amount, upon surrender of the Class B Notes to be
exchanged at such office or agency. Whenever any Class B Notes are so
surrendered for exchange, and if the requirements of Section 8-401(1) of the UCC
are met, the Issuer shall execute and upon its request the Indenture Trustee
shall authenticate the Class B Notes which the Noteholder making the exchange is
entitled to receive. Such requirements shall not be deemed to create a duty in
the Indenture Trustee to monitor the compliance by the Issuer with Section 8-401
of the UCC.
All Class B Notes issued upon any registration of transfer or
exchange of Class B Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Class B Notes surrendered upon such registration of transfer
or exchange.
Every Class B Note presented or surrendered for registration
of transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibit A, duly executed
by the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar all in accordance with the Exchange Act, and
(ii) accompanied by such other documents as the Note Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Class B Notes, but the Note Registrar
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 Class B Notes, other than exchanges pursuant to Section 2.4 or 9.6
not involving any transfer.
The Note Registrar shall not register the transfer of any
Class B Note (other than the transfer of a Class B Note to the nominee of the
Depository) unless the transferee has executed and delivered to the Indenture
Trustee a certification to the effect that either (i) the transferee is not (A)
an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject
to the provisions of Title I of ERISA or (B) a plan (as defined in Section
4975(e)(1) of the Code) that is subject to Section 4975 of the Code (each of the
foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the
assets of a Benefit Plan, or (ii) that the transferee's acquisition and
continued holding of the Class B Note will be covered by a U.S. Department of
Labor Prohibited Transaction Class Exemption. Each transferee of a beneficial
interest in a Book-Entry Note shall be deemed to make one of the foregoing
representations.
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SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Class B
Notes. If (i) any mutilated Class B Note is surrendered to the Note Registrar,
or the Note Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Class B Note, and (ii) there is delivered to the Indenture
Trustee and the Note Insurer such security or indemnity as may be required by it
to hold the Issuer, the Indenture Trustee and the Note Insurer harmless, then,
in the absence of notice to the Issuer, the Note Registrar or the Indenture
Trustee that such Note has been acquired by a bona fide purchaser, and provided
that the requirements of Section 8-405 of the UCC are met, the Indenture Trustee
shall execute and authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Class B Note, a replacement Note (such
requirement shall not be deemed to create a duty in the Indenture Trustee to
monitor the compliance by the Issuer with Section 8-405); provided, however,
that if any such destroyed, lost or stolen Class B Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, the Indenture Trustee may, instead of issuing a
replacement Class B Note pay such destroyed, lost or stolen Note when so due or
payable or upon the Redemption Date without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, the Indenture Trustee and the Note
Insurer shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Note from such Person to whom such replacement Note was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Class B Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Class B Notes duly
issued hereunder.
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 Class B
Notes.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment
for registration of transfer of any Class B Note, the Issuer, the Indenture
Trustee and the Note Insurer and any agent of the Issuer, the Indenture Trustee
and the Note Insurer may treat the Person in whose name any Class B Note is
registered (as of the related Record Date) as the owner of such Class B Note for
the purpose of receiving payments of principal of and interest, if any on such
Class B Note and for all other purposes whatsoever, whether or not such Class B
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Note be overdue, and none of the Issuer, the Note Insurer, the Indenture Trustee
nor any agent of the Issuer, the Note Insurer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted
Interest.
(a) The Class B Notes shall accrue interest as provided
herein, and such amount shall be due and payable on each Payment Date as
specified herein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Class B Notes) is registered on the Record Date, by
check mailed first-class, postage prepaid, to such Person's address as it
appears on the Note Register on such Record Date, except that, unless Class B
Notes have been issued pursuant to Section 2.11, with respect to Class B Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee and except for the final installment of principal payable with respect
to such Note on a Payment Date or on the Final Scheduled Payment Date (and
except for the Redemption Price for any Note called for redemption pursuant to
Section 10.1(a)) which shall be payable as provided below. The funds represented
by any such checks returned undelivered shall be held in accordance with Section
3.3.
(b) Upon written notice from the Issuer, the Indenture Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Class B Notes shall be
mailed to Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the
Class B Notes, the Issuer shall pay defaulted interest (plus interest on such
defaulted interest to the extent lawful) at the Late Payment Rate to the extent
lawful. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and, at least 15 days
before any such special record date, the Issuer shall mail to each Noteholder
and the Indenture Trustee a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Class B Notes has been paid in full and the Class B Notes have
been surrendered to the Indenture Trustee, the Indenture Trustee shall, upon
written notice from the Master Servicer of the amounts, if any, that the Note
Insurer has paid in respect of the Class B Notes under the Note Policy or
otherwise which has not been reimbursed to it, deliver such surrendered Class B
Notes to the Note Insurer to the extent not previously cancelled or destroyed.
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SECTION 2.7. Cancellation. Subject to Section 2.6(d), all
Class B Notes surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Indenture Trustee,
be delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. Subject to Section 2.6(d), the Issuer may at any time deliver
to the Indenture Trustee for cancellation any Class B Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Class B Notes so delivered shall be promptly canceled
by the Indenture Trustee. No Class B Notes shall be authenticated in lieu of or
in exchange for any Class B Notes canceled as provided in this Section, except
as expressly permitted by this Indenture. Subject to Section 2.6(d), all
canceled Class B Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Class B Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee
shall, on or after the Termination Date, release any remaining portion of the
Trust Estate from the lien created by this Indenture and deposit in the Trust B
Note Account any funds then on deposit in any other Account. Except as otherwise
set forth in the Trust B Sale and Servicing Agreement, the Indenture Trustee
shall release property from the lien created by this Indenture pursuant to this
Section 2.8 only upon receipt of an Issuer Request by it accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1 or as provided in
Section 4.14 of the Trust B Sale and Servicing Agreement.
SECTION 2.9. Book-Entry Class B Notes. The Class B Notes, upon
original issuance, will be issued in the form of typewritten Class B Notes
representing the Book-Entry Class B Notes, to be delivered to The Depository
Trust Company or its custodian, the initial Clearing Agency, by, or on behalf
of, the Issuer. Such Class B Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Note Owner will receive a Definitive Note representing such Note Owner's
interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Class B Notes have been issued to Note Owners
pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Class B Notes and the giving of instructions or directions hereunder)
as the sole Holder of the Class B Notes, and shall have no obligation
to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless
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and until Class B Notes are issued pursuant to Section 2.11, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Class B Notes to such Clearing Agency
Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Class B Notes
evidencing a specified percentage of the Outstanding Amount of the
Class B Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such
effect from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Class B Notes and has delivered such instructions to
the Indenture Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Indenture Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Class B Notes shall have been issued to Note Owners pursuant to
Section 2.11, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Class B Notes to
the Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Sponsor advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Class B
Notes, and the Sponsor is unable to locate a qualified successor, (ii) the
Sponsor at its option advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of a Event of Default, Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Class B Notes
advise the Indenture Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Class B Note or Class B
Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Notes as Class B Noteholders.
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ARTICLE III.
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal of and interest on the Class B Notes
in accordance with the terms of the Class B Notes and this Indenture. Without
limiting the foregoing, the Issuer will cause to be distributed all amounts on
deposit in the Trust B Note Account on a Payment Date deposited therein pursuant
to the Trust B Sale and Servicing Agreement for the benefit of the Class A Class
B Notes, to Class B Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will
maintain an office or agency where Class B Notes may be surrendered for
registration, transfer or exchange of the Class B Notes, and where notices and
demands to or upon the Issuer in respect of the Class B Notes and this Indenture
may be served. The Issuer hereby initially appoints the Indenture Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Indenture Trustee of the location, and of any change in
the location, of any such office or agency. If at any time the Issuer shall fail
to maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Indenture Trustee's offices maintained at 123 Washington
Street, NY, NY 10006 and the Issuer hereby appoints the Indenture Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. The
Issuer will cause each Note Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Note Insurer an instrument
in which such Note Paying Agent shall agree with the Indenture Trustee (and if
the Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject
to the provisions of this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Class B Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee written notice of any default
by the Issuer (or any other obligor upon the Class B Notes) of which it
has actual knowledge in the making of any payment required to be made
with respect to the Class B Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the
payment of Class B Notes if at any
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time it ceases to meet the standards required to be met by a Note
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Class B Notes of
any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Indenture Trustee or any Note Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer on Issuer Request, and
shall be deposited by the Indenture Trustee in the Trust B Note Account; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Note
Paying Agent with respect to such trust money shall thereupon cease.
SECTION 3.4. Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Trust Estate, the Class B Notes, and each
other instrument or agreement included in the Trust Estate.
SECTION 3.5. Protection of Trust Estate. The Issuer intends
the security interest granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Indenture Trustee, for the benefit of the Issuer Secured Parties, a first
lien on and a first priority, perfected security interest in the Trust Estate.
The Issuer will from time to time prepare (or shall cause to be prepared),
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
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(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Indenture Trustee for the benefit
of the Issuer Secured Parties created by this Indenture or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee in such Trust Estate against the claims
of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section;
provided that, such designation shall not be deemed to create a duty in the
Indenture Trustee or the Indenture Trustee to monitor the compliance of the
Issuer with respect to its duties under this Section 3.5 or the adequacy of any
financing statement, continuation statement or other instrument prepared by the
Issuer.
SECTION 3.6. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee and the Note Insurer an Opinion of Counsel stating that, in
the opinion of such counsel, such actions have been taken with respect to the
recording and filing of this Indenture, any indentures supplemental hereto, and
any other requisite documents, and with respect to the execution and filing of
any financing statements and continuation statements, as are necessary to
perfect and make effective the first priority lien and security interest in
favor of the Indenture Trustee, for the benefit of the Issuer Secured Parties,
created by this Indenture.
(b) Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Issuer shall furnish to the Indenture Trustee and the Note
Insurer, an Opinion of Counsel either stating that, in the opinion of such
counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel, no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.
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SECTION 3.7. Performance of Obligations; Servicing of Mortgage
Loans.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Operative Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to
the Note Insurer to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Indenture Trustee
and the Note Insurer in an Officer's Certificate of the Issuer shall be deemed
to be action taken by the Issuer. Initially, the Issuer has contracted with the
Master Servicer to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Operative Documents
and in the instruments and agreements included in the Trust Estate, including,
but not limited, to preparing (or causing to be prepared) and filing (or causing
to be filed) all UCC financing statements and continuation statements required
to be filed by the terms of this Indenture and the Trust B Sale and Servicing
Agreement in accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Issuer shall not
waive, amend, modify, supplement or terminate any Operative Document or any
provision thereof without the consent of the Indenture Trustee, the Note Insurer
or the Holders of at least a majority of the Outstanding Amount of the Class B
Notes.
(d) If an Authorized Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicer Termination under the
Trust B Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee, the Note Insurer and the Rating Agencies thereof in
accordance with Section 11.4, and shall specify in such notice the action, if
any, the Issuer is taking in respect of such default. If an Event of Servicer
Termination shall arise from the failure of the Master Servicer to perform any
of its duties or obligations under the Trust B Sale and Servicing Agreement with
respect to the Mortgage Loans, the Issuer shall take all reasonable steps
available to it to remedy such failure.
(e) The Issuer agrees that it will not waive timely
performance or observance by the Master Servicer or the Sponsor of their
respective duties under the Operative Documents (x) without the prior consent of
the Note Insurer or (y) if the effect thereof would adversely affect the Holders
of the Class B Notes.
SECTION 3.8. Negative Covenants. So long as any Class B Notes
are Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Operative Documents, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, including those included
in the Trust Estate, without the consent of the Note
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Insurer (which consent may not be unreasonably withheld; provided, that
if an Note Insurer Default has occurred and is continuing, the
Noteholders representing 51% of the Noteholders may direct the
Indenture Trustee to sell or dispose of the Trust Estate if the
Indenture Trustee receives the Redemption Price, as described in
Section 10.1.
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Class B Notes (other
than amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Noteholder by reason of
the payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Class B
Notes under this Indenture except as may be expressly permitted hereby,
(B) permit any lien, charge, excise, claim, security interest, mortgage
or other encumbrance (other than the lien of this Indenture) to be
created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on a Mortgaged Property and
arising solely as a result of an action or omission of the related
Mortgagor), (C) permit the lien of this Indenture not to constitute a
valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Trust Estate or (D)
amend, modify or fail to comply with the provisions of the Operative
Documents without the prior written consent of the Note Insurer, which
consent may not be unreasonably withheld.
SECTION 3.9. Annual Statement as to Compliance. The Issuer
will deliver to the Indenture Trustee and the Note Insurer, within 90 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year ended
December 31, 1999), and otherwise in compliance with the requirements of TIA
Section 314(a)(4) an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets.
(a) The Issuer shall not consolidate or merge with or into any
other Person.
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(b) Except as otherwise provided in the Trust B Sale and
Servicing Agreement, the Issuer shall not convey or transfer all or
substantially all of its properties or assets, including those included in the
Trust Estate, to any Person.
SECTION 3.11. No Other Business. The Issuer shall not engage
in any business other than purchasing, owning, selling and managing the Mortgage
Loans and other assets in the manner contemplated by this Indenture and the
Operative Documents and activities incidental thereto.
SECTION 3.12. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Class B Notes, (ii) obligations owing from time
to time to the Note Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Operative Documents. The proceeds
of the Class B Notes shall be used exclusively to fund the Issuer's purchase of
the Mortgage Loans and the other assets specified in the Trust B Sale and
Servicing Agreement, to fund the Pre-Funding Account and the Capitalized
Interest Account and to pay the Issuer's organizational, transactional and
start-up expenses.
SECTION 3.13. Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Trust B Sale and Servicing Agreement
or this Indenture, the Issuer shall not make any loan or advance or credit to,
or guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.14. Capital Expenditures. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.15. Compliance with Laws. The Issuer shall comply
with the requirements of all applicable laws, the non-compliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of the Issuer to perform its obligations under the Class B Notes, this
Indenture or any Operative Document.
SECTION 3.16. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Master Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made,
distributions to the Master Servicer, the Owner Trustee, the Indenture Trustee
and the Certificateholders as permitted by, and to the extent funds are
available for such purpose under, the Trust B Sale and Servicing Agreement, this
Indenture, or Trust Agreement.
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The Issuer will not, directly or indirectly, make payments to or distributions
from the Note Account except in accordance with this Indenture and the Operative
Documents.
SECTION 3.17. Notice of Event of Defaults and Events of
Servicing Termination. Upon a Responsible Officer of the Owner Trustee having
actual knowledge thereof, the Issuer agrees to give the Indenture Trustee, the
Note Insurer and the Rating Agencies prompt written notice of each Event of
Default hereunder or Event of Servicer Termination under the Trust B Sale and
Servicing Agreement.
SECTION 3.18. Further Instruments and Acts. Upon request of
the Indenture Trustee or the Note Insurer, the Issuer will execute and deliver
such further instruments and do such further acts as may be reasonably necessary
or proper to carry out more effectively the purpose of this Indenture.
SECTION 3.19. Amendments of Trust B Sale and Servicing
Agreement and Trust B Trust Agreement. The Issuer shall not agree to any
amendment to Section 9.01 of the Trust B Sale and Servicing Agreement or Section
11.1 of the Trust B Trust Agreement to eliminate the requirements thereunder
that the Indenture Trustee, the Note Insurer or the Holders of the Class B Notes
consent to amendments thereto as provided therein.
SECTION 3.20. Income Tax Characterization. For purposes of
federal income, state and local income and franchise and any other income taxes,
the Issuer will treat the Class B Notes as indebtedness of the Sponsor and
hereby instructs the Indenture Trustee to treat the Class B Notes as
indebtedness of the Sponsor for federal and state tax reporting purposes.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon
payment in full of the Class B Notes, this Indenture shall cease to be of
further effect with respect to the Class B Notes except as to (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Class B Notes, (iii) rights of Class B Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.3,
3.4, 3.5, 3.8, 3.10, 3.12, and 3.19, (v) the rights, obligations and immunities
of the Indenture Trustee hereunder (including the rights of the Indenture
Trustee under Section 6.7 and the obligations of the Indenture Trustee under
Section 4.2) and (vi) the rights of Class B Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them, and the Indenture Trustee, on written demand in the form of
an Issuer Order and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Class B Notes, when
(A) either
(1) all Class B Notes theretofore authenticated and delivered
(other than (i) Class B Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.4 and (ii)
Class B Notes for which payment money has
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theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.3) have been delivered to the Indenture
Trustee for cancellation and the Note Policy has terminated and been
returned to the Note Insurer for cancellation and all amounts owing to
the Note Insurer have been paid in full; or
(2) all Class B Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Trust B Final
Scheduled Payment Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and in the case of (i), (ii) or (iii) above, the Issuer, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Class B Notes not theretofore delivered to the Indenture Trustee for
cancellation when due on the Final Scheduled Payment Date or Redemption
Date (if the Class B Notes shall have been called for redemption
pursuant to Section 10.1(a) or (b)), as the case may be;
(B) the Issuer has paid or caused to be paid all Note Insurer
Issuer Secured Obligations and all Indenture Trustee Issuer Secured Obligations;
and
(C) the Issuer has delivered to the Indenture Trustee and the
Note Insurer an Officer's Certificate, an Opinion of Counsel and if required by
the TIA, the Indenture Trustee or the Note Insurer an Independent Certificate
from a firm of certified public accountants, each meeting the applicable
requirements of Section 11.1(a) and each stating that all conditions precedent
herein provided relating to the satisfaction and discharge of this Indenture
have been complied with.
SECTION 4.2. Application of Trust Money. All monies deposited
with the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Class B Notes and
this Indenture, to the payment, either directly or through any Note Paying
Agent, as the Indenture Trustee may determine, to the Holders of the particular
Class B Notes for the payment or redemption of which such monies have been
deposited with the Indenture Trustee, of all sums due and to become due thereon
for principal and interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Class B Notes, all monies then held by any Note Paying Agent other than the
Indenture Trustee under the
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provisions of this Indenture with respect to such Class B Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.3 and thereupon such Note Paying Agent shall be released
from all further liability with respect to such monies.
ARTICLE V.
REMEDIES
SECTION 5.1. Rights Upon an Event of Default. If an Event of
Default as described in Article XII shall have occurred and be continuing, but
with the consent of the Note Insurer in the absence of a Note Insurer Default,
the Indenture Trustee may, and on request of the Note Insurer or the Holders of
Class B Notes representing not less than 51% of the Outstanding Amount of the
Class B Notes (with the consent of the Note Insurer), shall, declare all the
Class B Notes to be immediately due and payable by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Class B Noteholders), and upon
any such declaration such Class B Notes, in an amount equal to the Outstanding
Amount of the Class B Notes, together with accrued and unpaid interest thereon
to the date of such acceleration, shall become immediately due and payable, all
subject to the prior written consent of the Note Insurer in the absence of a
Note Insurer Default.
At any time after such a declaration of acceleration of
maturity of the Class B Notes has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article; provided the Note Insurer or the Holders of Class B
Notes representing more than 50% of the Outstanding Amount of the Class B Notes,
with the prior written consent of the Note Insurer, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of, and interest on, all
Class B Notes and all other amounts that would then be due
hereunder or upon such Class B Notes if the Event of Default
giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee, its agents and counsel; and
(2) all Events of Default with respect to the Class B Notes,
other than the nonpayment of the principal of Class B Notes that have become due
solely by such acceleration, have been cured or waived as provided in Section
5.19.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.2. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. Subject to the following sentence, if an Event
of Default with respect to the
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Class B Notes occurs and is continuing, the Indenture Trustee may, with
the prior written consent of the Note Insurer and shall, at the direction of the
Note Insurer, proceed to protect and enforce its rights and the rights of the
Class B Noteholders and the Note Insurer by any Proceedings the Indenture
Trustee deems appropriate to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or enforce any other proper
remedy. Any proceedings brought by the Indenture Trustee on behalf of the Class
B Noteholders and the Note Insurer or any Class B Noteholder against the Issuer
shall be limited to the preservation, enforcement and foreclosure of the liens,
assignments, rights and security interests under the Indenture and no
attachment, execution or other unit or process shall be sought, issued or levied
upon any assets, properties or funds of the Issuer, other than the Trust Estate
relative to the Class B Notes in respect of which such Event of Default has
occurred. If there is a foreclosure of any such liens, assignments, rights and
security interests under this Indenture, by private power of sale or otherwise,
no judgment for any deficiency upon the indebtedness represented by the Class B
Notes may be sought or obtained by the Indenture Trustee or any Class B
Noteholder against the Issuer. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to this Article V
including reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
SECTION 5.3. Remedies. (a) If an Event of Default with respect
to the Class B Notes shall have occurred and be continuing and the Class B Notes
have been declared due and payable and such declaration and its consequences
have not been rescinded and annulled, the Indenture Trustee, at the direction of
the Note Insurer may, for the benefit of the Class B Noteholders and the Note
Insurer, do one or more of the following:
(i) institute Proceedings for the collection of all amounts
then payable on the Class B Notes, or under this Indenture, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer moneys adjudged due, subject in all cases to the
provisions of Sections 3.1 and 5.3;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) institute Proceedings from time to time for the complete
or partial foreclosure of this Trust B Indenture with respect to the
Trust Estate;
(iv) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee or
the Holders of the Class B Notes and the Note Insurer hereunder; and
(v) refrain from selling the Trust Estate and apply all
related Trust B Monthly Remittance Amounts pursuant to Section 5.6.
SECTION 5.4. Indenture Trustee May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Issuer or any other obligor upon any of
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the Class B Notes or the property of the Issuer or of such other obligor or
their creditors, the Indenture Trustee (irrespective of whether the Class B
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand on the Issuer for the payment of any overdue principal or interest)
shall, at the direction of the Note Insurer, be entitled and empowered, by
intervention in such Proceeding or otherwise to:
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Class B Notes and file
such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel) and of the Class B
Noteholders and the Note Insurer allowed in such Proceeding, and
(ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
receiver, assignee, Indenture Trustee, liquidator, or sequestrator (or
other similar official) in any such Proceeding is hereby authorized by
each Class B Noteholder and the Note Insurer to make such payments to
the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of such payments directly to the Class B
Noteholders and the Note Insurer, to pay to the Indenture Trustee any
amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or consent to or accept or adopt on behalf of any Class B Noteholder
or the Note Insurer any plan of reorganization, arrangement, adjustment or
composition affecting any of the Class B Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Class B Noteholder or the Note Insurer in any such
Proceeding. Any plan of reorganization, arrangement, adjustment or composition
relative to the Issuer or any other obligor upon any of the Class B Notes or the
property of the Issuer or of such obligor or their creditors and affecting the
Class B Notes or the rights of the Note Insurer under this Indenture or the
Insurance Agreement must be acceptable to the Note Insurer and, as long as no
Note Insurer Default exists and is continuing, the Note Insurer shall be
entitled to exercise the voting rights of the Holders of the Class B Notes
regarding such plan, reorganization, arrangement, adjustment or composition.
SECTION 5.5. Indenture Trustee May Enforce Claims Without
Possession of Class B Notes. All rights of action and claims under this
Indenture or any of the Class B Notes may be prosecuted and enforced by the
Indenture Trustee without the possession of any of the Class B Notes or the
production thereof in any Proceeding relating thereto, and any such Proceeding
instituted by the Indenture Trustee, at the direction of the Note Insurer, shall
be brought in its own name as Indenture Trustee of an express trust, and any
recovery of judgment shall be for the ratable benefit of the Holders of the
Class B Notes and the Note Insurer in respect of which such judgment has been
recovered after payment of amounts required to be paid pursuant to clause (i)
Section 5.6.
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SECTION 5.6. Application of Money Collected. If the Class B
Notes have been declared due and payable following an Event of Default with
respect to the Class B Notes and such declaration and its consequences have not
been rescinded and annulled, any money collected by the Indenture Trustee with
respect to the Class B Notes pursuant to this Article or otherwise and any other
monies that may then be held or thereafter received by the Indenture Trustee as
security for the Class B Notes shall be applied in the following order, at the
date or dates fixed by the Indenture Trustee and, in case of the payment of the
entire amount due on account of principal of, and interest on, the Class B
Notes, upon presentation and surrender thereof:
(i) first, to the Indenture Trustee any unpaid Indenture
Trustee's Fees related to the Class B Notes then due and any other
amounts payable and due to the Indenture Trustee under this Indenture,
including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article;
(ii) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees related to the Mortgage Loans
then due and, upon the final liquidation of the related Mortgage Loan
or the final liquidation of the Trust Estate related to the Mortgage
Loans, Servicing Advances and Delinquency Advances, including
Nonrecoverable Advances related to the Mortgage Loans previously made
by, and not previously reimbursed or retained by, the Servicer;
(iii) third, to the payment of the Class B Interest
Distribution Amount then due and unpaid upon the Outstanding Amount of
the Class B Notes through the day preceding the date on which such
payment is made;
(iv) fourth, to the payment of the Class B Note Principal
Balance then due and unpaid upon the Outstanding Amount of the Class B
Notes;
(v) fifth, to the payment of the Note Insurer, all amounts due
pursuant to the Insurance Agreement; and
(vi) sixth, to the Trust B Certificateholders, any amount
remaining on deposit in the Trust B Note Account.
SECTION 5.7. Limitation of Suits. No Holder of any Note shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee in
bankruptcy, or for any other remedy hereunder, unless:
(i) the Holders of not less than 25% of the Outstanding Amount
of the related Class B Notes have made written request to the Indenture
Trustee to institute such proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(ii) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request;
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(iii) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such proceedings;
(iv) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the related Class B
Notes; and
(v) an Note Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Holders of Class B Notes shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Class B Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of related Class B
Notes, each representing less than a majority of the Outstanding Amount of the
related Class B Notes, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Class B Noteholders to
Receive Principal and Interest. Notwithstanding any other provisions in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies. If the
Control Party or any Class B Noteholder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, then and in every such case the
Issuer, the Note Insurer, the Indenture Trustee and the Class B Noteholders
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Indenture Trustee, the Note Insurer and the Class B
Noteholders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Control Party or to the related
Class B Noteholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee, Control Party or any Holder of any Note to
exercise any right or remedy
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accruing upon 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 V or by law to the Indenture
Trustee, the Note Insurer or to the Class B Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee,
the Note Insurer or by the Class B Noteholders, as the case may be.
SECTION 5.12. Control by Noteholders. If the Indenture Trustee
is the Control Party, the Holders of a majority of the Outstanding Amount of the
related Class B Notes, with the consent of the Note Insurer, shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee pursuant to Section 12.1 with respect
to the related Class B Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any related Class B Noteholders not
consenting to such action.
SECTION 5.13. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by the Note Insurer, any Class B
Noteholder, or group of Class B Noteholders with the prior written consent of
the Note Insurer, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Class B Notes or (c) any suit instituted by any Class
B Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
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SECTION 5.15. Action on Class B Notes. The Indenture Trustee's
right to seek and recover judgment on the Class B Notes or under this Indenture
shall not be affected by the seeking, obtaining or application of any other
relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Indenture Trustee, the Note Insurer
or the Class B Noteholders shall be impaired by the recovery of any judgment by
the Indenture Trustee or the Note Insurer against the Issuer or by the levy of
any execution under such judgment upon any portion of the Trust Estate or upon
any of the assets of the Issuer.
SECTION 5.16. Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Indenture Trustee (at the
direction of the Note Insurer) to do so and at the Master Servicer's expense,
the Issuer agrees to take all such lawful action as the Indenture Trustee may
request to compel or secure the performance and observance by the Sponsor and
the Master Servicer, as applicable, of each of their obligations to the Issuer
under or in connection with the Sale and Servicing Agreement in accordance with
the terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the Sale
and Servicing Agreement to the extent and in the manner directed by the
Indenture Trustee, including the transmission of notices of default on the part
of the Sponsor or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Sponsor or the Master Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Indenture Trustee is a Control Party and if an
Event of Default has occurred and is continuing, the Indenture Trustee may, and,
at the written direction of the Holders of 66-2/3% of the Outstanding Amount of
the related Class of Class B Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Sponsor or the Master Servicer
under or in connection with the Sale and Servicing Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Sponsor or the Master Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
SECTION 5.17. Subrogation. The Indenture Trustee shall receive
as attorney-in-fact of each Class B Noteholder any Insured Payment from the Note
Insurer pursuant to the Trust B Note Policy. Any and all Trust B Insured
Payments disbursed by the Indenture Trustee from claims made under the Trust B
Note Policy shall not be considered payment by the Trust, and shall not
discharge the obligations of the Trust with respect thereto. The Note Insurer
shall, to the extent it makes any payment with respect to any Class B Notes,
become subrogated to the rights of the recipient of such payments to the extent
of such payments. Subject to and conditioned upon any payment with respect to
any Class B Notes by or on behalf of the Note Insurer, the Indenture Trustee
shall assign to the Note Insurer all rights to the payment of interest or
principal with respect to such Class of Class B Notes which are then due for
payment to the extent of all payments made by the Note Insurer. In addition to
the rights of the Note Insurer set forth in Section 11.20 hereof, the Note
Insurer may exercise any option, vote, right, power or the like with respect to
such Class of Class B Notes to the extent that it has made payment pursuant to
the related Trust B Note Policy.
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SECTION 5.18. Preference Claims. (a) In the event that the
Indenture Trustee has received a certified copy of an order of the appropriate
court that any payment on a Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Indenture Trustee shall
so notify the Note Insurer, shall comply with the provisions of the related
Policy to obtain payment by the Note Insurer of such avoided payment, and shall,
at the time it provides notice to the Note Insurer, notify Holders of the Class
B Notes by mail that, in the event that any Class B Noteholder's payment is so
recoverable, such Class B Noteholder will be entitled to payment pursuant to the
terms of the related Policy. The Indenture Trustee shall furnish to the Note
Insurer at its written request, the requested records it holds in its possession
evidencing the payments of principal of and interest on Class B Notes, if any,
which have been made by the Indenture Trustee and subsequently recovered from
Class B Noteholders, and the dates on which such payments were made. Pursuant to
the terms of the related Policy, the Note Insurer will make such payment on
behalf of the Class B Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order (as
defined in the related Policy) and not to the Indenture Trustee or any Class B
Noteholder directly.
(b) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action (of which the
Indenture Trustee has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Preference Claim") of any distribution made with respect to
the Class B Notes. Each Holder, by its purchase of Class B Notes, and the
Indenture Trustee hereby agree that so long as an Note Insurer Default shall not
have occurred and be continuing, the Note Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim including, without limitation, (i) the
direction of any appeal of any order relating to any Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal at the expense of the Note Insurer, but subject to reimbursement as
provided in the Insurance Agreement. In addition, and without limitation of the
foregoing, as set forth in Section 5.18, the Note Insurer shall be subrogated
to, and each Class B Noteholder and the Indenture Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the Indenture
Trustee and each Class B Noteholder in the conduct of any proceeding with
respect to a Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim.
SECTION 5.19. Waiver of Past Defaults. The Note Insurer or the
Holders of Class B Notes representing more than 50% of the aggregate Class A
Principal Balance of the Outstanding Class B Notes on the applicable Record Date
may on behalf of the Holders of all the Class B Notes, and with the consent of
the Note Insurer, waive any past default hereunder and its consequences, except
a default in the payment of principal or any installment of interest on any
Class B Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
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ARTICLE VI.
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee.
(a) If a Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and the Operative Documents and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs; provided, however,
that if the Indenture Trustee is acting as Master Servicer, it shall use the
same degree of care and skill as is required of the Master Servicer under the
Trust B Sale and Servicing Agreement.
(b) Except during the continuance of a Event of Default:
(i) The Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.11; and
(iv) the Indenture Trustee shall not be charged with knowledge
of any failure by the Master Servicer to comply with the obligations of
the Master Servicer referred to in clauses (i) and (ii) of Section 5.1
of the Trust B Sale and Servicing Agreement unless a Responsible
Officer of the Indenture Trustee at the Corporate Trust Office obtains
actual knowledge of such failure or occurrence or the Indenture Trustee
receives written notice of such failure or occurrence from the Master
Servicer, the Note Insurer or the Holders of Class B Notes evidencing
Voting Rights aggregating not less than 51%.
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(d) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(g) The Indenture Trustee shall, upon two Business Days' prior
written notice to the Indenture Trustee, permit any representative of the Note
Insurer, during the Indenture Trustee's normal business hours, to examine all
books of account, records, reports and other papers of the Indenture Trustee
relating to the Class B Notes, to make copies and extracts therefrom and to
discuss the Indenture Trustee's affairs and actions, as such affairs and actions
relate to the Indenture Trustee's duties with respect to the Class B Notes, with
the Indenture Trustee's officers and employees responsible for carrying out the
Indenture Trustee's duties with respect to the Class B Notes.
(h) The Indenture Trustee shall, and hereby agrees that it
will, perform all of the obligations and duties required of it under the Trust B
Sale and Servicing Agreement.
(i) The Indenture Trustee shall, and hereby agrees that it
will, hold the Note Policy in trust, and will hold any proceeds of any claim on
the Note Policy in trust solely for the use and benefit of the Noteholders.
(j) In no event shall Bankers Trust Company of California,
N.A., in any of its capacities hereunder, be deemed to have assumed any duties
of the Owner Trustee under the Delaware Business Trust Statute, common law, or
the Trust Agreement except making payments to the Trust B Certificateholders.
SECTION 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee.
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(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Class B Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture, at the request, order or direction of any of the Holders of
Class B Notes or the Control Party, pursuant to the provisions of this
Indenture, unless such Holders of Class B Notes or the Control Party shall have
offered to the Indenture Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby;
provided, however, that the Indenture Trustee shall, upon the occurrence of a
Event of Default or Event of Servicer Termination as defined in the Trust B Sale
and Servicing Agreement (that has not been cured or waived), exercise the rights
and powers vested in it by this Indenture or the Trust B Sale and Servicing
Agreement with reasonable care and skill.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Note Insurer or by the Holders of Class B Notes evidencing not less than
25% of the Outstanding Amount thereof; provided, however, that if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or the
Trust B Sale and Servicing Agreement, the Indenture Trustee may require
indemnity reasonably satisfactory to it against such cost, expense or liability
as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person making such request, or, if paid by the
Indenture Trustee shall be reimbursed by the Person making such request upon
demand.
(h) The Indenture Trustee shall not be accountable, shall have
no liability and makes no representation as to any acts or omissions hereunder
of the Master Servicer until such time as, and only to the extent that, the
Indenture Trustee may be required to act as Master Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Class B Notes and may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not Indenture Trustee.
Any Note Paying Agent, Note Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Indenture Trustee must comply with
Sections 6.11 and 6.12.
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SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Trust Estate or the Class B Notes,
it shall not be accountable for the Issuer's use of the proceeds from the Class
B Notes, and it shall not be responsible for any statement of the Issuer in the
Indenture or in any document issued in connection with the sale of the Class B
Notes or in the Class B Notes other than the Indenture Trustee's certificate of
authentication.
SECTION 6.5. Notice of Defaults. If an Event of Default or an
Event of Servicer Termination occurs and is continuing and if it is either known
by, or written notice of the existence thereof has been delivered to, a
Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail
to each Noteholder and to the Note Insurer of such event within 10 days after
such knowledge or notice occurs. Except in the case of an Event of Default in
payment of principal of or interest on any Class B Note, the Indenture Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Class B Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. Upon
written request, the Note Paying Agent or the Master Servicer shall on behalf of
the Issuer deliver to each Noteholder such information as may be reasonably
required to enable such Holder to prepare its Federal and state income tax
returns required by law.
SECTION 6.7. Compensation and Indemnity.
(a) The Indenture Trustee shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Indenture Trustee herein. Neither the Indenture Trustee nor
any of the directors, officers, employees or agents of the Indenture Trustee
shall be under any liability on any Note or otherwise to any Account, the
Issuer, the Sponsor, the Master Servicer or any Securityholder for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Indenture, or for errors in judgment; provided, however, that this
provision shall not protect the Indenture 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 Indenture 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 Indenture Trustee is the obligor). The indemnification
provided in this Section 6.7 shall survive the termination of this Indenture or
the resignation or removal of the Indenture Trustee hereunder. The Indenture
Trustee and any director, officer, employee or agent of the Indenture 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.
(b) The Issuer's obligations to the Indenture Trustee pursuant
to this Section shall survive the discharge of this Indenture. Notwithstanding
anything else set forth in this Indenture or the Operative Documents, the
Indenture Trustee agrees that the obligations of the Issuer (but not the Master
Servicer) to the Indenture Trustee hereunder and under the Operative Documents
shall be recourse to the Trust Estate only and specifically shall not be
recourse to the
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assets of the Issuer or any Securityholder. In addition, the Indenture Trustee
agrees that its recourse to the Issuer, the Trust Estate, the Sponsor and
amounts held in the Accounts shall be limited to the right to receive the
distributions referred to herein.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture
Trustee may resign at any time by so notifying the Issuer and the Note Insurer
by written notice. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor Indenture Trustee (approved in writing by the Note
Insurer, so long as such approval is not unreasonably withheld) by written
instrument, in duplicate, one copy of such instrument shall be delivered to the
resigning Indenture Trustee (who shall deliver a copy to the Master Servicer)
and one copy to the successor Indenture Trustee; provided, however, that any
such successor Indenture Trustee shall be subject to the prior written approval
of the Master Servicer, which approval shall not be unreasonably withheld. The
Issuer may and, at the request of the Note Insurer shall, remove the Indenture
Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, Indenture Trustee, conservator, sequestrator (or similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or ordering the winding-up or liquidation
of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
Indenture Trustee, conservator, sequestrator (or other similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or makes any assignment for the benefit
of creditors or fails generally to pay its debts as such debts become
due or takes any corporate action in furtherance of any of the
foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee acceptable to the
Note Insurer. If the Issuer fails to appoint such a successor Indenture Trustee,
the Note Insurer may appoint a successor Indenture Trustee.
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A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee, to the Note
Insurer and to the Issuer. Thereupon the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the retiring Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor Indenture
Trustee.
If a successor Indenture Trustee does not take office within
30 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Class B Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee acceptable to the Note Insurer.
If the Indenture Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Note Insurer.
Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section shall not become effective until acceptance of appointment by
the successor Indenture Trustee pursuant to Section 6.8 and payment of all fees
and expenses owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's and the Master Servicer's indemnity
obligations under Section 6.7 shall continue for the benefit of the retiring
Indenture Trustee and the Master Servicer shall pay any amounts owing to the
Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Class B Notes shall have been authenticated
but not delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor Indenture Trustee, and deliver
such Class B Notes so authenticated; and in case at that time any of the Class B
Notes shall not have been authenticated, any successor to the Indenture Trustee
may authenticate such Class B Notes either in the name of any predecessor
hereunder or in the name of the successor to the Indenture Trustee; and in all
such cases such certificates shall have the full force which it is anywhere in
the Class B Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
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(a) Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust may at the time be located, the Indenture Trustee
with the consent of the Note Insurer shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-Indenture
Trustee or co-Indenture Trustees, or separate Indenture Trustee or separate
Indenture Trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-Indenture Trustee or separate
Indenture Trustee hereunder shall be required to meet the terms of eligibility
as a successor Indenture Trustee under Section 6.11 and no notice to Noteholders
of the appointment of any co-Indenture Trustee or separate Indenture Trustee
shall be required under Section 6.8 hereof.
(b) Every separate Indenture Trustee and co-Indenture Trustee
shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate Indenture Trustee or co-Indenture Trustee, but solely at the
direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally liable
by reason of any act or omission of any other Indenture Trustee
hereunder, including acts or omissions of predecessor or successor
Indenture Trustees; and
(iii) the Indenture Trustee and the Master Servicer acting
jointly may at any time accept the resignation of or remove any
separate Indenture Trustee or co-Indenture Trustee except that
following the occurrence of an Event of Servicer Termination, the
Indenture Trustee acting alone may accept the resignation of or remove
any separate Indenture Trustee or co-Indenture Trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate Indenture Trustees and co-Indenture Trustees, as effectively as if
given to each of them. Every instrument appointing any separate Indenture
Trustee or co-Indenture Trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate Indenture Trustee and co-Indenture Trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
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Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate Indenture Trustee or co-Indenture Trustee may
at any time constitute the Indenture Trustee, its agent or attorney-in-fact with
full power and authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, dissolve, become
insolvent, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor Indenture Trustee.
(e) The Master Servicer shall be responsible for the fees of
any co-Indenture Trustee or separate Indenture Trustee appointed hereunder.
SECTION 6.11. Eligibility: Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Indenture Trustee shall provide copies of such reports to the
Note Insurer upon request. The Indenture Trustee shall comply with TIA Section
310(b), including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints Bankers
Trust Company of California, N.A. as the Indenture Trustee with respect to the
Collateral, and Bankers Trust Company of California, N.A. hereby accepts such
appointment and agrees to act as Indenture Trustee with respect to the Trust
Estate for the Issuer Secured Parties, to maintain custody and possession of
such Trust Estate (except as otherwise provided hereunder) and to perform the
other duties of the Indenture Trustee in accordance with the provisions of this
Indenture and the other Operative Documents. Each Issuer Secured Party hereby
authorizes the Indenture Trustee to take such action on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder, as the Control
Party may direct and as are specifically authorized to be exercised by the
Indenture Trustee by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The
Indenture Trustee shall act upon and in compliance with the written instructions
of the Control Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Indenture Trustee shall
not act in accordance with any instructions (i) which are not authorized by, or
in violation of the provisions of, this Indenture or (ii) for which the
Indenture Trustee has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Indenture Trustee
of
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its express duties hereunder, except where this Indenture provides that the
Indenture Trustee is permitted to act only following and in accordance with such
instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee
shall have no duties or responsibilities except those expressly set forth in
this Indenture and the other Operative Documents to which the Indenture Trustee
is a party or as directed by the Control Party in accordance with this
Indenture. The Indenture Trustee shall not be required to take any discretionary
actions hereunder except at the written direction and with the indemnification
of the Control Party. The Indenture Trustee shall, and hereby agrees that it
will, perform all of the duties and obligations required of it under the Trust B
Sale and Servicing Agreement.
SECTION 6.15. Limitation on Liability. Neither the Indenture
Trustee nor any of its directors, officers, employees and agents shall be liable
for any action taken or omitted to be taken by it or them hereunder, or in
connection herewith, except that the Indenture Trustee shall be liable for its
negligence, bad faith or willful misconduct; nor shall the Indenture Trustee be
responsible for the validity, effectiveness, value, sufficiency or
enforceability against the Issuer of this Indenture or any of the Trust Estate
(or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of
negligence, bad faith or willful misconduct on its part, the Indenture Trustee
shall be entitled to rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such document
or instrument.
SECTION 6.17. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Issuer and to each
Issuer Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a national
banking association, duly organized, validly existing and in good standing under
the laws of the United States and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite
right, power and authority to execute and deliver this Indenture and to perform
all of its duties as the Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the
Indenture Trustee of this Indenture and the other Operative Documents to which
it is a party, and the performance by the Indenture Trustee of its duties
hereunder and thereunder, have been duly authorized by all necessary corporate
proceedings, are required for the valid execution and delivery by the Indenture
Trustee, or the performance by the Indenture Trustee, of this Indenture and such
other Operative Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has
duly executed and delivered this Indenture and each other Operative Document to
which it is a party, and each of this Indenture and each such other Operative
Document constitutes the legal, valid and
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binding obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as (i) such enforceability may be
limited by bankruptcy, insolvency, reorganization and similar laws relating to
or affecting the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to any Account and
agrees that amounts in the Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
SECTION 6.19. Control by the Control Party. The Indenture
Trustee shall comply with notices and instructions given by the Issuer only if
accompanied by the written consent of the Control Party.
SECTION 6.20. Indenture Trustee May Enforce Claims Without
Possession of Class B Notes. All rights of action and claims under this
Agreement or the Class B Notes may be prosecuted and enforced by the Indenture
Trustee without the possession of any of the Class B Notes or the production
thereof in any proceeding relating thereto, and such proceeding instituted by
the Indenture Trustee shall be brought in its own name or in its capacity as
Indenture Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursement and advances of
the Indenture Trustee, its agents and counsel, be for the ratable benefit of the
Noteholders in respect of which such judgment has been recovered.
SECTION 6.21. Suits for Enforcement. In case an Event of
Servicer Termination or other default by the Master Servicer or the Sponsor
hereunder shall occur and be continuing, the Indenture Trustee, if the Control
Party (and if not the Control Party, with the consent of the Note Insurer), may
proceed to protect and enforce its rights and the rights of the Noteholders
under this Agreement by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Agreement or in aid of the execution of any power granted in
this Agreement or for the enforcement of any other legal, equitable or other
remedy, as the Indenture Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Indenture Trustee and
the Noteholders.
SECTION 6.22. Mortgagor Claims. In connection with any offset
defenses, or affirmative claim for recovery, asserted in legal actions brought
by Mortgagors under one or more Mortgage Loans based upon provisions therein or
upon other rights or remedies arising from any requirements of law applicable to
the Mortgage Loans:
(a) The Indenture Trustee is the holder of the Mortgage Loans
only as Indenture Trustee on behalf of the holders of the Class B Notes, and not
as a principal or in any individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable for,
or obligated to pay Mortgagors, any affirmative claims asserted thereby, or
responsible to holders of the Class B
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Notes for any offset defense amounts applied against Mortgage Loan payments,
pursuant to such legal actions.
(c) The Indenture Trustee will pay, solely from available
Trust money, affirmative claims for recovery by Mortgagors only pursuant to
final judicial orders or judgments, or judicially-approved settlement
agreements, resulting from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and
judgments which require its actions or cooperation in connection with
Mortgagors' legal actions to recover affirmative claims against holders of the
Class B Notes.
(e) The Indenture Trustee will cooperate with and assist the
Master Servicer, the Sponsor, or holders of the Class B Notes in their defense
of legal actions by Mortgagors to recover affirmative claims if such cooperation
and assistance is not contrary to the interests of the Indenture Trustee as a
party to such legal actions and if the Indenture Trustee is satisfactorily
indemnified for all liability, costs and expenses arising therefrom.
(f) The Issuer hereby agrees to cause the Master Servicer to
indemnify, hold harmless and defend the Indenture Trustee from and against any
and all liability, loss, costs and expenses of the Indenture Trustee resulting
from any affirmative claims for recovery asserted or collected by Mortgagors
under the Mortgage Loans.
ARTICLE VII.
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished. The Indenture Trustee or, if the Indenture Trustee is
not the Note Registrar, the Issuer shall furnish to the Note Insurer or the
Issuer in writing upon their written request and at such other times as the Note
Insurer or the Issuer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 and the names and addresses of Holders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.1 upon receipt of a new list
so furnished.
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(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Class B Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and copies of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Issuer may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each December 31, beginning with December
31, 1999, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
stock exchange, if any, on which the Class B Notes are listed. The Issuer shall
notify the Indenture Trustee if and when the Class B Notes are listed on any
stock exchange.
ARTICLE VIII.
PAYMENTS AND STATEMENTS TO CLASS B
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NOTEHOLDERS AND TRUST B CERTIFICATEHOLDERS;
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture and the Trust B Sale and Servicing Agreement including (a) all
payments due on the Mortgage Loans and required to be paid over to the Indenture
Trustee by the Master Servicer or by any Sub-Servicer and (b) Trust B Insured
Payments. The Indenture Trustee shall apply all such money received by it as
provided in this Indenture and the Trust B Sale and Servicing Agreement. Except
as otherwise expressly provided in this Indenture or in the Trust B Sale and
Servicing Agreement, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Trust Estate,
the Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
SECTION 8.2. Release of Trust Estate.
(a) Subject to Section 8.12 and the payment of its fees and
expenses pursuant to Section 6.7, the Indenture Trustee may, and when required
by the Issuer and the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture or
the Trust B Sale and Servicing Agreement. No party relying upon an instrument
executed by the Indenture Trustee as provided in this Article VIII shall be
bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no
Class B Notes outstanding and all sums due the Indenture Trustee pursuant to
Section 6.7 and to the Note Insurer pursuant to the Insurance Agreement have
been paid, release any remaining portion of the Trust Estate that secured the
Class B Notes from the lien of this Indenture and release to the Issuer or any
other Person entitled thereto any funds then on deposit in the Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.2(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.3. Establishment of Accounts. The Issuer shall cause
to be established, and the Indenture Trustee shall maintain, at the corporate
trust office of the Indenture Trustee, a Trust B Note Account, a Trust B
Pre-Funding Account and a Trust B Capitalized Interest Account, each to be held
by the Indenture Trustee in the name of Trust B for the benefit of the Class B
Noteholders and the Note Insurer, as their interests may appear.
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SECTION 8.4. The Trust B Note Policy.
(a) On or before each Determination Date the Indenture Trustee
shall determine with respect to the immediately following Payment Date, the
Class B Deficiency Amount, if any.
(b) If the Indenture Trustee determines pursuant to paragraph
(a) above that a Class B Deficiency Amount would exist, the Indenture Trustee
shall complete a Notice in the form of Exhibit A to the Trust B Note Policy and
submit such notice to the Note Insurer no later than 12:00 p.m., New York City
time on the third Business Day preceding such Payment Date as a claim for a
payment in an amount equal to the Class B Deficiency Amount.
(c) Upon receipt of payments made pursuant to the Trust B Note
Policy from the Note Insurer on behalf of Class B Noteholders, the Indenture
Trustee shall deposit such payments in the Trust B Note Account and shall
distribute such payments, or the proceeds thereof, in accordance with Section
8.7(b) hereof to the Class B Noteholders.
(d) The Indenture Trustee shall (i) receive payments made
pursuant to the Note Policy as attorney-in-fact of each Class B Noteholder
receiving any Insured Payment from the Note Insurer and (ii) disburse such
Insured Payment to the Class B Noteholders as set forth in Section 8.7(b)
hereof. The Note Insurer shall be entitled to receive the related Trust B
Reimbursement Amount pursuant to Section 8.7(b)(viii) hereof with respect to
each Insured Payment made by the Note Insurer. The Indenture Trustee hereby
agrees on behalf of each Class B Noteholder and the Trust for the benefit of the
Note Insurer that it recognizes that to the extent the Note Insurer makes
payments pursuant to the Trust B Note Policy, either directly or indirectly (as
by paying through the Indenture Trustee), to the Class B Noteholders, the Note
Insurer will be entitled to receive such related Trust B Reimbursement Amount.
SECTION 8.5. Trust C Reserve Account.
(a) On each Payment Date the Indenture Trustee shall deposit
to the Trust C Reserve Account the amounts, if any, described in Section
8.7(b)(xii) hereof, if necessary. The amounts on deposit in the Trust C Reserve
Account on any date of determination shall be the "Available Reserve Amounts".
(b) If, on any Payment Date, and after taking into account the
application of the Trust B Total Available Funds (but not the proceeds of any
Trust B Insured Payment) to the items listed in clauses (i) through (viii) of
Section 8.7(b) hereof on such Payment Date, the full amount of the Class B
Interest Distribution Amount (excluding any Class B Available Funds Cap Current
Amount and Class B Available Funds Cap Carry-Forward Amounts, and any related
Relief Act Shortfalls) has not been paid, and/or a Trust B Overcollateralization
Deficit would result, the Indenture Trustee with respect to Trust B shall
provide notice to the Indenture Trustee with respect to Trust C and such
Indenture Trustee shall withdraw from the Trust C Reserve Account after funding
any deficiency in (A) the Class C Interest Distribution Amount and (B) any Trust
C Overcollateralization Deficit, and deposit in the Trust B Note Account an
amount with respect to the Class B Notes equal to the lesser of (x) the product
of (I) a fraction, the numerator of which is the Trust B Full Deficiency Amount
and the denominator of which is the
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sum of the Trust B Full Deficiency Amount and the Trust A Full Deficiency Amount
and (II) the Available Reserve Amounts and (y) the amount of such shortfall in
the amount of the Class B Interest Distribution Amount (excluding any Class B
Available Funds Cap Current Amount and Class B Available Funds Cap Carry-Forward
Amounts, and any related Relief Act Shortfalls) and the amount of such unpaid
Trust B Overcollateralization Deficit (the amount described in this clause (y)
is the "Trust B Full Deficiency Amount").
(c) If, on any Payment Date, (A) the sum of (x) the Trust C
Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Trust C
Overcollateralization Reduction Amount, plus (y) the Available Reserve Amounts,
after taking into account any withdrawals therefrom pursuant to clause (b) above
and any similar withdrawals as described in Section 8.5(b) of the Trust A
Indenture and in Section 8.5 of the Trust C Indenture, exceeds (B) the Trust C
Specified Overcollateralization Amount for such Payment Date (such excess being
a "Trust C O/C Surplus Amount"), an amount equal to the product of (I) a
fraction, the numerator of which is the Trust B Aggregate Reserve Contribution
Amount and the denominator of which is the sum of the Trust B Aggregate Reserve
Contribution Amount and the Trust A Aggregate Reserve Contribution Amount and
(II) the lesser of (x) such Trust C O/C Surplus Amount and (y) the Available
Reserve Amounts shall be released from the Trust C Reserve Account and deposited
in the Trust B Note Account for distribution to the Trust B Certificateholders.
SECTION 8.6. Pre-Funding Account and Capitalized Interest
Account.
(a) On the Closing Date, the Indenture Trustee will deposit
from the proceeds of the sale of the Class B Notes, on behalf of the Class B
Noteholders and the Note Insurer, in the Trust B Pre-Funding Account, the Trust
B Original Pre-Funded Amount and in the Trust B Capitalized Interest Account,
the Trust B Capitalized Interest Account Deposit.
(b) On each Subsequent Transfer Date, the Sponsor shall
instruct the Indenture Trustee to withdraw from the Trust B Pre-Funding Account
an amount equal to 100% of the aggregate Loan Balances of the Subsequent
Mortgage Loans transferred to the Trust on such Subsequent Transfer Date and pay
such amount to or upon the order of the Sponsor upon satisfaction of the
conditions set forth in Section 2.4 of the Trust B Sale and Servicing Agreement
with respect to such transfer.
(c) On the Payment Dates occurring in December 1998, January
1999 and February, 1999, the Indenture Trustee shall transfer from the Trust B
Pre-Funding Account to the Trust B Note Account, the Trust B Pre-Funding
Earnings required to pay interest on the portion of the Class B Notes
collateralized by amounts on deposit in the Trust B Pre-Funding Account, if any,
applicable to each such Payment Date. On the Payment Dates occurring in December
1998, January 1999 and February, 1999, the Indenture Trustee shall distribute
directly to the holders of the Trust B Certificates the Trust B Pre-Funding
Earnings not required to pay interest on the portion of the Class B Notes
collateralized by amounts on deposit in the Trust B Pre-Funding Account, if any,
applicable to such Payment Date.
(d) On each Subsequent Transfer Date the Sponsor may instruct
the Indenture Trustee in writing to withdraw from the Trust B Capitalized
Interest Account and pay on such
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Subsequent Transfer Date to the holders of the Trust B Certificates the Trust B
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Sponsor pursuant to Section 2.4(g) of the Trust B Sale and Servicing
Agreement.
(e) On each Payment Date occurring in December 1998, January
1999 and February, 1999, the Indenture Trustee shall transfer from the Trust B
Capitalized Interest Account to the Trust B Note Account the Trust B Capitalized
Interest Requirement, if any, for such Payment Dates.
(f) On the Payment Date occurring on February 1999, any
amounts remaining in the Trust B Capitalized Interest Account after taking into
account the transfers on such Payment Date described in clause (d) above shall
be paid to the holders of the Trust B Certificates, and the Trust B Capitalized
Interest Account shall be closed.
(g) If (x) the Trust B Pre-Funded Amount has not been reduced
to zero by the Payment Date occurring in February 1999 or (y) the Trust B
Pre-Funded Amount has been reduced to $100,000 or less on any Remittance Date
occurring during the Trust B Pre-Funding Period, in either case after giving
effect to any reductions in the Trust B Pre-Funded Amount on or before the
related such Remittance Date, the Sponsor shall instruct the Indenture Trustee
to withdraw from the Trust B Pre-Funding Account on such Remittance Date and
deposit to the Trust B Note Account the difference, if any, between (A) the
Trust B Original Pre-Funded Amount and (B) all amounts theretofore withdrawn
from the Trust B Pre-Funding Account with respect to Subsequent Mortgage Loans.
SECTION 8.7. Flow of Funds.
(a) The Indenture Trustee shall deposit to the Trust B Note
Account, without duplication, upon receipt, (i) any payments made pursuant to
the Note Policy relating to Trust B, (ii) the proceeds of any liquidation of the
assets of Trust B, (iii) the Trust B Monthly Remittance Amount remitted by the
Master Servicer or any Sub-Servicer, together with any Substitution Amounts, and
any Loan Purchase Price amounts received by the Indenture Trustee, (iv) on the
Payment Dates occurring in December 1998, January 1999 and February 1999, the
Trust B Pre-Funding Earnings transferred by the Indenture Trustee pursuant to
Section 8.6(c) hereof, (v) the Trust B Capitalized Interest Requirement to be
transferred on such Payment Dates from the Trust B Capitalized Interest Account,
pursuant to Section 8.6(e) hereof and (vi) the portion of the amount, if any, to
be transferred on such Payment Date from the Trust B Pre-Funding Account,
pursuant to Section 8.(g) hereof (collectively, the "Trust B Total Available
Funds").
(b) Subject to any superseding provisions of clause (d) below,
on each Payment Date, the Indenture Trustee shall make the following
allocations, disbursements and transfers from amounts then on deposit in the
Trust B Note Account in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having occurred only
after all preceding allocations, transfers and disbursements have occurred:
(i) first, to the Indenture Trustee, the Indenture Trustee's
Fee then due and to the Owner Trustee, the Owner Trustee's Fee then
due;
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(ii) second, to the Note Insurer, the Trust B Premium Amount
then due to the Note Insurer for such Payment Date.
(iii) third, to the Master Servicer, an amount equal to any
previously unreimbursed Master Servicing Fees then due to it on account
of the Unaffiliated Originator Loans not theretofore received by the
Master Servicer pursuant to Section 4.8(c)(i) of the Trust B Sale and
Servicing Agreement, as reported by the Master Servicer to the
Indenture Trustee.
(iv) fourth, to the Class B Noteholders, the Class B Interest
Distribution Amount for such Payment Date;
(v) fifth, to the Class B Noteholders, as a distribution of
principal, the Trust B Scheduled Principal Distribution Amount for such
Payment Date;
(vi) sixth, to the Class B Noteholders, as a distribution of
principal, the related Trust B Overcollateralization Deficit for such
Payment Date;
(vii) seventh, if such Payment Date is the last Payment Date
in the Trust B Pre-Funding Period, to the Class B Noteholders, as a
distribution of principal, any amount remaining in the Trust B
Pre-Funding Account (after taking into account all transfers of
Subsequent Mortgage Loans on or prior to such Payment Date);
(viii) eighth, to the Note Insurer, the Trust B Reimbursement
Amount, if any, then due to it;
(ix) ninth, to the Class B Noteholders, as a distribution of
principal, up to an amount equal to the Trust B Accelerated Principal
Payment;
(x) tenth, for deposit to the Trust C Note Account, for
allocation to the Class C Noteholders, an amount equal to the
deficiency in the Class C Interest Distribution Amount and any Trust C
Overcollateralization Deficit for such Payment Date, after taking into
account the allocation of 100% of Trust C Total Available Funds, if
any, on such Payment Date; provided, that if Trust A Available
Crossover Amounts exist on such Payment Date, the Indenture Trustee
shall deposit into the Trust C Note Account pursuant to this clause (x)
an amount equal to the lesser of (I) the Trust B Available Crossover
Amount for such Payment Date and (II) the product of (a) the Trust C
Full Deficiency Amount on such Payment Date and (b) a fraction, the
numerator of which is the Trust B Available Crossover Amounts on such
Payment Date and the denominator of which is the sum of the Trust B
Available Crossover Amount and the Trust A Available Crossover Amount
on such Payment Date;
(xi) eleventh, for deposit to the Trust A Note Account, for
allocation to the Class A Noteholders an amount equal to the deficiency
in the Class A Interest Distribution Amount and any Trust A
Overcollateralization Deficit for such Payment Date, after taking into
account the allocation of 100% of Trust A Total Available Funds on such
Payment Date; provided, that if unused Trust C Available Crossover
Amounts exist on such Payment Date, the Indenture Trustee shall deposit
into the Trust A Note
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Account pursuant to this clause (xi) an amount equal to the lesser of
(I) the remaining Trust B Available Crossover Amount for such Payment
Date and (II) the product of (a) the Trust A Full Deficiency Amount on
such Payment Date and (b) a fraction, the numerator of which is such
remaining Trust B Available Crossover Amount on such Payment Date and
the denominator of which is the sum of the unused Trust B Available
Crossover Amount and the unused Trust C Available Crossover Amount on
such Payment Date;
(xii) twelfth, for deposit to the Trust C Reserve Account, an
amount equal to the excess of the Trust C Overcollateralization Amount
over the Trust C Specified Overcollateralization Amount, after taking
into account the allocation of 100% of Trust C Total Available Funds on
such Payment Date; provided, that if unused Trust A Available Crossover
Amounts exist on such Payment Date, the Indenture Trustee shall deposit
into the Trust C Reserve Account pursuant to this clause (xii) an
amount equal to the lesser of (I) the then-remaining Trust B Available
Crossover Amount for such Payment Date and (II) the product of (a) the
Trust C Reserve Account Deposit on such Payment Date and (b) a
fraction, the numerator of which is such Trust B Available Crossover
Amounts on such Payment Date and the denominator of which is the sum of
such then-remaining Trust B Available Crossover Amount and the
remaining Trust A Available Crossover Amount on such Payment Date;
(xiii) thirteenth, to the Class B Noteholders, to fund the
amount of any Class B Available Funds Cap Current Amount for such
Payment Date;
(xiv) fourteenth, to the Class B Noteholders, to fund the
amount of any Class B Available Funds Cap Carry-Forward Amount for such
Payment Date;
(xv) fifteenth, for deposit to the Trust A Note Account and
the Trust C Note Account, to fund pro rata (calculated based on the
amount of each such Trust's Available Funds Cap Current Amount on such
Payment Date), (I) the Trust A Available Funds Cap Current Amount after
taking into account the allocation of 100% of the Trust A Total
Available Funds on such Payment Date (such amount, the "Trust B
Available Funds Cap Current Deficiency Amount") and (II) the Trust C
Available Funds Cap Current Amount, after taking into account the
allocation of 100% of the Trust C Total Available Funds on such Payment
Date (such amount, the "Trust C Available Funds Cap Current Deficiency
Amount") provided, that with respect to the foregoing clause (I), if
unused Trust C Available Crossover Amounts exist on such Payment Date,
the Indenture Trustee shall deposit into the Trust A Note Account
pursuant to this clause (xv) an amount equal to the lesser of (a) the
remaining Trust B Available Crossover Amount for such Payment Date and
(b) the product of (x) the Trust A Available Funds Cap Current
Deficiency Amount and (y) a fraction, the numerator of which is such
remaining Trust B Available Crossover Amount on such Payment Date and
the denominator of which is the sum of such remaining Trust B Available
Crossover Amount and the unused Trust C Available Crossover Amount on
such Payment Date and with respect to the foregoing clause (II), if
unused Trust A Available Crossover Amounts exist on such Payment Date,
the Indenture Trustee shall deposit into the Trust C Note Account
pursuant to this clause (xv) an amount equal to the lesser of (a) the
remaining Trust B Available Crossover Amount for
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such Payment Date and (b) the product of (x) the Trust C Available
Funds Cap Current Deficiency Amount and (y) a fraction, the numerator
of which is such remaining Trust B Available Crossover Amount on such
Payment Date and the denominator of which is the sum of such remaining
Trust B Available Crossover Amount and the unused Trust A Available
Crossover Amount on such Payment Date;
(xvi) sixteenth, for deposit to the Trust A Note Account and
the Trust C Note Account, to fund pro rata (calculated based on the
amount of each Trust's Available Funds Cap Carry-Forward Amount on such
Payment Date), (I) the Trust A Available Funds Cap Carry-Forward Amount
after taking into account the allocation of 100% of the Trust A Total
Available Funds on such Payment Date (such amount, the "Trust A
Available Funds Cap Carry-Forward Deficiency Amount") and (II) the
Trust C Available Funds Cap Carry-Forward Amount, after taking into
account the allocation of 100% of the Trust C Total Available Funds on
such Payment Date (such amount, the "Trust C Available Funds Cap
Carry-Forward Deficiency Amount") provided, that with respect to the
foregoing clause (I), if unused Trust C Available Crossover Amounts
exist on such Payment Date, the Indenture Trustee shall deposit into
the Trust B Note Account pursuant to this clause (xvi) an amount equal
to the lesser of (a) the remaining Trust B Available Crossover Amount
for such Payment Date and (b) the product of (x) the Trust A Available
Funds Cap Carry-Forward Deficiency Amount and (y) a fraction, the
numerator of which is such remaining Trust B Available Crossover Amount
on such Payment Date and the denominator of which is the sum of the
unused Trust B Available Crossover Amount and the unused Trust C
Available Crossover Amount on such Payment Date and with respect to the
foregoing clause (II), if unused Trust A Available Crossover Amounts
exist on such Payment Date, the Indenture Trustee shall deposit into
the Trust C Note Account pursuant to this clause (xvi) an amount equal
to the lesser of (a) the then-remaining Trust B Available Crossover
Amount for such Payment Date and (b) the product of (x) the Trust C
Available Funds Cap Carry-Forward Deficiency Amount and (y) a fraction,
the numerator of which is such remaining Trust B Available Crossover
Amount on such Payment Date and the denominator of which is the sum of
such remaining Trust B Available Crossover Amount and the unused Trust
A Available Crossover Amount on such Payment Date;
(xvii) seventeenth, to the Master Servicer, to the extent of
any unreimbursed Delinquency Advances, unreimbursed Servicing Advances,
including Nonrecoverable Delinquency Advances and Nonrecoverable
Servicing Advances and accrued and unpaid Master Servicing Fees as of
such Payment Date;
(xviii) eighteenth, to the Indenture Trustee and the Owner
Trustee, to the extent of any unreimbursed expenses owed to each of
them with respect to Trust B;
(xix) nineteenth, to the Trust B Certificateholders, the sum
of (A) any Trust B Overcollateralization Reduction Amount and (B) any
funds released from the amounts on deposit in the Trust C Reserve
Account pursuant to Section 8.5(c) hereof; and
(xx) twentieth, to the Trust B Certificateholders, any amount
remaining on deposit in the Trust B Note Account.
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(c) Notwithstanding the foregoing, Trust A Available Crossover
Amounts will be available to fund deficiencies in the items specified in clauses
(iv) and (vi) of this Section 8.7(b) only after it has funded the items in
clauses (iv) and (vi) of Section 8.7(b) of the Trust C Indenture first and will
only be available to fund deficiencies in the items specified in clauses (xiii)
and (xiv) of this Section 8.7(b) only after it has made the required deposit, if
any, to the Trust C Reserve Account The Trust C Available Crossover Amounts,
however, will be available to fund the items indicated in clauses (iv), (vi),
(xiii) and (xv) of this Section 8.7(b) on a pro-rata basis with the similar
items set forth in Section 8.7(b) of the Trust A Indenture.
(d) On any Payment Date during the continuance of any Note
Insurer Default described in clause (b) or (c) of the definition thereof:
No Trust B Premium Amount shall be paid to the Note Insurer
(unless the Note Insurer or its custodian, Indenture Trustee, agent, receiver,
custodian, or similar official continues to make payments required under the
Trust B Note Policy) and any amounts otherwise payable to the Note Insurer as
Trust B Premium Amounts shall be retained in the Trust B Note Account as Trust B
Total Available Funds. On any Payment Date wherein such Note Insurer Default has
been cured, the Trust B Premium Amounts shall be paid to the Note Insurer.
SECTION 8.8. Investment of Accounts.
(a) So long as no event described in Section 5.1(a) or (b) of
the Trust B Sale and Servicing Agreement shall have occurred and be continuing,
and consistent with any requirements of the Code, all or a portion of the
Accounts held by the Indenture Trustee shall be invested and reinvested by the
Indenture Trustee in the name of the Indenture Trustee for the benefit of the
Class B Noteholders and the Note Insurer, 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 Section 5.1(a) or (b)
of the Trust B Sale and Servicing Agreement and following any removal of the
Master Servicer, the Note Insurer shall direct such investments. All investment
income shall be held in the Accounts for the benefit of the Master Servicer. 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 Indenture Trustee and sufficient uninvested funds are not
available to make such disbursement, the Indenture 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) The Indenture Trustee shall not in any way be held liable
by reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any loss on any Eligible Investment included therein.
(d) The Indenture Trustee shall hold funds in the Accounts
held by the Indenture Trustee uninvested upon the occurrence of either of the
following events:
(i) the Master Servicer or the Note Insurer, as the case may
be, shall have failed to give investment directions to the Indenture
Trustee; or
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(ii) the Master Servicer or the Note Insurer, as the case may
be, shall have failed to give investment directions to the Indenture
Trustee by 11:15 a.m. New York time (or such other time as may be
agreed by the Master Servicer or the Note Insurer, as the case may be,
and the Indenture Trustee) on any Business Day (any such investment by
the Indenture Trustee pursuant to this clause (ii) to mature on the
next Business Day after the date of such investment).
SECTION 8.9. 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 if applicable.
(c) Freddie Mac senior debt obligations and rated Aa2 or
higher by Moody's and AA or better by Standard & Poor's, if applicable .
(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 if applicable.
(e) FNMA senior debt obligations and rated Aa2 or higher by
Moody's and AA or better by Standard & Poor's, if applicable.
(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 Note Insurer
provided:
1. The agreement is with a bank or insurance company which has
an unsecured, uninsured and unguaranteed obligation (or claims-paying
ability) rated Aa2 or better by Moody's and AA or better by 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
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5. The Indenture Trustee and the Note 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 Certificate Insurer
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 8.10. Reports by Indenture Trustee.
(a) On each Payment Date, to the extent that the related
report described in Section 4.8(d)(ii) of the Trust B Sale and Servicing
Agreement has been received by the Indenture Trustee, the Indenture Trustee
shall provide to each Class B Noteholder, to the Master Servicer, to the Note
Insurer, to the Underwriter, to the Sponsor, to Standard & Poor's and to Moody's
a written report in substantially the form set forth as Exhibit B hereto, as
such form may be revised by the Indenture 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 B hereto and the following information:
(i) the Trust B Scheduled Principal Distribution Amount;
(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;
(iii) the amount of such distributions allocable to interest;
(iv) the amount of any Class B Interest Carry-Forward Amount;
(v) the amount of any Trust B Insured Payment included in the
amounts distributed to the Class B Notes on such Payment Date;
(vi) information furnished by the Sponsor pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Class B Noteholders in computing their market discount;
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(vii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(viii) for Payment Dates during the Trust B Pre-Funding
Period, the remaining Trust B Pre-Funded Amount;
(ix) for the final Subsequent Transfer Date, the amount of any
remaining Trust B Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Mortgage Loans and that will be distributed to
the Class B Noteholders as principal, if any, on the immediately
following Payment Date;
(x) the amounts, if any, of any Realized Losses for the
related Remittance Period; and
(xi) 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 Aggregate Loan Balance; and
(xii) the Class B Note Principal Balance and the Pool Factor,
each after giving effect to such distribution of principal on such
Payment Date;
(xiii) the aggregate Loan Balances of all Mortgage Loans after
giving effect to any payment of principal on such Payment Date both in
the aggregate and in each Trust.
(xiv) the weighted average Coupon Rate of the Mortgage Loans
with respect to Trust B;
(xv) the amount of any Trust B Available Funds Cap Current
Amount and Trust B Available Funds Cap Carry-Forward Amount;
(xvi) the Trust B Overcollateralization Deficit; and
(xvii) the amount of the Accelerated Principal Payment, if
any, for the related Payment Date.
(xviii) the amount by aggregate principal balance of Mortgage
Loans repurchased for the previous period and the cumulative number of
Mortgage Loans repurchased to date pursuant to Section 3.3(b) of the
Trust A Sale and Servicing Agreement.
Items (i) through (iii) above shall, with respect to each
Class B Note, be presented on the basis of a Note having a $1,000 denomination.
In addition, by January 31 of each calendar year following any year during which
the Class B Notes are outstanding, the Indenture Trustee shall furnish a report
to each holder 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 Class B Notes for such calendar year.
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(b) In addition, on each Payment Date the Indenture Trustee
will distribute to each Class B Noteholder, to the Note Insurer, to the
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 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 Indenture Trustee for such purpose on or
prior to the related Remittance Date:
(i) the total number of Mortgage Loans and the Loan Balances
thereof in Trust B, together with the number, aggregate Loan Balances
of such Mortgage Loans and the percentage (based on the aggregate Loan
Balance of the Mortgage Loans) of the aggregate Loan Balance of such
Mortgage Loans to the aggregate Loan Balance of all Mortgage Loans (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
and percentage (based on the aggregate Loan Balance of the Mortgage
Loans) of the aggregate Loan Balance of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans 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 and percentage (based on the aggregate Loan Balance of the
Mortgage Loans) of the aggregate Loan Balance of such Mortgage Loans to
the aggregate Loan Balance of all Mortgage Loans relating to Mortgagors
in bankruptcy proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause
(i));
(iv) the number, aggregate Loan Balances of all Mortgage Loans
and percentage (based on the aggregate Loan Balance of the Mortgage
Loans) of the aggregate Loan Balance of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans relating to REO Properties
(and whether any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (i)); and
(v) the loan number of the related Mortgage Loan and the book
value of any REO Property.
(c) The foregoing reports shall be sent be to a Class B
Noteholder only insofar as such holder possesses a Class B Note.
(d) The Sponsor and the Master Servicer, on behalf of Class B
Noteholders and the Trust (the "Trust Parties") hereby authorize the Indenture
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 Note
Insurer, contained in reports provided to the Note Insurer or the Indenture
Trustee by the Master Servicer hereunder and, if so directed by an Authorized
Officer of the Sponsor in writing to the Indenture Trustee, the monthly report
in the Form of Exhibit F to the Class B Noteholders prepared by the Indenture
Trustee (the "Information") on The
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Bloomberg, an on-line computer based information network maintained by Bloomberg
L.P. ("Bloomberg") or on any other on-line computer based 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 Indenture 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 Indenture Trustee or its affiliates or
any of the Indenture 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 Indenture Trustee, including, but not
limited to, claims based on allegations of inaccurate or incomplete information
by the Indenture Trustee to Bloomberg or to any Information Network or otherwise
(other than in connection with the Indenture 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 Indenture Trustee makes no representations or
warranties, expressed or implied, of any kind whatsoever with respect to the
accuracy, adequacy, timeliness, completeness, merchantability or fitness for any
particular purpose of any Information in any form or manner. The authorizations,
covenants and obligations of the Trust Parties under this section shall be
irrevocable and shall survive the termination of this Agreement.
SECTION 8.11. Additional Reports by Indenture Trustee.
(a) The Indenture Trustee shall report to the Sponsor, the
Master Servicer and the Note Insurer with respect to the amount then held in
each Account (including investment earnings accrued or scheduled to accrue) held
by the Indenture Trustee and the identity of the investments included therein,
as the Sponsor, the Master Servicer or the Note Insurer may from time to time
request. Without limiting the generality of the foregoing, the Indenture Trustee
shall, at the request of the Sponsor, the Master Servicer or the Note Insurer,
transmit promptly to the Sponsor, the Master Servicer and the Note Insurer
copies of all accounting of aggregate receipts in respect of the Mortgage Loans
furnished to it by the Master Servicer pursuant to Section 4.8(d)(ii) of the
Trust B Sale and Servicing Agreement and shall notify the Sponsor, the Master
Servicer and the Note Insurer if any such receipts have not been received by the
Indenture Trustee.
(b) From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer 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
Section 3.3(a) of the Trust B Sale and Servicing Agreement. On the date that is
eighteen months after the Closing Date, the Indenture Trustee shall provide the
Note Insurer with a written report of all of such inaccuracies to such date of
which it has actual knowledge, without independent investigation, and of the
action taken by the Sponsor under Section 3.4(b) of the Trust B Sale and
Servicing Agreement with respect thereto.
SECTION 8.12. Opinion of Counsel. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.2(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also
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require as a condition to such action, an Opinion of Counsel, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Class B Notes or the rights of the Class B Noteholders or the
Note Insurer in contravention of the provisions of this Indenture; provided,
however, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of the Holders of any Class B Notes
but with the consent of the Note Insurer, as evidenced to the Indenture Trustee,
the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any
time and from time to time, may enter into one or more indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Class B Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Class B Notes, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Class B Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture Trustee with respect to
the Class B Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the
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administration of the trusts hereunder by more than one Indenture
Trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Holders of the
Class B Notes but with the prior written consent of the Note Insurer and with
prior notice to the Rating Agencies by the Issuer, as evidenced to the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Class B Notes under this Indenture; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of
Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies, with the consent of
the Note Insurer and with the consent of the Holders of not less than a majority
of the Outstanding Class B Notes, by Act of such Holders delivered to the Issuer
and the Indenture Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Class B Notes under this Indenture;
provided, however, that, subject to the express rights of the Note Insurer under
the Operative Documents, no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Class B Notes, or change any
place of payment where, or the coin or currency in which, any Note or
the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Class B Notes on or after the respective due
dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(iii) reduce the percentage of the Outstanding Class B Notes,
the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
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Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Class B Notes
required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 12.1;
(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Operative Documents cannot be
modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation); or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein or in any of the Operative Documents, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may determine whether or not any Class B
Notes would be adversely affected by any supplemental indenture upon receipt of
an Opinion of Counsel to that effect and any such determination shall be
conclusive upon the Holders of all Class B Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Holders of the Class B Notes to which such amendment
or supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel (and, if requested, an Officer's
Certificate) stating that the
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execution of such supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Class B Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Indenture Trustee, the Issuer and the Holders of the
Class B Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6. Reference in Class B Notes to Supplemental
Indentures. Class B Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer or the Indenture Trustee shall so determine, new Class B Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Class B Notes.
SECTION 9.7. Amendment.
(a) The Indenture Trustee, the Sponsor, the Issuer and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Class B Noteholders, amend this Agreement, and the
Indenture Trustee shall consent to such amendment, for the purpose of 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; provided, however, that any
such action shall not, as evidenced by an opinion of counsel delivered to the
Indenture Trustee, materially and adversely affect the interests of any Owner
(without its written consent).
(b) The Indenture Trustee, the Sponsor, the Issuer and the
Master Servicer may, at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Class B Noteholders, amend this Agreement, and the
Indenture Trustee shall consent to such amendment, for the purpose of changing
the definitions of "Trust B Specified Overcollateralization Amount"; provided,
however, that no such change shall affect the weighted average life of the Class
B Notes
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(assuming an appropriate prepayment speed as determined by the Underwriter with
respect to the Class B Notes by more than five percent, as determined by the
Underwriter).
(c) This Agreement may also be amended by the Indenture
Trustee, the Sponsor, the Issuer and the Master Servicer at any time and from
time to time, with the prior written approval of the Note Insurer and not less
than a majority of the Percentage Interest represented by the Class B Notes 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 Class B Noteholders 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 Class B
Noteholders without the consent of the Class B Noteholders, (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 Class B Notes, without the consent of all Class B
Noteholders then Outstanding.
ARTICLE X.
REDEMPTION OF CLASS B NOTES
SECTION 10.1. Redemption.
(a) The Class B Notes are subject to redemption following the
later of (A) the Payment Date following payment in full of all amounts owing to
the Note Insurer and (B) the earliest of (i) the transfer, under the conditions
specified in Section 10.1(b), to the Master Servicer of the Class B Noteholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust for an amount equal to the sum of (a) the
Class B Note Principal Balance and (b) the sum of accrued and unpaid Class B
Interest Distribution Amount through the day preceding the final Payment Date,
(ii) the day following the Payment Date on which the distribution made to Class
B Noteholders has reduced the Class B Note Principal Balance to zero and no
other amounts are owed to the Class B Noteholders, (iii) the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust (including,
without limitation, the disposition of the Mortgage Loan pursuant to Section
12.1 hereof) or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan and (iv) the Payment Date in
November 2028; provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the date of death of the
last surviving descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof. Upon
termination in accordance with clause (B)(i) of this Section 10.1(a), the
Indenture Trustee shall execute such documents and instruments of transfer
presented by the Sponsor, in each case without recourse, representation or
warranty, and take such other actions as the Sponsor may reasonably request to
effect the transfer of the Mortgage Loan to the Sponsor.
(b) The Class B Notes shall be subject to optional redemption
by the Trust B Certificateholder on any Payment Date after the Class B Note
Principal Balance has been reduced to an amount less than or equal to
$35,000,000 (10% of the Original Class B Note Principal Balance) and all amounts
due and owing to the Note Insurer pursuant to the Insurance Agreement have been
paid. Such transfer shall only be permitted if the Trust B Certificateholder
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delivers to the Indenture Trustee an amount equal to the sum of the outstanding
Class B Note Principal Balance and accrued and unpaid interest thereon at the
Class B Note Interest Rate through the day preceding the final Payment Date plus
all Trust B Reimbursement Amounts. In connection with such purchase, the Master
Servicer shall remit to the Indenture Trustee all amounts then on deposit in the
Trust B Principal and Interest Account for deposit to the Trust B Note Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(c) Promptly following any such purchase, the Indenture
Trustee will release the Files to the Master Servicer, or otherwise upon their
order, in a manner similar to that described in Section 4.14 of the Trust B Sale
and Servicing Agreement.
(d) Advanta National Bank may not participate in any purchase
described in this Section 10.1(b), or fund any portion of the purchase price,
unless the then-outstanding Principal Balances of the Mortgage Loans in the
Trust Estate is less than or equal to five percent of the sum of the aggregate
Loan Balances of all Mortgage Loans in the Trust Estate as of the Initial
Cut-Off Date and the Original Pre-Funded Amount.
(e) If the Class B Notes are to be redeemed pursuant to this
Section 10.1(a), the Master Servicer or the Issuer shall furnish notice of such
election to the Indenture Trustee not later than 45 days prior to the Redemption
Date and the Issuer shall deposit with the Indenture Trustee in the Trust B Note
Account the Redemption Price of the Class B Notes not less than five Business
Days prior to the Redemption Date whereupon all such Class B Notes shall be due
and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.2.
SECTION 10.2. Surrender of Class B Notes.
(a) Notice of any termination, specifying the Payment Date
(which shall be a date that would otherwise be a Payment Date) upon which the
Noteholders may surrender their Class B Notes to the Indenture Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Indenture Trustee (upon receipt of written directions from the Sponsor, if
the Sponsor is exercising its right to transfer of the Mortgage Loans, given not
later than the first day of the month preceding the month of such final
distribution) to the Note Insurer and to the Master Servicer and by letter to
Noteholders mailed not earlier than the 15th day and not later than the 25th day
of the month next preceding the month of such final distribution specifying (i)
the Payment Date upon which final distribution of the Class B Notes will be made
upon presentation and surrender of Class B Notes at the office or agency of the
Indenture Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, distributions being made only upon presentation and
surrender of the Class B Notes at the office or agency of the Indenture Trustee
therein specified.
(b) Any money held by the Indenture Trustee in trust for the
payment of any amount due with respect to any Class B Note and remaining
unclaimed by the related Class B Noteholder 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
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Note Insurer on account of any Trust B Reimbursement Amounts, and second, to the
Trust B Certificateholders; and such Class B Noteholder shall thereafter, as an
unsecured general creditor, look only to the Note Insurer or the Trust B
Certificateholders for payment thereof (but only to the extent of the amounts so
paid to the Note Insurer or the Trust B Certificateholders), and all liability
of the Indenture Trustee with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee, before being required to make any
such payment, shall at the expense of the Trust 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 Note Insurer or the Trust B
Certificateholders. The Indenture Trustee shall, at the direction of the
Sponsor, also adopt and employ, at the expense of the Trust, any other
reasonable means of notification of such payment (including, but not limited to,
mailing notice of such payment to Class B Noteholders whose right to or interest
in monies due and payable but not claimed is determinable from the Note Register
at the last address of record for each such Class B Noteholder).
SECTION 10.3. Form of Redemption Notice. Notice of redemption
supplied to the Indenture Trustee by the Master Servicer under Section 10.1(a)
shall be given by the Indenture Trustee by facsimile or by first-class mail,
postage prepaid, transmitted or mailed prior to the applicable Redemption Date
to each Holder of Class B Notes of record, as of the close of business on the
date which is not less than 5 days prior to the applicable Redemption Date, at
such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Class B Notes at the place
where such Class B Notes are to be surrendered for payment of the
Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.2); and
(iv) that interest on the Class B Notes shall cease to accrue
on the Redemption Date.
Notice of redemption of the Class B Notes shall be given by
the Indenture Trustee in the name and at the expense of the Issuer. Failure to
give notice of redemption, or any defect therein, to any Holder of any Note
shall not impair or affect the validity of the redemption of any other Note.
SECTION 10.4. Class B Notes Payable on Redemption Date. The
Class B Notes to be redeemed shall, following notice of redemption as required
by Section 10.2, on the Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price
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for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc. Upon
any application or request by the Issuer to the Indenture Trustee to take any
action under any provision of this Indenture, the Issuer shall furnish to the
Indenture Trustee and to the Note Insurer if the application or request is made
to the Indenture Trustee (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Master Servicer, the Sponsor or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Master
Servicer, the Sponsor or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to conclusively
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Article VI.
SECTION 11.3. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of the
Indenture Trustee.
(c) The ownership of Class B Notes shall be proved by the Note
Register.
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(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Class B Notes shall bind
the Holder of every Note issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Note.
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and
Rating Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed first-class and shall be deemed to have
been duly given upon receipt to the Indenture Trustee at its Corporate Trust
Office and any notice delivered by facsimile shall be addressed to the Corporate
Trust Office, telecopy number (949) 253-7577, or
(b) The Issuer by the Indenture Trustee or by any Noteholder
shall be in writing and shall be sufficient for every purpose hereunder if
personally delivered, delivered by facsimile or overnight courier or mailed
first class, and shall deemed to have been duly given upon receipt to the Issuer
addressed to: Advanta Mortgage Loan Trust 1998-4B, in care of Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, DE
19890-0001 Attention: Corporate Trust Administration, or at any other address
previously furnished in writing to the Indenture Trustee by Issuer. The Issuer
shall promptly transmit any notice received by it from the Class B Noteholders
to the Indenture Trustee.
(c) The Sponsor or the Master Servicer by the Indenture
Trustee shall be in writing and shall be sufficient for every purpose hereunder
if personally delivered, delivered by facsimile or overnight courier or mailed
first class and shall be deemed to have been duly given upon receipt to the
Sponsor or the Master Service addressed to:
Advanta Mortgage Conduit Services, Inc.
Welsh & McKean Roads
P.O. Box 918
Springhouse, PA 19477-0918
Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, CA 92127
or such other address previously furnished in writing to the Indenture Trustee
by Sponsor or Master Services.
(d) The Note Insurer by the Issuer or the Indenture Trustee
shall be sufficient for any purpose hereunder if in writing and mailed by
first-class mail, personally delivered, or telecopied to the recipient as
follows:
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To the Note Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: ___________
Structured Finance Department - MBS
Telecopy: (212) 363-1459
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, delivered by overnight courier or first class or via
facsimile to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004, Fax No:
(212) 533-0355 and (ii) in the case of Standard & Poor's, at the following
address: Standard & Poor's Ratings Group, 26 Broadway (15th Floor), New York,
New York 10004, Attention: Asset Backed Surveillance Department, Fax No: (212)
412-0224; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 11.5. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Class B Notes to
the contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Note Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Indenture Trustee (which consent shall
not be
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unreasonably withheld). The Issuer will furnish to the Indenture Trustee
a copy of each such agreement and the Indenture Trustee will cause payments to
be made and notices to be given in accordance with such agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that
impose duties on any person (including the provisions automatically deemed
included herein unless expressly excluded by this Indenture) are a part of and
govern this Indenture, whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and
agreements in this Indenture and the Class B Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors.
SECTION 11.10. Separability. In case any provision in this
Indenture or in the Class B Notes shall be invalid, illegal or unenforceable,
the validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Class B Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, the Note Insurer and the Noteholders, and any other
party secured hereunder, and any other person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Note Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such right or power hereunder), but not its duties and obligations under the
Note Policy, upon delivery of a written notice to the Indenture Trustee.
SECTION 11.12. Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (except as otherwise
provided by any other provision of the Class B Notes or this Indenture) payment
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the date on which nominally
due, and no interest shall accrue for the period from and after any such nominal
date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
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OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture 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 11.15. Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trust or any other counsel reasonably
acceptable to the Indenture Trustee and the Note Insurer) to the effect that
such recording is necessary either for the protection of the Noteholders or any
other person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Sponsor, any Originator, the Master Servicer, the Owner Trustee or the Indenture
Trustee on the Class B Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Sponsor,
any Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Sponsor, any Originator, the Master Servicer, the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of
a beneficial interest in the Issuer, the Sponsor, any Originator, the Master
Servicer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Sponsor, any Originator, the Master Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Sponsor, or the
Issuer, or join in any institution against the Sponsor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Class B Notes,
this Indenture or any of the Operative Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee or of the Note Insurer, during the Issuer's normal business hours, to
examine all the books of account, records, reports, and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be audited
by
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independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees, and
independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Indenture Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its Obligations hereunder.
SECTION 11.19. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
ARTICLE XII.
EVENTS OF DEFAULT
SECTION 12.1. Events of Default. The following shall
constitute Events of Default:
(a) failure on the part of Trust A, Trust B or Trust C (i) to
make a payment or deposit required under the related Sale and Servicing
Agreement within five Business Days after the date such payment or deposit is
required to be made or (ii) to observe or perform in any material respect any
other covenants or agreements of such Issuer set forth in the related Sale and
Servicing Agreement, which failure continues unremedied for a period of 60 days
after written notice;
(b) any representation or warranty made by the Sponsor in a
Sale and Servicing Agreement proves to have been incorrect in any material
respect when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result of which the interests of
the Holders or the Note Insurer are materially and adversely affected; provided,
however, that a Event of Default shall not be deemed to occur if the Sponsor has
purchased or made a substitution for the related Mortgage Loan or Mortgage Loans
if applicable during such period (or within an additional 60 days with the
consent of the Indenture Trustee and the Note Insurer) in accordance with the
provisions of the related Sale and Servicing Agreement;
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(c) the occurrence of certain events of bankruptcy, insolvency
or receivership relating to the Sponsor or the Master Servicer;
(d) Any of Trust A, Trust B or Trust C becomes subject to
regulation by the Securities and Exchange Commission as an investment company
within the meaning of the Investment Company Act of 1940, as amended;
(e) the occurrence of an Event of Servicer Termination;
(f) default in the payment of any interest, principal or any
installment of principal on any Class A Note, Class B Note or Class C Note when
the same becomes due and payable, and such default continues for a period of
five days; and
(g) on any Payment Date, the failure to pay interest at the
Class B Note Formula Capped Rate.
In the case of any event described in clause (a), (b), (e) or
(g), an Event of Default will be deemed to have occurred only if, after the
applicable grace period, if any, described herein or in the related Indenture or
Sale and Servicing Agreement either (i) the Indenture Trustee or Holders holding
Class B Notes evidencing at least 50% of the aggregate principal amount of the
Class B Notes with the consent of the Note Insurer (so long as there is no
continuing default by the Note Insurer in the performance of its obligations
under the Note Policy) or the Note Insurer (so long as there is no continuing
default by the Note Insurer in the performance of its obligations under the Note
Policy), by written notice to the Note Insurer, the Sponsor, the Rating
Agencies, and the Master Servicer (and to the Indenture Trustee, if given by the
Holders or the Note Insurer) declare that an Event of Default has occurred as of
the date of such notice. In the case of any event described in clause (c), (d)
or (f), an Event of Default will be deemed to have occurred without any notice
or other action on the part of the Indenture Trustee, the Class B Noteholders or
the Note Insurer immediately upon the occurrence of such event.
In addition to the consequences of an Event of Default
discussed above, unless otherwise instructed within 60 days by the Class B
Noteholders representing undivided interests aggregating more than 50% of the
aggregate principal amount of the Class B Notes, the Indenture Trustee will
sell, dispose of or otherwise liquidate the Trust Estate in a commercially
reasonable manner and on commercially reasonable terms. Any such sale, disposal
or liquidation and such sale, disposal or liquidation will be "servicing
retained" by the Master Servicer. The net proceeds of such sale will first (if a
Note Insurer Default shall not have occurred and be continuing) be paid to the
Note Insurer to the extent of unreimbursed draws under the Note Policy and other
amounts owing to the Note Insurer. The amount required to reduce the Class B
Note Principal Balance, together with all accrued and unpaid interest due
thereon, to zero will be distributed to the Holders of the Class B Notes; the
Note Policy will guarantee and pay in full any amount by which such remaining
net proceeds are insufficient to pay the Class B Note Principal Balance in full.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers, hereunto
duly authorized, all as of the day and year first above written.
ADVANTA MORTGAGE LOAN TRUST 1998-4B
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee,
By: /s/ Emmet Harmon
-----------------------------------------------
Name: Emmet Harmon
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as Indenture
Trustee,
By: /s/ Mark McNeill
-----------------------------------------------
Name: Mark McNeill
Title: Assistant Secretary
<PAGE> 95
EXHIBIT A
[Form of Class B Note]
REGISTERED $350,000,000
No. A
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. _________
Unless this Class B Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange or payment,
and any Class B Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS CLASS B NOTE IS PAYABLE IN INSTALLMENTS
AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS
B NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA MORTGAGE LOAN TRUST 1998-4B
CLASS A MORTGAGE BACKED CLASS B NOTES
Advanta Mortgage Loan Trust 1998-4B, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of ($350,000,000), such amount payable
on each Payment Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is $350,000,000 and the denominator of
which is $350,000,000 by (ii) the aggregate amount, if any, payable from the
Trust B Note Account in respect of principal on the Class B Notes pursuant to
Section 8.7 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the November 2028,
Payment Date (the "Final Scheduled Payment Date"). The Issuer will pay interest
on this Class B Note at the rate per annum provided in the Trust B Indenture on
each Payment Date until the principal of this Class B Note is paid or made
available for payment, on the principal amount of this Class B Note outstanding
on the preceding Payment Date (after giving effect to all payments of principal
made on the preceding Payment Date). Interest on this Class B Note will accrue
for each Payment Date from the most recent Payment Date on which interest has
been paid to but excluding such Payment Date or, if no interest has yet been
paid, from November 24, 1998. Interest will be computed on the basis of the
actual
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number of days elapsed in a 360-day year. Such principal of and interest
on this Class B Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Class B Note are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Class B Note shall be applied first to
interest due and payable on this Class B Note as provided above and then to the
unpaid principal of this Class B Note.
The Class B Notes are entitled to the benefits of a financial
guaranty insurance policy (the "Note Policy") issued by Ambac Assurance
Corporation (the "Note Insurer"), pursuant to which the Note Insurer has
unconditionally guaranteed payments of the Trust B Insured Payments on each
Payment Date, all as more fully set forth in the Trust B Indenture.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Class B Notes as
indebtedness of the Issuer and hereby instructs the Indenture Trustee to treat
the Class B Notes as indebtedness of the Issuer for federal and state tax
reporting purposes.
Each Class B Noteholder or Note Owner, by acceptance of this
Class B Note or, in the case of a Note Owner, a beneficial interest in a Class B
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Class B Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Sponsor, any Originator, the Master Servicer, the Indenture Trustee, or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any owner, beneficiary, agent, officer, director
or employee of the Sponsor, any Originator, the Master Servicer, the Indenture
Trustee, or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Sponsor, any Originator, the Master
Servicer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Sponsor, any Originator, the Master Servicer, the Indenture
Trustee, or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Reference is made to the further provisions of this Class B
Note set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class B Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Class B Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
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Each Note Owner, by acceptance of a beneficial interest in a
Class B Note, shall be deemed to represent either (i) that it is not (A) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to the
provisions of Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1)
of the Internal Revenue Code of 1986, as amended (the "Code")) that is subject
to Section 4975 of the Code (each of the foregoing, a "Benefit Plan"), and is
not acting on behalf of or investing the assets of a Benefit Plan, or (ii) that
its acquisition and continued holding of a beneficial interest in the Class B
Note will be covered by a U.S. Department of Labor Prohibited Transaction Class
Exemption.
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<PAGE> 98
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: November 24, 1998 ADVANTA MORTGAGE LOAN TRUST 1998-4B
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:
---------------------------------------
Name:
Title:
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<PAGE> 99
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes designated above and referred
to in the within-mentioned Indenture.
Date: November 24, 1998 BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely
as Indenture Trustee
By:
--------------------------------------
Authorized Signatory
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<PAGE> 100
REVERSE OF NOTE
This Class B Note is one of a duly authorized issue of Class B
Notes of the Issuer, designated as its Class A Mortgage Backed Notes (herein
called the "Class B Notes"), all issued under an Indenture dated as of November
1, 1998 (such indenture, as supplemented or amended, is herein called the "Trust
B Indenture"), between the Issuer and Bankers Trust Company of California, N.A.,
as Indenture Trustee (the "Indenture Trustee", which term includes any successor
Indenture Trustee under the Trust B Indenture), to which Trust B Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Class B Notes. The Class B Notes are subject to
all terms of the Trust B Indenture. All terms used in this Class B Note that are
defined in the Trust B Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Trust B Indenture, as so
supplemented or amended.
The Class B Notes are and will be secured by the collateral
pledged as security therefor as provided in the Trust B Indenture.
Principal of the Class B Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
twenty-fifth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing December 28, 1998. The term "Payment
Date," shall be deemed to include the Trust B Final Scheduled Payment Date.
As described above, the entire unpaid principal amount of this
Class B Note shall be due and payable on the earlier of the Final Scheduled
Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Class B Notes shall be due and payable if the Sponsor or Master Servicer
voluntarily files a bankruptcy petition or goes into liquidation or any person
is appointed a receiver or bankruptcy trustee of the Sponsor or Master Servicer
and the Indenture Trustee or the Holders of the Class B Notes representing at
least 50% of the Outstanding Amount of the Class B Notes shall have the right to
direct the Indenture Trustee to sell or liquidate the Trust Estate as provided
in Section 5.1 of the Trust B Indenture. All principal payments on the Class B
Notes shall be made pro rata to the Class B Noteholders entitled thereto.
Payments of interest on this Class B Note due and payable on
each Payment Date, together with the installment of principal, if any, to the
extent not in full payment of this Class B Note, shall be made by check mailed
to the Person whose name appears as the Holder of this Class B Note (or one or
more Predecessor Class B Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Class B Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Class B Note be submitted for notation of payment. Any reduction in
the principal amount of this Class B Note (or any one or more Predecessor Class
B Notes) effected by any payments made on any Payment Date shall be binding upon
all future Holders of
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<PAGE> 101
this Class B Note and of any Class B Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Class B
Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Holder hereof as of the Record
Date preceding such Payment Date by notice mailed prior to such Payment Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Class B Note at the Indenture Trustee's principal Corporate
Trust Office or at the office of the Indenture Trustee's agent appointed for
such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of
interest at the Class B Note Rate to the extent lawful.
As provided in the Trust B Indenture, the Class B Notes may be
redeemed pursuant to Section 10.1(b) of the Indenture at the option of the Trust
B Certificateholders, on any Payment Date on or after the date on which the
Class B Note Principal Balance is less than or equal to 10% of the Original
Class B Note Principal Balance.
As provided in the Trust B Indenture and subject to certain
limitations set forth therein, the transfer of this Class B Note may be
registered on the Note Register upon surrender of this Class B Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, (i) duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder hereof or his attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Indenture
Trustee may require, and thereupon one or more new Class B Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class B Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by acceptance of a Class B Note
or, in the case of a Note Owner, a beneficial interest in a Class B Note
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee or the Indenture
Trustee on the Class B Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any owner, beneficiary, agent, officer, director or employee of the
Sponsor, any Originator, the Master Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Sponsor, any Originator, the Master Servicer, the Owner Trustee or
the Indenture Trustee or of any successor or assign of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, except as any such Person may have
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<PAGE> 102
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Class B Noteholder or Note Owner, by acceptance of a
Class B Note or, in the case of a Note Owner, a beneficial interest in a Class B
Note covenants and agrees that by accepting the benefits of the Indenture that
such Class B Noteholder will not at any time institute against the Sponsor, or
the Issuer or join in any institution against the Sponsor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings, under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Class B Notes,
the Trust B Indenture or the Operative Documents.
Prior to the due presentment for registration of transfer of
this Class B Note, the Issuer, the Indenture Trustee and the Note Insurer and
any agent of the Issuer, the Indenture Trustee or the Note Insurer may treat the
Person in whose name this Class B Note (as of the day of determination or as of
such other date as may be specified in the Trust B Indenture) is registered as
the owner hereof for all purposes, whether or not this Note be overdue, and
neither the Issuer, the Indenture Trustee nor any such agent shall be affected
by notice to the contrary.
The Trust B Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Class B Notes
under the Indenture at any time by the Issuer with the consent of the Note
Insurer and of the Holders of Class B Notes representing a majority of the
Outstanding Amount of all Class B Notes at the time Outstanding. Any such
consent or waiver by the Holder of this Class B Note (or any one of more
Predecessor Class B Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Class B Note and of any Class B Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Class B
Note. The Trust B Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
Holders of the Class B Notes issued thereunder but with the consent of the Note
Insurer.
The term "Issuer" as used in this Class B Note includes any
successor to the Issuer under the Trust B Indenture.
The Class B Notes are issuable only in registered form in
denominations as provided in the Trust B Indenture, subject to certain
limitations therein set forth.
This Class B Note and the Trust B Indenture shall be construed
in accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this
Class B Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and
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<PAGE> 103
unconditional, to pay the principal of and interest on this Class B Note at the
times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Trust B Indenture or the Operative Documents, neither
Wilmington Trust Company in its individual capacity, any owner of a beneficial
interest in the Issuer, nor any of their respective beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on, or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in this Class B Note or
the Trust B Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Issuer for the sole
purposes of binding the interests of the Issuer in the assets of the Issuer. The
Holder of this Class B Note by the acceptance hereof agrees that except as
expressly provided in the Trust B Indenture or the Operative Documents, in the
case of an Event of Default under the Trust B Indenture, the Holder shall have
no claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Trust B
Indenture or in this Class B Note.
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<PAGE> 104
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
---------------------- --------------------------------(1)
Signature Guaranteed:
- ---------------------------- --------------------------------
(1) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
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<PAGE> 1
EXHIBIT 4.1.3
ADVANTA MORTGAGE LOAN TRUST 1998-4C
Mortgage Backed Notes, Series 1998-4, Class C
INDENTURE
Dated as of November 1, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE..........................2
SECTION 1.1. Definitions...............................................2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act....24
SECTION 1.3. Rules of Construction....................................24
SECTION 1.4. Action by or Consent of Noteholders......................24
SECTION 1.5. Conflict with TIA........................................25
ARTICLE II. THE CLASS C NOTES.................................................25
SECTION 2.1. Form.....................................................25
SECTION 2.2. Execution, Authentication and Delivery...................25
SECTION 2.3. Registration; Registration of Transfer and Exchange......26
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Class C Notes.......27
SECTION 2.5. Persons Deemed Owners....................................28
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest....28
SECTION 2.7. Cancellation.............................................29
SECTION 2.8. Release of Collateral....................................29
SECTION 2.9. Book-Entry Class C Notes.................................30
SECTION 2.10. Notices to Clearing Agency...............................30
SECTION 2.11. Definitive Notes.........................................31
ARTICLE III. COVENANTS........................................................31
SECTION 3.1. Payment of Principal and Interest........................31
SECTION 3.2. Maintenance of Office or Agency..........................31
SECTION 3.3. Money for Payments to be Held in Trust...................32
SECTION 3.4. Existence................................................33
SECTION 3.5. Protection of Trust Estate...............................33
SECTION 3.6. Opinions as to Trust Estate..............................33
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans..34
SECTION 3.8. Negative Covenants.......................................35
SECTION 3.9. Annual Statement as to Compliance........................36
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets..........36
SECTION 3.11. No Other Business........................................36
SECTION 3.12. No Borrowing.............................................36
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities........36
SECTION 3.14. Capital Expenditures.....................................37
SECTION 3.15. Compliance with Laws.....................................37
SECTION 3.16. Restricted Payments......................................37
SECTION 3.17. Notice of Event of Defaults and Events of Servicing
Termination............................................37
SECTION 3.18. Further Instruments and Acts.............................37
i
<PAGE> 3
SECTION 3.19. Amendments of Trust C Sale and Servicing Agreement and
Trust C Trust Agreement................................37
SECTION 3.20. Income Tax Characterization..............................37
ARTICLE IV. SATISFACTION AND DISCHARGE........................................38
SECTION 4.1. Satisfaction and Discharge of Indenture..................38
SECTION 4.2. Application of Trust Money...............................39
SECTION 4.3. Repayment of Monies Held by Note Paying Agent............39
ARTICLE V. REMEDIES...........................................................39
SECTION 5.1. Rights Upon an Event of Default..........................39
SECTION 5.2. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee......................................40
SECTION 5.3. Remedies.................................................40
SECTION 5.4. Indenture Trustee May File Proofs of Claim...............41
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession
of Class C Notes.......................................42
SECTION 5.6. Application of Money Collected...........................42
SECTION 5.7. Limitation of Suits......................................43
SECTION 5.8. Unconditional Rights of Class C Noteholders to Receive
Principal and Interest.................................43
SECTION 5.9. Restoration of Rights and Remedies.......................44
SECTION 5.10. Rights and Remedies Cumulative...........................44
SECTION 5.11. Delay or Omission Not a Waiver...........................44
SECTION 5.12. Control by Noteholders...................................44
SECTION 5.13. Undertaking for Costs....................................44
SECTION 5.14. Waiver of Stay or Extension Laws.........................45
SECTION 5.15. Action on Class C Notes..................................45
SECTION 5.16. Performance and Enforcement of Certain Obligations.......45
SECTION 5.17. Subrogation..............................................46
SECTION 5.18. Preference Claims........................................46
SECTION 5.19. Waiver of Past Defaults..................................47
ARTICLE VI. THE INDENTURE TRUSTEE.............................................47
SECTION 6.1. Duties of Indenture Trustee..............................47
SECTION 6.2. Rights of Indenture Trustee..............................49
SECTION 6.3. Individual Rights of Indenture Trustee...................50
SECTION 6.4. Indenture Trustee's Disclaimer...........................50
SECTION 6.5. Notice of Defaults.......................................50
SECTION 6.6. Reports by Indenture Trustee to Holders..................50
SECTION 6.7. Compensation and Indemnity...............................50
SECTION 6.8. Replacement of Indenture Trustee.........................51
SECTION 6.9. Successor Indenture Trustee by Merger....................53
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee......................................53
SECTION 6.11. Eligibility: Disqualification............................54
ii
<PAGE> 4
SECTION 6.12. Preferential Collection of Claims Against Issuer.........55
SECTION 6.13. Appointment and Powers...................................55
SECTION 6.14. Performance of Duties....................................55
SECTION 6.15. Limitation on Liability..................................55
SECTION 6.16. Reliance Upon Documents..................................55
SECTION 6.17. Representations and Warranties of the Indenture Trustee..56
SECTION 6.18. Waiver of Setoffs........................................56
SECTION 6.19. Control by the Control Party.............................56
SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession
of Class C Notes.......................................56
SECTION 6.21. Suits for Enforcement....................................57
SECTION 6.22. Mortgagor Claims.........................................57
ARTICLE VII. NOTEHOLDERS' LISTS AND REPORTS...................................58
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and
Addresses of Noteholders...............................58
SECTION 7.2. Preservation of Information; Communications to
Noteholders............................................58
SECTION 7.3. Reports by Issuer........................................58
SECTION 7.4. Reports by Indenture Trustee.............................59
ARTICLE VIII. PAYMENTS AND STATEMENTS TO CLASS C NOTEHOLDERS AND TRUST C
CERTIFICATEHOLDERS; ACCOUNTS, DISBURSEMENTS AND RELEASES......59
SECTION 8.1. Collection of Money......................................59
SECTION 8.2. Release of Trust Estate..................................59
SECTION 8.3. Establishment of Accounts................................60
SECTION 8.4. The Trust C Note Policy..................................60
SECTION 8.5. Trust C Reserve Account..................................61
SECTION 8.6. Reserved.................................................62
SECTION 8.7. Flow of Funds............................................62
SECTION 8.8. Investment of Accounts...................................65
SECTION 8.9. Eligible Investments.....................................65
SECTION 8.10. Reports by Indenture Trustee.............................67
SECTION 8.11. Additional Reports by Indenture Trustee..................70
SECTION 8.12. Opinion of Counsel.......................................70
ARTICLE IX. SUPPLEMENTAL INDENTURES...........................................71
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders...71
SECTION 9.2. Supplemental Indentures with Consent of Noteholders......72
SECTION 9.3. Execution of Supplemental Indentures.....................73
SECTION 9.4. Effect of Supplemental Indenture.........................73
SECTION 9.5. Conformity With Trust Indenture Act......................74
SECTION 9.6. Reference in Class C Notes to Supplemental Indentures....74
SECTION 9.7. Amendment................................................74
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<PAGE> 5
ARTICLE X. REDEMPTION OF CLASS C NOTES........................................75
SECTION 10.1. Redemption...............................................75
SECTION 10.2. Surrender of Class C Notes...............................76
SECTION 10.3. Form of Redemption Notice................................77
SECTION 10.4. Class C Notes Payable on Redemption Date.................77
ARTICLE XI. MISCELLANEOUS.....................................................77
SECTION 11.1. Compliance Certificates and Opinions, etc................77
SECTION 11.2. Form of Documents Delivered to Indenture Trustee.........78
SECTION 11.3. Acts of Noteholders......................................79
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and
Rating Agencies........................................79
SECTION 11.5. Notices to Noteholders; Waiver...........................81
SECTION 11.6. Alternate Payment and Notice Provisions..................81
SECTION 11.7. Conflict with Trust Indenture Act........................81
SECTION 11.8. Effect of Headings and Table of Contents.................82
SECTION 11.9. Successors and Assigns...................................82
SECTION 11.10. Separability.............................................82
SECTION 11.11. Benefits of Indenture....................................82
SECTION 11.12. Legal Holidays...........................................82
SECTION 11.13. GOVERNING LAW............................................82
SECTION 11.14. Counterparts.............................................82
SECTION 11.15. Recording of Indenture...................................82
SECTION 11.16. Trust Obligation.........................................83
SECTION 11.17. No Petition..............................................83
SECTION 11.18. Inspection...............................................83
SECTION 11.19. Limitation of Liability..................................83
ARTICLE XII. EVENTS OF DEFAULT................................................84
SECTION 12.1. Events of Default........................................84
EXHIBITS
Exhibit A -- Form of Class C Note
iv
<PAGE> 6
INDENTURE dated as of November 1, 1998, between ADVANTA MORTGAGE
LOAN TRUST 1998-4C, a Delaware business trust (the "Issuer"), and BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association, as Indenture
Trustee (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's Mortgage Backed
Notes Series 1998-4, Class C (the "Class C Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Class C Notes, the Issuer has agreed to
pledge the Collateral (as defined herein) to the Indenture Trustee on behalf of
the Class C Noteholders.
Ambac Assurance Corporation (the "Note Insurer") has issued and
delivered a financial guaranty insurance policy, dated as of the Closing Date,
pursuant to which the Note Insurer guarantees the Trust C Insured Payments (as
defined herein).
As an inducement to the Note Insurer to issue and deliver the Trust
C Note Policy, the Issuer and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of November 24, 1998 (as amended
from time to time, the "Insurance Agreement"), among the Note Insurer, the
Issuer, Trust A, Trust B, Advanta Mortgage Conduit Services, Inc. and the
Indenture Trustee.
As an additional inducement to the Note Insurer to issue the Trust C
Note Policy, and as security for the performance by the Issuer of the Note
Insurer Issuer Secured Obligations and as security for the performance by the
Issuer of the Indenture Trustee Issuer Secured Obligations, the Issuer has
agreed to grant and assign the Collateral (as defined below) to the Indenture
Trustee for the benefit of the Issuer Secured Parties, as their respective
interests may appear.
<PAGE> 7
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, for the benefit of the Issuer Secured Parties all of the Issuer's right,
title and interest in and to (i) certain adjustable rate mortgage loans (the
"Mortgage Loans") made or to be made and conveyed to the Issuer under certain
mortgage notes ("Notes"); (ii) collections in respect of the Mortgage Loans with
due dates on or after the Cut-Off Date including eligible investments as from
time to time may be held by the Indenture Trustee in the Trust C Note Account
and by the Master Servicer in the related Trust C Principal and Interest Account
(except as otherwise provided in the Trust C Sale and Servicing Agreement but
excluding any premium recapture, each to be created pursuant to the Trust C Sale
and Servicing Agreement, (iii) property, the ownership of which has been
effected on behalf of Trust C, as a result of foreclosure or acceptance by the
Master Servicer of a deed in lieu of foreclosure and that has not been withdrawn
from Trust C; (iv) rights of the Sponsor or any Affiliated Originators under
Insurance Policies relating to the Mortgage Loans; (v) the Trust C Note Policy;
(vi) Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan;
(vii) all rights of the Issuer under the Trust C Sale and Servicing Agreement;
and (viii) any and all proceeds of the foregoing (the foregoing, collectively,
the "Collateral").
The foregoing Grant is made in trust to the Indenture Trustee, for
the benefit first, of the Class C Noteholders, and second, for the benefit of
the Note Insurer. The Indenture Trustee hereby acknowledges such Grant, accepts
the trust under this Indenture in accordance with the provisions of this
Indenture and agrees to perform the duties required of it by this Indenture to
the best of its ability to the end that the interests of such parties,
recognizing the priorities of their respective interests, may be adequately and
effectively protected.
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture. In addition, other capitalized terms used herein and not defined
herein shall have their respective meanings as set forth in the Trust C Sale and
Servicing Agreement.
"Account": Any account established in accordance with Section 8.3
hereof or Section 4.8 of the Trust C Sale and Servicing Agreement.
"Act" has the meaning specified in Section 11.3(a) hereof.
"Affiliate" means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"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 Newspapers": Any of the following, The Wall Street
Journal, the New York Times, the Washington Post, the Los Angeles Times or such
other newspaper determined by the Indenture Trustee in its sole judgment.
"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 Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Available Reserve Amount": As defined in Section 8.5(a) hereof.
"Benefit Plan": As defined in Section 2.3 hereof.
"Book Entry Class C Notes": A beneficial interest in the Class C
Notes, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.9 hereof.
"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
Indenture Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Civil Relief Act": The Soldiers and Sailors' Civil Relief Act of
1940, as amended from time to time.
"Class A Notes": The Mortgage Backed Notes, Series 1998-4, Class C,
issued pursuant to the Trust C Indenture.
"Class A Interest Distribution Amount": As defined in the Trust A
Indenture.
"Class B Interest Distribution Amount": As defined in the Trust B
Indenture.
"Class B Notes": The Mortgage Backed Notes, Series 1998-4, Class B
issued by Trust B pursuant to the Trust B Indenture.
"Class C Available Funds Cap Current Amount": With respect to any
Payment Date, the sum of (i) the excess of (x) the Class C Interest Distribution
Amount due on such Payment Date, calculated using the Class C Note Formula Rate
over (y) the Class C Interest
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Distribution Amount due on such Payment Date, calculated using the Class C
Available Funds Cap Rate and (ii) the Class C Available Funds Cap Carry-Forward
Amount.
"Class C Available Funds Cap Carry-Forward Amount:" With respect to
any Payment Date, the amount, if any, by which (x) the Class C Available Funds
Cap Current Amount payable as of the immediately preceding Payment Date exceeded
(y) the amount of the actual distribution made to the Class C Noteholders on
such immediately preceding Payment Date on account of the Class C Available
Funds Cap Carry-Forward Amount.
"Class C Available Funds Cap Rate": As 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 Trust C
for the related Remittance Period, minus (ii) the aggregate of the Servicing
Fee, the Indenture Trustee's Fee, the Owner Trustee's Fee and the Trust C
Premium Amount on such Payment Date, minus (iii) commencing on the seventh
Payment Date following the Closing Date, an amount equal to 0.75% per annum
times the aggregate Loan Balances of the Mortgage Loans in Trust C as of the
beginning of such related Remittance Period divided by (b) the aggregate Loan
Balances of the Mortgage Loans in Trust C as of the beginning of such related
Remittance Period calculated on the basis of a 360-day year and the actual
number of days elapsed.
"Class C Deficiency Amount": (a) For any Payment Date, any
shortfalls in the Trust C Total Available Funds to pay, the sum of (i) the Class
C Interest Distribution Amount (excluding any Class C Available Funds Cap
Current Amounts, Class C Available Funds Cap Carry Forward Amounts, and any
Relief Act Shortfalls), and (ii) the Trust C Overcollateralization Deficit and
(b) on the Class C Final Scheduled Payment Date, any shortfall in the Trust C
Total Available Funds to pay the outstanding Class C Note Principal Balance.
"Class C Final Scheduled Payment Date": The Payment Date in November
2028 whereby the Class C Noteholders will be entitled to receive a payment of
principal in an amount equal to the outstanding Class C Note Principal Balance.
"Class C Interest Carry-Forward Amount": With respect to any Payment
Date, the amount, if any, by which (x) the Class C Interest Distribution Amount
as of the immediately preceding Payment Date exceeded (y) the amount of the
actual distribution made to the Class C Noteholders on such immediately
preceding Payment Date on account of the Class C Interest Distribution Amount.
"Class C Interest Distribution Amount": With respect to any Payment
Date, the sum of (i) the product of (x) the Class C Note Interest Rate
applicable to such Payment Date and (y) the Class C Principal Balance
immediately prior to such Payment Date and (z) the actual number of days elapsed
during the related Interest Accrual Period divided by 360; provided that such
amount will be reduced by any Relief Act Shortfalls relating to Trust C during
the related Remittance Period and (ii) the Class C Interest Carry Forward
Amount.
"Class C Note": As defined in the recitals hereto.
"Class C Note Formula Capped Rate": With respect to any Payment
Date, the lesser of (i) the Class C Note Formula Rate for such Payment Date and
(ii) 6.75%.
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"Class C Note Formula Rate": With respect to the first Interest
Accrual Period, LIBOR plus 0.55%. For any subsequent Interest Accrual Period,
(x) with respect to any Interest Accrual Period which occurs on or prior to the
Initial Redemption Date, LIBOR plus 0.55% per annum and (y) for any Interest
Accrual Period thereafter, LIBOR plus 1.10% per annum.
"Class C Noteholder": The Person in whose name a Class C Note is
registered on the Note Register.
"Class C Note Interest Rate": As to any Payment Date, the lesser of
(i) the Class C Note Formula Rate and (ii) the Class C Available Funds Cap Rate.
"Class C Note Principal Balance": As defined in the Trust C Sale and
Servicing Agreement.
"Class C Principal Distribution Amount": With respect to the Class C
Notes for any Payment Date, the lesser of:
(i) the excess of (a) the sum, as of such Payment Date, of (x) the
Trust C Total Available Funds and (y) any Insured Payment over (b) the
Class C Interest Distribution Amount; and
(ii) the sum, without duplication, of:
(a) the principal actually collected by the Master Servicer with
respect to the Mortgage Loans in Trust C during the related Remittance Period,
(b) the Loan Balance of each Mortgage Loan in Trust C that either
was repurchased by an Originator or by the Sponsor or purchased by the Master
Servicer or any Sub-Servicer on the related Remittance Date, to the extent such
Loan Balance is actually received by the Indenture Trustee,
(c) any Substitution Amounts delivered by the Sponsor or an
Originator on the related Remittance Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Amounts are actually received by
the Indenture Trustee,
(d) all Net Liquidation Proceeds actually collected by the Master
Servicer with respect to the Mortgage Loans during the related Remittance Period
(to the extent such Net Liquidation Proceeds relate to principal),
(e) the proceeds received by the Indenture Trustee of any
termination of Trust C (to the extent such proceeds relate to principal),
minus
(f) the amount of any Trust C Overcollateralization Reduction Amount
for such Payment Date.
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"Clearing Agency" An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant": A broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date": November 24, 1998.
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Collateral": As defined in the Recitals hereof.
"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 Loan Balance, as of origination of the Second Mortgage Loan
or Third Mortgage Loan, as appropriate, of the Senior Lien note(s) relating to
such Second Mortgage Loan or Third Mortgage Loan, as appropriate, and (ii) the
Original Principal Amount of the Note relating to such Second Mortgage Loan or
Third Mortgage Loan, as appropriate, divided by (b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) of the Trust C
Sale and Servicing Agreement.
"Conduit Acquisition Trust": As defined in the Trust C Sale and
Servicing Agreement.
"Control Party": As defined in the Trust C Sale and Servicing
Agreement.
"Corporate Trust Office": As of the Closing Date, the Indenture
Trustee's office at 3 Park Plaza, 16th Floor, Irvine, California 92614.
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Mortgage Loans are transferred
and assigned to the Trust, the opening of business, November 1, 1998.
"Class C Notes" has the meaning specified in Section 2.9.
"Definitive Notes": Class C Notes issued in definitive form without
coupons.
"Delinquency Advances": As defined in Section 4.9(a) of the Trust C
Sale and Servicing Agreement.
"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
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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 E of the Trust C Sale and Servicing Agreement and required to be
delivered by the Issuer pursuant to Section 2.2 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 or A or better by Standard & Poor's and
in the highest short-term rating category for Moody's, and Standard & Poor's
unless otherwise approved in writing by the Note Insurer, Moody's and Standard &
Poor'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 Note Insurer, Moody's and
Standard & Poor's and, in each case acting or designated by the Master Servicer
as the depository institution for the Trust C Principal and Interest Account;
provided, however, that any such institution or association shall have combined
capital, surplus and undivided profits of at least $100,000,000. Notwithstanding
the foregoing, an Account may be held by an institution otherwise meeting the
preceding requirements except that the only applicable rating requirement shall
be that the unsecured and uncollateralized debt obligations thereof shall be
rated Baa3 or better by Moody's or BBB or better by Standard & Poor's if such
institution has trust powers and the Trust C Principal and Interest Account is
held by such institution in its corporate trust department.
"Determination Date": As to each Payment Date, the third Business
Day next preceding such Payment Date or such earlier day as shall be agreed to
by the Note Insurer and Indenture Trustee.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank
or other financial institution for which the Depository holds the Class C Notes
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.
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"Eligible Investments": Those investments so designated pursuant to
Section 8.9 hereof.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": As defined in Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fannie Mae": 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.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"First Mortgage Loan": A Mortgage Loan which constitutes a first
priority mortgage lien with respect to any Mortgaged 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.
"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.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, Class C Notes or other instruments, or for the
deferred purchase price of property or services (including trade obligations);
(b) obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
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purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indemnification Agreement": The Indemnification Agreement dated as
of November 24, 1998 between the Note Insurer and the Underwriter.
"Indenture Trustee": Bankers Trust Company of California, N.A.,
located on the date of execution of this Agreement at 3 Park Plaza, 16th Floor,
Irvine, California 92614, not in its individual capacity but solely as Indenture
Trustee under this Agreement, and any successor hereunder.
"Indenture Trustee Issuer Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to the Indenture Trustee for
the benefit of the Noteholders under this Indenture or the Class C Notes.
"Indenture Trustee's Fees": With respect to any Payment Date, the
product of (x) one- twelfth of 0.007% and (y) the aggregate Loan Balance of the
Mortgage Loan as of the beginning of the related Remittance Period.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Class C Notes, the Sponsor and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Sponsor
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Sponsor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, Indenture
Trustee, partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, prepared
by an Independent appraiser or other expert appointed pursuant to an Issuer
Order and approved by the Indenture Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Indirect Participant" shall mean any financial institution for whom
any Direct Participant holds an interest in the Class C Notes.
"Initial Redemption Date": The first date on which the Trust C
Certificateholder is eligible to exercise its right of optional redemption of
the Class C Notes pursuant to Section 10.1(b) herein.
"Insurance Agreement": The Insurance and Indemnity Agreement dated
as of November 24, 1998 among the Sponsor, the Master Servicer, the Issuer,
Trust A, Trust B, the Indenture Trustee and the Note Insurer, as it may be
amended from time to time.
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"Insurance Policy": Any hazard, title or primary mortgage insurance
policy relating to a Mortgage Loan.
"Insurance Proceeds": Proceeds paid by any insurer (other than the
Note Insurer) pursuant to any Insurance Policy covering a Mortgage Loan, or
amounts required to be paid by the Master Servicer pursuant to the last sentence
of the first paragraph of Section 4.11(b) of the Trust C Sale and Servicing
Agreement, or the penultimate sentence of Section 4.11(c) of the Trust C Sale
and Servicing Agreement, net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures, or (iv) required to be paid to
any holder of a mortgage senior to such Mortgage Loan.
"Interest Accrual Period": With respect to any Payment Date, the
period commencing on the immediately preceding Payment Date (or the Closing Date
in the case of the first Payment Date) to and including the day prior to the
current Payment Date. All calculations of interest on the Class C Notes will be
made on the basis of the actual number of days elapsed in the related Interest
Accrual Period in a year of 360 days.
"Interest Determination Date": With respect to any Interest Accrual
Period for the Class C Notes, the second London Business Day preceding the first
day of such Interest Accrual Period.
"Interest Remittance Amount": As of any Remittance Date, the sum,
without duplication, of (i) all interest collected (or advanced) by the Master
Servicer during the related Remittance Period with respect to the Mortgage Loans
(net of the Servicing Fee), except that with respect to Prepaid Installments,
interest shall be remitted in the related Remittance Period and (ii) all Net
Liquidation Proceeds actually collected by the Master Servicer with respect to
the Mortgage Loans during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to interest).
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Class C Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Issuer Secured Obligations" means the Note Insurer Issuer Secured
Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee in
respect of the Indenture Trustee Issuer Secured Obligations and the Note Insurer
in respect of the Note Insurer Issuer Secured Obligations.
"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
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change is announced by Citibank), plus 2% per annum and (y) the then applicable
highest rate of interest on the Class C Notes 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 Interest Accrual Period for the Class C
Notes, the rate determined by the Indenture 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 Screen Page
3750 (or any successor service thereto), as of 11:00 a.m. (London time) on such
Interest Determination Date. On each Interest Determination Date, LIBOR for the
related Interest Accrual Period will be established by the Indenture Trustee as
follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related Interest
Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 1/16%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
"Liquidated Mortgage Loan": As defined in the Trust C Sale and
Servicing Agreement.
"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 4.9 of the Trust C Sale and
Servicing Agreement with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan, any amounts (including the proceeds of any Insurance Policy but excluding
any amounts drawn on the Trust C Note Policy) recovered by the Master Servicer
in connection with such Liquidated Mortgage Loan, whether through Indenture
Trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the outstanding
principal balance thereof as of the Cut-Off Date, less any related Principal
Remittance Amounts relating to such Mortgage Loan included in previous related
Trust C Monthly Remittance Amounts that were transferred by the Master Servicer
or any Sub-servicer to the Indenture Trustee for deposit in the related Trust C
Note Account; provided, however, (x) that the Loan Balance for any Mortgage Loan
which has become a Liquidated Loan shall be zero as of the first day of the
Remittance Period following the Remittance Period in which such Mortgage Loan
becomes a Liquidated Loan, and at all times thereafter and (y) the Loan Balance
"as of the Cut-Off Date" for any Mortgage Loan originated during the period from
the Cut-Off Date to the Closing Date shall be the original Loan Balance thereof.
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"London Business Day": A day on which banks are open for dealing in
foreign currency, and exchange in London and New York City.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer 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.
"Master Transfer Agreement": Any one of the Master Loan Transfer
Agreements among the Sponsor and/or the Conduit Acquisition Trust, the Indenture
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).
"Minimum Monthly Payment": With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in that
month.
"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 Files": As defined in the Trust C Sale and Servicing
Agreement.
"Mortgage Loans": As defined in the Trust C Sale and Servicing
Agreement.
"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.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Note Insurer": Ambac Assurance Corporation or any successor
thereto, as issuer of the Trust C Note Policy.
"Note Insurer Default": Any one of the following events shall have
occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment required
under the Note Policy;
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(b) The Note 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, the Wisconsin Department of Insurance, or other competent
regulatory authority shall have entered a final and nonappealable order,
judgment or decree (i) appointing a custodian, Indenture Trustee, agent or
receiver for the Note Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian,
Indenture Trustee, agent or receiver of the Note Insurer (or the taking of
possession of all or any material portion of the property of the Note
Insurer).
"Note Insurer Issuer Secured Obligations": All amounts and
obligations which the Issuer may at any time owe to or on behalf of the Note
Insurer under this Indenture, the Insurance Agreement or any other Operative
Document.
"Note Owner": With respect to a Book-Entry Note, the person who is
the owner of such Book-Entry Note or following the issuance of definitive Class
C Notes, the registered owner of the Class C Notes.
"Note Paying Agent": The Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make payments to and distributions from
the Note Account, including payment of principal of or interest on the Class C
Notes on behalf of the Issuer.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.3.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA Section 314,
and delivered to the Indenture Trustee.
"Operative Documents": With respect to each of Trust A, Trust B and
Trust C, collectively, the Indenture, the Trust Agreement, the Sale and
Servicing Agreement, the Subsequent Transfer Agreements (if any) the Note Policy
and the Notes relating to each such Trust and the Indemnification Agreement and
the Insurance Agreement.
"Opinion of Counsel": One or more opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and, if addressed to the Note Insurer, satisfactory to the
Note Insurer, and which shall comply with any applicable requirements of Section
11.1, and if addressed to the Note Insurer, satisfactory to the Note Insurer.
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"Original Class C Note Principal Balance": $650,000,000.
"Original Principal Amount": With respect to each Note, the
principal amount of such Note relating to a Senior Lien 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.
"Outstanding": With respect to all Class C Notes, as of any date of
determination, all such Class C Notes theretofore executed and delivered
hereunder except:
(i) Class C Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Class C Notes or portions thereof for which full and
final payment money in the necessary amount has been theretofore deposited
with the Indenture Trustee in trust for the Class C Noteholders;
(iii) Class C Notes in exchange for or in lieu of which other
Class C Notes have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Indenture Trustee is presented that any
such Class C Notes are held by a bona fide purchaser; and
(iv) Class C Notes alleged to have been destroyed, lost or
stolen for which replacement Class C Notes have been issued as provided
for in Section 2.4 hereof.
"Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee's Fee": A fee which is separately agreed to in
writing between the Sponsor and the Owner Trustee.
"Payment Date": Any date on which the Indenture Trustee is required
to make distributions to the Class C Noteholders, which shall be the 25th day of
each month, commencing in the month following the Closing Date or, if such day
is not a Business Day, then on the succeeding Business Day.
"Percentage Interest": As to any Class C Note that percentage,
expressed as a fraction, the numerator of which is the Class C Note Principal
Balance of such Class C Note as of the related Cut-Off Date and the denominator
of which is the Original Class C Note Principal Balance of all Class C Notes;
and as to any Trust C Certificate, that Percentage Interest set forth on such
Trust C Certificate.
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"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period, the
sum of all Realized Losses with respect to the Mortgage Loans experienced during
such period.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate Loan Balances of
all Mortgage Loans 90 or more days Delinquent (including all foreclosures and
REO Properties) as of the close of business on the last day of such Remittance
Period over (y) the Trust C Pool Principal Balance as of the close of business
on the last day of such Remittance Period.
"Pool Factor": A seven-digit decimal which the Indenture Trustee
shall compute monthly expressing the Class C Note Principal Balance as of each
Payment Date (after giving effect to any distribution of principal on such
Payment Date) as a proportion of the Original Class C Note Principal Balance. On
the Closing Date, the Pool Factor will be 1.0000000. Thereafter, the Pool Factor
shall decline to reflect reductions in the related Class C Principal Balance
resulting from distributions of principal to the Class C Notes.
"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.
"Predecessor Note": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Amount": As defined in the Trust C Note Policy.
"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 in full
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.
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"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 Trust C during the related Remittance
Period, (ii) the Loan Balance of each such Mortgage Loan that either was
repurchased by an Originator or by the Sponsor or purchased by the Master
Servicer or any Sub-Servicer on such Remittance Date, to the extent such Loan
Balance was actually deposited in the Trust C Principal and Interest Account,
(iii) any Substitution Amounts delivered by the Sponsor or an Originator in
connection with a substitution of a Mortgage Loan, to the extent such
Substitution Amounts were actually deposited in the Trust C Principal and
Interest Account on such Remittance Date, (iv) all Net Liquidation Proceeds
actually collected by the Master Servicer with respect to such Mortgage Loans
during the related Remittance Period (to the extent such Liquidation Proceeds
related to principal) net of amounts allowed to be retained pursuant to Section
4.8(c) of the Trust C Sale and Servicing Agreement, (v) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
principal).
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998
naming Advanta Mortgage Conduit Services, Inc. as registrant and describing
certain mortgage loan asset-backed securities to be issued from time to time as
described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated
November 2, 1998, describing the Class C Notes issued by the Trust.
"Rating Agency": Moody's and Standard & Poor's. If such agency or a
successor is no longer in existence, "Rating Agency" shall be such statistical
credit rating agency, or other comparable Person, designated by the Sponsor and
the Note Insurer, notice of which designation shall be given to the Indenture
Trustee. References herein to the highest short-term unsecured rating category
of a Rating Agency shall means A-1 or better in the case of Standard & Poor's
and P-1 or better in the case of Moody's, and in the case of any other Rating
Agency shall mean the ratings such other Rating Agency deems equivalent to the
foregoing ratings. References herein to the highest long-term rating category of
a Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa" in
the case of Moody's, and in the case of any other Rating Agency, the rating such
other Rating Agency deems equivalent to the foregoing ratings.
"Realized Loss": As to any Liquidated Mortgage 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 business day
immediately preceding the Payment Date occurs; provided, that if the Class C
Notes revert to Definitive Notes, the Record Date with respect to each Payment
Date thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such payment date occurs.
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"Redemption Date": In the case of a redemption of the Class C Notes
pursuant to Section 10.1, the Payment Date specified by the Master Servicer or
the Issuer pursuant to Section 10.2(a).
"Redemption Price": In the case of a redemption of the Class C Notes
pursuant to Section 10.1, an amount equal to the unpaid principal amount of the
then outstanding principal amount of each class of Class C Notes being redeemed
plus accrued and unpaid interest thereon to but excluding the Redemption Date.
"Reference Banks": Chase Manhattan Bank, Deutsche Morgan Grenfell,
Fuji Bank, Merita Bank, Lloyds, Sumitomo Bank, Barclay's Bank PLC, National
Westminster Bank PLC, Abbey, Westpac, Hambros, Commerzbank AG, Citibank, United
Bank of Switzerland AG, BTM, and Royal Bank of Scotland; provided that if any of
the foregoing banks are not suitable to serve as a Reference Bank, then any
leading banks selected by the Indenture Trustee which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market (i)
with an established place of business in London, (ii) not controlling, under the
control of or under common control with the Sponsor or any affiliate thereof,
(iii) whose quotations appear on the Telerate Screen Page 3750 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Indenture Trustee.
"Registration Statement": The Registration Statement filed by the
Sponsor with the Securities and Exchange Commission, including all amendments
thereto and including the Prospectus and the Prospectus Supplement relating to
the Class C Notes constituting a part thereof.
"Relief Act Shortfall": With respect to any Remittance Period, for
any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Remittance Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (ii) the sum of (a) one month's interest on the Loan
Balance of such Mortgage Loan at the rate equal to the sum of the Class C Note
Interest Rate, the rate at which the Indenture Trustee's Fee is calculated and
the Trust C Premium Percentage, plus (b) the aggregate Servicing Fee for such
Mortgage Loan payable to the Master Servicer in such calendar month.
"Remittance Date": Any date on which the Master Servicer is required
to remit monies on deposit in the Trust C Principal and Interest Account to the
Indenture Trustee, which shall be the 18th day or, if such day is not a Business
Day, the next preceding Business Day, of each month, commencing in the month
following the month in which the Closing Date occurs.
"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
"REO Property": A Mortgaged 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.
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"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": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class C Notes
registered in the Register under the nominee name of the Depository.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Indenture Trustee determines to be either (i)
the arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of 1/16%) of the one-month U.S. dollar lending rates which three New York City
banks selected by the Indenture Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate
which three New York City banks selected by the Indenture Trustee are quoting on
such Interest Determination Date to leading European banks.
"Schedules of Mortgage Loans": The Schedules of Mortgage Loans,
attached hereto as Schedule I. Such Schedules shall also contain one of the
following codes for each Mortgage Loan: "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
Indenture 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 Mortgaged 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.
"Servicing Advance": As defined in the Trust C Sale and Servicing
Agreement.
"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 Indenture 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 Rating Group, a division of
The McGraw Hill Companies.
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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.
"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.
"Telerate Screen Page 3750": The display designated on page 3750 on
the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks)
"Termination Date" means the latest of (i) the termination of the
Note Policy and the return of the Note Policy to the Note Insurer for
cancellation, (ii) the date on which the Note Insurer shall have received
payment and performance of all Note Insurer Issuer Secured Obligations and (iii)
the date on which the Indenture Trustee shall have received payment and
performance of all Indenture Trustee Issuer Secured Obligations.
"Third Mortgage Loan": A Mortgage Loan which constitutes a third
priority mortgage lien with respect to the related Property.
"Trust": Advanta Mortgage Loan Trust 1998-4C.
"Trust Agreement": The Trust Agreement dated as of November 1, 1998
between the Issuer and the Sponsor.
"Trust A": Advanta Mortgage Loan Trust 1998-4A, the trust created
pursuant to the Trust A Trust Agreement.
"Trust A Aggregate Reserve Contribution Amount": The sum of all
amounts contributed to the Trust C Reserve Account from Trust C pursuant to
Section 8.7(b)(xii) of the Trust A Indenture.
"Trust A Available Crossover Amounts": As defined in the Trust A
Indenture.
"Trust A Available Funds Cap Current Deficiency Amount": As defined
in Section 8.7(b)(xii) hereof.
"Trust A Available Funds Cap Carry-Forward Deficiency Amount": As
defined in Section 8.7(b)(xiii) hereof.
"Trust A Full Deficiency Amount": As defined in the Trust A
Indenture.
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"Trust A Indenture": The Indenture relating to Trust A, dated as of
November 1, 1998 between Trust A and the Indenture Trustee, as amended and
supplemented from time to time.
"Trust A Note Account": The Trust A Note Account established in
accordance with Section 8.3 of the Trust A Indenture.
"Trust A Overcollateralization Deficit": As defined in the Trust A
Indenture.
"Trust A Total Available Funds": As defined in the Trust A
Indenture.
"Trust A Trust Agreement": The Trust Agreement dated as of November
1, 1998 between the Sponsor and the Owner Trustee relating to Trust A.
"Trust B": Advanta Mortgage Loan Trust 1998-4B, the trust created
pursuant to the Trust B Trust Agreement.
"Trust B Aggregate Reserve Contribution Amount": The sum of all
amounts contributed to the Trust C Reserve Account from Trust B pursuant to
Section 8.7(b)(xii) of the Trust B Indenture.
"Trust B Available Crossover Amounts": As defined in the Trust B
Indenture.
"Trust B Available Funds Cap Current Deficiency Amount": As defined
in Section 8.7(b)(xii) hereof.
"Trust B Available Funds Cap Carry-Forward Deficiency Amount": As
defined in Section 8.7(b)(xii) hereof.
"Trust B Full Deficiency Amount": As defined in the Trust B
Indenture.
"Trust B Indenture": The Indenture relating to Trust B, dated as of
November 1, 1998 between Trust B and the Indenture Trustee, as amended and
supplemented from time to time.
"Trust B Note Account": The Trust B Note Account established in
accordance with Section 8.3 of the Trust B Indenture.
"Trust B Overcollateralization Deficit": As defined in the Trust B
Indenture.
"Trust B Total Available Funds": As defined in the Trust B
Indenture.
"Trust B Trust Agreement": The Trust Agreement dated as of November
1, 1998 between the Sponsor and the Owner Trustee relating to Trust B.
"Trust C Accelerated Principal Payments": With respect to any
Payment Date, a payment received as a payment of principal by the Class C
Noteholders for the purpose of increasing the Trust C Overcollateralization
Amount to the Trust C Specified Overcollateralization Amount applicable to such
Payment Date, and to be paid from amounts
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remaining in the Trust C Note Account on such Payment Date, after deduction of
the amounts described in clauses (i) through (viii) of Section 8.7(b) hereof
(the "Remaining Cashflow") on such Payment Date and equal to the lesser of (x)
the amount of such Remaining Cashflow and (y) the Trust C Overcollateralization
Deficiency Amount.
"Trust C Available Crossover Amounts": On any determination date,
the amounts in the Trust C Note Account available for distribution after the
payment of amounts described in clauses (i) through (ix) of Section 8.7(b)
hereof for the related Payment Date.
"Trust C Certificate": As defined in the Trust C Trust Agreement.
"Trust C Certificateholders": The holders of the Trust C
Certificates issued pursuant to the Trust C Trust Agreement.
"Trust C Excess Overcollateralization Amount": With respect to any
Payment Date, the amount by which (x) the Trust C Overcollateralization Amount
after taking into account the payment of the Class C Principal Distribution
Amount on such Payment Date exceeds (y) the Trust C Specified
Overcollateralization Amount for such Payment Date.
"Trust C Full Deficiency Amount": As defined in Section 8.5(b)
herein.
"Trust C Indenture" means this Indenture as amended and supplemented
from time to time.
"Trust C Insured Payment": As of any Payment Date, (i) any Class C
Deficiency Amount and (ii) any Preference Amount.
"Trust C Monthly Remittance Amounts": With respect to any Remittance
Date, the sum of (i) the Interest Remittance Amount with respect to such
Remittance Date and (ii) the Principal Remittance Amount with respect to such
Remittance Date.
"Trust C Note Account": The Trust C Note Account established in
accordance with Section 8.3 hereof and maintained by the Indenture Trustee.
"Trust C Note Policy": The financial guaranty insurance policy dated
November 24, 1998, issued by the Note Insurer to the Indenture Trustee for the
benefit of the Class C Noteholders.
"Trust C O/C Surplus Amount": As defined in Section 8.5(c) hereof.
"Trust C Overcollateralization Amount": With respect to any Payment
Date, the excess, if any, of (x) the Trust C Pool Principal Balance as of such
Payment Date over (y) the Class C Note Principal Balance as of such Payment Date
(after taking into account reductions therein on such Payment Date).
"Trust C Overcollateralization Deficiency Amount": With respect to
any Payment Date, the difference, if any, between (i) the Trust C Specified
Overcollateralization
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Amount applicable to such Payment Date and (ii) the Trust C
Overcollateralization Amount applicable to such Payment Date.
"Trust C Overcollateralization Deficit": With respect to any Payment
Date, the amount, if any, by which (i) the aggregate Class C Note Principal
Balance, after taking into account the payment to the Class C Noteholders of all
principal from sources other than the Trust C Note Policy on such Payment Date,
exceeds (ii) the Trust C Pool Principal Balance as of the end of the applicable
Remittance Period.
"Trust C Overcollateralization Increase Amount": With respect to any
Payment Date, the lesser of (i) the Trust C Overcollateralization Deficiency
Amount as of such Payment Date (after taking into account the payment of the
Class C Principal Distribution Amount on such Payment Date (except for any Trust
C Overcollateralization Increase Amount) and (ii) the amount of Trust C Total
Available Funds remaining to be allocated for such purpose pursuant to Section
8.7(b)(viii) hereof on such Payment Date.
"Trust C Overcollateralization Reduction Amount": With respect to
any Payment Date, the lesser of (x) the Trust C Excess Overcollateralization
Amount for such Payment Date and (y) the Principal Remittance Amount for the
prior Remittance Period.
"Trust C Pool Principal Balance": The aggregate Loan Balances of all
Mortgage Loans.
"Trust C Preference Amount": Any amount previously distributed to
Class C Noteholder that is recoverable and sought to be recovered as a voidable
preference by a Indenture 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.
"Trust C Premium Amount": As to any Payment Date, the product of (x)
one-twelfth of the Trust C Premium Percentage and (y) the Class C Note Principal
Balance on such Payment Date (before taking into account any distributions of
the Trust C Scheduled Principal Distribution Amount to be made on such Payment
Date).
"Trust C Premium Percentage": As defined in the Insurance Agreement.
"Trust C Principal and Interest Account": Collectively, each
principal and interest account created by the Master Servicer or any
Sub-Servicer pursuant to Section 4.8(a) of the Trust C Sale and Servicing
Agreement.
"Trust C Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all payments made pursuant to the Note Policy previously received by the
Indenture Trustee and all Preference Amounts previously paid to the Indenture
Trustee by the Note Insurer and in each case not previously repaid to the Note
Insurer pursuant to Section 8.7(b)(viii) hereof plus (ii) interest accrued on
each such payment made pursuant to the Note Policy not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related payment made pursuant to the Note Policy and (y)(i) any amounts then
due and owing to the Note Insurer under the Insurance Agreement plus (ii)
interest on such amounts at the Late
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Payment Rate. The Note Insurer shall notify the Indenture Trustee and the
Sponsor of the amount of any Trust C Reimbursement Amount.
"Trust C Reserve Account:" The reserve account established pursuant
Section 8.3 hereof.
"Trust C Reserve Account Deposit:" With respect to the Payment Date,
the amount required to be deposited in the Trust C Reserve Account for the
purpose of funding the excess of the Trust C Overcollateralization Amount over
the Trust C Specified Overcollateralization Amount applicable to such Payment
Date.
"Trust C Sale and Servicing Agreement": The Trust C Sale and
Servicing Agreement dated as of November 1, 1998, among the Issuer, the Sponsor,
the Master Servicer and the Indenture Trustee, as the same may be amended or
supplemented from time to time.
"Trust C Scheduled Principal Distribution Amount": With respect to
the Class C Notes for any Payment Date, an amount equal to the lesser of (x) the
Class C Principal Distribution Amount as of such Payment Date and (y) the Class
C Note Principal Balance as of such Payment Date.
"Trust C Specified Overcollateralization Amount": As defined in the
Insurance Agreement.
"Trust C Total Available Funds": As defined in Section 8.7(a)
hereof.
"Trust C Weighted Note Interest Rate": On any Payment Date, the
Class C Note Interest Rate weighted by the Class C Note Principal Balance as of
such Payment Date, and prior to taking into account any distributions to be made
on such Payment Date.
"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
Class C Noteholders and the Note Insurer, including all proceeds thereof,
including, without limitation, (i) the Mortgage Loans and Qualified Replacement
Mortgages, (ii) such amounts, including Eligible Investments, as from time to
time may be held in all Accounts (except as otherwise provided herein), (iii)
any Mortgaged Property, the owner of which has been effected on behalf of the
Trust Cs a result of foreclosure or acceptance by the Master Servicer or any
Sub-Servicer of a deed in lieu of foreclosure and that has not been withdrawn
from the Trust, (iv) any Insurance Policies relating to the Mortgage Loans and
any rights of the Trust and the Originators under any Insurance Policies, (v)
Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan, (vi) the
Insurance Policies and (vii) such amounts held in the Trust C Principal and
Interest Account and the Note Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
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"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.
"Underwriter": Morgan Stanley & Co. Incorporated.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Trust C Sale and Servicing Agreement
or the Trust Agreement.
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Class C Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional Indenture Trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by the
TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
SECTION 1.4. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Class C Noteholders, such provision shall be deemed to refer to the Class C
Noteholder of record as of the Record Date immediately preceding the date on
which such action is to be taken, or consent given, by Class C
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Noteholders. Solely for the purposes of any action to be taken, or consented to,
by Class C Noteholders, any Class C Note registered in the name of Advanta
Mortgage Conduit Services, Inc. or any Affiliate thereof shall be deemed not to
be outstanding; provided, however, that, solely for the purpose of determining
whether the Indenture Trustee or the Owner Trustee is entitled to rely upon any
such action or consent, only Class C Notes which the Owner Trustee or the
Indenture Trustee, respectively, knows to be so owned shall be so disregarded.
SECTION 1.5. Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be part of and govern this Indenture, the latter provision shall control
and all provisions required by the TIA are hereby incorporated by reference. If
any provision of this Indenture modifies or excludes any provision of the TIA
that may be so modified or excluded, the latter provisions shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
ARTICLE II.
THE CLASS C NOTES
SECTION 2.1. Form. The Class C Notes, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Class C Notes, as evidenced by their execution of the
Class C Notes. Any portion of the text of any Class C Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Class C Note.
Each Class C Note shall be dated the date of its authentication. The
terms of the Class C Note set forth in Exhibit A are part of the terms of this
Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Class C
Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Class C Notes may
be original or facsimile.
Class C Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Class C Notes
or did not hold such offices at the date of such Class C Notes.
The Indenture Trustee, upon receipt of a written Delivery Order from
the Issuer, shall authenticate and deliver Class C Notes for original issue in
an aggregate principal amount of $650,000,000. The Class C Notes outstanding at
any time may not exceed such amounts except as provided in Section 2.6.
Each Class C Note shall be dated the date of its authentication. The
Class C Notes shall be Isabel as registered Class C Notes in the minimum
denomination of $1000 and in integral multiples of $1,000 in excess thereof.
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No Class C Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears
attached to such Class C Note a certificate of authentication substantially in
the form provided for herein executed by the Indenture Trustee by the manual
signature of one of its authorized signatories, and such certificate attached to
any Class C Note shall be conclusive evidence, and the only evidence, that such
Class C Note has been duly authenticated and delivered hereunder. Subject to
Section 2.11, the Class C Notes shall be Book-Entry Class C Notes.
SECTION 2.3. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Class C Notes and the registration of transfers
of Class C Notes. The Indenture Trustee shall be "Note Registrar" for the
purpose of registering Class C Notes and transfers of Class C Notes as herein
provided. Upon any resignation of any Note Registrar, the Issuer shall promptly
appoint a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Class C Notes and
the principal amounts and number of such Class C Notes.
Upon surrender for registration or transfer of any Class C Note at
the office or agency of the Issuer to be maintained as provided in Section 3.2,
and if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute or cause the Indenture Trustee to authenticate one or more new Class C
Notes, in any authorized denominations, of the same Class and a like aggregate
principal amount. A Class C Noteholder may also obtain from the Indenture
Trustee, in the name of the designated transferee or transferees one or more new
Class C Notes, in any authorized denominations, of the same Class and a like
aggregate principal amount. Such requirements shall not be deemed to create a
duty in the Indenture Trustee to monitor the compliance by the Issuer with
Section 8-401 of the UCC.
At the option of the Holder, Class C Notes may be exchanged for
other Class C Notes in any authorized denominations, of the same Class And a
like aggregate principal amount, upon surrender of the Class C Notes to be
exchanged at such office or agency. Whenever any Class C Notes are so
surrendered for exchange, and if the requirements of Section 8-401(1) of the UCC
are met, the Issuer shall execute and upon its request the Indenture Trustee
shall authenticate the Class C Notes which the Noteholder making the exchange is
entitled to receive. Such requirements shall not be deemed to create a duty in
the Indenture Trustee to monitor the compliance by the Issuer with Section 8-401
of the UCC.
All Class C Notes issued upon any registration of transfer or
exchange of Class C Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the
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same benefits under this Indenture, as the Class C Notes surrendered upon such
registration of transfer or exchange.
Every Class C Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibit A, duly executed
by the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar all in accordance with the Exchange Act, and
(ii) accompanied by such other documents as the Note Registrar may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Class C Notes, but the Note Registrar 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
Class C Notes, other than exchanges pursuant to Section 2.4 or 9.6 not involving
any transfer.
The Note Registrar shall not register the transfer of any Class C
Note (other than the transfer of a Class C Note to the nominee of the
Depository) unless the transferee has executed and delivered to the Indenture
Trustee a certification to the effect that either (i) the transferee is not (A)
an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject
to the provisions of Title I of ERISA or (B) a plan (as defined in Section
4975(e)(1) of the Code) that is subject to Section 4975 of the Code (each of the
foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the
assets of a Benefit Plan, or (ii) that the transferee's acquisition and
continued holding of the Class C Note will be covered by a U.S. Department of
Labor Prohibited Transaction Class Exemption. Each transferee of a beneficial
interest in a Book-Entry Note shall be deemed to make one of the foregoing
representations.
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Class C Notes. If
(i) any mutilated Class C Note is surrendered to the Note Registrar, or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Class C Note, and (ii) there is delivered to the Indenture Trustee
and the Note Insurer such security or indemnity as may be required by it to hold
the Issuer, the Indenture Trustee and the Note Insurer harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Indenture Trustee shall
execute and authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Class C Note, a replacement Note (such
requirement shall not be deemed to create a duty in the Indenture Trustee to
monitor the compliance by the Issuer with Section 8-405); provided, however,
that if any such destroyed, lost or stolen Class C Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, the Indenture Trustee may, instead of issuing a
replacement Class C Note pay such destroyed, lost or stolen Note when so due or
payable or upon the Redemption Date without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, the Indenture Trustee and the Note
Insurer shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Note from such Person
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to whom such replacement Note was delivered or any assignee of such Person,
except a bona fide purchaser, and shall be entitled to recover upon the security
or indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Class C Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Class C Notes duly
issued hereunder.
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 Class C Notes.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Class C Note, the Issuer, the Indenture Trustee
and the Note Insurer and any agent of the Issuer, the Indenture Trustee and the
Note Insurer may treat the Person in whose name any Class C Note is registered
(as of the related Record Date) as the owner of such Class C Note for the
purpose of receiving payments of principal of and interest, if any on such Class
C Note and for all other purposes whatsoever, whether or not such Class C Note
be overdue, and none of the Issuer, the Note Insurer, the Indenture Trustee nor
any agent of the Issuer, the Note Insurer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.
(a) The Class C Notes shall accrue interest as provided herein, and
such amount shall be due and payable on each Payment Date as specified herein.
Any installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Class C Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid, to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Class C Notes have been issued
pursuant to Section 2.11, with respect to Class C Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a Payment
Date or on the Final Scheduled Payment Date (and except for the Redemption Price
for any Note called for redemption pursuant to Section 10.1(a)) which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
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(b) Upon written notice from the Issuer, the Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of business on
the Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final Payment
Date and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Class C Notes shall be mailed to Noteholders
as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Class C
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the Late Payment Rate to the extent lawful.
The Issuer may pay such defaulted interest to the Persons who are Noteholders on
a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the special record date, the payment date and the
amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Class C Notes has been paid in full and the Class C Notes have
been surrendered to the Indenture Trustee, the Indenture Trustee shall, upon
written notice from the Master Servicer of the amounts, if any, that the Note
Insurer has paid in respect of the Class C Notes under the Note Policy or
otherwise which has not been reimbursed to it, deliver such surrendered Class C
Notes to the Note Insurer to the extent not previously cancelled or destroyed.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all Class C
Notes surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. Subject to Section 2.6(d), the Issuer may at any time deliver
to the Indenture Trustee for cancellation any Class C Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Class C Notes so delivered shall be promptly canceled
by the Indenture Trustee. No Class C Notes shall be authenticated in lieu of or
in exchange for any Class C Notes canceled as provided in this Section, except
as expressly permitted by this Indenture. Subject to Section 2.6(d), all
canceled Class C Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Class C Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee shall, on
or after the Termination Date, release any remaining portion of the Trust Estate
from the lien created by this Indenture and deposit in the Trust C Note Account
any funds then on deposit in any other Account. Except as otherwise set forth in
the Trust C Sale and Servicing Agreement, the Indenture Trustee shall release
property from the lien created by this Indenture pursuant to this Section 2.8
only upon receipt of an Issuer Request by it accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with
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TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1 or as provided in Section 4.14 of the Trust C Sale and Servicing Agreement.
SECTION 2.9. Book-Entry Class C Notes. The Class C Notes, upon
original issuance, will be issued in the form of typewritten Class C Notes
representing the Book-Entry Class C Notes, to be delivered to The Depository
Trust Company or its custodian, the initial Clearing Agency, by, or on behalf
of, the Issuer. Such Class C Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Note Owner will receive a Definitive Note representing such Note Owner's
interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Class C Notes have been issued to Note Owners
pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Class C Notes
and the giving of instructions or directions hereunder) as the sole Holder
of the Class C Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Unless and until Class C Notes are issued
pursuant to Section 2.11, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments of principal of and interest on the Class C Notes to such
Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Class C Notes
evidencing a specified percentage of the Outstanding Amount of the Class C
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect from
Note Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Class C Notes and has delivered such instructions to the Indenture
Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of reproduction
and postage expenses associated with the distribution of such reports,
from the Indenture Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Class C Notes shall have been issued to Note Owners pursuant to Section
2.11, the Indenture Trustee
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shall give all such notices and communications specified herein to be given to
Holders of the Class C Notes to the Clearing Agency, and shall have no
obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Sponsor advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Class C
Notes, and the Sponsor is unable to locate a qualified successor, (ii) the
Sponsor at its option advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of a Event of Default, Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Class C Notes
advise the Indenture Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Class C Note or Class C
Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Notes as Class C Noteholders.
ARTICLE III.
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Class C Notes in
accordance with the terms of the Class C Notes and this Indenture. Without
limiting the foregoing, the Issuer will cause to be distributed all amounts on
deposit in the Trust C Note Account on a Payment Date deposited therein pursuant
to the Trust C Sale and Servicing Agreement for the benefit of the Class C Class
C Notes, to Class C Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will
maintain an office or agency where Class C Notes may be surrendered for
registration, transfer or exchange of the Class C Notes, and where notices and
demands to or upon the Issuer in respect of the Class C Notes and this Indenture
may be served. The Issuer hereby initially appoints the Indenture Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Indenture Trustee of the location, and of any change in
the location, of any such office or agency. If at any time the Issuer shall fail
to maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Indenture Trustee's offices maintained at 123 Washington
Street, NY, NY 10006 and the Issuer hereby appoints the Indenture Trustee as its
agent to receive all such surrenders, notices and demands.
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SECTION 3.3. Money for Payments to be Held in Trust. The Issuer will
cause each Note Paying Agent other than the Indenture Trustee to execute and
deliver to the Indenture Trustee and the Note Insurer an instrument in which
such Note Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject to
the provisions of this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Class C Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such Persons
as herein provided;
(ii) give the Indenture Trustee written notice of any default by the
Issuer (or any other obligor upon the Class C Notes) of which it has
actual knowledge in the making of any payment required to be made with
respect to the Class C Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Class C Notes if at any time it ceases to meet the standards required to
be met by a Note Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Class C Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Indenture Trustee or any Note Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such Trust And be paid to the Issuer on Issuer Request, and shall be deposited
by the Indenture Trustee in the Trust C Note Account; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the Issuer
for payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee or such Note Paying Agent
with respect to such trust money shall thereupon cease.
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SECTION 3.4. Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Trust Estate, the Class C Notes, and each
other instrument or agreement included in the Trust Estate.
SECTION 3.5. Protection of Trust Estate. The Issuer intends the
security interest granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Indenture Trustee, for the benefit of the Issuer Secured Parties, a first
lien on and a first priority, perfected security interest in the Trust Estate.
The Issuer will from time to time prepare (or shall cause to be prepared),
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Trustee for the benefit of the
Issuer Secured Parties created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee in such Trust Estate against the claims of all
persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section;
provided that, such designation shall not be deemed to create a duty in the
Indenture Trustee or the Indenture Trustee to monitor the compliance of the
Issuer with respect to its duties under this Section 3.5 or the adequacy of any
financing statement, continuation statement or other instrument prepared by the
Issuer.
SECTION 3.6. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Note Insurer an Opinion of Counsel stating that, in the opinion
of such counsel, such actions
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have been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the first priority
lien and security interest in favor of the Indenture Trustee, for the benefit of
the Issuer Secured Parties, created by this Indenture.
(b) Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Issuer shall furnish to the Indenture Trustee and the Note
Insurer, an Opinion of Counsel either stating that, in the opinion of such
counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel, no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.
SECTION 3.7. Performance of Obligations; Servicing of Mortgage
Loans.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Operative Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Note Insurer to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee and
the Note Insurer in an Officer's Certificate of the Issuer shall be deemed to be
action taken by the Issuer. Initially, the Issuer has contracted with the Master
Servicer to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Operative Documents
and in the instruments and agreements included in the Trust Estate, including,
but not limited to, preparing (or causing to be prepared) and filing (or causing
to be filed) all UCC financing statements and continuation statements required
to be filed by the terms of this Indenture and the Trust C Sale and Servicing
Agreement in accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Issuer shall not
waive, amend, modify, supplement or terminate any Operative Document or any
provision thereof without the consent of the Indenture Trustee, the Note Insurer
or the Holders of at least a majority of the Outstanding Amount of the Class C
Notes.
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(d) If an Authorized Officer of the Owner Trustee shall have actual
knowledge of the occurrence of an Event of Servicer Termination under the Trust
C Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Note Insurer and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If an Event of Servicer Termination shall
arise from the failure of the Master Servicer to perform any of its duties or
obligations under the Trust C Sale and Servicing Agreement with respect to the
Mortgage Loans, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Master Servicer or the Sponsor of their respective duties
under the Operative Documents (x) without the prior consent of the Note Insurer
or (y) if the effect thereof would adversely affect the Holders of the Class C
Notes.
SECTION 3.8. Negative Covenants. So long as any Class C Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Operative
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Estate, without the consent of the Note Insurer (which consent may not be
unreasonably withheld; provided, that if an Note Insurer Default has
occurred and is continuing, the Noteholders representing 51% of the
Noteholders may direct the Indenture Trustee to sell or dispose of the
Trust Estate if the Indenture Trustee receives the Redemption Price, as
described in Section 10.1.
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Class C Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien in favor of the Indenture Trustee created
by this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Class C Notes under this Indenture except
as may be expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens
and other liens that arise by operation of law, in each case on a
Mortgaged Property and arising solely as a result of an action or omission
of the related Mortgagor), (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate or
(D) amend, modify or fail to comply with the provisions of the Operative
Documents without the prior written consent of the Note Insurer, which
consent may not be unreasonably withheld.
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SECTION 3.9. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Note Insurer, within 90 days after the
end of each fiscal year of the Issuer (commencing with the fiscal year ended
December 31, 1999), and otherwise in compliance with the requirements of TIA
Section 314(a)(4) an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in the compliance of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status
thereof.
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets.
(a) The Issuer shall not consolidate or merge with or into any other
Person.
(b) Except as otherwise provided in the Trust C Sale and Servicing
Agreement, the Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person.
SECTION 3.11. No Other Business. The Issuer shall not engage in any
business other than purchasing, owning, selling and managing the Mortgage Loans
and other assets in the manner contemplated by this Indenture and the Operative
Documents and activities incidental thereto.
SECTION 3.12. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Class C Notes, (ii) obligations owing from time
to time to the Note Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Operative Documents. The proceeds
of the Class C Notes shall be used exclusively to fund the Issuer's purchase of
the Mortgage Loans and the other assets specified in the Trust C Sale and
Servicing Agreement and to pay the Issuer's organizational, transactional and
start-up expenses.
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Trust C Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
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SECTION 3.14. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.15. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Class C Notes, this Indenture or
any Operative Document.
SECTION 3.16. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Master Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Master Servicer, the Owner Trustee, the Indenture Trustee and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Trust C Sale and Servicing Agreement, this Indenture, or
Trust Agreement. The Issuer will not, directly or indirectly, make payments to
or distributions from the Note Account except in accordance with this Indenture
and the Operative Documents.
SECTION 3.17. Notice of Event of Defaults and Events of Servicing
Termination. Upon a Responsible Officer of the Owner Trustee having actual
knowledge thereof, the Issuer agrees to give the Indenture Trustee, the Note
Insurer and the Rating Agencies prompt written notice of each Event of Default
hereunder or Event of Servicer Termination under the Trust C Sale and Servicing
Agreement.
SECTION 3.18. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 3.19. Amendments of Trust C Sale and Servicing Agreement and
Trust C Trust Agreement. The Issuer shall not agree to any amendment to Section
9.01 of the Trust C Sale and Servicing Agreement or Section 11.1 of the Trust C
Trust Agreement to eliminate the requirements thereunder that the Indenture
Trustee, the Note Insurer or the Holders of the Class C Notes consent to
amendments thereto as provided therein.
SECTION 3.20. Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Class C Notes as indebtedness of the Sponsor and hereby
instructs the Indenture Trustee to treat the Class C Notes as indebtedness of
the Sponsor for federal and state tax reporting purposes.
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ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon payment
in full of the Class C Notes, this Indenture shall cease to be of further effect
with respect to the Class C Notes except as to (i) rights of registration of
transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen
Class C Notes, (iii) rights of Class C Noteholders to receive payments of
principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10,
3.12, and 3.19, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vi) the
rights of Class C Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of them,
and the Indenture Trustee, on written demand in the form of an Issuer Order and
at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Class C Notes,
when
(A) either
(1) all Class C Notes theretofore authenticated and delivered (other
than (i) Class C Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.4 and (ii) Class C
Notes for which payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation and the Note
Policy has terminated and been returned to the Note Insurer for
cancellation and all amounts owing to the Note Insurer have been paid in
full; or
(2) all Class C Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Trust C Final
Scheduled Payment Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture Trustee in the name, and at
the expense, of the Issuer,
and in the case of (i), (ii) or (iii) above, the Issuer, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee
cash or direct obligations of or obligations guaranteed by the United
States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Class C Notes not theretofore
delivered to the Indenture Trustee for cancellation when due on the Final
Scheduled Payment Date or Redemption Date (if the Class C Notes shall have
been called for redemption pursuant to Section 10.1(a)), as the case may
be;
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(B) the Issuer has paid or caused to be paid all Note Insurer Issuer
Secured Obligations and all Indenture Trustee Issuer Secured Obligations; and
(C) the Issuer has delivered to the Indenture Trustee and the Note
Insurer an Officer's Certificate, an Opinion of Counsel and if required by the
TIA, the Indenture Trustee or the Note Insurer an Independent Certificate from a
firm of certified public accountants, each meeting the applicable requirements
of Section 11.1(a) and each stating that all conditions precedent herein
provided relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.2. Application of Trust Money. All monies deposited with
the Indenture Trustee pursuant to Section 4.1 hereof shall be held in Trust And
applied by it, in accordance with the provisions of the Class C Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Class C
Notes for the payment or redemption of which such monies have been deposited
with the Indenture Trustee, of all sums due and to become due thereon for
principal and interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Class C Notes, all monies then held by any Note Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Class C Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee
to be held and applied according to Section 3.3 and thereupon such Note Paying
Agent shall be released from all further liability with respect to such monies.
ARTICLE V.
REMEDIES
SECTION 5.1. Rights Upon an Event of Default. If an Event of Default
as described in Article XII shall have occurred and be continuing, but with the
consent of the Note Insurer in the absence of a Note Insurer Default, the
Indenture Trustee may, and on request of the Note Insurer or the Holders of
Class C Notes representing not less than 51% of the Outstanding Amount of the
Class C Notes (with the consent of the Note Insurer), shall, declare all the
Class C Notes to be immediately due and payable by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Class C Noteholders), and upon
any such declaration such Class C Notes, in an amount equal to the Outstanding
Amount of the Class C Notes, together with accrued and unpaid interest thereon
to the date of such acceleration, shall become immediately due and payable, all
subject to the prior written consent of the Note Insurer in the absence of a
Note Insurer Default.
At any time after such a declaration of acceleration of maturity of
the Class C Notes has been made and before a judgment or decree for payment of
the money due has been obtained by the Indenture Trustee as hereinafter in this
Article; provided the Note Insurer or the Holders of Class C Notes representing
more than 50% of the Outstanding Amount of the Class C Notes, with the prior
written consent of the Note Insurer, by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
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(1) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(A) all payments of principal of, and interest on, all Class C
Notes and all other amounts that would then be due hereunder or upon such
Class C Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel; and
(2) all Events of Default with respect to the Class C Notes, other
than the nonpayment of the principal of Class C Notes that have become due
solely by such acceleration, have been cured or waived as provided in Section
5.19.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.2. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. Subject to the following sentence, if an Event of Default
with respect to the Class C Notes occurs and is continuing, the Indenture
Trustee may, with the prior written consent of the Note Insurer and shall, at
the direction of the Note Insurer, proceed to protect and enforce its rights and
the rights of the Class C Noteholders and the Note Insurer by any Proceedings
the Indenture Trustee deems appropriate to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or enforce any
other proper remedy. Any proceedings brought by the Indenture Trustee on behalf
of the Class C Noteholders and the Note Insurer or any Class C Noteholder
against the Issuer shall be limited to the preservation, enforcement and
foreclosure of the liens, assignments, rights and security interests under the
Indenture and no attachment, execution or other unit or process shall be sought,
issued or levied upon any assets, properties or funds of the Issuer, other than
the Trust Estate relative to the Class C Notes in respect of which such Event of
Default has occurred. If there is a foreclosure of any such liens, assignments,
rights and security interests under this Indenture, by private power of sale or
otherwise, no judgment for any deficiency upon the indebtedness represented by
the Class C Notes may be sought or obtained by the Indenture Trustee or any
Class C Noteholder against the Issuer. The Indenture Trustee shall be entitled
to recover the costs and expenses expended by it pursuant to this Article V
including reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
SECTION 5.3. Remedies. (a) If an Event of Default with respect to
the Class C Notes shall have occurred and be continuing and the Class C Notes
have been declared due and payable and such declaration and its consequences
have not been rescinded and annulled, the Indenture Trustee, at the direction of
the Note Insurer may, for the benefit of the Class C Noteholders and the Note
Insurer, do one or more of the following:
(i) institute Proceedings for the collection of all amounts then
payable on the Class C Notes, or under this Indenture, whether by
declaration or otherwise, enforce any
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judgment obtained, and collect from the Issuer moneys adjudged due,
subject in all cases to the provisions of Sections 3.1 and 5.3;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) institute Proceedings from time to time for the complete or
partial foreclosure of this Trust C Indenture with respect to the Trust
Estate;
(iv) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of
the Class C Notes and the Note Insurer hereunder; and
(v) refrain from selling the Trust Estate and apply all related
Trust C Monthly Remittance Amounts pursuant to Section 5.6.
SECTION 5.4. Indenture Trustee May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Issuer or any other obligor upon any of the Class C Notes or the property
of the Issuer or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether the Class C Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Issuer for the payment of
any overdue principal or interest) shall, at the direction of the Note Insurer,
be entitled and empowered, by intervention in such Proceeding or otherwise to:
(i) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Class C Notes and file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel) and of the Class C Noteholders
and the Note Insurer allowed in such Proceeding, and
(ii) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, Indenture Trustee, liquidator, or sequestrator (or
other similar official) in any such Proceeding is hereby authorized by
each Class C Noteholder and the Note Insurer to make such payments to the
Indenture Trustee and, in the event that the Indenture Trustee shall
consent to the making of such payments directly to the Class C Noteholders
and the Note Insurer, to pay to the Indenture Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or consent to or accept or adopt on behalf of any Class C Noteholder
or the Note Insurer any plan of reorganization, arrangement, adjustment or
composition affecting any of the Class C Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Class C Noteholder or the Note Insurer in any such
Proceeding. Any
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plan of reorganization, arrangement, adjustment or composition relative to the
Issuer or any other obligor upon any of the Class C Notes or the property of the
Issuer or of such obligor or their creditors and affecting the Class C Notes or
the rights of the Note Insurer under this Indenture or the Insurance Agreement
must be acceptable to the Note Insurer and, as long as no Note Insurer Default
exists and is continuing, the Note Insurer shall be entitled to exercise the
voting rights of the Holders of the Class C Notes regarding such plan,
reorganization, arrangement, adjustment or composition.
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession
of Class C Notes. All rights of action and claims under this Indenture or any of
the Class C Notes may be prosecuted and enforced by the Indenture Trustee
without the possession of any of the Class C Notes or the production thereof in
any Proceeding relating thereto, and any such Proceeding instituted by the
Indenture Trustee, at the direction of the Note Insurer, shall be brought in its
own name as Indenture Trustee of an express trust, and any recovery of judgment
shall be for the ratable benefit of the Holders of the Class C Notes and the
Note Insurer in respect of which such judgment has been recovered after payment
of amounts required to be paid pursuant to clause (i) Section 5.6.
SECTION 5.6. Application of Money Collected. If the Class C Notes
have been declared due and payable following an Event of Default with respect to
the Class C Notes and such declaration and its consequences have not been
rescinded and annulled, any money collected by the Indenture Trustee with
respect to the Class C Notes pursuant to this Article or otherwise and any other
monies that may then be held or thereafter received by the Indenture Trustee as
security for the Class C Notes shall be applied in the following order, at the
date or dates fixed by the Indenture Trustee and, in case of the payment of the
entire amount due on account of principal of, and interest on, the Class C
Notes, upon presentation and surrender thereof:
(i) first, to the Indenture Trustee any unpaid Indenture Trustee's
Fees related to the Class C Notes then due and any other amounts payable
and due to the Indenture Trustee under this Indenture, including any costs
or expenses incurred by it in connection with the enforcement of the
remedies provided for in this Article;
(ii) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees related to the Mortgage Loans then
due and, upon the final liquidation of the related Mortgage Loan or the
final liquidation of the Trust Estate related to the Mortgage Loans,
Servicing Advances and Delinquency Advances, including Nonrecoverable
Advances related to the Mortgage Loans previously made by, and not
previously reimbursed or retained by, the Servicer;
(iii) third, to the payment of the Class C Interest Distribution
Amount then due and unpaid upon the Outstanding Amount of the Class C
Notes through the day preceding the date on which such payment is made;
(iv) fourth, to the payment of the Class C Note Principal Balance
then due and unpaid upon the Outstanding Amount of the Class C Notes;
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(v) fifth, to the payment of the Note Insurer, all amounts due
pursuant to the Insurance Agreement; and
(vi) sixth, to the Trust C Certificateholders, any amount remaining
on deposit in the Trust C Note Account.
SECTION 5.7. Limitation of Suits. No Holder of any Note shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee in bankruptcy,
or for any other remedy hereunder, unless:
(i) the Holders of not less than 25% of the Outstanding Amount of
the related Class C Notes have made written request to the Indenture
Trustee to institute such proceeding in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(ii) such Holder or Holders have offered to the Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(iii) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
proceedings;
(iv) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority of the Outstanding Amount of the related Class C Notes; and
(v) an Note Insurer Default shall have occurred and be continuing;
it being understood and intended that no Holders of Class C Notes shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Class C Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of related Class C
Notes, each representing less than a majority of the Outstanding Amount of the
related Class C Notes, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Class C Noteholders to Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
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SECTION 5.9. Restoration of Rights and Remedies. If the Control
Party or any Class C Noteholder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, then and in every such case the Issuer, the Note
Insurer, the Indenture Trustee and the Class C Noteholders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Note Insurer and the Class C Noteholders shall continue
as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Control Party or to the related Class C
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission
of the Indenture Trustee, Control Party or any Holder of any Note to exercise
any right or remedy accruing upon 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 V or by law
to the Indenture Trustee, the Note Insurer or to the Class C Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Class C Noteholders, as the case
may be.
SECTION 5.12. Control by Noteholders. If the Indenture Trustee is
the Control Party, the Holders of a majority of the Outstanding Amount of the
related Class C Notes, with the consent of the Note Insurer, shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee pursuant to Section 12.1 with respect
to the related Class C Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any related Class C Noteholders not
consenting to such action.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
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undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by the Note Insurer, any Class C
Noteholder, or group of Class C Noteholders with the prior written consent of
the Note Insurer, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Class C Notes or (c) any suit instituted by any Class
C Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.15. Action on Class C Notes. The Indenture Trustee's right
to seek and recover judgment on the Class C Notes or under this Indenture shall
not be affected by the seeking, obtaining or application of any other relief
under or with respect to this Indenture. Neither the lien of this Indenture nor
any rights or remedies of the Indenture Trustee, the Note Insurer or the Class C
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee or the Note Insurer against the Issuer or by the levy of any execution
under such judgment upon any portion of the Trust Estate or upon any of the
assets of the Issuer.
SECTION 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee (at the direction of
the Note Insurer) to do so and at the Master Servicer's expense, the Issuer
agrees to take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by the Sponsor and the Master
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Sale and Servicing Agreement in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Sponsor or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Sponsor or the Master Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Indenture Trustee is a Control Party and if an Event of
Default has occurred and is continuing, the Indenture Trustee may, and, at the
written direction of the Holders of 66-2/3% of the Outstanding Amount of the
related Class of Class C Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Sponsor or the Master Servicer
under or in connection with the Sale and Servicing Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Sponsor
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or the Master Servicer of each of their obligations to the Issuer thereunder and
to give any consent, request, notice, direction, approval, extension or waiver
under the Sale and Servicing Agreement, and any right of the Issuer to take such
action shall be suspended.
SECTION 5.17. Subrogation. The Indenture Trustee shall receive as
attorney-in-fact of each Class C Noteholder any Insured Payment from the Note
Insurer pursuant to the Trust C Note Policy. Any and all Trust C Insured
Payments disbursed by the Indenture Trustee from claims made under the Trust C
Note Policy shall not be considered payment by the Trust, and shall not
discharge the obligations of the Trust with respect thereto. The Note Insurer
shall, to the extent it makes any payment with respect to any Class C Notes,
become subrogated to the rights of the recipient of such payments to the extent
of such payments. Subject to and conditioned upon any payment with respect to
any Class C Notes by or on behalf of the Note Insurer, the Indenture Trustee
shall assign to the Note Insurer all rights to the payment of interest or
principal with respect to such Class of Class C Notes which are then due for
payment to the extent of all payments made by the Note Insurer. In addition to
the rights of the Note Insurer set forth in Section 11.20 hereof, the Note
Insurer may exercise any option, vote, right, power or the like with respect to
such Class of Class C Notes to the extent that it has made payment pursuant to
the related Trust C Note Policy.
SECTION 5.18. Preference Claims. (a) In the event that the Indenture
Trustee has received a certified copy of an order of the appropriate court that
any payment on a Note has been avoided in whole or in part as a preference
payment under applicable bankruptcy law, the Indenture Trustee shall so notify
the Note Insurer, shall comply with the provisions of the related Policy to
obtain payment by the Note Insurer of such avoided payment, and shall, at the
time it provides notice to the Note Insurer, notify Holders of the Class C Notes
by mail that, in the event that any Class C Noteholder's payment is so
recoverable, such Class C Noteholder will be entitled to payment pursuant to the
terms of the related Policy. The Indenture Trustee shall furnish to the Note
Insurer at its written request, the requested records it holds in its possession
evidencing the payments of principal of and interest on Class C Notes, if any,
which have been made by the Indenture Trustee and subsequently recovered from
Class C Noteholders, and the dates on which such payments were made. Pursuant to
the terms of the related Policy, the Note Insurer will make such payment on
behalf of the Class C Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order (as
defined in the related Policy) and not to the Indenture Trustee or any Class C
Noteholder directly.
(b) The Indenture Trustee shall promptly notify the Note Insurer of
any proceeding or the institution of any action (of which the Indenture Trustee
has actual knowledge) seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the Class C
Notes. Each Holder, by its purchase of Class C Notes, and the Indenture Trustee
hereby agree that so long as an Note Insurer Default shall not have occurred and
be continuing, the Note Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedes or performance bond pending any such appeal at the expense of
the Note Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.18, the
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Note Insurer shall be subrogated to, and each Class C Noteholder and the
Indenture Trustee hereby delegate and assign, to the fullest extent permitted by
law, the rights of the Indenture Trustee and each Class C Noteholder in the
conduct of any proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
SECTION 5.19. Waiver of Past Defaults. The Note Insurer or the
Holders of Class C Notes representing more than 50% of the aggregate Class C
Principal Balance of the Outstanding Class C Notes on the applicable Record Date
may on behalf of the Holders of all the Class C Notes, and with the consent of
the Note Insurer, waive any past default hereunder and its consequences, except
a default in the payment of principal or any installment of interest on any
Class C Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
ARTICLE VI.
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee.
(a) If a Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and the Operative Documents and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs; provided, however,
that if the Indenture Trustee is acting as Master Servicer, it shall use the
same degree of care and skill as is required of the Master Servicer under the
Trust C Sale and Servicing Agreement.
(b) Except during the continuance of a Event of Default:
(i) The Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11; and
(iv) the Indenture Trustee shall not be charged with knowledge of
any failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 5.1 of the
Trust C Sale and Servicing Agreement unless a Responsible Officer of the
Indenture Trustee at the Corporate Trust Office obtains actual knowledge
of such failure or occurrence or the Indenture Trustee receives written
notice of such failure or occurrence from the Master Servicer, the Note
Insurer or the Holders of Class C Notes evidencing Voting Rights
aggregating not less than 51%.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(g) The Indenture Trustee shall, upon two Business Days' prior
written notice to the Indenture Trustee, permit any representative of the Note
Insurer, during the Indenture Trustee's normal business hours, to examine all
books of account, records, reports and other papers of the Indenture Trustee
relating to the Class C Notes, to make copies and extracts therefrom and to
discuss the Indenture Trustee's affairs and actions, as such affairs and actions
relate to the Indenture Trustee's duties with respect to the Class C Notes, with
the Indenture Trustee's officers and employees responsible for carrying out the
Indenture Trustee's duties with respect to the Class C Notes.
(h) The Indenture Trustee shall, and hereby agrees that it will,
perform all of the obligations and duties required of it under the Trust C Sale
and Servicing Agreement.
(i) The Indenture Trustee shall, and hereby agrees that it will,
hold the Note Policy in trust, and will hold any proceeds of any claim on the
Note Policy in trust solely for the use and benefit of the Noteholders.
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(j) In no event shall Bankers Trust Company of California, N.A., in
any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement except making payments to the Trust C Certificateholders.
SECTION 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Class C Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Class C
Notes or the Control Party, pursuant to the provisions of this Indenture, unless
such Holders of Class C Notes or the Control Party shall have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; provided, however, that
the Indenture Trustee shall, upon the occurrence of a Event of Default or Event
of Servicer Termination as defined in the Trust C Sale and Servicing Agreement
(that has not been cured or waived), exercise the rights and powers vested in it
by this Indenture or the Trust C Sale and Servicing Agreement with reasonable
care and skill.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Note Insurer or by the Holders of Class C Notes evidencing not less than
25% of the Outstanding Amount thereof; provided, however, that if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred
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by it in the making of such investigation is, in the opinion of the Indenture
Trustee, not reasonably assured to the Indenture Trustee by the security
afforded to it by the terms of this Indenture or the Trust C Sale and Servicing
Agreement, the Indenture Trustee may require indemnity reasonably satisfactory
to it against such cost, expense or liability as a condition to so proceeding;
the reasonable expense of every such examination shall be paid by the Person
making such request, or, if paid by the Indenture Trustee shall be reimbursed by
the Person making such request upon demand.
(h) The Indenture Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions hereunder of
the Master Servicer until such time as, and only to the extent that, the
Indenture Trustee may be required to act as Master Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Class C Notes and may otherwise deal with the Issuer or its Affiliates with
the same rights it would have if it were not Indenture Trustee. Any Note Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Trust Estate or the Class C Notes, it shall not
be accountable for the Issuer's use of the proceeds from the Class C Notes, and
it shall not be responsible for any statement of the Issuer in the Indenture or
in any document issued in connection with the sale of the Class C Notes or in
the Class C Notes other than the Indenture Trustee's certificate of
authentication.
SECTION 6.5. Notice of Defaults. If an Event of Default or an Event
of Servicer Termination occurs and is continuing and if it is either known by,
or written notice of the existence thereof has been delivered to, a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder and to the Note Insurer of such event within 10 days after such
knowledge or notice occurs. Except in the case of an Event of Default in payment
of principal of or interest on any Class C Note, the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of Class C
Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. Upon written
request, the Note Paying Agent or the Master Servicer shall on behalf of the
Issuer deliver to each Noteholder such information as may be reasonably required
to enable such Holder to prepare its Federal and state income tax returns
required by law.
SECTION 6.7. Compensation and Indemnity.
(a) The Indenture Trustee shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Indenture Trustee herein. Neither the Indenture Trustee nor any of the
directors, officers, employees or agents of the Indenture Trustee shall be under
any liability on any Note or otherwise to any Account, the
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Issuer, the Sponsor, the Master Servicer or any Securityholder for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Indenture, or for errors in judgment; provided, however, that this
provision shall not protect the Indenture 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 Indenture 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 Indenture Trustee is the obligor). The indemnification
provided in this Section 6.7 shall survive the termination of this Indenture or
the resignation or removal of the Indenture Trustee hereunder. The Indenture
Trustee and any director, officer, employee or agent of the Indenture 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.
(b) The Issuer's obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. Notwithstanding
anything else set forth in this Indenture or the Operative Documents, the
Indenture Trustee agrees that the obligations of the Issuer (but not the Master
Servicer) to the Indenture Trustee hereunder and under the Operative Documents
shall be recourse to the Trust Estate only and specifically shall not be
recourse to the assets of the Issuer or any Securityholder. In addition, the
Indenture Trustee agrees that its recourse to the Issuer, the Trust Estate, the
Sponsor and amounts held in the Accounts shall be limited to the right to
receive the distributions referred to herein.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Issuer and the Note Insurer by
written notice. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor Indenture Trustee (approved in writing by the Note
Insurer, so long as such approval is not unreasonably withheld) by written
instrument, in duplicate, one copy of such instrument shall be delivered to the
resigning Indenture Trustee (who shall deliver a copy to the Master Servicer)
and one copy to the successor Indenture Trustee; provided, however, that any
such successor Indenture Trustee shall be subject to the prior written approval
of the Master Servicer, which approval shall not be unreasonably withheld. The
Issuer may and, at the request of the Note Insurer shall, remove the Indenture
Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, Indenture Trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering the
winding-up or liquidation of the Indenture Trustee's affairs;
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(iii) an involuntary case under the federal bankruptcy laws, as now
or hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
Indenture Trustee, conservator, sequestrator (or other similar official)
for the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of creditors
or fails generally to pay its debts as such debts become due or takes any
corporate action in furtherance of any of the foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee acceptable to the
Note Insurer. If the Issuer fails to appoint such a successor Indenture Trustee,
the Note Insurer may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee, to the Note Insurer and to
the Issuer. Thereupon the resignation or removal of the retiring Indenture
Trustee shall become effective, and the successor Indenture Trustee shall have
all the rights, powers and duties of the retiring Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its succession
to Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Class C Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee acceptable to the Note Insurer.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Note Insurer.
Any resignation or removal of the Indenture Trustee and appointment
of a successor Indenture Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor Indenture Trustee pursuant to Section 6.8 and payment of all fees and
expenses owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Master Servicer's indemnity obligations under
Section 6.7 shall
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continue for the benefit of the retiring Indenture Trustee and the Master
Servicer shall pay any amounts owing to the Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Class C Notes shall have been authenticated
but not delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor Indenture Trustee, and deliver
such Class C Notes so authenticated; and in case at that time any of the Class C
Notes shall not have been authenticated, any successor to the Indenture Trustee
may authenticate such Class C Notes either in the name of any predecessor
hereunder or in the name of the successor to the Indenture Trustee; and in all
such cases such certificates shall have the full force which it is anywhere in
the Class C Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Indenture Trustee
with the consent of the Note Insurer shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-Indenture
Trustee or co-Indenture Trustees, or separate Indenture Trustee or separate
Indenture Trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-Indenture Trustee or separate
Indenture Trustee hereunder shall be required to meet the terms of eligibility
as a successor Indenture Trustee under Section 6.11 and no notice to Noteholders
of the appointment of any co-Indenture Trustee or separate Indenture Trustee
shall be required under Section 6.8 hereof.
(b) Every separate Indenture Trustee and co-Indenture Trustee shall,
to the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee shall
be incompetent or unqualified to perform such
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act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
separate Indenture Trustee or co-Indenture Trustee, but solely at the
direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally liable by
reason of any act or omission of any other Indenture Trustee hereunder,
including acts or omissions of predecessor or successor Indenture
Trustees; and
(iii) the Indenture Trustee and the Master Servicer acting jointly
may at any time accept the resignation of or remove any separate Indenture
Trustee or co-Indenture Trustee except that following the occurrence of an
Event of Servicer Termination, the Indenture Trustee acting alone may
accept the resignation of or remove any separate Indenture Trustee or
co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
Indenture Trustees and co-Indenture Trustees, as effectively as if given to each
of them. Every instrument appointing any separate Indenture Trustee or
co-Indenture Trustee shall refer to this Agreement and the conditions of this
Article VI. Each separate Indenture Trustee and co-Indenture Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Indenture Trustee. Every such instrument shall be filed with the
Indenture Trustee.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at
any time constitute the Indenture Trustee, its agent or attorney-in-fact with
full power and authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, dissolve, become
insolvent, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor Indenture Trustee.
(e) The Master Servicer shall be responsible for the fees of any
co-Indenture Trustee or separate Indenture Trustee appointed hereunder.
SECTION 6.11. Eligibility: Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. The Indenture
Trustee shall provide copies of such reports to the Note Insurer upon request.
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
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SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints Bankers
Trust Company of California, N.A. as the Indenture Trustee with respect to the
Collateral, and Bankers Trust Company of California, N.A. hereby accepts such
appointment and agrees to act as Indenture Trustee with respect to the Trust
Estate for the Issuer Secured Parties, to maintain custody and possession of
such Trust Estate (except as otherwise provided hereunder) and to perform the
other duties of the Indenture Trustee in accordance with the provisions of this
Indenture and the other Operative Documents. Each Issuer Secured Party hereby
authorizes the Indenture Trustee to take such action on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder, as the Control
Party may direct and as are specifically authorized to be exercised by the
Indenture Trustee by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The
Indenture Trustee shall act upon and in compliance with the written instructions
of the Control Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Indenture Trustee shall
not act in accordance with any instructions (i) which are not authorized by, or
in violation of the provisions of, this Indenture or (ii) for which the
Indenture Trustee has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Indenture Trustee
of its express duties hereunder, except where this Indenture provides that the
Indenture Trustee is permitted to act only following and in accordance with such
instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee shall
have no duties or responsibilities except those expressly set forth in this
Indenture and the other Operative Documents to which the Indenture Trustee is a
party or as directed by the Control Party in accordance with this Indenture. The
Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction and with the indemnification of the
Control Party. The Indenture Trustee shall, and hereby agrees that it will,
perform all of the duties and obligations required of it under the Trust C Sale
and Servicing Agreement.
SECTION 6.15. Limitation on Liability. Neither the Indenture Trustee
nor any of its directors, officers, employees and agents shall be liable for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Indenture Trustee shall be liable for its negligence,
bad faith or willful misconduct; nor shall the Indenture Trustee be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Issuer of this Indenture or any of the Trust Estate (or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of negligence,
bad faith or willful misconduct on its part, the Indenture Trustee shall be
entitled to rely on any communication, instrument, paper or other document
reasonably believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons and shall have no liability in acting, or
omitting to act, where such action or omission to act is in reasonable reliance
upon any statement or opinion contained in any such document or instrument.
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SECTION 6.17. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Issuer and to each
Issuer Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States and is duly authorized and licensed under applicable
law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite right,
power and authority to execute and deliver this Indenture and to perform all of
its duties as the Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Indenture
Trustee of this Indenture and the other Operative Documents to which it is a
party, and the performance by the Indenture Trustee of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate proceedings,
are required for the valid execution and delivery by the Indenture Trustee, or
the performance by the Indenture Trustee, of this Indenture and such other
Operative Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has duly
executed and delivered this Indenture and each other Operative Document to which
it is a party, and each of this Indenture and each such other Operative Document
constitutes the legal, valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms, except
as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to any Account and
agrees that amounts in the Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
SECTION 6.19. Control by the Control Party. The Indenture Trustee
shall comply with notices and instructions given by the Issuer only if
accompanied by the written consent of the Control Party.
SECTION 6.20. Indenture Trustee May Enforce Claims Without
Possession of Class C Notes. All rights of action and claims under this
Agreement or the Class C Notes may be prosecuted and enforced by the Indenture
Trustee without the possession of any of the Class C Notes or the production
thereof in any proceeding relating thereto, and such proceeding instituted by
the Indenture Trustee shall be brought in its own name or in its capacity as
Indenture Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursement and advances of
the Indenture Trustee, its agents and counsel, be for the ratable benefit of the
Noteholders in respect of which such judgment has been recovered.
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SECTION 6.21. Suits for Enforcement. In case an Event of Servicer
Termination or other default by the Master Servicer or the Sponsor hereunder
shall occur and be continuing, the Indenture Trustee, if the Control Party (and
if not the Control Party, with the consent of the Note Insurer), may proceed to
protect and enforce its rights and the rights of the Noteholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Indenture Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Indenture Trustee and the
Noteholders.
SECTION 6.22. Mortgagor Claims. In connection with any offset
defenses, or affirmative claim for recovery, asserted in legal actions brought
by Mortgagors under one or more Mortgage Loans based upon provisions therein or
upon other rights or remedies arising from any requirements of law applicable to
the Mortgage Loans:
(a) The Indenture Trustee is the holder of the Mortgage Loans only
as Indenture Trustee on behalf of the holders of the Class C Notes, and not as a
principal or in any individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable for, or
obligated to pay Mortgagors, any affirmative claims asserted thereby, or
responsible to holders of the Class C Notes for any offset defense amounts
applied against Mortgage Loan payments, pursuant to such legal actions.
(c) The Indenture Trustee will pay, solely from available Trust
money, affirmative claims for recovery by Mortgagors only pursuant to final
judicial orders or judgments, or judicially-approved settlement agreements,
resulting from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and
judgments which require its actions or cooperation in connection with
Mortgagors' legal actions to recover affirmative claims against holders of the
Class C Notes.
(e) The Indenture Trustee will cooperate with and assist the Master
Servicer, the Sponsor, or holders of the Class C Notes in their defense of legal
actions by Mortgagors to recover affirmative claims if such cooperation and
assistance is not contrary to the interests of the Indenture Trustee as a party
to such legal actions and if the Indenture Trustee is satisfactorily indemnified
for all liability, costs and expenses arising therefrom.
(f) The Issuer hereby agrees to cause the Master Servicer to
indemnify, hold harmless and defend the Indenture Trustee from and against any
and all liability, loss, costs and expenses of the Indenture Trustee resulting
from any affirmative claims for recovery asserted or collected by Mortgagors
under the Mortgage Loans.
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ARTICLE VII.
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished. The Indenture Trustee or, if the Indenture Trustee is
not the Note Registrar, the Issuer shall furnish to the Note Insurer or the
Issuer in writing upon their written request and at such other times as the Note
Insurer or the Issuer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.1
and the names and addresses of Holders received by the Indenture Trustee in its
capacity as Note Registrar. The Indenture Trustee may destroy any list furnished
to it as provided in such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Class C Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and copies of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
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(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.3(a) as may be required by rules and regulations prescribed from time to
time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each December 31, beginning with December
31, 1999, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders
shall be filed by the Indenture Trustee with the Commission and each stock
exchange, if any, on which the Class C Notes are listed. The Issuer shall notify
the Indenture Trustee if and when the Class C Notes are listed on any stock
exchange.
ARTICLE VIII.
PAYMENTS AND STATEMENTS TO CLASS C
NOTEHOLDERS AND TRUST C CERTIFICATEHOLDERS;
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Trust
C Sale and Servicing Agreement including (a) all payments due on the Mortgage
Loans and required to be paid over to the Indenture Trustee by the Master
Servicer or by any Sub-Servicer and (b) Trust C Insured Payments. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture
and the Trust C Sale and Servicing Agreement. Except as otherwise expressly
provided in this Indenture or in the Trust C Sale and Servicing Agreement, if
any default occurs in the making of any payment or performance under any
agreement or instrument that is part of the Trust Estate, the Indenture Trustee
may take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings.
SECTION 8.2. Release of Trust Estate.
(a) Subject to Section 8.12 and the payment of its fees and expenses
pursuant to Section 6.7, the Indenture Trustee may, and when required by the
Issuer and the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture or
the Trust C Sale and Servicing Agreement. No party relying upon an instrument
executed by the
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Indenture Trustee as provided in this Article VIII shall be bound to ascertain
the Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Class
C Notes outstanding and all sums due the Indenture Trustee pursuant to Section
6.7 and to the Note Insurer pursuant to the Insurance Agreement have been paid,
release any remaining portion of the Trust Estate that secured the Class C Notes
from the lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Accounts. The Indenture
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.2(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.3. Establishment of Accounts. The Issuer shall cause to be
established, and the Indenture Trustee shall maintain, at the corporate trust
office of the Indenture Trustee a Trust C Note Account and a Trust C Reserve
Account, each to be held by the Indenture Trustee in the name of Trust C for the
benefit of the Class C Noteholders and the Note Insurer, as their interests may
appear.
SECTION 8.4. The Trust C Note Policy.
(a) On or before each Determination Date the Indenture Trustee shall
determine with respect to the immediately following Payment Date, the Class C
Deficiency Amount, if any.
(b) If the Indenture Trustee determines pursuant to paragraph (a)
above that a Class C Deficiency Amount would exist, the Indenture Trustee shall
complete a Notice in the form of Exhibit A to the Trust C Note Policy and submit
such notice to the Note Insurer no later than 12:00 p.m., New York City time on
the third Business Day preceding such Payment Date as a claim for a payment in
an amount equal to the Class C Deficiency Amount.
(c) Upon receipt of payments made pursuant to the Trust C Note
Policy from the Note Insurer on behalf of Class C Noteholders, the Indenture
Trustee shall deposit such payments in the Trust C Note Account and shall
distribute such payments, or the proceeds thereof, in accordance with Section
8.7(b) hereof to the Class C Noteholders.
(d) The Indenture Trustee shall (i) receive payments made pursuant
to the Note Policy as attorney-in-fact of each Class C Noteholder receiving any
Insured Payment from the Note Insurer and (ii) disburse such Insured Payment to
the Class C Noteholders as set forth in Section 8.7(b) hereof. The Note Insurer
shall be entitled to receive the related Trust C Reimbursement Amount pursuant
to Section 8.7(b)(viii) hereof with respect to each Insured Payment made by the
Note Insurer. The Indenture Trustee hereby agrees on behalf of each Class C
Noteholder and the Trust for the benefit of the Note Insurer that it recognizes
that to the extent the Note Insurer makes payments pursuant to the Trust C Note
Policy, either directly or indirectly (as by paying through the Indenture
Trustee), to the Class C Noteholders, the Note Insurer will be entitled to
receive such related Trust C Reimbursement Amount.
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SECTION 8.5. Trust C Reserve Account.
(a) On each Payment Date the Indenture Trustee shall deposit to the
Trust C Reserve Account the amounts, if any, transferred to the Indenture
Trustee pursuant to Sections 8.5(a) of the Trust A Indenture and Section 8.5(a)
of the Trust B Indenture. The amounts on deposit in the Trust C Reserve Account
on any date of determination shall be the "Available Reserve Amounts".
(b) If, on any Payment Date, and after taking into account the
application of the Trust C Total Available Funds (but not the proceeds of any
Trust C Insured Payment) to the items listed in clauses (i) through (vi) of
Section 8.7(b) hereof on such Payment Date, the full amount of the Class C
Interest Distribution Amount (excluding any Class C Available Funds Cap Current
Amount and Class C Available Funds Cap Carry-Forward Amounts, and any related
Relief Act Shortfalls) has not been paid, and/or a Trust A Overcollateralization
Deficit would result, the Indenture shall withdraw from the Trust C Reserve
Account and deposit into the Class C Note Account for distribution to the Class
C Noteholders an amount equal to the lesser of (x) the Available Reserve Amount
as of such Payment Date and (y) the shortfall in the Class C Interest
Distribution Amount and the amount of the unpaid Trust C Overcollateralization
Deficit as of such Payment Date.
(c) If, on any Payment Date, and after taking into account the
application of the Trust C Total Available Funds (but not the proceeds of any
Trust C Insured Payment) to the items listed in clauses (i) through (vi) of
Section 8.7(b) hereof on such Payment Date, the full amount of the Class C
Interest Distribution Amount (excluding any Class C Available Funds Cap Current
Amount and Class C Available Funds Cap Carry-Forward Amounts, and any related
Relief Act Shortfalls) has been paid, and/or a Trust A Overcollateralization
Deficit does not exist, amounts on deposit in the Trust C Reserve Account may be
withdrawn by the Indenture Trustee for deposit to the Class A Note Account and
the Class B Note Account to fund any Class A Full Deficiency Amounts and Class B
Full Deficiency Amounts, pro rata, based on the amount of such deficiencies in
accordance with clauses (ix), (xii) and (xiii) of Section 8.7(b) hereof.
(d) If, on any Payment Date, the sum of (x) the Trust C
Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Trust C
Overcollateralization Reduction Amount, plus (y) the Available Reserve Amounts,
after taking into account any withdrawals therefrom pursuant to clause (b) and
(c) above exceeds the Trust C Specified Overcollateralization Amount for such
Payment Date (such excess being a "Trust C O/C Surplus Amount"), the Trustee
shall withdraw from the Class C Reserve Account for deposit (A) to the Trust A
Note Account for distribution to the Trust A Certificateholders an amount equal
to the product of (I) a fraction, the numerator of which is the Trust A
Aggregate Reserve Contribution Amount and the denominator of which is the sum of
the Trust A Aggregate Reserve Contribution Amount and the Trust B Aggregate
Reserve Contribution Amount and (II) such Trust C O/C Surplus Amount and (B) to
the Trust B Note Account for distribution to the Trust B Certificateholders an
amount equal to the product of (I) a fraction, the numerator of which is the
Trust B Aggregate Reserve Contribution Amount and the denominator of which is
the sum of the Trust A Aggregate Reserve Contribution Amount and the Trust B
Aggregate Reserve Contribution Amount and (II) such Trust C O/C Surplus Amount.
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SECTION 8.6. Reserved.
SECTION 8.7. Flow of Funds.
(a) The Indenture Trustee shall deposit to the Trust C Note Account,
without duplication, upon receipt, (i) any payments made pursuant to the Note
Policy relating to Trust C, (ii) the proceeds of any liquidation of the assets
of Trust C, and (iii) the Trust C Monthly Remittance Amount remitted by the
Master Servicer or any Sub-Servicer, together with any Substitution Amounts, and
any Loan Purchase Price amounts received by the Indenture Trustee (collectively,
the "Trust C Total Available Funds").
(b) Subject to any superseding provisions of clause (d) below, on
each Payment Date, the Indenture Trustee shall make the following allocations,
disbursements and transfers from amounts then on deposit in the Trust C Note
Account in the following order of priority, and each such allocation, transfer
and disbursement shall be treated as having occurred only after all preceding
allocations, transfers and disbursements have occurred:
(i) first, to the Indenture Trustee, the Indenture Trustee's Fee
then due and to the Owner Trustee, the Owner Trustee's Fee then due;
(ii) second, to the Note Insurer, the Trust C Premium Amount then
due to the Note Insurer for such Payment Date.
(iii) third, to the Master Servicer, an amount equal to any
previously unreimbursed Master Servicing Fees then due to it on account of
the Unaffiliated Originator Loans not theretofore received by the Master
Servicer pursuant to Section 4.8(c)(i) of the Trust C Sale and Servicing
Agreement, as reported by the Master Servicer to the Indenture Trustee.
(iv) fourth, to the Class C Noteholders, the Class C Interest
Distribution Amount for such Payment Date;
(v) fifth, to the Class C Noteholders, as a distribution of
principal, the Trust C Scheduled Principal Distribution Amount for such
Payment Date;
(vi) sixth, to the Class C Noteholders, as a distribution of
principal, the related Trust C Overcollateralization Deficit for such
Payment Date;
(vii) seventh, to the Note Insurer, the Trust C Reimbursement
Amount, if any, then due to it;
(viii) eighth, to the Class C Noteholders, as a distribution of
principal, up to an amount equal to the Trust C Accelerated Principal
Payment;
(ix) ninth, for deposit to the Trust A Note Account and the Trust B
Note Account, to fund pro rata (calculated based on the amount of each
such Trust's Full Deficiency Amount on such Payment Date), (I) the Trust A
Full Deficiency Amount (after taking into account the allocation of 100%
of the Trust A Total Available Funds on
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such Payment Date) and (II) the Trust B Full Deficiency Amount, (after
taking into account the allocation of 100% of the Trust B Total Available
Funds, on such Payment Date); provided, that with respect to the foregoing
clause (I), if Trust B Available Crossover Amounts exist on such Payment
Date, the Indenture Trustee shall deposit into the Trust A Note Account
pursuant to this clause (ix) an amount equal to the lesser of (a) the
Trust C Available Crossover Amount for such Payment Date and (b) the
product of (x) such Trust A Full Deficiency Amount (after taking into
account the allocation of 100% of the Trust A Total Available Funds on
such Payment Date) and (y) a fraction, the numerator of which is the Trust
C Available Crossover Amount on such Payment Date and the denominator of
which is the sum of the Trust B Available Crossover Amount and the Trust C
Available Crossover Amount on such Payment Date and with respect to the
foregoing clause (II), if Trust A Available Crossover Amounts exist on
such Payment Date, the Indenture Trustee shall deposit into the Trust B
Note Account an amount equal to the lesser of (a) the Trust C Available
Crossover Amount for such Payment Date and (b) the product of (x) such
Trust B Full Deficiency Amount (after taking into account the allocation
of 100% of the Trust B Total Available Funds on such Payment Date) and (y)
a fraction, the numerator of which is the Trust C Available Crossover
Amount on such Payment Date and the denominator of which is the sum of the
Trust B Available Crossover Amount and the Trust C Available Crossover
Amount on such Payment Date;
(x) tenth, to the Class C Noteholders, to fund the amount of any
Class C Available Funds Cap Current Amount for such Payment Date;
(xi) eleventh, to the Class C Noteholders, to fund the amount of any
Class C Available Funds Cap Carry Forward Amount then due on such Payment
Date;
(xii) twelfth, for deposit to the Trust A Note Account and the Trust
B Note Account, to fund pro rata (calculated based on the amount of each
such Trust's Available Funds Cap Current Amount on such Payment Date), (I)
the Trust A Available Funds Cap Current Amount after taking into account
the allocation of 100% of the Trust A Total Available Funds on such
Payment Date (such amount, the "Trust A Available Funds Cap Current
Deficiency Amount") and (II) the Trust B Available Funds Cap Current
Amount, after taking into account the allocation of 100% of the Trust B
Total Available Funds, on such Payment Date (such amount, the "Trust B
Available Funds Cap Current Deficiency Amount"); provided, that with
respect to the foregoing clause (I), if unused Trust B Available Crossover
Amounts exist on such Payment Date, the Indenture Trustee shall deposit
into the Trust A Note Account pursuant to this clause (xii) an amount
equal to the lesser of (a) the remaining Trust C Available Crossover
Amount for such Payment Date and (b) the product of (x) the Trust A
Available Funds Cap Current Deficiency Amount and (y) a fraction, the
numerator of which is such remaining Trust C Available Crossover Amount on
such Payment Date and the denominator of which is the sum of such
remaining Trust B Available Crossover Amount and the unused Trust C
Available Crossover Amounts on such Payment Date and with respect to the
foregoing clause (II), if unused Trust A Available Crossover Amounts exist
on such Payment Date, the Indenture Trustee shall deposit into the Trust B
Note Account pursuant to this clause (xii) an amount equal to the lesser
of (a) the remaining Trust C Available Crossover Amount for such Payment
Date and (b) the product of (x) the Trust B Available Funds Cap
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Current Deficiency Amount and (y) a fraction, the numerator of which is
such remaining Trust C Available Crossover Amounts on such Payment Date
and the denominator of which is the sum of such remaining Trust B
Available Crossover Amount and the unused Trust C Available Crossover
Amounts on such Payment Date;
(xiii) thirteenth, for deposit to the Trust A Note Account and the
Trust B Note Account, to fund pro rata (calculated based on the amount of
each Trust's Available Funds Cap Carry Forward Amount on such Payment
Date), (I) the Trust A Available Funds Cap Carry Forward Amount after
taking into account the allocation of 100% of the Trust A Total Available
Funds, on such Payment Date (such amount, the "Trust A Available Funds Cap
Carry-Forward Deficiency Amount") and (II) the Trust B Available Funds Cap
Carry Forward Amount, after taking into account the allocation of 100% of
the Trust B Total Available Funds on such Payment Date (such amount, the
"Trust B Available Funds Cap Carry-Forward Deficiency Amount"); provided,
that with respect to the foregoing clause (I), if unused Trust B Available
Crossover Amounts exist on such Payment Date, the Indenture Trustee shall
deposit into the Trust A Note Account pursuant to this clause (xiii) an
amount equal to the lesser of (a) the remaining Trust C Available
Crossover Amount for such Payment Date and (b) the product of (x) the
Trust A Available Funds Cap Carry-Forward Deficiency Amount and (y) a
fraction, the numerator of which is such remaining Trust C Available
Crossover Amount on such Payment Date and the denominator of which is the
sum of such remaining Trust B Available Crossover Amount and the unused
Trust C Available Crossover Amounts on such Payment Date and with respect
to the foregoing clause (II), if unused Trust A Available Crossover
Amounts exist on such Payment Date, the Indenture Trustee shall deposit
into the Trust B Note Account pursuant to this clause (xiii) an amount
equal to the lesser of (a) the remaining Trust C Available Crossover
Amount for such Payment Date and (b) the product of (x) the Trust B
Available Funds Cap Carry-Forward Deficiency Amount and (y) a fraction,
the numerator of which is such remaining Trust C Available Crossover
Amounts on such Payment Date and the denominator of which is the sum of
such remaining Trust A Available Crossover Amounts and the unused Trust C
Available Crossover Amounts on such Payment Date;
(xiv) fourteenth, to the Master Servicer, to the extent of any
unreimbursed Delinquency Advances, unreimbursed Servicing Advances,
including Nonrecoverable Delinquency Advances and Nonrecoverable Servicing
Advances and accrued and unpaid Master Servicing Fees as of such Payment
Date;
(xv) fifteenth, to the Indenture Trustee and the Owner Trustee, to
the extent of any unreimbursed expenses owed to each of them with respect
to Trust C;
(xvi) sixteenth, to the Trust C Certificateholders, any Trust C
Overcollateralization Reduction Amount; and
(xvii) seventeenth, to the Trust C Certificateholders, any amount
remaining on deposit in the Trust C Note Account.
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(c) On any Payment Date during the continuance of any Note Insurer
Default described in clause (b) or (c) of the definition thereof, no Trust C
Premium Amount shall be paid to the Note Insurer (unless the Note Insurer or its
custodian, Indenture Trustee, agent, receiver, custodian, or similar official
continues to make payments required under the Trust C Note Policy) and any
amounts otherwise payable to the Note Insurer as Trust C Premium Amounts shall
be retained in the Trust C Note Account as Trust C Total Available Funds. On any
Payment Date wherein such Note Insurer Default has been cured, the Trust C
Premium Amounts shall be paid to the Note Insurer.
SECTION 8.8. Investment of Accounts.
(a) So long as no event described in Section 5.1(a) or (b) of the
Trust C Sale and Servicing Agreement shall have occurred and be continuing, and
consistent with any requirements of the Code, all or a portion of the Accounts
held by the Indenture Trustee shall be invested and reinvested by the Indenture
Trustee in the name of the Indenture Trustee for the benefit of the Class C
Noteholders and the Note Insurer, 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 Section 5.1(a) or (b) of the
Trust C Sale and Servicing Agreement and following any removal of the Master
Servicer, the Note Insurer shall direct such investments. All investment income
shall be held in the Accounts for the benefit of the Master Servicer. 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 Indenture Trustee and sufficient uninvested funds are not available to
make such disbursement, the Indenture 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) The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any loss on any Eligible Investment included therein.
(d) The Indenture Trustee shall hold funds in the Accounts held by
the Indenture Trustee uninvested upon the occurrence of either of the following
events:
(i) the Master Servicer or the Note Insurer, as the case may be,
shall have failed to give investment directions to the Indenture Trustee;
or
(ii) the Master Servicer or the Note Insurer, as the case may be,
shall have failed to give investment directions to the Indenture Trustee
by 11:15 a.m. New York time (or such other time as may be agreed by the
Master Servicer or the Note Insurer, as the case may be, and the Indenture
Trustee) on any Business Day (any such investment by the Indenture Trustee
pursuant to this clause (ii) to mature on the next Business Day after the
date of such investment).
SECTION 8.9. Eligible Investments. The following are Eligible
Investments:
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(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 if applicable.
(c) Freddie Mac senior debt obligations and rated Aa2 or higher by
Moody's and AA or better by Standard & Poor's, if applicable .
(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 if
applicable.
(e) FNMA senior debt obligations and rated Aa2 or higher by Moody's
and AA or better by Standard & Poor's, if applicable.
(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 Note Insurer provided:
1. The agreement is with a bank or insurance company which has
an unsecured, uninsured and unguaranteed obligation (or
claims-paying ability) rated Aa2 or better by Moody's and AA or
better by 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 Indenture Trustee and the Note 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.
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(j) Investments approved in writing by the Certificate Insurer 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 8.10. Reports by Indenture Trustee.
(a) On each Payment Date, to the extent that the related report
described in Section 4.8(d)(ii) of the Trust C Sale and Servicing Agreement has
been received by the Indenture Trustee, the Indenture Trustee shall provide to
each Class C Noteholder, to the Master Servicer, to the Note Insurer, to the
Underwriter, to the Sponsor, to Standard & Poor's and to Moody's a written
report in substantially the form set forth as Exhibit B hereto, as such form may
be revised by the Indenture 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 B hereto and the following information:
(i) the Trust C Scheduled Principal Distribution Amount;
(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;
(iii) the amount of such distributions allocable to interest;
(iv) the amount of any Class C Interest Carry Forward Amount;
(v) the amount of any Trust C Insured Payment included in the
amounts distributed to the Class C Notes on such Payment Date;
(vi) information furnished by the Sponsor pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Class C Noteholders in computing their market discount;
(vii) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution;
(viii) [Reserved];
(ix) [Reserved];
(x) the amounts, if any, of any Realized Losses for the related
Remittance Period; and
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(xi) 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 Aggregate Loan Balance; and
(xii) the Class C Note Principal Balance and the Pool Factor, each
after giving effect to such distribution of principal on such Payment
Date;
(xiii) the aggregate Loan Balances of all Mortgage Loans after
giving effect to any payment of principal on such Payment Date both in the
aggregate and in each Trust.
(xiv) the weighted average Coupon Rate of the Mortgage Loans with
respect to Trust C;
(xv) the amount of any Trust C Available Funds Cap Current Amount
and Trust C Available Funds Cap Carry Forward Amount;
(xvi) the Trust C Overcollateralization Deficit; and
(xvii) the amount of the Accelerated Principal Payment, if any, for
the related Payment Date.
(xviii) the amount by aggregate principal balance of Mortgage Loans
repurchased for the previous period and the cumulative number of Mortgage
Loans repurchased to date pursuant to Section 3.3(b) of the Trust C Sale
and Servicing Agreement.
Items (i) through (iii) above shall, with respect to each Class C
Note, be presented on the basis of a Note having a $1,000 denomination. In
addition, by January 31 of each calendar year following any year during which
the Class C Notes are outstanding, the Indenture Trustee shall furnish a report
to each holder 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 Class C Notes for such calendar year.
(b) In addition, on each Payment Date the Indenture Trustee will
distribute to each Class C Noteholder, to the Note Insurer, to the 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 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 Indenture Trustee for such purpose on or prior to
the related Remittance Date:
(i) the total number of Mortgage Loans and the Loan Balances thereof
in Trust C, together with the number, aggregate Loan Balances of such
Mortgage Loans and the percentage (based on the aggregate Loan Balance of
the Mortgage Loans) of the aggregate Loan Balance of such Mortgage Loans
to the aggregate Loan Balance of all Mortgage Loans (a) 30-59 days
Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days Delinquent;
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(ii) the number, aggregate Loan Balances of all Mortgage Loans and
percentage (based on the aggregate Loan Balance of the Mortgage Loans) of
the aggregate Loan Balance of such Mortgage Loans to the aggregate Loan
Balance of all Mortgage Loans 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 and
percentage (based on the aggregate Loan Balance of the Mortgage Loans) of
the aggregate Loan Balance of such Mortgage Loans to the aggregate Loan
Balance of all Mortgage Loans relating to Mortgagors in bankruptcy
proceedings (and whether any such Mortgage Loans are also included in any
of the statistics described in the foregoing clause (i));
(iv) the number, aggregate Loan Balances of all Mortgage Loans and
percentage (based on the aggregate Loan Balance of the Mortgage Loans) of
the aggregate Loan Balance of such Mortgage Loans to the aggregate Loan
Balance of all Mortgage Loans relating to REO Properties (and whether any
such Mortgage Loans are also included in any of the statistics described
in the foregoing clause (i)); and
(v) the loan number of the related Mortgage Loan and the book value
of any REO Property.
(c) The foregoing reports shall be sent be to a Class C Noteholder
only insofar as such holder possesses a Class C Note.
(d) The Sponsor and the Master Servicer, on behalf of Class C
Noteholders and the Trust (the "Trust Parties") hereby authorize the Indenture
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 Note
Insurer, contained in reports provided to the Note Insurer or the Indenture
Trustee by the Master Servicer hereunder and, if so directed by an Authorized
Officer of the Sponsor in writing to the Indenture Trustee, the monthly report
in the Form of Exhibit F to the Class C Noteholders prepared by the Indenture
Trustee (the "Information") on The Bloomberg, an on-line computer based
information network maintained by Bloomberg L.P. ("Bloomberg") or on any other
on-line computer based 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 Indenture 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
Indenture Trustee or its affiliates or any of the Indenture 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 Indenture
Trustee, including, but not limited to, claims based on allegations of
inaccurate or incomplete information by the Indenture Trustee to Bloomberg or to
any Information Network or otherwise (other than in connection with the
Indenture Trustee's negligence or willful
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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 Indenture Trustee makes no representations or
warranties, expressed or implied, of any kind whatsoever with respect to the
accuracy, adequacy, timeliness, completeness, merchantability or fitness for any
particular purpose of any Information in any form or manner. The authorizations,
covenants and obligations of the Trust Parties under this section shall be
irrevocable and shall survive the termination of this Agreement.
SECTION 8.11. Additional Reports by Indenture Trustee.
(a) The Indenture Trustee shall report to the Sponsor, the Master
Servicer and the Note Insurer with respect to the amount then held in each
Account (including investment earnings accrued or scheduled to accrue) held by
the Indenture Trustee and the identity of the investments included therein, as
the Sponsor, the Master Servicer or the Note Insurer may from time to time
request. Without limiting the generality of the foregoing, the Indenture Trustee
shall, at the request of the Sponsor, the Master Servicer or the Note Insurer,
transmit promptly to the Sponsor, the Master Servicer and the Note Insurer
copies of all accounting of aggregate receipts in respect of the Mortgage Loans
furnished to it by the Master Servicer pursuant to Section 4.8(d)(ii) of the
Trust C Sale and Servicing Agreement and shall notify the Sponsor, the Master
Servicer and the Note Insurer if any such receipts have not been received by the
Indenture Trustee.
(b) From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer 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
Section 3.3(a) of the Trust C Sale and Servicing Agreement. On the date that is
eighteen months after the Closing Date, the Indenture Trustee shall provide the
Note Insurer with a written report of all of such inaccuracies to such date of
which it has actual knowledge, without independent investigation, and of the
action taken by the Sponsor under Section 3.4(b) of the Trust C Sale and
Servicing Agreement with respect thereto.
SECTION 8.12. Opinion of Counsel. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.2(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require as a condition to such
action, an Opinion of Counsel, stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with and
such action will not materially and adversely impair the security for the Class
C Notes or the rights of the Class C Noteholders or the Note Insurer in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Class C Notes but with
the consent of the Note Insurer, as evidenced to the Indenture Trustee, the
Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any
time and from time to time, may enter into one or more indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Class
C Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Class C Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action
shall not adversely affect the interests of the Holders of the Class C
Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Indenture Trustee with respect to the Class C
Notes and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one Indenture Trustee, pursuant to the requirements
of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
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(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the Class C
Notes but with the prior written consent of the Note Insurer and with prior
notice to the Rating Agencies by the Issuer, as evidenced to the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Class C Notes under this Indenture; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior notice to the Rating Agencies, with the consent of the Note
Insurer and with the consent of the Holders of not less than a majority of the
Outstanding Class C Notes, by Act of such Holders delivered to the Issuer and
the Indenture Trustee, enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Class C Notes under this Indenture;
provided, however, that, subject to the express rights of the Note Insurer under
the Operative Documents, no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal
of or interest on the Class C Notes, or change any place of payment where,
or the coin or currency in which, any Note or the interest thereon is
payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Class C Notes on or after the respective due dates thereof (or, in
the case of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Class C Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(v) reduce the percentage of the Outstanding Class C Notes required
to direct the Indenture Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 12.1;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the
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Operative Documents cannot be modified or waived without the consent of
the Holder of each Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation
of any of the individual components of such calculation); or
(viii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein or
in any of the Operative Documents, terminate the lien of this Indenture on
any property at any time subject hereto or deprive the Holder of any Note
of the security provided by the lien of this Indenture.
The Indenture Trustee may determine whether or not any Class C Notes
would be adversely affected by any supplemental indenture upon receipt of an
Opinion of Counsel to that effect and any such determination shall be conclusive
upon the Holders of all Class C Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Indenture Trustee shall not be liable
for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Holders of the Class C Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel (and, if requested, an Officer's Certificate) stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Class C Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Class
C Notes shall thereafter be determined, exercised and enforced hereunder subject
in all respects
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to such modifications and amendments, and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6. Reference in Class C Notes to Supplemental Indentures.
Class C Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer or the Indenture Trustee shall so determine, new Class C Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Class C Notes.
SECTION 9.7. Amendment.
(a) The Indenture Trustee, the Sponsor, the Issuer and the Master
Servicer, may at any time and from time to time, with the prior written consent
of the Note Insurer but without the giving of notice to or the receipt of the
consent of the Class C Noteholders, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of 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; provided, however, that any
such action shall not, as evidenced by an opinion of counsel delivered to the
Indenture Trustee, materially and adversely affect the interests of any Owner
(without its written consent).
(b) The Indenture Trustee, the Sponsor, the Issuer and the Master
Servicer may, at any time and from time to time, with the prior written consent
of the Note Insurer but without the giving of notice to or the receipt of the
consent of the Class C Noteholders, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of changing the
definitions of "Trust C Specified Overcollateralization Amount"; provided,
however, that no such change shall affect the weighted average life of the Class
C Notes (assuming an appropriate prepayment speed as determined by the
Underwriter with respect to the Class C Notes by more than five percent, as
determined by the Underwriter).
(c) This Agreement may also be amended by the Indenture Trustee, the
Sponsor, the Issuer and the Master Servicer at any time and from time to time,
with the prior written approval of the Note Insurer and not less than a majority
of the Percentage Interest represented by the Class C Notes 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 Class C Noteholders 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 Class C
Noteholders without the consent of the Class
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C Noteholders, (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 Class C Notes,
without the consent of all Class C Noteholders then Outstanding.
ARTICLE X.
REDEMPTION OF CLASS C NOTES
SECTION 10.1. Redemption.
(a) The Class C Notes are subject to redemption following the later
of (A) the Payment Date following payment in full of all amounts owing to the
Note Insurer and (B) the earliest of (i) the transfer, under the conditions
specified in Section 10.1(b), to the Master Servicer of the Class C Noteholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust for an amount equal to the sum of (a) the
Class C Note Principal Balance and (b) the sum of accrued and unpaid Class C
Interest Distribution Amount through the day preceding the final Payment Date,
(ii) the day following the Payment Date on which the distribution made to Class
C Noteholders has reduced the Class C Note Principal Balance to zero and no
other amounts are owed to the Class C Noteholders, (iii) the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust (including,
without limitation, the disposition of the Mortgage Loan pursuant to Section
12.1 hereof) or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan and (iv) the Payment Date in
November 2028; provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the date of death of the
last surviving descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof. Upon
termination in accordance with clause (B)(i) of this Section 10.1(a), the
Indenture Trustee shall execute such documents and instruments of transfer
presented by the Sponsor, in each case without recourse, representation or
warranty, and take such other actions as the Sponsor may reasonably request to
effect the transfer of the Mortgage Loan to the Sponsor.
(b) The Class C Notes shall be subject to optional redemption by the
Trust C Certificateholder on any Payment Date after the Class C Note Principal
Balance has been reduced to an amount less than or equal to $10,000,000 (10% of
the Original Class C Note Principal Balance) and all amounts due and owing to
the Note Insurer pursuant to the Insurance Agreement have been paid. Such
transfer shall only be permitted if the Trust C Certificateholder delivers to
the Indenture Trustee an amount equal to the sum of the outstanding Class C Note
Principal Balance and accrued and unpaid interest thereon at the Class C Note
Interest Rate through the day preceding the final Payment Date plus all Trust C
Reimbursement Amounts. In connection with such purchase, the Master Servicer
shall remit to the Indenture Trustee all amounts then on deposit in the Trust C
Principal and Interest Account for deposit to the Trust C Note Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(c) Promptly following any such purchase, the Indenture Trustee will
release the Files to the Master Servicer, or otherwise upon their order, in a
manner similar to that described in Section 4.14 of the Trust C Sale and
Servicing Agreement.
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(d) Advanta National Bank may not participate in any purchase
described in this Section 10.1(b), or fund any portion of the purchase price,
unless the then-outstanding Principal Balances of the Mortgage Loans in the
Trust Estate is less than or equal to five percent of the sum of the aggregate
Loan Balances of all Mortgage Loans in the Trust Estate as of the Initial
Cut-Off Date.
(e) If the Class C Notes are to be redeemed pursuant to this Section
10.1(a), the Master Servicer or the Issuer shall furnish notice of such election
to the Indenture Trustee not later than 45 days prior to the Redemption Date and
the Issuer shall deposit with the Indenture Trustee in the Trust C Note Account
the Redemption Price of the Class C Notes not less than five Business Days prior
to the Redemption Date whereupon all such Class C Notes shall be due and payable
on the Redemption Date upon the furnishing of a notice complying with Section
10.2.
SECTION 10.2. Surrender of Class C Notes.
(a) Notice of any termination, specifying the Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which the
Noteholders may surrender their Class C Notes to the Indenture Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Indenture Trustee (upon receipt of written directions from the Sponsor, if
the Sponsor is exercising its right to transfer of the Mortgage Loans, given not
later than the first day of the month preceding the month of such final
distribution) to the Note Insurer and to the Master Servicer and by letter to
Noteholders mailed not earlier than the 15th day and not later than the 25th day
of the month next preceding the month of such final distribution specifying (i)
the Payment Date upon which final distribution of the Class C Notes will be made
upon presentation and surrender of Class C Notes at the office or agency of the
Indenture Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, distributions being made only upon presentation and
surrender of the Class C Notes at the office or agency of the Indenture Trustee
therein specified.
(b) Any money held by the Indenture Trustee in trust for the payment
of any amount due with respect to any Class C Note and remaining unclaimed by
the related Class C Noteholder 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 Note Insurer on account of
any Trust C Reimbursement Amounts, and second, to the Trust C
Certificateholders; and such Class C Noteholder shall thereafter, as an
unsecured general creditor, look only to the Note Insurer or the Trust C
Certificateholders for payment thereof (but only to the extent of the amounts so
paid to the Note Insurer or the Trust C Certificateholders), and all liability
of the Indenture Trustee with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee, before being required to make any
such payment, shall at the expense of the Trust 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 Note Insurer or the Trust C
Certificateholders. The Indenture Trustee shall, at the direction of the
Sponsor, also adopt and employ, at the expense of the Trust, any other
reasonable means of notification of such payment (including, but
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not limited to, mailing notice of such payment to Class C Noteholders whose
right to or interest in monies due and payable but not claimed is determinable
from the Note Register at the last address of record for each such Class C
Noteholder).
SECTION 10.3. Form of Redemption Notice. Notice of redemption
supplied to the Indenture Trustee by the Master Servicer under Section 10.1(a)
shall be given by the Indenture Trustee by facsimile or by first-class mail,
postage prepaid, transmitted or mailed prior to the applicable Redemption Date
to each Holder of Class C Notes of record, as of the close of business on the
date which is not less than 5 days prior to the applicable Redemption Date, at
such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only upon
presentation and surrender of such Class C Notes at the place where such
Class C Notes are to be surrendered for payment of the Redemption Price
(which shall be the office or agency of the Issuer to be maintained as
provided in Section 3.2); and
(iv) that interest on the Class C Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Class C Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note shall not
impair or affect the validity of the redemption of any other Note.
SECTION 10.4. Class C Notes Payable on Redemption Date. The Class C
Notes to be redeemed shall, following notice of redemption as required by
Section 10.2, on the Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period after the
date to which accrued interest is calculated for purposes of calculating the
Redemption Price.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Note Insurer if the application or request is made to the
Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the
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proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
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 or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Master Servicer, the Sponsor or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Master
Servicer, the Sponsor or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
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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 Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Indenture
Trustee.
(c) The ownership of Class C Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Class C Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed first-class and shall be deemed to have been duly
given upon receipt to the Indenture
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Trustee at its Corporate Trust Office and any notice delivered by facsimile
shall be addressed to the Corporate Trust Office, telecopy number
(949) 253-7577, or
(b) The Issuer by the Indenture Trustee or by any Noteholder shall
be in writing and shall be sufficient for every purpose hereunder if personally
delivered, delivered by facsimile or overnight courier or mailed first class,
and shall deemed to have been duly given upon receipt to the Issuer addressed
to: Advanta Mortgage Loan Trust 1998-4C, in care of Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-0001
Attention: Corporate Trust Administration, or at any other address previously
furnished in writing to the Indenture Trustee by Issuer. The Issuer shall
promptly transmit any notice received by it from the Class C Noteholders to the
Indenture Trustee.
(c) The Sponsor or the Master Servicer by the Indenture Trustee
shall be in writing and shall be sufficient for every purpose hereunder if
personally delivered, delivered by facsimile or overnight courier or mailed
first Class And shall be deemed to have been duly given upon receipt to the
Sponsor or the Master Service addressed to:
Advanta Mortgage Conduit Services, Inc.
Welsh & McKean Roads
P.O. Box 918
Springhouse, PA 19477-0918
Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, CA 92127
or such other address previously furnished in writing to the Indenture Trustee
by Sponsor or Master Services.
(d) The Note Insurer by the Issuer or the Indenture Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by first-class
mail, personally delivered, or telecopied to the recipient as follows:
To the Note Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: ___________
Structured Finance Department - MBS
Telecopy: (212) 363-1459
Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or first class or via facsimile to (i)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10004, Fax No: (212) 533-0355 and
(ii) in the case of Standard & Poor's, at the following address: Standard &
Poor's Ratings Group, 26 Broadway (15th Floor), New York, New York 10004,
Attention: Asset
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Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Class C Notes to
the contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Note Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Indenture Trustee (which consent shall
not be unreasonably withheld). The Issuer will furnish to the Indenture Trustee
a copy of each such agreement and the Indenture Trustee will cause payments to
be made and notices to be given in accordance with such agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
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SECTION 11.8. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements
in this Indenture and the Class C Notes by the Issuer shall bind its successors
and assigns, whether so expressed or not. All agreements of the Indenture
Trustee in this Indenture shall bind its successors.
SECTION 11.10. Separability. In case any provision in this Indenture
or in the Class C Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Class C Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, the Note Insurer and the Noteholders, and any other
party secured hereunder, and any other person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Note Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such right or power hereunder), but not its duties and obligations under the
Note Policy, upon delivery of a written notice to the Indenture Trustee.
SECTION 11.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (except as otherwise
provided by any other provision of the Class C Notes or this Indenture) payment
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the date on which nominally
due, and no interest shall accrue for the period from and after any such nominal
date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture 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 11.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trust or any other counsel reasonably
acceptable to the Indenture Trustee and the Note Insurer) to the effect that
such recording is necessary either for the protection of the Noteholders or any
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other person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Sponsor, any
Originator, the Master Servicer, the Owner Trustee or the Indenture Trustee on
the Class C Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Sponsor, any Originator, the Master Servicer, the Indenture Trustee
or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Sponsor, any Originator, the Master Servicer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Sponsor, any Originator, the Master Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Sponsor, or the
Issuer, or join in any institution against the Sponsor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Class C Notes,
this Indenture or any of the Operative Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or of
the Note Insurer, during the Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.
SECTION 11.19. Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by Wilmington Trust Company, not individually or personally but solely
as Owner Trustee of the Issuer under the Trust Agreement, in the exercise of the
powers and authority conferred and vested in it, (b) each
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of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties to
this Agreement and by any person claiming by, through or under them and (d)
under no circumstances shall Wilmington Trust Company be personally liable for
the payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaking by the Issuer under this Agreement or any related documents.
ARTICLE XII.
EVENTS OF DEFAULT
SECTION 12.1. Events of Default. The following shall constitute
Events of Default:
(a) failure on the part of Trust A, Trust B or Trust C (i) to make a
payment or deposit required under the related Sale and Servicing Agreement
within five Business Days after the date such payment or deposit is required to
be made or (ii) to observe or perform in any material respect any other
covenants or agreements of the Issuer set forth in the related Sale and
Servicing Agreement, which failure continues unremedied for a period of 60 days
after written notice;
(b) any representation or warranty made by the Sponsor in the
remaining Sale and Servicing Agreement proves to have been incorrect in any
material respect when made and continues to be incorrect in any material respect
for a period of 60 days after written notice and as a result of which the
interests of the Holders or the Note Insurer are materially and adversely
affected; provided, however, that a Event of Default shall not be deemed to
occur if the Sponsor has purchased or made a substitution for the related
Mortgage Loan or Mortgage Loans if applicable during such period (or within an
additional 60 days with the consent of the Indenture Trustee and the Note
Insurer) in accordance with the provisions of the related Sale and Servicing
Agreement;
(c) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to the Sponsor or the Master Servicer;
(d) any of Trust A, Trust B or Trust C becomes subject to regulation
by the Securities and Exchange Commission as an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(e) the occurrence of an Event of Servicer Termination;
(f) default in the payment of any interest, principal or any
installment of principal on any Class A Note, Class B Note or Class C Note when
the same becomes due and payable, and such default continues for a period of
five days; and
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(g) on any Payment Date, the failure to pay interest at the Class C
Note Formula Capped Rate.
In the case of any event described in clause (a), (b), (e) or (g),
an Event of Default will be deemed to have occurred only if, after the
applicable grace period, if any, described herein or in the related Indenture or
Sale and Servicing Agreement either (i) the Indenture Trustee or Holders holding
Class C Notes evidencing at least 50% of the aggregate principal amount of the
Class C Notes with the consent of the Note Insurer (so long as there is no
continuing default by the Note Insurer in the performance of its obligations
under the Note Policy) or the Note Insurer (so long as there is no continuing
default by the Note Insurer in the performance of its obligations under the Note
Policy), by written notice to the Note Insurer, the Sponsor, the Rating
Agencies, and the Master Servicer (and to the Indenture Trustee, if given by the
Holders or the Note Insurer) declare that an Event of Default has occurred as of
the date of such notice. In the case of any event described in clause (c), (d)
or (f), an Event of Default will be deemed to have occurred without any notice
or other action on the part of the Indenture Trustee, the Class C Noteholders or
the Note Insurer immediately upon the occurrence of such event.
In addition to the consequences of an Event of Default discussed
above, unless otherwise instructed within 60 days by the Class C Noteholders
representing undivided interests aggregating more than 50% of the aggregate
principal amount of the Class C Notes, the Indenture Trustee will sell, dispose
of or otherwise liquidate the Trust Estate in a commercially reasonable manner
and on commercially reasonable terms. Any such sale, disposal or liquidation and
such sale, disposal or liquidation will be "servicing retained" by the Master
Servicer. The net proceeds of such sale will first (if a Note Insurer Default
shall not have occurred and be continuing) be paid to the Note Insurer to the
extent of unreimbursed draws under the Note Policy and other amounts owing to
the Note Insurer. The amount required to reduce the Class C Note Principal
Balance, together with all accrued and unpaid interest due thereon, to zero will
be distributed to the Holders of the Class C Notes; the Note Policy will
guarantee and pay in full any amount by which such remaining net proceeds are
insufficient to pay the Class C Note Principal Balance in full.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
ADVANTA MORTGAGE LOAN TRUST 1998-4C
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee,
By: /s/ Emmet Harmon
-----------------------------------
Name: Emmet Harmon
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely
as Indenture Trustee,
By: /s/ Mark McNeill
-----------------------------------
Name: Mark McNeill
Title: Assistant Secretary
<PAGE> 92
EXHIBIT A
[Form of Class C Note]
REGISTERED $650,000,000
No. A
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. __________
Unless this Class C Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange or payment,
and any Class C Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS CLASS C NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS C NOTE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA MORTGAGE LOAN TRUST 1998-4C
CLASS C MORTGAGE BACKED CLASS C NOTES
Advanta Mortgage Loan Trust 1998-4C, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ($650,000,000), such amount payable on
each Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $650,000,000 and the denominator of which is
$650,000,000 by (ii) the aggregate amount, if any, payable from the Trust C Note
Account in respect of principal on the Class C Notes pursuant to Section 8.7 of
the Indenture; provided, however, that the entire unpaid principal amount of
this Note shall be due and payable on the November 2028, Payment Date (the
"Final Scheduled Payment Date"). The Issuer will pay interest on this Class C
Note at the rate per annum provided in the Trust C Indenture on each Payment
Date until the principal of this Class C Note is paid or made available for
payment, on the principal amount of this Class C Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date). Interest on this Class C Note will accrue for each
Payment Date from the most recent Payment Date on which interest has been paid
to but excluding such Payment Date or, if no interest has yet been paid, from
November 24, 1998. Interest will be computed on the basis of the actual
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<PAGE> 93
number of days elapsed in a 360-day year. Such principal of and interest on this
Class C Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Class C Note are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Class C Note shall be applied first to interest
due and payable on this Class C Note as provided above and then to the unpaid
principal of this Class C Note.
The Class C Notes are entitled to the benefits of a financial
guaranty insurance policy (the "Note Policy") issued by Ambac Assurance
Corporation (the "Note Insurer"), pursuant to which the Note Insurer has
unconditionally guaranteed payments of the Trust C Insured Payments on each
Payment Date, all as more fully set forth in the Trust C Indenture.
For purposes of federal income, state and local income and franchise
and any other income taxes, the Issuer will treat the Class C Notes as
indebtedness of the Issuer and hereby instructs the Indenture Trustee to treat
the Class C Notes as indebtedness of the Issuer for federal and state tax
reporting purposes.
Each Class C Noteholder or Note Owner, by acceptance of this Class C
Note or, in the case of a Note Owner, a beneficial interest in a Class C Note,
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee or the Indenture
Trustee on the Class C Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee, or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any owner, beneficiary, agent, officer, director or employee of the
Sponsor, any Originator, the Master Servicer, the Indenture Trustee, or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Sponsor, any Originator, the Master Servicer, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee, or the Owner Trustee in
its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Reference is made to the further provisions of this Class C Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class C Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class C
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
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<PAGE> 94
Each Note Owner, by acceptance of a beneficial interest in a Class C
Note, shall be deemed to represent either (i) that it is not (A) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975
of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii) that its
acquisition and continued holding of a beneficial interest in the Class C Note
will be covered by a U.S. Department of Labor Prohibited Transaction Class
Exemption.
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<PAGE> 95
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: November 24, 1998 ADVANTA MORTGAGE LOAN TRUST 1998-4C
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:
-----------------------------------
Name:
Title:
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<PAGE> 96
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class C Notes designated above and referred to in
the within-mentioned Indenture.
Date: November 24, 1998 BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as
Indenture Trustee
By:
-----------------------------------
Authorized Signatory
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<PAGE> 97
REVERSE OF NOTE
This Class C Note is one of a duly authorized issue of Class C Notes
of the Issuer, designated as its Class C Mortgage Backed Notes (herein called
the "Class C Notes"), all issued under an Indenture dated as of November 1, 1998
(such indenture, as supplemented or amended, is herein called the "Trust C
Indenture"), between the Issuer and Bankers Trust Company of California, N.A.,
as Indenture Trustee (the "Indenture Trustee", which term includes any successor
Indenture Trustee under the Trust C Indenture), to which Trust C Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Class C Notes. The Class C Notes are subject to
all terms of the Trust C Indenture. All terms used in this Class C Note that are
defined in the Trust C Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Trust C Indenture, as so
supplemented or amended.
The Class C Notes are and will be secured by the collateral pledged
as security therefor as provided in the Trust C Indenture.
Principal of the Class C Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the twenty-fifth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing December 28, 1998. The term "Payment Date,"
shall be deemed to include the Trust C Final Scheduled Payment Date.
As described above, the entire unpaid principal amount of this Class
C Note shall be due and payable on the earlier of the Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Class C Notes shall be due and payable if the Sponsor or Master Servicer
voluntarily files a bankruptcy petition or goes into liquidation or any person
is appointed a receiver or bankruptcy trustee of the Sponsor or Master Servicer
and the Indenture Trustee or the Holders of the Class C Notes representing at
least 50% of the Outstanding Amount of the Class C Notes shall have the right to
direct the Indenture Trustee to sell or liquidate the Trust Estate as provided
in Section 5.1 of the Trust C Indenture. All principal payments on the Class C
Notes shall be made pro rata to the Class C Noteholders entitled thereto.
Payments of interest on this Class C Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class C Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Class C Note (or one or more
Predecessor Class C Notes) on the Note Register as of the close of business on
each Record Date, except that with respect to Class C Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Class C Note be submitted for notation of payment. Any reduction in
the principal amount of this Class C Note (or any one or more Predecessor Class
C Notes) effected by any payments made on any Payment Date shall be binding upon
all future Holders of
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<PAGE> 98
this Class C Note and of any Class C Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Class C
Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Holder hereof as of the Record
Date preceding such Payment Date by notice mailed prior to such Payment Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Class C Note at the Indenture Trustee's principal Corporate
Trust Office or at the office of the Indenture Trustee's agent appointed for
such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class C Note Rate to the extent lawful.
As provided in the Trust C Indenture, the Class C Notes may be
redeemed pursuant to Section 10.1(b) of the Indenture at the option of the Trust
C Certificateholders, on any Payment Date on or after the date on which the
Class C Note Principal Balance is less than or equal to 10% of the Original
Class C Note Principal Balance.
As provided in the Trust C Indenture and subject to certain
limitations set forth therein, the transfer of this Class C Note may be
registered on the Note Register upon surrender of this Class C Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, (i) duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder hereof or his attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Indenture
Trustee may require, and thereupon one or more new Class C Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class C Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by acceptance of a Class C Note or,
in the case of a Note Owner, a beneficial interest in a Class C Note covenants
and agrees that no recourse may be taken, directly or indirectly, with respect
to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Class C Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Sponsor, any Originator, the
Master Servicer, the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
owner, beneficiary, agent, officer, director or employee of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer, the
Sponsor, any Originator, the Master Servicer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Sponsor, any Originator, the Master
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have
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<PAGE> 99
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Class C Noteholder or Note Owner, by acceptance of a Class C
Note or, in the case of a Note Owner, a beneficial interest in a Class C Note
covenants and agrees that by accepting the benefits of the Indenture that such
Class C Noteholder will not at any time institute against the Sponsor, or the
Issuer or join in any institution against the Sponsor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings, under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Class C Notes,
the Trust C Indenture or the Operative Documents.
Prior to the due presentment for registration of transfer of this
Class C Note, the Issuer, the Indenture Trustee and the Note Insurer and any
agent of the Issuer, the Indenture Trustee or the Note Insurer may treat the
Person in whose name this Class C Note (as of the day of determination or as of
such other date as may be specified in the Trust C Indenture) is registered as
the owner hereof for all purposes, whether or not this Note be overdue, and
neither the Issuer, the Indenture Trustee nor any such agent shall be affected
by notice to the contrary.
The Trust C Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Class C Notes
under the Indenture at any time by the Issuer with the consent of the Note
Insurer and of the Holders of Class C Notes representing a majority of the
Outstanding Amount of all Class C Notes at the time Outstanding. Any such
consent or waiver by the Holder of this Class C Note (or any one of more
Predecessor Class C Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Class C Note and of any Class C Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Class C
Note. The Trust C Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
Holders of the Class C Notes issued thereunder but with the consent of the Note
Insurer.
The term "Issuer" as used in this Class C Note includes any
successor to the Issuer under the Trust C Indenture.
The Class C Notes are issuable only in registered form in
denominations as provided in the Trust C Indenture, subject to certain
limitations therein set forth.
This Class C Note and the Trust C Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Class
C Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and
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<PAGE> 100
unconditional, to pay the principal of and interest on this Class C Note at the
times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Trust C Indenture or the Operative Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Issuer, nor any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Class C Note or the Trust C
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Issuer for the sole purposes of binding
the interests of the Issuer in the assets of the Issuer. The Holder of this
Class C Note by the acceptance hereof agrees that except as expressly provided
in the Trust C Indenture or the Operative Documents, in the case of an Event of
Default under the Trust C Indenture, the Holder shall have no claim against any
of the foregoing for any deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Trust C Indenture or in this Class
C Note.
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<PAGE> 101
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: (1)
---------------------- -----------------------------------
Signature Guaranteed:
- ----------------------------- -----------------------------------
- ----------
(1) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
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<PAGE> 1
Exhibit 4.2.1
ADVANTA MORTGAGE HOLDING TRUST 1998-4
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. Definitions....................................................................................... 1
SECTION 1.1 Capitalized Terms............................................................... 1
SECTION 1.2 Other Definitional Provisions................................................... 3
ARTICLE II. Organization..................................................................................... 4
SECTION 2.1 Name............................................................................ 4
SECTION 2.2 Office.......................................................................... 4
SECTION 2.3 Purposes and Powers............................................................. 4
SECTION 2.4 Appointment of Owner Trustee.................................................... 6
SECTION 2.5 Initial Capital Contribution of Trust Estate.................................... 6
SECTION 2.6 Declaration of Trust............................................................ 6
SECTION 2.7 Liability....................................................................... 6
SECTION 2.8 Title to Trust Property......................................................... 6
SECTION 2.9 Situs of Trust.................................................................. 6
SECTION 2.10 Representations and Warranties of the Sponsor................................... 7
SECTION 2.11 Covenants of the Sponsor........................................................ 7
SECTION 2.12 Covenants of the Certificateholders............................................. 8
SECTION 2.13 Investment Company.............................................................. 9
ARTICLE III. Certificates and Transfer of Interests.......................................................... 9
SECTION 3.1 Initial Ownership............................................................... 9
SECTION 3.2 The Certificates................................................................ 9
SECTION 3.3 Authentication of Certificates.................................................. 9
SECTION 3.4 Registration of Transfer and Exchange of Certificates........................... 10
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates............................... 10
SECTION 3.6 Persons Deemed Certificateholders............................................... 10
SECTION 3.7 Access to List of Certificateholders' Names and Addresses....................... 10
SECTION 3.8 Maintenance of Office or Agency................................................. 10
SECTION 3.9 ERISA........................................................................... 11
SECTION 3.10 Restrictions on Transfer of Certificates........................................ 11
SECTION 3.11 Acceptance of Obligations....................................................... 12
SECTION 3.12 Payments on Certificates........................................................ 12
ARTICLE IV. Voting Rights and Other Actions.................................................................. 12
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain Matters.............. 12
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters.................... 13
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy......................... 13
SECTION 4.4 Restrictions on Certificateholders' Power....................................... 13
SECTION 4.5 Majority Control................................................................ 14
SECTION 4.6 Rights of Note Insurer.......................................................... 14
ARTICLE V. Certain Duties.................................................................................... 14
SECTION 5.1 Accounting and Records to the Certificateholders, the Internal Revenue
Service and Others........................................................... 14
SECTION 5.2 Reserved........................................................................ 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI. Authority and Duties of Owner Trustee............................................................ 15
SECTION 6.1 General Authority............................................................... 15
SECTION 6.2 General Duties.................................................................. 15
SECTION 6.3 Action upon Instruction......................................................... 15
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions.............. 16
SECTION 6.5 No Action Except under Specified Documents or Instructions...................... 16
SECTION 6.6 Restrictions.................................................................... 16
ARTICLE VII. Concerning the Owner Trustee.................................................................... 16
SECTION 7.1 Acceptance of Trust and Duties.................................................. 16
SECTION 7.2 Furnishing of Documents......................................................... 17
SECTION 7.3 Representations and Warranties.................................................. 17
SECTION 7.4 Reliance; Advice of Counsel..................................................... 18
SECTION 7.5 Not Acting in Individual Capacity............................................... 18
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans..................... 18
SECTION 7.7 Owner Trustee May Own Certificates.............................................. 19
SECTION 7.8 Payments from Owner Trust Estate................................................ 19
SECTION 7.9 Doing Business in Other Jurisdictions........................................... 19
ARTICLE VIII. Compensation of Owner Trustee.................................................................. 19
SECTION 8.1 Owner Trustee's Fees and Expenses............................................... 19
SECTION 8.2 Indemnification................................................................. 19
SECTION 8.3 Payments to the Owner Trustee................................................... 20
SECTION 8.4 Non-recourse Obligations........................................................ 20
ARTICLE IX. Termination of Trust Agreement................................................................... 20
SECTION 9.1 Termination of Trust Agreement.................................................. 20
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees............................................ 21
SECTION 10.1 Eligibility Requirements for Owner Trustee...................................... 21
SECTION 10.2 Resignation or Removal of Owner Trustee......................................... 21
SECTION 10.3 Successor Owner Trustee......................................................... 22
SECTION 10.4 Merger or Consolidation of Owner Trustee........................................ 23
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee....................... 23
ARTICLE XI. Miscellaneous.................................................................................... 24
SECTION 11.1 Supplements and Amendments...................................................... 24
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders...................... 25
SECTION 11.3 Limitations on Rights of Others................................................. 25
SECTION 11.4 Notices......................................................................... 25
SECTION 11.5 Severability.................................................................... 25
SECTION 11.6 Separate Counterparts........................................................... 25
SECTION 11.7 Assignments; Note Insurer....................................................... 25
SECTION 11.8 No Petition..................................................................... 26
SECTION 11.9 No Recourse..................................................................... 26
SECTION 11.10 Headings........................................................................ 26
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 11.11 GOVERNING LAW................................................................... 26
SECTION 11.12 Master Servicer................................................................. 26
</TABLE>
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
<PAGE> 5
TRUST AGREEMENT relating to Advanta Mortgage Holding Trust
1998-4 dated as of November 1, 1998 between ADVANTA MORTGAGE CONDUIT SERVICES,
INC., a Delaware corporation as Sponsor, and WILMINGTON TRUST COMPANY, a
Delaware banking corporation as Owner Trustee.
ARTICLE I.
Definitions
SECTION 1.1 Capitalized Terms. For the purposes of this Agreement, the following
terms shall have the meanings set forth below.
"Affiliate" shall mean with respect to any specified Person, a
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, or owns, directly or
indirectly, 50% or more of, the Person specified.
"Agreement" shall mean this Holding Trust Trust Agreement, as
the same may be amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the
beneficial ownership interest of a Certificateholder in Holding Trust,
substantially in the form of Exhibit A attached hereto.
"Certificateholder" or "Holder" shall initially mean [the
Sponsor], until and unless [Sponsor] transfers any or all of its interest in the
Certificate to any other Person and thereafter "Certificateholder" shall also
mean or include such Person.
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for Holding Trust pursuant to Section 3810(a)
of the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean
the register maintained and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Sponsor and
Holding Trust, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Sponsor).
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"ERISA" shall have the meaning assigned to such term in
Section 3.9.
<PAGE> 6
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"Holding Trust" shall mean Advanta Mortgage Holding Trust
1998-4.
"Indemnification Agreement" shall mean the Indemnification
Agreement dated as of November 24, 1998 between the Note Insurer and Morgan
Stanley & Co. Incorporated.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Indenture Trustee" shall initially mean Bankers Trust Company
of California, N.A., in its capacity as indenture trustee, including its
successors in interest, until and unless a successor Person shall have become
the Indenture Trustee pursuant to the Trust A Sale and Servicing Agreement, the
Trust B Sale and Servicing Agreement or the Trust C Sale and Servicing Agreement
and thereafter "Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such
term in Section 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement dated as of November 24, 1998 among the Note Insurer, the Sponsor, the
Master Servicer, Trust A, Trust B, Trust C and the Indenture Trustee.
"Majority Certificateholders" shall mean more than 50% by
principal amount of the Certificateholders.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a
Delaware corporation, and its permitted successors and assigns.
"Note Insurer" shall mean AMBAC Assurance Corporation, or its
successor in interest.
"Operative Documents" shall mean this Agreement, the Trust A
Sale and Servicing Agreement, Trust B Sale and Servicing Agreement, the Trust C
Sale and Servicing Agreement, the Master Transfer Agreement, the Trust A Note
Policy, the Trust B Note Policy, the Trust C Note Policy, the Insurance
Agreement, the Indemnification Agreement, the Trust A Indenture, the Trust B
Indenture, the Trust C Indenture.
"Originators" shall mean any entity from which the Sponsor
has purchased (or, in the case of Subsequent Mortgage Loans, will purchase)
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.
"Owner Trust Estate" shall mean all right, title and interest
of Holding Trust in and to the Trust Certificates and related property and
rights held by Holding Trust from time to time pursuant to this Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
"Record Date" shall mean with respect to any Payment Date, the
close of business on the last Business Day immediately preceding such Payment
Date, provided, that if the Certificates or Trust Notes are in definitive form,
the Record Date with respect to each Payment Date shall be the last Business Day
of the calendar month immediately preceding the calendar month in which such
Payment Date occurs.
2
<PAGE> 7
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Sponsor" shall mean Advanta Mortgage Conduit Services, Inc.
in its capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust A" shall mean the trust established by the Trust A
Trust Agreement.
"Trust A Sale and Servicing Agreement" shall mean the Trust A
Sale and Servicing Agreement relating to Trust A among Trust A, Advanta Mortgage
Conduit Services, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust A Trust Agreement": The Trust Agreement relating to
Trust A dated as of November 1, 1998 between the Sponsor and the Owner Trustee.
"Trust B" shall have the meaning assigned to it in the Trust
B Sale and Servicing Agreement.
"Trust B Sale and Servicing Agreement": The Trust B Sale and
Servicing Agreement relating to Trust B among Trust B, the Sponsor, the Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust C" shall have the meaning assigned to it in the Trust
C Sale and Servicing Agreement.
"Trust C Sale and Servicing Agreement": The Trust C Sale and
Servicing Agreement relating to Trust C among Trust C, the Sponsor, the Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust Certificates" shall mean collectively, the
Certificates issued by Trust A, Trust B and Trust C.
"Trust Notes" shall mean collectively, the Class A Notes, the
Class B Notes and the Class C Notes.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized
terms used herein and not otherwise defined have the meanings assigned to them
in the Operative Documents.
(b) All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such
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terms under generally accepted accounting principles, the definitions contained
in this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
ARTICLE II.
Organization
SECTION 2.1 Name. There is hereby formed a trust to be known
as "Advanta Mortgage Holding Trust 1998-4", in which name the Owner Trustee may
conduct the business of Holding Trust, make and execute contracts and other
instruments on behalf of Holding Trust and sue and be sued.
SECTION 2.2 Office. The office of Holding Trust shall be in
care of the Owner Trustee at the Corporate Trust Office or at such other address
as the Owner Trustee may designate by written notice to the Certificateholders
and the Sponsor.
SECTION 2.3 Purposes and Powers(a). The purpose of Holding
Trust is, and Holding Trust shall have the power and authority, to
engage in the following activities:
(i) hold and transfer the Trust Certificates issued by Trust
A, Trust B and Trust C;
(ii) to assign, grant, transfer and convey to the
Certificateholders such distributions as the Holding Trust may receive
pursuant to its beneficial interest in the Trust Certificates;
(iii) to enter into and perform its obligations under the
Operative Documents to which it is a party;
(iv) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(v) subject to compliance with the Operative Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders.
Holding Trust is hereby authorized to engage in the foregoing activities.
(b) Holding Trust shall not engage in any activity other than
those described in Section 2.3(a) or other than as required or authorized by the
terms of this Agreement or the Operative Documents. In addition, Holding Trust
shall not:
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(i) incur any indebtedness;
(ii) engage in any dissolution, liquidation, consolidation,
merger or sale of assets;
(iii) engage in any business activity in which it is not
currently engaged;
(iv) take any action that might cause Holding Trust to become
insolvent; or
(v) form, or caused to be formed, any subsidiaries;
(c) Holding Trust shall:
(i) maintain books and records separate from any other person
or entity;
(ii) maintain its bank accounts separate from any other person
or entity;
(iii) not commingle its assets with those of any other person
or entity and will hold all of its assets in its own name;
(iv) conduct its own business in its own name;
(v) maintain separate financial statements, showing its assets
and liabilities separate and apart from those of any other person or
entity and not have its assets listed on the financial statement of any
other entity;
(vi) file its tax returns separate from those of any other
entity and not file a consolidated federal income tax return with any
other entity;
(vii) except as set forth herein, pay its own liabilities and
expenses only out of its own funds;
(viii) observe all organizational formalities;
(ix) enter into transactions with affiliates only where each
such transaction is intrinsically fair, commercially reasonable, and on
the same terms as would be available in an arm's-length transaction
with a person or entity that is not an affiliate;
(x) pay the salaries of its own employees from its own funds;
(xi) not guarantee or become obligated for the debts of any
other entity or person;
(xii) not hold out its credit as being available to satisfy
the obligation of any other person or entity;
(xiii) hold itself out as a separate entity;
(xiv) correct any known misunderstanding regarding its
separate entity;
(xv) not identify itself as a division of any other person or
entity; and
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(xvi) maintain adequate capital in light of its contemplated
business operations.
SECTION 2.4 Appointment of Owner Trustee. The Sponsor hereby
appoints the Owner Trustee as trustee of Holding Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute.
SECTION 2.5 Initial Capital Contribution of Trust Estate. The
Sponsor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Sponsor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate.
On or prior to the Closing Date, the Owner Trustee will also, upon receipt
thereof, acknowledge on behalf of Holding Trust, receipt of the Trust
Certificates. The Sponsor shall pay the organizational expenses of Holding Trust
as they may arise.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for tax purposes the Holding Trust
shall elect on Internal Revenue Service Form 8832 within 75 days of its
formation to be classified as an association (and thus as a corporation pursuant
to Section 301.7701-2(b)(2) of the regulations promulgated under the Code). The
Holding Trust shall file or cause to be filed any additional forms or documents
as may be required to make such election under the applicable federal, state and
local law. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and to the extent not inconsistent
herewith, in the Business Trust Statute with respect to accomplishing the
purposes of the Holding Trust. The Owner Trustee shall file the Certificate of
Trust with the Secretary of State.
SECTION 2.7 Liability. No Holder shall have any personal
liability for any liability or obligation of Holding Trust.
SECTION 2.8 Title to Trust Property. (a) Legal title to all
of the Owner Trust Estate shall be vested at all times in Holding Trust as a
separate legal entity except where applicable law in any jurisdiction requires
title to any part of the Owner Trust Estate to be vested in a trustee or
trustees, in which case title shall be deemed to be vested in the Owner Trustee,
a co-trustee and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any
part of the Trust Property of any of Trust A, Trust B or Trust C. The
Certificateholders shall be entitled to receive distributions with respect to
their undivided beneficial ownership interest therein only in accordance with
Article IX. No transfer, by operation of law or otherwise, of any right, title
or interest by any Certificateholder of its ownership interest in the Owner
Trust Estate shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Property.
SECTION 2.9 Situs of Trust. Holding Trust will be located and
administered in the State of Delaware. All bank accounts, if any, maintained by
the Owner Trustee on behalf of Holding Trust shall be located in the State of
Delaware or the State of New York. Payments will be received by Holding Trust
only in Delaware or New York and payments will be made by Holding Trust only
from Delaware or New York. Holding Trust shall not have any employees in any
state other than Delaware; provided, however, that nothing herein shall restrict
or prohibit the Owner Trustee, the
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Master Servicer or any agent of Holding Trust from having employees within or
without the State of Delaware. The only office of Holding Trust will be at the
Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Sponsor.
The Sponsor makes the following representations and warranties on which the
Owner Trustee relies in accepting the Owner Trust Estate in trust and issuing
the Certificates.
(a) The Sponsor is duly organized and validly existing as a
Delaware corporation with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted and is proposed to be conducted pursuant to this Agreement
and the Operative Documents;
(b) It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of its property,
the conduct of its business and the performance of its obligations under this
Agreement and the Operative Documents requires such qualification;
(c) The Sponsor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Sponsor by all necessary corporate action. The Sponsor has duly executed
this Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Sponsor enforceable against the Sponsor, in accordance with
its terms.
(d) To the best knowledge of the Sponsor, no consent,
license, approval or authorization or registration or declaration with, any
Person or with any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this Agreement and the
Operative Documents, except for such as have been obtained, effected or made;
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Sponsor, or any material indenture, agreement or
other instrument to which the Sponsor is a party or by which it is bound; nor
result in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Operative Documents); nor violate any law or, to the
best of the Sponsor's knowledge, any order, rule or regulation applicable to the
Sponsor of any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Sponsor or its properties; and
(f) There are no proceedings or investigations pending or, to
its knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Operative Documents, (B) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions contemplated
by this Agreement or any of the Operative Documents, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of, this
Agreement or any of the Operative Documents, or (D) seeking to adversely affect
the federal income tax or other federal, state or local tax attributes of the
Certificates.
SECTION 2.11 Covenants of the Sponsor. The Sponsor agrees and
covenants for the benefit of each Certificateholder, the Note Insurer and the
Owner Trustee, during the term of this Agreement, and to the fullest extent
permitted by applicable law, that:
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(a) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as permitted by
its certificate of incorporation and the Operative Documents;
(b) it shall not, for any reason, institute proceedings for
Holding Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against Holding Trust, or
file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of Holding Trust, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of Holding Trust or a substantial part
of the property of Holding Trust or cause or permit Holding Trust to make any
assignment for the benefit of creditors, or admit in writing the inability of
Holding Trust to pay its debts generally as they become due, or declare or
effect a moratorium on the debt of Holding Trust or take any action in
furtherance of any such action;
(c) it shall obtain from each counterparty to each Operative
Document to which it or Holding Trust is a party and each other agreement
entered into on or after the date hereof to which it or Holding Trust is a
party, an agreement by each such counterparty that prior to the occurrence of
the event specified in Section 9.1(e) such counterparty shall not institute
against, or join any other Person in instituting against, it or Holding Trust,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United States or
any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against it, or file a petition seeking or consenting
to reorganization or relief under any applicable federal or state law relating
to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
SECTION 2.12 Covenants of the Certificateholders. Each
Certificateholder agrees:
(a) to be bound by the terms and conditions of the
Certificates and of this Agreement, including any supplements or amendments
hereto and to perform the obligations of a Certificateholder as set forth
therein or herein, in all respects as if it were a signatory hereto. This
undertaking is made for the benefit of Holding Trust, the Owner Trustee, and all
other Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's
agent and attorney-in-fact to sign all corporate, federal, state and local
income or franchise tax returns filed on behalf of Holding Trust, and agree
that, if requested by Holding Trust, it will sign such tax returns on behalf of
Holding Trust. Each Certificateholder also hereby agrees that in its tax returns
it will not take any position inconsistent with those taken in any tax returns
that may be filed by Holding Trust;
(c) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099-B, to notify the Owner Trustee of any transfer by it of a
Certificate in a taxable sale or exchange, within 30 days of the date of the
transfer; and
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for Holding Trust or the
Sponsor to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against Holding Trust, or file a
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petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Sponsor or Holding Trust or a substantial part of its property,
or cause or permit the Sponsor or Holding Trust to make any assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or declare or effect a moratorium on its debt or
take any action in furtherance of any such action.
Except as provided in this Section 2.12, and notwithstanding
any other provision to the contrary in this Agreement, no Certificateholder
shall be deemed to have adopted, be bound by, or succeed in any way to any
representation by, or duty of indemnification by or any other duty of, Holding
Trust, including those contained in Sections 2.10, 8.2 or elsewhere herein.
SECTION 2.13 Investment Company. Neither the Sponsor nor any
Certificateholders shall take any action that would cause the Trust to become an
"Investment Company" required to register under the Investment Company Act of
1940, as amended.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of Holding
Trust by the contribution by the Sponsor pursuant to Section 2.5, the Owner
Trustee, contemporaneously therewith, having full power, authority, and
authorization to do so, has executed, authenticated, dated, issued, and
delivered, in the name and on behalf of Holding Trust, to the Sponsor, one or
more Certificates representing in the aggregate a 100% interest in Holding
Trust, and the Sponsor shall direct that such Certificate(s) on the Certificate
Register be registered in the name of the Sponsor, initially. Accordingly, the
Sponsor shall initially be the sole beneficiary of Holding Trust. Such
Certificate(s) are duly authorized, validly issued, and entitled to the benefits
of this Agreement. For so long as the Sponsor shall own such 100% interest in
Holding Trust, the Sponsor shall be the sole beneficial owner of Holding Trust.
SECTION 3.2 The Certificates. The Certificates shall be
issued in denominations of $1,000 and integral multiples of $1,000 in excess
thereof. The Certificates shall be executed on behalf of Holding Trust by manual
or facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of Holding Trust, shall be validly issued and entitled to the benefit of
this Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. Subject to Section 2.13(d), a transferee of a
Certificate shall become a Certificateholder, and shall be entitled to the
rights and subject to the obligations of a Certificateholder hereunder, upon due
registration of such Certificate in such transferee's name pursuant to Section
3.4.
SECTION 3.3 Authentication of Certificates. Concurrently with
the initial registration of the Trust Certificates in the name of the Holding
Trust the Owner Trustee shall cause each Certificate, to be executed on behalf
of Holding Trust, authenticated and delivered to or upon the written order of
the Sponsor, signed by its chairman of the board, its president or any vice
president, its treasurer or any assistant treasurer without further corporate
action by the Sponsor, in authorized denominations. No Certificate shall entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
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SECTION 3.4 Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar, the Owner Trustee and the
Note Insurer such security or indemnity as may be required by them to save each
of them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of Holding
Trust shall execute and the Owner Trustee shall 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 denomination. In
connection with the issuance of any new Certificate under this Section, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute conclusive evidence of an ownership interest in Holding Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Except as
otherwise stated herein, every Person by virtue of becoming a Certificateholder
in accordance with this Agreement and the rules and regulations of the
Certificate Registrar shall be deemed to be bound by the terms of this
Agreement. Prior to due presentation of a Certificate for registration of
transfer, the Owner Trustee, the Certificate Registrar and the Note Insurer and
any agent of the Owner Trustee, the Certificate Registrar and the Note Insurer,
may treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving any distributions and for all other purposes whatsoever, and none of
the Owner Trustee, the Certificate Registrar or the Note Insurer nor any agent
of the Owner Trustee, the Certificate Registrar or the Note Insurer shall be
bound by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Master Servicer, the Sponsor or the Note Insurer, within 15 days after receipt
by the Owner Trustee of a request therefor from such Person in writing, a list,
of the names and addresses of the Certificateholders as of the most recent
Record Date. If three or more Certificateholders or one or more
Certificateholders evidencing not less than 25% by Percentage Interest apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed not to hold any of the Sponsor, the Master Servicer, the Owner
Trustee or the Note Insurer or any agent thereof accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner
Trustee shall maintain in Wilmington, Delaware an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give
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prompt written notice to the Sponsor, the Certificateholders and the Note
Insurer of any change in the location of the Certificate Register or any such
office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or
for the account of (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any entity whose underlying assets include assets of a plan described in
(i) or (ii) by reason of such plan's investment in the entity (each, a "Benefit
Plan"). By accepting and holding its beneficial ownership interest in its
Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
SECTION 3.10 Restrictions on Transfer of Certificates. (a)
The Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a 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. Except for the initial issuance of the
Certificate to the Sponsor, the Owner Trustee shall require (i) the transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to the Owner Trustee and the Note Insurer certifying to the Owner
Trustee and the Note Insurer the facts surrounding such transfer, which
investment letter shall not be an expense of the Owner Trustee or the Note
Insurer or (ii) if the investment letter is not delivered, a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Owner
Trustee, the Note Insurer and the Sponsor that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor from said Act or is being made pursuant to said Act, which Opinion of
Counsel shall not be an expense of the Owner Trustee, the Note Insurer or the
Sponsor. The Certificateholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Sponsor and the Owner Trustee and the Note
Insurer 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.
(c) The Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Certificate shall (A) be organized and existing under
the laws of the United States of America or any state thereof or the District of
Columbia; (B) expressly assume, by an agreement supplemental hereto, executed
and delivered to the Owner Trustee, the performance of every covenant and
obligation of the Sponsor hereunder except for the covenants and obligations,
and Sections 2.10, 2.11 or 8.2 of this Agreement; (ii) the person that acquires
a Certificate shall deliver to the Owner Trustee and the Note Insurer an
Officer's Certificate stating that such transfer and such supplemental agreement
comply with this Section 3.10 and that all conditions precedent provided by this
subsection 3.10 have been complied with and an Opinion of Counsel stating that
such transfer and such supplemental agreement comply with this Section 3.10 and
that all conditions precedent provided by this Section 3.10 have been complied
with, and the Owner Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying; (iii) the person that
acquires a Certificate shall deliver to the Owner Trustee and the Note Insurer a
letter from each Rating Agency confirming that its rating of the Trust Notes,
after giving effect to such transfer, will not be reduced or withdrawn without
regard to the related Note Policy; (iv) the person that acquires a Certificate
shall deliver to the Owner Trustee and the Note Insurer an Opinion of Counsel to
the effect that (a) such transfer will not adversely affect the treatment of the
Trust Notes after such transfer as debt for federal and applicable state income
tax purposes, (b) such transfer will not result in Trust A, Trust B or Trust C
being subject to tax at the entity level for federal or applicable state tax
purposes, (c) such
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transfer will not have any material adverse impact on the federal or applicable
state income taxation of a Trust Noteholder and (d) such transfer will not
result in the arrangement created by this Agreement or any "portion" of any of
Trust A, Trust B, Trust C or the Holding Trust, being treated as a taxable
mortgage pool as defined in Section 7701(i) of the Code. Notwithstanding the
foregoing, the requirement set forth in subclause (i)(A) of this Section 3.10
shall not apply in the event the Owner Trustee and the Note Insurer shall have
received a letter from each Rating Agency confirming that its rating of the
Trust Notes, after giving effect to a proposed transfer to a Person that does
not meet the requirement set forth in subclause (i)(A), shall not be reduced or
withdrawn without regard to the related Note Policy. Notwithstanding the
foregoing, the requirements set forth in this paragraph (b) shall not apply to
the initial issuance of the Certificates to the Sponsor.
(d) Except for the initial issuance of the Certificates to
the Sponsor or the transfer to an affiliate of the Sponsor, no transfer of a
Certificate shall be made unless the Owner Trustee shall have received a
representation letter from the transferee of such Certificate, acceptable to and
in form and substance satisfactory to the Owner Trustee, to the effect that such
transferee is not a Benefit Plan and is not acting on behalf of or using the
assets of a Benefit Plan and is not acting on behalf of or using the assets of a
Benefit Plan, which representation letter shall not be an expense of the Owner
Trustee.
(e) No transfer or pledge of the Certificates shall result in
more than 98 other holders of Certificates.
SECTION 3.11 Acceptance of Obligations. The Sponsor agrees to
be bound by and to perform all the duties of the Sponsor set forth in this
Agreement.
SECTION 3.12 Payments on Certificates. The Certificateholders
will be entitled to distributions as beneficial owners of Trust A, Trust B and
Trust C.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Certificateholders with Respect
to Certain Matters. With respect to the following matters, the Owner Trustee
shall not take action unless at least 30 days before the taking of such action,
the Owner Trustee shall have notified the Certificateholders in writing of the
proposed action and the Certificateholders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the election by Holding Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Holders);
(b) the amendment of the Trust A Indenture, the Trust B
Indenture, or the Trust C Indenture by a supplemental indenture in circumstances
where the consent of any related Noteholder is required;
(c) the amendment of the Trust A Indenture, the Trust B
Indenture, or the Trust C Indenture by a supplemental indenture in circumstances
where the consent of any related Noteholder is not required and such amendment
materially adversely affects the interest of the Certificateholders; or
(d) except pursuant to Section 7.14 of the Trust A Sale and
Servicing Agreement, the Trust B Sale and Servicing Agreement or the Trust C
Sale and Servicing Agreement, the
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amendment, change or modification of the related Sale and Servicing Agreement,
except to cure any ambiguity or defect or to amend or supplement any provision
in a manner that would not materially adversely affect the interests of the
Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to
Certain Matters
Upon the written request of any Certificateholder (a
"Proposer"), the Owner Trustee shall distribute promptly to all
Certificateholders any request for action or consent of Certificateholders
submitted by such Proposer. The Owner Trustee shall provide a reasonable method
for collecting responses to such request and shall tabulate and report the
results thereof to the Certificateholders and the Sponsor. The Owner Trustee
shall have no responsibility or duty to determine if any such proposed action or
consent is permitted under the terms of this Agreement or applicable law.
SECTION 4.3 Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the related
Trust Notes have been paid in full, the Owner Trustee shall not have the power
to, and shall not, commence any proceeding or other actions contemplated by
Section 2.12(b) relating to the Holding Trust without the prior written consent
of the Note Insurer (unless a Note Insurer Default shall have occurred and is
continuing) or upon a Note Insurer Default, the Majority Certificateholders.
Until one year and one day following the day on which the related Trust Notes
have been paid in full, all amounts due to the Note Insurer under the Insurance
Agreement have been paid in full, each Note Policy has terminated and the
Indenture Trustee has surrendered the Note Policies to the Note Insurer, the
Owner Trustee shall not have the power to, and shall not, commence any
proceeding or other actions contemplated by Section 2.12(b) relating to Holding
Trust without the prior written consent of all of the Certificateholders and the
delivery to the Owner Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that the Holding
Trust is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. (a)
The Certificateholders shall not direct the Owner Trustee to take or refrain
from taking any action if such action or inaction would be contrary to any
obligation of the Holding Trust or the Owner Trustee under this Agreement or any
of the Operative Documents or would be contrary to Section 2.3 or otherwise
contrary to law nor shall the Owner Trustee be obligated to follow any such
direction, if given.
(b) No Certificateholder (other than the Sponsor or its
initial transferee) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any
Operative Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% by Percentage Interest shall have made written
request upon the Owner Trustee to institute such action, suit or proceeding in
its own name as Owner Trustee under this Agreement and shall have offered to the
Owner Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Owner
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding, and during such 30-day period no request or waiver inconsistent
with such written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other
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of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner provided in this Agreement and for the equal, ratable, and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 4.4, each and every Certificateholder and the Owner
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 4.5 Majority Control. No Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of Holding Trust except as expressly provided in this Agreement.
Except as otherwise expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority interest in Holding Trust.
Except as otherwise expressly provided herein, any written notice of the
Certificateholders delivered pursuant to this Agreement shall be effective if
signed by Certificateholders evidencing not less than a majority interest in
Holding Trust at the time of the delivery of such notice.
SECTION 4.6 Rights of Note Insurer. Notwithstanding anything
to the contrary in the Operative Documents, without the prior written consent of
the Note Insurer (or if a Note Insurer Default shall have occurred and is
continuing, the Majority Certificateholders) the Owner Trustee shall not (i)
initiate any claim, suit or proceeding by Holding Trust or compromise any claim,
suit or proceeding brought by or against Holding Trust, other than with respect
to the enforcement of any Mortgage Loan or any rights of Holding Trust
thereunder, (ii) authorize the merger or consolidation of Holding Trust with or
into any other business trust or other entity, (iii) amend the Certificate of
Trust or (iv) amend this Agreement in accordance with Section 11.1 of this
Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1 Accounting and Records to the Certificateholders,
the Internal Revenue Service and Others. The Sponsor shall (a) maintain (or
cause to be maintained) the books of Holding Trust on a calendar year basis on
the accrual method of accounting, (b) deliver (or cause to be delivered) to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required to enable each
Certificateholder to prepare its Federal and state income tax returns, (c) file
or cause to be filed, such tax returns relating to Holding Trust (including a
corporate return, Form 1120), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections and file such forms as may
from time to time be required or appropriate under any applicable state or
Federal statute or rule or regulation thereunder given the Trust's
characterization as a corporation, or if applicable, as a partnership, for
Federal income tax purposes. The Owner Trustee or the Master Servicer, as the
case may be, shall make all elections pursuant to this Section as directed in
writing by the Sponsor. The Owner Trustee shall sign all tax information returns
presented to it in final execution form, if any, filed pursuant to this Section
5.1 and any other returns as may be required by law, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Sponsor or the Master Servicer.
SECTION 5.2 Reserved.
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ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Operative Documents to which
Holding Trust is named as a party and each certificate or other document
attached as an exhibit to or contemplated by the Operative Documents to which
Holding Trust is named as a party and any amendment thereto, in each case, in
such form as the Sponsor shall approve as evidenced conclusively by the Owner
Trustee's execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of Holding
Trust pursuant to the Operative Documents. The Owner Trustee is further
authorized from time to time to take such action as the Instructing Party
recommends with respect to the Operative Documents so long as such activities
are consistent with the terms of the Operative Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and to administer Holding Trust in the
interest of the Holders, subject to the Operative Documents and in accordance
with the provisions of this Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article
IV, the Note Insurer (so long as a Note Insurer Default shall not have occurred
and be continuing) or the Certificateholders (if a Note Insurer Default shall
have occurred and be continuing) (the "Instructing Party") shall have the
exclusive right to direct the actions of the Owner Trustee in the management of
Holding Trust, so long as such instructions are not inconsistent with the
express terms set forth herein or in any Operative Document. The Instructing
Party shall not instruct the Owner Trustee in a manner inconsistent with this
Agreement or the Operative Documents.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Operative Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Operative Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Operative Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Operative Documents, as it shall deem to
be in the best interests of the Certificateholders, and shall have no liability
to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Operative Document or any
such provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have
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received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Operative Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement
or in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for Holding Trust or to
record this Agreement or any Operative Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Operative
Documents and (iii) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take
any action (a) that is inconsistent with the purposes of Holding Trust set forth
in Section 2.3. The Certificateholders shall not direct the Owner Trustee to
take action that would violate the provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee
accepts the trust hereby created and agrees to perform its duties hereunder with
respect to such trust but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of the Operative Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Operative Document under any circumstances, except (i)
for its own willful misconduct, bad faith or gross negligence, (ii) in the case
of the inaccuracy of any representation or warranty contained in Section 7.3
expressly made by the Owner Trustee in its individual capacity, (iii) for
liabilities arising from the failure of the Owner Trustee to perform obligations
expressly undertaken by it in the last sentence of Section 6.4 hereof, (iv) for
any investments issued by the Owner Trustee or any branch or affiliate thereof
in its commercial capacity or (v) for taxes, fees or other charges on, based on
or measured by, any fees, commissions or compensation received by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
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(a) the Owner Trustee shall not be liable for any error of
judgment, not constituting gross negligence, made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it if such action or omission is in
accordance with the instructions of the Instructing Party, the Sponsor, the
Master Servicer or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Operative Documents;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Sponsor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Operative Documents, other than
the certificate of authentication on the Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty or obligation to the
Sponsor, the Note Insurer, Indenture Trustee, any Certificateholder, other than
as expressly provided for herein and in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Sponsor, the Note Insurer, the Indenture Trustee, the Issuer,
or the Master Servicer under any of the Operative Documents or otherwise and the
Owner Trustee shall have no obligation or liability to perform the obligations
under this Agreement or the Operative Documents that are required to be
performed by the Sponsor under this Agreement; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement or any Operative Document, at the request, order
or direction of the Instructing Party or any of the Certificateholders, unless
such Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Operative Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its negligence, bad faith
or willful misconduct in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Operative Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee
hereby represents and warrants, in its individual capacity, to the Sponsor and
the Holders, that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
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(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer, secretary or other authorized officers of the relevant party,
as to such fact or matter, and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and according to such opinion not contrary to this Agreement or any
Operative Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Operative Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Sponsor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or related documents.
The Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any Trust
Certificate, or the perfection and priority of any security interest created by
any Trust Certificate or the maintenance of any such perfection and priority, or
for or with respect to the sufficiency of the Owner Trust Estate or its ability
to generate the payments to be distributed to Certificateholders under this
Agreement, including, without limitation: the existence, condition and ownership
of any Trust Certificate; the existence and enforceability of any insurance
thereon; the existence and contents of any Trust Certificate on any computer or
other record thereof; the validity of the assignment of any Trust Certificate to
Holding Trust or of any intervening assignment; the completeness of any Mortgage
Loan; the performance or enforcement of any Mortgage
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Loan; the compliance by the Sponsor, the Master Servicer or any other Person
with any warranty or representation made under any Operative Document or in any
related document or the accuracy of any such warranty or representation or any
action of the Indenture Trustee or the Master Servicer or any Sub-Servicer taken
in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates and may deal with the Sponsor, the Indenture Trustee and the
Master Servicer in banking transactions with the same rights as it would have if
it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to
be made by the Owner Trustee under this Agreement or any of the Operative
Documents to which Holding Trust or the Owner Trustee is a party shall be made
only from the income and proceeds of the Owner Trust Estate and only to the
extent that Holding Trust shall have received income or proceeds from the Owner
Trust Estate to make such payments in accordance with the terms hereof.
Wilmington Trust Company, or any successor thereto, in its individual capacity,
shall not be liable for any amounts payable under this Agreement or any of the
Operative Documents to which Holding Trust or the Owner Trustee is a party.
SECTION 7.9 Doing Business in Other Jurisdictions.
Notwithstanding anything contained to the contrary, neither Wilmington Trust
Company or any successor thereto, nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5 hereof, (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware ; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by Wilmington Trust Company (or
any successor thereto); or (iii) subject Wilmington Trust Company (or any
successor thereto) to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company (or any successor
thereto) or the Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Sponsor and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Sponsor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder and under the Operative Documents.
SECTION 8.2 Indemnification. The Sponsor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee (in its individual
and trust capacities) and its officers, directors, successors, assigns, agents
and servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may (in its trust or individual capacities) at
any time be imposed on, incurred by, or asserted against the Owner Trustee or
any Indemnified Party in
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any way relating to or arising out of this Agreement, the Operative Documents,
the Owner Trust Estate, the administration of the Owner Trust Estate or the
action or inaction of the Owner Trustee hereunder, except only that the Sponsor
shall not be liable for or required to indemnify the Owner Trustee from and
against Expenses arising or resulting from any of the matters described in the
third sentence of Section 7.1. The indemnities contained in this Section and the
rights under Section 8.1 shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Sponsor which approval shall not be unreasonably withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid
to the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding
anything in this Agreement or any Operative Document, the Owner Trustee agrees
in its individual capacity and in its capacity as Owner Trustee for Holding
Trust that all obligations of Holding Trust to the Owner Trustee individually or
as Owner Trustee for Holding Trust shall be recourse to the Owner Trust Estate
only and specifically shall not be recourse to the assets of any
Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1 Termination of Trust Agreement. (a) This
Agreement and Holding Trust shall terminate and be of no further force or effect
upon the payment to Certificateholders of all amounts required to be paid to
them pursuant to this Agreement and the payment to the Note Insurer of all
amounts payable or reimbursable to it pursuant to the Trust A Sale and Servicing
Agreement, the Trust B Sale and Servicing Agreement and the Trust C Sale and
Servicing Agreement and the Insurance Agreement; provided, however, that the
rights to indemnification under Section 8.2 and the rights under Section 8.1
shall survive the termination of the Holding Trust. The Master Servicer shall
promptly notify the Owner Trustee and the Note Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or Holding Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of Holding Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Sponsor nor
any other Certificateholder shall be entitled to revoke or terminate Holding
Trust.
(c) Notice of any termination of Holding Trust, specifying
the Payment Date upon which the Certificateholders shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of all notices of
such redemption from the Master Servicer given pursuant to Section 10.1 of the
Trust A Sale and Servicing Agreement, the Trust B Sale and Servicing Agreement
and the Trust C Sale and Servicing Agreement, stating (i) the Payment Date upon
or with respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates at the office of the Indenture
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Indenture Trustee therein specified. The Owner
Trustee shall give such
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notice to the Certificate Registrar (if other than the Owner Trustee) and the
Indenture Trustee at the time such notice is given to Certificateholders.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in Holding Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Certificateholders shall look
solely to the Sponsor for payment.
(d) Any funds remaining in Holding Trust after funds for
final distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Sponsor.
(e) Upon the winding up of Holding Trust and its termination,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
(f) The Sponsor shall take all necessary steps to qualify the
termination of the Holding Trust as a liquidation under Section 332 of the Code,
if applicable, including the adoption of a plan of liquidation.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation (i) satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poors or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the Note Insurer in its sole discretion.
If such corporation shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2 Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Sponsor, the Note Insurer and
the Master Servicer. Upon receiving such notice of resignation, the Sponsor
shall promptly appoint a successor Owner Trustee, meeting the qualifications set
forth in Section 10.1 herein, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Owner Trustee and one copy
to the successor Owner Trustee, provided that the Sponsor shall have received
written confirmation from each of the Rating Agencies that the proposed
appointment will not result in an increased capital charge to the Note Insurer
by either of the Rating Agencies. If no successor Owner Trustee shall have been
so appointed and have accepted appointment
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<PAGE> 26
within 30 days after the giving of such notice of resignation, the resigning
Owner Trustee or the Note Insurer may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing) may remove the Owner Trustee. If a majority of the
Certificateholders shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Sponsor shall promptly appoint a successor
Owner Trustee, meeting the qualifications set forth in Section 10.1 herein, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed, one copy to the Note Insurer
and one copy to the successor Owner Trustee and the Sponsor shall pay all fees
owed to the outgoing Owner Trustee, if not previously paid by Holding Trust.
Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section shall not become effective until acceptance of appointment by the
successor Owner Trustee pursuant to Section 10.3 and payment of all reasonable
fees and expenses owed to the outgoing Owner Trustee.
Notwithstanding any other provision of this Agreement, and in
addition to any other method of removal of the Owner Trustee contained herein,
upon a proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in Holding
Trust, the Owner Trustee may be removed as Owner Trustee, which consent is not
to be unreasonably withheld. In the event the Owner Trustee is removed pursuant
to this paragraph, the provisions of this Agreement, including Article X herein,
shall apply as if the Owner Trustee had resigned hereunder.
SECTION 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Sponsor, the Master Servicer, the Note Insurer and to its
predecessor Owner Trustee an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Owner
Trustee shall become effective and such successor Owner Trustee, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor under this Agreement, with
like effect as if originally named as Owner Trustee. The predecessor Owner
Trustee shall upon payment of its fees and expenses deliver to the successor
Owner Trustee all documents and statements and monies held by it under this
Agreement; and the Sponsor and the predecessor Owner Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Owner Trustee
all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Master Servicer shall mail notice of the successor
of such Owner Trustee to all Certificateholders. If the Master Servicer shall
fail to mail such notice within 10 days after acceptance of appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice to
be mailed at the expense of the Master Servicer.
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<PAGE> 27
The successor Owner Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State reflecting the name and
principal place of business of such successor Owner Trustee in the State of
Delaware.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee 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 Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate
Owner 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 Owner Trust Estate may at the time be located, the Master
Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee and the Note Insurer to act as co-trustee, jointly with the
Owner Trustee, or separate trustee or separate trustees, of all or any part of
the Owner Trust Estate, and to vest in such Person, in such capacity, such title
to Holding Trust, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Owner 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, the Owner Trustee subject to the
approval of the Note Insurer (which approval shall not be unreasonably withheld)
shall have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner 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 Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner 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 Holding Trust 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
Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Master Servicer and the Owner 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 Owner
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 Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts
23
<PAGE> 28
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Owner 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 Owner Trustee.
Each such instrument shall be filed with the Owner Trustee and a copy thereof
given to the Master Servicer and the Note Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner 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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement
may be amended by the Sponsor and the Owner Trustee, with the prior written
consent of the Note Insurer (so long as no Note Insurer Default shall have
occurred and is continuing), without the consent of any of the
Certificateholders (i) to cure any ambiguity or defect or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel which may be based
upon a certificate of the Master Servicer, adversely affect in any material
respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time,
with the prior written consent of the Note Insurer which consent shall not be
unreasonably withheld (so long as no Note Insurer Default shall have occurred
and is continuing) by the Sponsor and the Owner Trustee, with prior written
notice to the Rating Agencies, and, the consent of the Certificateholders
evidencing not less than a majority interest in Holding Trust (which consent of
any Holder of a Certificate given pursuant to this Section or pursuant to any
other provision of this Agreement shall be conclusive and binding on such Holder
and on all future Holders of such Certificate and of any Certificate issued upon
the transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Certificate) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that, subject to the express rights of
the Note Insurer under the Operative Documents, no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, distributions that shall be required to be made for the benefit of
the Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Certificates, the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all the outstanding
Certificates.
Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of
Certificateholders, pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents (and
any other consents of Certificateholders provided for in this Agreement or in
any other Operative Document) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe. Promptly after the execution of
any
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<PAGE> 29
amendment to the Certificate of Trust, the Owner Trustee shall cause the filing
of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for
Section 11.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to
the extent expressly provided herein, the Note Insurer, the Indenture Trustee
and the Trust Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt, if
to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Sponsor, addressed to Advanta Mortgage Conduit Services, Inc., 10790 Rancho
Bernardo Road, San Diego, CA 92127; if to the Note Insurer, addressed to, Ambac
Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Thomas Adams and Ted Molin, Telecopy No.: (212) 363-1459; or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7 Assignments; Note Insurer. (a) This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
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<PAGE> 30
This Agreement shall also inure to the benefit of the Note Insurer for so long
as a Note Insurer Default shall not have occurred and be continuing. Without
limiting the generality of the foregoing, all covenants and agreements in this
Agreement which confer rights upon the Note Insurer shall be for the benefit of
and run directly to the Note Insurer, and the Note Insurer shall be entitled to
rely on and enforce such covenants, subject, however, to the limitations on such
rights provided in this Agreement and the Operative Documents. The Note Insurer
may disclaim any of its rights and powers under this Agreement upon delivery of
a written notice to the Owner Trustee.
SECTION 11.8 No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, hereby covenants
and agrees that they will not at any time institute against the Sponsor, or join
in any institution against the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, this Agreement or any of the
Operative Documents.
SECTION 11.9 No Recourse. Each Certificateholder by accepting
a Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in Holding Trust only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Note Insurer or any Affiliate thereof and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates or the Operative
Documents.
SECTION 11.10 Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.12 Master Servicer. The Master Servicer is
authorized to prepare, or cause to be prepared, execute and deliver on behalf of
Holding Trust all such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of Holding Trust or Owner Trustee to
prepare, file or deliver pursuant to the Operative Documents. Upon written
request, the Owner Trustee shall execute and deliver to the Master Servicer a
limited power of attorney appointing the Master Servicer the Holding Trust's
agent and attorney-in-fact to prepare, or cause to be prepared, execute and
deliver all such documents, reports, filings, instruments, certificates and
opinions.
26
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY, as Owner Trustee
By /s/ Emmet Harmon
--------------------------------
Name: Emmet Harmon
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By /s/ Mark Dunsheath
--------------------------------
Name: Mark Dunsheath
Title: Vice President
27
<PAGE> 32
Exhibit A
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE
EXTENT DESCRIBED HEREIN AND IN THE HOLDING TRUST TRUST AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION
AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.10 OF THE HOLDING
TRUST TRUST AGREEMENT REFERRED TO HEREIN.
EXCEPT WITH RESPECT TO THE INITIAL ISSUANCE HEREOF OR A TRANSFER TO AN
AFFILIATE OF THE SPONSOR, NO TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS THE OWNER TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER
FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, TO THE EFFECT THAT SUCH
TRANSFEREE IS NOT A BENEFIT PLAN AND NOT ACTING ON BEHALF OF OR USING
THE ASSETS OF A BENEFIT PLAN, WHICH REPRESENTATION LETTER SHALL NOT BE
AN EXPENSE OF THE OWNER TRUSTEE.
NO TRANSFER OF A 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. EXCEPT FOR THE INITIAL ISSUANCE
OF THE CERTIFICATES TO THE SPONSOR, THE OWNER TRUSTEE SHALL REQUIRE (i)
THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN
FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE NOTE
INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE NOTE INSURER THE FACTS
SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN
EXPENSE OF THE OWNER TRUSTEE OR THE NOTE INSURER OR (ii) IF THE
INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF COUNSEL
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER
TRUSTEE, THE NOTE INSURER AND THE SPONSOR THAT SUCH TRANSFER MAY BE
MADE PURSUANT TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND
THE BASIS THEREFOR, FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID
ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER
TRUSTEE, THE NOTE INSURER OR THE SPONSOR. THE HOLDER OF A CERTIFICATE
DESIRING TO EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO,
INDEMNIFY THE SPONSOR AND THE NOTE INSURER AGAINST ANY LIABILITY
<PAGE> 33
THAT MAY RESULT IF THE TRANSFER IS NOT SO EXEMPT OR IS NOT MADE IN
ACCORDANCE WITH SUCH FEDERAL AND STATE LAWS.
THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED
EXCEPT UPON SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE
PERSON THAT ACQUIRES A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING
UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE OR THE
DISTRICT OF COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN AGREEMENT
SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO THE OWNER TRUSTEE, THE
PERFORMANCE OF EVERY COVENANT AND OBLIGATION OF THE SPONSOR UNDER THE
HOLDING TRUST TRUST AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS
CONTAINED IN SECTIONS 2.10, 2.11 OR 8.2 OF THE HOLDING TRUST TRUST
AGREEMENT; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO
THE OWNER TRUSTEE AND THE NOTE INSURER AN OFFICER'S CERTIFICATE STATING
THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION
3.10 OF THE HOLDING TRUST TRUST AGREEMENT AND THAT ALL CONDITIONS
PRECEDENT PROVIDED BY SECTION 3.10 OF THE HOLDING TRUST TRUST AGREEMENT
HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT SUCH
TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 AND
THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 HAVE BEEN
COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY ON SUCH
OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD
TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO
RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO
THE OWNER TRUSTEE AND THE NOTE INSURER A LETTER FROM EACH RATING AGENCY
CONFIRMING THAT ITS RATING OF THE TRUST NOTES, AFTER GIVING EFFECT TO
SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE
RELATED NOTE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL
DELIVER TO THE OWNER TRUSTEE AND THE NOTE INSURER AN OPINION OF COUNSEL
TO THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE
TREATMENT OF THE TRUST NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL
AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT
RESULT IN HOLDING TRUST BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR
FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT
HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE
INCOME TAXATION OF A TRUST NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT
RESULT IN THE ARRANGEMENT CREATED BY THE HOLDING TRUST TRUST AGREEMENT
OR ANY "PORTION" OF HOLDING TRUST, BEING TREATED AS A TAXABLE MORTGAGE
POOL AS DEFINED IN SECTION 7701(I) OF THE CODE; (V) ALL FILINGS AND
OTHER ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF
HOLDING TRUST IN THE MORTGAGE LOANS AND THE OTHER PROPERTY CONVEYED
UNDER THE HOLDING TRUST TRUST AGREEMENT SHALL HAVE BEEN TAKEN OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE> 34
ADVANTA MORTGAGE HOLDING TRUST 1998-4
CERTIFICATE
Percentage Interest: [100%]
Date of Cut-Off Date:
November 1, 1998
First Payment Date: Issue Date: November 24, 1998
December 28, 1998
No. 1
---------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by:
------------------------------------
Authenticating Agent
Holding Trust was created pursuant to a Holding Trust Trust
Agreement dated as of November 1, 1998 (the "Trust Agreement"), between the
Sponsor and Wilmington Trust Company, as owner trustee (the "Owner Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as Advanta Mortgage Holding Trust 1998-4 Certificates (herein called
the "Certificates"). These Certificates are issued under and are subject to the
terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of Holding Trust
includes the Trust A, the Trust B and the Trust C Certificates.
Under the Trust Agreement, there will be distributed on the
25th day of each month or, if such 25th day is not a Business Day, the next
Business Day (the "Payment Date"), commencing on December 28, 1998, to the
Person in whose name this Certificate is registered at the close of business on
the Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.
<PAGE> 35
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Holding Trust
will be treated as a corporation. The Sponsor and any other Certificateholders,
by acceptance of a Certificate, agree to treat, and to take no action
inconsistent with the treatment of the Certificates for such tax purposes as
equity interests in a corporation.
Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for the purpose by the Owner Trustee in the Corporate Trust
Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or be valid for any purpose.
<PAGE> 36
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Holding
Trust and not in its individual capacity, has caused this Certificate to be duly
executed.
ADVANTA MORTGAGE HOLDING TRUST 1998-4
By: WILMINGTON TRUST COMPANY not in its individual
capacity but solely as Owner Trustee
Dated: November 24, 1998
By: ____________________________________
Name:
Title:
<PAGE> 37
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, the Originators, the Sponsor, the Master Servicer, the Note
Insurer, the Owner Trustee or any Affiliates of any of them and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated herein or in the Trust Agreement or the Operative
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
distributions received by each of the Trust Certificates.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Trust Agreement at any time by the Sponsor and the Owner Trustee with the prior
written consent of the Note Insurer and with the consent of the holders of the
Certificates evidencing not less than a majority of the outstanding
Certificates. Any such consent by the holder of this Certificate shall be
conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates (other than the Sponsor or the Note Insurer).
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in Holding
Trust will be issued to the designated transferee. The initial Certificate
Registrar appointed under the Trust Agreement is Wilmington Trust Company.
The Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 or integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates in authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Certificate Registrar, the Note Insurer
and any agent of the Owner Trustee, the Certificate Registrar, the Note Insurer
or the Note Insurer may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Owner Trustee,
the Certificate Registrar, the Note Insurer nor any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and Holding Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Certificate.
The recitals contained herein shall be taken as the statements
of the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
<PAGE> 38
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement be valid for any purpose.
<PAGE> 39
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------- Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
---------------------------------------------------
Signature Guaranteed:
*
---------------------------------------------------
- ---------------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
<PAGE> 40
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA MORTGAGE HOLDING TRUST 1998-4
This Certificate of Trust of Advanta Mortgage Holding Trust
1998-4 ("Holding Trust"), dated as of November 20, 1998, is being duly executed
and filed by Wilmington Trust Company, a Delaware banking corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is
Advanta Mortgage Holding Trust 1998-4.
2. Delaware Trust. The name and business address of the Owner
Trustee of Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001. Attn:
Corporate Trust Administration.
3. This Certificate of Trust will be effective November 20,
1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
Holding Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee of Holding Trust.
By:_________________________________
Name:
Title:
<PAGE> 1
Exhibit 4.2.2
TRUST A
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. Definitions......................................................1
SECTION 1.1 Capitalized Terms.......................................1
SECTION 1.2 Other Definitional Provisions...........................3
SECTION 1.3 Action by or Consent of Class A Noteholders and
Certificateholders....................................4
ARTICLE II. Organization....................................................4
SECTION 2.1 Name....................................................4
SECTION 2.2 Office..................................................4
SECTION 2.3 Purposes and Powers.....................................4
SECTION 2.4 Appointment of Owner Trustee............................6
SECTION 2.5 Initial Capital Contribution of Trust Estate............6
SECTION 2.6 Declaration of Trust....................................7
SECTION 2.7 Liability...............................................7
SECTION 2.8 Title to Trust Property.................................7
SECTION 2.9 Situs of Trust..........................................7
SECTION 2.10 Representations and Warranties of the Sponsor...........7
SECTION 2.11 Federal Income Tax Allocations..........................8
SECTION 2.12 Covenants of the Sponsor................................9
SECTION 2.13 Covenants of the Certificateholders.....................9
SECTION 2.14 Investment Companies...................................10
ARTICLE III. Certificates and Transfer of Interests........................10
SECTION 3.1 Initial Ownership......................................10
SECTION 3.2 The Certificates.......................................10
SECTION 3.3 Authentication of Certificates.........................11
SECTION 3.4 Registration of Transfer and Exchange of
Certificates.........................................11
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates......11
SECTION 3.6 Persons Deemed Certificateholders......................11
SECTION 3.7 Access to List of Certificateholders' Names and
Addresses............................................12
SECTION 3.8 Maintenance of Office or Agency........................12
SECTION 3.9 ERISA..................................................12
SECTION 3.10 Restrictions on Transfer of Certificates...............12
SECTION 3.11 Acceptance of Obligations..............................14
SECTION 3.12 Payments on Certificates...............................14
ARTICLE IV. Voting Rights and Other Actions................................14
SECTION 4.1 Prior Notice to Certificateholders with Respect to
Certain Matters......................................14
SECTION 4.2 Action by Certificateholders with Respect to
Certain Matters......................................14
SECTION 4.3 Action by Certificateholders with Respect to
Bankruptcy...........................................15
SECTION 4.4 Restrictions on Certificateholders' Power..............15
SECTION 4.5 Majority Control.......................................15
SECTION 4.6 Rights of Note Insurer.................................16
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<PAGE> 3
ARTICLE V. Certain Duties..................................................16
SECTION 5.1 Accounting and Records to the Class A Noteholders,
Certificateholders, the Internal Revenue Service
and Others...........................................16
SECTION 5.2 Signature on Returns; Tax Matters Partner..............16
ARTICLE VI. Authority and Duties of Owner Trustee..........................17
SECTION 6.1 General Authority......................................17
SECTION 6.2 General Duties.........................................17
SECTION 6.3 Action upon Instruction................................17
SECTION 6.4 No Duties Except as Specified in this Agreement or
in Instructions......................................18
SECTION 6.5 No Action Except under Specified Documents or
Instructions.........................................18
SECTION 6.6 Restrictions...........................................18
ARTICLE VII. Concerning the Owner Trustee..................................18
SECTION 7.1 Acceptance of Trust and Duties.........................18
SECTION 7.2 Furnishing of Documents................................19
SECTION 7.3 Representations and Warranties.........................20
SECTION 7.4 Reliance; Advice of Counsel............................20
SECTION 7.5 Not Acting in Individual Capacity......................20
SECTION 7.6 Owner Trustee Not Liable for Certificates or
Mortgage Loans.......................................20
SECTION 7.7 Owner Trustee May Own Certificates and Class A Notes...21
SECTION 7.8 Payments from Owner Trust Estate.......................21
SECTION 7.9 Doing Business in Other Jurisdictions..................21
ARTICLE VIII. Compensation of Owner Trustee................................21
SECTION 8.1 Owner Trustee's Fees and Expenses......................21
SECTION 8.2 Indemnification........................................22
SECTION 8.3 Payments to the Owner Trustee..........................22
SECTION 8.4 Non-recourse Obligations...............................22
ARTICLE IX. Termination of Trust Agreement.................................22
SECTION 9.1 Termination of Trust Agreement.........................22
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees..........23
SECTION 10.1 Eligibility Requirements for Owner Trustee.............23
SECTION 10.2 Resignation or Removal of Owner Trustee................24
SECTION 10.3 Successor Owner Trustee................................24
SECTION 10.4 Merger or Consolidation of Owner Trustee...............25
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee..............................................25
ARTICLE XI. Miscellaneous..................................................26
SECTION 11.1 Supplements and Amendments.............................26
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders...................................27
SECTION 11.3 Limitations on Rights of Others........................27
SECTION 11.4 Notices................................................27
ii
<PAGE> 4
SECTION 11.5 Severability...........................................28
SECTION 11.6 Separate Counterparts..................................28
SECTION 11.7 Assignments; Note Insurer..............................28
SECTION 11.8 No Petition............................................28
SECTION 11.9 No Recourse............................................28
SECTION 11.10 Headings...............................................28
SECTION 11.11 GOVERNING LAW..........................................28
SECTION 11.12 Master Servicer........................................28
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
<PAGE> 5
TRUST AGREEMENT relating to Trust A dated as of November 1, 1998
between ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation as
Sponsor, and WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner
Trustee.
ARTICLE I.
Definitions
SECTION 1.1 Capitalized Terms. For the purposes of this Agreement, the
following terms shall have the meanings set forth below.
"Accounts" shall have the meaning ascribed thereto in the Trust A
Indenture.
"Affiliate" shall mean with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, or owns, directly or indirectly,
50% or more of, the Person specified.
"Agreement" shall mean this Trust A Trust Agreement, as the same may be
amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the beneficial
ownership interest of a Certificateholder in Trust A, substantially in the form
of Exhibit A attached hereto.
"Certificateholder" or "Holder" shall initially mean Holding Trust,
until and unless Holding Trust transfers any or all of its interest in the
Certificate to any other Person and thereafter "Certificateholder" shall also
mean or include such Person.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for Trust A pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register maintained and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Sponsor and
Holding Trust, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Sponsor).
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"ERISA" shall have the meaning assigned to such term in Section 3.9.
<PAGE> 6
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holding Trust" shall mean Advanta Mortgage Holding Trust 1998-4.
"Indemnification Agreement" shall mean the Indemnification Agreement
dated as of November 24, 1998 between the Note Insurer and Morgan Stanley & Co.
Incorporated.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture Trustee" shall initially mean Bankers Trust Company of
California, N.A., in its capacity as indenture trustee, including its successors
in interest, until and unless a successor Person shall have become the Indenture
Trustee pursuant to the Trust A Sale and Servicing Agreement and thereafter
"Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement
dated as of November 24, 1998 among the Note Insurer, the Sponsor, the Master
Servicer Trust A, Trust B, Trust C and the Indenture Trustee.
"Issuer" shall mean Advanta Mortgage Loan Trust 1998-4A.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Note Insurer" shall mean Ambac Assurance Corporation, or its successor
in interest.
"Operative Documents" shall mean this Agreement, the Trust A Sale and
Servicing Agreement, the Master Transfer Agreement, the Subsequent Transfer
Agreements, the Trust A Note Policy, the Insurance Agreement, the
Indemnification Agreement, the Trust A Indenture, and the Class A Notes.
"Originators" shall mean any entity from which the Sponsor has
purchased (or, in the case of Subsequent Mortgage Loans, will purchase) 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.
"Outstanding" shall have the meaning assigned to such term in the Trust
A Indenture.
"Owner Trust Estate" shall mean all right, title and interest of Trust
A in and to the property and rights assigned to Trust A pursuant to Article II
of the Trust A Sale and Servicing Agreement, all funds on deposit from time to
time in the Accounts and the Trust A Note Account and all other property of
Trust A from time to time, including any rights of the Owner Trustee and the
Trust pursuant to the Trust A Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Record Date" shall mean with respect to any Payment Date, the close of
business on the last Business Day immediately preceding such Payment Date,
provided, that if the Certificates or Class A Notes are in definitive form, the
Record Date with respect to each Payment Date shall be the
2
<PAGE> 7
last Business Day of the calendar month immediately preceding the calendar month
in which such Payment Date occurs.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Security Majority" means a majority by principal amount of the Class A
Noteholders so long as the Class A Notes are Outstanding and a majority by
principal amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Mortgage Conduit Services, Inc. in its
capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust A" shall mean the trust established by this Agreement.
"Trust A Indenture" shall mean the Trust A Indenture dated as of
November 1, 1998 between the Sponsor and the Issuer, as the same may be amended
and supplemented from time to time.
"Trust A Note Account" as defined in the Trust A Indenture.
"Trust A Sale and Servicing Agreement" shall mean the Trust A Sale and
Servicing Agreement relating to Trust A among the Issuer, Advanta Mortgage
Conduit Services, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust B" shall have the meaning assigned to it in the Trust A
Indenture.
"Trust C" shall have the meaning assigned to it in the Trust A
Indenture.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the Trust
A Sale and Servicing Agreement or, if not defined therein, in the Trust A
Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections
3
<PAGE> 8
and Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3 Action by or Consent of Class A Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Class A Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Class A
Noteholder, as the case may be, of record as of the Record Date immediately
preceding the date on which such action is to be taken, or consent given, by
Class A Noteholders or Certificateholders. Solely for the purposes of any action
to be taken, or consented to, by Class A Noteholders or Certificateholders, any
Class A Note or Certificate registered in the name of the Sponsor, Holding Trust
or any Affiliate thereof shall be deemed not to be outstanding; provided,
however, that, solely for the purpose of determining whether the Indenture
Trustee is entitled to rely upon any such action or consent, only Class A Notes
or Certificates which the Owner Trustee, or the Indenture Trustee, respectively,
knows to be so owned shall be so disregarded.
ARTICLE II.
Organization
SECTION 2.1 Name. There is hereby formed a trust to be known as
"Advanta Mortgage Loan Trust 1998-4A", in which name the Owner Trustee may
conduct the business of Trust A, make and execute contracts and other
instruments on behalf of Trust A and sue and be sued.
SECTION 2.2 Office. The office of Trust A shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders and the
Sponsor.
SECTION 2.3 Purposes and Powers. The purpose of Trust A is, and Trust A
shall have the power and authority, to engage in the following activities:
(i) to issue the Class A Notes pursuant to the Trust A Indenture
and the Certificates pursuant to this Agreement, and to sell the Class
A Notes;
(ii) with the proceeds of the sale of the Class A Notes, to fund
the Pre-Funding Account relating to Trust A and to pay the
organizational, start-up and transactional expenses of Trust A and to
pay the balance to the Sponsor pursuant to the Trust A Sale and
Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate to the Indenture Trustee on behalf of the Class A
Noteholders and for the benefit of the Note Insurer and to hold, manage
and distribute to the Certificateholders pursuant to the terms of the
Trust A Sale and Servicing Agreement any portion of the Owner Trust
Estate released from the lien of, and remitted to Trust A pursuant to,
the Trust A Indenture;
(iv) to enter into and perform its obligations under the
Operative Documents to which it is a party;
4
<PAGE> 9
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Operative Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Class A Noteholders.
Trust A is hereby authorized to engage in the foregoing activities.
(b) Trust A shall not engage in any activity other than in connection
with those described in Section 2.3(a) or other than as required or authorized
by the terms of this Agreement or the Operative Documents. In addition, Trust A
shall not:
(i) incur any indebtedness other than the Notes issued pursuant
to the Indenture
(ii) engage in any dissolution, liquidation, consolidation,
merger or sale of assets;
(iii) amend this Trust Agreement without a confirmation from each
applicable Rating Agency then rating the Notes, that such amendment
would not result in the qualification, downgrade or withdrawal of the
rating on the Notes;
(iv) effect a transfer of any direct or indirect ownership
interest in Trust A such that either (y) the transferee owns more than
a 49% interest in Trust A, or (z) the transferee is an affiliate or a
family member of a transferor which owned more than a 49% interest in
the Borrower before such transfer may be made unless such transfer is
conditioned upon the delivery of an acceptable non-consolidation
opinion to the Rating Agencies concerning, as applicable, the
transferee and/or their respective owners;
(v) engage in any business activity in which it is not currently
engaged;
(vi) take any action that might cause Trust A to become
insolvent; or
(vii) form, or caused to be formed, any subsidiaries;
(c) Trust A shall:
(i) maintain books and records separate from any other person or
entity;
(ii) maintain its bank accounts separate from any other person or
entity;
(iii) not commingle its assets with those of any other person or
entity and will hold all of its assets in its own name;
(iv) conduct its own business in its own name;
(v) maintain separate financial statements, showing its assets
and liabilities separate and apart from those of any other person or
entity and not have its assets listed on the financial statement of any
other entity;
5
<PAGE> 10
(vi) file its tax returns separate from those of any other
entity and not file a consolidated federal income tax return with any
other entity;
(vii) except as set forth herein, pay its own liabilities and
expenses only out of its own funds;
(viii) observe all organizational formalities;
(ix) enter into transactions with affiliates only where each
such transaction is intrinsically fair, commercially reasonable, and on
the same terms as would be available in an arm's length transaction
with a person or entity that is not an affiliate;
(x) pay the salaries of its own employees from its own funds;
(xi) maintain a sufficient number of employees in light of its
contemplated business operations;
(xii) not guarantee or become obligated for the debts of any
other entity or person;
(xiii) not hold out its credit as being available to satisfy the
obligation of any other person or entity;
(xiv) not acquire the obligations or securities of its
affiliates or owners, including partners, members or shareholders, as
appropriate;
(xv) not make loans to any other person or entity or buy or
hold evidence of indebtedness issued by any other person or entity
(except for cash and investment-grade securities);
(xvi) allocate fairly and reasonably any overhead expenses that
are shared with an affiliate, including paying for office space and
services performed by any employee of any affiliate;
(xvii) not pledge its assets for the benefit of any other person
or entity other than with respect to the Notes;
(xviii) hold itself out as a separate identity;
(xix) correct any known misunderstanding regarding its separate
identity;
(xx) not identify itself as a division of any other person or
entity; and
(xxi) maintain adequate capital in light of its contemplated
business operations.
SECTION 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints
the Owner Trustee as trustee of Trust A effective as of the date hereof, to have
all the rights, powers and duties set forth herein and in the Business Trust
Statute.
SECTION 2.5 Initial Capital Contribution of Trust Estate. The Sponsor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Sponsor, as of the date hereof, of
6
<PAGE> 11
the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Trust A Note Account. On or prior to the
Closing Date, the Owner Trustee will also, upon receipt thereof, acknowledge on
behalf of Trust A, receipt of the Mortgage Loans pursuant to the Trust A Sale
and Servicing Agreement. The Sponsor shall pay the organizational expenses of
Trust A as they may arise.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of Trust A under the Operative Documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, solely for income tax purposes, Trust A shall be treated as a branch;
provided, however, that in the event Certificates are owned by more than one
Certificateholder, it is the intention of the parties hereto that, solely for
income and franchise tax purposes, Trust A shall then be treated as a
partnership and that, unless otherwise required by appropriate tax authorities,
only after such time Trust A will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of Trust A as a partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and duties set forth
herein and to the extent not inconsistent herewith, in the Business Trust
Statute with respect to accomplishing the purposes of Trust A. The Owner Trustee
shall file the Certificate of Trust with the Secretary of State.
SECTION 2.7 Liability. No Holder shall have any personal liability for
any liability or obligation of Trust A.
SECTION 2.8 Title to Trust Property. (a) Legal title to all of the
Owner Trust Estate shall be vested at all times in Trust A as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of
the Trust Property. The Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest by any Certificateholder of its ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Trust Property.
SECTION 2.9 Situs of Trust. Trust A will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of Trust A shall be located in the State of Delaware or the State of New
York. Payments will be received by Trust A only in Delaware or New York and
payments will be made by Trust A only from Delaware or New York. Trust A shall
not have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee, the Master Servicer
or any agent of Trust A from having employees within or without the State of
Delaware. The only office of Trust A will be at the Corporate Trust Office in
Delaware.
SECTION 2.10 Representations and Warranties of the Sponsor. The Sponsor
makes the following representations and warranties on which the Owner Trustee
relies in accepting the Owner Trust Estate in trust and issuing the Certificates
and upon which the Note Insurer relies in issuing the Trust A Note Policy.
7
<PAGE> 12
(a) The Sponsor is duly organized and validly existing as a Delaware
corporation with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted and is proposed to be conducted pursuant to this Agreement and the
Operative Documents;
(b) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this Agreement and the
Operative Documents requires such qualification;
(c) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Sponsor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with Trust A and the Sponsor has duly authorized such sale and
assignment and deposit to Trust A by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Sponsor by all necessary corporate action. The Sponsor has duly executed
this Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Sponsor enforceable against the Sponsor, in accordance with
its terms.
(d) To the best knowledge of the Sponsor, no consent, license, approval
or authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Operative
Documents, except for such as have been obtained, effected or made;
(e) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
by-laws of the Sponsor, or any material indenture, agreement or other instrument
to which the Sponsor is a party or by which it is bound; nor result in the
creation or imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to the Operative Documents); nor violate any law or, to the best of the
Sponsor's knowledge, any order, rule or regulation applicable to the Sponsor of
any court or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Sponsor or its
properties; and
(f) There are no proceedings or investigations pending or, to its
knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Operative Documents, (B) seeking to prevent the issuance
of the Certificates or the Class A Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Documents,
(C) seeking any determination or ruling that might materially and adversely
affect its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of the Operative Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Class A Notes or the Certificates.
SECTION 2.11 Federal Income Tax Allocations. In the event that Trust A
is treated as a partnership for Federal income tax purposes, net income of Trust
A for any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership percentage of principal amount of Certificates
on such date.
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Net losses of Trust A, if any, for any month as determined for Federal
income tax purposes (and each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated among the
Certificateholders as of the Record Date in proportion to their ownership
percentage of principal amount of Certificates on such Record Date until the
principal balance of the Certificates is reduced to zero. The Sponsor, as agent
on behalf of the Certificateholders, is authorized to modify the allocations in
this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.
SECTION 2.12 Covenants of the Sponsor. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Note Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Operative Documents;
(b) it shall not, for any reason, institute proceedings for Trust A to
be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against Trust A, or file a petition seeking
or consenting to reorganization or relief under any applicable federal or state
law relating to the bankruptcy of Trust A, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Trust A or a substantial part of the property of Trust A or cause
or permit Trust A to make any assignment for the benefit of creditors, or admit
in writing the inability of Trust A to pay its debts generally as they become
due, or declare or effect a moratorium on the debt of Trust A or take any action
in furtherance of any such action;
(c) it shall obtain from each counterparty to each Operative Document
to which it or Trust A is a party and each other agreement entered into on or
after the date hereof to which it or Trust A is a party, an agreement by each
such counterparty that prior to the occurrence of the event specified in Section
9.1(e) such counterparty shall not institute against, or join any other Person
in instituting against, it or Trust A, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Covenants of the Certificateholders. Each
Certificateholder agrees:
(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of Trust A, the Owner Trustee, the Note Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of Trust A, if any, and
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agree that, if requested by Trust A, it will sign such federal income tax
information return in its capacity as holder of an interest in Trust A. Each
Certificateholder also hereby agrees that in its tax returns it will not take
any position inconsistent with those taken in any tax returns that may be filed
by Trust A;
(c) if such Certificateholder is other than an individual or other
entity holding its Certificate through a broker who reports securities sales on
Form 1099-B, to notify the Owner Trustee of any transfer by it of a Certificate
in a taxable sale or exchange, within 30 days of the date of the transfer; and
(d) until the completion of the events specified in Section 9.1(e), not
to, for any reason, institute proceedings for Trust A or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Trust A, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Sponsor or
Trust A or a substantial part of its property, or cause or permit the Sponsor or
Trust A to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
Except as provided in this Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.12, 8.2 or elsewhere herein.
SECTION 2.14 Investment Company. Neither the Sponsor nor any
Certificateholders shall take any action that would cause the Trust to become an
"Investment Company" required to register under the Investment Company Act of
1940, as amended.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of Trust A by the
contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of Trust A, to the Sponsor, one or more Certificates representing
in the aggregate a 100% interest in Trust A, and the Sponsor shall direct that
such Certificate(s) on the Certificate Register be registered in the name of
Holding Trust. Accordingly, Holding Trust shall initially be the sole
beneficiary of Trust A. Such Certificate(s) are duly authorized, validly issued,
and entitled to the benefits of this Agreement. For so long as Holding Trust
shall own such 100% interest in Trust A, Holding Trust shall be the sole
beneficial owner of Trust A.
SECTION 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of Trust A by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of Trust
A, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. Subject to Section 2.13(d), a transferee of a Certificate shall
become a Certificateholder, and shall be entitled to the rights and subject to
the obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
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SECTION 3.3 Authentication of Certificates. Concurrently with the
initial sale of the Mortgage Loans to Trust A pursuant to the Trust A Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate, to be
executed on behalf of Trust A, authenticated and delivered to or upon the
written order of the Sponsor, signed by its chairman of the board, its president
or any vice president, its treasurer or any assistant treasurer without further
corporate action by the Sponsor, in authorized denominations. No Certificate
shall entitle its holder to any benefit under this Agreement, or shall be valid
for any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 3.4 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held in the Trust
A Pre-Funding Account prior to the release of such monies pursuant to Section
8.7(b)(vii) of the Trust A Indenture (other than Trust A Pre-Funding Earnings),
such monies being held in trust for the benefit of the Class A Noteholders and
the Note Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Trust A Pre-Funding Account constitute a
pledge of collateral, then the provisions of the Trust A Sale and Servicing
Agreement shall be considered to constitute a security agreement and the Sponsor
and the Certificateholders hereby grant to the Indenture Trustee and the Note
Insurer a first priority perfected security interest in such amounts. In
addition, each Certificateholder, by acceptance of its Certificate, hereby
appoints the Sponsor as its agent to pledge a first priority perfected security
interest in the Trust A Pre-Funding Account, and any amounts held therein from
time to time to the Indenture Trustee and the Note Insurer and agrees to execute
and deliver such instruments of conveyance, assignment, grant, confirmation,
etc., as well as any financing statements, in each case as the Note Insurer
shall consider reasonably necessary in order to perfect the Indenture Trustee's
security interest in the Mortgage Loans.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and the Note Insurer such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of Trust A shall execute and
the Owner Trustee shall 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 denomination. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in Trust A, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Except as otherwise
stated herein, every Person by virtue of becoming a Certificateholder in
accordance with this Agreement and the rules and regulations of the Certificate
Registrar shall be deemed to be bound by the terms of this Agreement. Prior to
due presentation of a Certificate for registration of transfer, the Owner
Trustee, the
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Certificate Registrar and the Note Insurer and any agent of the Owner Trustee,
the Certificate Registrar and the Note Insurer, may treat the Person in whose
name any Certificate shall be registered in the Certificate Register as the
owner of such Certificate for the purpose of receiving distributions pursuant to
the Trust A Sale and Servicing Agreement and the Trust A Indenture and for all
other purposes whatsoever, and none of the Owner Trustee, the Certificate
Registrar or the Note Insurer nor any agent of the Owner Trustee, the
Certificate Registrar or the Note Insurer shall be bound by any notice to the
contrary.
SECTION 3.7 Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Sponsor or the Note Insurer, within 15 days after receipt by the Owner
Trustee of a request therefor from such Person in writing, a list, of the names
and addresses of the Certificateholders as of the most recent Record Date. If
three or more Certificateholders or one or more Certificateholders evidencing
not less than 25% by Percentage Interest apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the
Master Servicer, the Owner Trustee or the Note Insurer or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Note Insurer of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any entity whose underlying assets include assets of a plan described in
(i) or (ii) plan assets by reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding its beneficial ownership interest in
its Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
SECTION 3.10 Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a 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. Except for the initial issuance of the Certificate to Holding
Trust and its initial transferee, the Owner Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Owner Trustee and the Note Insurer certifying to
the Owner Trustee and the Note Insurer the facts surrounding such transfer,
which investment letter shall not be an expense of the Owner Trustee or the Note
Insurer or (ii) if the investment letter is not delivered, a written Opinion of
Counsel acceptable to and in form and
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substance satisfactory to the Owner Trustee, the Note Insurer and the Sponsor
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor from said Act or is being made
pursuant to said Act, which Opinion of Counsel shall not be an expense of the
Owner Trustee, the Note Insurer or the Sponsor. The Certificateholder desiring
to effect such transfer shall, and does hereby agree to, indemnify the Sponsor,
the Owner Trustee and the Note Insurer 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.
(c) The Certificates and any interest therein shall not be transferred
except upon satisfaction of the following conditions precedent: (i) the Person
that acquires a Certificate shall (A) be organized and existing under the laws
of the United States of America or any state thereof or the District of
Columbia; (B) expressly assume, by an agreement supplemental hereto, executed
and delivered to the Owner Trustee, the performance of every covenant and
obligation of the Sponsor hereunder except for the covenants and obligations
contained in Sections 3.1, 3.3, 3.4 of the Trust A Sale and Servicing Agreement,
and Sections 2.10, 2.12 or 8.2 of this Agreement; (ii) the person that acquires
a Certificate shall deliver to the Owner Trustee and the Note Insurer an
Officer's Certificate stating that such transfer and such supplemental agreement
comply with this Section 3.10 and that all conditions precedent provided by this
subsection 3.10 have been complied with and an Opinion of Counsel stating that
such transfer and such supplemental agreement comply with this Section 3.10 and
that all conditions precedent provided by this Section 3.10 have been complied
with, and the Owner Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying; (iii) the person that
acquires a Certificate shall deliver to the Owner Trustee and the Note Insurer a
letter from each Rating Agency confirming that its rating of the Class A Notes,
after giving effect to such transfer, will not be reduced or withdrawn without
regard to the Trust A Note Policy; (iv) the person that acquires a Certificate
shall deliver to the Owner Trustee and the Note Insurer an Opinion of Counsel to
the effect that (a) such transfer will not adversely affect the treatment of the
Class A Notes after such transfer as debt for federal and applicable state
income tax purposes, (b) such transfer will not result in Trust A being subject
to tax at the entity level for federal or applicable state tax purposes, (c)
such transfer will not have any material adverse impact on the federal or
applicable state income taxation of a Class A Noteholder and (d) such transfer
will not result in the arrangement created by this Agreement or any "portion" of
the Trust, being treated as a taxable mortgage pool as defined in Section
7701(i) of the Code; (v) all filings and other actions necessary to continue the
perfection of the interest of Trust A in the Mortgage Loans and the other
property conveyed hereunder shall have been taken or made. Notwithstanding the
foregoing, the requirement set forth in subclause (i)(A) of this Section 3.10
shall not apply in the event the Owner Trustee and the Note Insurer shall have
received a letter from each Rating Agency confirming that its rating of the
Class A Notes, after giving effect to a proposed transfer to a Person that does
not meet the requirement set forth in subclause (i)(A), shall not be reduced or
withdrawn without regard to the Trust A Note Policy. Notwithstanding the
foregoing, the requirements set forth in this paragraph (b) shall not apply to
the initial issuance of the Certificates to the Holding Trust and its initial
transferee.
(d) Except for the initial issuance of the Certificates to Holding
Trust and its initial transferee, no transfer of a Certificate shall be made
unless the Owner Trustee shall have received a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Owner Trustee, to the effect that such transferee is not a
Benefit Plan and is not acting on behalf of or using the assets of a Benefit
Plan, which representation letter shall not be an expense of the Owner Trustee.
(e) No transfer or pledge of the Certificates shall result in more than
98 other holders of Certificates.
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SECTION 3.11 Acceptance of Obligations. The Sponsor agrees to be bound
by and to perform all the duties of the Sponsor set forth in this Agreement.
SECTION 3.12 Payments on Certificates. The Certificateholders will be
entitled to distributions on each Payment Date, as provided in the Trust A
Indenture.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the election by Trust A to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Holders);
(b) the amendment of the Trust A Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(c) the amendment of the Trust A Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(d) except pursuant to Section 7.14 of the Trust A Sale and Servicing
Agreement, the amendment, change or modification of the Trust A Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially adversely affect
the interests of the Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to Certain
Matters. (a) The Owner Trustee shall not have the power, except upon the
direction of the Note Insurer or in the event that a Note Insurer Default shall
have occurred and is continuing, the Security Majority in accordance with the
Operative Documents, to (i) remove the Master Servicer under the Trust A Sale
and Servicing Agreement or (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Trust A
Indenture. The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the Note Insurer or the Class
A Noteholders, as the case may be, and the furnishing of indemnification
satisfactory to the Owner Trustee by the Certificateholders.
(b) Upon the written request of any Certificateholder (a "Proposer"),
the Owner Trustee shall distribute promptly to all Certificateholders any
request for action or consent of Certificateholders submitted by such Proposer.
The Owner Trustee shall provide a reasonable method for collecting responses to
such request and shall tabulate and report the results thereof to the
Certificateholders and the Sponsor. The Owner Trustee shall have no
responsibility or duty to
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determine if any such proposed action or consent is permitted under the terms of
this Agreement or applicable law.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.
Until one year and one day following the day on which the Class A Notes have
been paid in full, the Owner Trustee shall not have the power to, and shall not,
commence any proceeding or other actions contemplated by Section 2.12(b)
relating to the Trust without the prior written consent of the Note Insurer
(unless a Note Insurer Default shall have occurred and is continuing) or upon a
Note Insurer Default, the Security Majority. Until one year and one day
following the day on which the Class A Notes have been paid in full, all amounts
due to the Note Insurer under the Insurance Agreement have been paid in full,
the Trust A Note Policy has terminated and the Indenture Trustee has surrendered
the Trust A Note Policy to the Note Insurer, the Owner Trustee shall not have
the power to, and shall not, commence any proceeding or other actions
contemplated by Section 2.12(b) relating to Trust A without the prior written
consent of all of the Certificateholders and the delivery to the Owner Trustee
by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that Trust A is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of Trust A or the Owner Trustee under this Agreement or any of the Operative
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than Holding Trust or its initial
transferee) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any
Operative Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% by Percentage Interest shall have made written
request upon the Owner Trustee to institute such action, suit or proceeding in
its own name as Owner Trustee under this Agreement and shall have offered to the
Owner Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Owner
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding, and during such 30-day period no request or waiver inconsistent
with such written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5 Majority Control. No Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of Trust
A except as expressly provided in this Agreement. Except as otherwise expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing not less
than a majority interest in Trust A. Except as otherwise expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if
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signed by Certificateholders evidencing not less than a majority interest in
Trust A at the time of the delivery of such notice.
SECTION 4.6 Rights of Note Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Note Insurer (or if a Note Insurer Default shall have occurred and is
continuing, the Security Majority) the Owner Trustee shall not (i) remove the
Master Servicer, (ii) initiate any claim, suit or proceeding by Trust A or
compromise any claim, suit or proceeding brought by or against Trust A, other
than with respect to the enforcement of any Mortgage Loan or any rights of Trust
A thereunder, (iii) authorize the merger or consolidation of Trust A with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Trust A Indenture), (iv) amend the Certificate of Trust or
(v) amend this Agreement in accordance with Section 11.1 of this Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1 Accounting and Records to the Class A Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Sponsor shall
(a) maintain (or cause to be maintained) the books of Trust A on a calendar year
basis on the accrual method of accounting, including, without limitation, the
allocations of net income under Section 2.11 hereof, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1, if applicable) to enable each Certificateholder to prepare its
Federal and state income tax returns, (c) file or cause to be filed, if
necessary, such tax returns relating to Trust A (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain Trust A's characterization as a branch,
or if applicable, as a partnership, for Federal income tax purposes and (d)
collect or cause to be collected any withholding tax as described in and in
accordance with Section 6.1(a)(ii) of the Trust A Sale and Servicing Agreement
with respect to income or distributions to Certificateholders and the
appropriate forms relating thereto. The Owner Trustee or the Master Servicer, as
the case may be, shall make all elections pursuant to this Section as directed
in writing by the Sponsor. The Owner Trustee shall sign all tax information
returns presented to it in final execution form, if any, filed pursuant to this
Section 5.1 and any other returns as may be required by law, and in doing so
shall rely entirely upon, and shall have no liability for information provided
by, or calculations provided by, the Sponsor or the Master Servicer. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Mortgage Loans.
The Owner Trustee shall not make the election provided under Section 754 of the
Code.
SECTION 5.2 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that Trust A is
characterized as a partnership, the Owner Trustee shall sign on behalf of Trust
A the tax returns of Trust A presented to it in final execution form, unless
applicable law requires a Certificateholder to sign such documents, in which
case such documents shall be signed by the Sponsor, as agent, on behalf of the
Certificateholders.
(b) In the event that Trust A is characterized as a partnership, each
Certificateholder shall be the "tax matters partner" of Trust A pursuant to the
Code.
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ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which Trust A is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Operative Documents to which Trust A is named as a
party and any amendment thereto, in each case, in such form as the Sponsor shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and
on behalf of Trust A, to direct the Indenture Trustee to authenticate and
deliver Class A Notes in the aggregate principal amount of $650,000,000. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of Trust A pursuant to the Operative
Documents. The Owner Trustee is further authorized from time to time to take
such action as the Instructing Party recommends with respect to the Operative
Documents so long as such activities are consistent with the terms of the
Operative Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer Trust A in the interest of the
Holders, subject to the Operative Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Operative Documents to the extent the Master Servicer has agreed in
the Trust A Sale and Servicing Agreement to perform any act or to discharge any
duty of Trust A or the Owner Trustee hereunder or under any Operative Document,
and the Owner Trustee shall not be liable for the default or failure of the
Master Servicer to carry out its obligations under the Trust A Sale and
Servicing Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the
Note Insurer (so long as a Note Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if a Note Insurer Default shall have
occurred and be continuing) (the "Instructing Party") shall have the exclusive
right to direct the actions of the Owner Trustee in the management of Trust A,
so long as such instructions are not inconsistent with the express terms set
forth herein or in any Operative Document. The Instructing Party shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
Operative Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Operative Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Operative Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Operative Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Instructing Party received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Operative Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Operative Document or any such
provision is ambiguous as to its
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application, or is, or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement permits any determination by the
Owner Trustee or is silent or is incomplete as to the course of action that the
Owner Trustee is required to take with respect to a particular set of facts, the
Owner Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Instructing Party requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received, the Owner Trustee shall not be
liable, on account of such action or inaction, to any Person. If the Owner
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent with
this Agreement or the Operative Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for Trust A or to
record this Agreement or any Operative Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Operative Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of Trust A set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in Trust
A becoming taxable as a corporation or a publicly traded partnership for Federal
income tax purposes. The Certificateholders shall not direct the Owner Trustee
to take action that would violate the provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts
the trust hereby created and agrees to perform its duties hereunder with respect
to such trust but only upon the terms of this Agreement. The Owner Trustee also
agrees to disburse all monies actually received by it constituting part of the
Owner Trust Estate upon the terms of the Operative Documents and this Agreement.
The Owner Trustee shall not be answerable or accountable hereunder or under any
Operative Document under any circumstances, except (i) for its own willful
misconduct, bad faith or
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gross negligence, (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Owner Trustee in its
individual capacity, (iii) for liabilities arising from the failure of the Owner
Trustee to perform obligations expressly undertaken by it in the last sentence
of Section 6.4 hereof, (iv) for any investments issued by the Owner Trustee or
any branch or affiliate thereof in its commercial capacity or (v) for taxes,
fees or other charges on, based on or measured by, any fees, commissions or
compensation received by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment,
not constituting gross negligence, made by a Responsible Officer of the Owner
Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it if such action or omission is in accordance
with the instructions of the Instructing Party, the Sponsor, the Master Servicer
or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the Class A Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Sponsor or for the form, character, genuineness, sufficiency, value or validity
of any of the Owner Trust Estate or for or in respect of the validity or
sufficiency of the Operative Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to the Sponsor, the Note
Insurer, Indenture Trustee, any Certificateholder, other than as expressly
provided for herein and in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Sponsor, the Note Insurer, the Indenture Trustee, the Issuer, or the
Master Servicer under any of the Operative Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations under
this Agreement or the Operative Documents that are required to be performed by
the Sponsor under this Agreement, by the Indenture Trustee under the Trust A
Indenture or the Master Servicer under the Trust A Sale and Servicing Agreement;
and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Operative Document, at the request, order or direction of the
Instructing Party or any of the Certificateholders, unless such Instructing
Party or Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Operative Document shall not be construed as a duty, and the Owner Trustee shall
not be answerable for other than its negligence, bad faith or willful misconduct
in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports,
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notices, requests, demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the Operative Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants, in its individual capacity, to the Sponsor and the
Holders (which shall have relied on such representations and warranties in
issuing the Trust A Note Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and according to such opinion not contrary to this Agreement or any
Operative Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Operative Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Sponsor and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
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representations as to the validity or sufficiency of this Agreement, of any
Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Class A Notes,
or of any Mortgage Loan or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage Loan, or the perfection and priority
of any security interest created by any Mortgage Loan or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of the
Owner Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Class A Noteholders under the
Trust A Indenture, including, without limitation: the existence, condition and
ownership of any Mortgage Loan; the existence and enforceability of any
insurance thereon; the existence and contents of any Mortgage Loan on any
computer or other record thereof; the validity of the assignment of any Mortgage
Loan to Trust A or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Sponsor, the Master Servicer or any other Person with any
warranty or representation made under any Operative Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the
name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates and Class A Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Class A Notes and may deal with the Sponsor, the
Indenture Trustee and the Master Servicer in banking transactions with the same
rights as it would have if it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to be made
by the Owner Trustee under this Agreement or any of the Operative Documents to
which Trust A or the Owner Trustee is a party shall be made only from the income
and proceeds of the Owner Trust Estate and only to the extent that Trust A shall
have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Wilmington Trust Company, or any
successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the Operative Documents to which
Trust A or the Owner Trustee is a party.
SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Wilmington Trust Company or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware ; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Wilmington Trust Company (or any successor
thereto); or (iii) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Sponsor and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor
for its other reasonable expenses hereunder, including the reasonable
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compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder and under the
Operative Documents.
SECTION 8.2 Indemnification. The Sponsor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee (in its individual and trust
capacities) and its officers, directors, successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may (in its trust or individual capacities) at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Operative Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Sponsor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section and the rights under Section 8.1 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Sponsor which approval shall not be unreasonably
withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Operative Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for Trust A that all obligations
of Trust A to the Owner Trustee individually or as Owner Trustee for Trust A
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement and
Trust A shall terminate and be of no further force or effect upon the later of
(i) the maturity or other liquidation of the last Mortgage Loan (including the
redemption by the Majority Certificateholders at its option of the corpus of
Trust A as described in Section 10.1(b) of the Trust A Indenture) and the
subsequent distribution of amounts in respect of such Mortgage Loans as provided
in the Operative Documents or (ii) the payment to Certificateholders of all
amounts required to be paid to them pursuant to this Agreement and the payment
to the Note Insurer of all amounts payable or reimbursable to it pursuant to the
Trust A Sale and Servicing Agreement and the Insurance Agreement; provided,
however, that the rights to indemnification under Section 8.2 and the rights
under Section 8.1 shall survive the termination of Trust A. The Master Servicer
shall promptly notify the Owner Trustee and the Note Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or Trust A, nor (y) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
Trust A or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.
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(b) Except as provided in clause (a), neither the Sponsor nor any other
Certificateholder shall be entitled to revoke or terminate Trust A.
(c) Notice of any termination of Trust A, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Indenture Trustee for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such redemption from the Master Servicer
given pursuant to Section 10.1 of the Trust A Sale and Servicing Agreement,
stating (i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Payment Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the Indenture Trustee therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Indenture Trustee at the time such
notice is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Indenture Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Payment Date pursuant to
Section 8.7(b)(xx) of the Trust A Indenture.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in Trust A after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Certificateholders shall look
solely to the Sponsor for payment.
(d) Any funds remaining in Trust A after funds for final distribution
have been distributed or set aside for distribution shall be distributed by the
Owner Trustee to the Sponsor.
(e) Upon the winding up of Trust A and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poors or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the Note Insurer in its sole discretion.
If such corporation shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
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SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Sponsor, the Note Insurer and the Master
Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly
appoint a successor Owner Trustee, meeting the qualifications set forth in
Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Note Insurer by either of the
Rating Agencies. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Note Insurer may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing) may remove the Owner Trustee. If a majority of the
Certificateholders shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Sponsor shall promptly appoint a successor
Owner Trustee, meeting the qualifications set forth in Section 10.1 herein, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed, one copy to the Note Insurer
and one copy to the successor Owner Trustee and the Sponsor shall pay all fees
owed to the outgoing Owner Trustee, if not previously paid by Trust A.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all reasonable fees and expenses
owed to the outgoing Owner Trustee.
Notwithstanding any other provision of this Agreement, and in addition
to any other method of removal of the Owner Trustee contained herein, upon a
proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in Trust A, the
Owner Trustee may be removed as Owner Trustee , subject to the consent of the
Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), which consent is not to be unreasonably withheld. In the event the
Owner Trustee is removed pursuant to this paragraph, the provisions of this
Agreement, including Article X herein, shall apply as if the Owner Trustee had
resigned hereunder.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Sponsor, the Master Servicer, the Note Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Sponsor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
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No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Master Servicer shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Indenture Trustee and the Class A
Noteholders. If the Master Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Master Servicer.
The successor Owner Trustee shall file an amendment to the Certificate
of Trust with the Secretary of State reflecting the name and principal place of
business of such successor Owner Trustee in the State of Delaware.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee 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 Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner 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 Owner Trust Estate or any Mortgaged Property may at the time be located,
the Master Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Note Insurer to act as co-trustee, jointly
with the Owner Trustee, or separate trustee or separate trustees, of all or any
part of the Owner Trust Estate, and to vest in such Person, in such capacity,
such title to Trust A, or any part thereof, and, subject to the other provisions
of this Section, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Owner 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, the Owner Trustee subject to the
approval of the Note Insurer (which approval shall not be unreasonably withheld)
shall have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner 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 Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner 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 Trust A 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
Owner Trustee;
25
<PAGE> 30
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Master Servicer and the Owner 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 Owner 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 Article. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Master Servicer and the Note Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be
amended by the Sponsor and the Owner Trustee, with the prior written consent of
the Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), without the consent of any of the Class A Noteholders or
Certificateholders (i) to cure any ambiguity or defect or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel which may be based
upon a certificate of the Master Servicer, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time, with the
prior written consent of the Note Insurer which consent shall not be
unreasonably withheld (so long as no Note Insurer Default shall have occurred
and is continuing) by the Sponsor and the Owner Trustee, with prior written
notice to the Rating Agencies, and, to the extent such amendment materially and
adversely affects the interests of the Class A Noteholders, with the consent of
the Class A Noteholders evidencing not less than a majority of the Outstanding
amount of the Class A Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in Trust A (which consent of any
Holder of a Certificate or Class A Note given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate or Class A
Note and of any Certificate or Class A Note issued upon the transfer thereof or
in exchange thereof or in lieu thereof whether or not notation of such consent
is made upon the Certificate or Class A Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Class A
Noteholders or the Certificateholders; provided, however, that, subject to the
express rights of the Note Insurer under the Operative Documents, no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Mortgage Loans or
distributions that shall be required to be made for the benefit of the Class A
Noteholders or the Certificateholders or (b) reduce
26
<PAGE> 31
the aforesaid percentage of the Outstanding Amount of the Class A Notes and the
Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Class A
Notes and holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of Certificateholders, the
Class A Noteholders or the Indenture Trustee pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Certificateholders provided
for in this Agreement or in any other Operative Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe. Promptly after
the execution of any amendment to the Certificate of Trust, the Owner Trustee
shall cause the filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Section 11.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to the
extent expressly provided herein, the Note Insurer, the Indenture Trustee and
the Class A Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor,
addressed to Advanta Mortgage Conduit Services, Inc., Welsh & McKean Roads,
Spring House, Pennsylvania 19477; if to the Note Insurer, addressed to, Ambac
Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Thomas Adams and Ted Molin, Telecopy No.: (212) 363-1459; or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate
27
<PAGE> 32
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Assignments; Note Insurer. (a) This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Note Insurer for so long as a Note Insurer Default shall not have
occurred and be continuing. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement which confer rights upon the Note
Insurer shall be for the benefit of and run directly to the Note Insurer, and
the Note Insurer shall be entitled to rely on and enforce such covenants,
subject, however, to the limitations on such rights provided in this Agreement
and the Operative Documents. The Note Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Trust
A Note Policy) upon delivery of a written notice to the Owner Trustee.
SECTION 11.8 No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenants
and agrees that they will not at any time institute against the Sponsor, or join
in any institution against the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Class A Notes, this Agreement
or any of the Operative Documents.
SECTION 11.9 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in Trust A only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Note Insurer or any Affiliate thereof and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates or the Operative
Documents.
SECTION 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12 Master Servicer. The Master Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of Trust A all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of Trust A or Owner Trustee to prepare, file or deliver
pursuant to the Operative Documents. Upon written request, the Owner Trustee
shall execute
28
<PAGE> 33
and deliver to the Master Servicer a limited power of attorney appointing the
Master Servicer the Trust A's agent and attorney-in-fact to prepare, or cause to
be prepared, execute and deliver all such documents, reports, filings,
instruments, certificates and opinions.
29
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.
WILMINGTON TRUST COMPANY, as Owner
Trustee
By /s/ Emmet Harmon
------------------------------------
Name: Emmet Harmon
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By /s/ Mark Dunsheath
------------------------------------
Name: Mark Dunsheath
Title: Vice President
30
<PAGE> 35
Exhibit A
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE
EXTENT DESCRIBED HEREIN AND IN THE TRUST A TRUST AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE,
TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 3.10 OF THE TRUST A TRUST AGREEMENT REFERRED TO
HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE OWNER TRUSTEE SHALL
HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH
CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
OWNER TRUSTEE, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT A BENEFIT PLAN
AND NOT ACTING ON BEHALF OF OR USING THE ASSETS OF A BENEFIT PLAN, WHICH
REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE.
NO TRANSFER OF A 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. EXCEPT FOR THE INITIAL ISSUANCE OF THE
CERTIFICATES TO HOLDING TRUST AND ITS INITIAL TRANSFEREE, THE OWNER
TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE
AND THE NOTE INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE NOTE INSURER
THE FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE
AN EXPENSE OF THE OWNER TRUSTEE OR THE NOTE INSURER OR (ii) IF THE
INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF COUNSEL
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE,
THE NOTE INSURER AND THE SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT
TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS
THEREFOR, FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE, THE NOTE
INSURER OR THE SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO EFFECT
SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR AND
THE NOTE INSURER 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.
<PAGE> 36
THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED EXCEPT
UPON SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON
THAT ACQUIRES A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING UNDER THE
LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE OR THE DISTRICT OF
COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL
HERETO, EXECUTED AND DELIVERED TO THE OWNER TRUSTEE, THE PERFORMANCE OF
EVERY COVENANT AND OBLIGATION OF THE SPONSOR UNDER THE TRUST A TRUST
AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS CONTAINED IN SECTIONS
3.1, 3.3, AND 3.4 OF THE TRUST A SALE AND SERVICING AGREEMENT, AND
SECTIONS 2.10, 2.12 OR 8.2 OF THE TRUST A TRUST AGREEMENT; (II) THE PERSON
THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE
NOTE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH
SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST A TRUST
AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF
THE TRUST A TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF
COUNSEL STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY
WITH SECTION 3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION
3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY
ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH
REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO
RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE
OWNER TRUSTEE AND THE NOTE INSURER A LETTER FROM EACH RATING AGENCY
CONFIRMING THAT ITS RATING OF THE CLASS A NOTES, AFTER GIVING EFFECT TO
SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE
TRUST A NOTE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL
DELIVER TO THE OWNER TRUSTEE AND THE NOTE INSURER AN OPINION OF COUNSEL TO
THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT
OF THE CLASS A NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND
APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN
TRUST A BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE
STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE
IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A CLASS A
NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT
CREATED BY THE TRUST A TRUST AGREEMENT OR ANY "PORTION" OF TRUST A, BEING
TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(I) OF THE
CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE
PERFECTION OF THE INTEREST OF TRUST A IN THE MORTGAGE LOANS AND THE OTHER
PROPERTY CONVEYED UNDER THE TRUST A TRUST AGREEMENT SHALL HAVE BEEN TAKEN
OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE> 37
ADVANTA MORTGAGE LOAN TRUST
1998-4A CERTIFICATE
Percentage Interest: 100%
Date of Cut-Off Date:
November 1, 1998
First Payment Date: Issue Date: November 24, 1998
December 28, 1998
No. 1
_________________________________
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by:____________________________________
Authenticating Agent
Trust A was created pursuant to a Trust Agreement dated as of November
1, 1998 (the "Trust Agreement"), between the Sponsor and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated
as Advanta Mortgage Loan Trust 1998-4A Certificates (herein called the
"Certificates"). Also issued under the Trust A Indenture dated as of November 1,
1998, among Trust A and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee") are Class A Notes (the "Class A Notes"). These
Certificates are issued under and are subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of Trust A includes a pool of fixed-rate mortgage loans
secured by first or second deeds of trust or Mortgages on primarily one-to-four
family residential properties.
Under the Trust Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business Day
(the "Payment Date"), commencing on December 28, 1998, to the Person in whose
name this Certificate is registered at the close of business on
<PAGE> 38
the Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Trust A Sale and Servicing
Agreement, the Trust A Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this Certificate,
specifically acknowledges that it has no right to or interest in any monies at
any time held pursuant to the Trust A Pre-Funding Account or prior to the
release of such monies pursuant to Section 8.7 of the Trust A Indenture, such
monies being held in trust for the benefit of the Class A Noteholders and the
Note Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Trust A Pre-Funding Account constitute a
pledge of collateral, then the provisions of the Trust A Sale and Servicing
Agreement shall be considered to constitute a security agreement and the holder
of this Certificate hereby grants to the Indenture Trustee and the Note Insurer
a first priority perfected security interest in such amounts. In addition, each
Certificateholder, by acceptance of its Certificate, hereby appoints the Sponsor
as its agent to pledge a first priority perfected security interest in the Trust
A Pre-Funding Account and agrees to execute and deliver such instruments of
conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case as the Note Insurer shall consider reasonably necessary
in order to perfect the Indenture Trustee's security interest in the Trust
Property.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Trust A will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Trust A will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
Trust A. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
Trust A or the Sponsor, or join in any institution against Trust A or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Operative
Documents.
Distributions on this Certificate will be made as provided in the Trust
A Sale and Servicing Agreement and the Trust A Indenture by the Indenture
Trustee by wire transfer or check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise provided
in the Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the holder
<PAGE> 39
hereof to any benefit under the Trust Agreement or the Trust A Sale and
Servicing Agreement or be valid for any purpose.
<PAGE> 40
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Trust A and not in
its individual capacity, has caused this Certificate to be duly executed.
ADVANTA MORTGAGE LOAN TRUST 1998-4A
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner
Trustee
Dated: November 24, 1998
By: _________________________________________
Name:
Title:
<PAGE> 41
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in,
the Originators, the Sponsor, the Master Servicer, the Note Insurer, the Owner
Trustee or any Affiliates of any of them and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Trust A Indenture or the Operative
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Mortgage Loans, as more specifically set forth
herein, in the Trust A Sale and Servicing Agreement and in the Trust A
Indenture. A copy of each of the Trust A Sale and Servicing Agreement and the
Trust Agreement may be examined during normal business hours at the principal
office of the Sponsor, and at such other places, if any, designated by the
Sponsor, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Sponsor and the rights of the Certificateholders under the Trust Agreement at
any time by the Sponsor and the Owner Trustee with the prior written consent of
the Note Insurer and with the consent of the holders of the Notes and the
Certificates evidencing not less than a majority of the outstanding Notes and
the Certificates. Any such consent by the holder of this Certificate shall be
conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates (other than the Sponsor or the Note Insurer).
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in Trust A
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to Advanta Mortgage Holding Trust
1998-4, the Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 or integral multiples of $1,000 in excess
thereof. As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates in
authorized denominations evidencing the same aggregate denomination, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Note Insurer and any
agent of the Owner Trustee, the Certificate Registrar, the Note Insurer or the
Note Insurer may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and none of the Owner Trustee, the
Certificate Registrar, the Note Insurer nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
Trust A created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement, the
Trust A Indenture and the Trust A Sale and Servicing Agreement and the
disposition of all property held as part of Trust A. The Certificateholder may
at its
<PAGE> 42
option elect to redeem the corpus of Trust A at a price specified in the Trust A
Sale and Servicing Agreement, and after such redemption of the Mortgage Loans
and other property of Trust A , all proceeds will be distributed to the
Certificateholders; however, the Certificateholder's right to elect to redeem is
exercisable, subject to certain restrictions, only on any Payment Date on or
after the Payment Date immediately prior to which the Class A Note Principal
Balance is less than 10% of the Original Class A Note Principal Balance and all
amounts due and owing to the Note Insurer for unpaid premiums and unreimbursed
draws on the Trust A Note Policy and all other amounts due and owing to the Note
Insurer pursuant to the Insurance Agreement, together with interest thereon as
provided under the Insurance Agreement, have been paid.
The recitals contained herein shall be taken as the statements of the
Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Trust A Sale and Servicing Agreement or be
valid for any purpose.
<PAGE> 43
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the
- -------------------------------
books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
*
-------------------------------------------
Signature Guaranteed:
*
-------------------------------------------
- --------------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
<PAGE> 44
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA MORTGAGE LOAN TRUST 1998-4A
This Certificate of Trust of Advanta Mortgage Loan Trust 1998-4A
("Trust A"), dated as of November 20, 1998, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is Advanta
Mortgage Loan Trust 1998-4A.
2. Delaware Trust. The name and business address of the Owner Trustee
of Trust A in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001. Attn:
Corporate Trust Administration.
3. This Certificate of Trust will be effective November 20, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of Trust A,
has executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as Owner
Trustee of Trust A.
By:_________________________________
Name:
Title:
<PAGE> 1
Exhibit 4.2.3
TRUST B
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. Definitions.............................................................................. 1
SECTION 1.1 Capitalized Terms................................................................ 1
SECTION 1.2 Other Definitional Provisions.................................................... 3
SECTION 1.3 Action by or Consent of Class B Noteholders and Certificateholders............... 4
ARTICLE II. Organization............................................................................ 4
SECTION 2.1 Name............................................................................. 4
SECTION 2.2 Office........................................................................... 4
SECTION 2.3 Purposes and Powers.............................................................. 4
SECTION 2.4 Appointment of Owner Trustee..................................................... 6
SECTION 2.5 Initial Capital Contribution of Trust Estate..................................... 7
SECTION 2.6 Declaration of Trust............................................................. 7
SECTION 2.7 Liability........................................................................ 7
SECTION 2.8 Title to Trust Property.......................................................... 7
SECTION 2.9 Situs of Trust................................................................... 7
SECTION 2.10 Representations and Warranties of the Sponsor.................................... 7
SECTION 2.11 Federal Income Tax Allocations................................................... 8
SECTION 2.12 Covenants of the Sponsor......................................................... 9
SECTION 2.13 Covenants of the Certificateholders.............................................. 9
SECTION 2.14 Investment Companies............................................................. 10
ARTICLE III. Certificates and Transfer of Interests................................................. 10
SECTION 3.1 Initial Ownership................................................................ 10
SECTION 3.2 The Certificates................................................................. 10
SECTION 3.3 Authentication of Certificates................................................... 11
SECTION 3.4 Registration of Transfer and Exchange of Certificates............................ 11
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates................................ 11
SECTION 3.6 Persons Deemed Certificateholders................................................ 11
SECTION 3.7 Access to List of Certificateholders' Names and Addresses........................ 12
SECTION 3.8 Maintenance of Office or Agency.................................................. 12
SECTION 3.9 ERISA............................................................................ 12
SECTION 3.10 Restrictions on Transfer of Certificates......................................... 12
SECTION 3.11 Acceptance of Obligations........................................................ 13
SECTION 3.12 Payments on Certificates......................................................... 14
ARTICLE IV. Voting Rights and Other Actions......................................................... 14
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain Matters............... 14
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters..................... 14
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.......................... 15
SECTION 4.4 Restrictions on Certificateholders' Power........................................ 15
SECTION 4.5 Majority Control................................................................. 15
SECTION 4.6 Rights of Note Insurer........................................................... 16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V. Certain Duties........................................................................... 16
SECTION 5.1 Accounting and Records to the Class B Noteholders, Certificateholders, the
Internal Revenue Service and Others............................................ 16
SECTION 5.2 Signature on Returns; Tax Matters Partner........................................ 16
ARTICLE VI. Authority and Duties of Owner Trustee................................................... 17
SECTION 6.1 General Authority................................................................ 17
SECTION 6.2 General Duties................................................................... 17
SECTION 6.3 Action upon Instruction.......................................................... 17
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions............... 18
SECTION 6.5 No Action Except under Specified Documents or Instructions....................... 18
SECTION 6.6 Restrictions..................................................................... 18
ARTICLE VII. Concerning the Owner Trustee........................................................... 18
SECTION 7.1 Acceptance of Trust and Duties................................................... 18
SECTION 7.2 Furnishing of Documents.......................................................... 19
SECTION 7.3 Representations and Warranties................................................... 20
SECTION 7.4 Reliance; Advice of Counsel...................................................... 20
SECTION 7.5 Not Acting in Individual Capacity................................................ 20
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans...................... 20
SECTION 7.7 Owner Trustee May Own Certificates and Class B Notes............................. 21
SECTION 7.8 Payments from Owner Trust Estate................................................. 21
SECTION 7.9 Doing Business in Other Jurisdictions............................................ 21
ARTICLE VIII. Compensation of Owner Trustee......................................................... 21
SECTION 8.1 Owner Trustee's Fees and Expenses................................................ 21
SECTION 8.2 Indemnification.................................................................. 22
SECTION 8.3 Payments to the Owner Trustee.................................................... 22
SECTION 8.4 Non-recourse Obligations......................................................... 22
ARTICLE IX. Termination of Trust Agreement.......................................................... 22
SECTION 9.1 Termination of Trust Agreement................................................... 22
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees................................... 23
SECTION 10.1 Eligibility Requirements for Owner Trustee....................................... 23
SECTION 10.2 Resignation or Removal of Owner Trustee.......................................... 24
SECTION 10.3 Successor Owner Trustee.......................................................... 24
SECTION 10.4 Merger or Consolidation of Owner Trustee......................................... 25
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee........................ 25
ARTICLE XI. Miscellaneous........................................................................... 26
SECTION 11.1 Supplements and Amendments....................................................... 26
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders....................... 27
SECTION 11.3 Limitations on Rights of Others.................................................. 27
SECTION 11.4 Notices.......................................................................... 27
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 11.5 Severability..................................................................... 28
SECTION 11.6 Separate Counterparts............................................................ 28
SECTION 11.7 Assignments; Note Insurer........................................................ 28
SECTION 11.8 No Petition...................................................................... 28
SECTION 11.9 No Recourse...................................................................... 28
SECTION 11.10 Headings......................................................................... 28
SECTION 11.11 GOVERNING LAW.................................................................... 28
SECTION 11.12 Master Servicer.................................................................. 28
</TABLE>
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
<PAGE> 5
TRUST AGREEMENT relating to Trust B dated as of November 1, 1998 between
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation as Sponsor, and
WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner Trustee.
ARTICLE I.
Definitions
SECTION 1.1 Capitalized Terms. For the purposes of this Agreement, the
following terms shall have the meanings set forth below.
"Accounts" shall have the meaning ascribed thereto in the Trust B
Indenture.
"Affiliate" shall mean with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, or owns, directly or indirectly,
50% or more of, the Person specified.
"Agreement" shall mean this Trust B Trust Agreement, as the same may be
amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et. seq. as the same may be amended from time to
time.
"Certificate" means a trust certificate evidencing the beneficial
ownership interest of a Certificateholder in Trust B, substantially in the form
of Exhibit A attached hereto.
"Certificateholder" or "Holder" shall initially mean Holding Trust, until
and unless Holding Trust transfers any or all of its interest in the Certificate
to any other Person and thereafter "Certificateholder" shall also mean or
include such Person.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B to be filed for Trust B pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the register
maintained and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Sponsor and
Holding Trust, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Sponsor).
"Definitive Certificates" shall mean Certificates issued in certificated,
fully registered form.
"ERISA" shall have the meaning assigned to such term in Section 3.9.
<PAGE> 6
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holding Trust" shall mean Advanta Mortgage Holding Trust 1998-4.
"Indemnification Agreement" shall mean the Indemnification Agreement dated
as of November 24, 1998 between the Note Insurer and Morgan Stanley & Co.
Incorporated.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture Trustee" shall initially mean Bankers Trust Company of
California, N.A., in its capacity as indenture trustee, including its successors
in interest, until and unless a successor Person shall have become the Indenture
Trustee pursuant to the Trust B Sale and Servicing Agreement and thereafter
"Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement
dated as of November 24, 1998 among the Note Insurer, the Sponsor, the Master
Servicer Trust A, Trust B, Trust C and the Indenture Trustee.
"Issuer" shall mean Advanta Mortgage Loan Trust 1998-4B.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Note Insurer" shall mean Ambac Assurance Corporation, or its successor in
interest.
"Operative Documents" shall mean this Agreement, the Trust B Sale and
Servicing Agreement, the Master Transfer Agreement, the Subsequent Transfer
Agreements, the Trust B Note Policy, the Insurance Agreement, the
Indemnification Agreement, the Trust B Indenture, and the Class B Notes.
"Originators" shall mean any entity from which the Sponsor has purchased
(or, in the case of Subsequent Mortgage Loans, will purchase) 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.
"Outstanding" shall have the meaning assigned to such term in the Trust B
Indenture.
"Owner Trust Estate" shall mean all right, title and interest of Trust B
in and to the property and rights assigned to Trust B pursuant to Article II of
the Trust B Sale and Servicing Agreement, all funds on deposit from time to time
in the Accounts and the Trust B Note Account and all other property of Trust B
from time to time, including any rights of the Owner Trustee and the Trust
pursuant to the Trust B Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Record Date" shall mean with respect to any Payment Date, the close of
business on the last Business Day immediately preceding such Payment Date,
provided, that if the Certificates or Class B Notes are in definitive form, the
Record Date with respect to each Payment Date shall be the
2
<PAGE> 7
last Business Day of the calendar month immediately preceding the calendar month
in which such Payment Date occurs.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Security Majority" means a majority by principal amount of the Class B
Noteholders so long as the Class B Notes are Outstanding and a majority by
principal amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Mortgage Conduit Services, Inc. in its
capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust A" shall have the meaning assigned to it in the Trust B Indenture.
"Trust B" shall mean the trust established by this Agreement.
"Trust B Indenture" shall mean the Trust B Indenture dated as of November
1, 1998 between the Sponsor and the Issuer, as the same may be amended and
supplemented from time to time.
"Trust B Note Account" as defined in the Trust B Indenture.
"Trust B Sale and Servicing Agreement" shall mean the Trust B Sale and
Servicing Agreement relating to Trust B among the Issuer, Advanta Mortgage
Conduit Services, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust C" shall have the meaning assigned to it in the Trust B Indenture.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the Trust
B Sale and Servicing Agreement or, if not defined therein, in the Trust B
Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections
3
<PAGE> 8
and Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3 Action by or Consent of Class B Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Class B Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Class B
Noteholder, as the case may be, of record as of the Record Date immediately
preceding the date on which such action is to be taken, or consent given, by
Class B Noteholders or Certificateholders. Solely for the purposes of any action
to be taken, or consented to, by Class B Noteholders or Certificateholders, any
Class B Note or Certificate registered in the name of the Sponsor, Holding Trust
or any Affiliate thereof shall be deemed not to be outstanding; provided,
however, that, solely for the purpose of determining whether the Indenture
Trustee is entitled to rely upon any such action or consent, only Class B Notes
or Certificates which the Owner Trustee, or the Indenture Trustee, respectively,
knows to be so owned shall be so disregarded.
ARTICLE II.
Organization
SECTION 2.1 Name. There is hereby formed a trust to be known as "Advanta
Mortgage Loan Trust 1998-4B", in which name the Owner Trustee may conduct the
business of Trust B, make and execute contracts and other instruments on behalf
of Trust B and sue and be sued.
SECTION 2.2 Office. The office of Trust B shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders and the
Sponsor.
SECTION 2.3 Purposes and Powers
(a) The purpose of Trust B is, and Trust B shall have the power and
authority, to engage in the following activities:
(i) to issue the Class B Notes pursuant to the Trust B Indenture and
the Certificates pursuant to this Agreement, and to sell the Class B
Notes;
(ii) with the proceeds of the sale of the Class B Notes, to fund the
Pre-Funding Account relating to Trust B and to pay the organizational,
start-up and transactional expenses of Trust B and to pay the balance to
the Sponsor pursuant to the Trust B Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate to the Indenture Trustee on behalf of the Class B
Noteholders and for the benefit of the Note Insurer and to hold, manage
and distribute to the Certificateholders pursuant to the terms of the
Trust B Sale and Servicing Agreement any portion of the Owner Trust Estate
released from the lien of, and remitted to Trust B pursuant to, the Trust
B Indenture;
4
<PAGE> 9
(iv) to enter into and perform its obligations under the Operative
Documents to which it is a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Operative Documents, to engage
in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions to
the Certificateholders and the Class B Noteholders.
(b) Trust B shall not engage in any activity other than in connection with
those described in Section 2.3(a) or other than as required or authorized by the
terms of this Agreement or the Operative Documents. In addition, Trust B shall
not:
(i) incur any indebtedness other than the Notes issued pursuant to
the Indenture
(ii) engage in any dissolution, liquidation, consolidation, merger
or sale of assets;
(iii) amend this Trust Agreement without a confirmation from each
applicable Rating Agency then rating the Notes, that such amendment would
not result in the qualification, downgrade or withdrawal of the rating on
the Notes;
(iv) effect a transfer of any direct or indirect ownership interest
in Trust B such that either (y) the transferee owns more than a 49%
interest in Trust B, or (z) the transferee is an affiliate or a family
member of a transferor which owned more than a 49% interest in the
Borrower before such transfer may be made unless such transfer is
conditioned upon the delivery of an acceptable non-consolidation opinion
to the Rating Agencies concerning, as applicable, the transferee and/or
their respective owners;
(v) engage in any business activity in which it is not currently
engaged;
(vi) take any action that might cause Trust B to become insolvent;
or
(vii) form, or caused to be formed, any subsidiaries;
(c) Trust B shall:
(i) maintain books and records separate from any other person or
entity;
(ii) maintain its bank accounts separate from any other person or
entity;
(iii) not commingle its assets with those of any other person or
entity and will hold all of its assets in its own name;
(iv) conduct its own business in its own name;
(v) maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other person or entity
and not have its assets listed on the financial statement of any other
entity;
5
<PAGE> 10
(vi) file its tax returns separate from those of any other entity
and not file a consolidated federal income tax return with any other
entity;
(vii) except as set forth herein, pay its own liabilities and
expenses only out of its own funds;
(viii) observe all organizational formalities;
(ix) enter into transactions with affiliates only where each such
transaction is intrinsically fair, commercially reasonable, and on the
same terms as would be available in an arm's length transaction with a
person or entity that is not an affiliate;
(x) pay the salaries of its own employees from its own funds;
(xi) maintain a sufficient number of employees in light of its
contemplated business operations;
(xii) not guarantee or become obligated for the debts of any other
entity or person;
(xiii) not hold out its credit as being available to satisfy the
obligation of any other person or entity;
(xiv) not acquire the obligations or securities of its affiliates or
owners, including partners, members or shareholders, as appropriate;
(xv) not make loans to any other person or entity or buy or hold
evidence of indebtedness issued by any other person or entity (except for
cash and investment-grade securities);
(xvi) allocate fairly and reasonably any overhead expenses that are
shared with an affiliate, including paying for office space and services
performed by any employee of any affiliate;
(xvii) not pledge its assets for the benefit of any other person or
entity other than with respect to the Notes;
(xviii) hold itself out as a separate identity;
(xix) correct any known misunderstanding regarding its separate
identity;
(xx) not identify itself as a division of any other person or
entity; and
(xxi) maintain adequate capital in light of its contemplated
business operations.
(d)
SECTION 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints the
Owner Trustee as trustee of Trust B effective as of the date hereof, to have all
the rights, powers and duties set forth herein and in the Business Trust
Statute.
6
<PAGE> 11
SECTION 2.5 Initial Capital Contribution of Trust Estate. The Sponsor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Sponsor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Owner Trust Estate and shall be deposited in
the Trust B Note Account. On or prior to the Closing Date, the Owner Trustee
will also, upon receipt thereof, acknowledge on behalf of Trust B, receipt of
the Mortgage Loans pursuant to the Trust B Sale and Servicing Agreement. The
Sponsor shall pay the organizational expenses of Trust B as they may arise.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of Trust B under the Operative Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income tax purposes, Trust B shall be treated as a branch; provided, however,
that in the event Certificates are owned by more than one Certificateholder, it
is the intention of the parties hereto that, solely for income and franchise tax
purposes, Trust B shall then be treated as a partnership and that, unless
otherwise required by appropriate tax authorities, only after such time Trust B
will file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of Trust B as a partnership for
such tax purposes. Effective as of the date hereof, the Owner Trustee shall have
all rights, powers and duties set forth herein and to the extent not
inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of Trust B. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
SECTION 2.7 Liability. No Holder shall have any personal liability for any
liability or obligation of Trust B.
SECTION 2.8 Title to Trust Property. (a) Legal title to all of the Owner
Trust Estate shall be vested at all times in Trust B as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of the
Trust Property. The Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest by any Certificateholder of its ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Trust Property.
SECTION 2.9 Situs of Trust. Trust B will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of Trust B shall be located in the State of Delaware or the State of New
York. Payments will be received by Trust B only in Delaware or New York and
payments will be made by Trust B only from Delaware or New York. Trust B shall
not have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee, the Master Servicer
or any agent of Trust B from having employees within or without the State of
Delaware. The only office of Trust B will be at the Corporate Trust Office in
Delaware.
SECTION 2.10 Representations and Warranties of the Sponsor. The Sponsor
makes the following representations and warranties on which the Owner Trustee
relies in accepting the
7
<PAGE> 12
Owner Trust Estate in trust and issuing the Certificates and upon which the Note
Insurer relies in issuing the Trust B Note Policy.
(a) The Sponsor is duly organized and validly existing as a Delaware
corporation with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted and is proposed to be conducted pursuant to this Agreement and the
Operative Documents;
(b) It is duly qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this Agreement and the
Operative Documents requires such qualification;
(c) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Sponsor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with Trust B and the Sponsor has duly authorized such sale and
assignment and deposit to Trust B by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Sponsor by all necessary corporate action. The Sponsor has duly executed
this Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Sponsor enforceable against the Sponsor, in accordance with
its terms.
(d) To the best knowledge of the Sponsor, no consent, license, approval or
authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Operative
Documents, except for such as have been obtained, effected or made;
(e) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
by-laws of the Sponsor, or any material indenture, agreement or other instrument
to which the Sponsor is a party or by which it is bound; nor result in the
creation or imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to the Operative Documents); nor violate any law or, to the best of the
Sponsor's knowledge, any order, rule or regulation applicable to the Sponsor of
any court or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Sponsor or its
properties; and
(f) There are no proceedings or investigations pending or, to its
knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Operative Documents, (B) seeking to prevent the issuance
of the Certificates or the Class B Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Documents,
(C) seeking any determination or ruling that might materially and adversely
affect its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of the Operative Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Class B Notes or the Certificates.
SECTION 2.11 Federal Income Tax Allocations. In the event that Trust B is
treated as a partnership for Federal income tax purposes, net income of Trust B
for any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership percentage of principal amount of Certificates
on such date.
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Net losses of Trust B, if any, for any month as determined for Federal
income tax purposes (and each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated among the
Certificateholders as of the Record Date in proportion to their ownership
percentage of principal amount of Certificates on such Record Date until the
principal balance of the Certificates is reduced to zero. The Sponsor, as agent
on behalf of the Certificateholders, is authorized to modify the allocations in
this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.
SECTION 2.12 Covenants of the Sponsor. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Note Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Operative Documents;
(b) it shall not, for any reason, institute proceedings for Trust B to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Trust B, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to the bankruptcy of Trust B, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Trust B or a substantial part of the property of Trust B or cause
or permit Trust B to make any assignment for the benefit of creditors, or admit
in writing the inability of Trust B to pay its debts generally as they become
due, or declare or effect a moratorium on the debt of Trust B or take any action
in furtherance of any such action;
(c) it shall obtain from each counterparty to each Operative Document to
which it or Trust B is a party and each other agreement entered into on or after
the date hereof to which it or Trust B is a party, an agreement by each such
counterparty that prior to the occurrence of the event specified in Section
9.1(e) such counterparty shall not institute against, or join any other Person
in instituting against, it or Trust B, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Covenants of the Certificateholders. Each Certificateholder
agrees:
(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of Trust B, the Owner Trustee, the Note Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of Trust B, if any, and
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agree that, if requested by Trust B, it will sign such federal income tax
information return in its capacity as holder of an interest in Trust B. Each
Certificateholder also hereby agrees that in its tax returns it will not take
any position inconsistent with those taken in any tax returns that may be filed
by Trust B;
(c) if such Certificateholder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales on Form
1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within 30 days of the date of the transfer; and
(d) until the completion of the events specified in Section 9.1(e), not
to, for any reason, institute proceedings for Trust B or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Trust B, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Sponsor or
Trust B or a substantial part of its property, or cause or permit the Sponsor or
Trust B to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
Except as provided in this Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.12, 8.2 or elsewhere herein.
SECTION 2.14 Investment Company. Neither the Sponsor nor any
Certificateholders shall take any action that would cause the Trust to become an
"Investment Company" required to register under the Investment Company Act of
1940, as amended.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of Trust B by the
contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of Trust B, to the Sponsor, one or more Certificates representing
in the aggregate a 100% interest in Trust B, and the Sponsor shall direct that
such Certificate(s) on the Certificate Register be registered in the name of
Holding Trust. Accordingly, Holding Trust shall initially be the sole
beneficiary of Trust B. Such Certificate(s) are duly authorized, validly issued,
and entitled to the benefits of this Agreement. For so long as Holding Trust
shall own such 100% interest in Trust B, Holding Trust shall be the sole
beneficial owner of Trust B.
SECTION 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of Trust B by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of Trust
B, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. Subject to Section 2.13(d), a transferee of a Certificate shall
become a Certificateholder, and shall be entitled to the rights and subject to
the obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
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SECTION 3.3 Authentication of Certificates. Concurrently with the initial
sale of the Mortgage Loans to Trust B pursuant to the Trust B Sale and Servicing
Agreement, the Owner Trustee shall cause each Certificate, to be executed on
behalf of Trust B, authenticated and delivered to or upon the written order of
the Sponsor, signed by its chairman of the board, its president or any vice
president, its treasurer or any assistant treasurer without further corporate
action by the Sponsor, in authorized denominations. No Certificate shall entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 3.4 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held in the Trust
B Pre-Funding Account prior to the release of such monies pursuant to Section
8.7(b)(vii) of the Trust B Indenture (other than Trust B Pre-Funding Earnings),
such monies being held in trust for the benefit of the Class B Noteholders and
the Note Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Trust B Pre-Funding Account constitute a
pledge of collateral, then the provisions of the Trust B Sale and Servicing
Agreement shall be considered to constitute a security agreement and the Sponsor
and the Certificateholders hereby grant to the Indenture Trustee and the Note
Insurer a first priority perfected security interest in such amounts. In
addition, each Certificateholder, by acceptance of its Certificate, hereby
appoints the Sponsor as its agent to pledge a first priority perfected security
interest in the Trust B Pre-Funding Account, and any amounts held therein from
time to time to the Indenture Trustee and the Note Insurer and agrees to execute
and deliver such instruments of conveyance, assignment, grant, confirmation,
etc., as well as any financing statements, in each case as the Note Insurer
shall consider reasonably necessary in order to perfect the Indenture Trustee's
security interest in the Mortgage Loans.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and the Note Insurer such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of Trust B shall execute and
the Owner Trustee shall 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 denomination. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in Trust B, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Except as otherwise stated
herein, every Person by virtue of becoming a Certificateholder in accordance
with this Agreement and the rules and regulations of the Certificate Registrar
shall be deemed to be bound by the terms of this Agreement. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee,
the Certificate Registrar and the Note Insurer and any agent of the Owner
Trustee, the Certificate Registrar
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and the Note Insurer, may treat the Person in whose name any Certificate shall
be registered in the Certificate Register as the owner of such Certificate for
the purpose of receiving distributions pursuant to the Trust B Sale and
Servicing Agreement and the Trust B Indenture and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar or the Note
Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the
Note Insurer shall be bound by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and Addresses. The
Owner Trustee shall furnish or cause to be furnished to the Master Servicer, the
Sponsor or the Note Insurer, within 15 days after receipt by the Owner Trustee
of a request therefor from such Person in writing, a list, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Certificateholders evidencing not less
than 25% by Percentage Interest apply in writing to the Owner Trustee, and such
application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the
Master Servicer, the Owner Trustee or the Note Insurer or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Note Insurer of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any entity whose underlying assets include assets of a plan described in
(i) or (ii) plan assets by reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding its beneficial ownership interest in
its Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
SECTION 3.10 Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a 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. Except for the initial issuance of the Certificate to Holding
Trust and its initial transferee, the Owner Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Owner Trustee and the Note Insurer certifying to
the Owner Trustee and the Note Insurer the facts surrounding such transfer,
which investment letter shall not be an expense of the Owner Trustee or the Note
Insurer or (ii) if the investment letter is not delivered, a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Owner
Trustee, the Note Insurer and the Sponsor that such transfer may be
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made pursuant to an exemption, describing the applicable exemption and the basis
therefor from said Act or is being made pursuant to said Act, which Opinion of
Counsel shall not be an expense of the Owner Trustee, the Note Insurer or the
Sponsor. The Certificateholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Sponsor, the Owner Trustee and the Note Insurer
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.
(c) The Certificates and any interest therein shall not be transferred
except upon satisfaction of the following conditions precedent: (i) the Person
that acquires a Certificate shall (A) be organized and existing under the laws
of the United States of America or any state thereof or the District of
Columbia; (B) expressly assume, by an agreement supplemental hereto, executed
and delivered to the Owner Trustee, the performance of every covenant and
obligation of the Sponsor hereunder except for the covenants and obligations
contained in Sections 3.1, 3.3, 3.4 of the Trust A Sale and Servicing Agreement,
and Sections 2.10, 2.12 or 8.2 of this Agreement; (ii) the person that acquires
a Certificate shall deliver to the Owner Trustee and the Note Insurer an
Officer's Certificate stating that such transfer and such supplemental agreement
comply with this Section 3.10 and that all conditions precedent provided by this
subsection 3.10 have been complied with and an Opinion of Counsel stating that
such transfer and such supplemental agreement comply with this Section 3.10 and
that all conditions precedent provided by this Section 3.10 have been complied
with, and the Owner Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying; (iii) the person that
acquires a Certificate shall deliver to the Owner Trustee and the Note Insurer a
letter from each Rating Agency confirming that its rating of the Class B Notes,
after giving effect to such transfer, will not be reduced or withdrawn without
regard to the Trust B Note Policy; (iv) the person that acquires a Certificate
shall deliver to the Owner Trustee and the Note Insurer an Opinion of Counsel to
the effect that (a) such transfer will not adversely affect the treatment of the
Class B Notes after such transfer as debt for federal and applicable state
income tax purposes, (b) such transfer will not result in Trust B being subject
to tax at the entity level for federal or applicable state tax purposes, (c)
such transfer will not have any material adverse impact on the federal or
applicable state income taxation of a Class B Noteholder and (d) such transfer
will not result in the arrangement created by this Agreement or any "portion" of
the Trust, being treated as a taxable mortgage pool as defined in Section
7701(i) of the Code; (v) all filings and other actions necessary to continue the
perfection of the interest of Trust B in the Mortgage Loans and the other
property conveyed hereunder shall have been taken or made. Notwithstanding the
foregoing, the requirement set forth in subclause (i)(A) of this Section 3.10
shall not apply in the event the Owner Trustee and the Note Insurer shall have
received a letter from each Rating Agency confirming that its rating of the
Class B Notes, after giving effect to a proposed transfer to a Person that does
not meet the requirement set forth in subclause (i)(A), shall not be reduced or
withdrawn without regard to the Trust B Note Policy. Notwithstanding the
foregoing, the requirements set forth in this paragraph (b) shall not apply to
the initial issuance of the Certificates to the Holding Trust and its initial
transferee.
(d) Except for the initial issuance of the Certificates to Holding Trust
and its initial transferee, no transfer of a Certificate shall be made unless
the Owner Trustee shall have received a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Owner Trustee, to the effect that such transferee is not a
Benefit Plan and is not acting on behalf of or using the assets of a Benefit
Plan, which representation letter shall not be an expense of the Owner Trustee.
(e) No transfer or pledge of the Certificates shall result in more than 98
other holders of Certificates.
SECTION 3.11 Acceptance of Obligations. The Sponsor agrees to be bound by
and to perform all the duties of the Sponsor set forth in this Agreement.
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SECTION 3.12 Payments on Certificates. The Certificateholders will be
entitled to distributions on each Payment Date, as provided in the Trust B
Indenture.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the election by Trust B to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Holders);
(b) the amendment of the Trust B Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Trust B Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(d) except pursuant to Section 7.14 of the Trust B Sale and Servicing
Agreement, the amendment, change or modification of the Trust B Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially adversely affect
the interests of the Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters.
(a) The Owner Trustee shall not have the power, except upon the direction of the
Note Insurer or in the event that a Note Insurer Default shall have occurred and
is continuing, the Security Majority in accordance with the Operative Documents,
to (i) remove the Master Servicer under the Trust B Sale and Servicing Agreement
or (ii) except as expressly provided in the Operative Documents, sell the
Mortgage Loans after the termination of the Trust B Indenture. The Owner Trustee
shall take the actions referred to in the preceding sentence only upon written
instructions signed by the Note Insurer or the Class B Noteholders, as the case
may be, and the furnishing of indemnification satisfactory to the Owner Trustee
by the Certificateholders.
(b) Upon the written request of any Certificateholder (a "Proposer"), the
Owner Trustee shall distribute promptly to all Certificateholders any request
for action or consent of Certificateholders submitted by such Proposer. The
Owner Trustee shall provide a reasonable method for collecting responses to such
request and shall tabulate and report the results thereof to the
Certificateholders and the Sponsor. The Owner Trustee shall have no
responsibility or duty to determine if any such proposed action or consent is
permitted under the terms of this Agreement or applicable law.
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SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy. Until
one year and one day following the day on which the Class B Notes have been paid
in full, the Owner Trustee shall not have the power to, and shall not, commence
any proceeding or other actions contemplated by Section 2.12(b) relating to the
Trust without the prior written consent of the Note Insurer (unless a Note
Insurer Default shall have occurred and is continuing) or upon a Note Insurer
Default, the Security Majority. Until one year and one day following the day on
which the Class B Notes have been paid in full, all amounts due to the Note
Insurer under the Insurance Agreement have been paid in full, the Trust B Note
Policy has terminated and the Indenture Trustee has surrendered the Trust B Note
Policy to the Note Insurer, the Owner Trustee shall not have the power to, and
shall not, commence any proceeding or other actions contemplated by Section
2.12(b) relating to Trust B without the prior written consent of all of the
Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that Trust B is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of Trust B or the Owner Trustee under this Agreement or any of the Operative
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than Holding Trust or its initial
transferee) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any
Operative Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% by Percentage Interest shall have made written
request upon the Owner Trustee to institute such action, suit or proceeding in
its own name as Owner Trustee under this Agreement and shall have offered to the
Owner Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Owner
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding, and during such 30-day period no request or waiver inconsistent
with such written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5 Majority Control. No Certificateholder shall have any right to
vote or in any manner otherwise control the operation and management of Trust B
except as expressly provided in this Agreement. Except as otherwise expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing not less
than a majority interest in Trust B. Except as otherwise expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Certificateholders evidencing not less
than a majority interest in Trust B at the time of the delivery of such notice.
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SECTION 4.6 Rights of Note Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Note Insurer (or if a Note Insurer Default shall have occurred and is
continuing, the Security Majority) the Owner Trustee shall not (i) remove the
Master Servicer, (ii) initiate any claim, suit or proceeding by Trust B or
compromise any claim, suit or proceeding brought by or against Trust B, other
than with respect to the enforcement of any Mortgage Loan or any rights of Trust
B thereunder, (iii) authorize the merger or consolidation of Trust B with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Trust B Indenture), (iv) amend the Certificate of Trust or
(v) amend this Agreement in accordance with Section 11.1 of this Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1 Accounting and Records to the Class B Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Sponsor shall
(a) maintain (or cause to be maintained) the books of Trust B on a calendar year
basis on the accrual method of accounting, including, without limitation, the
allocations of net income under Section 2.11 hereof, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1, if applicable) to enable each Certificateholder to prepare its
Federal and state income tax returns, (c) file or cause to be filed, if
necessary, such tax returns relating to Trust B (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain Trust B's characterization as a branch,
or if applicable, as a partnership, for Federal income tax purposes and (d)
collect or cause to be collected any withholding tax as described in and in
accordance with Section 6.1(a)(ii) of the Trust B Sale and Servicing Agreement
with respect to income or distributions to Certificateholders and the
appropriate forms relating thereto. The Owner Trustee or the Master Servicer, as
the case may be, shall make all elections pursuant to this Section as directed
in writing by the Sponsor. The Owner Trustee shall sign all tax information
returns presented to it in final execution form, if any, filed pursuant to this
Section 5.1 and any other returns as may be required by law, and in doing so
shall rely entirely upon, and shall have no liability for information provided
by, or calculations provided by, the Sponsor or the Master Servicer. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Mortgage Loans.
The Owner Trustee shall not make the election provided under Section 754 of the
Code.
SECTION 5.2 Signature on Returns; Tax Matters Partner. (a) Notwithstanding
the provisions of Section 5.1 and in the event that Trust B is characterized as
a partnership, the Owner Trustee shall sign on behalf of Trust B the tax returns
of Trust B presented to it in final execution form, unless applicable law
requires a Certificateholder to sign such documents, in which case such
documents shall be signed by the Sponsor, as agent, on behalf of the
Certificateholders.
(b) In the event that Trust B is characterized as a partnership, each
Certificateholder shall be the "tax matters partner" of Trust B pursuant to the
Code.
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ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which Trust B is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Operative Documents to which Trust B is named as a
party and any amendment thereto, in each case, in such form as the Sponsor shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and
on behalf of Trust B, to direct the Indenture Trustee to authenticate and
deliver Class B Notes in the aggregate principal amount of $650,000,000. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of Trust B pursuant to the Operative
Documents. The Owner Trustee is further authorized from time to time to take
such action as the Instructing Party recommends with respect to the Operative
Documents so long as such activities are consistent with the terms of the
Operative Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer Trust B in the interest of the
Holders, subject to the Operative Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Operative Documents to the extent the Master Servicer has agreed in
the Trust B Sale and Servicing Agreement to perform any act or to discharge any
duty of Trust B or the Owner Trustee hereunder or under any Operative Document,
and the Owner Trustee shall not be liable for the default or failure of the
Master Servicer to carry out its obligations under the Trust B Sale and
Servicing Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the Note
Insurer (so long as a Note Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if a Note Insurer Default shall have
occurred and be continuing) (the "Instructing Party") shall have the exclusive
right to direct the actions of the Owner Trustee in the management of Trust B,
so long as such instructions are not inconsistent with the express terms set
forth herein or in any Operative Document. The Instructing Party shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
Operative Documents.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any Operative Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Operative Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Operative Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Instructing Party received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Operative Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Operative Document or any such provision
is ambiguous as to its
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application, or is, or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement permits any determination by the
Owner Trustee or is silent or is incomplete as to the course of action that the
Owner Trustee is required to take with respect to a particular set of facts, the
Owner Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Instructing Party requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received, the Owner Trustee shall not be
liable, on account of such action or inaction, to any Person. If the Owner
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent with
this Agreement or the Operative Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for Trust B or to
record this Agreement or any Operative Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Operative Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of Trust B set forth in Section 2.3 or
(b) that, to the actual knowledge of the Owner Trustee, would result in Trust B
becoming taxable as a corporation or a publicly traded partnership for Federal
income tax purposes. The Certificateholders shall not direct the Owner Trustee
to take action that would violate the provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts the
trust hereby created and agrees to perform its duties hereunder with respect to
such trust but only upon the terms of this Agreement. The Owner Trustee also
agrees to disburse all monies actually received by it constituting part of the
Owner Trust Estate upon the terms of the Operative Documents and this Agreement.
The Owner Trustee shall not be answerable or accountable hereunder or under any
Operative Document under any circumstances, except (i) for its own willful
misconduct, bad faith or
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gross negligence, (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Owner Trustee in its
individual capacity, (iii) for liabilities arising from the failure of the Owner
Trustee to perform obligations expressly undertaken by it in the last sentence
of Section 6.4 hereof, (iv) for any investments issued by the Owner Trustee or
any branch or affiliate thereof in its commercial capacity or (v) for taxes,
fees or other charges on, based on or measured by, any fees, commissions or
compensation received by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment, not
constituting gross negligence, made by a Responsible Officer of the Owner
Trustee;
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it if such action or omission is in accordance with
the instructions of the Instructing Party, the Sponsor, the Master Servicer or
any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Operative Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the Class B Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Sponsor or for the form, character, genuineness, sufficiency, value or validity
of any of the Owner Trust Estate or for or in respect of the validity or
sufficiency of the Operative Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to the Sponsor, the Note
Insurer, Indenture Trustee, any Certificateholder, other than as expressly
provided for herein and in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Sponsor, the Note Insurer, the Indenture Trustee, the Issuer, or the Master
Servicer under any of the Operative Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations under this
Agreement or the Operative Documents that are required to be performed by the
Sponsor under this Agreement, by the Indenture Trustee under the Trust B
Indenture or the Master Servicer under the Trust B Sale and Servicing Agreement;
and
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Operative Document, at the request, order or direction of the
Instructing Party or any of the Certificateholders, unless such Instructing
Party or Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Operative Document shall not be construed as a duty, and the Owner Trustee shall
not be answerable for other than its negligence, bad faith or willful misconduct
in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports,
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notices, requests, demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the Operative Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants, in its individual capacity, to the Sponsor and the
Holders (which shall have relied on such representations and warranties in
issuing the Trust B Note Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur
no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Operative
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and (ii) may
consult with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such persons
and according to such opinion not contrary to this Agreement or any Operative
Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Operative Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Owner Trustee on the Certificates) shall be taken as
the statements of the Sponsor and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no
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representations as to the validity or sufficiency of this Agreement, of any
Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Class B Notes,
or of any Mortgage Loan or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage Loan, or the perfection and priority
of any security interest created by any Mortgage Loan or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of the
Owner Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Class B Noteholders under the
Trust B Indenture, including, without limitation: the existence, condition and
ownership of any Mortgage Loan; the existence and enforceability of any
insurance thereon; the existence and contents of any Mortgage Loan on any
computer or other record thereof; the validity of the assignment of any Mortgage
Loan to Trust B or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Sponsor, the Master Servicer or any other Person with any
warranty or representation made under any Operative Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the
name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates and Class B Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Class B Notes and may deal with the Sponsor, the
Indenture Trustee and the Master Servicer in banking transactions with the same
rights as it would have if it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to be made by
the Owner Trustee under this Agreement or any of the Operative Documents to
which Trust B or the Owner Trustee is a party shall be made only from the income
and proceeds of the Owner Trust Estate and only to the extent that Trust B shall
have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Wilmington Trust Company, or any
successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the Operative Documents to which
Trust B or the Owner Trustee is a party.
SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Wilmington Trust Company or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware ; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Wilmington Trust Company (or any successor
thereto); or (iii) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Sponsor and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor
for its other reasonable expenses hereunder, including the reasonable
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compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder and under the
Operative Documents.
SECTION 8.2 Indemnification. The Sponsor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee (in its individual and trust
capacities) and its officers, directors, successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may (in its trust or individual capacities) at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Operative Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Sponsor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section and the rights under Section 8.1 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Sponsor which approval shall not be unreasonably
withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Operative Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for Trust B that all obligations
of Trust B to the Owner Trustee individually or as Owner Trustee for Trust B
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement and Trust B
shall terminate and be of no further force or effect upon the later of (i) the
maturity or other liquidation of the last Mortgage Loan (including the
redemption by the Certificateholder at its option of the corpus of Trust B as
described in Section 10.1(b) of the Trust B Indenture) and the subsequent
distribution of amounts in respect of such Mortgage Loans as provided in the
Operative Documents or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Note Insurer of all amounts payable or reimbursable to it pursuant to the Trust
B Sale and Servicing Agreement and the Insurance Agreement; provided, however,
that the rights to indemnification under Section 8.2 and the rights under
Section 8.1 shall survive the termination of Trust B. The Master Servicer shall
promptly notify the Owner Trustee and the Note Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or Trust B, nor (y) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
Trust B or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.
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(b) Except as provided in clause (a), neither the Sponsor nor any other
Certificateholder shall be entitled to revoke or terminate Trust B.
(c) Notice of any termination of Trust B, specifying the Payment Date upon
which the Certificateholders shall surrender their Certificates to the Indenture
Trustee for payment of the final distribution and cancellation, shall be given
by the Owner Trustee by letter to Certificateholders mailed within five Business
Days of receipt of notice of such redemption from the Master Servicer given
pursuant to Section 10.1 of the Trust B Sale and Servicing Agreement, stating
(i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Payment Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the Indenture Trustee therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Indenture Trustee at the time such
notice is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Indenture Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Payment Date pursuant to
Section 8.7(b)(xx) of the Trust B Indenture.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Owner Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in Trust B after exhaustion of
such remedies shall be distributed, subject to applicable escheat laws, by the
Owner Trustee to the Sponsor and Certificateholders shall look solely to the
Sponsor for payment.
(d) Any funds remaining in Trust B after funds for final distribution have
been distributed or set aside for distribution shall be distributed by the Owner
Trustee to the Sponsor.
(e) Upon the winding up of Trust B and its termination, the Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times be a corporation (i) satisfying the provisions of Section
3807(a) of the Business Trust Statute; (ii) authorized to exercise corporate
trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poors or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the Note Insurer in its sole discretion.
If such corporation shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
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SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Sponsor, the Note Insurer and the Master
Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly
appoint a successor Owner Trustee, meeting the qualifications set forth in
Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Note Insurer by either of the
Rating Agencies. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Note Insurer may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by the Sponsor, or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver
of the Owner Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Owner Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then a
majority of the Certificateholders with the consent of the Note Insurer (so long
as no Note Insurer Default shall have occurred and is continuing) may remove the
Owner Trustee. If a majority of the Certificateholders shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Sponsor
shall promptly appoint a successor Owner Trustee, meeting the qualifications set
forth in Section 10.1 herein, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the outgoing Owner Trustee so removed,
one copy to the Note Insurer and one copy to the successor Owner Trustee and the
Sponsor shall pay all fees owed to the outgoing Owner Trustee, if not previously
paid by Trust B.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all reasonable fees and expenses
owed to the outgoing Owner Trustee.
Notwithstanding any other provision of this Agreement, and in addition to
any other method of removal of the Owner Trustee contained herein, upon a
proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in Trust B, the
Owner Trustee may be removed as Owner Trustee , subject to the consent of the
Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), which consent is not to be unreasonably withheld. In the event the
Owner Trustee is removed pursuant to this paragraph, the provisions of this
Agreement, including Article X herein, shall apply as if the Owner Trustee had
resigned hereunder.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Sponsor, the Master Servicer, the Note Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Sponsor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
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<PAGE> 29
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Master Servicer shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Indenture Trustee and the Class B
Noteholders. If the Master Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Master Servicer.
The successor Owner Trustee shall file an amendment to the Certificate of
Trust with the Secretary of State reflecting the name and principal place of
business of such successor Owner Trustee in the State of Delaware.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee 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 Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner 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 Owner Trust Estate or any Mortgaged Property may at the time be located,
the Master Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Note Insurer to act as co-trustee, jointly
with the Owner Trustee, or separate trustee or separate trustees, of all or any
part of the Owner Trust Estate, and to vest in such Person, in such capacity,
such title to Trust B, or any part thereof, and, subject to the other provisions
of this Section, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Owner 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, the Owner Trustee subject to the
approval of the Note Insurer (which approval shall not be unreasonably withheld)
shall have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner 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 Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner 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 Trust B 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 Owner Trustee;
25
<PAGE> 30
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Master Servicer and the Owner 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 Owner 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 Article. 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 Owner 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
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Master Servicer and the Note Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be amended
by the Sponsor and the Owner Trustee, with the prior written consent of the Note
Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), without the consent of any of the Class B Noteholders or
Certificateholders (i) to cure any ambiguity or defect or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel which may be based
upon a certificate of the Master Servicer, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time, with the prior
written consent of the Note Insurer which consent shall not be unreasonably
withheld (so long as no Note Insurer Default shall have occurred and is
continuing) by the Sponsor and the Owner Trustee, with prior written notice to
the Rating Agencies, and, to the extent such amendment materially and adversely
affects the interests of the Class B Noteholders, with the consent of the Class
B Noteholders evidencing not less than a majority of the Outstanding amount of
the Class B Notes and, the consent of the Certificateholders evidencing not less
than a majority interest in Trust B (which consent of any Holder of a
Certificate or Class B Note given pursuant to this Section or pursuant to any
other provision of this Agreement shall be conclusive and binding on such Holder
and on all future Holders of such Certificate or Class B Note and of any
Certificate or Class B Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made upon
the Certificate or Class B Note) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Class B Noteholders or the
Certificateholders; provided, however, that, subject to the express rights of
the Note Insurer under the Operative Documents, no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Mortgage Loans or distributions that shall
be required to be made for the benefit of the Class B Noteholders or the
Certificateholders or (b) reduce
26
<PAGE> 31
the aforesaid percentage of the Outstanding Amount of the Class B Notes and the
Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Class B
Notes and holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of Certificateholders, the Class
B Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Operative Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe. Promptly after
the execution of any amendment to the Certificate of Trust, the Owner Trustee
shall cause the filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their ownership interest therein only in accordance with Article IX.
No transfer, by operation of law or otherwise, of any right, title or interest
of the Certificateholders to and in their ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal title
to any part of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Section 11.7, the
provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Sponsor, the Certificateholders, the Master Servicer and, to the extent
expressly provided herein, the Note Insurer, the Indenture Trustee and the Class
B Noteholders, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor,
addressed to Advanta Mortgage Conduit Services, Inc., Welsh & McKean Roads,
Spring House, Pennsylvania 19477; if to the Note Insurer, addressed to, Ambac
Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Thomas Adams and Ted Molin, Telecopy No.: (212) 363-1459; or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate
27
<PAGE> 32
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Assignments; Note Insurer. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Note Insurer for so long as a Note Insurer Default shall not have
occurred and be continuing. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement which confer rights upon the Note
Insurer shall be for the benefit of and run directly to the Note Insurer, and
the Note Insurer shall be entitled to rely on and enforce such covenants,
subject, however, to the limitations on such rights provided in this Agreement
and the Operative Documents. The Note Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Trust
B Note Policy) upon delivery of a written notice to the Owner Trustee.
SECTION 11.8 No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenants
and agrees that they will not at any time institute against the Sponsor, or join
in any institution against the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Class B Notes, this Agreement
or any of the Operative Documents.
SECTION 11.9 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in Trust B only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Note Insurer or any Affiliate thereof and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates or the Operative
Documents.
SECTION 11.10 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12 Master Servicer. The Master Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of Trust B all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of Trust B or Owner Trustee to prepare, file or deliver
pursuant to the Operative Documents. Upon written request, the Owner Trustee
shall execute
28
<PAGE> 33
and deliver to the Master Servicer a limited power of attorney appointing the
Master Servicer the Trust B's agent and attorney-in-fact to prepare, or cause to
be prepared, execute and deliver all such documents, reports, filings,
instruments, certificates and opinions.
29
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized as of the
day and year first above written.
WILMINGTON TRUST COMPANY, as Owner
Trustee
By: /s/ Emmet Harmon
-------------------------------
Name: Emmet Harmon
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By: /s/ Mark Dunsheath
-------------------------------
Name: Mark Dunsheath
Title: Vice President
30
<PAGE> 35
Exhibit A
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE TRUST B TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER
OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH
REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION
3.10 OF THE TRUST B TRUST AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE OWNER TRUSTEE SHALL HAVE
RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE,
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, TO
THE EFFECT THAT SUCH TRANSFEREE IS NOT A BENEFIT PLAN AND NOT ACTING ON BEHALF
OF OR USING THE ASSETS OF A BENEFIT PLAN, WHICH REPRESENTATION LETTER SHALL NOT
BE AN EXPENSE OF THE OWNER TRUSTEE.
NO TRANSFER OF A 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. EXCEPT FOR THE INITIAL ISSUANCE OF THE CERTIFICATES TO HOLDING TRUST AND
ITS INITIAL TRANSFEREE, THE OWNER TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO
EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE OWNER TRUSTEE AND THE NOTE INSURER CERTIFYING TO THE OWNER
TRUSTEE AND THE NOTE INSURER THE FACTS SURROUNDING SUCH TRANSFER, WHICH
INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE NOTE
INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF
COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER
TRUSTEE, THE NOTE INSURER AND THE SPONSOR THAT SUCH TRANSFER MAY BE MADE
PURSUANT TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS
THEREFOR, FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE, THE NOTE INSURER OR THE
SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO EFFECT SUCH TRANSFER SHALL, AND
DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR AND THE NOTE INSURER 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.
<PAGE> 36
THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED EXCEPT UPON
SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON THAT ACQUIRES
A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED
STATES OF AMERICA OR ANY STATE OR THE DISTRICT OF COLUMBIA THEREOF, (B)
EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO
THE OWNER TRUSTEE, THE PERFORMANCE OF EVERY COVENANT AND OBLIGATION OF THE
SPONSOR UNDER THE TRUST B TRUST AGREEMENT, EXCEPT FOR THE COVENANTS AND
OBLIGATIONS CONTAINED IN SECTIONS 3.1, 3.3, AND 3.4 OF THE TRUST B SALE AND
SERVICING AGREEMENT, AND SECTIONS 2.10, 2.12 OR 8.2 OF THE TRUST B TRUST
AGREEMENT; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE
OWNER TRUSTEE AND THE NOTE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH
TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST B
TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF
THE TRUST B TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL
STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION
3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 HAVE BEEN
COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY ON SUCH OFFICER'S
CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD TO THE MATTERS SET
FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO RELYING; (III) THE PERSON THAT
ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE NOTE INSURER A
LETTER FROM EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE CLASS B NOTES,
AFTER GIVING EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT
REGARD TO THE TRUST A NOTE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE
SHALL DELIVER TO THE OWNER TRUSTEE AND THE NOTE INSURER AN OPINION OF COUNSEL TO
THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE
CLASS B NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE
INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN TRUST A BEING SUBJECT
TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C)
SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR
APPLICABLE STATE INCOME TAXATION OF A CLASS B NOTEHOLDER AND (D) SUCH TRANSFER
WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST B TRUST AGREEMENT OR ANY
"PORTION" OF TRUST B, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN
SECTION 7701(I) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO
CONTINUE THE PERFECTION OF THE INTEREST OF TRUST B IN THE MORTGAGE LOANS AND THE
OTHER PROPERTY CONVEYED UNDER THE TRUST B TRUST AGREEMENT SHALL HAVE BEEN TAKEN
OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
<PAGE> 37
ADVANTA MORTGAGE LOAN TRUST
1998-4B CERTIFICATE
Percentage Interest: 100%
Date of Cut-Off Date:
November 1, 1998
First Payment Date: Issue Date: November 24, 1998
December 28, 1998
No. 1
---------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by:
------------------------------------
Authenticating Agent
Trust B was created pursuant to a Trust Agreement dated as of November 1,
1998 (the "Trust Agreement"), between the Sponsor and Wilmington Trust Company,
as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated as
Advanta Mortgage Loan Trust 1998-4B Certificates (herein called the
"Certificates"). Also issued under the Trust B Indenture dated as of November 1,
1998, among Trust B and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee") are Class B Notes (the "Class B Notes"). These
Certificates are issued under and are subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of Trust B includes a pool of fixed-rate mortgage loans
secured by first or second deeds of trust or Mortgages on primarily one-to-four
family residential properties.
Under the Trust Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business Day
(the "Payment Date"), commencing on December 28, 1998, to the Person in whose
name this Certificate is registered at the close of business on
<PAGE> 38
the Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that its rights to
receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Trust B Sale and Servicing
Agreement, the Trust B Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this Certificate,
specifically acknowledges that it has no right to or interest in any monies at
any time held pursuant to the Trust B Pre-Funding Account or prior to the
release of such monies pursuant to Section 8.7 of the Trust B Indenture, such
monies being held in trust for the benefit of the Class B Noteholders and the
Note Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Trust B Pre-Funding Account constitute a
pledge of collateral, then the provisions of the Trust B Sale and Servicing
Agreement shall be considered to constitute a security agreement and the holder
of this Certificate hereby grants to the Indenture Trustee and the Note Insurer
a first priority perfected security interest in such amounts. In addition, each
Certificateholder, by acceptance of its Certificate, hereby appoints the Sponsor
as its agent to pledge a first priority perfected security interest in the Trust
B Pre-Funding Account and agrees to execute and deliver such instruments of
conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case as the Note Insurer shall consider reasonably necessary
in order to perfect the Indenture Trustee's security interest in the Trust
Property.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Trust B will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Trust B will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
Trust B. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
Trust B or the Sponsor, or join in any institution against Trust B or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Operative
Documents.
Distributions on this Certificate will be made as provided in the Trust B
Sale and Servicing Agreement and the Trust B Indenture by the Indenture Trustee
by wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this
Certificate shall not entitle the holder
<PAGE> 39
hereof to any benefit under the Trust Agreement or the Trust B Sale and
Servicing Agreement or be valid for any purpose.
<PAGE> 40
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Trust B and not in its
individual capacity, has caused this Certificate to be duly executed.
ADVANTA MORTGAGE LOAN TRUST 1998-4B
By: WILMINGTON TRUST COMPANY not in its individual
capacity but solely as Owner Trustee
Dated: November 24, 1998
By: _________________________________________
Name:
Title:
<PAGE> 41
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in, the
Originators, the Sponsor, the Master Servicer, the Note Insurer, the Owner
Trustee or any Affiliates of any of them and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Trust B Indenture or the Operative
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Mortgage Loans, as more specifically set forth
herein, in the Trust B Sale and Servicing Agreement and in the Trust B
Indenture. A copy of each of the Trust B Sale and Servicing Agreement and the
Trust Agreement may be examined during normal business hours at the principal
office of the Sponsor, and at such other places, if any, designated by the
Sponsor, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Sponsor and the rights of the Certificateholders under the Trust Agreement at
any time by the Sponsor and the Owner Trustee with the prior written consent of
the Note Insurer and with the consent of the holders of the Notes and the
Certificates evidencing not less than a majority of the outstanding Notes and
the Certificates. Any such consent by the holder of this Certificate shall be
conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates (other than the Sponsor or the Note Insurer).
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in Trust B
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to Advanta Mortgage Holding Trust 1998-4,
the Certificates are issuable only as registered Certificates without coupons in
denominations of $1,000 or integral multiples of $1,000 in excess thereof. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates in authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Note Insurer and any
agent of the Owner Trustee, the Certificate Registrar, the Note Insurer or the
Note Insurer may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and none of the Owner Trustee, the
Certificate Registrar, the Note Insurer nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
Trust B created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement, the
Trust B Indenture and the Trust B Sale and Servicing Agreement and the
disposition of all property held as part of Trust B. The Certificateholder may
at its
<PAGE> 42
option elect to redeem the corpus of Trust B at a price specified in the Trust B
Sale and Servicing Agreement, and after such redemption of the Mortgage Loans
and other property of Trust B, all proceeds will be distributed to the
Certificateholders; however, the Certificateholder's right to elect to redeem is
exercisable, subject to certain restrictions, only on any Payment Date on or
after the Payment Date immediately prior to which the Class B Note Principal
Balance is less than 10% of the Original Class B Note Principal Balance and all
amounts due and owing to the Note Insurer for unpaid premiums and unreimbursed
draws on the Trust B Note Policy and all other amounts due and owing to the Note
Insurer pursuant to the Insurance Agreement, together with interest thereon as
provided under the Insurance Agreement, have been paid.
The recitals contained herein shall be taken as the statements
of the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Trust B Sale and Servicing Agreement or
be valid for any purpose.
<PAGE> 43
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________ Attorney to transfer said Certificate on
the books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
_______________________________________*
Signature Guaranteed:
_______________________________________*
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
<PAGE> 44
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA MORTGAGE LOAN TRUST 1998-4B
This Certificate of Trust of Advanta Mortgage Loan Trust 1998-4B ("Trust
B"), dated as of November 20, 1998, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is Advanta Mortgage
Loan Trust 1998-4B.
2. Delaware Trust. The name and business address of the Owner Trustee of
Trust B in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001. Attn:
Corporate Trust Administration.
3. This Certificate of Trust will be effective November 20, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of Trust B,
has executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as Owner
Trustee of Trust B.
By:_________________________________
Name:
Title:
<PAGE> 1
Exhibit 4.2.4
TRUST C
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. Definitions......................................................1
SECTION 1.1 Capitalized Terms.......................................1
SECTION 1.2 Other Definitional Provisions...........................3
SECTION 1.3 Action by or Consent of Class C Noteholders and
Certificateholders....................................4
ARTICLE II. Organization....................................................4
SECTION 2.1 Name....................................................4
SECTION 2.2 Office..................................................4
SECTION 2.3 Purposes and Powers.....................................4
SECTION 2.4 Appointment of Owner Trustee............................6
SECTION 2.5 Initial Capital Contribution of Trust Estate............6
SECTION 2.6 Declaration of Trust....................................7
SECTION 2.7 Liability...............................................7
SECTION 2.8 Title to Trust Property.................................7
SECTION 2.9 Situs of Trust..........................................7
SECTION 2.10 Representations and Warranties of the Sponsor...........7
SECTION 2.11 Federal Income Tax Allocations..........................8
SECTION 2.12 Covenants of the Sponsor................................9
SECTION 2.13 Covenants of the Certificateholders.....................9
SECTION 2.14 Investment Companies...................................10
ARTICLE III. Certificates and Transfer of Interests........................10
SECTION 3.1 Initial Ownership......................................10
SECTION 3.2 The Certificates.......................................10
SECTION 3.3 Authentication of Certificates.........................10
SECTION 3.4 Registration of Transfer and Exchange of
Certificates.........................................11
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates......11
SECTION 3.6 Persons Deemed Certificateholders......................11
SECTION 3.7 Access to List of Certificateholders' Names and
Addresses............................................11
SECTION 3.8 Maintenance of Office or Agency........................12
SECTION 3.9 ERISA..................................................12
SECTION 3.10 Restrictions on Transfer of Certificates...............12
SECTION 3.11 Acceptance of Obligations..............................13
SECTION 3.12 Payments on Certificates...............................13
ARTICLE IV. Voting Rights and Other Actions................................13
SECTION 4.1 Prior Notice to Certificateholders with Respect to
Certain Matters......................................13
SECTION 4.2 Action by Certificateholders with Respect to
Certain Matters......................................14
SECTION 4.3 Action by Certificateholders with Respect to
Bankruptcy...........................................14
SECTION 4.4 Restrictions on Certificateholders' Power..............14
SECTION 4.5 Majority Control.......................................15
SECTION 4.6 Rights of Note Insurer.................................15
i
<PAGE> 3
ARTICLE V. Certain Duties..................................................15
SECTION 5.1 Accounting and Records to the Class C Noteholders,
Certificateholders, the Internal Revenue Service
and Others...........................................15
SECTION 5.2 Signature on Returns; Tax Matters Partner..............16
ARTICLE VI. Authority and Duties of Owner Trustee..........................16
SECTION 6.1 General Authority......................................16
SECTION 6.2 General Duties.........................................16
SECTION 6.3 Action upon Instruction................................16
SECTION 6.4 No Duties Except as Specified in this Agreement or
in Instructions......................................17
SECTION 6.5 No Action Except under Specified Documents or
Instructions.........................................18
SECTION 6.6 Restrictions...........................................18
ARTICLE VII. Concerning the Owner Trustee..................................18
SECTION 7.1 Acceptance of Trust and Duties.........................18
SECTION 7.2 Furnishing of Documents................................19
SECTION 7.3 Representations and Warranties.........................19
SECTION 7.4 Reliance; Advice of Counsel............................19
SECTION 7.5 Not Acting in Individual Capacity......................20
SECTION 7.6 Owner Trustee Not Liable for Certificates or
Mortgage Loans.......................................20
SECTION 7.7 Owner Trustee May Own Certificates and Class C Notes...20
SECTION 7.8 Payments from Owner Trust Estate.......................20
SECTION 7.9 Doing Business in Other Jurisdictions..................21
ARTICLE VIII. Compensation of Owner Trustee................................21
SECTION 8.1 Owner Trustee's Fees and Expenses......................21
SECTION 8.2 Indemnification........................................21
SECTION 8.3 Payments to the Owner Trustee..........................21
SECTION 8.4 Non-recourse Obligations...............................21
ARTICLE IX. Termination of Trust Agreement.................................22
SECTION 9.1 Termination of Trust Agreement.........................22
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees..........23
SECTION 10.1 Eligibility Requirements for Owner Trustee.............23
SECTION 10.2 Resignation or Removal of Owner Trustee................23
SECTION 10.3 Successor Owner Trustee................................24
SECTION 10.4 Merger or Consolidation of Owner Trustee...............24
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee..............................................24
ARTICLE XI. Miscellaneous..................................................25
SECTION 11.1 Supplements and Amendments.............................25
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders...................................26
SECTION 11.3 Limitations on Rights of Others........................27
SECTION 11.4 Notices................................................27
ii
<PAGE> 4
SECTION 11.5 Severability...........................................27
SECTION 11.6 Separate Counterparts..................................27
SECTION 11.7 Assignments; Note Insurer..............................27
SECTION 11.8 No Petition............................................27
SECTION 11.9 No Recourse............................................28
SECTION 11.10 Headings...............................................28
SECTION 11.11 GOVERNING LAW..........................................28
SECTION 11.12 Master Servicer........................................28
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
<PAGE> 5
TRUST AGREEMENT relating to Trust C dated as of November 1, 1998
between ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation as
Sponsor, and WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner
Trustee.
ARTICLE I.
Definitions
SECTION 1.1 Capitalized Terms. For the purposes of this Agreement, the
following terms shall have the meanings set forth below.
"Accounts" shall have the meaning ascribed thereto in the Trust C
Indenture.
"Affiliate" shall mean with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, or owns, directly or indirectly,
50% or more of, the Person specified.
"Agreement" shall mean this Trust C Trust Agreement, as the same may be
amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the beneficial
ownership interest of a Certificateholder in Trust C, substantially in the form
of Exhibit A attached hereto.
"Certificateholder" or "Holder" shall initially mean Holding Trust,
until and unless Holding Trust transfers any or all of its interest in the
Certificate to any other Person and thereafter "Certificateholder" shall also
mean or include such Person.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for Trust C pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register maintained and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Sponsor and
Holding Trust, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Sponsor).
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"ERISA" shall have the meaning assigned to such term in Section 3.9.
<PAGE> 6
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holding Trust" shall mean Advanta Mortgage Holding Trust 1998-4.
"Indemnification Agreement" shall mean the Indemnification Agreement
dated as of November 24, 1998 between the Note Insurer and Morgan Stanley & Co.
Incorporated.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture Trustee" shall initially mean Bankers Trust Company of
California, N.A., in its capacity as indenture trustee, including its successors
in interest, until and unless a successor Person shall have become the Indenture
Trustee pursuant to the Trust C Sale and Servicing Agreement and thereafter
"Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement
dated as of November 24, 1998 among the Note Insurer, the Sponsor, the Master
Servicer Trust A, Trust B, Trust C and the Indenture Trustee.
"Issuer" shall mean Advanta Mortgage Loan Trust 1998-4C.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Note Insurer" shall mean Ambac Assurance Corporation, or its successor
in interest.
"Operative Documents" shall mean this Agreement, the Trust C Sale and
Servicing Agreement, the Master Transfer Agreement, the Trust C Note Policy, the
Insurance Agreement, the Indemnification Agreement, the Trust C Indenture, and
the Class C Notes.
"Originators" shall mean 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.
"Outstanding" shall have the meaning assigned to such term in the Trust
C Indenture.
"Owner Trust Estate" shall mean all right, title and interest of Trust
C in and to the property and rights assigned to Trust C pursuant to Article II
of the Trust C Sale and Servicing Agreement, all funds on deposit from time to
time in the Accounts and the Trust C Note Account and all other property of
Trust C from time to time, including any rights of the Owner Trustee and the
Trust pursuant to the Trust C Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Record Date" shall mean with respect to any Payment Date, the close of
business on the last Business Day immediately preceding such Payment Date,
provided, that if the Certificates or Class C Notes are in definitive form, the
Record Date with respect to each Payment Date shall be the last Business Day of
the calendar month immediately preceding the calendar month in which such
Payment Date occurs.
2
<PAGE> 7
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Security Majority" means a majority by principal amount of the Class C
Noteholders so long as the Class C Notes are Outstanding and a majority by
principal amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Mortgage Conduit Services, Inc. in its
capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust A" shall have the meaning assigned to it in the Trust C
Indenture.
"Trust C" shall mean the trust established by this Agreement.
"Trust C Indenture" shall mean the Trust C Indenture dated as of
November 1, 1998 between the Sponsor and the Issuer, as the same may be amended
and supplemented from time to time.
"Trust C Note Account" as defined in the Trust C Indenture.
"Trust C Sale and Servicing Agreement" shall mean the Trust C Sale and
Servicing Agreement relating to Trust C among the Issuer, Advanta Mortgage
Conduit Services, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust C" shall have the meaning assigned to it in the Trust C
Indenture.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the Trust
C Sale and Servicing Agreement or, if not defined therein, in the Trust C
Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
3
<PAGE> 8
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3 Action by or Consent of Class C Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Class C Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Class C
Noteholder, as the case may be, of record as of the Record Date immediately
preceding the date on which such action is to be taken, or consent given, by
Class C Noteholders or Certificateholders. Solely for the purposes of any action
to be taken, or consented to, by Class C Noteholders or Certificateholders, any
Class C Note or Certificate registered in the name of the Sponsor, Holding Trust
or any Affiliate thereof shall be deemed not to be outstanding; provided,
however, that, solely for the purpose of determining whether the Indenture
Trustee is entitled to rely upon any such action or consent, only Class C Notes
or Certificates which the Owner Trustee, or the Indenture Trustee, respectively,
knows to be so owned shall be so disregarded.
ARTICLE II.
Organization
SECTION 2.1 Name. There is hereby formed a trust to be known as
"Advanta Mortgage Loan Trust 1998-4C", in which name the Owner Trustee may
conduct the business of Trust C, make and execute contracts and other
instruments on behalf of Trust C and sue and be sued.
SECTION 2.2 Office. The office of Trust C shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders and the
Sponsor.
SECTION 2.3 Purposes and Powers. The purpose of Trust C is, and Trust C
shall have the power and authority, to engage in the following activities:
(i) to issue the Class C Notes pursuant to the Trust C Indenture
and the Certificates pursuant to this Agreement, and to sell the Class
C Notes;
(ii) with the proceeds of the sale of the Class C Notes, to pay
the organizational, start-up and transactional expenses of Trust C and
to pay the balance to the Sponsor pursuant to the Trust C Sale and
Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate to the Indenture Trustee on behalf of the Class C
Noteholders and for the benefit of the Note Insurer and to hold, manage
and distribute to the Certificateholders pursuant to the terms of the
Trust C Sale and Servicing Agreement any portion of the Owner Trust
Estate released from the lien of, and remitted to Trust C pursuant to,
the Trust C Indenture;
(iv) to enter into and perform its obligations under the
Operative Documents to which it is a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
4
<PAGE> 9
(vi) subject to compliance with the Operative Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Class C Noteholders.
Trust C is hereby authorized to engage in the foregoing activities.
(b) Trust C shall not engage in any activity other than in connection
with those described in Section 2.3(a) or other than as required or authorized
by the terms of this Agreement or the Operative Documents. In addition, Trust C
shall not:
(i) incur any indebtedness other than the Notes issued pursuant
to the Indenture
(ii) engage in any dissolution, liquidation, consolidation,
merger or sale of assets;
(iii) amend this Trust Agreement without a confirmation from each
applicable Rating Agency then rating the Notes, that such amendment
would not result in the qualification, downgrade or withdrawal of the
rating on the Notes;
(iv) effect a transfer of any direct or indirect ownership
interest in Trust C such that either (y) the transferee owns more than
a 49% interest in Trust C, or (z) the transferee is an affiliate or a
family member of a transferor which owned more than a 49% interest in
the Borrower before such transfer may be made unless such transfer is
conditioned upon the delivery of an acceptable non-consolidation
opinion to the Rating Agencies concerning, as applicable, the
transferee and/or their respective owners;
(v) engage in any business activity in which it is not currently
engaged;
(vi) take any action that might cause Trust C to become
insolvent; or
(vii) form, or caused to be formed, any subsidiaries;
(c) Trust C shall:
(i) maintain books and records separate from any other person or
entity;
(ii) maintain its bank accounts separate from any other person or
entity;
(iii) not commingle its assets with those of any other person or
entity and will hold all of its assets in its own name;
(iv) conduct its own business in its own name;
(v) maintain separate financial statements, showing its assets
and liabilities separate and apart from those of any other person or
entity and not have its assets listed on the financial statement of any
other entity;
(vi) file its tax returns separate from those of any other entity
and not file a consolidated federal income tax return with any other
entity;
5
<PAGE> 10
(vii) except as set forth herein, pay its own liabilities and
expenses only out of its own funds;
(viii) observe all organizational formalities;
(ix) enter into transactions with affiliates only where each
such transaction is intrinsically fair, commercially reasonable, and on
the same terms as would be available in an arm's length transaction
with a person or entity that is not an affiliate;
(x) pay the salaries of its own employees from its own funds;
(xi) maintain a sufficient number of employees in light of its
contemplated business operations;
(xii) not guarantee or become obligated for the debts of any
other entity or person;
(xiii) not hold out its credit as being available to satisfy the
obligation of any other person or entity;
(xiv) not acquire the obligations or securities of its
affiliates or owners, including partners, members or shareholders, as
appropriate;
(xv) not make loans to any other person or entity or buy or
hold evidence of indebtedness issued by any other person or entity
(except for cash and investment-grade securities);
(xvi) allocate fairly and reasonably any overhead expenses that
are shared with an affiliate, including paying for office space and
services performed by any employee of any affiliate;
(xvii) not pledge its assets for the benefit of any other person
or entity other than with respect to the Notes;
(xviii) hold itself out as a separate identity;
(xix) correct any known misunderstanding regarding its separate
identity;
(xx) not identify itself as a division of any other person or
entity; and
(xxi) maintain adequate capital in light of its contemplated
business operations.
SECTION 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints
the Owner Trustee as trustee of Trust C effective as of the date hereof, to have
all the rights, powers and duties set forth herein and in the Business Trust
Statute.
SECTION 2.5 Initial Capital Contribution of Trust Estate. The Sponsor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Sponsor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Owner Trust Estate and shall be deposited in
the Trust C Note Account. On or prior to the Closing Date, the Owner Trustee
will also, upon receipt thereof, acknowledge on behalf of Trust C, receipt of
the Mortgage Loans pursuant to the Trust C Sale
6
<PAGE> 11
and Servicing Agreement. The Sponsor shall pay the organizational expenses of
Trust C as they may arise.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of Trust C under the Operative Documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, solely for income tax purposes, Trust C shall be treated as a branch;
provided, however, that in the event Certificates are owned by more than one
Certificateholder, it is the intention of the parties hereto that, solely for
income and franchise tax purposes, Trust C shall then be treated as a
partnership and that, unless otherwise required by appropriate tax authorities,
only after such time Trust C will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of Trust C as a partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and duties set forth
herein and to the extent not inconsistent herewith, in the Business Trust
Statute with respect to accomplishing the purposes of Trust C. The Owner Trustee
shall file the Certificate of Trust with the Secretary of State.
SECTION 2.7 Liability. No Holder shall have any personal liability for
any liability or obligation of Trust C.
SECTION 2.8 Title to Trust Property. (a) Legal title to all of the
Owner Trust Estate shall be vested at all times in Trust C as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of
the Trust Property. The Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest by any Certificateholder of its ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Trust Property.
SECTION 2.9 Situs of Trust. Trust C will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of Trust C shall be located in the State of Delaware or the State of New
York. Payments will be received by Trust C only in Delaware or New York and
payments will be made by Trust C only from Delaware or New York. Trust C shall
not have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee, the Master Servicer
or any agent of Trust C from having employees within or without the State of
Delaware. The only office of Trust C will be at the Corporate Trust Office in
Delaware.
SECTION 2.10 Representations and Warranties of the Sponsor. The Sponsor
makes the following representations and warranties on which the Owner Trustee
relies in accepting the Owner Trust Estate in trust and issuing the Certificates
and upon which the Note Insurer relies in issuing the Trust C Note Policy.
(a) The Sponsor is duly organized and validly existing as a Delaware
corporation with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted and is proposed to be conducted pursuant to this Agreement and the
Operative Documents;
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(b) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this Agreement and the
Operative Documents requires such qualification;
(c) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Sponsor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with Trust C and the Sponsor has duly authorized such sale and
assignment and deposit to Trust C by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Sponsor by all necessary corporate action. The Sponsor has duly executed
this Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Sponsor enforceable against the Sponsor, in accordance with
its terms.
(d) To the best knowledge of the Sponsor, no consent, license, approval
or authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Operative
Documents, except for such as have been obtained, effected or made;
(e) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
by-laws of the Sponsor, or any material indenture, agreement or other instrument
to which the Sponsor is a party or by which it is bound; nor result in the
creation or imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to the Operative Documents); nor violate any law or, to the best of the
Sponsor's knowledge, any order, rule or regulation applicable to the Sponsor of
any court or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Sponsor or its
properties; and
(f) There are no proceedings or investigations pending or, to its
knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Operative Documents, (B) seeking to prevent the issuance
of the Certificates or the Class C Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Documents,
(C) seeking any determination or ruling that might materially and adversely
affect its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of the Operative Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Class C Notes or the Certificates.
SECTION 2.11 Federal Income Tax Allocations. In the event that Trust C
is treated as a partnership for Federal income tax purposes, net income of Trust
C for any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership percentage of principal amount of Certificates
on such date.
Net losses of Trust C, if any, for any month as determined for Federal
income tax purposes (and each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated among the
Certificateholders as of the Record Date in proportion to their ownership
percentage of principal amount of Certificates on such Record Date until the
principal balance of the Certificates is reduced to zero. The Sponsor, as agent
on behalf of the Certificateholders, is authorized to modify the allocations in
this paragraph if necessary or appropriate, in its sole
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discretion, for the allocations to fairly reflect the economic income, gain or
loss to the Certificateholders, or as otherwise required by the Code.
SECTION 2.12 Covenants of the Sponsor. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Note Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Operative Documents;
(b) it shall not, for any reason, institute proceedings for Trust C to
be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against Trust C, or file a petition seeking
or consenting to reorganization or relief under any applicable federal or state
law relating to the bankruptcy of Trust C, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Trust C or a substantial part of the property of Trust C or cause
or permit Trust C to make any assignment for the benefit of creditors, or admit
in writing the inability of Trust C to pay its debts generally as they become
due, or declare or effect a moratorium on the debt of Trust C or take any action
in furtherance of any such action;
(c) it shall obtain from each counterparty to each Operative Document
to which it or Trust C is a party and each other agreement entered into on or
after the date hereof to which it or Trust C is a party, an agreement by each
such counterparty that prior to the occurrence of the event specified in Section
9.1(e) such counterparty shall not institute against, or join any other Person
in instituting against, it or Trust C, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Covenants of the Certificateholders. Each
Certificateholder agrees:
(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of Trust C, the Owner Trustee, the Note Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of Trust C, if any, and agree that, if requested by Trust C, it will sign
such federal income tax information return in its capacity as holder of an
interest in Trust C. Each Certificateholder also hereby agrees that in its tax
returns it will not take any position inconsistent with those taken in any tax
returns that may be filed by Trust C;
(c) if such Certificateholder is other than an individual or other
entity holding its Certificate through a broker who reports securities sales on
Form 1099-B, to notify the Owner Trustee
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of any transfer by it of a Certificate in a taxable sale or exchange, within 30
days of the date of the transfer; and
(d) until the completion of the events specified in Section 9.1(e), not
to, for any reason, institute proceedings for Trust C or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Trust C, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Sponsor or
Trust C or a substantial part of its property, or cause or permit the Sponsor or
Trust C to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
Except as provided in this Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.12, 8.2 or elsewhere herein.
SECTION 2.14 Investment Company. Neither the Sponsor nor any
Certificateholders shall take any action that would cause the Trust to become an
"Investment Company" required to register under the Investment Company Act of
1940, as amended.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of Trust C by the
contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of Trust C, to the Sponsor, one or more Certificates representing
in the aggregate a 100% interest in Trust C, and the Sponsor shall direct that
such Certificate(s) on the Certificate Register be registered in the name of
Holding Trust. Accordingly, Holding Trust shall initially be the sole
beneficiary of Trust C. Such Certificate(s) are duly authorized, validly issued,
and entitled to the benefits of this Agreement. For so long as Holding Trust
shall own such 100% interest in Trust C, Holding Trust shall be the sole
beneficial owner of Trust C.
SECTION 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of Trust C by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of Trust
C, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. Subject to Section 2.13(d), a transferee of a Certificate shall
become a Certificateholder, and shall be entitled to the rights and subject to
the obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
SECTION 3.3 Authentication of Certificates. Concurrently with the
initial sale of the Mortgage Loans to Trust C pursuant to the Trust C Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate, to be
executed on behalf of Trust C, authenticated and delivered to or upon the
written order of the Sponsor, signed by its chairman of the board, its president
or any vice president, its treasurer or any assistant treasurer without further
corporate action by the Sponsor, in
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authorized denominations. No Certificate shall entitle its holder to any benefit
under this Agreement, or shall be valid for any purpose, unless there shall
appear on such Certificate a certificate of authentication substantially in the
form set forth in Exhibit A, executed by the Owner Trustee, by manual signature;
such authentication shall constitute conclusive evidence that such Certificate
shall have been duly authenticated and delivered hereunder. All Certificates
shall be dated the date of their authentication.
SECTION 3.4 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and the Note Insurer such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of Trust C shall execute and
the Owner Trustee shall 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 denomination. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in Trust C, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Except as otherwise
stated herein, every Person by virtue of becoming a Certificateholder in
accordance with this Agreement and the rules and regulations of the Certificate
Registrar shall be deemed to be bound by the terms of this Agreement. Prior to
due presentation of a Certificate for registration of transfer, the Owner
Trustee, the Certificate Registrar and the Note Insurer and any agent of the
Owner Trustee, the Certificate Registrar and the Note Insurer, may treat the
Person in whose name any Certificate shall be registered in the Certificate
Register as the owner of such Certificate for the purpose of receiving
distributions pursuant to the Trust C Sale and Servicing Agreement and the Trust
C Indenture and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar or the Note Insurer nor any agent of the
Owner Trustee, the Certificate Registrar or the Note Insurer shall be bound by
any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Sponsor or the Note Insurer, within 15 days after receipt by the Owner
Trustee of a request therefor from such Person in writing, a list, of the names
and addresses of the Certificateholders as of the most recent Record Date. If
three or more Certificateholders or one or more Certificateholders evidencing
not less than 25% by Percentage Interest apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the
Master Servicer, the Owner Trustee or the Note Insurer or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
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SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Note Insurer of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any entity whose underlying assets include assets of a plan described in
(i) or (ii) plan assets by reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding its beneficial ownership interest in
its Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
SECTION 3.10 Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a 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. Except for the initial issuance of the Certificate to Holding
Trust and its initial transferee, the Owner Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Owner Trustee and the Note Insurer certifying to
the Owner Trustee and the Note Insurer the facts surrounding such transfer,
which investment letter shall not be an expense of the Owner Trustee or the Note
Insurer or (ii) if the investment letter is not delivered, a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Owner
Trustee, the Note Insurer and the Sponsor that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor from said Act or is being made pursuant to said Act, which Opinion of
Counsel shall not be an expense of the Owner Trustee, the Note Insurer or the
Sponsor. The Certificateholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Sponsor, the Owner Trustee and the Note Insurer
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.
(c) The Certificates and any interest therein shall not be transferred
except upon satisfaction of the following conditions precedent: (i) the Person
that acquires a Certificate shall (A) be organized and existing under the laws
of the United States of America or any state thereof or the District of
Columbia; (B) expressly assume, by an agreement supplemental hereto, executed
and delivered to the Owner Trustee, the performance of every covenant and
obligation of the Sponsor hereunder except for the covenants and obligations
contained in Sections 3.1, 3.3, 3.4 of the Trust C Sale and Servicing Agreement,
and Sections 2.10, 2.12 or 8.2 of this Agreement, Sections; (ii) the person that
acquires a Certificate shall deliver to the Owner Trustee and the Note Insurer
an Officer's Certificate stating that such transfer and such supplemental
agreement comply with this Section 3.10 and that all conditions precedent
provided by this subsection 3.10 have been complied with and an Opinion of
Counsel stating that such transfer and such supplemental agreement comply with
this Section 3.10 and that all conditions precedent provided by this Section
3.10 have been complied with, and the Owner Trustee may conclusively rely on
such Officer's Certificate, shall have no duty to make inquiries with regard to
the matters set forth therein and shall incur no liability in so relying; (iii)
the person that acquires a Certificate shall deliver to the Owner Trustee and
the Note Insurer a letter from each Rating Agency
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confirming that its rating of the Class C Notes, after giving effect to such
transfer, will not be reduced or withdrawn without regard to the Trust C Note
Policy; (iv) the person that acquires a Certificate shall deliver to the Owner
Trustee and the Note Insurer an Opinion of Counsel to the effect that (a) such
transfer will not adversely affect the treatment of the Class C Notes after such
transfer as debt for federal and applicable state income tax purposes, (b) such
transfer will not result in Trust C being subject to tax at the entity level for
federal or applicable state tax purposes, (c) such transfer will not have any
material adverse impact on the federal or applicable state income taxation of a
Class C Noteholder and (d) such transfer will not result in the arrangement
created by this Agreement or any "portion" of the Trust, being treated as a
taxable mortgage pool as defined in Section 7701(i) of the Code; (v) all filings
and other actions necessary to continue the perfection of the interest of Trust
C in the Mortgage Loans and the other property conveyed hereunder shall have
been taken or made. Notwithstanding the foregoing, the requirement set forth in
subclause (i)(A) of this Section 3.10 shall not apply in the event the Owner
Trustee and the Note Insurer shall have received a letter from each Rating
Agency confirming that its rating of the Class C Notes, after giving effect to a
proposed transfer to a Person that does not meet the requirement set forth in
subclause (i)(A), shall not be reduced or withdrawn without regard to the Trust
C Note Policy. Notwithstanding the foregoing, the requirements set forth in this
paragraph (b) shall not apply to the initial issuance of the Certificates to the
Holding Trust and its initial transferee.
(d) Except for the initial issuance of the Certificates to Holding
Trust and its initial transferee, no transfer of a Certificate shall be made
unless the Owner Trustee shall have received a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Owner Trustee, to the effect that such transferee is not a
Benefit Plan and is not acting on behalf of or using the assets of a Benefit
Plan, which representation letter shall not be an expense of the Owner Trustee.
(e) No transfer or pledge of the Certificates shall result in more than
98 other holders of Certificates.
SECTION 3.11 Acceptance of Obligations. The Sponsor agrees to be bound
by and to perform all the duties of the Sponsor set forth in this Agreement.
SECTION 3.12 Payments on Certificates. The Certificateholders will be
entitled to distributions on each Payment Date, as provided in the Trust C
Indenture.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the election by Trust C to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Holders);
(b) the amendment of the Trust C Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
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(c) the amendment of the Trust C Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(d) except pursuant to Section 7.14 of the Trust C Sale and Servicing
Agreement, the amendment, change or modification of the Trust C Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially adversely affect
the interests of the Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to Certain
Matters. (a) The Owner Trustee shall not have the power, except upon the
direction of the Note Insurer or in the event that a Note Insurer Default shall
have occurred and is continuing, the Security Majority in accordance with the
Operative Documents, to (i) remove the Master Servicer under the Trust C Sale
and Servicing Agreement or (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Trust C
Indenture. The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the Note Insurer or the Class
C Noteholders, as the case may be, and the furnishing of indemnification
satisfactory to the Owner Trustee by the Certificateholders.
(b) Upon the written request of any Certificateholder (a "Proposer"),
the Owner Trustee shall distribute promptly to all Certificateholders any
request for action or consent of Certificateholders submitted by such Proposer.
The Owner Trustee shall provide a reasonable method for collecting responses to
such request and shall tabulate and report the results thereof to the
Certificateholders and the Sponsor. The Owner Trustee shall have no
responsibility or duty to determine if any such proposed action or consent is
permitted under the terms of this Agreement or applicable law.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.
Until one year and one day following the day on which the Class C Notes have
been paid in full, the Owner Trustee shall not have the power to, and shall not,
commence any proceeding or other actions contemplated by Section 2.12(b)
relating to the Trust without the prior written consent of the Note Insurer
(unless a Note Insurer Default shall have occurred and is continuing) or upon a
Note Insurer Default, the Security Majority. Until one year and one day
following the day on which the Class C Notes have been paid in full, all amounts
due to the Note Insurer under the Insurance Agreement have been paid in full,
the Trust C Note Policy has terminated and the Indenture Trustee has surrendered
the Trust C Note Policy to the Note Insurer, the Owner Trustee shall not have
the power to, and shall not, commence any proceeding or other actions
contemplated by Section 2.12(b) relating to Trust C without the prior written
consent of all of the Certificateholders and the delivery to the Owner Trustee
by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that Trust C is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of Trust C or the Owner Trustee under this Agreement or any of the Operative
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than Holding Trust or its initial
transferee) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any
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Operative Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% by Percentage Interest shall have made written
request upon the Owner Trustee to institute such action, suit or proceeding in
its own name as Owner Trustee under this Agreement and shall have offered to the
Owner Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Owner
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding, and during such 30-day period no request or waiver inconsistent
with such written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5 Majority Control. No Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of Trust
C except as expressly provided in this Agreement. Except as otherwise expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing not less
than a majority interest in Trust C. Except as otherwise expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Certificateholders evidencing not less
than a majority interest in Trust C at the time of the delivery of such notice.
SECTION 4.6 Rights of Note Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Note Insurer (or if a Note Insurer Default shall have occurred and is
continuing, the Security Majority) the Owner Trustee shall not (i) remove the
Master Servicer, (ii) initiate any claim, suit or proceeding by Trust C or
compromise any claim, suit or proceeding brought by or against Trust C, other
than with respect to the enforcement of any Mortgage Loan or any rights of Trust
C thereunder, (iii) authorize the merger or consolidation of Trust C with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Trust C Indenture), (iv) amend the Certificate of Trust or
(v) amend this Agreement in accordance with Section 11.1 of this Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1 Accounting and Records to the Class C Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Sponsor shall
(a) maintain (or cause to be maintained) the books of Trust C on a calendar year
basis on the accrual method of accounting, including, without limitation, the
allocations of net income under Section 2.11 hereof, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1, if applicable) to enable each Certificateholder to prepare its
Federal and state income tax returns, (c) file or cause to be filed, if
necessary, such tax returns relating to Trust C (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections
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as may from time to time be required or appropriate under any applicable state
or Federal statute or rule or regulation thereunder so as to maintain Trust C's
characterization as a branch, or if applicable, as a partnership, for Federal
income tax purposes and (d) collect or cause to be collected any withholding tax
as described in and in accordance with Section 6.1(a)(ii) of the Trust C Sale
and Servicing Agreement with respect to income or distributions to
Certificateholders and the appropriate forms relating thereto. The Owner Trustee
or the Master Servicer, as the case may be, shall make all elections pursuant to
this Section as directed in writing by the Sponsor. The Owner Trustee shall sign
all tax information returns presented to it in final execution form, if any,
filed pursuant to this Section 5.1 and any other returns as may be required by
law, and in doing so shall rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Sponsor or the Master
Servicer. The Owner Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to the
Mortgage Loans. The Owner Trustee shall not make the election provided under
Section 754 of the Code.
SECTION 5.2 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that Trust C is
characterized as a partnership, the Owner Trustee shall sign on behalf of Trust
C the tax returns of Trust C presented to it in final execution form, unless
applicable law requires a Certificateholder to sign such documents, in which
case such documents shall be signed by the Sponsor, as agent, on behalf of the
Certificateholders.
(b) In the event that Trust C is characterized as a partnership, each
Certificateholder shall be the "tax matters partner" of Trust C pursuant to the
Code.
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which Trust C is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Operative Documents to which Trust C is named as a
party and any amendment thereto, in each case, in such form as the Sponsor shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and
on behalf of Trust C, to direct the Indenture Trustee to authenticate and
deliver Class C Notes in the aggregate principal amount of $650,000,000. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of Trust C pursuant to the Operative
Documents. The Owner Trustee is further authorized from time to time to take
such action as the Instructing Party recommends with respect to the Operative
Documents so long as such activities are consistent with the terms of the
Operative Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer Trust C in the interest of the
Holders, subject to the Operative Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Operative Documents to the extent the Master Servicer has agreed in
the Trust C Sale and Servicing Agreement to perform any act or to discharge any
duty of Trust C or the Owner Trustee hereunder or under any Operative Document,
and the Owner Trustee shall not be liable for the default or failure of the
Master Servicer to carry out its obligations under the Trust C Sale and
Servicing Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the
Note Insurer (so long as a Note Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if a Note Insurer Default shall have
occurred and be continuing) (the "Instructing
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Party") shall have the exclusive right to direct the actions of the Owner
Trustee in the management of Trust C, so long as such instructions are not
inconsistent with the express terms set forth herein or in any Operative
Document. The Instructing Party shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Operative Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Operative Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Operative Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Operative Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Instructing Party received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Operative Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Operative Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Operative
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for Trust C or to
record this Agreement or any Operative Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
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SECTION 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Operative Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of Trust C set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in Trust
C becoming taxable as a corporation or a publicly traded partnership for Federal
income tax purposes. The Certificateholders shall not direct the Owner Trustee
to take action that would violate the provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts
the trust hereby created and agrees to perform its duties hereunder with respect
to such trust but only upon the terms of this Agreement. The Owner Trustee also
agrees to disburse all monies actually received by it constituting part of the
Owner Trust Estate upon the terms of the Operative Documents and this Agreement.
The Owner Trustee shall not be answerable or accountable hereunder or under any
Operative Document under any circumstances, except (i) for its own willful
misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment,
not constituting gross negligence, made by a Responsible Officer of the Owner
Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it if such action or omission is in accordance
with the instructions of the Instructing Party, the Sponsor, the Master Servicer
or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the Class C Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Sponsor or for the form, character, genuineness, sufficiency, value or validity
of any of the Owner Trust Estate or for or in respect of the validity or
sufficiency of the Operative Documents, other than the certificate of
authentication on the
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Certificates, and the Owner Trustee shall in no event assume or incur any
liability, duty or obligation to the Sponsor, the Note Insurer, Indenture
Trustee, any Certificateholder, other than as expressly provided for herein and
in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Sponsor, the Note Insurer, the Indenture Trustee, the Issuer, or the
Master Servicer under any of the Operative Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations under
this Agreement or the Operative Documents that are required to be performed by
the Sponsor under this Agreement, by the Indenture Trustee under the Trust C
Indenture or the Master Servicer under the Trust C Sale and Servicing Agreement;
and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Operative Document, at the request, order or direction of the
Instructing Party or any of the Certificateholders, unless such Instructing
Party or Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Operative Document shall not be construed as a duty, and the Owner Trustee shall
not be answerable for other than its negligence, bad faith or willful misconduct
in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Operative Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants, in its individual capacity, to the Sponsor and the
Holders (which shall have relied on such representations and warranties in
issuing the Trust C Note Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
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president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and according to such opinion not contrary to this Agreement or any
Operative Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Operative Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Sponsor and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Class C Notes,
or of any Mortgage Loan or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage Loan, or the perfection and priority
of any security interest created by any Mortgage Loan or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of the
Owner Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Class C Noteholders under the
Trust C Indenture, including, without limitation: the existence, condition and
ownership of any Mortgage Loan; the existence and enforceability of any
insurance thereon; the existence and contents of any Mortgage Loan on any
computer or other record thereof; the validity of the assignment of any Mortgage
Loan to Trust C or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Sponsor, the Master Servicer or any other Person with any
warranty or representation made under any Operative Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the
name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates and Class C Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Class C Notes and may deal with the Sponsor, the
Indenture Trustee and the Master Servicer in banking transactions with the same
rights as it would have if it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to be made
by the Owner Trustee under this Agreement or any of the Operative Documents to
which Trust C or the Owner Trustee is a party shall be made only from the income
and proceeds of the Owner Trust Estate and only to the extent that Trust C shall
have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Wilmington Trust Company, or any
successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the Operative Documents to which
Trust C or the Owner Trustee is a party.
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SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Wilmington Trust Company or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware ; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Wilmington Trust Company (or any successor
thereto); or (iii) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Sponsor and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder and under the
Operative Documents.
SECTION 8.2 Indemnification. The Sponsor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee (in its individual and trust
capacities) and its officers, directors, successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may (in its trust or individual capacities) at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Operative Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Sponsor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section and the rights under Section 8.1 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Sponsor which approval shall not be unreasonably
withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Operative Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for Trust C that all obligations
of Trust C to the Owner Trustee individually or as Owner Trustee for Trust C
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Certificateholder.
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ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement and
Trust C shall terminate and be of no further force or effect upon the later of
(i) the maturity or other liquidation of the last Mortgage Loan (including the
redemption by the Certificateholders at its option of the corpus of Trust C as
described in Section 10.1(b) of the Trust C Indenture) and the subsequent
distribution of amounts in respect of such Mortgage Loans as provided in the
Operative Documents or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Note Insurer of all amounts payable or reimbursable to it pursuant to the Trust
C Sale and Servicing Agreement and the Insurance Agreement; provided, however,
that the rights to indemnification under Section 8.2 and the rights under
Section 8.1 shall survive the termination of Trust C. The Master Servicer shall
promptly notify the Owner Trustee and the Note Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or Trust C, nor (y) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
Trust C or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Sponsor nor any other
Certificateholder shall be entitled to revoke or terminate Trust C.
(c) Notice of any termination of Trust C, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Indenture Trustee for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such redemption from the Master Servicer
given pursuant to Section 10.1 of the Trust C Sale and Servicing Agreement,
stating (i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Payment Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the Indenture Trustee therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Indenture Trustee at the time such
notice is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Indenture Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Payment Date pursuant to
Section 8.7(b)(xx) of the Trust C Indenture.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in Trust C after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Certificateholders shall look
solely to the Sponsor for payment.
(d) Any funds remaining in Trust C after funds for final distribution
have been distributed or set aside for distribution shall be distributed by the
Owner Trustee to the Sponsor.
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(e) Upon the winding up of Trust C and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poors or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the Note Insurer in its sole discretion.
If such corporation shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Sponsor, the Note Insurer and the Master
Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly
appoint a successor Owner Trustee, meeting the qualifications set forth in
Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Note Insurer by either of the
Rating Agencies. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Note Insurer may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing) may remove the Owner Trustee. If a majority of the
Certificateholders shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Sponsor shall promptly appoint a successor
Owner Trustee, meeting the qualifications set forth in Section 10.1 herein, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed, one copy to the Note Insurer
and one copy to the successor Owner Trustee and the Sponsor shall pay all fees
owed to the outgoing Owner Trustee, if not previously paid by Trust C.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all reasonable fees and expenses
owed to the outgoing Owner Trustee.
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Notwithstanding any other provision of this Agreement, and in addition
to any other method of removal of the Owner Trustee contained herein, upon a
proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in Trust C, the
Owner Trustee may be removed as Owner Trustee , subject to the consent of the
Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), which consent is not to be unreasonably withheld. In the event the
Owner Trustee is removed pursuant to this paragraph, the provisions of this
Agreement, including Article X herein, shall apply as if the Owner Trustee had
resigned hereunder.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Sponsor, the Master Servicer, the Note Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Sponsor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Master Servicer shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Indenture Trustee and the Class C
Noteholders. If the Master Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Master Servicer.
The successor Owner Trustee shall file an amendment to the Certificate
of Trust with the Secretary of State reflecting the name and principal place of
business of such successor Owner Trustee in the State of Delaware.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee 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 Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner 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 Owner Trust Estate or any Mortgaged Property may at the time be located,
the Master Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Note Insurer to act as co-trustee, jointly
with the Owner Trustee, or separate trustee or separate trustees, of all or any
part of the Owner Trust Estate, and to vest in such Person, in such capacity,
such title to Trust C, or any part thereof, and, subject to the other provisions
of this Section, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Owner Trustee
24
<PAGE> 29
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, the Owner Trustee subject to the approval of the Note Insurer (which
approval shall not be unreasonably withheld) shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner 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 Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner 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 Trust C 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
Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Master Servicer and the Owner 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 Owner 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 Article. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Master Servicer and the Note Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be
amended by the Sponsor and the Owner Trustee, with the prior written consent of
the Note Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), without the consent of any of the Class C Noteholders or
Certificateholders (i) to cure any ambiguity or defect or (ii) to correct,
25
<PAGE> 30
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel which may be based
upon a certificate of the Master Servicer, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time, with the
prior written consent of the Note Insurer which consent shall not be
unreasonably withheld (so long as no Note Insurer Default shall have occurred
and is continuing) by the Sponsor and the Owner Trustee, with prior written
notice to the Rating Agencies, and, to the extent such amendment materially and
adversely affects the interests of the Class C Noteholders, with the consent of
the Class C Noteholders evidencing not less than a majority of the Outstanding
amount of the Class C Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in Trust C (which consent of any
Holder of a Certificate or Class C Note given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate or Class C
Note and of any Certificate or Class C Note issued upon the transfer thereof or
in exchange thereof or in lieu thereof whether or not notation of such consent
is made upon the Certificate or Class C Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Class C
Noteholders or the Certificateholders; provided, however, that, subject to the
express rights of the Note Insurer under the Operative Documents, no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Mortgage Loans or
distributions that shall be required to be made for the benefit of the Class C
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Class C Notes and the Certificates, the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all the outstanding Class C Notes and holders of all outstanding
Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of Certificateholders, the
Class C Noteholders or the Indenture Trustee pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Certificateholders provided
for in this Agreement or in any other Operative Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe. Promptly after
the execution of any amendment to the Certificate of Trust, the Owner Trustee
shall cause the filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
26
<PAGE> 31
SECTION 11.3 Limitations on Rights of Others. Except for Section 11.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to the
extent expressly provided herein, the Note Insurer, the Indenture Trustee and
the Class C Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor,
addressed to Advanta Mortgage Conduit Services, Inc., Welsh & McKean Roads,
Spring House, Pennsylvania 19477; if to the Note Insurer, addressed to, Ambac
Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Thomas Adams and Ted Molin, Telecopy No.: (212) 363-1459; or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Assignments; Note Insurer. (a) This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Note Insurer for so long as a Note Insurer Default shall not have
occurred and be continuing. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement which confer rights upon the Note
Insurer shall be for the benefit of and run directly to the Note Insurer, and
the Note Insurer shall be entitled to rely on and enforce such covenants,
subject, however, to the limitations on such rights provided in this Agreement
and the Operative Documents. The Note Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Trust
C Note Policy) upon delivery of a written notice to the Owner Trustee.
SECTION 11.8 No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenants
and agrees that they will not at any time institute against the Sponsor, or join
in any institution against the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Class C Notes, this Agreement
or any of the Operative Documents.
27
<PAGE> 32
SECTION 11.9 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in Trust C only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Note Insurer or any Affiliate thereof and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates or the Operative
Documents.
SECTION 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12 Master Servicer. The Master Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of Trust C all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of Trust C or Owner Trustee to prepare, file or deliver
pursuant to the Operative Documents. Upon written request, the Owner Trustee
shall execute and deliver to the Master Servicer a limited power of attorney
appointing the Master Servicer the Trust C's agent and attorney-in-fact to
prepare, or cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.
28
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY, as Owner Trustee
By /s/ Emmet Harmon
------------------------------------
Name: Emmet Harmon
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By /s/ Mark Dunsheath
------------------------------------
Name: Mark Dunsheath
Title: Vice President
29
<PAGE> 34
Exhibit A
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE
EXTENT DESCRIBED HEREIN AND IN THE TRUST C TRUST AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE,
TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 3.10 OF THE TRUST C TRUST AGREEMENT REFERRED TO
HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE OWNER TRUSTEE SHALL
HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH
CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
OWNER TRUSTEE, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT A BENEFIT PLAN
AND NOT ACTING ON BEHALF OF OR USING THE ASSETS OF A BENEFIT PLAN, WHICH
REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE.
NO TRANSFER OF A 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. EXCEPT FOR THE INITIAL ISSUANCE OF THE
CERTIFICATES TO HOLDING TRUST AND ITS INITIAL TRANSFEREE, THE OWNER
TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE
AND THE NOTE INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE NOTE INSURER
THE FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE
AN EXPENSE OF THE OWNER TRUSTEE OR THE NOTE INSURER OR (ii) IF THE
INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF COUNSEL
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE,
THE NOTE INSURER AND THE SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT
TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS
THEREFOR, FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE, THE NOTE
INSURER OR THE SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO EFFECT
SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR AND
THE NOTE INSURER 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.
<PAGE> 35
THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED EXCEPT
UPON SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON
THAT ACQUIRES A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING UNDER THE
LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE OR THE DISTRICT OF
COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL
HERETO, EXECUTED AND DELIVERED TO THE OWNER TRUSTEE, THE PERFORMANCE OF
EVERY COVENANT AND OBLIGATION OF THE SPONSOR UNDER THE TRUST C TRUST
AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS CONTAINED IN SECTIONS
3.1, 3.3, AND 3.4 OF THE TRUST C SALE AND SERVICING AGREEMENT, AND
SECTIONS 2.10, 2.12 OR 8.2 OF THE TRUST C TRUST AGREEMENT; (II) THE PERSON
THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE
NOTE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH
SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST C TRUST
AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF
THE TRUST C TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF
COUNSEL STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY
WITH SECTION 3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION
3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY
ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH
REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO
RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE
OWNER TRUSTEE AND THE NOTE INSURER A LETTER FROM EACH RATING AGENCY
CONFIRMING THAT ITS RATING OF THE CLASS C NOTES, AFTER GIVING EFFECT TO
SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE
TRUST C NOTE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL
DELIVER TO THE OWNER TRUSTEE AND THE NOTE INSURER AN OPINION OF COUNSEL TO
THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT
OF THE CLASS C NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND
APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN
TRUST C BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE
STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE
IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A CLASS C
NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT
CREATED BY THE TRUST C TRUST AGREEMENT OR ANY "PORTION" OF TRUST A, BEING
TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(I) OF THE
CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE
PERFECTION OF THE INTEREST OF TRUST C IN THE MORTGAGE LOANS AND THE OTHER
PROPERTY CONVEYED UNDER THE TRUST C TRUST AGREEMENT SHALL HAVE BEEN TAKEN
OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE> 36
ADVANTA MORTGAGE LOAN TRUST
1998-4C CERTIFICATE
Percentage Interest: 100%
Date of Cut-Off Date:
November 1, 1998
First Payment Date: Issue Date: November 24, 1998
December 28, 1998
No. 1
---------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by:
------------------------------------
Authenticating Agent
Trust C was created pursuant to a Trust Agreement dated as of November
1, 1998 (the "Trust Agreement"), between the Sponsor and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated
as Advanta Mortgage Loan Trust 1998-4C Certificates (herein called the
"Certificates"). Also issued under the Trust C Indenture dated as of November 1,
1998, among Trust C and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee") are Class C Notes (the "Class C Notes"). These
Certificates are issued under and are subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of Trust C includes a pool of fixed-rate mortgage loans
secured by first or second deeds of trust or Mortgages on primarily one-to-four
family residential properties.
Under the Trust Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business Day
(the "Payment Date"), commencing on December 28, 1998, to the Person in whose
name this Certificate is registered at the close of business on
<PAGE> 37
the Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Trust C Sale and Servicing
Agreement, the Trust C Indenture and the Trust Agreement, as applicable.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Trust C will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, Trust C will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
Trust A. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
Trust C or the Sponsor, or join in any institution against Trust C or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Operative
Documents.
Distributions on this Certificate will be made as provided in the Trust
C Sale and Servicing Agreement and the Trust C Indenture by the Indenture
Trustee by wire transfer or check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise provided
in the Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Trust C Sale and Servicing Agreement or be valid for any
purpose.
<PAGE> 38
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Trust C and not in
its individual capacity, has caused this Certificate to be duly executed.
ADVANTA MORTGAGE LOAN TRUST 1998-4C
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner
Trustee
Dated: November 24, 1998
By: _________________________________________
Name:
Title:
<PAGE> 39
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in,
the Originators, the Sponsor, the Master Servicer, the Note Insurer, the Owner
Trustee or any Affiliates of any of them and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Trust C Indenture or the Operative
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Mortgage Loans, as more specifically set forth
herein, in the Trust C Sale and Servicing Agreement and in the Trust C
Indenture. A copy of each of the Trust C Sale and Servicing Agreement and the
Trust Agreement may be examined during normal business hours at the principal
office of the Sponsor, and at such other places, if any, designated by the
Sponsor, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Sponsor and the rights of the Certificateholders under the Trust Agreement at
any time by the Sponsor and the Owner Trustee with the prior written consent of
the Note Insurer and with the consent of the holders of the Notes and the
Certificates evidencing not less than a majority of the outstanding Notes and
the Certificates. Any such consent by the holder of this Certificate shall be
conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates (other than the Sponsor or the Note Insurer).
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in Trust C
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to Advanta Mortgage Holding Trust
1998-4, the Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 or integral multiples of $1,000 in excess
thereof. As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates in
authorized denominations evidencing the same aggregate denomination, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Note Insurer and any
agent of the Owner Trustee, the Certificate Registrar, the Note Insurer or the
Note Insurer may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and none of the Owner Trustee, the
Certificate Registrar, the Note Insurer nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
Trust C created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement, the
Trust C Indenture and the Trust C Sale and Servicing Agreement and the
disposition of all property held as part of Trust A. The Certificateholder may
at its
<PAGE> 40
option elect to redeem the corpus of Trust C at a price specified in the Trust C
Sale and Servicing Agreement, and after such redemption of the Mortgage Loans
and other property of Trust C , all proceeds will be distributed to the
Certificateholders; however, the Certificateholder's right to elect to redeem is
exercisable, subject to certain restrictions, only on any Payment Date on or
after the Payment Date immediately prior to which the Class C Note Principal
Balance is less than 10% of the Original Class C Note Principal Balance and all
amounts due and owing to the Note Insurer for unpaid premiums and unreimbursed
draws on the Trust C Note Policy and all other amounts due and owing to the Note
Insurer pursuant to the Insurance Agreement, together with interest thereon as
provided under the Insurance Agreement, have been paid.
The recitals contained herein shall be taken as the statements of the
Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Trust C Sale and Servicing Agreement or be
valid for any purpose.
<PAGE> 41
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- ----------------------------- Attorney to transfer said Certificate on the
books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
*
-------------------------------------------
Signature Guaranteed:
*
-------------------------------------------
- --------------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
<PAGE> 42
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA MORTGAGE LOAN TRUST 1998-4C
This Certificate of Trust of Advanta Mortgage Loan Trust 1998-4C
("Trust C"), dated as of November 20, 1998, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is Advanta
Mortgage Loan Trust 1998-4C.
2. Delaware Trust. The name and business address of the Owner Trustee
of Trust C in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001. Attn:
Corporate Trust Administration.
3. This Certificate of Trust will be effective November 20, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of Trust C,
has executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as Owner
Trustee of Trust C.
By:_________________________________
Name:
Title:
<PAGE> 1
Exhibit 4.3.1
TRUST A
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST 1998-4A,
as Issuer,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<CAPTION>
Page
<S> <C>
Parties................................................................................................. 1
Recitals................................................................................................ 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION............................................................ 2
Section 1.1. Definitions.......................................................................... 2
Section 1.2. Use of Words and Phrases............................................................. 15
Section 1.3. Captions; Table of Contents.......................................................... 15
Section 1.4. Opinions............................................................................. 15
ARTICLE II CONVEYANCE OF MORTGAGE LOANS................................................................. 15
Section 2.1. Conveyance of the Initial Mortgage Loans............................................. 15
Section 2.2. Acceptance by the Issuer; Certain Substitutions of Mortgage Loans;
Certification by Indenture Trustee................................................. 18
Section 2.3. Cooperation Procedures............................................................... 19
Section 2.4. Conveyance of the Subsequent Mortgage Loans.......................................... 19
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor................................. 22
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER............ 23
Section 3.1. Representations and Warranties of the Sponsor........................................ 23
Section 3.2. Representations and Warranties of the Master Servicer............................... 24
Section 3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage
Loans.............................................................................. 26
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage
Loans In Certain Situations........................................................ 28
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS............................................... 29
Section 4.1. Master Servicer and Sub-Servicers.................................................... 29
Section 4.2. Collection of Certain Mortgage Loan Payments......................................... 30
Section 4.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers................... 31
Section 4.4. Successor Sub-Servicers.............................................................. 31
Section 4.5. Liability of Master Servicer......................................................... 31
Section 4.6. No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the
Class A Noteholders................................................................ 31
Section 4.7. Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee............ 32
Section 4.8. Trust A Principal and Interest Account............................................... 32
Section 4.9. Delinquency Advances, Compensating Interest and Servicing Advances................... 34
Section 4.10. Purchase of Mortgage Loans.......................................................... 35
Section 4.11. Maintenance of Insurance............................................................ 35
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements......................... 36
Section 4.13. Realization Upon Defaulted Mortgage Loans........................................... 37
Section 4.14. Indenture Trustee to Cooperate; Release of Files.................................... 37
Section 4.15. Servicing Compensation.............................................................. 39
Section 4.16. Annual Statement as to Compliance................................................... 39
Section 4.17. Annual Independent Certified Public Accountants' Reports............................ 39
Section 4.18. Access to Certain Documentation and Information Regarding the Mortgage Loans........ 40
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.19. Assignment of Agreement............................................................. 40
ARTICLE V SERVICING TERMINATION......................................................................... 40
Section 5.1. Events of Servicer Termination....................................................... 40
Section 5.2. Inspections by the Note Insurer and the Indenture Trustee; Errors and
Omissions Insurance................................................................ 45
Section 5.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer....... 45
Section 5.4. Notices of to Class A Noteholders.................................................... 45
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER................................................. 46
Section 6.1. Administrative Duties with Respect to the Indenture.................................. 46
Section 6.2. Records.............................................................................. 47
Section 6.3. Additional Information to be Furnished to the Issuer................................. 47
ARTICLE VII MISCELLANEOUS............................................................................... 48
Section 7.1. Compliance Certificates and Opinions................................................. 48
Section 7.2. Form of Documents Delivered to the Indenture Trustee................................. 48
Section 7.3. Acts of Class A Noteholders.......................................................... 49
Section 7.4. Notices, etc., to Indenture Trustee.................................................. 49
Section 7.5. Notices and Reports to Class A Noteholders; Waiver of Notices........................ 50
Section 7.6. Rules by Indenture Trustee and Sponsor............................................... 50
Section 7.7. Successors and Assigns............................................................... 50
Section 7.8. Severability......................................................................... 50
Section 7.9. Benefits of Agreement................................................................ 50
Section 7.10. Legal Holidays...................................................................... 51
Section 7.11. Governing Law....................................................................... 51
Section 7.12. Counterparts........................................................................ 51
Section 7.13. Usury............................................................................... 51
Section 7.14. Amendment........................................................................... 51
Section 7.15. The Note Insurer.................................................................... 52
Section 7.16. Notices............................................................................. 52
Section 7.17. Limitation of Liability............................................................. 54
</TABLE>
ii
<PAGE> 4
SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Contents of Mortgage Loan File
EXHIBIT B -- Form of Certificate Re: Mortgage Loans Prepaid in Full
EXHIBIT C -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT D -- Form of Certification
EXHIBIT E -- Form of Delivery Order
EXHIBIT F -- Form of Monthly Report
EXHIBIT G -- Form of Master Servicer's Trust Receipt
EXHIBIT H -- Form of Subsequent Transfer Agreement
EXHIBIT I -- Form of Addition Notice
iii
<PAGE> 5
SALE AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE LOAN TRUST
1998-4A (the "Trust" or "Issuer"), dated as of November 1, 1998, by and among
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in its capacity
as sponsor of the Issuer (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 indenture trustee (the "Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of the Mortgage Loans
(as defined herein) originated by the Originators (as defined herein);
WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Issuer;
WHEREAS, the Issuer desires to purchase Subsequent Mortgage Loans (as
defined herein) to be originated by the Originators.
WHEREAS, the Sponsor has an agreement to purchase such Subsequent Mortgage
Loans from the Originators and is willing to sell such Subsequent Mortgage Loans
to the Issuer;
WHEREAS, the Master Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the trust estate; and
WHEREAS, Ambac Assurance Corporation (the "Note 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, the Issuer and the Indenture
Trustee hereby agree as follows:
<PAGE> 6
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. In addition, capitalized terms used herein and not
defined herein shall have their respective meanings as set forth in the
Indenture:
"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 Class A
Noteholders' reliance on the Master Servicer.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Issuer pursuant to Section 2.4(a) of this Agreement, a notice in
the form of Exhibit J hereto, which shall be given not later than five Business
Days prior to the related Subsequent Transfer Date, of the Sponsor's designation
of Subsequent Mortgage Loans to be sold to the Issuer and the aggregate Loan
Balance and the weighted average Coupon Rate of such Subsequent Mortgage Loans.
Such Addition Notice shall include an electronic data file in a form agreeable
to the Indenture Trustee, the Note Insurer and the Master Servicer.
"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 A 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 4.15 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.
"Agreement": This Trust A Sale and Servicing Agreement, as it may be
amended from time to time, and including the Exhibits and Schedules attached
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.
2
<PAGE> 7
"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 Indenture
Trustee, the Sponsor, the Issuer and the Master Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered on the Closing Date.
"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.
"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
Indenture Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Trust A Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 8.3 of the Indenture and maintained by
the Indenture Trustee.
"Class A Deficiency Amount": As defined in the Trust A Indenture.
"Class A Note": Any note designated as a "Class A Note" on the face
thereof.
"Class A Note Principal Balance": As of the Closing Date, $650,000,000. As
of any Payment Date with respect to the Class A Certificates, the Class A Note
Principal Balance as of the Closing Date less any amounts actually distributed
theretofore as principal thereon to the Class A Notes on all prior Payment
Dates.
"Class A Noteholders": The holders of the Class A Notes.
"Class B Note": Any note designated as a "Class B Note" on the face
thereof.
"Class C Note": Any note designated as a "Class C Note" on the face
thereof.
"Closing Date": November 24, 1998.
"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, the percentage equal to (a) the sum of (i) the remaining
principal balance, as of origination of the Second Mortgage Loan of the Senior
Lien note(s) relating to such Second Mortgage Loan and (ii) the Original
Principal Amount of the Note relating to such Second Mortgage Loan divided by
(b) the Appraised Value.
3
<PAGE> 8
"Compensating Interest": As defined in Section 4.9(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" code, the items listed on Exhibit A
hereto.
"Control Party": Until the last sentence of Section 7.15 hereof is
applicable and so long as no Note Insurer Default has occurred and is
continuing, the Note Insurer, and thereafter, the Indenture Trustee.
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Initial Mortgage Loans are
transferred and assigned to the Issuer, the opening of business, November 1,
1998.
"Definitive Notes": Class A Notes issued in definitive form without
coupons.
"Delinquency Advance": As defined in Section 4.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit E
hereto and delivered by the Issuer to the Indenture Trustee on the Closing Date
pursuant to Section 2.2 of the Trust A Indenture.
"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 the Trust A Principal
and Interest 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 or A or
better by Standard & Poor's and in the highest short-term rating category for
Moody's, and Standard & Poor's unless otherwise approved in writing by the
Indenture Trustee. The Note Insurer, Moody's and Standard & Poor'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 Indenture Trustee, the Note Insurer, Moody's and Standard &
Poor's and, in each case acting or designated
4
<PAGE> 9
by the Master Servicer as the depository institution for the Trust A Principal
and Interest Account; provided, however, that any such institution or
association shall have combined capital, surplus and undivided profits of at
least $100,000,000. Notwithstanding the foregoing, a Trust A Principal and
Interest 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 or BBB or better by Standard & Poor's if such institution
has trust powers and the Trust A Principal and Interest Account is held by such
institution in its corporate trust department.
"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
Note Insurer and the Indenture Trustee.
"Direct Participant" or "DTC Participant" means any broker-dealer, bank or
other financial institution for which the Depository holds Class A Notes from
time to time as a securities depository.
"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 2.1(b) hereof.
"Eligible Investments": Those investments so designated pursuant to
Section 8.9 of the Trust A Indenture.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"File": The documents delivered to the Indenture Trustee pursuant to
Section 2.1 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Advanta Mortgage File or Conduit Mortgage
File, as appropriate, pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a first priority
mortgage lien with respect to any Property.
"Indemnification Agreement": The Indemnification Agreement dated as of
November 24, 1998 between the Note Insurer and the Underwriter as may be amended
from time to time.
"Indenture 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 Indenture Trustee under this Agreement, and any successor
hereunder.
"Indenture Trustee's Fees": With respect to any Payment Date, the product
of (x) one-twelfth of 0.007% and (y) the aggregate Loan Balance of the Mortgage
Loans as of the beginning of the related Remittance Period.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in the Class A Notes.
5
<PAGE> 10
"Initial Mortgage Loans": The Mortgage Loans delivered by the Sponsor to
the Issuer on the Closing Date.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as of
November 24, 1998 among the Sponsor, the Indenture Trustee, the Master Servicer,
Trust A, Trust B, Trust C, and the Note 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.
"Issuer" or "Trust A": Advanta Mortgage Loan Trust 1998-4A, as created by
the Trust A Trust Agreement.
"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 Class A Notes 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.
"Liquidated Mortgage Loan": As defined in Section 4.13(b) hereof. A
Mortgage Loan which is purchased from the Issuer pursuant to Section 3.3, 3.4,
2.2(b) or 4.10 hereof is not a "Liquidated Mortgage 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 4.9 with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the Master
Servicer in connection with such Liquidated Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the outstanding
principal balance thereof as of the Cut-Off Date or Subsequent Cut-Off-Date, as
the case may be, less any related Principal Remittance Amounts relating to such
Mortgage Loan included in previous related Trust A Monthly Remittance Amounts
that were transferred by the Master Servicer or any Sub-servicer to the
Indenture Trustee for deposit in the Trust A Note Account; provided, however,
(x) that the Loan Balance for any Mortgage Loan which has become a Liquidated
Mortgage 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
Mortgage Loan, and at all times thereafter and (y) the Loan Balance "as of the
Cut-Off Date" for any Mortgage Loan originated during the period from the
Cut-Off Date to the Closing Date shall be the original Loan Balance thereof.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Issuer on a Remittance Date pursuant to Section 3.3, 3.4, 2.2(b) or 4.10
hereof, an amount equal to the Loan Balance of such Mortgage Loan as of the date
of purchase, plus one month's interest
6
<PAGE> 11
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, including Nonrecoverable Advances theretofore made with
respect to such Mortgage Loan and not subsequently recovered from the related
Mortgage Loan, (ii) all Delinquency Advances which the Master Servicer or any
Sub-servicer has theretofore failed to remit with respect to such Mortgage Loan
and (iii) any Reimbursement Amount relating to the Issuer.
"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 H 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 Indenture
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 Indenture 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).
"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 Loans": Such of the mortgage loans transferred and assigned to
the Issuer pursuant to Section 2.1(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
Issuer. Any mortgage loan which, although intended by the parties hereto to have
been, and which purportedly was, transferred and assigned to the Issuer by the
Sponsor, in fact was not transferred and assigned to the Issuer for any reason
whatsoever shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement. The term "Mortgage Loan" includes the terms "Initial Mortgage
Loan" and "Subsequent Mortgage Loan".
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through
7
<PAGE> 12
the date of liquidation relating to such Liquidated Mortgage Loan. In no event
shall Net Liquidation Proceeds with respect to any Liquidated Mortgage 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 Section 8.7 (b)(xvii) of the Indenture or Section 4.9, (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 promptly to the Note Insurer and the Indenture Trustee following such
determination would not be ultimately recoverable pursuant to Section
8.7(b)(xvii) of the Indenture or Section 4.9 or (c) any other advance identified
as a Nonrecoverable Advance in subsection 4.8(d).
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Note Account": The Note Account established in accordance with Section
8.3 of the Trust A Indenture and maintained by the Indenture Trustee.
"Note Insurer": As defined in the recitals.
"Note Insurer Default": Any one of the following events shall have
occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment required under
the Note Policy;
(b) The Note 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, the Wisconsin 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 Note 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 Note Insurer (or
the taking of possession of all or any material portion of the property of the
Note Insurer).
"Note Policy": The note guaranty insurance policy dated November 24, 1998
issued by the Note Insurer to the Indenture Trustee for the benefit of the Class
A Noteholders.
"Noteholders": The holders of the Class A Notes, the Class B Notes and the
Class C Notes.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Indenture Trustee.
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"Operative Documents": Collectively, the Master Transfer Agreements, the
Insurance Agreement, the Indemnification Agreement, and, with respect to each of
Trust A, Trust B and Trust C, the related Sale and Servicing Agreement,
Subsequent Transfer Agreements, Trust Agreement, Note Policy, Indenture and
Notes.
"Original Pool Principal Balance": The Pool Principal Balance as of the
Closing Date.
"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 (or, in the
case of Subsequent Mortgage Loans, will purchase) 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.
"Outstanding": With respect to the Class A Notes, as of any date of
determination, all such Class A Notes theretofore executed and delivered
hereunder except:
(i) Class A Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Class A Notes or portions thereof for which full and final payment
money in the necessary amount has been theretofore deposited with the
Indenture Trustee in trust for the Class A Noteholders;
(iii) Class A Notes in exchange for or in lieu of which other Class A
Notes have been executed and delivered pursuant to this Agreement, unless
proof satisfactory to the Indenture Trustee is presented that any such Class
A Notes are held by a bona fide purchaser; and
(iv) Class A Notes alleged to have been destroyed, lost or stolen for
which replacement Class A Notes have been issued as provided for in Section
2.4 of the Indenture.
"Overall Event of Servicer Termination": Any event described in clause (b)
of Section 5.1 hereof.
"Owner Trustee": Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee under the Trust A Trust Agreement, its successors in
interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Class A Noteholders, which shall be the 25th day of
each month, commencing in the month following the Closing Date or if the 25th
day is not a Business Day, then the next succeeding Business Day.
"Percentage Interest": As to any Class A Note, that percentage, expressed
as a fraction, the numerator of which is the Class A Note Principal Balance of
such Class A Note as of
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the related Cut-Off Date and the denominator of which is the Aggregate Class A
Note Principal Balance; and as to any Certificate, that Percentage Interest set
forth on such 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 Trust A experienced
during such period.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate principal
balances of all Mortgage Loans 90 or more days Delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
"Pool Principal Balance": The aggregate principal balances of all Mortgage
Loans.
"Pool Rolling 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.
"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 in full 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.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998 naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in the related Prospectus Supplement.
"Prospectus Supplement": That certain Prospectus Supplement dated November
2, 1998, discussing the Class A Notes issued by Trust A.
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"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.3, 3.4 or 2.2(b) hereof, which (i) bears a fixed rate of
interest, (ii) has a Coupon Rate at least equal to the Coupon Rate of 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 the Payment Date in November, 2028,
(vi) has a Combined Loan-to-Value Ratio as of the Cut-Off Date or Subsequent
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, all as evidenced by an
Officer's Certificate of the Sponsor delivered to the Note Insurer and the
Indenture 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. In the event that one or more mortgage loans are
proposed to be substituted for one or more mortgage loans, the Note Insurer may
allow the foregoing tests to be met on a weighted average basis or other
aggregate basis acceptable to the Note Insurer, as evidenced by a written
consent delivered to the Indenture Trustee by the Note 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 Mortgage 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 business day
immediately preceding the Payment Date; provided, that, if the Class A Notes
revert to Definitive Notes, the Record Date with respect to each Payment Date
thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs.
"Register": The register maintained by the Indenture Trustee in accordance
with Section 2.3 of the Indenture, in which the names of the Class A Noteholders
are set forth.
"Registrar": The Indenture Trustee, acting in its capacity as Indenture
Trustee appointed pursuant to Section 6.13 of the Indenture, 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 Class A
Notes constituting a part thereof.
"Remittance Date": Any date on which the Master Servicer is required to
remit monies on deposit in the Trust A Principal and Interest Account to the
Indenture 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 Closing Date 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.
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"REO Property": A Property acquired by the Master Servicer or any
Sub-servicer on behalf of the Issuer 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 Issuer.
"Schedules of Mortgage Loans": The Schedules of Mortgage Loans, attached
hereto as Schedule I as they may be further supplemented in connection with
Subsequent Transfers. Such Schedules shall also contain one of the following
codes for each Mortgage Loan or Subsequent Mortgage 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
Indenture 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.
"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.
"Servicer Termination Delinquency Rate Trigger". As defined in the
Insurance Agreement.
"Servicer Termination Loss Trigger". As defined in the Insurance
Agreement.
"Servicing Advance": As defined in Section 4.9(c) and Section 4.13(a)
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 Indenture 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.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage Loans,
the first day of the month in which such Subsequent Mortgage Loans are
transferred and assigned to the Issuer.
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"Subsequent Mortgage Loans": The Mortgage Loans sold to the Issuer
pursuant to Section 2.4 hereof, which shall be listed on the Schedule of
Mortgage Loans attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Indenture Trustee and the
Sponsor substantially in the form of Exhibit I hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Issuer.
"Subsequent Transfer Date": The date specified in each Subsequent Transfer
Agreement.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage, if the outstanding principal amount of such Qualified
Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than
the Loan Balance of the Mortgage Loan being replaced as of such Replacement
Cut-Off Date, an amount equal to such difference together with accrued and
unpaid interest on such amount calculated at the Coupon Rate net of the
Servicing Fee of the Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has entered into
a Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 4.3 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
"Trust A": Advanta Mortgage Loan Trust 1998-4A, the trust created under
the Trust A Trust Agreement.
"Trust A Capitalized Interest Requirement": As defined in the Trust A
Indenture.
"Trust A Certificate": As defined in the Trust A Trust Agreement.
"Trust A Event of Servicer Termination": Any event described in clause (a)
of Section 5.1 hereof.
"Trust A Indenture": The Indenture dated as of November 1, 1998 relating
to Trust A between the Issuer and the Indenture Trustee, as the same may be
amended and supplemented from time to time.
"Trust A Monthly Remittance Amounts". As defined in the Indenture.
"Trust A Overfunded Interest Amount": As defined in the Trust A Indenture.
"Trust A Pre-Funded Amount": With respect to any Determination Date, the
amount on deposit in the Trust A Pre-Funding Account and available for the
purchase of the Subsequent Mortgage Loans.
"Trust A Pre-Funding Account": The Trust A Pre-Funding Account established
in accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.
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"Trust A Pre-Funding Earnings": With respect to the December, 1998 Payment
Date, the actual investment earnings earned during the period November 24, 1998
through December 28, 1998 (inclusive) on the Pre-Funding Account during such
period as calculated by the Indenture Trustee pursuant to Section 2.4(g) hereof;
with respect to the January, 1999 Payment Date, the actual investment earnings
during the period December 29, 1998 through January 25, 1999 (inclusive) on the
Pre-Funding Account during such period as calculated by the Indenture Trustee
pursuant to Section 2.4(g) hereof.
"Trust A Pre-Funding Period": The period commencing on the Closing Date
and ending on the earlier to occur of (i) the date on which the Trust A
Pre-Funded Amount (exclusive of any investment earnings) is less than $100,000
and (ii) January 25, 1999.
"Trust A Principal and Interest Account": Collectively, each Trust A
Principal and Interest Account created by the Master Servicer or any
Sub-servicer pursuant to Section 4.8(a) hereof, or pursuant to any Sub-Servicing
Agreement.
"Trust A Trust Agreement": The Trust Agreement dated as of November 1,
1998 between the Owner Trustee and the Sponsor.
"Trust B": Advanta Mortgage Loan Trust 1998-4B, the trust created under
the Trust B Trust Agreement.
"Trust B Sale and Servicing Agreement": The Trust B Sale and Servicing
Agreement, dated as of November 1, 1998, among Trust B, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibits and Schedules attached thereto.
"Trust B Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
"Trust C": Advanta Mortgage Loan Trust 1998-4C, the trust created under
the Trust C Trust Agreement.
"Trust C Sale and Servicing Agreement": The Trust C Sale and Servicing
Agreement, dated as of November 1, 1998 among Trust C, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibit and Schedules attached thereto.
"Trust C Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
"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 for the benefit of the Class A Noteholders, including all
proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii)
such amounts including collections in respect of the related Mortgage Loans
received on or after the Cut-Off Date and each Subsequent Cut-Off Date, but
excluding any premium recapture, as applicable, including Eligible Investments,
as from time to time may be held in the Trust A Note Account and by the Master
Servicer in the Trust A Principal and Interest Account (except as otherwise
provided herein), each to be created pursuant to this Agreement, (iii) any
Property, the ownership of which has been effected on behalf of the Issuer as a
result of foreclosure or acceptance by the Master Servicer of a deed in lieu of
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foreclosure and that has not been withdrawn from the Issuer, (iv) any Insurance
Policies relating to the Mortgage Loans and any rights of the Sponsor or the
Affiliated Originators under any Insurance Policies, (v) Net Liquidation
Proceeds with respect to any Liquidated Mortgage Loan.
"Trust Notes": The Class A Note issued by Trust A or the Class B Note
issued by Trust B or the Class C Note issued by Trust C.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased by the Sponsor
from an Unaffiliated Originator and sold to the Issuer by the Sponsor.
"Unaffiliated Originators": Any Originator who is not affiliated with the
Sponsor.
"Underwriter": Morgan Stanley & Co. Incorporated.
SECTION 1.2. USE OF WORDS AND PHRASES. "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used. The definitions set forth in Section 1.1 hereof
include both the singular and the plural. Whenever used in this Agreement, any
pronoun shall be deemed to include both singular and plural and to cover all
genders.
SECTION 1.3. CAPTIONS; TABLE OF CONTENTS. The captions or headings in this
Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
SECTION 1.4. OPINIONS. Each opinion with respect to the validity, binding
nature and enforceability of documents or Certificates may be qualified to the
extent that the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law) and may state that no
opinion is expressed on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy. Any opinion required to be
furnished by any Person hereunder must be delivered by counsel upon whose
opinion the addressee of such opinion may reasonably rely, and such opinion may
state that it is given in reasonable reliance upon an opinion of another, a copy
of which must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.1. CONVEYANCE OF THE INITIAL MORTGAGE LOANS. (a) The Sponsor,
concurrently with the execution and delivery hereof, hereby transfers, assigns,
sets over and otherwise conveys without recourse, to Trust A, for pledge to the
Indenture Trustee on behalf of the Class A Noteholders all right, title and
interest of the Sponsor in and to (i) each Initial Mortgage Loan listed on the
Schedule of Mortgage Loans, including its Loan Balance and all collections in
respect thereof received on or after the Cut-Off Date (excluding payments in
respect of accrued interest due prior to the Cut-Off Date); (ii) property that
secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of
foreclosure; (iii) the Sponsor's rights under the hazard insurance policies; and
(iv) all other assets included or to be included in the Trust
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Estate for pledge to the Indenture Trustee on behalf of the Class A Noteholders
and the Note Insurer. In addition, on or prior to the Closing Date, the Sponsor
shall cause the Note Insurer to deliver the Trust A Note Policy to Trust A for
pledge to the Indenture Trustee on behalf of the Class A Noteholders. The
foregoing transfer, assignment, set-over and conveyance shall be made by the
Sponsor to Trust A for pledge to the Indenture Trustee on behalf of the Class A
Noteholders, and each reference in this Agreement to such transfer, assignment,
set-over and conveyance shall be construed accordingly.
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 Date)
describing the Mortgage Loans and naming the Sponsor as debtor and the Indenture
Trustee as secured party and any amendments to UCC-1 financing statements
required to reflect a change in the name or corporate structure of the Sponsor
or the filing of any additional UCC-1 financing statements due to the change in
the principal office of the Sponsor (within 90 days of any event necessitating
such filing)) as are necessary to perfect and protect the Class A Noteholders'
and the Note Insurer's interests in each Mortgage Loan and the proceeds thereof.
(b) In connection with the transfer and assignment of the Mortgage Loans,
the Sponsor agrees to:
(i) cause to be delivered on the Closing Date, without recourse, to the
Indenture Trustee, with respect to the Initial Mortgage Loans or, on the
Subsequent Transfer Date with respect to Subsequent Mortgage Loans, or, on
the Transfer Date with respect to the Qualified Replacement Mortgage listed
on the Schedule of Mortgage Loans, the items listed in the definitions of
"Advanta Mortgage Files" and "Conduit Mortgage Files," as appropriate, in
Exhibit A hereto; and
(ii) cause, within 75 Business Days following the Closing Date or any
Subsequent Transfer Date, as applicable, 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 Indenture 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 Indenture Trustee has received an
Opinion of Counsel to the effect that the recordation of such assignments in
any specific jurisdiction is not necessary to protect the Indenture Trustee's
interest in the related Mortgagee.
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, 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 Indenture 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 and any assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
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(c) In the case of Initial Mortgage Loans which have been prepaid in full
on or after the Initial Cut-Off Date and prior to the Closing Date, or with
respect to Subsequent Mortgage Loans which have been prepaid in full on or after
the Subsequent Cut-Off Date and prior to the Subsequent Transfer Date, the
Sponsor, in lieu of the foregoing, will deliver within 15 Business Days after
the Closing Date, or Subsequent Transfer Date, as applicable, to the Indenture
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit B.
(d) The Sponsor shall transfer, assign, set over and otherwise convey
without recourse, to Trust A for pledge to the Indenture Trustee on behalf of
the Class A Noteholders all right, title and interest of the Sponsor in and to
any Qualified Replacement Mortgage delivered to Trust A by the Sponsor pursuant
to Section, 2.2, Section 3.3, Section 3.4 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 shall reserve and retain all right, title
and interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from Trust A in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Indenture Trustee
will transfer, 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 of the Issuer'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 Issuer shall
reserve and retain all right, title and interest in and to payments of principal
collected and interest accruing on such released Mortgage Loan prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Issuer, the Sponsor agrees to cause to be delivered
to the Indenture Trustee the items described in Section 2.1(b) on the date of
such transfer and assignment or, if a later delivery time is permitted by
Section 2.1(b), then no later than such later delivery time.
(g) As to each Mortgage Loan released from the Issuer in connection with
the conveyance of a Qualified Replacement Mortgage the Indenture 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.
(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein, the
Sponsor shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
(i) The Sponsor shall reflect on its records that the Mortgage Loans have
been sold to the Issuer.
(j) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Sponsor or of its ultimate corporate parent are satisfactory to the
Control Party, Moody's and Standard & Poor'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 Indenture 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.
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SECTION 2.2. ACCEPTANCE BY THE ISSUER; CERTAIN SUBSTITUTIONS OF MORTGAGE
LOANS; CERTIFICATION BY INDENTURE TRUSTEE. The Indenture Trustee, on behalf of
the Issuer, hereby acknowledges receipt of the Trust Estate and agrees to
execute and deliver on the Closing Date and on each Subsequent Transfer Date and
each Transfer Date an acknowledgment of receipt of the Files delivered to it on
behalf of the Issuer by the Sponsor in the form attached as Exhibit C 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 pledged to it on behalf of the Class A Noteholders and the Note
Insurer.
The Indenture Trustee agrees to review any documents delivered by the
Sponsor within 90 days after the Closing Date (or within 90 days with respect to
any Subsequent Mortgage Loan or Qualified Replacement Mortgage after the
assignment thereof) and to deliver to the Sponsor, the Master Servicer and the
Note Insurer a Certification in the form attached hereto as Exhibit D hereto.
The Indenture 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 Indenture 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 Indenture 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 Indenture Trustee shall promptly so notify the
Sponsor, the Issuer and the Note Insurer. In performing any such review, the
Indenture 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 Indenture Trustee. If, however,
within 60 days after the Indenture 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 Class A Noteholders or of the Note Insurer, the Sponsor will then 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 Trust A 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 Trust A Principal and Interest Account. Upon
receipt of any Qualified Replacement Mortgage or of written notification signed
by a Servicing Officer to the effect that the Loan Purchase Price in respect of
a Defective Mortgage Loan has been deposited into the Trust A Principal and
Interest Account, then as promptly as practicable, the Indenture Trustee shall
execute such documents and instruments of transfer presented by the Sponsor, in
each case without recourse, representation or warranty, and take such other
actions as shall reasonably be requested by the Sponsor to effect such transfer
by the Issuer of such Defective Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Sponsor to accept a transfer of
a Defective Mortgage Loan and to either convey a Qualified Replacement Mortgage
or to make a deposit of any related Loan Purchase Price into the Trust A
Principal and Interest Account shall constitute the sole remedy respecting such
defect available to Class A Noteholders, the Indenture Trustee, the Issuer and
the Note Insurer against the Sponsor.
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The Sponsor, promptly following the transfer of a Defective Mortgage Loan
from or to the Issuer pursuant to this Section, shall deliver an amended
Mortgage Loan Schedule to the Indenture Trustee and the Note Insurer and shall
make appropriate entries in its general account records to reflect such
transfer. The Master Servicer shall, following such retransfer, appropriately
mark its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Issuer. The Sponsor, promptly following such transfer, shall
appropriately mark its electronic ledger and make appropriate entries in its
general account records to reflect such transfer.
(c) As to any Qualified Replacement Mortgage, the Sponsor shall, if
required to deliver any such Qualified Replacement Mortgage, deliver to the
Indenture Trustee with respect to such Qualified Replacement Mortgage such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.2. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgages, the Master Servicer
shall determine the Substitution Amount which amount shall be deposited by the
Sponsor in the Trust A Principal and Interest Account at the time of
substitution. All amounts received in respect of the Qualified Replacement
Mortgage during the Remittance Period in which the circumstances giving rise to
such substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Trust A Principal and Interest Account.
All amounts received by the Master Servicer during the Remittance Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust Estate shall be deposited by the
Master Servicer in the Trust A Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage shall be subject to the terms
of this Agreement in all respects, and the Sponsor shall be deemed (i) to have
made with respect to such Qualified Replacement Mortgage or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 3.3 and (ii) to have certified that such Mortgage Loan(s) is/are
Qualified Replacement Loan(s). The procedures applied by the Sponsor in
selecting each Qualified Replacement Mortgage shall not be materially adverse to
the interests of the Indenture Trustee, the Issuer, the Class A Noteholders or
the Note Insurer.
SECTION 2.3. COOPERATION PROCEDURES. (a) The Sponsor shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Indenture
Trustee, provide the Indenture 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 Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
SECTION 2.4. CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS. Subject to the
conditions set forth in paragraph (b) below, in consideration of the Indenture
Trustee's delivery on the related Subsequent Transfer Dates to or upon the order
of the Sponsor of all or a portion of the balance of funds in the Trust A
Pre-Funding Account, the Sponsor shall, on Subsequent Transfer Dates, transfer,
assign and convey, without recourse, to Trust A for pledge to the Indenture
Trustee on behalf of the Class A Noteholders all right, title and interest of
the Sponsor in and to each Subsequent Mortgage Loan listed on the Schedule of
Mortgage Loans delivered by the Sponsor on such Subsequent Transfer Date, all of
the Sponsor's right, title and interest in and to principal collected and
interest accruing on each such Subsequent Mortgage Loan on and after
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the related Subsequent Cut-Off Date; provided, however, that the Sponsor
reserves and retains all of its right, title and interest in and to principal
collected and interest accruing on each such Subsequent Mortgage Loan prior to
the related Subsequent Cut-Off Date.
Upon assignment of any Subsequent Mortgage Loan, the Indenture Trustee
shall release to the Sponsor an amount equal to the Loan Balance thereof as of
the related Subsequent Cut-Off Date from amounts then on deposit in the Trust A
Pre-Funding Account.
(b) The Sponsor shall transfer to the Indenture Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date.
(i) the Sponsor shall have provided the Indenture Trustee and the Note
Insurer with a timely Addition Notice and shall have provided any information
reasonably requested by any of the foregoing with respect to the Subsequent
Mortgage Loans;
(ii) the Sponsor shall have delivered to the Indenture Trustee a duly
executed written assignment (including an acceptance by the Indenture
Trustee) in substantially the form of Exhibit I (the "Subsequent Transfer
Agreement"), which shall include Schedules of Mortgage Loans, listing the
Subsequent Mortgage Loans and any other exhibits listed thereon;
(iii) the Master Servicer shall have deposited in the Trust A Principal
and Interest Account all collections in respect of the Subsequent Mortgage
Loans received on or after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Master Servicer nor
the Sponsor was insolvent nor will any of them have been made insolvent by
such transfer nor is any of them aware of any pending insolvency;
(v) such addition will not result in a material adverse tax consequence
to the Issuer or the Class A Noteholders;
(vi) the Trust A Pre-Funding Period shall not have terminated; and
(vii) the Sponsor shall have delivered to the Indenture Trustee an
Officer's Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and paragraphs (c) and (d) below and in the
related Subsequent Transfer Agreement;
(c) The obligation of the Issuer to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the
following requirements: (i) such Subsequent Mortgage Loan may not be more than
30 days contractually delinquent as of the related Subsequent Cut-Off Date.
(d) The obligation of the Issuer to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the
following additional requirements, any of which may be waived or modified in any
respect by the Insurer by a written instrument executed by the Insurer:
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(1) (i) No such Subsequent Mortgage Loan may have (i) a Combined
Loan-to-Value Ratio greater than 95%; (ii) a Loan Balance in excess of
$351,300; (iii) a remaining term to stated maturity in excess of 360 months;
(iv) a Loan Rate (as of the related Subsequent Cut-Off Date) below 6.325%; or
(v) be more than 30 days Delinquent (as of the related Subsequent Cut-off
Date).
(2) After giving effect to the assignment to the Issuer of any such
Subsequent Mortgage Loan (i) the weighted average net Loan Rate of all
Mortgage Loans shall be no less than 9.63%; (ii) the average Loan Balance
shall not exceed $68,000; (iii) no more than 7.60% of the Pool Principal
Balance as of such Subsequent Transfer Date shall relate to Mortgaged
Properties which are non-owner occupied; (iv) the weighted average Combined
Loan-to-Value Ratio of all Mortgage Loans shall be no greater than 76%; (v)
at least 90% of the Pool Principal Balance as of such Subsequent Transfer
Date shall be "full documentation" loans; (vi) at least 87% of the Pool
Principal Balance as of such Subsequent Transfer Date shall relate to
Mortgaged Properties which are single-family residences; (vii) no more than
1.0% of the Pool Principal Balance as of such Subsequent Transfer Date shall
relate to Mortgaged Properties in any one zip code; (viii) no more than 9.0%
of the Pool Principal Balance as of such Subsequent Transfer Date shall
relate to Mortgaged Properties in any one state; (ix) at least 76% of the
Pool Principal Balance as of such Subsequent Transfer Date shall relate to
Mortgage Loans characterized with a credit grade of at least "A-"; (x) no
more than 14% of the Pool Principal Balance as of such Subsequent Transfer
Date shall relate to Mortgage Loans characterized with a credit grade of "B";
(xi) no more than 8.0% of the Pool Principal Balance as of such Subsequent
Transfer Date shall relate to Mortgage Loans characterized with a credit
grade of "C"; (xii) no more than 2.0% of the Pool Principal Balance as of
such Subsequent Transfer Date shall relate to Mortgage Loans characterized
with a credit grade of "D"; and (xiv) no more than 3.0% of the Pool Principal
Balance as of such Subsequent Transfer Date shall relate to Mortgage Loans
secured by junior liens.
(e) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Sponsor agrees to satisfy the conditions set forth in
Sections 2.1(b)-(j), 2.2 and 2.3.
(f) In connection with the transfer of any Subsequent Mortgage Loans to
the Issuer, the Sponsor, the Master Servicer and the Indenture Trustee may, with
the prior written consent of the Insurer, amend the definition of "Trust A
Specified Overcollateralization Amount" for the purpose of changing the Trust A
Specified Overcollateralization Amount; provided, however, that any such
amendment must comply with the provisions of Section ____ of the Indenture.
(g) In connection with each Subsequent Transfer Date and on the Payment
Date occurring in December of 1998 and January of 1999, the Sponsor and the
Indenture Trustee will cooperate in determining (i) the amount and correct
dispositions of Trust A Capitalized Interest Requirement, the Trust A
Pre-Funding Earnings, the Trust A Overfunded Interest Amount and the amount then
on deposit in the Trust A Pre-Funding Account and (ii) any other necessary
matters in connection with the administration of the Trust A Pre-Funding Account
and of the Trust A Capitalized Interest Account. In the event that any amounts
are incorrectly released to the owners of the Certificates from either the Trust
A Pre-Funding Account or the Trust A Capitalized Interest Account, such owners
or the Sponsor shall immediately repay such amounts to the Indenture Trustee.
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SECTION 2.5. RETRANSFERS OF MORTGAGE LOANS AT ELECTION OF SPONSOR. Subject
to the conditions set forth below, the Sponsor may, but shall not be obligated
to (except the Sponsor shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans from the Issuer as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor shall give the Indenture Trustee, the Note Insurer and the
Master Servicer a notice of the proposed reassignment that contains a list of
the Mortgage Loans to be reassigned. Such reassignment of Mortgage Loans shall
be permitted upon satisfaction of the following conditions:
(i) No Event of Default has occurred or will occur as a result of such
removal;
(ii) the Overcollateralization Amount as of such Payment Date equals or
exceeds the then Specified Overcollateralization Amount.
(iii) On or before the Transfer Date, the Sponsor shall have delivered to
the Indenture Trustee and the Note Insurer a revised Schedule of Mortgage
Loans, reflecting the proposed transfer and the Transfer Date, and the Master
Servicer shall have marked its servicing records to show that the Mortgage
Loans reassigned to the holder of the Sponsor are no longer owned by the
Issuer;
(iv) The Sponsor shall represent and warrant that random selection
procedures were used in selecting the Mortgage Loans and no other selection
procedures were used which are adverse to the interests of the Sponsor or the
Class A Noteholders or the Note Insurer were utilized in selecting the
Mortgage Loans to be removed from the Issuer;
(v) The Sponsor shall have delivered to the Indenture Trustee and the
Insurer an Officer's Certificate certifying that the items set forth in
subparagraphs (i) through (iv), inclusive, have been performed or are true
and correct, as the case may be. The Indenture Trustee may conclusively rely
on such Officer's Certificate, shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability in so
relying.
Upon receiving the requisite information from the Sponsor, the Master Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the File for
each Mortgage Loan being so reassigned, and the Indenture Trustee shall execute
and deliver to the Sponsor such other documents prepared by the Sponsor as shall
be reasonably necessary to reassign such Mortgage Loans to the Sponsor. Any such
transfer of the Issuer's right, title and interest in and to Mortgage Loans
shall be without recourse, representation or warranty by or of the Indenture
Trustee or the Issuer to the Sponsor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
hereby represents, warrants and covenants to the Indenture Trustee, the Note
Insurer and to the Class A Noteholders as of the Closing Date that:
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(a) The Sponsor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is in good standing as
a foreign corporation in each jurisdiction in which the nature of its business,
or the properties owned or leased by it make such qualification necessary. The
Sponsor has all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which the Sponsor is a party by the Sponsor and its performance and
compliance with the terms of this Agreement and of the other Operative Documents
to which it is a party have been duly authorized by all necessary corporate
action on the part of the Sponsor and will not violate the Sponsor's Articles of
Incorporation or Bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to which the
Sponsor is a party or by which the Sponsor is bound, or violate any statute or
any order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which the Sponsor
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Sponsor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may 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
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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.
(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
Class A Notes 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 to the
Issuer.
(k) The Sponsor did not sell any interest in any Mortgage Loan 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 Issuer.
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
Indenture Trustee.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER. The
Master Servicer hereby represents, warrants and covenants to the Indenture
Trustee, the Note Insurer and to the Class A Noteholders as of the Closing Date
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
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Master Servicer has, on a consolidated basis with its parent, AMHC, equity of at
least $5,000,000, as determined in accordance with generally accepted accounting
principles.
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Master Servicer and will not
violate the Master Servicer's Articles of Incorporation or Bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which the Master Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the Master
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Master Servicer, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or 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) 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.
(g) 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
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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.
(h) 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.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Master Servicer.
(j) 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 4.3.
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
Indenture Trustee.
Upon discovery by any of the Master Servicer, the Sponsor, any
Sub-Servicer, the Note Insurer or the Indenture 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 Class A Noteholders or of
the Note Insurer, the party discovering such breach shall give prompt written
notice to the other parties. Within 60 days of its discovery or its receipt of
notice of breach, the Master Servicer shall cure such breach in all material
respects; provided, however, that, if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer and the Indenture Trustee that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Note Insurer.
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 Note Insurer relies and the
Indenture Trustee relies in accepting the Mortgage Loans in trust and executing
and authenticating the Class A Noteholders. Such representations and warranties
speak as of the Closing Date with respect to the Initial Mortgage Loans, as of
the related Subsequent Transfer Date with respect to any Subsequent Mortgage
Loan, or as of the Transfer Date upon which any Qualified Replacement Mortgage
is added to the Issuer, but shall in each case survive the sale, transfer, and
assignment of the Mortgage Loans to the Indenture:
(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 or the
Subsequent Cut-Off Date, as the case may be;
(ii) All of the original or certified documentation set forth in Section
2.1 (including all material documents related thereto) with respect to each
Mortgage Loan has been or will be delivered to the Indenture Trustee on the
Closing Date or the related Subsequent Transfer Date, as the case may be, or
as otherwise provided in Section 2.1;
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(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 Trust A bears a Coupon
Rate of at least 6.22% per annum;
(v) As of the Cut-Off Date, none of the Initial Mortgage Loans are more
than 59 days Delinquent; as of the related Subsequent Cut-Off Date, no
Subsequent Mortgage Loan shall be more than 30 days Delinquent;
(vi) As of the Closing Date and any Subsequent Transfer Date, no more
than 1.0% of the aggregate Loan Balances of the Initial Mortgage Loans or the
Subsequent Mortgage Loans, as applicable, is secured by Properties located
within any single zip code area;
(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; and
(viii) 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 Indenture Trustee for the benefit
of the Class A Noteholders and the Note Insurer (so long as a Note Insurer
Default has not occurred and is continuing) all of its right, title and interest
in respect of each Master Transfer Agreement applicable to the related Mortgage
Loan. Insofar as such Master Transfer Agreement provides for representations and
warranties made by the related Originator in respect of a Mortgage Loan and any
remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer or by the Indenture Trustee on behalf of the Class A Noteholders and
the Note Insurer. Upon the discovery by the Sponsor, the Master Servicer, the
Note Insurer or the Indenture 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 Class A
Noteholders or of the Note 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 the Sponsor,
the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture 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 Closing Date (or the Subsequent Transfer Date, as the case may
be) and
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such breaches of the representations and warranties materially and adversely
affect the interests of the Class A Noteholders or of the Note 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 Class A Noteholders or of the Note
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 Note
Insurer or such time as a breach of any representation and warranty materially
and adversely affects the interests of the Class A Noteholders or of the Note
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), 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 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, including Nonrecoverable Advances, theretofore made with
respect to such Mortgage Loan, to the Master Servicer for deposit in the Trust A
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Issuer 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
Trust A Principal and Interest Account. 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 Class A Noteholders, the Indenture Trustee or the Note 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 Issuer pursuant to Section 3.3, Section 3.4 or Section 2.2
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 Class A Noteholders, the Sponsor, the
Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture 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 Issuer such that the
interests of the Class A Noteholders or the Note 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 Subsequent
Cut-Off Date" or "as of the Closing Date" or "as of the Subsequent Transfer
Date" shall be deemed to refer to such items as of the date such Qualified
Replacement Mortgage is conveyed to the Issuer.
(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 Indenture Trustee on behalf of the
Issuer.
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ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
SECTION 4.1. MASTER SERVICER AND SUB-SERVICERS. (a) Acting directly or
through one or more Sub-Servicers as provided in Section 4.3, the Master
Servicer, as master servicer, shall service and administer the Mortgage Loans in
accordance with this Agreement and on behalf of the Indenture Trustee and the
Note Insurer and with reasonable care, and using that degree of skill and
attention that the Master Servicer exercises with respect to comparable mortgage
loans that it services for itself or others, and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable.
(b) The duties of the Master Servicer shall include collecting and posting
of all payments, responding to inquiries of Mortgagors or by federal, state or
local government authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in accordance with its
customary practices and accounting for collections and furnishing monthly and
annual statements to the Indenture Trustee and the Note 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
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate to
enable the Indenture Trustee to perform its tax reporting duties hereunder. The
Indenture 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.
(c) 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 such 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 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.
(d) 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.
(e) Without limiting the generality of the foregoing, but subject to
Sections 4.13 and 4.14, the Master Servicer in its own name or in the name of a
Sub-Servicer may be
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authorized and empowered pursuant to a power of attorney executed and delivered
by the Indenture Trustee to execute and deliver, and may be authorized and
empowered by the Indenture Trustee, to execute and deliver, on behalf of itself,
the Class A Noteholders, the Note Insurer and the Indenture 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) to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Property on behalf of the Indenture Trustee, (iii) to hold
title to any Property upon such foreclosure or deed in lieu of foreclosure on
behalf of the Indenture Trustee, and (iv) to consent to any modification of the
terms of any Note not expressly prohibited hereby if the effect of any such
modification will not be to affect materially and adversely the security
afforded by the related Property and the timing of the receipt of payments
required hereby or the interests of the Note Insurer; provided, however, that
Section 4.14(a) shall constitute a power of attorney from the Indenture 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).
(f) The Master Servicer shall give prompt notice to the Indenture Trustee
of any action, of which the Master Servicer has actual knowledge, to (i) assert
a claim against the Issuer or (ii) assert jurisdiction over the Issuer.
(g) 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 4.9(c) and in Section 8.7(b)(xvii) of the
Indenture.
SECTION 4.2. 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 4.3. 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
may be an Affiliate, and 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 Note Insurer and the
Indenture Trustee of the appointment of any Sub-Servicer and shall furnish to
the Note Insurer and the Indenture Trustee a copy of the Subservicing Agreement.
For purposes of this Agreement, the Master shall be deemed to have received
payments on Mortgage Loans when any
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Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement.
SECTION 4.4. 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 4.3.
SECTION 4.5. 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 Issuer shall not indemnify the
Master Servicer for any losses due to the Master Servicer's negligence.
SECTION 4.6. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER AND
INDENTURE TRUSTEE OR THE CLASS A NOTEHOLDERS. 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 Note Insurer, the Indenture Trustee and the Class A
Noteholders 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 4.7.
SECTION 4.7. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
INDENTURE 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 Indenture Trustee pursuant to Section 5.1, 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 Indenture 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 Indenture
Trustee be liable for any such fee.
The Master Servicer shall, upon request of the Indenture 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 Indenture Trustee,
notwithstanding any contrary provision in any Sub-Servicing Agreement.
SECTION 4.8. TRUST A PRINCIPAL AND INTEREST ACCOUNT. (a) The Master
Servicer and/or each Sub-servicer, as applicable, shall establish in the name of
the Issuer for the benefit of the Class A Noteholders and the Note Insurer, as
their interests may appear, and maintain at one or more Designated Depository
Institutions the Trust A 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
Trust A Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
Within one Business Day of the Closing Date, on each Subsequent Transfer
Date and each Transfer Date, the Sponsor and/or the Master Servicer shall
deposit to the Trust A Principal and Interest Account all receipts related to
the Mortgage Loans which relate to or are received on or after the Cut-Off Date
or the Subsequent Cut-Off Date, as the case may be.
(b) All funds in the Trust A 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 Trust A Principal and Interest Account shall be held
in Trust A in the name of the Issuer and for the benefit of the Class A
Noteholders and the Note Insurer. Any investment earnings on funds held in the
Trust A Principal and Interest Account shall be for the account of the Master
Servicer and may only be withdrawn from the Trust A Principal and Interest
Account by the Master Servicer immediately following the remittance of the Trust
A Monthly Remittance Amounts by the Master Servicer. Any references herein to
amounts on deposit in the Trust A 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 Trust A Principal and Interest Account all principal and interest
collections on the Mortgage Loans received on or after the Cut-Off Date or
related Subsequent 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 Trust A 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 4.15
hereof, (ii) principal (including Prepayments) collected on the related Mortgage
Loans prior to the Cut-Off Date or related Subsequent Cut-Off Date, (iii)
interest accruing on the related Mortgage Loans prior to the Cut-Off Date or
related Subsequent 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 Trust A
Principal and Interest Account only for the following purposes:
(1) to effect the timely remittance to the Indenture Trustee of the
Trust A Monthly Remittance Amounts due on the Remittance Date;
(2) to reimburse itself for unreimbursed Delinquency Advances and
Servicing Advances and Nonrecoverable Advances;
(3) to withdraw investment earnings on amounts on deposit in the
Trust A Principal and Interest Account;
(4) to withdraw amounts that have been deposited to the Trust A
Principal and Interest Account in error; and
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(5) to clear and terminate the Trust A Principal and Interest
Account following the termination of the Trust Estate pursuant to Article
X of the Indenture.
(ii) On the tenth day of each month, the Master Servicer shall send to
the Indenture 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 Indenture Trustee from time to time. The
Note 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
Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds for deposit in the Trust A Note Account pursuant
to Section 8.7(a) of the Indenture, the Trust A Interest Remittance Amount
and the Trust A 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 Note Insurer, the Indenture Trustee, Moody's and
Standard & Poor's, then the requirement to maintain the Trust A Principal and
Interest Account may be waived by an instrument signed by the Note Insurer,
Standard & Poor's, Indenture 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 Trust A Principal and Interest Account, on such terms and
subject to such conditions as the Note Insurer, the Indenture Trustee, Moody's
and Standard & Poor's may permit.
SECTION 4.9. DELINQUENCY ADVANCES, COMPENSATING INTEREST AND SERVICING
ADVANCES. (a) The Master Servicer is required, not later than each Remittance
Date, to deposit into the Trust A 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 Trust
A Principal and Interest Account subsequent to the related Remittance Period to
fund its payment of Delinquency Advances related to a Payment Date. The Master
Servicer shall also fund Delinquency Advances from the deposits into the Trust A
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 8.7(b)(xvii) of the Indenture and Section 4.8(a)
hereof.
(b) On or prior to each Remittance Date, the Master Servicer shall deposit
in the Trust A Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of
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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 nor shall it be
required to pay Compensating Interest due to partial prepayments or Relief Act
Shortfalls.
(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 (a) foreclosures and (b) other legal actions and
costs associated therewith that potentially affect the existence, validity,
priority, enforceability, or collectibility of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions, and (iii) the costs of the
conservation, management, liquidation, sale or other disposition of any REO
Property, including reasonable fees paid to any independent contractor in
connection therewith, and (iv) advances to keep liens current, unless with
respect to any of the foregoing the Master Servicer has determined that such
advance would not be recoverable. 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 4.8(d) hereof.
(d) On the Remittance Date in December 1998, the Master Servicer shall
make a special non-recoverable advance equal to one-month's interest, calculated
at the Class A Note Interest Rate (applicable to the December 1998 Payment Date)
for the Class A Notes with respect to all Mortgage Loans in Trust A not having a
payment due during November 1998 and the amounts of such advance shall be
included in the Interest Remittance Amount related to Trust A.
SECTION 4.10. 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 4.13. Any such
Mortgage 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 Trust A Principal and Interest
Account provided, that the Master Servicer may not purchase any Mortgage Loans
pursuant to this Section 4.10 if such purchase will cause the aggregate purchase
price to exceed 10% of the Original Pool Principal Balance.
SECTION 4.11. 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 Issuer 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
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to compensate for damage or loss on a replacement cost basis and (iii) the full
insurable value of the premises.
(b) If the Mortgage Loan at the time of origination relates to a Property
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer will
cause to be maintained with respect thereto a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Issuer 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
Issuer and the Note Insurer out of the Master Servicer's own funds for any loss
to the Issuer and the Note Insurer resulting from the Master Servicer's failure
to maintain the insurance required by this Section.
(c) It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Any cost incurred by the Master Servicer in maintaining
any such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Master Servicer pursuant to Section 4.9.
(d) 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 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, 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 4.11, and there shall have been a loss which would
have been covered by such policy, deposit in the Trust A 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 4.11 and the amount paid under such blanket policy.
Upon the request of the Indenture Trustee or the Note Insurer, the Master
Servicer shall cause to be delivered to the Indenture Trustee and the Note
Insurer, a certified true copy of such policy.
SECTION 4.12. 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
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adversely affect the interest of the Class A Noteholders or of the Note 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
notify the Indenture Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Indenture Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Indenture 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 4.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall foreclose upon or otherwise comparably effect the ownership on
behalf of the Issuer 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
4.10. 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 4.9(c) hereof.
Notwithstanding the generality of the foregoing provisions, the Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Class A Noteholders solely for the purpose of its prompt disposition and sale.
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 Class A Noteholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Class A Noteholders 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 Mortgage Loan" and shall promptly deliver to the Note
Insurer, with a copy to the Indenture Trustee, a related liquidation report with
respect to such Liquidated Mortgage Loan.
SECTION 4.14. INDENTURE 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 Indenture Trustee a Master Servicer's Trust Receipt attached
hereto as Exhibit G. Upon receipt of such Master Servicer's Trust Receipt, the
Indenture Trustee shall promptly release the related File, in trust to the
applicable party as directed in writing by the Master Servicer on the Master
Servicer's Trust Receipt, in each case pending its release by the such party.
Upon any such payment in full, or the receipt of such notification that such
funds have been placed in escrow, the Master Servicer or any Sub-servicer is
authorized to give, as attorney-in-fact for the Indenture 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 Trust A 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 Indenture Trustee, a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed by the Master
Servicer or any Sub-servicer; in such event, the Indenture 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
Indenture 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 Indenture Trustee), upon request of the
Master Servicer or any Sub-servicer and delivery to the Indenture 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. The Indenture
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Trustee shall complete in the name of the Indenture 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 Indenture 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 Indenture Trustee to the Master Servicer or any
Sub-servicer.
(c) No costs associated with the procedures described in this Section 4.14
shall be an expense of the Issuer.
(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 Note
Insurer, Moody's and Standard & Poor's pursuant to Section 2.1(b) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to the Indenture
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 Indenture Trustee shall mutually agree. The
Indenture 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 Indenture Trustee.
Receipt of a Master Servicer's Trust Receipt pursuant to clauses (i), (ii) or
(iii) above shall be authorization to the Indenture Trustee to release such
Files, provided the Indenture Trustee has determined that such Master Servicer's
Trust Receipt has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an Authorized Officer of the
Master Servicer or any Sub-servicer, and so long as the Indenture Trustee
complies with its duties and obligations under this Agreement. If the Indenture
Trustee is unable to release the Files within the time frames previously
specified, the Indenture 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 Indenture Trustee's negligent failure to release the
related File or the Indenture Trustee's negligent failure to execute and release
documents in a timely manner, the Indenture Trustee shall be liable for such
penalties or damages.
On each day that the Master Servicer remits to the Indenture 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 Indenture 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 4.15. 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 Trust A Principal and
Interest Account pursuant to Section 4.8(c)(v) and similar items may, to the
extent collected from Mortgagors, be retained by the Master Servicer.
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SECTION 4.16. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer, at
its own expense, will deliver to the Indenture Trustee, the Note Insurer,
Standard & Poor's, and Moody's, on or before the last day of November of each
year, commencing in 1999, 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 4.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS. On
or before the last day of November of each year, commencing in 1999, the Master
Servicer, at its own expense, shall cause to be delivered to the Indenture
Trustee, the Note 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 4.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide to the Indenture Trustee,
the Note Insurer, the FDIC and the supervisory agents and examiners of each of
the foregoing access to the documentation regarding the Mortgage Loans required
by applicable state and federal regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such computer tape to the Indenture Trustee at such
other times as the Indenture Trustee may reasonably request. The Note Insurer
may request a copy of this computer tape upon three Business Days prior written
notice to the Master Servicer.
SECTION 4.19. 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 Indenture Trustee and the Note
Insurer, which such consent shall not be unreasonably withheld; provided,
however, that any assignee must meet the eligibility requirements set forth in
Section 5.1(g) hereof for a successor servicer. Notice of any such assignment
shall be given by the Master Servicer to the Indenture Trustee, the Note Insurer
and Moody's.
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ARTICLE V
SERVICING TERMINATION
SECTION 5.1. EVENTS OF SERVICER TERMINATION. (a) The Master Servicer may
be removed with respect to Trust A if any one of the following events ("Trust A
Events of Servicer Termination") shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture 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 Indenture Trustee or from Class A Noteholders
evidencing Percentage Interest aggregating not less than 25%.
(ii) The Master Servicer shall fail to perform any one or more of its
obligations hereunder other than the obligations contemplated by Subsection
5.1(i) above, and shall continue in default thereof for a period of sixty
(60) days after notice by the Indenture Trustee or the Note 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
(iii) 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 Class A Noteholders or the Note
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; or
(iv) The failure by the Master Servicer to make any required Servicing
Advance and such failure continues for fifteen days; provided, however; that
if the Master Servicer can demonstrate to the reasonable satisfaction of the
Control Party that any such event was due to circumstances beyond the control
of the Master Servicer, such event shall not be considered an event of
termination of the Master Servicer; or
(v) The failure by the Master Servicer to make any required Delinquency
Advance or to pay any Compensating Interest; provided, however, that if the
Master Servicer can demonstrate to the reasonable satisfaction of the Control
Party that any such event was due to circumstances beyond the control of the
Master Servicer, such event shall not be considered an event of termination
of the Master Servicer;
Then, and in each and every such case, so long as a Trust A Event of
Servicer Termination shall not have been remedied by the Master Servicer,
either the Indenture Trustee, the Note Insurer or the Class A Noteholders
evidencing Percentage Interests aggregating not less than 51% in each case
with the consent of the Note Insurer, or the Note Insurer, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee if
given by the Note Insurer of the Class A Noteholders) may terminate all of
the rights and obligations of the Master Servicer as servicer of Trust A
under this Agreement. Any such notice to the Master Servicer shall also be
given to each Rating Agency and the Note Insurer. On and after the receipt by
the Master Servicer of such written notice, all
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authority and power of the Master Servicer under this Agreement, whether
with respect to the Class A Notes or the Mortgage Loans or otherwise, shall
pass to and be vested in the Indenture Trustee pursuant to and under this
Section 5.1(a) and, without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the responsibilities and
rights of the Master Servicer hereunder, including, without limitation, the
transfer to the Indenture Trustee for the administration by it of all cash
amounts that shall at the time be held by the Master Servicer and to be
deposited by it in the Note Account, or that have been deposited by the
Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with amending
this Agreement to reflect such succession as Master Servicer pursuant to this
Section 5.1 shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 5.1(a)(i) for a period of two Business Days or under Section 5.1(ii),
(iii), (iv), or (v) for a period of 60 days, shall not constitute a Trust A
Event of Servicer Termination if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Master Servicer and such delay
or failure was caused by an act of God or the public enemy, acts of declared
or undeclared war, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes, floods or similar
causes. The preceding sentence shall not relieve the Master Servicer from
using its best efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Agreement and the Master Servicer
shall provide the Indenture Trustee, the Sponsor, the Note Insurer and the
Class A Noteholders with an Officer's Certificate giving prompt notice of
such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Master Servicer shall immediately notify the
Indenture Trustee and the Note Insurer in writing of any Trust A Event of
Servicer Termination.
(b) The Master Servicer may be removed with respect to Trust A, Trust B
and Trust C if any one of the following events ("Overall Events of Servicer
Termination") shall occur and be continuing:
(i) The occurrence of a Servicer Termination Loss Trigger or Servicer
Termination Delinquency Rate Trigger, as such terms are defined in the
Insurance Agreement; or
(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
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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; or
(iii) If, without the application, approval or consent of the Master
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Master
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or similar entity with respect to
the Master Servicer or of all or any substantial part of its assets, or other
like relief in respect thereof under any bankruptcy or insolvency law, and,
if such proceeding is being contested by the Master Servicer in good faith,
the same shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days.
Then, and in each and every such case, so long as an Overall Event of Servicer
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee, the Note Insurer or the Noteholders evidencing Percentage
Interests aggregating not less than 51% with the consent of the Note Insurer, or
the Note Insurer, by notice then given in writing to the Master Servicer (and to
the Indenture Trustee if given by the Note Insurer of the Noteholders) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement, the Trust B Sale and Servicing Agreement and the Trust C
Sale and Servicing Agreement. Any such notice to the Master Servicer shall also
be given to each Rating Agency and the Note Insurer. On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Trust Notes or
the Mortgage Loans or otherwise, shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 5.1(b) and, without limitation, the
Indenture Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan in Trust A and related documents, or otherwise. The Master Servicer agrees
to cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Note Account, or that have been deposited by the
Master Servicer in the Trust A Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1(b)
shall be paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
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 Indenture Trustee and the Note Insurer.
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(c) No removal or resignation of the Master Servicer shall become
effective until the Indenture 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 Indenture 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 Indenture Trustee will not be
obligated to act as successor servicer if it is legally unable to perform its
duties hereunder.
(d) 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 Indenture 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.
(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
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 Indenture 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 Note 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 Indenture 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 4.8 and 4.15; provided, however, that, if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture 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 Indenture 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.
(g) In the event the Indenture Trustee solicits bids as provided above,
the Indenture 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 4.8 and 4.15. Within thirty days after any
such public announcement, the Indenture 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
Indenture Trustee shall deduct from any sum received by the Indenture 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
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rights and responsibilities hereunder. After such deductions, the remainder of
such sum shall be paid by the Indenture Trustee to the Master Servicer at the
time of such sale, transfer and assignment to the Master Servicer's successor.
(h) The Indenture 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 Indenture 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 Indenture 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
Indenture Trustee or such successor Master Servicer, as applicable, all amounts
which then have been or should have been deposited in the Trust A Principal and
Interest Account by the Master Servicer or which are thereafter received with
respect to the Mortgage Loans. Neither the Indenture 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.
(i) The Indenture 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 Indenture Trustee is acting as successor Master Servicer,
the Indenture Trustee shall be required to make Delinquency Advances (including
the Delinquency Advances described in this clause (i)) only if, in the Indenture
Trustee's reasonable good faith judgment, such Delinquency Advances will
ultimately be recoverable from the related Mortgage Loans.
(j) 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.
(k) The Indenture Trustee shall give notice to the Note Insurer, Moody's,
Standard & Poor's and to the Noteholders of the occurrence of any event
specified in Section 5.1(a), 5.1(b) or any other event in which the Master
Servicer is no longer acting as Master Servicer hereunder of which the Indenture
Trustee has actual knowledge.
SECTION 5.2. INSPECTIONS BY THE NOTE INSURER AND THE INDENTURE TRUSTEE;
ERRORS AND OMISSIONS INSURANCE. (a) At any reasonable time and from time to time
upon reasonable notice, the Note Insurer, the Indenture 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.
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SECTION 5.3. 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 5.1(g).
SECTION 5.4. NOTICES OF TO CLASS A NOTEHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article V,
the Indenture Trustee shall give prompt written notice thereof to the Class A
Noteholders at their respective addresses appearing in the Note Register, the
Note Insurer and each Rating Agency.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 6.1. ADMINISTRATIVE DUTIES WITH RESPECT TO THE INDENTURE. The
Master Servicer shall perform all its duties and the duties of the Issuer under
the Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture. The Master Servicer shall prepare
for execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture. In furtherance of the foregoing, the Master Servicer
shall take all necessary action that is the duty of the Issuer to take pursuant
to the Indenture.
(a) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set forth in this
Agreement or any of the Documents, the Master Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner
Trustee or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to this Agreement or any of the Operative Documents or under
state and federal tax and securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the Issuer
to take pursuant to this Agreement or any of the Operative Documents. In
accordance with the directions of the Issuer or the Owner Trustee, the Master
Servicer shall administer, perform or supervise the performance of such other
activities in connection with the Mortgage Loans (including the Operative
Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by the Issuer or the Owner Trustee and are reasonably
within the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of the Operative
Documents to the contrary, the Master Servicer shall be responsible for
promptly notifying the Owner Trustee and the Indenture Trustee in the event
that any withholding
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tax is imposed on the Issuer's payments (or allocations of income) with
respect to the Trust A Certificates as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Owner Trustee or the Indenture Trustee
pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Operative
Documents to the contrary, the Master Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in [Section
5.1(a), (b), (c) and (d) of the Trust A Trust Agreement] with respect to,
among other things, accounting and reports with respect to the Trust A
Certificates.
(iv) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Master Servicer may enter into transactions with or
otherwise deal with any of its Servicer Affiliates; provided, however, that
the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Master
Servicer's opinion, no less favorable to the Issuer in any material respect.
(b) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Note Insurer of the proposed action and the
Owner Trustee and the Note Insurer shall not have withheld consent or provided
an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the Mortgage
Loans);
(C) the amendment, change or modification of this Agreement or any
of the Operative Documents;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its obligations under
the Indenture; and
(E) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders under the
Operative Documents, (2) sell the Trust Property pursuant to Section 5.1 of the
Indenture, (3) take any other action that the Issuer directs the Master Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
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(d) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Master Servicer under Section
6.1.
SECTION 6.2. RECORDS. The Master Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer and the Indenture Trustee at any time during normal business hours.
SECTION 6.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Master Servicer shall furnish to the Issuer and the Indenture Trustee from time
to time such additional information regarding the Mortgage Loans as the Issuer
and the Indenture Trustee shall reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Sponsor, the Note Insurer or the Class A Noteholders to the
Indenture Trustee to take any action under any provision of this Agreement, the
Sponsor, the Note Insurer or the Class A Noteholders, as the case may be, shall
furnish to the Indenture 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 7.2. FORM OF DOCUMENTS DELIVERED TO THE INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
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 Indenture 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 Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations
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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 Indenture Trustee, stating that the information with
respect to such matters is in the possession of the Indenture 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 Indenture Trustee may reasonably
rely upon the opinion of such other counsel.
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 7.3. ACTS OF CLASS A NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Class A Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Class A Noteholders 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
Indenture Trustee, and, where it is hereby expressly required, to the Sponsor
and/or the Note Insurer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Class A Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved 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 Class A Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Class A Noteholders shall bind the Class A Noteholders
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
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Class A Notes.
SECTION 7.4. NOTICES, ETC., TO INDENTURE TRUSTEE. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Class A Notes or
other documents provided or permitted by this Agreement to be made upon, given
or furnished to, or filed with the Indenture Trustee by any Class A Notes, the
Note Insurer or by the Sponsor shall be sufficient for
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every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Indenture Trustee at its corporate trust office as set forth
in the Indenture.
SECTION 7.5. NOTICES AND REPORTS TO CLASS A NOTEHOLDERS; WAIVER OF
NOTICES. Where this Agreement provides for notice to Class A Noteholders of any
event or the mailing of any report to Class A Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Class A Noteholder affected by such
event or to whom such report is required to be mailed, at the address of such
Class A- 1 Noteholder 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
Class A Noteholders 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 Class A Noteholder shall affect the sufficiency of such notice
or report with respect to other Class A Noteholders, 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 Class A Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such 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 Class A Noteholders 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 Indenture 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 Class A-1 Notes, failure to give such notice shall not affect any other
rights or obligations created hereunder.
SECTION 7.6. RULES BY INDENTURE TRUSTEE AND SPONSOR. The Indenture Trustee
may make reasonable rules for any meeting of Class A Noteholders.
SECTION 7.7. 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 7.8. SEVERABILITY. In case any provision in this Agreement or in
the Class A Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 7.9. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the
Class A Notes, expressed or implied, shall give to any Person, other than the
Class A Noteholders, the Note Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 7.10. LEGAL HOLIDAYS. In any case where the date of any Payment
Date, any other date on which any distribution to any Class A Noteholder 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 Class A
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Notes 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 Class A Noteholder 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 7.11. GOVERNING LAW. In view of the fact that Class A Noteholders
are expected to reside in many states and outside the United States and the
desire to establish with certainty that this Agreement will be governed by and
construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions of
the type contemplated herein, this Agreement and each Class A Note 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 7.12. 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 7.13. USURY. The amount of interest payable or paid on any Class A
Note 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 Class A Note
exceeds the Highest Lawful Rate, the Issuer stipulates that such excess amount
will be deemed to have been paid to the Class A Noteholder as a result of an
error on the part of the Indenture Trustee acting on behalf of the Issuer and
the Class A Noteholder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Indenture Trustee on
behalf of the Issuer, refund the amount of such excess or, at the option of such
Class A Noteholder, apply the excess to the payment of principal of such Class A
Note, if any, remaining unpaid. In addition, all sums paid or agreed to be paid
to the Indenture Trustee for the benefit of Class A Noteholders 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 Class A Notes.
SECTION 7.14. AMENDMENT. (a) The Indenture Trustee, the Sponsor and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Class A Noteholders, amend this Agreement, and the
Indenture 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) 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 Indenture Trustee, materially and adversely affect the
interests of any Class A Noteholder (without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any
time and from time to time, with the prior written consent of the Note Insurer
but without the giving of notice to or the receipt of the consent of the Class A
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of
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changing the definitions of Trust A Specified Overcollateralization Amount
provided, however, that no such change shall affect the weighted average life of
the Class A Notes (assuming an appropriate prepayment speed as determined by the
Underwriter by more than five percent, as determined by the Underwriter.
(c) This Agreement may also be amended by the Indenture Trustee, the
Sponsor, and the Master Servicer at any time and from time to time, with the
prior written approval of the Note Insurer and not less than a majority of the
Percentage Interest represented by each the Class A Notes 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 Class A Noteholders 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 Class A Noteholder without the
consent of the Class A Noteholder, (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 Class
A Notes, without the consent of the Class A Noteholders of the then Outstanding
Class A Notes.
(d) The Note Insurer, the Class A Noteholders, 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 7.15. THE NOTE INSURER. The Note Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Note Insurer shall be
suspended during any period in which the Note Insurer is in default in its
payment obligations under the Note Policy, except with respect to amendments to
this Agreement pursuant to Section 11.14. During the continuance of a Note
Insurer Default, the Note Insurer's rights hereunder shall vest in the Indenture
Trustee on behalf of the Class A Noteholders and shall be exercisable by the
Class A Noteholders of at least a majority in Percentage Interest of the Class A
Notes then Outstanding or, if there are no Class A Notes then Outstanding and
the Note Policy has expired or a Note Insurer Default has occurred and is
continuing, or if there are no Class A Notes outstanding and any and all amounts
due and owing the Note Insurer under the Insurance Agreement have been paid in
full, and the Note Policy has expired or is unavailable due to a Note Insurer
Default, by at least a majority of the Trust A Certificates then Outstanding. At
such time as the Class A Notes are no longer Outstanding hereunder and the Note
Insurer has been reimbursed for all Reimbursement Amounts to which it is
entitled hereunder and the Note Policy has expired, the Note Insurer's rights
hereunder shall terminate.
SECTION 7.16. NOTICES. All notices hereunder shall be given as follows,
until any superseding instructions are given to all other Persons listed below:
The Indenture Trustee: Bankers Trust Company
of California, N.A.
3 Park Plaza
Irvine, CA 92614
Attention: Advanta 1998-4 Trust A
Tel: (949) 253-7575
Fax: (949) 253-7577
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The Sponsor: Advanta Mortgage Conduit Services Inc.
Welsh & McKean Roads
P.O. Box 918
Springhouse, Pennsylvania 19477
Tel:
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, California 92127
Tel: (619) 674-3317
Fax: (619) 674-3666
The Note
Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
(Advanta Mortgage Loan Trust
1998-4A Mortgage Loan Backed
Notes Series 1998-4)
Telecopy No.: (212) 363-1459
Confirmation: ( ___ ) ___-____
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: Manager, Structured Finance Operations
Group
Underwriter: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
The Issuer: Advanta Mortgage Loan Trust 1998-4A
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 7.17. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually
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or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties to
this Agreement and by any person claiming by, through or under them and (d)
under no circumstances shall Wilmington Trust Company be personally liable for
the payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaking by the Issuer under this Agreement or any related documents.
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IN WITNESS WHEREOF, the Sponsor, the Issuer, the Master Servicer and the
Indenture 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: /s/ Mark T. Dunsheath
----------------------------------
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: /s/ Mark T. Dunsheath
----------------------------------
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE LOAN
TRUST 1998-4A,
as Issuer
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee,
By: /s/ Emmet Harmon
----------------------------------
Name: Emmet Harmon
Title: Vice President
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Indenture Trustee
By: /s/ Mark McNeil
----------------------------------
Name: Mark McNeil
Title: Assistant Secretary
[SIGNATURE PAGE TO THE TRUST A SALE AND SERVICING AGREEMENT]
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STATE OF CALIFORNIA )
: ss.:
COUNTY OF ________________ )
On the ____ day of _________, 1998, 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 92614; 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
Indenture 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> 60
EXHIBIT A
TO TRUST A SALE & SERVICE AGREEMENT
FORM OF CONTENTS OF MORTGAGE LOAN FILE
(a) the original Note, or a certified copy thereof, bearing all
intervening endorsements, endorsed either (i) "Pay to Mark McNeil the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse" or (ii) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse, Advanta as
Master Servicer," or (iii) "Pay to the order of Bankers Trust Company of
California, N.A., as custodian or trustee" by [Seller, signature, name, title]
and signed in the name of the previous owner by an authorized offer (in the
event that the Mortgage Loan was acquired by the previous owner in a merger the
signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]", in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]". The original Note should be accompanied by any rider made in
connection with the origination of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with the Note (if
any);
(c) the original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements;
(e) the original assignment of Mortgage of each Mortgage Loan to "Bankers
Trust Company of California, N.A., as custodian or trustee". In the event that
the Mortgage Loan was acquired by the previous owner in a merger, the assignment
of Mortgage must be the "(previous owner), successor by merger to (names of
predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) the originals of all intervening assignments of Mortgage, showing a
complete chain of assignment from origination to the related Seller, including
warehousing assignments, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof.
A-1
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EXHIBIT B
FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID IN FULL
I, Mark T. Dunsheath, Vice President of Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as sponsor (the "Sponsor"), hereby certify that
between the "Cut-Off Date" (as defined in the Trust A Sale and Servicing
Agreement dated as of November 1, 1998 among the Sponsor, Advanta Mortgage Corp.
USA, as master servicer, Advanta Mortgage Loan Trust 1998-4A, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee) and the date
hereof the following schedule of "Mortgage Loans" (as defined in the Trust A
Sale and Servicing Agreement) has been prepaid in full.
Dated: November 24, 1998
By: _______________________________
Name: Mark T. Dunsheath
Title: Vice President
B-1
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EXHIBIT C
FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., in its capacity as Indenture
Trustee (the "Indenture Trustee") under that certain Trust A Sale and Servicing
Agreement dated as of November 1, 1998 (the "Trust A Sale and Servicing
Agreement") by and among ADVANTA Mortgage Conduit Services, Inc., a Delaware
corporation, as sponsor (the "Sponsor"), ADVANTA Mortgage Corp. USA, a Delaware
corporation, as master servicer, the Issuer and Bankers Trust Company of
California, N.A., as Indenture Trustee, hereby acknowledges receipt of the items
delivered to it on behalf of the Issuer by the Sponsor with respect to the
Mortgage Loans listed on Schedule I of the Trust A Sale and Servicing Agreement
except as set forth in the exception report attached hereto and hereby declares
that it will hold such items on behalf of the Class A Noteholders and the Note
Insurer.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity but solely in
its capacity as Indenture Trustee
By: ________________________________
Name:
Title:
Dated: November 24, 1998
C-1
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EXHIBIT D
FORM OF CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company
of California, N.A., a national banking association, acting in its capacity as
Indenture Trustee (the "Indenture Trustee") of a certain pool of mortgage loans
(the "Pool") heretofore conveyed in trust to the Indenture Trustee, pursuant to
that certain Trust A Indenture dated as of November 1, 1998 (the " Trust A
Indenture ") by and among Advanta Mortgage Loan Trust 1998-4A, as Issuer (the
"Issuer") and the Indenture Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 2.2(a) of the Trust
A Sale and Servicing Agreement dated as of November 1, 1998 (the "Trust A Sale
and Servicing Agreement") among the Sponsor, the Issuer, the Indenture Trustee
and Advanta Mortgage Corp. USA, as Master Servicer, to review the Files relating
to the Pool within a specified period following the Closing Date and to notify
the Sponsor promptly of any defects with respect to the Pool, and the Sponsor is
required to remedy such defects or take certain other action, all as set forth
in Section 2.2(b) of the Trust A Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Trust A Sale and Servicing Agreement
requires the Indenture Trustee to deliver this Certification upon the
satisfaction of certain conditions set forth therein.
NOW, THEREFORE, it has determined that all required documents (or
certified copies of documents listed in Section 2.1 of the Trust A Sale and
Servicing Agreement) have been executed or received, and that such documents
relate to the Initial Mortgage Loans identified in the Schedules of Mortgage
Loans pursuant to Section 2.1(a) of the Trust A Sale and Servicing Agreement or,
in the event that such documents have not been executed and received or do not
so relate to such Mortgage Loans, any remedial action by the Sponsor pursuant to
Section 2.2(b) of the Trust A Sale and Servicing Agreement has been completed.
The Indenture Trustee makes no certification hereby, however, with respect to
any intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By: ___________________________________
Name:
Title:
D-1
<PAGE> 64
EXHIBIT E
DELIVERY ORDER
November 24, 1998
Bankers Trust Company
of California, N.A.
Three Park Plaza
16th Floor
Irvine, California 92614
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Trust A Indenture, dated as of November 1,
1998 (the "Trust A Indenture") by and between Advanta Mortgage Loan Trust
1998-4A, as Issuer and Bankers Trust Company of California, N.A., as Indenture
Trustee, the Issuer HEREBY CERTIFIES that all conditions precedent to the
issuance of Advanta Mortgage Loan Trust 1998-4A, Mortgage Loan Asset-Backed
Notes (the "Class A Notes"), HAVE BEEN SATISFIED and HEREBY REQUESTS YOU TO
AUTHENTICATE AND DELIVER said Class A Notes, and to RELEASE said Class A Notes
to the holders thereof, or otherwise upon their order.
Very truly yours,
ADVANTA MORTGAGE LOAN TRUST 1998-4A
by: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner
Trustee
By: ______________________________
Name:
Title:
E-1
<PAGE> 65
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Certificates
Series 1998-4A
Statement to Class A Noteholders
AS TO THE POOL
DISTRIBUTION DATE:
DELINQUENCY ADVANCES MADE:
ACCRUED SERVICING FEE FOR THE CURRENT PERIOD:
PLUS ADDITIONAL SERVICING FEES:
LESS PERMITTED REDUCTIONS TO SERVICING FEES:
TOTAL SERVICING FEES DUE MASTER SERVICER (INCLUDING MASTER SERVICING FEE):
COLLECTED SERVICING FEES FOR CURRENT PERIOD:
<TABLE>
<CAPTION>
Total Delinquency (Excluding Foreclosure & REO, Including Loans in
delinquent bankruptcies) Foreclosure
(Including
30-59 60-89 90+ Total bankruptcies
Days Days Days Delinquency in F/C)
----- ----- ---- ----------- ------------
<S> <C> <C> <C> <C> <C>
UPS-$
%-$
Loans-$
%-#
</TABLE>
BOOK VALUE AND LOAN NUMBER OF REO PROPERTY:
NUMBER OF LOANS AS OF THE CURRENT DISTRIBUTION DATE:
NUMBER OF LOANS AS OF THE NEXT DISTRIBUTION DATE:
WEIGHTED AVERAGE COUPON AS OF THE CURRENT DISTRIBUTION DATE:
E-2
<PAGE> 66
WEIGHTED AVERAGE COUPON AS OF THE NEXT DISTRIBUTION DATE:
E-3
<PAGE> 67
SUBSTITUTION AMOUNTS:
LOAN PURCHASE PRICES
Bankruptcy
Proceedings
-----------
Loans -# UPB-$
Status
Current
Delinquent*
Foreclosure*
Total
Modified Loans
--------------
Loans-# UPS-$
Status
Current
Delinquent*
Foreclosure*
Total
* included in delinquency and foreclosure statistics above
CURTAILMENTS INCLUDED IN CURRENT DISTRIBUTION:
PREPAYMENTS IN FULL INCLUDED IN CURRENT DISTRIBUTION:
RECOVERIES OF PRINCIPAL INCLUDED IN CURRENT DISTRIBUTION:
CARRY-FORWARD AMOUNT:
AMOUNT OF SUBORDINATION INCREASE OR DECREASE:
INFORMATION PURSUANT TO
SECTION 6049(d)(7)(C):
PROJECTED EXCESS SPREAD:
BALANCE OF LARGEST LOAN:
E-4
<PAGE> 68
TRUST ACTIVITY
TRUST A NOTE ACCOUNT DEPOSIT
AS TO THE POOL:
PROCEEDS OF LIQUIDATION OF TRUST ESTATE:
AMOUNT OF DEPOSIT IN THE TRUST A NOTE ACCOUNT:
LOAN PURCHASE PRICE AMOUNTS:
SUBSTITUTION AMOUNT:
INVESTMENT EARNINGS: ON CERT. ACCT.
MONTHLY REMITTANCE FOR EACH CLASS:
AMOUNT OF EXCESS SPREAD ALLOCABLE USED TO COVER SHORTFALLS WITH RESPECT TO TRUST
B AND TRUST C:
AMOUNT WITHDRAWN FROM TRUST A NOTE ACCOUNT
AND DEPOSITED IN THE EXPENSE ACCOUNT:
AMOUNT WITHDRAWN FROM TRUST A NOTE ACCOUNT
AND DISTRIBUTED TO TRUST A CERTIFICATES:
.
.
AMOUNT REMAINING IN TRUST A ACCOUNT:
PREMIUM AMOUNT:
E-5
<PAGE> 69
EXHIBIT F
FORM OF MONTHLY REPORT
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Notes
Series 1998-4A
Statement to Class A Noteholders
PRIOR CURRENT
ORIGINAL PRINCIPAL PRINCIPAL
CLASS FACE VALUE BALANCE INTEREST PRINCIPAL TOTAL BALANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTALS
- --------------------------------------------------------------------------------
FACTOR INFORMATION PER $1000 OF ORIGINAL FACE PASS-THROUGH RATES
PRIOR CURRENT
PRINCIPAL PRINCIPAL
CLASS CUSIP BALANCE INTEREST PRINCIPAL TOTAL BALANCE CURRENT NEXT
- --------------------------------------------------------------------------------
SPONSOR: Advanta Mortgage Conduit Services, Inc. ACCOUNT
SERVICER: Advanta Mortgage Corp. USA MANAGER:
-----------------
LEAD UNDERWRITER: Morgan Stanley & Co. Incorporated
RECORD DATE:
DISTRIBUTION DATE:
FACTOR INFORMATION:
F-1
<PAGE> 70
EXHIBIT G
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company
of California, N.A.
Three Park Plaza
16th Floor
Irvine, California 92614
Attn: Corporate Trust
Date:
In connection with the administration of the mortgage loans held by you as
Indenture Trustee under a certain Trust A Indenture dated as of November 1, 1998
and by and between Advanta Mortgage Loan Trust 1998-4A, as Issuer, and you, as
Indenture Trustee (the "Agreement"), the Master Servicer hereby requests a
release of the File held by you as Indenture Trustee with respect to the
following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all amounts
received in connection with the loan have been or will be
credited to the Trust A Note Account (whichever is applicable)
pursuant to the Agreement.)
_______ 2. Mortgage Loan repurchased pursuant to Section 4.14 of the Agreement.
(The Master Servicer hereby certifies that the Loan Purchase
Price has been or will be paid to the Trust A Note Account
pursuant to the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a Qualified
Replacement Mortgage has been or will be assigned and
delivered to you along with the related File pursuant to the
Agreement.)
G-1
<PAGE> 71
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above File will be held by the
undersigned in accordance with the provisions of the Agreement and will be
returned to you, except if the Mortgage Loan has been paid in full, or
repurchased or substituted for by a Qualified Replacement Mortgage (in which
case the File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the File will be returned when no longer
required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
ADVANTA MORTGAGE CORP. USA
By __________________________________
Name:_____________________________
Title:____________________________
G-2
<PAGE> 72
EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Advanta Mortgage Conduit Services, Inc., as Seller, and Advanta Mortgage
Loan Trust 1998-4A, as Purchaser, pursuant to the Sale and Servicing Agreement
dated as of November 1, 1998 among Advanta Mortgage Corp. USA as Master
Servicer, Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta Mortgage
Loan Trust 1998-4A, as Issuer, Bankers Trust Company of California, N.A., as
Indenture Trustee (the "Trust A Sale and Servicing Agreement"), hereby confirm
their understanding with respect to the sale by the Seller and the purchase by
the Purchaser of those Mortgage Loans listed on the attached Schedule of
Mortgage Loans (the "Subsequent Mortgage Loans").
Conveyance of Subsequent Mortgage Loans. The Seller does hereby
irrevocably transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (except as otherwise explicitly provided for herein) all of its
right, title and interest in and to the Subsequent Mortgage Loans, including
specifically, without limitation, the Mortgages, the Files and all other
documents, materials and properties appurtenant thereto and the Notes, including
all interest accruing and principal collected by the Seller on or with respect
to the Subsequent Mortgage Loans on or after the Subsequent Cut-Off Date of any
related insurance policies on behalf of the Purchaser. The Seller shall deliver
the original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Trust A Sale and Servicing Agreement) and
other required documentation in accordance with the terms set forth in Section
2.4(a) of the Trust A Sale and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Trust A Sale and Servicing Agreement shall
be borne by the Seller.
Additional terms of the sale are attached hereto as Attachment A.
The Seller hereby affirms the representations and warranties set forth in
the Trust A Sale and Servicing Agreement that related to the Subsequent Mortgage
Loans as of the date hereof. The Seller hereby delivers notice and confirms that
each of the conditions set forth in Section 2.4(a) to the Trust A Sale and
Servicing Agreement are satisfied as of the date hereof.
All terms and conditions of the Trust A Sale and Servicing Agreement are
hereby ratified, confirmed and incorporated herein; provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Trust A Sale and Servicing
Agreement.
H-1
<PAGE> 73
Terms and capitalized and not defined herein shall have their respective
meanings as set forth in the Trust A Sale and Servicing Agreement.
IN WITNESS WHEREOF, the parties have executed this Subsequent Transfer
Agreement as of this ____ day of ____________, ______.
ADVANTA MORTGAGE CONDUIT
SERVICES, INC.,
as Seller
By:_______________________________
Mark Dunsheath
Vice President
ADVANTA MORTGAGE LOAN
TRUST 1998-4A
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:_______________________________
Name:
Title:
Dated:
Attachments
A. Additional Terms of the Sale.
B. Schedule of Mortgage Loans.
C. Opinion of Seller's Counsel.
D. Seller's Officer's Certificate.
E. Opinion of Seller's Bankruptcy Counsel.
F. Trustee's Certificate.
H. Purchase Request.
I. Assignment.
H-2
<PAGE> 74
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
SUBSEQUENT TRANSFER AGREEMENT
ADVANTA MORTGAGE POOL: 1998-4A
NOVEMBER, 1998
1. CUTOFF DATE 1 NOVEMBER 1998 (DD MONTH YEAR)
1A. PRICING DATE _________________ (DD MONTH YEAR)
2. CLOSING DATE 24 NOVEMBER 1998 (DD MONTH YEAR)
2A. DAYS - CUTOFF TO CLOSING
3. POOL PRINCIPAL BALANCE AS
OF THE CUTOFF DATE
4. NET PURCHASE PRICE EQUALS: 100.00%
PLUS:
5. ACCRUED INTEREST $
EQUALS: -------
6. NET PROCEEDS $
=======
7. PASSTHROUGH RATE %
SEE FORMULA BELOW
8. FIRST DISTRIBUTION DATE
9. MAXIMUM CLTV
10. REQUIRED MINIMUM COUPON
11. MAXIMUM BALLOON PERCENTAGE
12. MAXIMUM CONCENTRATION PCT
13. MAXIMUM VACATION &
INVESTOR OWNED PCT
14. ADDITIONAL REPS & WARRANTIES:
15. OTHER MATTERS
H-3
<PAGE> 75
EXHIBIT I
ADDITION NOTICE
Bankers Trust Company of California, N.A.
Three Park Plaza, 16th floor
Irvine, CA 92714
Moody's Investors Service, Inc.
99 Church Street
New York, NY 10007
Standard & Poor's Ratings Group
26 Broadway
New York, NY 10004
AMBAC Assurance Corporation
One State Street Plaza, 17th floor
New York, NY 10004
Re: Advanta Mortgage Loan Trust 1998-4A
Ladies and Gentlemen:
Pursuant to Section 2.4(a) of the Sale and Servicing Agreement, dated as
of November 1, 1998 (the "Agreement"), among Advanta Mortgage Conduit Services,
Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta
Mortgage Loan Trust 1998-4A, as Issuer, and Bankers Trust Company of California,
N.A., as Indenture Trustee, we expect to deliver to the Indenture Trustee on
_______________, for transfer to the Advanta Mortgage Loan Trust 1998-4A, the
Subsequent Mortgage Loans (as defined in the Agreement) on the schedule attached
hereto, in the aggregate Principal Balance (as defined in the Agreement) of
$_______________.
This Addition Notice is dated as of _______________.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
By: ___________________________
Name:
Title:
I-1
<PAGE> 1
Exhibit 4.3.2
TRUST B
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST 1998-4B,
as Issuer,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<CAPTION>
Page
<S> <C>
Parties.................................................................................................. 1
Recitals................................................................................................. 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION............................................................. 2
Section 1.1. Definitions.......................................................................... 2
Section 1.2. Use of Words and Phrases............................................................. 15
Section 1.3. Captions; Table of Contents.......................................................... 15
Section 1.4. Opinions............................................................................. 15
ARTICLE II CONVEYANCE OF MORTGAGE LOANS.................................................................. 15
Section 2.1. Conveyance of the Initial Mortgage Loans............................................. 15
Section 2.2. Acceptance by the Issuer; Certain Substitutions of Mortgage Loans; Certification by
Indenture Trustee................................................................. 18
Section 2.3. Cooperation Procedures............................................................... 19
Section 2.4. Conveyance of the Subsequent Mortgage Loans.......................................... 19
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor................................. 22
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER............. 22
Section 3.1. Representations and Warranties of the Sponsor........................................ 22
Section 3.2. Representations and Warranties of the Master Servicer............................... 24
Section 3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage Loans..... 26
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In
Certain Situations................................................................ 27
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS................................................ 29
Section 4.1. Master Servicer and Sub-Servicers.................................................... 29
Section 4.2. Collection of Certain Mortgage Loan Payments......................................... 30
Section 4.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers................... 30
Section 4.4. Successor Sub-Servicers.............................................................. 31
Section 4.5. Liability of Master Servicer......................................................... 31
Section 4.6. No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the
Class B Noteholders............................................................... 31
Section 4.7. Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee............ 31
Section 4.8. Trust B Principal and Interest Account............................................... 31
Section 4.9. Delinquency Advances, Compensating Interest and Servicing Advances................... 33
Section 4.10. Purchase of Mortgage Loans........................................................... 34
Section 4.11. Maintenance of Insurance............................................................. 34
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.......................... 35
Section 4.13. Realization Upon Defaulted Mortgage Loans............................................ 36
Section 4.14. Indenture Trustee to Cooperate; Release of Files..................................... 37
Section 4.15. Servicing Compensation............................................................... 38
Section 4.16. Annual Statement as to Compliance.................................................... 39
Section 4.17. Annual Independent Certified Public Accountants'Reports.............................. 39
Section 4.18. Access to Certain Documentation and Information Regarding the Mortgage Loans......... 39
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.19. Assignment of Agreement.............................................................. 39
ARTICLE V SERVICING TERMINATION.......................................................................... 40
Section 5.1. Events of Servicer Termination........................................................ 40
Section 5.2. Inspections by the Note Insurer and the Indenture Trustee; Errors and Omissions
Insurance.......................................................................... 44
Section 5.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer........ 45
Section 5.4. Notices of to Class B Noteholders..................................................... 45
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.................................................. 45
Section 6.1. Administrative Duties with Respect to the Indenture................................... 45
Section 6.2. Records............................................................................... 47
Section 6.3. Additional Information to be Furnished to the Issuer.................................. 47
ARTICLE VII MISCELLANEOUS................................................................................ 47
Section 7.1. Compliance Certificates and Opinions.................................................. 47
Section 7.2. Form of Documents Delivered to the Indenture Trustee.................................. 47
Section 7.3. Acts of Class B Noteholders........................................................... 48
Section 7.4. Notices, etc., to Indenture Trustee................................................... 48
Section 7.5. Notices and Reports to Class B Noteholders; Waiver of Notices......................... 49
Section 7.6. Rules by Indenture Trustee and Sponsor................................................ 49
Section 7.7. Successors and Assigns................................................................ 49
Section 7.8. Severability.......................................................................... 49
Section 7.9. Benefits of Agreement................................................................. 49
Section 7.10. Legal Holidays........................................................................ 49
Section 7.11. Governing Law......................................................................... 50
Section 7.12. Counterparts.......................................................................... 50
Section 7.13. Usury................................................................................. 50
Section 7.14. Amendment............................................................................. 50
Section 7.15. The Note Insurer...................................................................... 51
Section 7.16. Notices............................................................................... 51
Section 7.17. Limitation of Liability............................................................... 52
</TABLE>
ii
<PAGE> 4
SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Contents of Mortgage Loan File
EXHIBIT B -- Form of Certificate Re: Mortgage Loans Prepaid in Full
EXHIBIT C -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT D -- Form of Certification
EXHIBIT E -- Form of Delivery Order
EXHIBIT F -- Form of Power of Attorney
EXHIBIT G -- Form of Monthly Report
EXHIBIT H -- Form of Master Servicer's Trust Receipt
EXHIBIT I -- Form of Subsequent Transfer Agreement
EXHIBIT J -- Form of Addition Notice
iii
<PAGE> 5
SALE AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE LOAN TRUST
1998-4B (the "Trust" or "Issuer"), dated as of November 1, 1998, by and among
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in its capacity
as sponsor of the Issuer (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 indenture trustee (the "Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of the Mortgage Loans
(as defined herein) originated by the Originators (as defined herein);
WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Issuer;
WHEREAS, the Issuer desires to purchase Subsequent Mortgage Loans (as
defined herein) to be originated by the Originators.
WHEREAS, the Sponsor has an agreement to purchase such Subsequent Mortgage
Loans from the Originators and is willing to sell such Subsequent Mortgage Loans
to the Issuer;
WHEREAS, the Master Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the trust estate; and
WHEREAS, Ambac Assurance Corporation (the "Note 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, the Issuer and the Indenture
Trustee hereby agree as follows:
<PAGE> 6
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. In addition, capitalized terms used herein and not
defined herein shall have their respective meanings as set forth in the
Indenture:
"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 Class B
Noteholders' reliance on the Master Servicer.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Issuer pursuant to Section 2.4(a) of this Agreement, a notice in
the form of Exhibit J hereto, which shall be given not later than five Business
Days prior to the related Subsequent Transfer Date, of the Sponsor's designation
of Subsequent Mortgage Loans to be sold to the Issuer and the aggregate Loan
Balance and the weighted average Coupon Rate of such Subsequent Mortgage Loans.
Such Addition Notice shall include an electronic data file in a form agreeable
to the Indenture Trustee, the Note Insurer and the Master Servicer.
"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 A 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 4.15 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.
"Agreement": This Trust B Sale and Servicing Agreement, as it may be
amended from time to time, and including the Exhibits and Schedules attached
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.
2
<PAGE> 7
"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 Indenture
Trustee, the Sponsor, the Issuer and the Master Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered on the Closing Date.
"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.
"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
Indenture Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Class A Note": Any note designated as a "Class A Note" on the face
thereof.
"Class B Deficiency Amount": As defined in the Trust B Indenture.
"Class B Note Principal Balance": As of the Closing Date, $350,000,000. As
of any Payment Date with respect to the Class B Certificates, the Class B Note
Principal Balance as of the Closing Date less any amounts actually distributed
theretofor as principal thereon to the Class A Notes on all prior Payment Dates.
"Class B Note": Any note designated as a "Class B Note" on the face
thereof.
"Class B Noteholders": The holders of the Class A Notes.
"Class C Note": Any note designated as a "Class C Note" on the face
thereof.
"Closing Date": November 24, 1998.
"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, the percentage equal to (a) the sum of (i) the remaining
principal balance, as of origination of the Second Mortgage Loan of the Senior
Lien note(s) relating to such Second Mortgage Loan and (ii) the Original
Principal Amount of the Note relating to such Second Mortgage Loan divided by
(b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) hereof.
3
<PAGE> 8
"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" code, the items listed on Exhibit A
hereto.
"Control Party": Until the last sentence of Section 7.15 hereof is
applicable and so long as no Note Insurer Default has occurred and is
continuing, the Note Insurer, and thereafter, the Indenture Trustee.
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Initial Mortgage Loans are
transferred and assigned to the Issuer, the opening of business, November 1,
1998.
"Definitive Notes": Class B Notes issued in definitive form without
coupons.
"Delinquency Advance": As defined in Section 4.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit E
hereto and delivered by the Issuer to the Indenture Trustee on the Closing Date
pursuant to Section 2.2 of the Trust B Indenture.
"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 the Trust B Principal
and Interest 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 or A or
better by Standard & Poor's and in the highest short-term rating category for
Moody's, and Standard & Poor's unless otherwise approved in writing by the
Indenture Trustee. The Note Insurer, Moody's and Standard & Poor'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 Indenture Trustee, the Note Insurer, Moody's and Standard &
Poor's and, in each case acting or designated by the Master Servicer as the
depository institution for the Trust B Principal and Interest Account; provided,
however, that any such institution or association shall have combined capital,
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<PAGE> 9
surplus and undivided profits of at least $100,000,000. Notwithstanding the
foregoing, a Trust B Principal and Interest 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 or BBB or
better by Standard & Poor's if such institution has trust powers and the Trust B
Principal and Interest Account is held by such institution in its corporate
trust department.
"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
Note Insurer and the Indenture Trustee.
"Direct Participant" or "DTC Participant" means any broker-dealer, bank or
other financial institution for which the Depository holds Class B Notes from
time to time as a securities depository.
"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 2.1(b) hereof.
"Eligible Investments": Those investments so designated pursuant to
Section 8.9 of the Trust B Indenture.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"File": The documents delivered to the Indenture Trustee pursuant to
Section 2.1 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Advanta Mortgage File or Conduit Mortgage
File, as appropriate, pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a first priority
mortgage lien with respect to any Property.
"Indemnification Agreement": The Indemnification Agreement dated as of
November 24, 1998 between the Note Insurer and the Underwriter as may be amended
from time to time.
"Indenture 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 Indenture Trustee under this Agreement, and any successor
hereunder.
"Indenture Trustee's Fees": With respect to any Payment Date, the product
of (x) one-twelfth of 0.007% and (y) the aggregate Loan Balance of the Mortgage
Loans as of the beginning of the related Remittance Period.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in the Class B Notes.
"Initial Mortgage Loans": The Mortgage Loans delivered by the Sponsor to
the Issuer on the Closing Date.
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"Insurance Agreement": The Insurance and Indemnity Agreement dated as of
November 24, 1998 among the Sponsor, the Indenture Trustee, the Master Servicer,
Trust A, Trust B, Trust C, and the Note 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.
"Issuer" or "Trust B": Advanta Mortgage Loan Trust 1998-4B, as created by
the Trust B Trust Agreement.
"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 Class B Notes 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.
"Liquidated Mortgage Loan": As defined in Section 4.13(b) hereof. A
Mortgage Loan which is purchased from the Issuer pursuant to Section 3.3, 3.4,
2.2(b) or 4.10 hereof is not a "Liquidated Mortgage 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 4.9 with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the Master
Servicer in connection with such Liquidated Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the outstanding
principal balance thereof as of the Cut-Off Date or Subsequent Cut-Off-Date, as
the case may be, less any related Principal Remittance Amounts relating to such
Mortgage Loan included in previous related Trust B Monthly Remittance Amounts
that were transferred by the Master Servicer or any Sub-servicer to the
Indenture Trustee for deposit in the Trust B Note Account; provided, however,
(x) that the Loan Balance for any Mortgage Loan which has become a Liquidated
Mortgage 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
Mortgage Loan, and at all times thereafter and (y) the Loan Balance "as of the
Cut-Off Date" for any Mortgage Loan originated during the period from the
Cut-Off Date to the Closing Date shall be the original Loan Balance thereof.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Issuer on a Remittance Date pursuant to Section 3.3, 3.4, 2.2(b) or 4.10
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
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Delinquency Advances and Servicing Advances, including Nonrecoverable Advances
theretofore made with respect to such Mortgage Loan and not subsequently
recovered from the related Mortgage Loan, (ii) all Delinquency Advances which
the Master Servicer or any Sub-servicer has theretofore failed to remit with
respect to such Mortgage Loan and (iii) any Reimbursement Amount relating to the
Issuer.
"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 H 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 Indenture
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 Indenture 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).
"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 Loans": Such of the mortgage loans transferred and assigned to
the Issuer pursuant to Section 2.1(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
Issuer. Any mortgage loan which, although intended by the parties hereto to have
been, and which purportedly was, transferred and assigned to the Issuer by the
Sponsor, in fact was not transferred and assigned to the Issuer for any reason
whatsoever shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement. The term "Mortgage Loan" includes the terms "Initial Mortgage
Loan" and "Subsequent Mortgage Loan".
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Mortgage 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 Mortgage Loan. In no event shall Net Liquidation Proceeds with
respect to any Liquidated Mortgage Loan be less than zero.
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"Nonrecoverable Advances": With respect to any Mortgage Loan, (a) any
Delinquency Advance or Servicing Advance previously made and not reimbursed
pursuant to Section 8.7 (b)(xvii) of the Indenture or Section 4.9, (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 promptly to the Note Insurer and the Indenture Trustee following such
determination would not be ultimately recoverable pursuant to Section
8.7(b)(xvii) of the Indenture or Section 4.9 or (c) any other advance identified
as a Nonrecoverable Advance in subsection 4.8(d).
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Note Account": The Note Account established in accordance with Section
8.3 of the Trust B Indenture and maintained by the Indenture Trustee.
"Note Insurer": As defined in the recitals.
"Note Insurer Default": Any one of the following events shall have
occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment required under
the Note Policy;
(b) The Note 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, the Wisconsin 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 Note 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 Note Insurer (or
the taking of possession of all or any material portion of the property of the
Note Insurer).
"Note Policy": The note guaranty insurance policy dated November 24, 1998
issued by the Note Insurer to the Indenture Trustee for the benefit of the Class
B Noteholders.
"Noteholders": The holders of the Class A Notes, the Class B Notes and the
Class C Notes.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Indenture Trustee.
"Operative Documents": Collectively, the Master Transfer Agreements, the
Insurance Agreement, the Indemnification Agreement, and, with respect to each of
Trust A, Trust B and Trust C, the related Sale and Servicing Agreement,
Subsequent Transfer Agreements, Trust Agreement, Note Policy, Indenture and
Notes.
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"Original Pool Principal Balance": The Pool Principal Balance as of the
Closing Date.
"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 (or, in the
case of Subsequent Mortgage Loans, will purchase) 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.
"Outstanding": With respect to the Class B Notes, as of any date of
determination, all such Class B Notes theretofore executed and delivered
hereunder except:
(i) Class B Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Class B Notes or portions thereof for which full and final
payment money in the necessary amount has been theretofore deposited with
the Indenture Trustee in trust for the Class B Noteholders;
(iii) Class B Notes in exchange for or in lieu of which other Class
B Notes have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Indenture Trustee is presented that any
such Class B Notes are held by a bona fide purchaser; and
(iv) Class B Notes alleged to have been destroyed, lost or stolen
for which replacement Class B Notes have been issued as provided for in
Section 2.4 of the Indenture.
"Overall Event of Servicer Termination": Any event described in clause (b)
of Section 5.1 hereof.
"Owner Trustee": Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee under the Trust B Trust Agreement, its successors in
interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Class B Noteholders, which shall be the 25th day of
each month, commencing in the month following the Closing Date or if the 25th
day is not a Business Day, then the next succeeding Business Day.
"Percentage Interest": As to any Class B Note, that percentage, expressed
as a fraction, the numerator of which is the Class B Note Principal Balance of
such Class B Note as of the related Cut-Off Date and the denominator of which is
the Aggregate Class B Note Principal Balance; and as to any Certificate, that
Percentage Interest set forth on such Certificate.
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"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 Trust B experienced
during such period.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate principal
balances of all Mortgage Loans 90 or more days Delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
"Pool Principal Balance": The aggregate principal balances of all Mortgage
Loans.
"Pool Rolling 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.
"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 in full 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.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998 naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in the related Prospectus Supplement.
"Prospectus Supplement": That certain Prospectus Supplement dated November
2, 1998, discussing the Class B Notes issued by Trust B.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.3, 3.4 or 2.2(b) hereof, which (i) bears a fixed rate of
interest, (ii) has a Coupon Rate at least equal to the Coupon Rate of 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
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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 the Payment
Date in November, 2028, (vi) has a Combined Loan-to-Value Ratio as of the
Cut-Off Date or Subsequent 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, all as evidenced by an Officer's Certificate of the Sponsor delivered to
the Note Insurer and the Indenture 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. In the event that one or more
mortgage loans are proposed to be substituted for one or more mortgage loans,
the Note Insurer may allow the foregoing tests to be met on a weighted average
basis or other aggregate basis acceptable to the Note Insurer, as evidenced by a
written consent delivered to the Indenture Trustee by the Note 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 Mortgage 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 business day
immediately preceding the Payment Date; provided, that, if the Class B Notes
revert to Definitive Notes, the Record Date with respect to each Payment Date
thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs.
"Register": The register maintained by the Indenture Trustee in accordance
with Section 2.3 of the Indenture, in which the names of the Class B Noteholders
are set forth.
"Registrar": The Indenture Trustee, acting in its capacity as Indenture
Trustee appointed pursuant to Section 6.13 of the Indenture, 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 Class B
Notes constituting a part thereof.
"Remittance Date": Any date on which the Master Servicer is required to
remit monies on deposit in the Trust B Principal and Interest Account to the
Indenture 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 Closing Date 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 Issuer through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
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"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 Issuer.
"Schedules of Mortgage Loans": The Schedules of Mortgage Loans, attached
hereto as Schedule I as they may be further supplemented in connection with
Subsequent Transfers. Such Schedules shall also contain one of the following
codes for each Mortgage Loan or Subsequent Mortgage 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
Indenture 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.
"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.
"Servicer Termination Delinquency Rate Trigger". As defined in the
Insurance Agreement.
"Servicer Termination Loss Trigger". As defined in the Insurance
Agreement.
"Servicing Advance": As defined in Section 4.9(c) and Section 4.13(a)
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 Indenture 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.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage Loans,
the first day of the month in which such Subsequent Mortgage Loans are
transferred and assigned to the Issuer.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the Issuer
pursuant to Section 2.4 hereof, which shall be listed on the Schedule of
Mortgage Loans attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Indenture Trustee and the
Sponsor substantially
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in the form of Exhibit I hereto, by which Subsequent Mortgage Loans are sold and
assigned to the Issuer.
"Subsequent Transfer Date": The date specified in each Subsequent Transfer
Agreement.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage, if the outstanding principal amount of such Qualified
Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than
the Loan Balance of the Mortgage Loan being replaced as of such Replacement
Cut-Off Date, an amount equal to such difference together with accrued and
unpaid interest on such amount calculated at the Coupon Rate net of the
Servicing Fee of the Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has entered into
a Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 4.3 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
"Trust A": Advanta Mortgage Loan Trust 1998-4A, the trust created under
the Trust A Trust Agreement.
"Trust A Sale and Servicing Agreement": The Trust A Sale and Servicing
Agreement, dated as of November 1, 1998, among Trust A, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibits and Schedules attached thereto.
"Trust A Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
"Trust B": Advanta Mortgage Loan Trust 1998-4B, the trust created under
the Trust B Trust Agreement.
"Trust B Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 8.3 of the Indenture and maintained by
the Indenture Trustee.
"Trust B Capitalized Interest Requirement": As defined in the Trust B
Indenture.
"Trust B Certificate": As defined in the Trust B Trust Agreement.
"Trust B Event of Servicer Termination": Any event described in clause (a)
of Section 5.1 hereof.
"Trust B Indenture": The Indenture dated as of November 1, 1998 relating
to Trust A between the Issuer and the Indenture Trustee, as the same may be
amended and supplemented from time to time.
"Trust B Monthly Remittance Amounts". As defined in the Trust B Indenture.
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"Trust B Overfunded Interest Amount". As defined in the Trust B Indenture.
"Trust B Pre-Funded Amount": With respect to any Determination Date, the
amount on deposit in the Trust A Pre-Funding Account and available for the
purchase of the Subsequent Mortgage Loans.
"Trust B Pre-Funding Account": The Trust B Pre-Funding Account established
in accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.
"Trust B Pre-Funding Earnings": With respect to the December, 1998 Payment
Date, the actual investment earnings earned during the period November 24, 1998
through December 28, 1998 (inclusive) on the Pre-Funding Account during such
period as calculated by the Indenture Trustee pursuant to Section 2.4(g) hereof;
with respect to the January, 1999 Payment Date, the actual investment earnings
during the period December 29, 1998 through January 25, 1999 (inclusive) on the
Pre-Funding Account during such period as calculated by the Indenture Trustee
pursuant to Section 2.4(g) hereof; and with respect to the February, 1999
Payment Date, the actual investment earnings during the period January 25, 1998
through February 25, 1999 (inclusive) on the Pre-Funding Account during such
period as calculated by the Indenture Trustee pursuant to Section 2.4(e) hereof.
"Trust B Pre-Funding Period": The period commencing on the Closing Date
and ending on the earlier to occur of (i) the date on which the Trust A
Pre-Funded Amount (exclusive of any investment earnings) is less than $100,000
and (ii) February 25, 1999.
"Trust B Principal and Interest Account": Collectively, each Trust B
Principal and Interest Account created by the Master Servicer or any
Sub-servicer pursuant to Section 4.8(a) hereof, or pursuant to any Sub-Servicing
Agreement.
"Trust B Trust Agreement": The Trust Agreement dated as of November 1,
1998 between the Owner Trustee and the Sponsor.
"Trust C": Advanta Mortgage Loan Trust 1998-4C, the trust created under
the Trust C Trust Agreement.
"Trust C Sale and Servicing Agreement": The Trust C Sale and Servicing
Agreement, dated as of November 1, 1998 among Trust C, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibit and Schedules attached thereto.
"Trust C Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
"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 for the benefit of the Class B Noteholders, including all
proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii)
such amounts including collections in respect of the related Mortgage Loans
received on or after the Cut-Off Date and each Subsequent Cut-Off Date, but
excluding any premium recapture, as applicable, including Eligible Investments,
as from time to time may be held in the Trust B Note Account and by the Master
Servicer in the Trust B Principal and Interest Account (except as otherwise
provided herein), each to be created pursuant to this Agreement, (iii) any
Property, the ownership of which has been effected on behalf of the
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<PAGE> 19
Issuer as a result of foreclosure or acceptance by the Master Servicer of a deed
in lieu of foreclosure and that has not been withdrawn from the Issuer, (iv) any
Insurance Policies relating to the Mortgage Loans and any rights of the Sponsor
or the Affiliated Originators under any Insurance Policies, (v) Net Liquidation
Proceeds with respect to any Liquidated Mortgage Loan.
"Trust Notes": The Class A Note issued by Trust A or the Class B Note
issued by Trust B or the Class C Note issued by Trust C.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased by the Sponsor
from an Unaffiliated Originator and sold to the Issuer by the Sponsor.
"Unaffiliated Originators": Any Originator who is not affiliated with the
Sponsor.
"Underwriter": Morgan Stanley & Co. Incorporated.
SECTION 1.2. USE OF WORDS AND PHRASES. "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used. The definitions set forth in Section 1.1 hereof
include both the singular and the plural. Whenever used in this Agreement, any
pronoun shall be deemed to include both singular and plural and to cover all
genders.
SECTION 1.3. CAPTIONS; TABLE OF CONTENTS. The captions or headings in this
Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
SECTION 1.4. OPINIONS. Each opinion with respect to the validity, binding
nature and enforceability of documents or Certificates may be qualified to the
extent that the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law) and may state that no
opinion is expressed on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy. Any opinion required to be
furnished by any Person hereunder must be delivered by counsel upon whose
opinion the addressee of such opinion may reasonably rely, and such opinion may
state that it is given in reasonable reliance upon an opinion of another, a copy
of which must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.1. CONVEYANCE OF THE INITIAL MORTGAGE LOANS. (a) The Sponsor,
concurrently with the execution and delivery hereof, hereby transfers, assigns,
sets over and otherwise conveys without recourse, to Trust B, for pledge to the
Indenture Trustee on behalf of the Class B Noteholders all right, title and
interest of the Sponsor in and to (i) each Initial Mortgage Loan listed on the
Schedule of Mortgage Loans, including its Loan Balance and all collections in
respect thereof received on or after the Cut-Off Date (excluding payments in
respect of accrued interest due prior to the Cut-Off Date); (ii) property that
secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of
foreclosure; (iii) the Sponsor's rights under
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the hazard insurance policies; and (iv) all other assets included or to be
included in the Trust Estate for pledge to the Indenture Trustee on behalf of
the Class B Noteholders and the Note Insurer. In addition, on or prior to the
Closing Date, the Sponsor shall cause the Note Insurer to deliver the Trust B
Note Policy to Trust B for pledge to the Indenture Trustee on behalf of the
Class B Noteholders. The foregoing transfer, assignment, set-over and conveyance
shall be made by the Sponsor to Trust B for pledge to the Indenture Trustee on
behalf of the Class B Noteholders, and each reference in this Agreement to such
transfer, assignment, set-over and conveyance shall be construed accordingly.
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 Date)
describing the Mortgage Loans and naming the Sponsor as debtor and the Indenture
Trustee as secured party and any amendments to UCC-1 financing statements
required to reflect a change in the name or corporate structure of the Sponsor
or the filing of any additional UCC-1 financing statements due to the change in
the principal office of the Sponsor (within 90 days of any event necessitating
such filing)) as are necessary to perfect and protect the Class B Noteholders'
and the Note Insurer's interests in each Mortgage Loan and the proceeds thereof.
(b) In connection with the transfer and assignment of the Mortgage Loans,
the Sponsor agrees to:
(i) cause to be delivered on the Closing Date, without recourse, to
the Indenture Trustee, with respect to the Initial Mortgage Loans or, on
the Subsequent Transfer Date with respect to Subsequent Mortgage Loans,
or, on the Transfer Date with respect to the Qualified Replacement
Mortgage listed on the Schedule of Mortgage Loans, the items listed in the
definitions of "Advanta Mortgage Files" and "Conduit Mortgage Files," as
appropriate, in Exhibit A hereto; and
(ii) cause, within 75 Business Days following the Closing Date or
any Subsequent Transfer Date, as applicable, 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 Indenture
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
Indenture Trustee has received an Opinion of Counsel to the effect that
the recordation of such assignments in any specific jurisdiction is not
necessary to protect the Indenture Trustee's interest in the related
Mortgagee.
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, 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 Indenture 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 and any assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
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(c) In the case of Initial Mortgage Loans which have been prepaid in full
on or after the Initial Cut-Off Date and prior to the Closing Date, or with
respect to Subsequent Mortgage Loans which have been prepaid in full on or after
the Subsequent Cut-Off Date and prior to the Subsequent Transfer Date, the
Sponsor, in lieu of the foregoing, will deliver within 15 Business Days after
the Closing Date, or Subsequent Transfer Date, as applicable, to the Indenture
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit B.
(d) The Sponsor shall transfer, assign, set over and otherwise convey
without recourse, to Trust B for pledge to the Indenture Trustee on behalf of
the Class B Noteholders all right, title and interest of the Sponsor in and to
any Qualified Replacement Mortgage delivered to Trust B by the Sponsor pursuant
to Section, 2.2, Section 3.3, Section 3.4 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 shall reserve and retain all right, title
and interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from Trust B in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Indenture Trustee
will transfer, 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 of the Issuer'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 Issuer shall
reserve and retain all right, title and interest in and to payments of principal
collected and interest accruing on such released Mortgage Loan prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Issuer, the Sponsor agrees to cause to be delivered
to the Indenture Trustee the items described in Section 2.1(b) on the date of
such transfer and assignment or, if a later delivery time is permitted by
Section 2.1(b), then no later than such later delivery time.
(g) As to each Mortgage Loan released from the Issuer in connection with
the conveyance of a Qualified Replacement Mortgage the Indenture 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.
(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein, the
Sponsor shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
(i) The Sponsor shall reflect on its records that the Mortgage Loans have
been sold to the Issuer.
(j) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Sponsor or of its ultimate corporate parent are satisfactory to the
Control Party, Moody's and Standard & Poor'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 Indenture 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.
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SECTION 2.2. ACCEPTANCE BY THE ISSUER; CERTAIN SUBSTITUTIONS OF MORTGAGE
LOANS; CERTIFICATION BY INDENTURE TRUSTEE The Indenture Trustee, on behalf of
the Issuer, hereby acknowledges receipt of the Trust Estate and agrees to
execute and deliver on the Closing Date and on each Subsequent Transfer Date and
each Transfer Date an acknowledgment of receipt of the Files delivered to it on
behalf of the Issuer by the Sponsor in the form attached as Exhibit C 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 pledged to it on behalf of the Class B Noteholders and the Note
Insurer.
The Indenture Trustee agrees to review any documents delivered by the
Sponsor within 90 days after the Closing Date (or within 90 days with respect to
any Subsequent Mortgage Loan or Qualified Replacement Mortgage after the
assignment thereof) and to deliver to the Sponsor, the Master Servicer and the
Note Insurer a Certification in the form attached hereto as Exhibit D hereto.
The Indenture 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 Indenture 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 Indenture 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 Indenture Trustee shall promptly so notify the
Sponsor, the Issuer and the Note Insurer. In performing any such review, the
Indenture 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 Indenture Trustee. If, however,
within 60 days after the Indenture 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 Class B Noteholders or of the Note Insurer, the Sponsor will then 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 Trust B 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 Trust B Principal and Interest Account. Upon
receipt of any Qualified Replacement Mortgage or of written notification signed
by a Servicing Officer to the effect that the Loan Purchase Price in respect of
a Defective Mortgage Loan has been deposited into the Trust B Principal and
Interest Account, then as promptly as practicable, the Indenture Trustee shall
execute such documents and instruments of transfer presented by the Sponsor, in
each case without recourse, representation or warranty, and take such other
actions as shall reasonably be requested by the Sponsor to effect such transfer
by the Issuer of such Defective Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Sponsor to accept a transfer of
a Defective Mortgage Loan and to either convey a Qualified Replacement Mortgage
or to make a deposit of any related Loan Purchase Price into the Trust B
Principal and Interest Account shall constitute the sole remedy respecting such
defect available to Class B Noteholders, the Indenture Trustee, the Issuer and
the Note Insurer against the Sponsor.
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The Sponsor, promptly following the transfer of a Defective Mortgage Loan
from or to the Issuer pursuant to this Section, shall deliver an amended
Mortgage Loan Schedule to the Indenture Trustee and the Note Insurer and shall
make appropriate entries in its general account records to reflect such
transfer. The Master Servicer shall, following such retransfer, appropriately
mark its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Issuer. The Sponsor, promptly following such transfer, shall
appropriately mark its electronic ledger and make appropriate entries in its
general account records to reflect such transfer.
(c) As to any Qualified Replacement Mortgage, the Sponsor shall, if
required to deliver any such Qualified Replacement Mortgage, deliver to the
Indenture Trustee with respect to such Qualified Replacement Mortgage such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.2. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgages, the Master Servicer
shall determine the Substitution Amount which amount shall be deposited by the
Sponsor in the Trust B Principal and Interest Account at the time of
substitution. All amounts received in respect of the Qualified Replacement
Mortgage during the Remittance Period in which the circumstances giving rise to
such substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Trust B Principal and Interest Account.
All amounts received by the Master Servicer during the Remittance Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust Estate shall be deposited by the
Master Servicer in the Trust B Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage shall be subject to the terms
of this Agreement in all respects, and the Sponsor shall be deemed (i) to have
made with respect to such Qualified Replacement Mortgage or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 3.3 and (ii) to have certified that such Mortgage Loan(s) is/are
Qualified Replacement Loan(s). The procedures applied by the Sponsor in
selecting each Qualified Replacement Mortgage shall not be materially adverse to
the interests of the Indenture Trustee, the Issuer, the Class B Noteholders or
the Note Insurer.
SECTION 2.3. COOPERATION PROCEDURES. (a) The Sponsor shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Indenture
Trustee, provide the Indenture 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 Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
SECTION 2.4. CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.Subject to the
conditions set forth in paragraph (b) below, in consideration of the Indenture
Trustee's delivery on the related Subsequent Transfer Dates to or upon the order
of the Sponsor of all or a portion of the balance of funds in the Trust B
Pre-Funding Account, the Sponsor shall, on Subsequent Transfer Dates, transfer,
assign and convey, without recourse, to Trust B for pledge to the Indenture
Trustee on behalf of the Class B Noteholders all right, title and interest of
the Sponsor in and to each Subsequent Mortgage Loan listed on the Schedule of
Mortgage Loans delivered by the Sponsor on such Subsequent Transfer Date, all of
the Sponsor's right, title and interest in and to principal collected and
interest accruing on each such Subsequent Mortgage Loan on and after
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the related Subsequent Cut-Off Date; provided, however, that the Sponsor
reserves and retains all of its right, title and interest in and to principal
collected and interest accruing on each such Subsequent Mortgage Loan prior to
the related Subsequent Cut-Off Date.
Upon assignment of any Subsequent Mortgage Loan, the Indenture Trustee
shall release to the Sponsor an amount equal to the Loan Balance thereof as of
the related Subsequent Cut-Off Date from amounts then on deposit in the Trust B
Pre-Funding Account.
(b) The Sponsor shall transfer to the Indenture Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date.
(i) the Sponsor shall have provided the Indenture Trustee and
the Note Insurer with a timely Addition Notice and shall have
provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Sponsor shall have delivered to the Indenture Trustee
a duly executed written assignment (including an acceptance by the
Indenture Trustee) in substantially the form of Exhibit I (the
"Subsequent Transfer Agreement"), which shall include Schedules of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) the Master Servicer shall have deposited in the Trust B
Principal and Interest Account all collections in respect of the
Subsequent Mortgage Loans received on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Master
Servicer nor the Sponsor was insolvent nor will any of them have
been made insolvent by such transfer nor is any of them aware of any
pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Issuer or the Class B Noteholders;
(vi) the Trust B Pre-Funding Period shall not have terminated;
and
(vii) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and paragraphs
(c) and (d) below and in the related Subsequent Transfer Agreement;
(c) The obligation of the Issuer to accept the assignment of a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
requirements: (i) such Subsequent Mortgage Loan may not be more than 30 days
contractually delinquent as of the related Subsequent Cut-Off Date.
(d) The obligation of the Issuer to accept the assignment of a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
additional requirements, any of which may be waived or modified in any respect
by the Insurer by a written instrument executed by the Insurer:
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(1) (i) No such Subsequent Mortgage Loan may have (i) a Combined
Loan-to-Value Ratio greater than 95%; (ii) a Loan Balance in excess of
$600,000; (iii) a remaining term to stated maturity in excess of 360
months; (iv) a Loan Rate (as of the related Subsequent Cut-Off Date) below
6.325%; or (v) be more than 30 days Delinquent (as of the related
Subsequent Cut-off Date).
(2) After giving effect to the assignment to the Issuer of any such
Subsequent Mortgage Loan (i) the weighted average net Loan Rate of all
Mortgage Loans shall be no less than 9.51%; (ii) the average Loan Balance
shall not exceed $80,000; (iii) no more than 1.90% of the Pool Principal
Balance as of such Subsequent Transfer Date shall relate to Mortgaged
Properties which are non-owner occupied; (iv) the weighted average
Combined Loan-to-Value Ratio of all Mortgage Loans shall be no greater
than 76%; (v) at least 90% of the Pool Principal Balance as of such
Subsequent Transfer Date shall be "full documentation" loans; (vi) at
least 90% of the Pool Principal Balance as of such Subsequent Transfer
Date shall relate to Mortgaged Properties which are single-family
residences; (vii) no more than 1.0% of the Pool Principal Balance as of
such Subsequent Transfer Date shall relate to Mortgaged Properties in any
one zip code; (viii) no more than 12% of the Pool Principal Balance as of
such Subsequent Transfer Date shall relate to Mortgaged Properties in any
one state; (ix) at least 75% of the Pool Principal Balance as of such
Subsequent Transfer Date shall relate to Mortgage Loans characterized with
a credit grade of at least "A-"; (x) no more than 10.50% of the Pool
Principal Balance as of such Subsequent Transfer Date shall relate to
Mortgage Loans characterized with a credit grade of "B"; (xi) no more than
11.50% of the Pool Principal Balance as of such Subsequent Transfer Date
shall relate to Mortgage Loans characterized with a credit grade of "C";
(xii) no more than 3.0% of the Pool Principal Balance as of such
Subsequent Transfer Date shall relate to Mortgage Loans characterized with
a credit grade of "D"; and (xiv) none of the Pool Principal Balance as of
such Subsequent Transfer Date shall relate to Mortgage Loans secured by
junior liens.
(e) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Sponsor agrees to satisfy the conditions set forth in
Sections 2.1(b)-(j), 2.2 and 2.3.
(f) In connection with the transfer of any Subsequent Mortgage Loans to
the Issuer, the Sponsor, the Master Servicer and the Indenture Trustee may, with
the prior written consent of the Insurer, amend the definition of "Trust B
Specified Overcollateralization Amount" for the purpose of changing the Trust B
Specified Overcollateralization Amount; provided, however, that any such
amendment must comply with the provisions of Section ____ of the Indenture.
(g) In connection with each Subsequent Transfer Date and on the Payment
Date occurring in December of 1998, January of 1999 and February 1999, the
Sponsor and the Indenture Trustee will cooperate in determining (i) the amount
and correct dispositions of Trust B Capitalized Interest Requirement, the Trust
B Pre-Funding Earnings, the Trust B Overfunded Interest Amount and the amount
then on deposit in the Trust B Pre-Funding Account and (ii) any other necessary
matters in connection with the administration of the Trust A Pre-Funding Account
and of the Trust B Capitalized Interest Account. In the event that any amounts
are incorrectly released to the owners of the Certificates from either the Trust
B Pre-Funding Account or the Trust B Capitalized Interest Account, such owners
or the Sponsor shall immediately repay such amounts to the Indenture Trustee.
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SECTION 2.5. RETRANSFERS OF MORTGAGE LOANS AT ELECTION OF SPONSOR. Subject
to the conditions set forth below, the Sponsor may, but shall not be obligated
to (except the Sponsor shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans from the Issuer as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor shall give the Indenture Trustee, the Note Insurer and the
Master Servicer a notice of the proposed reassignment that contains a list of
the Mortgage Loans to be reassigned. Such reassignment of Mortgage Loans shall
be permitted upon satisfaction of the following conditions:
(i) No Event of Default has occurred or will occur as a result of
such removal;
(ii) the Overcollateralization Amount as of such Payment Date equals
or exceeds the then Specified Overcollateralization Amount.
(iii) On or before the Transfer Date, the Sponsor shall have
delivered to the Indenture Trustee and the Note Insurer a revised Schedule
of Mortgage Loans, reflecting the proposed transfer and the Transfer Date,
and the Master Servicer shall have marked its servicing records to show
that the Mortgage Loans reassigned to the holder of the Sponsor are no
longer owned by the Issuer;
(iv) The Sponsor shall represent and warrant that random selection
procedures were used in selecting the Mortgage Loans and no other
selection procedures were used which are adverse to the interests of the
Sponsor or the Class B Noteholders or the Note Insurer were utilized in
selecting the Mortgage Loans to be removed from the Issuer;
(v) The Sponsor shall have delivered to the Indenture Trustee and
the Insurer an Officer's Certificate certifying that the items set forth
in subparagraphs (i) through (iv), inclusive, have been performed or are
true and correct, as the case may be. The Indenture Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon receiving the requisite information from the Sponsor, the Master Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the File for
each Mortgage Loan being so reassigned, and the Indenture Trustee shall execute
and deliver to the Sponsor such other documents prepared by the Sponsor as shall
be reasonably necessary to reassign such Mortgage Loans to the Sponsor. Any such
transfer of the Issuer's right, title and interest in and to Mortgage Loans
shall be without recourse, representation or warranty by or of the Indenture
Trustee or the Issuer to the Sponsor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
hereby represents, warrants and covenants to the Indenture Trustee, the Note
Insurer and to the Class B Noteholders as of the Closing Date that:
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(a) The Sponsor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is in good standing as
a foreign corporation in each jurisdiction in which the nature of its business,
or the properties owned or leased by it make such qualification necessary. The
Sponsor has all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which the Sponsor is a party by the Sponsor and its performance and
compliance with the terms of this Agreement and of the other Operative Documents
to which it is a party have been duly authorized by all necessary corporate
action on the part of the Sponsor and will not violate the Sponsor's Articles of
Incorporation or Bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to which the
Sponsor is a party or by which the Sponsor is bound, or violate any statute or
any order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which the Sponsor
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Sponsor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may 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
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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.
(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
Class B Notes 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 to the
Issuer.
(k) The Sponsor did not sell any interest in any Mortgage Loan 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 Issuer.
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
Indenture Trustee.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER. The
Master Servicer hereby represents, warrants and covenants to the Indenture
Trustee, the Note Insurer and to the Class B Noteholders as of the Closing Date
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
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Master Servicer has, on a consolidated basis with its parent, AMHC, equity of at
least $5,000,000, as determined in accordance with generally accepted accounting
principles.
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Master Servicer and will not
violate the Master Servicer's Articles of Incorporation or Bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which the Master Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the Master
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Master Servicer, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or 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) 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.
(g) 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
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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.
(h) 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.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Master Servicer.
(j) 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 4.3.
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
Indenture Trustee.
Upon discovery by any of the Master Servicer, the Sponsor, any
Sub-Servicer, the Note Insurer or the Indenture 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 Class B Noteholders or of
the Note Insurer, the party discovering such breach shall give prompt written
notice to the other parties. Within 60 days of its discovery or its receipt of
notice of breach, the Master Servicer shall cure such breach in all material
respects; provided, however, that, if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer and the Indenture Trustee that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Note Insurer.
SECTION 3.3. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR WITH RESPECT TO
THE MORTGAGE LOANS. The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Note Insurer relies and the
Indenture Trustee relies in accepting the Mortgage Loans in trust and executing
and authenticating the Class B Noteholders. Such representations and warranties
speak as of the Closing Date with respect to the Initial Mortgage Loans, as of
the related Subsequent Transfer Date with respect to any Subsequent Mortgage
Loan, or as of the Transfer Date upon which any Qualified Replacement Mortgage
is added to the Issuer, but shall in each case survive the sale, transfer, and
assignment of the Mortgage Loans to the Indenture 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
or the Subsequent Cut-Off Date, as the case may be;
(ii) All of the original or certified documentation set forth in
Section 2.1 (including all material documents related thereto) with
respect to each Mortgage Loan has been or will be delivered to the
Indenture Trustee on the Closing Date or the related Subsequent Transfer
Date, as the case may be, or as otherwise provided in Section 2.1;
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(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 Trust B bears a
Coupon Rate of at least 6.45% per annum;
(v) As of the Cut-Off Date, none of the Initial Mortgage Loans are
more than 59 days Delinquent; as of the related Subsequent Cut-Off Date,
no Subsequent Mortgage Loan shall be more than 30 days Delinquent;
(vi) As of the Closing Date and any Subsequent Transfer Date, no
more than 1.0% of the aggregate Loan Balances of the Initial Mortgage
Loans or the Subsequent Mortgage Loans, as applicable, is secured by
Properties located within any single zip code area;
(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; and
(viii) 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 Indenture Trustee for the benefit of
the Class B Noteholders and the Note Insurer (so long as a Note Insurer Default
has not occurred and is continuing) all of its right, title and interest in
respect of each Master Transfer Agreement applicable to the related Mortgage
Loan. Insofar as such Master Transfer Agreement provides for representations and
warranties made by the related Originator in respect of a Mortgage Loan and any
remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer or by the Indenture Trustee on behalf of the Class B Noteholders and
the Note Insurer. Upon the discovery by the Sponsor, the Master Servicer, the
Note Insurer or the Indenture 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 Class B
Noteholders or of the Note 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 the Sponsor,
the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture 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 Closing Date (or the Subsequent Transfer Date, as the case may
be) and
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such breaches of the representations and warranties materially and
adversely affect the interests of the Class B Noteholders or of the Note
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 Class B Noteholders or of the Note
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 Note
Insurer or such time as a breach of any representation and warranty materially
and adversely affects the interests of the Class B Noteholders or of the Note
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), 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 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, including Nonrecoverable Advances, theretofore made with
respect to such Mortgage Loan, to the Master Servicer for deposit in the Trust B
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Issuer 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
Trust B Principal and Interest Account. 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 Class B Noteholders, the Indenture Trustee or the Note 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 Issuer pursuant to Section 3.3, Section 3.4 or Section 2.2
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 Class B Noteholders, the Sponsor, the
Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture 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 Issuer such that the
interests of the Class B Noteholders or the Note 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 Subsequent
Cut-Off Date" or "as of the Closing Date" or "as of the Subsequent Transfer
Date" shall be deemed to refer to such items as of the date such Qualified
Replacement Mortgage is conveyed to the Issuer.
(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 Indenture Trustee on behalf of the
Issuer.
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ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
SECTION 4.1. MASTER SERVICER AND SUB-SERVICERS. (a) Acting directly or
through one or more Sub-Servicers as provided in Section 4.3, the Master
Servicer, as master servicer, shall service and administer the Mortgage Loans in
accordance with this Agreement and on behalf of the Indenture Trustee and the
Note Insurer and with reasonable care, and using that degree of skill and
attention that the Master Servicer exercises with respect to comparable mortgage
loans that it services for itself or others, and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable.
(b) The duties of the Master Servicer shall include collecting and posting
of all payments, responding to inquiries of Mortgagors or by federal, state or
local government authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in accordance with its
customary practices and accounting for collections and furnishing monthly and
annual statements to the Indenture Trustee and the Note 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
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate to
enable the Indenture Trustee to perform its tax reporting duties hereunder. The
Indenture 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.
(c) 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 such 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 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.
(d) 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.
(e) Without limiting the generality of the foregoing, but subject to
Sections 4.13 and 4.14, the Master Servicer in its own name or in the name of a
Sub-Servicer may be
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authorized and empowered pursuant to a power of attorney executed and delivered
by the Indenture Trustee to execute and deliver, and may be authorized and
empowered by the Indenture Trustee, to execute and deliver, on behalf of itself,
the Class B Noteholders, the Note Insurer and the Indenture 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) to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Property on behalf of the Indenture Trustee, (iii) to hold
title to any Property upon such foreclosure or deed in lieu of foreclosure on
behalf of the Indenture Trustee, and (iv) to consent to any modification of the
terms of any Note not expressly prohibited hereby if the effect of any such
modification will not be to affect materially and adversely the security
afforded by the related Property and the timing of the receipt of payments
required hereby or the interests of the Note Insurer; provided, however, that
Section 4.14(a) shall constitute a power of attorney from the Indenture 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).
(f) The Master Servicer shall give prompt notice to the Indenture Trustee
of any action, of which the Master Servicer has actual knowledge, to (i) assert
a claim against the Issuer or (ii) assert jurisdiction over the Issuer.
(g) 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 4.9(c) and in Section 8.7(b)(xvii) of the
Indenture.
SECTION 4.2. 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 4.3. 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
may be an Affiliate, and 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 Note Insurer and the
Indenture Trustee of the appointment of any Sub-Servicer and shall furnish to
the Note Insurer and the Indenture Trustee a copy of the Subservicing Agreement.
For purposes of this Agreement, the Master shall be deemed to have received
payments on Mortgage Loans when any
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Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement.
SECTION 4.4. 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 4.3.
SECTION 4.5. 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 Issuer shall not indemnify the
Master Servicer for any losses due to the Master Servicer's negligence.
SECTION 4.6. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER AND
INDENTURE TRUSTEE OR THE CLASS B NOTEHOLDERS. 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 Note Insurer, the Indenture Trustee and the Class B
Noteholders 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 4.7.
SECTION 4.7. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
INDENTURE 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 Indenture Trustee pursuant to Section 5.1, 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 Indenture 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 Indenture
Trustee be liable for any such fee.
The Master Servicer shall, upon request of the Indenture 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 Indenture Trustee,
notwithstanding any contrary provision in any Sub-Servicing Agreement.
SECTION 4.8. TRUST B PRINCIPAL AND INTEREST ACCOUNT. (a) The Master
Servicer and/or each Sub-servicer, as applicable, shall establish in the name of
the Issuer for the benefit of the Class B Noteholders and the Note Insurer, as
their interests may appear, and maintain at one or more Designated Depository
Institutions the Trust B 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
Trust B Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
Within one Business Day of the Closing Date, on each Subsequent Transfer
Date and each Transfer Date, the Sponsor and/or the Master Servicer shall
deposit to the Trust B Principal and Interest Account all receipts related to
the Mortgage Loans which relate to or are received on or after the Cut-Off Date
or the Subsequent Cut-Off Date, as the case may be.
(b) All funds in the Trust B 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 Trust B Principal and Interest Account shall be held
in Trust B in the name of the Issuer and for the benefit of the Class B
Noteholders and the Note Insurer. Any investment earnings on funds held in the
Trust B Principal and Interest Account shall be for the account of the Master
Servicer and may only be withdrawn from the Trust B Principal and Interest
Account by the Master Servicer immediately following the remittance of the Trust
B Monthly Remittance Amounts by the Master Servicer. Any references herein to
amounts on deposit in the Trust B 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 Trust B Principal and Interest Account all principal and interest
collections on the Mortgage Loans received on or after the Cut-Off Date or
related Subsequent 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 Trust B 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 4.15
hereof, (ii) principal (including Prepayments) collected on the related Mortgage
Loans prior to the Cut-Off Date or related Subsequent Cut-Off Date, (iii)
interest accruing on the related Mortgage Loans prior to the Cut-Off Date or
related Subsequent 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 Trust B
Principal and Interest Account only for the following purposes:
(1) to effect the timely remittance to the Indenture Trustee
of the Trust B Monthly Remittance Amounts due on the Remittance
Date;
(2) to reimburse itself for unreimbursed Delinquency Advances
and Servicing Advances and Nonrecoverable Advances;
(3) to withdraw investment earnings on amounts on deposit in
the Trust B Principal and Interest Account;
(4) to withdraw amounts that have been deposited to the Trust
B Principal and Interest Account in error; and
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(5) to clear and terminate the Trust B Principal and Interest
Account following the termination of the Trust Estate pursuant to
Article X of the Indenture.
(ii) On the tenth day of each month, the Master Servicer shall send
to the Indenture 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 Indenture Trustee from
time to time. The Note 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
Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds for deposit in the Trust B Note Account
pursuant to Section 8.7(a) of the Indenture, the Trust B Interest
Remittance Amount and the Trust B 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 Note Insurer, the Indenture Trustee, Moody's and
Standard & Poor's, then the requirement to maintain the Trust B Principal and
Interest Account may be waived by an instrument signed by the Note Insurer,
Standard & Poor's, Indenture 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 Trust B Principal and Interest Account, on such terms and
subject to such conditions as the Note Insurer, the Indenture Trustee, Moody's
and Standard & Poor's may permit.
SECTION 4.9. DELINQUENCY ADVANCES, COMPENSATING INTEREST AND SERVICING
ADVANCES. (a) The Master Servicer is required, not later than each Remittance
Date, to deposit into the Trust B 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 Trust
B Principal and Interest Account subsequent to the related Remittance Period to
fund its payment of Delinquency Advances related to a Payment Date. The Master
Servicer shall also fund Delinquency Advances from the deposits into the Trust B
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 8.7(b)(xvii) of the Indenture and Section 4.8(a)
hereof.
(b) On or prior to each Remittance Date, the Master Servicer shall deposit
in the Trust B Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of
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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 nor shall it be
required to pay Compensating Interest due to partial prepayments or Relief Act
Shortfalls.
(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 (a) foreclosures and (b) other legal actions and
costs associated therewith that potentially affect the existence, validity,
priority, enforceability, or collectibility of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions, and (iii) the costs of the
conservation, management, liquidation, sale or other disposition of any REO
Property, including reasonable fees paid to any independent contractor in
connection therewith, and (iv) advances to keep liens current, unless with
respect to any of the foregoing the Master Servicer has determined that such
advance would not be recoverable. 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 4.8(d) hereof.
(d) On the Remittance Date in December 1998, the Master Servicer shall
make a special non-recoverable advance equal to one-month's interest, calculated
at the Class B Note Interest Rate (applicable to the December 1998 Payment Date)
for the Class B Notes with respect to all Mortgage Loans in Trust B not having a
payment due during November 1998 and the amounts of such advance shall be
included in the Interest Remittance Amount related to Trust B.
SECTION 4.10. 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 4.13. Any such
Mortgage 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 Trust B Principal and Interest
Account provided, that the Master Servicer may not purchase any Mortgage Loans
pursuant to this Section 4.10 if such purchase will cause the aggregate purchase
price to exceed 10% of the Original Pool Principal Balance.
SECTION 4.11. 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 Issuer 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
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to compensate for damage or loss on a replacement cost basis and (iii) the full
insurable value of the premises.
(b) If the Mortgage Loan at the time of origination relates to a Property
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer will
cause to be maintained with respect thereto a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Issuer 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
Issuer and the Note Insurer out of the Master Servicer's own funds for any loss
to the Issuer and the Note Insurer resulting from the Master Servicer's failure
to maintain the insurance required by this Section.
(c) It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Any cost incurred by the Master Servicer in maintaining
any such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Master Servicer pursuant to Section 4.9.
(d) 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 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, 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 4.11, and there shall have been a loss which would
have been covered by such policy, deposit in the Trust B 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 4.11 and the amount paid under such blanket policy.
Upon the request of the Indenture Trustee or the Note Insurer, the Master
Servicer shall cause to be delivered to the Indenture Trustee and the Note
Insurer, a certified true copy of such policy.
SECTION 4.12. 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
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adversely affect the interest of the Class B Noteholders or of the Note 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
notify the Indenture Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Indenture Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Indenture 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 4.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall foreclose upon or otherwise comparably effect the ownership on
behalf of the Issuer 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
4.10. 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 4.9(c) hereof.
Notwithstanding the generality of the foregoing provisions, the Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Class B Noteholders solely for the purpose of its prompt disposition and sale.
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 Class B Noteholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Class B Noteholders 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 Mortgage Loan" and shall promptly deliver to the Note
Insurer, with a copy to the Indenture Trustee, a related liquidation report with
respect to such Liquidated Mortgage Loan.
SECTION 4.14. INDENTURE 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 Indenture Trustee a Master Servicer's Trust Receipt attached
hereto as Exhibit H. Upon receipt of such Master Servicer's Trust Receipt, the
Indenture Trustee shall promptly release the related File, in trust to the
applicable party as directed in writing by the Master Servicer on the Master
Servicer's Trust Receipt, in each case pending its release by the such party.
Upon any such payment in full, or the receipt of such notification that such
funds have been placed in escrow, the Master Servicer or any Sub-servicer is
authorized to give, as attorney-in-fact for the Indenture 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 Trust B 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 Indenture Trustee, a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed by the Master
Servicer or any Sub-servicer; in such event, the Indenture 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
Indenture 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 Indenture Trustee), upon request of the
Master Servicer or any Sub-servicer and delivery to the Indenture 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. The Indenture
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Trustee shall complete in the name of the Indenture 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 Indenture 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 Indenture Trustee to the Master Servicer or any
Sub-servicer.
(c) No costs associated with the procedures described in this Section 4.14
shall be an expense of the Issuer.
(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 Note
Insurer, Moody's and Standard & Poor's pursuant to Section 2.1(b) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to the Indenture
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 Indenture Trustee shall mutually agree. The
Indenture 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 Indenture Trustee.
Receipt of a Master Servicer's Trust Receipt pursuant to clauses (i), (ii) or
(iii) above shall be authorization to the Indenture Trustee to release such
Files, provided the Indenture Trustee has determined that such Master Servicer's
Trust Receipt has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an Authorized Officer of the
Master Servicer or any Sub-servicer, and so long as the Indenture Trustee
complies with its duties and obligations under this Agreement. If the Indenture
Trustee is unable to release the Files within the time frames previously
specified, the Indenture 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 Indenture Trustee's negligent failure to release the
related File or the Indenture Trustee's negligent failure to execute and release
documents in a timely manner, the Indenture Trustee shall be liable for such
penalties or damages.
On each day that the Master Servicer remits to the Indenture 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 Indenture 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 4.15. 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 Trust B Principal and
Interest Account pursuant to Section 4.8(c)(v) and similar items may, to the
extent collected from Mortgagors, be retained by the Master Servicer.
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SECTION 4.16. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer, at
its own expense, will deliver to the Indenture Trustee, the Note Insurer,
Standard & Poor's, and Moody's, on or before the last day of November of each
year, commencing in 1999, 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 4.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS. On
or before the last day of November of each year, commencing in 1999, the Master
Servicer, at its own expense, shall cause to be delivered to the Indenture
Trustee, the Note 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 4.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide to the Indenture Trustee,
the Note Insurer, the FDIC and the supervisory agents and examiners of each of
the foregoing access to the documentation regarding the Mortgage Loans required
by applicable state and federal regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such computer tape to the Indenture Trustee at such
other times as the Indenture Trustee may reasonably request. The Note Insurer
may request a copy of this computer tape upon three Business Days prior written
notice to the Master Servicer.
SECTION 4.19. 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 Indenture Trustee and the Note
Insurer, which such consent shall not be unreasonably withheld; provided,
however, that any assignee must meet the eligibility requirements set forth in
Section 5.1(g) hereof for a successor servicer. Notice of any such assignment
shall be given by the Master Servicer to the Indenture Trustee, the Note Insurer
and Moody's.
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ARTICLE V
SERVICING TERMINATION
SECTION 5.1. EVENTS OF SERVICER TERMINATION. (a) The Master Servicer may
be removed with respect to Trust B if any one of the following events ("Trust B
Events of Servicer Termination") shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture
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 Indenture Trustee or
from Class B Noteholders evidencing Percentage Interest aggregating not
less than 25%.
(ii) The Master Servicer shall fail to perform any one or more of
its obligations hereunder other than the obligations contemplated by
Subsection 5.1(i) above, and shall continue in default thereof for a
period of sixty (60) days after notice by the Indenture Trustee or the
Note 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
(iii) 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 Class B Noteholders
or the Note 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; or
(iv) The failure by the Master Servicer to make any required
Servicing Advance and such failure continues for fifteen days; provided,
however; that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that any such event was due to
circumstances beyond the control of the Master Servicer, such event shall
not be considered an event of termination of the Master Servicer; or
(v) The failure by the Master Servicer to make any required
Delinquency Advance or to pay any Compensating Interest; provided,
however, that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that any such event was due to
circumstances beyond the control of the Master Servicer, such event shall
not be considered an event of termination of the Master Servicer;
Then, and in each and every such case, so long as a Trust B Event of
Servicer Termination shall not have been remedied by the Master Servicer,
either the Indenture Trustee, the Note Insurer or the Class B Noteholders
evidencing Percentage Interests aggregating not less than 51% in each case
with the consent of the Note Insurer, or the Note Insurer, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee if
given by the Note Insurer of the Class B Noteholders) may terminate all of
the rights and obligations of the Master Servicer as servicer of Trust B
under this Agreement. Any such notice to the Master Servicer shall also be
given to each Rating Agency and the Note Insurer. On and after the receipt
by the Master Servicer of such written notice, all
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authority and power of the Master Servicer under this Agreement, whether
with respect to the Class B Notes or the Mortgage Loans or otherwise,
shall pass to and be vested in the Indenture Trustee pursuant to and under
this Section 5.1(a) and, without limitation, the Indenture Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Master Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each
Mortgage Loan and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Indenture Trustee in effecting the
termination of the responsibilities and rights of the Master Servicer
hereunder, including, without limitation, the transfer to the Indenture
Trustee for the administration by it of all cash amounts that shall at the
time be held by the Master Servicer and to be deposited by it in the Note
Account, or that have been deposited by the Master Servicer in the Note
Account or thereafter received by the Master Servicer with respect to the
Mortgage Loans. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with amending this Agreement to reflect such
succession as Master Servicer pursuant to this Section 5.1 shall be paid
by the predecessor Master Servicer (or if the predecessor Master Servicer
is the Indenture Trustee, the initial Master Servicer) upon presentation
of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 5.1(a)(i) for a period of two Business Days or under Section
5.1(ii), (iii), (iv), or (v) for a period of 60 days, shall not constitute
a Trust B Event of Servicer Termination if such delay or failure could not
be prevented by the exercise of reasonable diligence by the Master
Servicer and such delay or failure was caused by an act of God or the
public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not
relieve the Master Servicer from using its best efforts to perform its
respective obligations in a timely manner in accordance with the terms of
this Agreement and the Master Servicer shall provide the Indenture
Trustee, the Sponsor, the Note Insurer and the Class B Noteholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations.
The Master Servicer shall immediately notify the Indenture Trustee and the
Note Insurer in writing of any Trust B Event of Servicer Termination.
(b) The Master Servicer may be removed with respect to Trust A, Trust B
and Trust C if any one of the following events ("Overall Events of Servicer
Termination") shall occur and be continuing:
(i) The occurrence of a Servicer Termination Loss Trigger or
Servicer Termination Delinquency Rate Trigger, as such terms are defined
in the Insurance Agreement; or
(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
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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; or
(iii) If, without the application, approval or consent of the Master
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Master
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or similar entity with respect
to the Master Servicer or of all or any substantial part of its assets, or
other like relief in respect thereof under any bankruptcy or insolvency
law, and, if such proceeding is being contested by the Master Servicer in
good faith, the same shall (A) result in the entry of an order for relief
or any such adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of seventy-five (75) consecutive days.
Then, and in each and every such case, so long as an Overall Event of Servicer
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee, the Note Insurer or the Noteholders evidencing Percentage
Interests aggregating not less than 51% with the consent of the Note Insurer, or
the Note Insurer, by notice then given in writing to the Master Servicer (and to
the Indenture Trustee if given by the Note Insurer of the Noteholders) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement, the Trust B Sale and Servicing Agreement and the Trust C
Sale and Servicing Agreement. Any such notice to the Master Servicer shall also
be given to each Rating Agency and the Note Insurer. On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Trust Notes or
the Mortgage Loans or otherwise, shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 5.1(b) and, without limitation, the
Indenture Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan in Trust B and related documents, or otherwise. The Master Servicer agrees
to cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Trust B Note Account, or that have been deposited by
the Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1(b)
shall be paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
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 Indenture Trustee and the Note Insurer.
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(c) No removal or resignation of the Master Servicer shall become
effective until the Indenture 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 Indenture 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 Indenture Trustee will not be
obligated to act as successor servicer if it is legally unable to perform its
duties hereunder.
(d) 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 Indenture 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.
(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
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 Indenture 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 Note 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 Indenture 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 4.8 and 4.15; provided, however, that, if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture 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 Indenture 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.
(g) In the event the Indenture Trustee solicits bids as provided above,
the Indenture 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 4.8 and 4.15. Within thirty days after any
such public announcement, the Indenture 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
Indenture Trustee shall deduct from any sum received by the Indenture 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
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rights and responsibilities hereunder. After such deductions, the remainder of
such sum shall be paid by the Indenture Trustee to the Master Servicer at the
time of such sale, transfer and assignment to the Master Servicer's successor.
(h) The Indenture 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 Indenture 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 Indenture 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
Indenture Trustee or such successor Master Servicer, as applicable, all amounts
which then have been or should have been deposited in the Trust B Principal and
Interest Account by the Master Servicer or which are thereafter received with
respect to the Mortgage Loans. Neither the Indenture 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.
(i) The Indenture 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 Indenture Trustee is acting as successor Master Servicer,
the Indenture Trustee shall be required to make Delinquency Advances (including
the Delinquency Advances described in this clause (i)) only if, in the Indenture
Trustee's reasonable good faith judgment, such Delinquency Advances will
ultimately be recoverable from the related Mortgage Loans.
(j) 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.
(k) The Indenture Trustee shall give notice to the Note Insurer, Moody's,
Standard & Poor's and to the Noteholders of the occurrence of any event
specified in Section 5.1(a), 5.1(b) or any other event in which the Master
Servicer is no longer acting as Master Servicer hereunder of which the Indenture
Trustee has actual knowledge.
SECTION 5.2. INSPECTIONS BY THE NOTE INSURER AND THE INDENTURE TRUSTEE;
ERRORS AND OMISSIONS INSURANCE. (a) At any reasonable time and from time to time
upon reasonable notice, the Note Insurer, the Indenture 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.
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SECTION 5.3. 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 5.1(g).
SECTION 5.4. NOTICES OF TO CLASS B NOTEHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article V,
the Indenture Trustee shall give prompt written notice thereof to the Class B
Noteholders at their respective addresses appearing in the Note Register, the
Note Insurer and each Rating Agency.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 6.1. ADMINISTRATIVE DUTIES WITH RESPECT TO THE INDENTURE. The
Master Servicer shall perform all its duties and the duties of the Issuer under
the Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture. The Master Servicer shall prepare
for execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture. In furtherance of the foregoing, the Master Servicer
shall take all necessary action that is the duty of the Issuer to take pursuant
to the Indenture.
(a) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set forth in
this Agreement or any of the Documents, the Master Servicer shall perform
such calculations and shall prepare for execution by the Issuer or the
Owner Trustee or shall cause the preparation by other appropriate Persons
of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the
Operative Documents or under state and federal tax and securities laws,
and at the request of the Owner Trustee shall take all appropriate action
that it is the duty of the Issuer to take pursuant to this Agreement or
any of the Operative Documents. In accordance with the directions of the
Issuer or the Owner Trustee, the Master Servicer shall administer, perform
or supervise the performance of such other activities in connection with
the Mortgage Loans (including the Operative Documents) as are not covered
by any of the foregoing provisions and as are expressly requested by the
Issuer or the Owner Trustee and are reasonably within the capability of
the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Operative Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Indenture
Trustee in the event that any withholding
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tax is imposed on the Issuer's payments (or allocations of income) with
respect to the Trust B Certificates as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any withholding
tax required to be withheld by the Owner Trustee or the Indenture Trustee
pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Operative
Documents to the contrary, the Master Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in
[Section 5.1(a), (b), (c) and (d) of the Trust B Trust Agreement] with
respect to, among other things, accounting and reports with respect to the
Trust B Certificates.
(iv) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Servicer Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Master Servicer's opinion, no less favorable to the
Issuer in any material respect.
(b) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Note Insurer of the proposed action and the
Owner Trustee and the Note Insurer shall not have withheld consent or provided
an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Mortgage Loans);
(C) the amendment, change or modification of this Agreement or
any of the Operative Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders under the
Operative Documents, (2) sell the Trust Property pursuant to Section 5.1 of the
Indenture, (3) take any other action that the Issuer directs the Master Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
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(d) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Master Servicer under Section
6.1.
SECTION 6.2. RECORDS. The Master Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer and the Indenture Trustee at any time during normal business hours.
SECTION 6.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Master Servicer shall furnish to the Issuer and the Indenture Trustee from time
to time such additional information regarding the Mortgage Loans as the Issuer
and the Indenture Trustee shall reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Sponsor, the Note Insurer or the Class B Noteholders to the
Indenture Trustee to take any action under any provision of this Agreement, the
Sponsor, the Note Insurer or the Class B Noteholders, as the case may be, shall
furnish to the Indenture 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 7.2. FORM OF DOCUMENTS DELIVERED TO THE INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
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 Indenture 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 Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations
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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 Indenture Trustee, stating that the information with
respect to such matters is in the possession of the Indenture 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 Indenture Trustee may reasonably
rely upon the opinion of such other counsel.
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 7.3. ACTS OF CLASS B NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Class B Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Class B Noteholders 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
Indenture Trustee, and, where it is hereby expressly required, to the Sponsor
and/or the Note Insurer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Class B Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved 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 Class B Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Class B Noteholders shall bind the Class B Noteholders
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
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Class B Notes.
SECTION 7.4. NOTICES, ETC., TO INDENTURE TRUSTEE. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Class B Notes or
other documents provided or permitted by this Agreement to be made upon, given
or furnished to, or filed with the Indenture Trustee by any Class B Notes, the
Note Insurer or by the Sponsor shall be sufficient for
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every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Indenture Trustee at its corporate trust office as set forth
in the Indenture.
SECTION 7.5. NOTICES AND REPORTS TO CLASS B NOTEHOLDERS; WAIVER OF
NOTICES. Where this Agreement provides for notice to Class B Noteholders of any
event or the mailing of any report to Class B Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Class B Noteholder affected by such
event or to whom such report is required to be mailed, at the address of such
Class B Noteholder 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
Class B Noteholders 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 Class B Noteholder shall affect the sufficiency of such notice
or report with respect to other Class B Noteholders, 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 Class B Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such 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 Class B Noteholders 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 Indenture 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 Class B Notes, failure to give such notice shall not affect any other rights
or obligations created hereunder.
SECTION 7.6. RULES BY INDENTURE TRUSTEE AND SPONSOR. The Indenture Trustee
may make reasonable rules for any meeting of Class B Noteholders.
SECTION 7.7. 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 7.8. SEVERABILITY. In case any provision in this Agreement or in
the Class B Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 7.9. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the
Class B Notes, expressed or implied, shall give to any Person, other than the
Class B Noteholders, the Note Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 7.10. LEGAL HOLIDAYS. In any case where the date of any Payment
Date, any other date on which any distribution to any Class B Noteholder 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 Class B
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Notes 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 Class B Noteholder 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 7.11. GOVERNING LAW. In view of the fact that Class B Noteholders
are expected to reside in many states and outside the United States and the
desire to establish with certainty that this Agreement will be governed by and
construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions of
the type contemplated herein, this Agreement and each Class B Note 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 7.12. 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 7.13. USURY. The amount of interest payable or paid on any Class B
Note 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 Class B Note
exceeds the Highest Lawful Rate, the Issuer stipulates that such excess amount
will be deemed to have been paid to the Class B Noteholder as a result of an
error on the part of the Indenture Trustee acting on behalf of the Issuer and
the Class B Noteholder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Indenture Trustee on
behalf of the Issuer, refund the amount of such excess or, at the option of such
Class B Noteholder, apply the excess to the payment of principal of such Class B
Note, if any, remaining unpaid. In addition, all sums paid or agreed to be paid
to the Indenture Trustee for the benefit of Class B Noteholders 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 Class B Notes.
SECTION 7.14. AMENDMENT. (a) The Indenture Trustee, the Sponsor and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Class B Noteholders, amend this Agreement, and the
Indenture 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) 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 Indenture Trustee, materially and adversely affect the
interests of any Class B Noteholder (without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any
time and from time to time, with the prior written consent of the Note Insurer
but without the giving of notice to or the receipt of the consent of the Class B
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of
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changing the definitions of Trust B Specified Overcollateralization Amount
provided, however, that no such change shall affect the weighted average life of
the Class B Notes (assuming an appropriate prepayment speed as determined by the
Underwriter by more than five percent, as determined by the Underwriter.
(c) This Agreement may also be amended by the Indenture Trustee, the
Sponsor, and the Master Servicer at any time and from time to time, with the
prior written approval of the Note Insurer and not less than a majority of the
Percentage Interest represented by each the Class B Notes 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 Class B Noteholders 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 Class B Noteholder without the
consent of the Class B Noteholder, (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 Class
B Notes, without the consent of the Class B Noteholders of the then Outstanding
Class B Notes.
(d) The Note Insurer, the Class B Noteholders, 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 7.15. THE NOTE INSURER. The Note Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Note Insurer shall be
suspended during any period in which the Note Insurer is in default in its
payment obligations under the Note Policy, except with respect to amendments to
this Agreement pursuant to Section 11.14. During the continuance of a Note
Insurer Default, the Note Insurer's rights hereunder shall vest in the Indenture
Trustee on behalf of the Class B Noteholders and shall be exercisable by the
Class B Noteholders of at least a majority in Percentage Interest of the Class B
Notes then Outstanding or, if there are no Class B Notes then Outstanding and
the Note Policy has expired or a Note Insurer Default has occurred and is
continuing, or if there are no Class B Notes outstanding and any and all amounts
due and owing the Note Insurer under the Insurance Agreement have been paid in
full, and the Note Policy has expired or is unavailable due to a Note Insurer
Default, by at least a majority of the Trust B Certificates then Outstanding. At
such time as the Class B Notes are no longer Outstanding hereunder and the Note
Insurer has been reimbursed for all Reimbursement Amounts to which it is
entitled hereunder and the Note Policy has expired, the Note Insurer's rights
hereunder shall terminate.
SECTION 7.16. NOTICES. All notices hereunder shall be given as follows,
until any superseding instructions are given to all other Persons listed below:
The Indenture Trustee: Bankers Trust Company
of California, N.A.
3 Park Plaza
Irvine, CA 92614
Attention: Advanta 1998-4B
Tel: (949) 253-7575
Fax: (949) 253-7577
51
<PAGE> 56
The Sponsor: Advanta Mortgage Conduit Services
Inc.
Welsh & McKean Road
Spring House, Pennsylvania 19477
Tel:
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, California 92127
Tel: (619) 674-3317
Fax: (619) 674-3666
The Note Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
(Advanta Mortgage Loan Trust
1998-4B Mortgage Loan Backed
Notes Series 1998-4)
Telecopy No.: (212) 363-1459
Confirmation: ( ___ ) ___-____
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: Manager, Structured
Finance Operations Group
Underwriter: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
The Issuer: Advanta Mortgage Loan Trust 1998-4B
c/o Wilmington Trust Company, as
Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 7.17. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such
52
<PAGE> 57
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
53
<PAGE> 58
IN WITNESS WHEREOF, the Sponsor, the Issuer, the Master Servicer and the
Indenture 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:/s/ Mark T. Dunsheath
------------------------------------------
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By:/s/ Mark T. Dunsheath
------------------------------------------
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE LOAN
TRUST 1998-4B,
as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By:/s/ Emmet Harmon
------------------------------------------
Name: Emmet Harmon
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By:/s/ Mark McNeill
------------------------------------------
Name: Mark McNeill
Title: Vice President
[SIGNATURE PAGE TO THE TRUST B SALE AND SERVICING AGREEMENT]
53
<PAGE> 59
STATE OF CALIFORNIA )
: ss.:
COUNTY OF )
On the ____ day of _________, 1998, 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 92614; 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
Indenture 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> 60
EXHIBIT A
TO TRUST B SALE AND SERVICING AGREEMENT
FORM OF CONTENTS OF MORTGAGE LOAN FILE
(a) the original Note, or a certified copy thereof, bearing all
intervening endorsements, endorsed either (i) "Pay to the order of Bankers Trust
Company of California, N.A., as custodian or trustee under the applicable
custody or trust agreement, without recourse" or (ii) "Pay to the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse, Advanta as Master
Servicer," or (iii) "Pay to the order of Bankers Trust Company of California,
N.A., as custodian or trustee" by [Seller, signature, name, title] and signed in
the name of the previous owner by an authorized offer (in the event that the
Mortgage Loan was acquired by the previous owner in a merger the signature must
be in the following form: "[the previous owner], successor by merger to [name of
predecessor]", in the event that the Mortgage Loan was acquired or originated
while doing business under another name, the signature must be in the following
form: "[the previous owner], formerly known as [previous name]". The original
Note should be accompanied by any rider made in connection with the origination
of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with the Note (if
any);
(c) the original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements;
(e) the original assignment of Mortgage of each Mortgage Loan to "Bankers
Trust Company of California, N.A., as custodian or trustee". In the event that
the Mortgage Loan was acquired by the previous owner in a merger, the assignment
of Mortgage must be the "(previous owner), successor by merger to (names of
predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) the originals of all intervening assignments of Mortgage, showing a
complete chain of assignment from origination to the related Seller, including
warehousing assignments, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof.
A-1
<PAGE> 61
EXHIBIT B
FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID IN FULL
I, Mark T. Dunsheath, Vice President of Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as sponsor (the "Sponsor"), hereby certify that
between the "Cut-Off Date" (as defined in the Trust B Sale and Servicing
Agreement dated as of November 1, 1998 among the Sponsor, Advanta Mortgage Corp.
USA, as master servicer, Advanta Mortgage Loan Trust 1998-4B, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee) and the date
hereof the following schedule of "Mortgage Loans" (as defined in the Trust B
Sale and Servicing Agreement) has been prepaid in full.
Dated: November 24, 1998
By: __________________________________
Name: Mark T. Dunsheath
Title: Vice President
B-1
<PAGE> 62
FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., in its capacity as Indenture
Trustee (the "Indenture Trustee") under that certain Trust B Sale and Servicing
Agreement dated as of November 1, 1998 (the "Trust B Sale and Servicing
Agreement") by and among Advanta Mortgage Conduit Services, Inc., a Delaware
corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware
corporation, as master servicer, Advanta Mortgage Loan Trust 1998-4B (the
"Issuer") and Bankers Trust Company of California, N.A., as Indenture Trustee,
hereby acknowledges receipt of the items delivered to it on behalf of the Issuer
by the Sponsor with respect to the Mortgage Loans listed on Schedule I of the
Trust B Sale and Servicing Agreement except as set forth in the exception report
attached hereto and hereby declares that it will hold such items on behalf of
the Class B Noteholders and the Note Insurer.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
By:________________________________________
Name:
Title:
Dated: December ___, 1998
C-1
<PAGE> 63
EXCEPTION REPORT
C-2
<PAGE> 64
EXHIBIT D
FORM OF CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company
of California, N.A., a national banking association, acting in its capacity as
Indenture Trustee (the "Indenture Trustee") of a certain pool of mortgage loans
(the "Pool") heretofore conveyed in trust to the Indenture Trustee, pursuant to
that certain Trust B Indenture dated as of November 1, 1998 (the " Trust B
Indenture ") by and among Advanta Mortgage Loan Trust 1998-4B, as Issuer (the
"Issuer") and the Indenture Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 2.2(a) of the Trust
B Sale and Servicing Agreement dated as of November 1, 1998 (the "Trust B Sale
and Servicing Agreement") among the Sponsor, the Issuer, the Indenture Trustee
and Advanta Mortgage Corp. USA, as Master Servicer, to review the Files relating
to the Pool within a specified period following the Closing Date and to notify
the Sponsor promptly of any defects with respect to the Pool, and the Sponsor is
required to remedy such defects or take certain other action, all as set forth
in Section 2.2(b) of the Trust B Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Trust B Sale and Servicing Agreement
requires the Indenture Trustee to deliver this Certification upon the
satisfaction of certain conditions set forth therein.
NOW, THEREFORE, it has determined that all required documents (or
certified copies of documents listed in Section 2.1 of the Trust B Sale and
Servicing Agreement) have been executed or received, and that such documents
relate to the Initial Mortgage Loans identified in the Schedules of Mortgage
Loans pursuant to Section 2.1(a) of the Trust B Sale and Servicing Agreement or,
in the event that such documents have not been executed and received or do not
so relate to such Mortgage Loans, any remedial action by the Sponsor pursuant to
Section 2.2(b) of the Trust B Sale and Servicing Agreement has been completed.
The Indenture Trustee makes no certification hereby, however, with respect to
any intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:_________________________________________
Name:
Title:
D-1
<PAGE> 65
EXHIBIT E
DELIVERY ORDER
November 24, 1998
Bankers Trust Company
of California, N.A.
Three Park Plaza
16th Floor
Irvine, California 92614
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Trust B Indenture, dated as of November 1,
1998 (the "Trust B Indenture") by and between Advanta Mortgage Loan Trust
1998-4B, as Issuer and Bankers Trust Company of California, N.A., as Indenture
Trustee, the Issuer HEREBY CERTIFIES that all conditions precedent to the
issuance of Advanta Mortgage Loan Trust 1998-4B, Mortgage Loan Asset-Backed
Notes (the "Class B Notes"), HAVE BEEN SATISFIED and HEREBY REQUESTS YOU TO
AUTHENTICATE AND DELIVER said Class B Notes, and to RELEASE said Class B Notes
to the holders thereof, or otherwise upon their order.
Very truly yours,
ADVANTA MORTGAGE LOAN TRUST 1998-4B
by: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: ______________________________
Name:
Title:
E-1
<PAGE> 66
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Certificates
Series 1998-4B
Statement to Class B Noteholders
AS TO THE POOL
DISTRIBUTION DATE:
DELINQUENCY ADVANCES MADE:
ACCRUED SERVICING FEE FOR THE CURRENT PERIOD:
PLUS ADDITIONAL SERVICING FEES:
LESS PERMITTED REDUCTIONS TO SERVICING FEES:
TOTAL SERVICING FEES DUE MASTER SERVICER (INCLUDING MASTER SERVICING FEE):
COLLECTED SERVICING FEES FOR CURRENT PERIOD:
<TABLE>
<CAPTION>
Total Delinquency (Excluding Foreclosure & REO, Including
delinquent bankruptcies)
Loans in
Foreclosure
30-59 60-89 90+ (Including
Days Days Days Total Delinquency bankruptcies in F/C)
---- ---- ---- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
UPS-$
%-$
Loans-$
%-#
</TABLE>
BOOK VALUE AND LOAN NUMBER OF REO PROPERTY:
NUMBER OF LOANS AS OF THE CURRENT DISTRIBUTION DATE:
NUMBER OF LOANS AS OF THE NEXT DISTRIBUTION DATE:
WEIGHTED AVERAGE COUPON AS OF THE CURRENT DISTRIBUTION DATE:
E-2
<PAGE> 67
WEIGHTED AVERAGE COUPON AS OF THE NEXT DISTRIBUTION DATE:
E-3
<PAGE> 68
SUBSTITUTION AMOUNTS:
LOAN PURCHASE PRICES
<TABLE>
<CAPTION>
Bankruptcy
Proceedings
-----------
<S> <C>
Loans -# UPB-$
Status
Current
Delinquent*
Foreclosure*
Total
</TABLE>
<TABLE>
<CAPTION>
Modified Loans
--------------
<S> <C>
Loans-# UPS-$
Status
Current
Delinquent*
Foreclosure*
Total
</TABLE>
* included in delinquency and foreclosure statistics above
CURTAILMENTS INCLUDED IN CURRENT DISTRIBUTION:
PREPAYMENTS IN FULL INCLUDED IN CURRENT DISTRIBUTION:
RECOVERIES OF PRINCIPAL INCLUDED IN CURRENT DISTRIBUTION:
CARRY-FORWARD AMOUNT:
AMOUNT OF SUBORDINATION INCREASE OR DECREASE:
INFORMATION PURSUANT TO
SECTION 6049(d)(7)(C):
PROJECTED EXCESS SPREAD:
BALANCE OF LARGEST LOAN:
E-4
<PAGE> 69
TRUST ACTIVITY
TRUST B NOTE ACCOUNT DEPOSIT
AS TO THE POOL:
PROCEEDS OF LIQUIDATION OF TRUST ESTATE:
AMOUNT OF DEPOSIT IN THE TRUST B NOTE ACCOUNT:
LOAN PURCHASE PRICE AMOUNTS:
SUBSTITUTION AMOUNT:
INVESTMENT EARNINGS: ON CERT. ACCT.
MONTHLY REMITTANCE FOR EACH CLASS:
AMOUNT OF EXCESS SPREAD ALLOCABLE USED TO COVER SHORTFALLS WITH RESPECT TO TRUST
A AND TRUST C:
AMOUNT WITHDRAWN FROM TRUST B NOTE ACCOUNT
AND DEPOSITED IN THE EXPENSE ACCOUNT:
AMOUNT WITHDRAWN FROM TRUST B NOTE ACCOUNT
AND DISTRIBUTED TO TRUST B CERTIFICATES:
.
.
AMOUNT REMAINING IN TRUST B ACCOUNT:
PREMIUM AMOUNT:
E-5
<PAGE> 70
EXHIBIT F
FORM OF MONTHLY REPORT
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Notes
Series 1998-4B
Statement to Class B Noteholders
<TABLE>
<CAPTION>
CURRENT
ORIGINAL FACE PRIOR PRINCIPAL PRINCIPAL
CLASS VALUE BALANCE INTEREST PRINCIPAL TOTAL BALANCE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
TOTALS
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FACTOR INFORMATION PER $1000 OF ORIGINAL FACE PASS-THROUGH RATES
<TABLE>
<CAPTION>
PRIOR CURRENT
PRINCIPAL PRINCIPAL
CLASS CUSIP BALANCE INTEREST PRINCIPAL TOTAL BALANCE CURRENT NEXT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
SPONSOR: Advanta Mortgage Conduit Services, Inc. ACCOUNT
SERVICER: Advanta Mortgage Corp. USA MANAGER: _________________
LEAD UNDERWRITER: Morgan Stanley & Co. Incorporated
RECORD DATE:
DISTRIBUTION DATE:
FACTOR INFORMATION:
F-1
<PAGE> 71
EXHIBIT G
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company
of California, N.A.
Three Park Plaza
16th Floor
Irvine, California 92614
Attn: Corporate Trust
Date:
In connection with the administration of the mortgage loans held by you as
Indenture Trustee under a certain Trust B Indenture dated as of November 1, 1998
and by and between Advanta Mortgage Loan Trust 1998-4B, as Issuer, and you, as
Indenture Trustee (the "Agreement"), the Master Servicer hereby requests a
release of the File held by you as Indenture Trustee with respect to the
following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that
all amounts received in connection with the
loan have been or will be credited to the
Trust B Note Account (whichever is
applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan repurchased pursuant to Section 4.14 of the
Agreement.
(The Master Servicer hereby certifies that
the Loan Purchase Price has been or will be
paid to the Trust B Note Account pursuant to
the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a
Qualified Replacement Mortgage has been or
will be assigned and delivered to you along
with the related File pursuant to the
Agreement.)
G-1
<PAGE> 72
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above File will be held by the
undersigned in accordance with the provisions of the Agreement and will be
returned to you, except if the Mortgage Loan has been paid in full, or
repurchased or substituted for by a Qualified Replacement Mortgage (in which
case the File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the File will be returned when no longer
required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
ADVANTA MORTGAGE CORP. USA
By ________________________________________
Name:___________________________________
Title:__________________________________
G-2
<PAGE> 73
EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Advanta Mortgage Conduit Services, Inc., as Seller, and Advanta Mortgage
Loan Trust 1998-4B, as Purchaser, pursuant to the Sale and Servicing Agreement
dated as of November 1, 1998 among Advanta Mortgage Corp. USA as Master
Servicer, Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta Mortgage
Loan Trust 1998-4B, as Issuer, Bankers Trust Company of California, N.A., as
Indenture Trustee (the "Trust B Sale and Servicing Agreement"), hereby confirm
their understanding with respect to the sale by the Seller and the purchase by
the Purchaser of those Mortgage Loans listed on the attached Schedule of
Mortgage Loans (the "Subsequent Mortgage Loans").
Conveyance of Subsequent Mortgage Loans. The Seller does hereby
irrevocably transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (except as otherwise explicitly provided for herein) all of its
right, title and interest in and to the Subsequent Mortgage Loans, including
specifically, without limitation, the Mortgages, the Files and all other
documents, materials and properties appurtenant thereto and the Notes, including
all interest accruing and principal collected by the Seller on or with respect
to the Subsequent Mortgage Loans on or after the Subsequent Cut-Off Date of any
related insurance policies on behalf of the Purchaser. The Seller shall deliver
the original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Trust B Sale and Servicing Agreement) and
other required documentation in accordance with the terms set forth in Section
2.4(a) of the Trust B Sale and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Trust B Sale and Servicing Agreement shall
be borne by the Seller.
Additional terms of the sale are attached hereto as Attachment A.
The Seller hereby affirms the representations and warranties set forth in
the Trust B Sale and Servicing Agreement that related to the Subsequent Mortgage
Loans as of the date hereof. The Seller hereby delivers notice and confirms that
each of the conditions set forth in Section 2.4(a) to the Trust B Sale and
Servicing Agreement are satisfied as of the date hereof.
All terms and conditions of the Trust B Sale and Servicing Agreement are
hereby ratified, confirmed and incorporated herein; provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Trust B Sale and Servicing
Agreement.
H-1
<PAGE> 74
Terms and capitalized and not defined herein shall have their respective
meanings as set forth in the Trust B Sale and Servicing Agreement.
IN WITNESS WHEREOF, the parties have executed this Subsequent Transfer
Agreement as of this ____ day of ____________, ______.
ADVANTA MORTGAGE CONDUIT
SERVICES, INC.,
as Seller
By:_______________________________
Mark Dunsheath
Vice President
ADVANTA MORTGAGE LOAN
TRUST 1998-4B
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee
By:_______________________________
Name:
Title:
Dated:
Attachments
A. Additional Terms of the Sale.
B. Schedule of Mortgage Loans.
C. Opinion of Seller's Counsel.
D. Seller's Officer's Certificate.
E. Opinion of Seller's Bankruptcy Counsel.
F. Trustee's Certificate.
H. Purchase Request.
I. Assignment.
H-2
<PAGE> 75
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
SUBSEQUENT TRANSFER AGREEMENT
ADVANTA MORTGAGE POOL: 1998-4B
NOVEMBER, 1998
1. CUTOFF DATE 1 NOVEMBER 1998 (DD MONTH YEAR)
1A. PRICING DATE _________________ (DD MONTH YEAR)
2. CLOSING DATE 24 NOVEMBER 1998 (DD MONTH YEAR)
2A. DAYS - CUTOFF TO CLOSING
3. POOL PRINCIPAL BALANCE AS
OF THE CUTOFF DATE
4. NET PURCHASE PRICE EQUALS: 100.00%
PLUS:
5. ACCRUED INTEREST $
EQUALS: --------
6. NET PROCEEDS $
========
7. PASSTHROUGH RATE %
SEE FORMULA BELOW
8. FIRST DISTRIBUTION DATE
9. MAXIMUM CLTV
10. REQUIRED MINIMUM COUPON
11. MAXIMUM BALLOON PERCENTAGE
12. MAXIMUM CONCENTRATION PCT
13. MAXIMUM VACATION &
INVESTOR OWNED PCT
14. ADDITIONAL REPS & WARRANTIES:
15. OTHER MATTERS
H-3
<PAGE> 76
EXHIBIT I
ADDITION NOTICE
Bankers Trust Company of California, N.A.
Three Park Plaza, 16th floor
Irvine, CA 92714
Moody's Investors Service, Inc.
99 Church Street
New York, NY 10007
Standard & Poor's Ratings Group
26 Broadway
New York, NY 10004
AMBAC Assurance Corporation
One State Street Plaza, 17th floor
New York, NY 10004
Re: Advanta Mortgage Loan Trust 1998-4B
Ladies and Gentlemen:
Pursuant to Section 2.4(a) of the Sale and Servicing Agreement, dated as
of November 1, 1998 (the "Agreement"), among Advanta Mortgage Conduit Services,
Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta
Mortgage Loan Trust 1998-4B, as Issuer, and Bankers Trust Company of California,
N.A., as Indenture Trustee, we expect to deliver to the Indenture Trustee on
_______________, for transfer to the Advanta Mortgage Loan Trust 1998-4B, the
Subsequent Mortgage Loans (as defined in the Agreement) on the schedule attached
hereto, in the aggregate Principal Balance (as defined in the Agreement) of
$_______________.
This Addition Notice is dated as of _______________.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
By: ___________________________
Name:
Title:
I-1
<PAGE> 1
Exhibit 4.3.3
DB Draft 12/3/98
TRUST C
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST 1998-4C,
as Issuer,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<CAPTION>
Page
<S> <C>
Parties................................................................................................. 1
Recitals................................................................................................ 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION............................................................ 2
Section 1.1. Definitions........................................................................... 2
Section 1.2. Use of Words and Phrases.............................................................. 14
Section 1.3. Captions; Table of Contents........................................................... 14
Section 1.4. Opinions.............................................................................. 14
ARTICLE II CONVEYANCE OF MORTGAGE LOANS................................................................. 14
Section 2.1. Conveyance of the Mortgage Loans...................................................... 14
Section 2.2. Acceptance by the Issuer; Certain Substitutions of Mortgage Loans; Certification by
Indenture Trustee.................................................................. 16
Section 2.3. Cooperation Procedures................................................................ 18
Section 2.4. [Reserved]............................................................................ 18
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor.................................. 18
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER............ 19
Section 3.1. Representations and Warranties of the Sponsor......................................... 19
Section 3.2. Representations and Warranties of the Master Servicer................................ 21
Section 3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage Loans...... 23
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In
Certain Situations................................................................. 24
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS............................................... 25
Section 4.1. Master Servicer and Sub-Servicers..................................................... 25
Section 4.2. Collection of Certain Mortgage Loan Payments.......................................... 27
Section 4.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.................... 27
Section 4.4. Successor Sub-Servicers............................................................... 28
Section 4.5. Liability of Master Servicer.......................................................... 28
Section 4.6. No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the Class C
Noteholders........................................................................ 28
Section 4.7. Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee............. 28
Section 4.8. Trust C Principal and Interest Account................................................ 28
Section 4.9. Delinquency Advances, Compensating Interest and Servicing Advances.................... 30
Section 4.10. Purchase of Mortgage Loans........................................................... 31
Section 4.11. Maintenance of Insurance............................................................. 31
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.......................... 32
Section 4.13. Realization Upon Defaulted Mortgage Loans............................................ 33
Section 4.14. Indenture Trustee to Cooperate; Release of Files..................................... 34
Section 4.15. Servicing Compensation............................................................... 35
Section 4.16. Annual Statement as to Compliance.................................................... 36
Section 4.17. Annual Independent Certified Public Accountants' Reports............................. 36
Section 4.18. Access to Certain Documentation and Information Regarding the Mortgage Loans......... 36
Section 4.19. Assignment of Agreement.............................................................. 36
</TABLE>
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<TABLE>
<S> <C>
ARTICLE V SERVICING TERMINATION......................................................................... 37
Section 5.1. Events of Servicer Termination........................................................ 37
Section 5.2. Inspections by the Note Insurer and the Indenture Trustee; Errors and Omissions
Insurance.......................................................................... 41
Section 5.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer........ 42
Section 5.4. Notices of to Class C Noteholders..................................................... 42
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER................................................. 42
Section 6.1. Administrative Duties with Respect to the Indenture................................... 42
Section 6.2. Records............................................................................... 44
Section 6.3. Additional Information to be Furnished to the Issuer.................................. 44
ARTICLE VII MISCELLANEOUS............................................................................... 44
Section 7.1. Compliance Certificates and Opinions.................................................. 44
Section 7.2. Form of Documents Delivered to the Indenture Trustee.................................. 45
Section 7.3. Acts of Class C Noteholders........................................................... 45
Section 7.4. Notices, etc., to Indenture Trustee................................................... 46
Section 7.5. Notices and Reports to Class C Noteholders; Waiver of Notices......................... 46
Section 7.6. Rules by Indenture Trustee and Sponsor................................................ 47
Section 7.7. Successors and Assigns................................................................ 47
Section 7.8. Severability.......................................................................... 47
Section 7.9. Benefits of Agreement................................................................. 47
Section 7.10. Legal Holidays....................................................................... 47
Section 7.11. Governing Law........................................................................ 47
Section 7.12. Counterparts......................................................................... 47
Section 7.13. Usury................................................................................ 47
Section 7.14. Amendment............................................................................ 48
Section 7.15. The Note Insurer..................................................................... 49
Section 7.16. Notices.............................................................................. 49
Section 7.17. Limitation of Liability.............................................................. 50
</TABLE>
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SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Contents of Mortgage Loan File
EXHIBIT B -- Form of Certificate Re: Mortgage Loans Prepaid in Full
EXHIBIT C -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT D -- Form of Certification
EXHIBIT E -- Form of Delivery Order
EXHIBIT F -- Form of Power of Attorney
EXHIBIT G -- Form of Monthly Report
EXHIBIT H -- Form of Master Servicer's Trust Receipt
EXHIBIT I -- Reserved
EXHIBIT J -- Form of Addition Notice
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<PAGE> 5
SALE AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE LOAN TRUST
1998-4C (the "Trust" or "Issuer"), dated as of November 1, 1998, by and among
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in its capacity
as sponsor of the Issuer (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 indenture trustee (the "Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of the Mortgage Loans
(as defined herein) originated by the Originators (as defined herein);
WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Issuer;
WHEREAS, the Master Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the trust estate; and
WHEREAS, Ambac Assurance Corporation (the "Note 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, the Issuer and the Indenture
Trustee hereby agree as follows:
<PAGE> 6
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. In addition, capitalized terms used herein and not
defined herein shall have their respective meanings as set forth in the
Indenture:
"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 Class C
Noteholders' reliance on the Master Servicer.
"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 A 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 4.15 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.
"Agreement": This Trust C Sale and Servicing Agreement, as it may be
amended from time to time, and including the Exhibits and Schedules attached
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 Indenture
Trustee, the Sponsor, the Issuer and the Master Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered on the Closing Date.
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<PAGE> 7
"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.
"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
Indenture Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Class A Note": Any note designated as a "Class A Note" on the face
thereof.
"Class B Note": Any note designated as a "Class B Note" on the face
thereof.
"Class C Deficiency Amount": As defined in the Trust C Indenture.
"Class C Note": Any note designated as a "Class B Note" on the face
thereof.
"Class C Note Principal Balance": As of the Closing Date, $100,000,000. As
of any Payment Date with respect to the Class C Certificates, the Class C Note
Principal Balance as of the Closing Date less any amounts actually distributed
theretofor as principal thereon to the Class C Notes on all prior Payment Dates.
"Class C Noteholders": The holders of the Class C Notes.
"Closing Date": November 24, 1998.
"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, the percentage equal to (a) the sum of (i) the remaining
principal balance, as of origination of the Second Mortgage Loan of the Senior
Lien note(s) relating to such Second Mortgage Loan and (ii) the Original
Principal Amount of the Note relating to such Second Mortgage Loan divided by
(b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(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" code, the items listed on Exhibit A
hereto.
"Control Party": Until the last sentence of Section 7.15 hereof is
applicable and so long as no Note Insurer Default has occurred and is
continuing, the Note Insurer, and thereafter, the Indenture Trustee.
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<PAGE> 8
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Mortgage Loans are transferred and
assigned to the Issuer, the opening of business, November 1, 1998.
"Definitive Notes": Class C Notes issued in definitive form without
coupons.
"Delinquency Advance": As defined in Section 4.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit E
hereto and delivered by the Issuer to the Indenture Trustee on the Closing Date
pursuant to Section 2.2 of the Trust C Indenture.
"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 the Trust C Principal
and Interest 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 or A or
better by Standard & Poor's and in the highest short-term rating category for
Moody's, and Standard & Poor's unless otherwise approved in writing by the
Indenture Trustee. The Note Insurer, Moody's and Standard & Poor'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 Indenture Trustee, the Note Insurer, Moody's and Standard &
Poor's and, in each case acting or designated by the Master Servicer as the
depository institution for the Trust C Principal and Interest Account; provided,
however, that any such institution or association shall have combined capital,
surplus and undivided profits of at least $100,000,000. Notwithstanding the
foregoing, a Trust C Principal and Interest 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 or BBB or
better by Standard & Poor's if such institution has trust powers and the Trust C
Principal and Interest Account is held by such institution in its corporate
trust department.
"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
Note Insurer and the Indenture Trustee.
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<PAGE> 9
"Direct Participant" or "DTC Participant" means any broker-dealer, bank or
other financial institution for which the Depository holds Class C Notes from
time to time as a securities depository.
"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 2.1(b) hereof.
"Eligible Investments": Those investments so designated pursuant to
Section 8.9 of the Trust C Indenture.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"File": The documents delivered to the Indenture Trustee pursuant to
Section 2.1 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Advanta Mortgage File or Conduit Mortgage
File, as appropriate, pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a first priority
mortgage lien with respect to any Property.
"Indemnification Agreement": The Indemnification Agreement dated as of
November 24, 1998 between Note Insurer and the Underwriter, as may be amended
from time to time.
"Indenture 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 Indenture Trustee under this Agreement, and any successor
hereunder.
"Indenture Trustee's Fees": With respect to any Payment Date, the product
of (x) one-twelfth of 0.007% and (y) the aggregate Loan Balance of the Mortgage
Loans as of the beginning of the related Remittance Period.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in the Class C Notes.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as of
November 24, 1998 among the Sponsor, the Indenture Trustee, the Master Servicer,
Trust A, Trust B, Trust C, and the Note 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.
"Issuer" or "Trust C": Advanta Mortgage Loan Trust 1998-4C, as created by
the Trust C Trust Agreement.
"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
5
<PAGE> 10
change is announced by Citibank, N.A.), plus 2% per annum and (y) the then
applicable highest rate of interest on the Class C Notes 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.
"Liquidated Mortgage Loan": As defined in Section 4.13(b) hereof. A
Mortgage Loan which is purchased from the Issuer pursuant to Section 3.3, 3.4,
2.2(b) or 4.10 hereof is not a "Liquidated Mortgage 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 4.9 with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the Master
Servicer in connection with such Liquidated Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the outstanding
principal balance thereof as of the Cut-Off Date less any related Principal
Remittance Amounts relating to such Mortgage Loan included in previous related
Trust C Monthly Remittance Amounts that were transferred by the Master Servicer
or any Sub-servicer to the Indenture Trustee for deposit in the Trust C Note
Account; provided, however, (x) that the Loan Balance for any Mortgage Loan
which has become a Liquidated Mortgage 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 Mortgage Loan, and at all times thereafter and (y) the
Loan Balance "as of the Cut-Off Date" for any Mortgage Loan originated during
the period from the Cut-Off Date to the Closing Date shall be the original Loan
Balance thereof.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Issuer on a Remittance Date pursuant to Section 3.3, 3.4, 2.2(b) or 4.10
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, including
Nonrecoverable Advances theretofore made with respect to such Mortgage Loan and
not subsequently recovered from the related Mortgage Loan, (ii) all Delinquency
Advances which the Master Servicer or any Sub-servicer has theretofore failed to
remit with respect to such Mortgage Loan and (iii) any Reimbursement Amount
relating to the Issuer.
"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 H hereto.
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<PAGE> 11
"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 Indenture
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 Indenture 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).
"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 Loans": Such of the mortgage loans transferred and assigned to
the Issuer pursuant to Section 2.1(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
Issuer. Any mortgage loan which, although intended by the parties hereto to have
been, and which purportedly was, transferred and assigned to the Issuer by the
Sponsor, in fact was not transferred and assigned to the Issuer for any reason
whatsoever shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Mortgage 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 Mortgage Loan. In no event shall Net Liquidation Proceeds with
respect to any Liquidated Mortgage 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 Section 8.7 (b)(xvii) of the Indenture or Section 4.9, (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 promptly to the Note Insurer and the Indenture Trustee following such
determination would not be ultimately recoverable pursuant to Section
8.7(b)(xvii) of the Indenture or Section 4.9 or (c) any other advance identified
as a Nonrecoverable Advance in subsection 4.8(d).
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
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<PAGE> 12
"Note Account": The Note Account established in accordance with Section
8.3 of the Trust C Indenture and maintained by the Indenture Trustee.
"Note Insurer": As defined in the recitals.
"Note Insurer Default": Any one of the following events shall have
occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment required under
the Note Policy;
(b) The Note 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, the Wisconsin 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 Note 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 Note Insurer (or
the taking of possession of all or any material portion of the property of the
Note Insurer).
"Note Policy": The note guaranty insurance policy dated November 24, 1998
issued by the Note Insurer to the Indenture Trustee for the benefit of the Class
C Noteholders.
"Noteholders": The holders of the Class A Notes, the Class B Notes and the
Class C Notes.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Indenture Trustee.
"Operative Documents": Collectively, the Master Transfer Agreements, the
Insurance Agreement, the Indemnification Agreement, and, with respect to each of
Trust A, Trust B and Trust C, the related Sale and Servicing Agreement,
Subsequent Transfer Agreements, Trust Agreement, Note Policy, Indenture and
Notes.
"Original Pool Principal Balance": The Pool Principal Balance as of the
Closing Date.
"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
8
<PAGE> 13
New Jersey, Advanta Mortgage Corp. Northeast, Advanta National Bank and Advanta
Finance Corp.
"Outstanding": With respect to the Class C Notes, as of any date of
determination, all such Class C Notes theretofore executed and delivered
hereunder except:
(i) Class C Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Class C Notes or portions thereof for which full and final
payment money in the necessary amount has been theretofore deposited with
the Indenture Trustee in trust for the Class C Noteholders;
(iii) Class C Notes in exchange for or in lieu of which other Class
C Notes have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Indenture Trustee is presented that any
such Class C Notes are held by a bona fide purchaser; and
(iv) Class C Notes alleged to have been destroyed, lost or stolen
for which replacement Class C Notes have been issued as provided for in
Section 2.4 of the Indenture.
"Overall Event of Servicer Termination": Any event described in clause (b)
of Section 5.1 hereof.
"Owner Trustee": Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee under the Trust C Trust Agreement, its successors in
interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Class C Noteholders, which shall be the 25th day of
each month, commencing in the month following the Closing Date or if the 25th
day is not a Business Day, then the next succeeding Business Day.
"Percentage Interest": As to any Class C Note, that percentage, expressed
as a fraction, the numerator of which is the Class C Note Principal Balance of
such Class C Note as of the related Cut-Off Date and the denominator of which is
the Aggregate Class C Note Principal Balance; and as to any Certificate, that
Percentage Interest set forth on such 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 Trust C experienced
during such period.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate principal
balances of all Mortgage Loans 90 or more days Delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
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<PAGE> 14
"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.
"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 in full 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.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998 naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in the related Prospectus Supplement.
"Prospectus Supplement": That certain Prospectus Supplement dated November
2, 1998, discussing the Class C Notes issued by Trust C.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.3, 3.4 or 2.2(b) hereof, which (i) bears a fixed rate of
interest, (ii) has a Coupon Rate at least equal to the Coupon Rate of 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 the Payment Date in November, 2028,
(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, all as evidenced by an Officer's Certificate of the
Sponsor delivered to the Note Insurer and the Indenture 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. In the event
that one or more mortgage loans are proposed to be substituted for one or more
mortgage loans, the Note Insurer may allow the foregoing tests to be met on a
weighted average basis or
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other aggregate basis acceptable to the Note Insurer, as evidenced by a written
consent delivered to the Indenture Trustee by the Note 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 Mortgage 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 business day
immediately preceding the Payment Date; provided, that, if the Class C Notes
revert to Definitive Notes, the Record Date with respect to each Payment Date
thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs.
"Register": The register maintained by the Indenture Trustee in accordance
with Section 2.3 of the Indenture, in which the names of the Class C Noteholders
are set forth.
"Registrar": The Indenture Trustee, acting in its capacity as Indenture
Trustee appointed pursuant to Section 6.13 of the Indenture, 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 Class C
Notes constituting a part thereof.
"Remittance Date": Any date on which the Master Servicer is required to
remit monies on deposit in the Trust C Principal and Interest Account to the
Indenture 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 Closing Date 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 Issuer 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 Issuer.
"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: "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 Indenture 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.
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"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.
"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.
"Servicer Termination Delinquency Rate Trigger": As defined in the
Insurance Agreement.
"Servicer Termination Loss Trigger": As defined in the Insurance
Agreement.
"Servicing Advance": As defined in Section 4.9(c) and Section 4.13(a)
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 Indenture 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.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage, if the outstanding principal amount of such Qualified
Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than
the Loan Balance of the Mortgage Loan being replaced as of such Replacement
Cut-Off Date, an amount equal to such difference together with accrued and
unpaid interest on such amount calculated at the Coupon Rate net of the
Servicing Fee of the Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has entered into
a Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 4.3 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.
"Trust A": Advanta Mortgage Loan Trust 1998-4A, the trust created under
the Trust A Trust Agreement.
"Trust A Sale and Servicing Agreement": The Trust A Sale and Servicing
Agreement, dated as of November 1, 1998 among Trust A, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibit and Schedules attached thereto.
"Trust A Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
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"Trust B": Advanta Mortgage Loan Trust 1998-4B, the trust created under
the Trust B Trust Agreement.
"Trust B Sale and Servicing Agreement": The Trust B Sale and Servicing
Agreement, dated as of November 1, 1998, among Trust B, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibits and Schedules attached thereto.
"Trust B Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
"Trust C": Advanta Mortgage Loan Trust 1998-4C, the trust created under
the Trust C Trust Agreement.
"Trust C Certificate": As defined in the Trust C Trust Agreement.
"Trust C Event of Servicer Termination": Any event described in clause (a)
of Section 5.1 hereof.
"Trust C Indenture": The Indenture dated as of November 1, 1998 relating
to Trust C between the Issuer and the Indenture Trustee, as the same may be
amended and supplemented from time to time.
"Trust C Monthly Remittance Amounts": As defined in the Indenture.
"Trust C Principal and Interest Account": Collectively, each Trust C
Principal and Interest Account created by the Master Servicer or any
Sub-servicer pursuant to Section 4.8(a) hereof, or pursuant to any Sub-Servicing
Agreement.
"Trust C Trust Agreement": The Trust Agreement dated as of November 1,
1998 between the Owner Trustee and the Sponsor.
"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 for the benefit of the Class C Noteholders, including all
proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii)
such amounts including collections in respect of the related Mortgage Loans
received on or after the Cut-Off Date, but excluding any premium recapture, as
applicable, including Eligible Investments, as from time to time may be held in
the Trust C Note Account and by the Master Servicer in the Trust C Principal and
Interest Account (except as otherwise provided herein), each to be created
pursuant to this Agreement, (iii) any Property, the ownership of which has been
effected on behalf of the Issuer as a result of foreclosure or acceptance by the
Master Servicer of a deed in lieu of foreclosure and that has not been withdrawn
from the Issuer, (iv) any Insurance Policies relating to the Mortgage Loans and
any rights of the Sponsor or the Affiliated Originators under any Insurance
Policies, (v) Net Liquidation Proceeds with respect to any Liquidated Mortgage
Loan.
"Trust Notes": The Class A Note issued by Trust A or the Class B Note
issued by Trust B or the Class C Note issued by Trust C.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased by the Sponsor
from an Unaffiliated Originator and sold to the Issuer by the Sponsor.
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"Unaffiliated Originators": Any Originator who is not affiliated with the
Sponsor.
"Underwriter": Morgan Stanley & Co. Incorporated.
SECTION 1.2. USE OF WORDS AND PHRASES. "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used. The definitions set forth in Section 1.1 hereof
include both the singular and the plural. Whenever used in this Agreement, any
pronoun shall be deemed to include both singular and plural and to cover all
genders.
SECTION 1.3. CAPTIONS; TABLE OF CONTENTS. The captions or headings in this
Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
SECTION 1.4. OPINIONS. Each opinion with respect to the validity, binding
nature and enforceability of documents or Certificates may be qualified to the
extent that the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law) and may state that no
opinion is expressed on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy. Any opinion required to be
furnished by any Person hereunder must be delivered by counsel upon whose
opinion the addressee of such opinion may reasonably rely, and such opinion may
state that it is given in reasonable reliance upon an opinion of another, a copy
of which must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.1. CONVEYANCE OF THE MORTGAGE LOANS. (a) The Sponsor,
concurrently with the execution and delivery hereof, hereby transfers, assigns,
sets over and otherwise conveys without recourse, to Trust C, for pledge to the
Indenture Trustee on behalf of the Class C Noteholders all right, title and
interest of the Sponsor in and to (i) each Mortgage Loan listed on the Schedule
of Mortgage Loans, including its Loan Balance and all collections in respect
thereof received on or after the Cut-Off Date (excluding payments in respect of
accrued interest due prior to the Cut-Off Date); (ii) property that secured a
Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Sponsor's rights under the hazard insurance policies; and (iv) all
other assets included or to be included in the Trust Estate for pledge to the
Indenture Trustee on behalf of the Class C Noteholders and the Note Insurer. In
addition, on or prior to the Closing Date, the Sponsor shall cause the Note
Insurer to deliver the Trust C Note Policy to Trust C for pledge to the
Indenture Trustee on behalf of the Class C Noteholders. The foregoing transfer,
assignment, set-over and conveyance shall be made by the Sponsor to Trust C for
pledge to the Indenture Trustee on behalf of the Class C Noteholders, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.
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
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within 90 days of the Closing Date) describing the Mortgage Loans and naming the
Sponsor as debtor and the Indenture Trustee as secured party and any amendments
to UCC-1 financing statements required to reflect a change in the name or
corporate structure of the Sponsor or the filing of any additional UCC-1
financing statements due to the change in the principal office of the Sponsor
(within 90 days of any event necessitating such filing)) as are necessary to
perfect and protect the Class C Noteholders' and the Note Insurer's interests in
each Mortgage Loan and the proceeds thereof.
(b) In connection with the transfer and assignment of the Mortgage Loans,
the Sponsor agrees to:
(i) cause to be delivered on the Closing Date, without recourse, to the
Indenture Trustee, with respect to the Mortgage Loans or, on the Transfer
Date with respect to the Qualified Replacement Mortgage listed on the
Schedule of Mortgage Loans, the items listed in the definitions of "Advanta
Mortgage Files" and "Conduit Mortgage Files," as appropriate, in Exhibit A
hereto; and
(ii) cause, within 75 Business Days following the Closing Date, 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 Indenture 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
Indenture Trustee has received an Opinion of Counsel to the effect that the
recordation of such assignments in any specific jurisdiction is not necessary
to protect the Indenture Trustee's interest in the related Mortgagee.
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, 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 Indenture 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 and any assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
(c) In the case of Mortgage Loans which have been prepaid in full on or
after the Initial Cut-Off Date and prior to the Closing Date, the Sponsor, in
lieu of the foregoing, will deliver within 15 Business Days after the Closing
Date to the Indenture Trustee a certification of an Authorized Officer in the
form set forth in Exhibit B.
(d) The Sponsor shall transfer, assign, set over and otherwise convey
without recourse, to Trust C for pledge to the Indenture Trustee on behalf of
the Class C Noteholders all right, title and interest of the Sponsor in and to
any Qualified Replacement Mortgage delivered to Trust C by the Sponsor pursuant
to Section, 2.2, Section 3.3, Section 3.4 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 shall reserve and retain all right, title
and interest in and to payments of principal and
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interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from Trust C in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Indenture Trustee
will transfer, 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 of the Issuer'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 Issuer shall
reserve and retain all right, title and interest in and to payments of principal
collected and interest accruing on such released Mortgage Loan prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Issuer, the Sponsor agrees to cause to be delivered
to the Indenture Trustee the items described in Section 2.1(b) on the date of
such transfer and assignment or, if a later delivery time is permitted by
Section 2.1(b), then no later than such later delivery time.
(g) As to each Mortgage Loan released from the Issuer in connection with
the conveyance of a Qualified Replacement Mortgage the Indenture 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.
(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein, the
Sponsor shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
(i) The Sponsor shall reflect on its records that the Mortgage Loans have
been sold to the Issuer.
(j) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Sponsor or of its ultimate corporate parent are satisfactory to the
Control Party, Moody's and Standard & Poor'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 Indenture 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 2.2. ACCEPTANCE BY THE ISSUER; CERTAIN SUBSTITUTIONS OF MORTGAGE
LOANS; CERTIFICATION BY INDENTURE TRUSTEE. The Indenture Trustee, on behalf of
the Issuer,hereby acknowledges receipt of the Trust Estate and agrees to execute
and deliver on the Closing Date and each Transfer Date an acknowledgment of
receipt of the Files delivered to it on behalf of the Issuer by the Sponsor in
the form attached as Exhibit C 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 pledged to it on
behalf of the Class C Noteholders and the Note Insurer.
The Indenture Trustee agrees to review any documents delivered by the
Sponsor within 90 days after the Closing Date (or within 90 days with respect to
any Qualified Replacement Mortgage after the assignment thereof) and to deliver
to the Sponsor, the Master Servicer and the Note Insurer a Certification in the
form attached hereto as Exhibit D hereto. The
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Indenture 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 Indenture 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 Indenture 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 Indenture Trustee shall promptly so notify the
Sponsor, the Issuer and the Note Insurer. In performing any such review, the
Indenture 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 Indenture Trustee. If, however,
within 60 days after the Indenture 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 Class C Noteholders or of the Note Insurer, the Sponsor will then 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 Trust C 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 Trust C Principal and Interest Account. Upon
receipt of any Qualified Replacement Mortgage or of written notification signed
by a Servicing Officer to the effect that the Loan Purchase Price in respect of
a Defective Mortgage Loan has been deposited into the Trust C Principal and
Interest Account, then as promptly as practicable, the Indenture Trustee shall
execute such documents and instruments of transfer presented by the Sponsor, in
each case without recourse, representation or warranty, and take such other
actions as shall reasonably be requested by the Sponsor to effect such transfer
by the Issuer of such Defective Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Sponsor to accept a transfer of
a Defective Mortgage Loan and to either convey a Qualified Replacement Mortgage
or to make a deposit of any related Loan Purchase Price into the Trust C
Principal and Interest Account shall constitute the sole remedy respecting such
defect available to Class C Noteholders, the Indenture Trustee, the Issuer and
the Note Insurer against the Sponsor.
The Sponsor, promptly following the transfer of a Defective Mortgage Loan
from or to the Issuer pursuant to this Section, shall deliver an amended
Mortgage Loan Schedule to the Indenture Trustee and the Note Insurer and shall
make appropriate entries in its general account records to reflect such
transfer. The Master Servicer shall, following such retransfer, appropriately
mark its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Issuer. The Sponsor, promptly following such transfer, shall
appropriately mark its electronic ledger and make appropriate entries in its
general account records to reflect such transfer.
(c) As to any Qualified Replacement Mortgage, the Sponsor shall, if
required to deliver any such Qualified Replacement Mortgage, deliver to the
Indenture Trustee with respect to such Qualified Replacement Mortgage such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.2. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgages, the Master
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Servicer shall determine the Substitution Amount which amount shall be deposited
by the Sponsor in the Trust C Principal and Interest Account at the time of
substitution. All amounts received in respect of the Qualified Replacement
Mortgage during the Remittance Period in which the circumstances giving rise to
such substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Trust C Principal and Interest Account.
All amounts received by the Master Servicer during the Remittance Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust Estate shall be deposited by the
Master Servicer in the Trust C Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage shall be subject to the terms
of this Agreement in all respects, and the Sponsor shall be deemed (i) to have
made with respect to such Qualified Replacement Mortgage or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 3.3 and (ii) to have certified that such Mortgage Loan(s) is/are
Qualified Replacement Loan(s). The procedures applied by the Sponsor in
selecting each Qualified Replacement Mortgage shall not be materially adverse to
the interests of the Indenture Trustee, the Issuer, the Class C Noteholders or
the Note Insurer.
SECTION 2.3. COOPERATION PROCEDURES. (a) The Sponsor shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Indenture
Trustee, provide the Indenture 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 Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
SECTION 2.4. [RESERVED].
SECTION 2.5. RETRANSFERS OF MORTGAGE LOANS AT ELECTION OF SPONSOR. Subject
to the conditions set forth below, the Sponsor may, but shall not be obligated
to (except the Sponsor shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans from the Issuer as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor shall give the Indenture Trustee, the Note Insurer and the
Master Servicer a notice of the proposed reassignment that contains a list of
the Mortgage Loans to be reassigned. Such reassignment of Mortgage Loans shall
be permitted upon satisfaction of the following conditions:
(i) No Event of Default has occurred or will occur as a result of
such removal;
(ii) the Overcollateralization Amount as of such Payment Date equals
or exceeds the then Specified Overcollateralization Amount;
(iii) On or before the Transfer Date, the Sponsor shall have
delivered to the Indenture Trustee and the Note Insurer a revised Schedule
of Mortgage Loans, reflecting the proposed transfer and the Transfer Date,
and the Master Servicer shall have marked its servicing records to show
that the Mortgage Loans reassigned to the holder of the Sponsor are no
longer owned by the Issuer;
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(iv) The Sponsor shall represent and warrant that random selection
procedures were used in selecting the Mortgage Loans and no other
selection procedures were used which are adverse to the interests of the
Sponsor or the Class C Noteholders or the Note Insurer were utilized in
selecting the Mortgage Loans to be removed from the Issuer;
(v) The Sponsor shall have delivered to the Indenture Trustee and
the Insurer an Officer's Certificate certifying that the items set forth
in subparagraphs (i) through (iv), inclusive, have been performed or are
true and correct, as the case may be. The Indenture Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon receiving the requisite information from the Sponsor, the Master Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the File for
each Mortgage Loan being so reassigned, and the Indenture Trustee shall execute
and deliver to the Sponsor such other documents prepared by the Sponsor as shall
be reasonably necessary to reassign such Mortgage Loans to the Sponsor. Any such
transfer of the Issuer's right, title and interest in and to Mortgage Loans
shall be without recourse, representation or warranty by or of the Indenture
Trustee or the Issuer to the Sponsor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
hereby represents, warrants and covenants to the Indenture Trustee, the Note
Insurer and to the Class C Noteholders as of the Closing Date that:
(a) The Sponsor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is in good standing as
a foreign corporation in each jurisdiction in which the nature of its business,
or the properties owned or leased by it make such qualification necessary. The
Sponsor has all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which the Sponsor is a party by the Sponsor and its performance and
compliance with the terms of this Agreement and of the other Operative Documents
to which it is a party have been duly authorized by all necessary corporate
action on the part of the Sponsor and will not violate the Sponsor's Articles of
Incorporation or Bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to which the
Sponsor is a party or by which the Sponsor is bound, or violate any statute or
any order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which the Sponsor
is a party, assuming due authorization, execution and delivery by the other
parties hereto and
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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.
(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
Class C Notes 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.
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(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 to the
Issuer.
(k) The Sponsor did not sell any interest in any Mortgage Loan 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 Issuer.
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
Indenture Trustee.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER. The
Master Servicer hereby represents, warrants and covenants to the Indenture
Trustee, the Note Insurer and to the Class C Noteholders as of the Closing Date
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 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
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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) 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.
(g) 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.
(h) 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.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Master Servicer.
(j) 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 4.3.
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
Indenture Trustee.
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Upon discovery by any of the Master Servicer, the Sponsor, any
Sub-Servicer, the Note Insurer or the Indenture 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 Class C Noteholders or of
the Note Insurer, the party discovering such breach shall give prompt written
notice to the other parties. Within 60 days of its discovery or its receipt of
notice of breach, the Master Servicer shall cure such breach in all material
respects; provided, however, that, if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer and the Indenture Trustee that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Note Insurer.
SECTION 3.3. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR WITH RESPECT TO
THE MORTGAGE LOANS. The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Note Insurer relies and the
Indenture Trustee relies in accepting the Mortgage Loans in trust and executing
and authenticating the Class C Noteholders. Such representations and warranties
speak as of the Closing Date with respect to the Mortgage Loans or as of the
Transfer Date upon which any Qualified Replacement Mortgage is added to the
Issuer, but shall in each case survive the sale, transfer, and assignment of the
Mortgage Loans to the Indenture 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;
(ii) All of the original or certified documentation set forth in
Section 2.1 (including all material documents related thereto) with
respect to each Mortgage Loan has been or will be delivered to the
Indenture Trustee on the Closing Date or as otherwise provided in Section
2.1;
(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 Trust C bears a
Coupon Rate of at least 5.99% per annum;
(v) As of the Cut-Off Date, none of the Mortgage Loans are more than
59 days Delinquent;
(vi) As of the Closing Date, no more than 1.0% of the aggregate Loan
Balances of the Mortgage Loans is secured by Properties located within any
single zip code area;
(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; and
(viii) 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 Indenture Trustee for the benefit of
the Class C Noteholders and the Note Insurer (so long as a Note Insurer Default
has not occurred and is continuing) all of its right, title and interest in
respect of each Master Transfer Agreement
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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 Indenture Trustee on
behalf of the Class C Noteholders and the Note Insurer. Upon the discovery by
the Sponsor, the Master Servicer, the Note Insurer or the Indenture 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 Class C Noteholders or of the Note 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 the Sponsor,
the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture 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 Closing Date and such breaches of the representations and
warranties materially and adversely affect the interests of the Class C
Noteholders or of the Note 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 Class C Noteholders or of the Note
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 Note
Insurer or such time as a breach of any representation and warranty materially
and adversely affects the interests of the Class C Noteholders or of the Note
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), 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 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, including Nonrecoverable Advances, theretofore made with
respect to such Mortgage Loan, to the Master Servicer for deposit in the Trust C
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Issuer 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
Trust C Principal and Interest Account. 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
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constitute the sole remedy available to the Class C Noteholders, the Indenture
Trustee or the Note 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 Issuer pursuant to Section 3.3, Section 3.4 or Section 2.2
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 Class C Noteholders, the Sponsor, the
Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture 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 Issuer such that the
interests of the Class C Noteholders or the Note 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 Closing
Date" shall be deemed to refer to such items as of the date such Qualified
Replacement Mortgage is conveyed to the Issuer.
(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 Indenture Trustee on behalf of the
Issuer.
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
SECTION 4.1. MASTER SERVICER AND SUB-SERVICERS. (a) Acting directly or
through one or more Sub-Servicers as provided in Section 4.3, the Master
Servicer, as master servicer, shall service and administer the Mortgage Loans in
accordance with this Agreement and on behalf of the Indenture Trustee and the
Note Insurer and with reasonable care, and using that degree of skill and
attention that the Master Servicer exercises with respect to comparable mortgage
loans that it services for itself or others, and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable.
(b) The duties of the Master Servicer shall include collecting and posting
of all payments, responding to inquiries of Mortgagors or by federal, state or
local government authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in accordance with its
customary practices and accounting for collections and furnishing monthly and
annual statements to the Indenture Trustee and the Note 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
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate to
enable the Indenture Trustee to perform its tax reporting duties hereunder. The
Indenture 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) 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 such 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 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.
(d) 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.
(e) Without limiting the generality of the foregoing, but subject to
Sections 4.13 and 4.14, 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 Indenture Trustee to execute and deliver, and may
be authorized and empowered by the Indenture Trustee, to execute and deliver, on
behalf of itself, the Class C Noteholders, the Note Insurer and the Indenture
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) to institute foreclosure proceedings or obtain a deed in lieu
of foreclosure so as to effect ownership of any Property on behalf of the
Indenture Trustee, (iii) to hold title to any Property upon such foreclosure or
deed in lieu of foreclosure on behalf of the Indenture Trustee, and (iv) to
consent to any modification of the terms of any Note not expressly prohibited
hereby if the effect of any such modification will not be to affect materially
and adversely the security afforded by the related Property and the timing of
the receipt of payments required hereby or the interests of the Note Insurer;
provided, however, that Section 4.14(a) shall constitute a power of attorney
from the Indenture 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).
(f) The Master Servicer shall give prompt notice to the Indenture Trustee
of any action, of which the Master Servicer has actual knowledge, to (i) assert
a claim against the Issuer or (ii) assert jurisdiction over the Issuer.
(g) 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 4.9(c) and in Section 8.7(b)(xvii) of the
Indenture.
SECTION 4.2. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer shall, to the extent such procedures shall be consistent with this
Agreement and
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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 4.3. 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
may be an Affiliate, and 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 Note Insurer and the
Indenture Trustee of the appointment of any Sub-Servicer and shall furnish to
the Note Insurer and the Indenture Trustee a copy of the Subservicing Agreement.
For purposes of this Agreement, the Master shall be deemed to have received
payments on Mortgage Loans when any Sub-Servicer has received such payments. Any
such Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement.
SECTION 4.4. 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 4.3.
SECTION 4.5. 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 Issuer shall not indemnify the
Master Servicer for any losses due to the Master Servicer's negligence.
SECTION 4.6. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER AND
INDENTURE TRUSTEE OR THE CLASS C NOTEHOLDERS. 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 Note Insurer, the Indenture Trustee and the Class C
Noteholders 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 4.7.
SECTION 4.7. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
INDENTURE TRUSTEE. In connection with the assumption of the responsibilities,
duties and
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liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee pursuant to Section 5.1, 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 Indenture 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 Indenture Trustee be liable for any
such fee.
The Master Servicer shall, upon request of the Indenture 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 Indenture Trustee,
notwithstanding any contrary provision in any Sub-Servicing Agreement.
SECTION 4.8. TRUST C PRINCIPAL AND INTEREST ACCOUNT. (a) The Master
Servicer and/or each Sub-servicer, as applicable, shall establish in the name of
the Issuer for the benefit of the Class C Noteholders and the Note Insurer, as
their interests may appear, and maintain at one or more Designated Depository
Institutions the Trust C Principal and Interest Account.
Subject to Subsections (c) and (e) below, the Master Servicer and any
Sub-servicer shall deposit all receipts related to the Mortgage Loans to the
Trust C Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
Within one Business Day of the Closing Date and each Transfer Date, the
Sponsor and/or the Master Servicer shall deposit to the Trust C 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 Trust C 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 Trust C Principal and Interest Account shall be held
in Trust C in the name of the Issuer and for the benefit of the Class C
Noteholders and the Note Insurer. Any investment earnings on funds held in the
Trust C Principal and Interest Account shall be for the account of the Master
Servicer and may only be withdrawn from the Trust C Principal and Interest
Account by the Master Servicer immediately following the remittance of the Trust
C Monthly Remittance Amounts by the Master Servicer. Any references herein to
amounts on deposit in the Trust C 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 Trust C 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
Trust C 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 4.15 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
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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 Trust C
Principal and Interest Account only for the following purposes:
(1) to effect the timely remittance to the Indenture Trustee
of the Trust C Monthly Remittance Amounts due on the Remittance
Date;
(2) to reimburse itself for unreimbursed Delinquency Advances
and Servicing Advances and Nonrecoverable Advances;
(3) to withdraw investment earnings on amounts on deposit in
the Trust C Principal and Interest Account;
(4) to withdraw amounts that have been deposited to the Trust
C Principal and Interest Account in error; and
(5) to clear and terminate the Trust C Principal and Interest
Account following the termination of the Trust Estate pursuant to
Article X of the Indenture.
(ii) On the tenth day of each month, the Master Servicer shall send
to the Indenture 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 Indenture Trustee from
time to time. The Note 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
Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds for deposit in the Trust C Note Account
pursuant to Section 8.7(a) of the Indenture, the Trust C Interest
Remittance Amount and the Trust C 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 Note Insurer, the Indenture Trustee, Moody's and
Standard & Poor's, then the requirement to maintain the Trust C Principal and
Interest Account may be waived by an instrument signed by the Note Insurer,
Standard & Poor's, Indenture 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 Trust C Principal and Interest Account, on such terms and
subject to such conditions as the Note Insurer, the Indenture Trustee, Moody's
and Standard & Poor's may permit.
SECTION 4.9. DELINQUENCY ADVANCES, COMPENSATING INTEREST AND SERVICING
ADVANCES. (a) The Master Servicer is required, not later than each Remittance
Date, to deposit into the Trust C 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".
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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 Trust
C Principal and Interest Account subsequent to the related Remittance Period to
fund its payment of Delinquency Advances related to a Payment Date. The Master
Servicer shall also fund Delinquency Advances from the deposits into the Trust C
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 8.7(b)(xvii) of the Indenture and Section 4.8(a)
hereof.
(b) On or prior to each Remittance Date, the Master Servicer shall deposit
in the Trust C Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of reimbursement therefor, an amount equal to
the difference between (x) 30 days' interest at the Mortgage Loan's Coupon Rate
(less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the
first day of the related Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) paid by the Mortgagor with
respect to the Mortgage Loan during such Remittance Period (any such amount paid
by the Master Servicer, "Compensating Interest"). The Master Servicer shall in
no event be required to pay Compensating Interest with respect to any Remittance
Period in an amount in excess of the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance Period
nor shall it be required to pay Compensating Interest due to partial prepayments
or Relief Act Shortfalls.
(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 (a) foreclosures and (b) other legal actions and
costs associated therewith that potentially affect the existence, validity,
priority, enforceability, or collectibility of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions, and (iii) the costs of the
conservation, management, liquidation, sale or other disposition of any REO
Property, including reasonable fees paid to any independent contractor in
connection therewith, and (iv) advances to keep liens current, unless with
respect to any of the foregoing the Master Servicer has determined that such
advance would not be recoverable. 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 4.8(d) hereof.
(d) On the Remittance Date in December 1998, the Master Servicer shall
make a special non-recoverable advance equal to one-month's interest, calculated
at the Class C Note Interest Rate (applicable to the December 1998 Payment Date)
for the Class C Notes with respect to all Mortgage Loans in Trust C not having a
payment due during November 1998 and the amounts of such advance shall be
included in the Interest Remittance Amount related to Trust C.
SECTION 4.10. 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
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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 4.13. Any such Mortgage 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 Trust C Principal and Interest Account provided, that
the Master Servicer may not purchase any Mortgage Loans pursuant to this Section
4.10 if such purchase will cause the aggregate purchase price to exceed 10% of
the Original Pool Principal Balance.
SECTION 4.11. 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 Issuer of insurance proceeds relating to
such Mortgage Loan in an amount not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the full
insurable value of the premises.
(b) If the Mortgage Loan at the time of origination relates to a Property
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer will
cause to be maintained with respect thereto a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Issuer 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
Issuer and the Note Insurer out of the Master Servicer's own funds for any loss
to the Issuer and the Note Insurer resulting from the Master Servicer's failure
to maintain the insurance required by this Section.
(c) It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Any cost incurred by the Master Servicer in maintaining
any such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Master Servicer pursuant to Section 4.9.
(d) 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 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, 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
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the preceding paragraphs of this Section 4.11, and there shall have been a loss
which would have been covered by such policy, deposit in the Trust C 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 4.11 and the amount paid under
such blanket policy. Upon the request of the Indenture Trustee or the Note
Insurer, the Master Servicer shall cause to be delivered to the Indenture
Trustee and the Note Insurer, a certified true copy of such policy.
SECTION 4.12. 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 Class C Noteholders or of
the Note 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
notify the Indenture Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Indenture Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Indenture 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 4.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall foreclose upon or otherwise comparably effect the ownership on
behalf of the
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Issuer 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 4.10. 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 4.9(c) hereof.
Notwithstanding the generality of the foregoing provisions, the Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Class C Noteholders solely for the purpose of its prompt disposition and sale.
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 Class C Noteholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Class C Noteholders 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 Mortgage Loan" and shall promptly deliver to the Note
Insurer, with a copy to the Indenture Trustee, a related liquidation report with
respect to such Liquidated Mortgage Loan.
SECTION 4.14. INDENTURE 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 Indenture Trustee a Master Servicer's Trust Receipt attached
hereto as Exhibit H. Upon receipt of such Master Servicer's Trust Receipt, the
Indenture Trustee shall promptly release the related File, in trust to the
applicable party as directed in writing by the Master Servicer on the Master
Servicer's Trust Receipt, in each case pending its release by the such party.
Upon any such payment in full, or the receipt of such notification that such
funds have been placed in escrow, the Master Servicer or any Sub-servicer is
authorized to give, as attorney-in-fact for the Indenture 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 Trust C Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the
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case may be, the Master Servicer or any Sub-servicer may prepare and submit to
the Indenture Trustee, a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed by the Master
Servicer or any Sub-servicer; in such event, the Indenture 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
Indenture 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 Indenture Trustee), upon request of the
Master Servicer or any Sub-servicer and delivery to the Indenture 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. The Indenture Trustee shall
complete in the name of the Indenture 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 Indenture 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 Indenture Trustee to the Master Servicer or any Sub-servicer.
(c) No costs associated with the procedures described in this Section 4.14
shall be an expense of the Issuer.
(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 Note
Insurer, Moody's and Standard & Poor's pursuant to Section 2.1(b) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to the Indenture
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 Indenture Trustee shall mutually agree. The
Indenture 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 Indenture Trustee.
Receipt of a Master Servicer's Trust Receipt pursuant to clauses (i), (ii) or
(iii) above shall be authorization to the Indenture Trustee to release such
Files, provided the Indenture Trustee has determined that such Master Servicer's
Trust Receipt has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an Authorized Officer of the
Master Servicer or any Sub-servicer, and so long as the Indenture Trustee
complies with its duties and obligations under this Agreement. If the Indenture
Trustee is unable to release the Files within the time frames previously
specified, the Indenture 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 Indenture Trustee's negligent failure to release the
related File or the Indenture Trustee's negligent failure to execute and release
documents in a timely manner, the Indenture Trustee shall be liable for such
penalties or damages.
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On each day that the Master Servicer remits to the Indenture 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 Indenture 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 4.15. 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 Trust C Principal and
Interest Account pursuant to Section 4.8(c)(v) and similar items may, to the
extent collected from Mortgagors, be retained by the Master Servicer.
SECTION 4.16. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer, at
its own expense, will deliver to the Indenture Trustee, the Note Insurer,
Standard & Poor's, and Moody's, on or before the last day of November of each
year, commencing in 1999, 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 4.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS. On
or before the last day of November of each year, commencing in 1999, the Master
Servicer, at its own expense, shall cause to be delivered to the Indenture
Trustee, the Note 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 4.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide to the Indenture Trustee,
the Note Insurer, the FDIC and the supervisory agents and examiners of each of
the foregoing access to the documentation regarding the Mortgage Loans required
by applicable state and federal regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such computer tape to the Indenture Trustee at such
other times as the Indenture Trustee may reasonably request. The Note Insurer
may request a copy of this computer tape upon three Business Days prior written
notice to the Master Servicer.
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SECTION 4.19. 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 Indenture Trustee and the Note
Insurer, which such consent shall not be unreasonably withheld; provided,
however, that any assignee must meet the eligibility requirements set forth in
Section 5.1(g) hereof for a successor servicer. Notice of any such assignment
shall be given by the Master Servicer to the Indenture Trustee, the Note Insurer
and Moody's.
ARTICLE V
SERVICING TERMINATION
SECTION 5.1. EVENTS OF SERVICER TERMINATION. (a) The Master Servicer may
be removed with respect to Trust C if any one of the following events ("Trust C
Events of Servicer Termination") shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture
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 Indenture Trustee or
from Class C Noteholders evidencing Percentage Interest aggregating not
less than 25%.
(ii) The Master Servicer shall fail to perform any one or more of
its obligations hereunder other than the obligations contemplated by
Subsection 5.1(i) above, and shall continue in default thereof for a
period of sixty (60) days after notice by the Indenture Trustee or the
Note 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
(iii) 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 Class C Noteholders
or the Note 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; or
(iv) The failure by the Master Servicer to make any required
Servicing Advance and such failure continues for fifteen days; provided,
however; that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that any such event was due to
circumstances beyond the control of the Master Servicer, such event shall
not be considered an event of termination of the Master Servicer; or
(v) The failure by the Master Servicer to make any required
Delinquency Advance or to pay any Compensating Interest; provided,
however, that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that any such event was due to
circumstances beyond the control of the Master Servicer, such event shall
not be considered an event of termination of the Master Servicer;
Then, and in each and every such case, so long as a Trust C Event of
Servicer
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Termination shall not have been remedied by the Master Servicer, either
the Indenture Trustee, the Note Insurer or the Class C Noteholders
evidencing Percentage Interests aggregating not less than 51% in each case
with the consent of the Note Insurer, or the Note Insurer, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee if
given by the Note Insurer of the Class C Noteholders) may terminate all of
the rights and obligations of the Master Servicer as servicer of Trust C
under this Agreement. Any such notice to the Master Servicer shall also be
given to each Rating Agency and the Note Insurer. On and after the receipt
by the Master Servicer of such written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Class C Notes or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to and under this Section 5.1(a)
and, without limitation, the Indenture Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether
to complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the responsibilities and
rights of the Master Servicer hereunder, including, without limitation,
the transfer to the Indenture Trustee for the administration by it of all
cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Trust C Note Account, or that have been
deposited by the Master Servicer in the Note Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. All
reasonable costs and expenses (including attorneys' fees) incurred in
connection with amending this Agreement to reflect such succession as
Master Servicer pursuant to this Section 5.1 shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) upon presentation of
reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 5.1(a)(i) for a period of two Business Days or under Section
5.1(ii), (iii), (iv), or (v) for a period of 60 days, shall not constitute
a Trust C Event of Servicer Termination if such delay or failure could not
be prevented by the exercise of reasonable diligence by the Master
Servicer and such delay or failure was caused by an act of God or the
public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not
relieve the Master Servicer from using its best efforts to perform its
respective obligations in a timely manner in accordance with the terms of
this Agreement and the Master Servicer shall provide the Indenture
Trustee, the Sponsor, the Note Insurer and the Class C Noteholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations.
The Master Servicer shall immediately notify the Indenture Trustee and the
Note Insurer in writing of any Trust C Event of Servicer Termination.
(b) The Master Servicer may be removed with respect to Trust A,
Trust B and Trust C if any one of the following events ("Overall Events of
Servicer Termination") shall occur and be continuing:
(i) The occurrence of a Servicer Termination Loss Trigger or
Servicer Termination Delinquency Rate Trigger, as such terms are defined
in the Insurance Agreement; or
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(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; or
(iii) If, without the application, approval or consent of the Master
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Master
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or similar entity with respect
to the Master Servicer or of all or any substantial part of its assets, or
other like relief in respect thereof under any bankruptcy or insolvency
law, and, if such proceeding is being contested by the Master Servicer in
good faith, the same shall (A) result in the entry of an order for relief
or any such adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of seventy-five (75) consecutive days.
Then, and in each and every such case, so long as an Overall Event of Servicer
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee, the Note Insurer or the Noteholders evidencing Percentage
Interests aggregating not less than 51% with the consent of the Note Insurer, or
the Note Insurer, by notice then given in writing to the Master Servicer (and to
the Indenture Trustee if given by the Note Insurer of the Noteholders) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement, the Trust B Sale and Servicing Agreement and the Trust C
Sale and Servicing Agreement. Any such notice to the Master Servicer shall also
be given to each Rating Agency and the Note Insurer. On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Trust Notes or
the Mortgage Loans or otherwise, shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 5.1(b) and, without limitation, the
Indenture Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan in Trust C and related documents, or otherwise. The Master Servicer agrees
to cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Note Account, or that have been deposited by the
Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1(b)
shall be paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
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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 Indenture Trustee and the Note Insurer.
(c) No removal or resignation of the Master Servicer shall become
effective until the Indenture 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 Indenture 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 Indenture Trustee will not be
obligated to act as successor servicer if it is legally unable to perform its
duties hereunder.
(d) 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 Indenture 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.
(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
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 Indenture 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 Note 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 Indenture 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 4.8 and 4.15; provided, however, that, if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture 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 Indenture 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.
(g) In the event the Indenture Trustee solicits bids as provided above,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above.
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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 4.8
and 4.15. Within thirty days after any such public announcement, the Indenture
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 Indenture Trustee shall deduct from
any sum received by the Indenture 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 Indenture Trustee to the Master
Servicer at the time of such sale, transfer and assignment to the Master
Servicer's successor.
(h) The Indenture 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 Indenture 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 Indenture 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
Indenture Trustee or such successor Master Servicer, as applicable, all amounts
which then have been or should have been deposited in the Trust C Principal and
Interest Account by the Master Servicer or which are thereafter received with
respect to the Mortgage Loans. Neither the Indenture 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.
(i) The Indenture 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 Indenture Trustee is acting as successor Master Servicer,
the Indenture Trustee shall be required to make Delinquency Advances (including
the Delinquency Advances described in this clause (i)) only if, in the Indenture
Trustee's reasonable good faith judgment, such Delinquency Advances will
ultimately be recoverable from the related Mortgage Loans.
(j) 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.
(k) The Indenture Trustee shall give notice to the Note Insurer, Moody's,
Standard & Poor's and to the Noteholders of the occurrence of any event
specified in Section 5.1(a), 5.1(b) or any other event in which the Master
Servicer is no longer acting as Master Servicer hereunder of which the Indenture
Trustee has actual knowledge.
SECTION 5.2. INSPECTIONS BY THE NOTE INSURER AND THE INDENTURE TRUSTEE;
ERRORS AND OMISSIONS INSURANCE. (a) At any reasonable time and from time to time
upon reasonable notice, the Note Insurer, the Indenture Trustee, or any agents
or representatives thereof may inspect the Master Servicer's servicing
operations and discuss the servicing operations of the
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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 5.3. 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 5.1(g).
SECTION 5.4. NOTICES OF TO CLASS C NOTEHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article V,
the Indenture Trustee shall give prompt written notice thereof to the Class C
Noteholders at their respective addresses appearing in the Note Register, the
Note Insurer and each Rating Agency.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 6.1. ADMINISTRATIVE DUTIES WITH RESPECT TO THE INDENTURE. The
Master Servicer shall perform all its duties and the duties of the Issuer under
the Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture. The Master Servicer shall prepare
for execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture. In furtherance of the foregoing, the Master Servicer
shall take all necessary action that is the duty of the Issuer to take pursuant
to the Indenture.
(a) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set forth in
this Agreement or any of the Documents, the Master Servicer shall perform
such calculations and shall prepare for execution by the Issuer or the
Owner Trustee or shall cause the preparation by other appropriate Persons
of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the
Operative Documents or under state and federal tax and securities laws,
and at the request of the Owner Trustee shall take all appropriate action
that it is the duty of the Issuer to take pursuant to this Agreement or
any of the Operative Documents. In accordance with the directions of the
Issuer or the Owner Trustee, the Master Servicer shall administer, perform
or supervise the performance of such other activities in connection with
the Mortgage Loans (including
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the Operative Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Operative Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Indenture
Trustee in the event that any withholding tax is imposed on the Issuer's
payments (or allocations of income) with respect to the Trust C
Certificates as contemplated by this Agreement. Any such notice shall be
in writing and specify the amount of any withholding tax required to be
withheld by the Owner Trustee or the Indenture Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Operative
Documents to the contrary, the Master Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in
[Section 5.1(a), (b), (c) and (d) of the Trust C Trust agreement] with
respect to, among other things, accounting and reports with respect to the
Trust C Certificates.
(iv) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Servicer Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Master Servicer's opinion, no less favorable to the
Issuer in any material respect.
(b) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Note Insurer of the proposed action and the
Owner Trustee and the Note Insurer shall not have withheld consent or provided
an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Mortgage Loans);
(C) the amendment, change or modification of this Agreement or
any of the Operative Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
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(c) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders under the
Operative Documents, (2) sell the Trust Property pursuant to Section 5.1 of the
Indenture, (3) take any other action that the Issuer directs the Master Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(d) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Master Servicer under Section
6.1.
SECTION 6.2. RECORDS. The Master Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer and the Indenture Trustee at any time during normal business hours.
SECTION 6.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Master Servicer shall furnish to the Issuer and the Indenture Trustee from time
to time such additional information regarding the Mortgage Loans as the Issuer
and the Indenture Trustee shall reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Sponsor, the Note Insurer or the Class C Noteholders to the
Indenture Trustee to take any action under any provision of this Agreement, the
Sponsor, the Note Insurer or the Class C Noteholders, as the case may be, shall
furnish to the Indenture 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 7.2. FORM OF DOCUMENTS DELIVERED TO THE INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more
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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 Indenture 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 Indenture 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 Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture 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
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
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 7.3. ACTS OF CLASS C NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Class C Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Class C Noteholders 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
Indenture Trustee, and, where it is hereby expressly required, to the Sponsor
and/or the Note Insurer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Class C Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved 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 Class C Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Class C Noteholders shall bind the Class C Noteholders
issued upon the
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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 Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Class C Notes.
SECTION 7.4. NOTICES, ETC., TO INDENTURE TRUSTEE. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Class C Notes or
other documents provided or permitted by this Agreement to be made upon, given
or furnished to, or filed with the Indenture Trustee by any Class C Notes, the
Note 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
Indenture Trustee at its corporate trust office as set forth in the Indenture.
SECTION 7.5. NOTICES AND REPORTS TO CLASS C NOTEHOLDERS; WAIVER OF
NOTICES. Where this Agreement provides for notice to Class C Noteholders of any
event or the mailing of any report to Class C Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Class C Noteholder affected by such
event or to whom such report is required to be mailed, at the address of such
Class C-1 Noteholder 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
Class C Noteholders 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 Class C Noteholder shall affect the sufficiency of such notice
or report with respect to other Class C Noteholders, 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 Class C Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such 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 Class C Noteholders 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 Indenture 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 Class C-1 Notes, failure to give such notice shall not affect any other
rights or obligations created hereunder.
SECTION 7.6. RULES BY INDENTURE TRUSTEE AND SPONSOR. The Indenture Trustee
may make reasonable rules for any meeting of Class C Noteholders.
SECTION 7.7. 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 7.8. SEVERABILITY. In case any provision in this Agreement or in
the Class C Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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SECTION 7.9. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the
Class C Notes, expressed or implied, shall give to any Person, other than the
Class C Noteholders, the Note Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 7.10. LEGAL HOLIDAYS. In any case where the date of any Payment
Date, any other date on which any distribution to any Class C Noteholder 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 Class C Notes 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 Class C Noteholder 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 7.11. GOVERNING LAW. In view of the fact that Class C Noteholders
are expected to reside in many states and outside the United States and the
desire to establish with certainty that this Agreement will be governed by and
construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions of
the type contemplated herein, this Agreement and each Class C Note 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 7.12. 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 7.13. USURY. The amount of interest payable or paid on any Class C
Note 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 Class C Note
exceeds the Highest Lawful Rate, the Issuer stipulates that such excess amount
will be deemed to have been paid to the Class C Noteholder as a result of an
error on the part of the Indenture Trustee acting on behalf of the Issuer and
the Class C Noteholder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Indenture Trustee on
behalf of the Issuer, refund the amount of such excess or, at the option of such
Class C Noteholder, apply the excess to the payment of principal of such Class C
Note, if any, remaining unpaid. In addition, all sums paid or agreed to be paid
to the Indenture Trustee for the benefit of Class C Noteholders 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 Class C Notes.
SECTION 7.14. AMENDMENT. (a) The Indenture Trustee, the Sponsor and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Class C Noteholders, amend this Agreement, and the
Indenture 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
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not inconsistent with the provisions hereof, (ii) 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 Indenture Trustee, materially and adversely affect the
interests of any Class C Noteholder (without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any
time and from time to time, with the prior written consent of the Note Insurer
but without the giving of notice to or the receipt of the consent of the Class C
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of changing the definitions of Trust C Specified
Overcollateralization Amount provided, however, that no such change shall affect
the weighted average life of the Class C Notes (assuming an appropriate
prepayment speed as determined by the Underwriter by more than five percent, as
determined by the Underwriter.
(c) This Agreement may also be amended by the Indenture Trustee, the
Sponsor, and the Master Servicer at any time and from time to time, with the
prior written approval of the Note Insurer and not less than a majority of the
Percentage Interest represented by each the Class C Notes 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 Class C Noteholders 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 Class C Noteholder without the
consent of the Class C Noteholder, (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 Class
C Notes, without the consent of the Class C Noteholders of the then Outstanding
Class C Notes.
(d) The Note Insurer, the Class C Noteholders, 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 7.15. THE NOTE INSURER. The Note Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Note Insurer shall be
suspended during any period in which the Note Insurer is in default in its
payment obligations under the Note Policy, except with respect to amendments to
this Agreement pursuant to Section 11.14. During the continuance of a Note
Insurer Default, the Note Insurer's rights hereunder shall vest in the Indenture
Trustee on behalf of the Class C Noteholders and shall be exercisable by the
Class C Noteholders of at least a majority in Percentage Interest of the Class C
Notes then Outstanding or, if there are no Class C Notes then Outstanding and
the Note Policy has expired or a Note Insurer Default has occurred and is
continuing, or if there are no Class C Notes outstanding and any and all amounts
due and owing the Note Insurer under the Insurance Agreement have been paid in
full, and the Note Policy has expired or is unavailable due to a Note Insurer
Default, by at least a majority of the Trust C Certificates then Outstanding. At
such time as the Class C Notes are no longer Outstanding hereunder and the Note
Insurer has been reimbursed for all Reimbursement Amounts to which it is
entitled hereunder and the Note Policy has expired, the Note Insurer's rights
hereunder shall terminate.
SECTION 7.16. NOTICES. All notices hereunder shall be given as follows,
until any superseding instructions are given to all other Persons listed below:
47
<PAGE> 52
The Indenture Trustee: Bankers Trust Company
of California, N.A.
3 Park Plaza
Irvine, CA 92614
Attention: Advanta 1998-4C
Tel: (949) 253-7575
Fax: (949) 253-7577
The Sponsor: Advanta Mortgage Conduit Services
Inc.
Welsh & McKean Roads
Spring House, Pennsylvania 19477
Tel: (619) 674-3317
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, California 92127
Tel: (619) 674-3317
Fax: (619) 674-3592
The Note Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
(Advanta Mortgage Loan Trust
1998-4C Mortgage Loan Backed
Notes Series 1998-4)
Telecopy No.: (212) 363-1459
Confirmation: ( ___ ) ___-____
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: Manager, Structured
Finance Operations Group
Underwriter: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
The Issuer: Advanta Mortgage Loan Trust 1998-4C
c/o Wilmington Trust Company, as
Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
48
<PAGE> 53
SECTION 7.17. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties to this Agreement and by any person
claiming by, through or under them and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
49
<PAGE> 54
IN WITNESS WHEREOF, the Sponsor, the Issuer, the Master Servicer and the
Indenture 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: /s/ Mark T. Dunsheath
-----------------------------------------
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: /s/ Mark T. Dunsheath
-----------------------------------------
Mark T. Dunsheath
Vice President
ADVANTA MORTGAGE LOAN
TRUST 1998-4C, as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ Emmet Harmon
------------------------------------
Name: Emmet Harmon
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By: /s/ Mark McNeill
-----------------------------------------
Name: Mark McNeill
Title: Assistant Secretary
[SIGNATURE PAGE TO THE TRUST C SALE AND SERVICING AGREEMENT]
50
<PAGE> 55
STATE OF CALIFORNIA )
: ss.:
COUNTY OF )
On the ____ day of _________, 1998, 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 92614; 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
Indenture 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> 56
EXHIBIT A
FORM OF CONTENTS OF MORTGAGE LOAN FILE
(a) the original Note, or a certified copy thereof, bearing all
intervening endorsements, endorsed either (i) "Pay to the order of Bankers Trust
Company of California, N.A., as custodian or trustee under the applicable
custody or trust agreement, without recourse" or (ii) "Pay to the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse, Advanta as Master
Servicer," or (iii) "Pay to the order of Bankers Trust Company of California,
N.A., as custodian or trustee" by [Seller, signature, name, title] and signed in
the name of the previous owner by an authorized offer (in the event that the
Mortgage Loan was acquired by the previous owner in a merger the signature must
be in the following form: "[the previous owner], successor by merger to [name of
predecessor]", in the event that the Mortgage Loan was acquired or originated
while doing business under another name, the signature must be in the following
form: "[the previous owner], formerly known as [previous name]". The original
Note should be accompanied by any rider made in connection with the origination
of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with the Note (if
any);
(c) the original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements;
(e) the original assignment of Mortgage of each Mortgage Loan to "Bankers
Trust Company of California, N.A., as custodian or trustee". In the event that
the Mortgage Loan was acquired by the previous owner in a merger, the assignment
of Mortgage must be the "(previous owner), successor by merger to (names of
predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) the originals of all intervening assignments of Mortgage, showing a
complete chain of assignment from origination to the related Seller, including
warehousing assignments, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof.
A-1
<PAGE> 57
EXHIBIT B
FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID IN FULL
I, Mark T. Dunsheath, Vice President of Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as sponsor (the "Sponsor"), hereby certify that
between the "Cut-Off Date" (as defined in the Trust C Sale and Servicing
Agreement dated as of November 1, 1998 among the Sponsor, Advanta Mortgage Corp.
USA, as master servicer, Advanta Mortgage Loan Trust 1998-4C, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee) and the date
hereof the following schedule of "Mortgage Loans" (as defined in the Trust C
Sale and Servicing Agreement) has been prepaid in full.
Dated: November 24, 1998
By: __________________________________
Name: Mark T. Dunsheath
Title: Vice President
B-1
<PAGE> 58
EXHIBIT C
FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., in its capacity as Indenture
Trustee (the "Indenture Trustee") under that certain Trust C Sale and Servicing
Agreement dated as of November 1, 1998 (the "Trust C Sale and Servicing
Agreement") by and among Advanta Mortgage Conduit Services, Inc., a Delaware
corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware
corporation, as master servicer, Advanta Mortgage Loan Trust 1998-4C (the
"Issuer") and Bankers Trust Company of California, N.A., as Indenture Trustee,
hereby acknowledges receipt of the items delivered to it on behalf of the Issuer
by the Sponsor with respect to the Mortgage Loans listed on Schedule I of the
Trust C Sale and Servicing Agreement and hereby declares that it will hold such
items on behalf of the Class C Noteholders and the Note Insurer.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely
in its capacity as Indenture Trustee
By:___________________________________________
Name:
Title:
Dated: November 24, 1998
C-1
<PAGE> 59
EXHIBIT D
FORM OF CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company
of California, N.A., a national banking association, acting in its capacity as
Indenture Trustee (the "Indenture Trustee") of a certain pool of mortgage loans
(the "Pool") heretofore conveyed in trust to the Indenture Trustee, pursuant to
that certain Trust C Indenture dated as of November 1, 1998 (the "Trust C
Indenture") by and among Advanta Mortgage Loan Trust 1998-4C, as Issuer (the
"Issuer") and the Indenture Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 2.2(a) of the Trust
C Sale and Servicing Agreement dated as of November 1, 1998 (the "Trust C Sale
and Servicing Agreement") among the Sponsor, the Issuer, the Indenture Trustee
and Advanta Mortgage Corp. USA, as Master Servicer, to review the Files relating
to the Pool within a specified period following the Closing Date and to notify
the Sponsor promptly of any defects with respect to the Pool, and the Sponsor is
required to remedy such defects or take certain other action, all as set forth
in Section 2.2(b) of the Trust C Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Trust C Sale and Servicing Agreement
requires the Indenture Trustee to deliver this Certification upon the
satisfaction of certain conditions set forth therein.
NOW, THEREFORE, it has determined that all required documents (or
certified copies of documents listed in Section 2.1 of the Trust C Sale and
Servicing Agreement) have been executed or received, and that such documents
relate to the Initial Mortgage Loans identified in the Schedules of Mortgage
Loans pursuant to Section 2.1(a) of the Trust C Sale and Servicing Agreement or,
in the event that such documents have not been executed and received or do not
so relate to such Mortgage Loans, any remedial action by the Sponsor pursuant to
Section 2.2(b) of the Trust C Sale and Servicing Agreement has been completed.
The Indenture Trustee makes no certification hereby, however, with respect to
any intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:__________________________________________
Name:
Title:
D-1
<PAGE> 60
EXHIBIT E
DELIVERY ORDER
November 24, 1998
Bankers Trust Company
of California, N.A.
Three Park Plaza
16th Floor
Irvine, California 92614
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Trust C Indenture, dated as of November 1,
1998 (the "Trust C Indenture") by and between Advanta Mortgage Loan Trust
1998-4C, as Issuer and Bankers Trust Company of California, N.A., as Indenture
Trustee, the Issuer HEREBY CERTIFIES that all conditions precedent to the
issuance of Advanta Mortgage Loan Trust 1998-4C, Mortgage Loan Asset-Backed
Notes (the "Class C Notes"), HAVE BEEN SATISFIED and HEREBY REQUESTS YOU TO
AUTHENTICATE AND DELIVER said Class C Notes, and to RELEASE said Class C Notes
to the holders thereof, or otherwise upon their order.
Very truly yours,
ADVANTA MORTGAGE LOAN TRUST 1998-4C
by: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:_____________________________________
Name:
Title:
E-1
<PAGE> 61
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Certificates
Series 1998-4C
Statement to Class C Noteholders
AS TO THE POOL
DISTRIBUTION DATE:
DELINQUENCY ADVANCES MADE:
ACCRUED SERVICING FEE FOR THE CURRENT PERIOD:
PLUS ADDITIONAL SERVICING FEES:
LESS PERMITTED REDUCTIONS TO SERVICING FEES:
TOTAL SERVICING FEES DUE MASTER SERVICER (INCLUDING MASTER SERVICING FEE):
COLLECTED SERVICING FEES FOR CURRENT PERIOD:
<TABLE>
<CAPTION>
Total Delinquency (Excluding Foreclosure & REO, Including
delinquent bankruptcies)
--------------------------------------------------------- Loans in
Foreclosure
30-59 60-89 90+ (Including
Days Days Days Total Delinquency bankruptcies in F/C)
---- ---- ---- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
UPS-$
%-$
Loans-$
%-#
</TABLE>
BOOK VALUE AND LOAN NUMBER OF REO PROPERTY:
NUMBER OF LOANS AS OF THE CURRENT DISTRIBUTION DATE:
NUMBER OF LOANS AS OF THE NEXT DISTRIBUTION DATE:
WEIGHTED AVERAGE COUPON AS OF THE CURRENT DISTRIBUTION DATE:
E-2
<PAGE> 62
WEIGHTED AVERAGE COUPON AS OF THE NEXT DISTRIBUTION DATE:
E-3
<PAGE> 63
SUBSTITUTION AMOUNTS:
LOAN PURCHASE PRICES
<TABLE>
<CAPTION>
Bankruptcy
Proceedings
-----------
Loans -# UPB-$
<S> <C> <C>
Status
Current
Delinquent*
Foreclosure*
Total
</TABLE>
<TABLE>
<CAPTION>
Modified Loans
--------------
Loans-# UPS-$
<S> <C> <C>
Status
Current
Delinquent*
Foreclosure*
Total
</TABLE>
* included in delinquency and foreclosure statistics above
CURTAILMENTS INCLUDED IN CURRENT DISTRIBUTION:
PREPAYMENTS IN FULL INCLUDED IN CURRENT DISTRIBUTION:
RECOVERIES OF PRINCIPAL INCLUDED IN CURRENT DISTRIBUTION:
CARRY-FORWARD AMOUNT:
AMOUNT OF SUBORDINATION INCREASE OR DECREASE:
INFORMATION PURSUANT TO
SECTION 6049(d)(7)(C):
PROJECTED EXCESS SPREAD:
BALANCE OF LARGEST LOAN:
E-4
<PAGE> 64
TRUST ACTIVITY
TRUST C NOTE ACCOUNT DEPOSIT
AS TO THE POOL:
PROCEEDS OF LIQUIDATION OF TRUST ESTATE:
AMOUNT OF DEPOSIT IN THE TRUST C NOTE ACCOUNT:
LOAN PURCHASE PRICE AMOUNTS:
SUBSTITUTION AMOUNT:
INVESTMENT EARNINGS: ON CERT. ACCT.
MONTHLY REMITTANCE FOR EACH CLASS:
AMOUNT OF EXCESS SPREAD ALLOCABLE USED TO COVER SHORTFALLS WITH RESPECT TO TRUST
A AND TRUST B:
AMOUNT WITHDRAWN FROM TRUST C NOTE ACCOUNT AND DEPOSITED IN THE EXPENSE ACCOUNT:
AMOUNT WITHDRAWN FROM TRUST C NOTE ACCOUNT AND DISTRIBUTED TO TRUST C
CERTIFICATES:
AMOUNT REMAINING IN TRUST C ACCOUNT:
PREMIUM AMOUNT:
E-5
<PAGE> 65
EXHIBIT F
FORM OF MONTHLY REPORT
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Notes
Series 1998-4C
Statement to Class C Noteholders
<TABLE>
<CAPTION>
CURRENT
ORIGINAL FACE PRIOR PRINCIPAL PRINCIPAL
CLASS VALUE BALANCE INTEREST PRINCIPAL TOTAL BALANCE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
FACTOR INFORMATION PER $1000 OF ORIGINAL FACE PASS-THROUGH RATES
<TABLE>
<CAPTION>
PRIOR CURRENT
PRINCIPAL PRINCIPAL
CLASS CUSIP BALANCE INTEREST PRINCIPAL TOTAL BALANCE CURRENT NEXT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
SPONSOR: Advanta Mortgage Conduit Services, Inc. ACCOUNT
SERVICER: Advanta Mortgage Corp. USA MANAGER:
-----------------
LEAD UNDERWRITER: Morgan Stanley & Co. Incorporated
RECORD DATE:
DISTRIBUTION DATE:
FACTOR INFORMATION:
F-1
<PAGE> 66
EXHIBIT G
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company
of California, N.A.
Three Park Plaza
16th Floor
Irvine, California 92614
Attn: Corporate Trust
Date:
In connection with the administration of the mortgage loans held by you as
Indenture Trustee under a certain Trust C Indenture dated as of November 1, 1998
and by and between Advanta Mortgage Loan Trust 1998-4C, as Issuer, and you, as
Indenture Trustee (the "Agreement"), the Master Servicer hereby requests a
release of the File held by you as Indenture Trustee with respect to the
following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that
all amounts received in connection with the
loan have been or will be credited to the
Trust C Note Account (whichever is
applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan repurchased pursuant to Section 4.14 of the Agreement.
(The Master Servicer hereby certifies that
the Loan Purchase Price has been or will be
paid to the Trust C Note Account pursuant to
the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a
Qualified Replacement Mortgage has been or
will be assigned and delivered to you along
with the related File pursuant to the
Agreement.)
<PAGE> 67
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above File will be held by the
undersigned in accordance with the provisions of the Agreement and will be
returned to you, except if the Mortgage Loan has been paid in full, or
repurchased or substituted for by a Qualified Replacement Mortgage (in which
case the File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the File will be returned when no longer
required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
ADVANTA MORTGAGE CORP. USA
By______________________________________
Name:_________________________________
Title:________________________________
<PAGE> 1
Exhibit 4.4
[Ambac Assurance Logo]
Certificate Guaranty Insurance Policy
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street, Madison,
Wisconsin 53703
Administrative Office:
One State Street Plaza, New York,
New York 10004
Telephone: (212) 668-0340
Insured Obligations: $650,000,000 Policy Number: AB0210BE
Advanta Mortgage Loan Trust 1998-4a,
Mortgage Backed Notes, Series 1998-A, Class A
Premium: Calculated as set forth in the Certificate
Guaranty Insurance Policy Endorsement attached
hereto and made a part hereof.
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/P. Lassiter /s/S. Cooke
President Secretary
Effective Date: Authorized Representative
November 24, 1998
<PAGE> 2
NOTE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #ABO210BE November 24, 1998
issued to:
Bankers Trust Company
of California, N.A.,
as Indenture Trustee for the Holders of
Advanta Mortgage Backed
Notes, Series 1998-4, Class A
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement dated as of
November 1, 1998 between Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company of
California, N.A., as Indenture Trustee, and the Advanta Mortgage Loan Trust
1998-4A, as Issuer, as such Agreement may be amended, modified or supplemented
from time to time as set forth in the Agreement.
"Certificate Insurance Policy" or "Policy" shall mean this Certificate
Guaranty Insurance Policy together with each and every endorsement hereto.
"Deficiency Amount" means the excess, if any, of Required Payments over
the Net Available Distribution Amount for such Payment Date.
"Due for Payment" shall mean the Business Day immediately preceding the
Payment Date on which Insured Amounts are due.
"First Payment Date" shall mean December 28, 1998.
"Holder" shall mean any person who is the registered owner or
beneficial owner of any Class A Notes.
"Indenture" shall mean the Indenture with respect to the Class A Notes
between Advanta Mortgage Loan Trust 1998-4A, as Issuer and Bankers Trust Company
of California, N.A. as Indenture Trustee, dated November 1, 1998.
"Indenture Trustee" shall mean Bankers Trust Company of California,
N.A. or its successor-in-interest, in its capacity as Indenture Trustee under
the Indenture, or if any successor indenture trustee or any co-trustee shall be
appointed as provided therein, then "Indenture Trustee" shall also mean such
successor trustee or such co-trustee, as the case may be, subject to the
provisions thereof.
<PAGE> 3
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement,
dated as of November 24, 1998, among Advanta Mortgage Conduit Services, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company
of California, N.A., as Indenture Trustee, Ambac Assurance Corporation, as
Insurer, and the Issuers as such Agreement may be amended, modified or
supplemented from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Insurer to the Trustee in respect of (i)
Insured Amounts for such Payment Date and (ii) Preference Amounts for any given
Business Day.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
"Late Payment Rate" shall mean for any Payment Date, the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on
the Class A Notes. The Late Payment Rate shall be computed on the basis of a
year of 360 days and the actual number of days elapsed. In no event shall the
Late Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Net Available Distribution Amount" means, with respect to any Payment
Date, the amount on deposit in the related Note Account on such Payment Date
minus the Owner Trustee's Fee, the Indenture Trustee's Fee and the Premium
Amount.
"Nonpayment" shall mean, with respect to any Payment Date, a Deficiency
Amount, owing in respect of such Payment Date.
"Note Account" shall mean the account created and maintained with the
Trustee for the benefit of the Noteholders and the Insurer pursuant to Section
8.3 of the Indenture.
"Notes" shall mean any one of the Class A Notes substantially in the
form set forth in Exhibit A-1 to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Payment Date.
"Payment Date" shall mean the 25th day of any month (or if such 25th
day is not a Business Day, the first Business Day immediately following)
beginning with the First Payment Date.
"Preference Amount" means any payment of principal or interest on a
Class A Note which has become Due for Payment and which is made to a Holder by
or on behalf of the Indenture Trustee which has been deemed a preferential
transfer and theretofore recovered from its Holder pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court of
competent jurisdiction.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of
(x) (i) all Insured Payments paid by the Insurer, but for which the Insurer has
not been reimbursed prior to such Payment Date pursuant to Section 8.7(b)(viii)
of the Indenture, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related Insured
Payments, and (y) without duplication (i) any amounts
<PAGE> 4
then due and owing to the Insurer under the Insurance Agreement plus (ii)
interest on such amounts at the Late Payment Rate.
"Required Payments" shall mean, as of any Payment Date, the sum of (i)
the Class A Interest Distribution Amount (excluding any Civil Relief Act
Shortfalls, any Compensating Interest, any Prepayment Interest Shortfalls, any
Available Funds Cap Current Amounts and any Available Funds Cap Carry-Forward
Amounts) and (ii) for any Payment Date, any shortfalls in amounts available in
the Note Account to pay the Overcollateralization Deficit and (iii) on the Final
Scheduled Payment Date, any shortfall in amounts available in the Note Account
to pay the outstanding Class A Principal Balance.
"Trust Agreement" shall mean the Advanta Mortgage Loan Trust 1998-4A
between Advanta Mortgage Conduit Services, Inc., as Sponsor and Wilmington Trust
Company as Owner Trustee, dated as of November 1, 1998.
Capitalized used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement or the Indenture.
As provided by the Policy, the Insurer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Insurer of a
Notice; 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 is not in proper form or is otherwise
insufficient for the purpose of making a claim under the Policy, it shall be
deemed not to have been received for purposes of this paragraph, and the Insurer
shall promptly so advise the Indenture Trustee and the Indenture Trustee may
submit an amended Notice.
The Insurer hereby agrees that if it shall be subrogated to the rights
of Holders by virtue of any previous payment under this Policy, no recovery of
such payment will occur unless the full amount of the Holders' allocable
distributions for such Payment Date can be made. In so doing, the Insurer does
not waive its rights to seek full payment of all Reimbursement Amounts owed to
it under the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as
provided in Section 8.7(b)(ii) of the Indenture, beginning with the First
Payment Date, in an amount equal to the Premium Amount.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy to which this Endorsement is attached and of which it forms
a part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York.
<PAGE> 5
IN WITNESS WHEREOF, the Ambac Assurance Corporation has caused this
Endorsement to the Policy to be signed by its duly authorized officers.
/s/____________________________ /s/______________________________
First Vice President Assistant Secretary
<PAGE> 6
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. ABO210BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
ABO210BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Indenture Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the Indenture for
the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date
is due to be received on ____________________________
under the Indenture, in an amount equal to
$___________________.
4. There is an Insured Amount of $______________________
in respect of the certificates, which amount is an
Insured Amount pursuant to the terms of the Indenture.
5. The sum of $____________________ is the Insured
Amount that is Due For Payment.
6. The Indenture Trustee has not heretofore made a
demand for the Insured Amount in respect of the
Payment Date.
<PAGE> 7
7. The Indenture Trustee hereby requests the payment of
the Insured Amount that is Due For Payment be made by
Ambac under the Policy and directs that payment under
the Policy 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 to: __________________________________
Indenture Trustee's account number.
8. The Indenture Trustee hereby agrees that, following
receipt of the Insured Amount from Ambac, it shall
(a) hold such amounts in trust and apply the same
directly to the distribution of payment on the Notes
when due; (b) not apply such funds for any other
purpose; (c) deposit such funds to the Note Account
and not commingle such funds with other funds held by
Trustee and (d) maintain an accurate record of such
payments with respect to each certificate and the
corresponding claim on the Policy and proceeds
thereof.
By:______________________________
Indenture Trustee
Title:__________________________
(Officer)
<PAGE> 8
[Ambac Assurance Logo]
Certificate Guaranty Insurance Policy
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street, Madison,
Wisconsin 53703
Administrative Office:
One State Street Plaza, New York,
New York 10004
Telephone: (212) 668-0340
Insured Obligations: $350,000,000 Policy Number: AB0211BE
Advanta Mortgage Loan Trust 1998-4b,
Mortgage Backed Notes, Series 1998-4, Class B
Premium: Calculated as set forth in the Certificate
Guaranty Insurance Policy Endorsement attached
hereto and made a part hereof.
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/P. Lassiter /s/S. Cooke
President Secretary
Effective Date: Authorized Representative
November 24, 1998
<PAGE> 9
NOTE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #ABO211BE November 24, 1998
issued to:
Bankers Trust Company
of California, N.A.,
as Indenture Trustee for the Holders of
Advanta Mortgage Backed
Notes, Series 1998-4, Class B
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement dated as of
November 1, 1998 between Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company of
California, N.A., as Indenture Trustee, and the Advanta Mortgage Loan Trust
1998-4B, as Issuer, as such Agreement may be amended, modified or supplemented
from time to time as set forth in the Agreement.
"Certificate Insurance Policy" or "Policy" shall mean this Certificate
Guaranty Insurance Policy together with each and every endorsement hereto.
"Deficiency Amount" means the excess, if any, of Required Payments over
the Net Available Distribution Amount for such Payment Date.
"Due for Payment" shall mean the Business Day immediately preceding the
Payment Date on which Insured Amounts are due.
"First Payment Date" shall mean December 28, 1998.
"Holder" shall mean any person who is the registered owner or
beneficial owner of any Class B Notes.
"Indenture" shall mean the Indenture with respect to the Class B Notes
between Advanta Mortgage Loan Trust 1998-4B, as Issuer and Bankers Trust Company
of California, N.A. as Indenture Trustee, dated November 1, 1998.
"Indenture Trustee" shall mean Bankers Trust Company of California,
N.A. or its successor-in-interest, in its capacity as Indenture Trustee under
the Indenture, or if any successor indenture trustee or any co-trustee shall be
appointed as provided therein, then "Indenture Trustee" shall also mean such
successor trustee or such co-trustee, as the case may be, subject to the
provisions thereof.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement,
dated as of November 24, 1998, among Advanta Mortgage Conduit Services, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master
<PAGE> 10
Servicer, Bankers Trust Company of California, N.A., as Indenture Trustee, Ambac
Assurance Corporation, as Insurer, and the Issuers as such Agreement may be
amended, modified or supplemented from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Insurer to the Trustee in respect of (i)
Insured Amounts for such Payment Date and (ii) Preference Amounts for any given
Business Day.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
"Late Payment Rate" shall mean for any Payment Date, the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on
the Class B Notes. The Late Payment Rate shall be computed on the basis of a
year of 360 days and the actual number of days elapsed. In no event shall the
Late Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Net Available Distribution Amount" means, with respect to any Payment
Date, the amount on deposit in the related Note Account on such Payment Date
minus the Owner Trustee's Fee, the Indenture Trustee's Fee and the Premium
Amount.
"Nonpayment" shall mean, with respect to any Payment Date, a Deficiency
Amount, owing in respect of such Payment Date.
"Note Account" shall mean the account created and maintained with the
Trustee for the benefit of the Noteholders and the Insurer pursuant to Section
8.3 of the Indenture.
"Notes" shall mean any one of the Class B Notes substantially in the
form set forth in Exhibit A-1 to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Payment Date.
"Payment Date" shall mean the 25th day of any month (or if such 25th
day is not a Business Day, the first Business Day immediately following)
beginning with the First Payment Date.
"Preference Amount" means any payment of principal or interest on a
Class B Note which has become Due for Payment and which is made to a Holder by
or on behalf of the Indenture Trustee which has been deemed a preferential
transfer and theretofore recovered from its Holder pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court of
competent jurisdiction.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of
(x) (i) all Insured Payments paid by the Insurer, but for which the Insurer has
not been reimbursed prior to such Payment Date pursuant to Section 8.7(b)(viii)
of the Indenture, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related Insured
Payments, and (y) without duplication (i) any amounts then due and owing to the
Insurer under the Insurance Agreement plus (ii) interest on such amounts at the
Late Payment Rate.
<PAGE> 11
"Required Payments" shall mean, as of any Payment Date, the sum of (i)
the Class A Interest Distribution Amount (excluding any Civil Relief Act
Shortfalls, any Compensating Interest, any Prepayment Interest Shortfalls, any
Available Funds Cap Current Amounts and any Available Funds Cap Carry-Forward
Amounts) and (ii) for any Payment Date, any shortfalls in amounts available in
the Note Account to pay the Overcollateralization Deficit and (iii) on the Final
Scheduled Payment Date, any shortfall in amounts available in the Note Account
to pay the outstanding Class A Principal Balance.
"Trust Agreement" shall mean the Advanta Mortgage Loan Trust 1998-4B
between Advanta Mortgage Conduit Services, Inc., as Sponsor and Wilmington Trust
Company as Owner Trustee, dated as of November 1, 1998.
Capitalized used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement or the Indenture.
As provided by the Policy, the Insurer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Insurer of a
Notice; 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 is not in proper form or is otherwise
insufficient for the purpose of making a claim under the Policy, it shall be
deemed not to have been received for purposes of this paragraph, and the Insurer
shall promptly so advise the Indenture Trustee and the Indenture Trustee may
submit an amended Notice.
The Insurer hereby agrees that if it shall be subrogated to the rights
of Holders by virtue of any previous payment under this Policy, no recovery of
such payment will occur unless the full amount of the Holders' allocable
distributions for such Payment Date can be made. In so doing, the Insurer does
not waive its rights to seek full payment of all Reimbursement Amounts owed to
it under the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as
provided in Section 8.7(b)(ii) of the Indenture, beginning with the First
Payment Date, in an amount equal to the Premium Amount.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy to which this Endorsement is attached and of which it forms
a part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York.
<PAGE> 12
IN WITNESS WHEREOF, the Ambac Assurance Corporation has caused this
Endorsement to the Policy to be signed by its duly authorized officers.
/s/__________________________ /s/______________________________
First Vice President Assistant Secretary
<PAGE> 13
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. ABO211BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
ABO211BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Indenture Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the Indenture for
the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date
is due to be received on ________________ under the
Indenture, in an amount equal to $________________.
4. There is an Insured Amount of $________________ in
respect of the certificates, which amount is an
Insured Amount pursuant to the terms of the Indenture.
5. The sum of $____________________ is the Insured
Amount that is Due For Payment.
6. The Indenture Trustee has not heretofore made a
demand for the Insured Amount in respect of the
Payment Date.
<PAGE> 14
7. The Indenture Trustee hereby requests the payment of
the Insured Amount that is Due For Payment be made by
Ambac under the Policy and directs that payment under
the Policy 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 to: __________________________________
Indenture Trustee's account number.
8. The Indenture Trustee hereby agrees that, following
receipt of the Insured Amount from Ambac, it shall
(a) hold such amounts in trust and apply the same
directly to the distribution of payment on the Notes
when due; (b) not apply such funds for any other
purpose; (c) deposit such funds to the Note Account
and not commingle such funds with other funds held by
Trustee and (d) maintain an accurate record of such
payments with respect to each certificate and the
corresponding claim on the Policy and proceeds
thereof.
By:_____________________________
Indenture Trustee
Title:__________________________
(Officer)
<PAGE> 15
[Ambac Assurance Logo]
Certificate Guaranty Insurance Policy
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street, Madison,
Wisconsin 53703
Administrative Office:
One State Street Plaza, New York,
New York 10004
Telephone: (212) 668-0340
Insured Obligations: $100,000,000 Policy Number: AB0212BE
Advanta Mortgage Loan Trust 1998-4c,
Mortgage Backed Notes, Series 1998-4, Class C
Premium: Calculated as set forth in the Certificate
Guaranty Insurance Policy Endorsement attached
hereto and made a part hereof.
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/P. Lassiter /s/S. Cooke
President Secretary
Effective Date: Authorized Representative
November 24, 1998
<PAGE> 16
NOTE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #ABO212BE November 24, 1998
issued to:
Bankers Trust Company
of California, N.A.,
as Indenture Trustee for the Holders of
Advanta Mortgage Backed
Notes, Series 1998-4, Class C
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement dated as of
November 1, 1998 between Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company of
California, N.A., as Indenture Trustee, and the Advanta Mortgage Loan Trust
1998-4C, as Issuer, as such Agreement may be amended, modified or supplemented
from time to time as set forth in the Agreement.
"Certificate Insurance Policy" or "Policy" shall mean this Certificate
Guaranty Insurance Policy together with each and every endorsement hereto.
"Deficiency Amount" means the excess, if any, of Required Payments over
the Net Available Distribution Amount for such Payment Date.
"Due for Payment" shall mean the Business Day immediately preceding the
Payment Date on which Insured Amounts are due.
"First Payment Date" shall mean December 28, 1998.
"Holder" shall mean any person who is the registered owner or
beneficial owner of any Class C Notes.
"Indenture" shall mean the Indenture with respect to the Class C Notes
between Advanta Mortgage Loan Trust 1998-4C, as Issuer and Bankers Trust Company
of California, N.A. as Indenture Trustee, dated November 1, 1998.
"Indenture Trustee" shall mean Bankers Trust Company of California,
N.A. or its successor-in-interest, in its capacity as Indenture Trustee under
the Indenture, or if any successor indenture trustee or any co-trustee shall be
appointed as provided therein, then "Indenture Trustee" shall also mean such
successor trustee or such co-trustee, as the case may be, subject to the
provisions thereof.
<PAGE> 17
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement,
dated as of November 24, 1998, among Advanta Mortgage Conduit Services, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company
of California, N.A., as Indenture Trustee, Ambac Assurance Corporation, as
Insurer, and the Issuers as such Agreement may be amended, modified or
supplemented from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Insurer to the Trustee in respect of (i)
Insured Amounts for such Payment Date and (ii) Preference Amounts for any given
Business Day.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
"Late Payment Rate" shall mean for any Payment Date, the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on
the Class C Notes. The Late Payment Rate shall be computed on the basis of a
year of 360 days and the actual number of days elapsed. In no event shall the
Late Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Net Available Distribution Amount" means, with respect to any Payment
Date, the amount on deposit in the related Note Account on such Payment Date
minus the Owner Trustee's Fee, the Indenture Trustee's Fee and the Premium
Amount.
"Nonpayment" shall mean, with respect to any Payment Date, a Deficiency
Amount, owing in respect of such Payment Date.
"Note Account" shall mean the account created and maintained with the
Trustee for the benefit of the Noteholders and the Insurer pursuant to Section
8.3 of the Indenture.
"Notes" shall mean any one of the Class C Notes substantially in the
form set forth in Exhibit A-1 to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Payment Date.
"Payment Date" shall mean the 25th day of any month (or if such 25th
day is not a Business Day, the first Business Day immediately following)
beginning with the First Payment Date.
"Preference Amount" means any payment of principal or interest on a
Class C Note which has become Due for Payment and which is made to a Holder by
or on behalf of the Indenture Trustee which has been deemed a preferential
transfer and theretofore recovered from its Holder pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court of
competent jurisdiction.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of
(x) (i) all Insured Payments paid by the Insurer, but for which the Insurer has
not been reimbursed prior to such Payment Date pursuant to Section 8.7(b)(viii)
of the Indenture, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related Insured
Payments, and (y) without duplication (i) any amounts then due and owing to the
Insurer under the Insurance Agreement plus (ii) interest on such amounts at the
Late Payment Rate.
<PAGE> 18
"Required Payments" shall mean, as of any Payment Date, the sum of (i)
the Class A Interest Distribution Amount (excluding any Civil Relief Act
Shortfalls, any Compensating Interest, any Prepayment Interest Shortfalls, any
Available Funds Cap Current Amounts and any Available Funds Cap Carry-Forward
Amounts) and (ii) for any Payment Date, any shortfalls in amounts available in
the Note Account to pay the Overcollateralization Deficit and (iii) on the Final
Scheduled Payment Date, any shortfall in amounts available in the Note Account
to pay the outstanding Class A Principal Balance.
"Trust Agreement" shall mean the Advanta Mortgage Loan Trust 1998-4C
between Advanta Mortgage Conduit Services, Inc., as Sponsor and Wilmington Trust
Company as Owner Trustee, dated as of November 1, 1998.
Capitalized used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement or the Indenture.
As provided by the Policy, the Insurer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Insurer of a
Notice; 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 is not in proper form or is otherwise
insufficient for the purpose of making a claim under the Policy, it shall be
deemed not to have been received for purposes of this paragraph, and the Insurer
shall promptly so advise the Indenture Trustee and the Indenture Trustee may
submit an amended Notice.
The Insurer hereby agrees that if it shall be subrogated to the rights
of Holders by virtue of any previous payment under this Policy, no recovery of
such payment will occur unless the full amount of the Holders' allocable
distributions for such Payment Date can be made. In so doing, the Insurer does
not waive its rights to seek full payment of all Reimbursement Amounts owed to
it under the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as
provided in Section 8.7(b)(ii) of the Indenture, beginning with the First
Payment Date, in an amount equal to the Premium Amount.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy to which this Endorsement is attached and of which it forms
a part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York.
<PAGE> 19
IN WITNESS WHEREOF, the Ambac Assurance Corporation has caused this
Endorsement to the Policy to be signed by its duly authorized officers.
/s/_____________________________ /s/_________________________________
First Vice President Assistant Secretary
<PAGE> 20
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. ABO212BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
ABO212BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Indenture Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the Indenture for
the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date
is due to be received on ________________ under the
Indenture, in an amount equal to $_________________.
4. There is an Insured Amount of $_________________ in
respect of the certificates, which amount is an
Insured Amount pursuant to the terms of the Indenture.
5. The sum of $____________________ is the Insured
Amount that is Due For Payment.
6. The Indenture Trustee has not heretofore made a
demand for the Insured Amount in respect of the
Payment Date.
<PAGE> 21
7. The Indenture Trustee hereby requests the payment of
the Insured Amount that is Due For Payment be made by
Ambac under the Policy and directs that payment under
the Policy 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 to: __________________________________
Indenture Trustee's account number.
8. The Indenture Trustee hereby agrees that, following
receipt of the Insured Amount from Ambac, it shall
(a) hold such amounts in trust and apply the same
directly to the distribution of payment on the Notes
when due; (b) not apply such funds for any other
purpose; (c) deposit such funds to the Note Account
and not commingle such funds with other funds held by
Trustee and (d) maintain an accurate record of such
payments with respect to each certificate and the
corresponding claim on the Policy and proceeds
thereof.
By:_____________________________
Indenture Trustee
Title:__________________________
(Officer)
<PAGE> 1
Exhibit 4.5.1
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 Advanta Mortgage Loan Trust 1998-4A.
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 1998-4A, 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.
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 November 1, 1998.
1
<PAGE> 2
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 Sale and Servicing Agreement dated as of
November 1, 1998 relating to Advanta Mortgage Loan Trust 1998-4A. Terms
capitalized herein and not defined herein shall have their respective meanings
as set forth in the Mortgage Transfer Agreement.
2
<PAGE> 3
Dated: November ___, 1998
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: /s/ Mark Dunsheath
-------------------------------
Mark Dunsheath, Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By: /s/ Mark Dunsheath
-------------------------------
Mark Dunsheath, Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/ Mark Mark McNeill
-------------------------------
Name: Mark McNeill
Title: Vice President
ADVANTA FINANCE CORP.
By: /s/ Mark Dunsheath
-------------------------------
Name: Mark Dunsheath
Title: Vice President
3
<PAGE> 1
Exhibit 4.5.2.
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 Advanta Mortgage Loan Trust 1998-4B.
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 1998-4B, 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.
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 November 1, 1998.
1
<PAGE> 2
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 Sale and Servicing Agreement dated as of
November 1, 1998 relating to Advanta Mortgage Loan Trust 1998-4B. Terms
capitalized herein and not defined herein shall have their respective meanings
as set forth in the Mortgage Transfer Agreement.
2
<PAGE> 3
Dated: November ___, 1998
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:/s/ Mark Dunsheath
----------------------------------
Mark Dunsheath, Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By:/s/ Mark Dunsheath
----------------------------------
Mark Dunsheath, Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:/s/ Mark McNeill
----------------------------------
Name: Mark McNeill
Title: Vice President
ADVANTA FINANCE CORP.
By:/s/ Mark Dunsheath
----------------------------------
Name: Mark Dunsheath
Title: Vice President
3
<PAGE> 1
Exhibit 4.5.3
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 Advanta Mortgage Loan Trust 1998-4C.
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 1998-4C, 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.
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 November 1, 1998.
1
<PAGE> 2
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 Sale and Servicing Agreement dated as of
November 1, 1998 relating to Advanta Mortgage Loan Trust 1998-4C. Terms
capitalized herein and not defined herein shall have their respective meanings
as set forth in the Mortgage Transfer Agreement.
2
<PAGE> 3
Dated: November ___, 1998
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: /s/ Mark Dunsheath
--------------------------------
Mark Dunsheath, Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By: /s/ Mark Dunsheath
--------------------------------
Mark Dunsheath, Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/ Mark McNeill
--------------------------------
Name: Mark McNeill
Title: Vice President
ADVANTA FINANCE CORP.
By: /s/ Mark Dunsheath
--------------------------------
Name: Mark Dunsheath
Title: Vice President
3
<PAGE> 1
Exhibit 8.1
November 24, 1998
To the Addressees listed
on Schedule I hereto
Re: Advanta Mortgage Loan Trust 1998-4A Class A Mortgage Backed Notes
Advanta Mortgage Loan Trust 1998-4B Class B Mortgage Backed Notes
Advanta Mortgage Loan Trust 1998-4C Class C Mortgage Backed Notes
Ladies and Gentlemen:
We have acted as special tax counsel in connection with the issuance
and delivery of certain notes denominated as Advanta Mortgage Loan Trust 1998-4A
Class A Mortgage Backed Notes (the "Class A Notes"), Advanta Mortgage Loan Trust
1998-4B Class B Mortgage Backed Notes (the "Class B Notes") and Advanta Mortgage
Loan Trust 1998-4C Class C Mortgage Backed Notes (the "Class C Notes" and
together with Class A Notes and Class B Notes, the "Notes"). The Class A Notes
will be issued pursuant to an Indenture, dated as of November 1, 1998 (the
"Trust A Indenture") between Trust A and the Indenture Trustee. The Class B
Notes will be issued pursuant to an Indenture, dated as of November 1, 1998 (the
"Trust B Indenture") between Trust B and the Indenture Trustee. The Class C
Notes will be issued pursuant to an Indenture, dated as of November 1, 1998 (the
"Trust C Indenture," together with the Trust A Indenture and the Trust B
Indenture, the "Indentures") between Trust C and the Indenture Trustee.
Capitalized terms used herein but not defined herein shall have the meanings
ascribed thereto in the Indentures.
As special tax counsel, we have examined such documents as we
have deemed appropriate for the purposes of rendering the opinions set forth
below, including the following: (a) an executed copy of each of the Class A
Indenture, the Class B Indenture, the Class C Indenture and the exhibits
attached thereto and (b) the Prospectus, dated September 15, 1998 and the
Prospectus Supplement, dated November 2, 1998 (the Prospectus and the Prospectus
Supplement, collectively, the "Prospectus").
In our examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
<PAGE> 2
We have examined the question of the proper treatment of the
Notes for federal income tax purposes. Our analysis is based on the provisions
of the Internal Revenue Code of 1986, as amended, and the Treasury regulations
promulgated thereunder as in effect on the date hereof and on existing judicial
and administrative interpretations thereof. These authorities are subject to
change and to differing interpretations, all of which could apply retroactively.
The opinion of special tax counsel is not binding on the courts or on the
Internal Revenue Service (the "IRS").
Based on the foregoing and such legal and factual
investigations as we have deemed appropriate, while no transaction closely
comparable to that contemplated has been the subject of any Treasury regulation,
revenue ruling or judicial decision, and therefore the matter is subject to
interpretation, we are of the opinion that:
(1) The portion of the Notes consisting of the right to
receive payments of interest at the Note Formula Capped Rate for each Class will
properly be treated as indebtedness for federal income tax purposes;
(2) The portion of the Notes consisting of the right to
receive interest in excess of the Note Formula Capped Rate and up to the Note
Interest Rate for each Class (the "Available Funds Amount") will be treated as a
notional principal contract as defined in Treasury regulations under section 446
of the Internal Revenue Code;
(3) None of the Trusts will be constitute an association (or a
publicly traded partnership) taxable as a corporation or a taxable mortgage pool
for federal income tax purposes; and
(4) The statements contained in the Prospectus under the
caption "Certain Federal Income Tax Consequences" insofar as they constitute
matters of law or legal conclusions with respect thereto, have been prepared by
us and are correct in all material respects.
We express no opinion on any matter not discussed in this
letter. This opinion is rendered as of the Closing Date, for the sole benefit of
the addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
Very truly yours,
/s/ Dewey Ballantine LLP
2
<PAGE> 3
SCHEDULE I
Advanta Mortgage Corp. USA Ambac Assurance Corporation
Welsh & McKean Roads One State Street Plaza
Spring House, Pennsylvania 19477 New York, New York 10004
Advanta Mortgage Conduit Services, Inc. Bankers Trust Company of
10790 Rancho Bernard Drive California, N.A.,
San Diego, California 92127 as Trustee
Three Park Plaza
Morgan Stanley & Co. Incorporated 16th Floor
1585 Broadway Irvine, California 92714
New York, New York 10036
Moody's Investors Service
Advanta Mortgage Loan Trust 1998-4A 99 Church Street
Advent Mortgage Loan Trust 1998-4B New York, New York 10007
Advanta Mortgage Loan Trust 1998-4C
c/o Wilmington Trust Company, Standard & Poor's Rating Group,
as Owner Trustee a division of The McGraw Hill
Rodney Square North Companies
1108 North Market Street 25 Broadway
Wilmington, Delaware 19890-0001 New York, New York 10004
Wilmington Trust Company,
as Owner Trustee
Rodney Square North
1108 North Market Street
Wilmington, Delaware 19890-0001
3
<PAGE> 1
Exhibit 10.1
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> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Definitions......................................................................... 1
Section 2. Interest Calculations............................................................... 3
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........................................................ 8
Section 6. Authorized Representatives.......................................................... 14
Section 7. Notices............................................................................. 14
Section 8. Governing Law....................................................................... 15
Section 9. Assignment.......................................................................... 15
Section 10. Counterparts........................................................................ 15
Section 11. Amendment........................................................................... 15
Section 12. Severability of Provisions.......................................................... 15
Section 13. No Agency; No Partnership or Joint Venture.......................................... 15
Section 14. Further Assurances.................................................................. 15
Section 15. The Certificate Insurer............................................................. 15
Section 16. Maintenance of Records.............................................................. 16
</TABLE>
i
<PAGE> 3
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.
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.
<PAGE> 4
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.
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.
2
<PAGE> 5
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 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
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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 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).
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(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 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
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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) 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
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any Conveyance Agreement and any other instruments of transfer to be
delivered pursuant to this Agreement) by the Sponsor and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and do not violate
the organization documents of the Sponsor, contravene or violate any
law, regulation, rule, order, judgement or decree to which the Sponsor
or its properties are subject or contravene, violate or result in any
breach of any provision of, or constitute a default under, or result in
the imposition of any lien on any assets of the Sponsor pursuant to the
provisions of, any mortgage, indenture, contract, agreement or other
undertaking to which the Sponsor is a party or which purports to be
binding upon Sponsor or any of Sponsor's assets; this Agreement
evidences the valid and binding obligation of the Sponsor enforceable
against the Sponsor in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally or the
application of equitable principles in any proceeding, whether at law
or in equity;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or
agency, that are necessary in connection with the execution and
delivery by the Sponsor of this Agreement, have been duly taken, given
or obtained, as the case may be, are in full force and effect, are not
subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement on the part of the Sponsor and the performance by the Sponsor
of its obligations under this Agreement; and
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Sponsor's knowledge, threatened against
the Sponsor which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Sponsor or in any
material impairment of the right or ability of the Sponsor to carry on
its business substantially as now conducted, or in any material
liability on the part of the Sponsor or which would draw into question
the validity of this Agreement or of any action taken or to be taken in
connection with the obligations of the Sponsor contemplated herein, or
which would be likely to impair the ability of the Sponsor to perform
under the terms of this Agreement.
The representations and warranties set forth in this paragraph (b) shall survive
the sale and assignment of the Mortgage Loans to the Sponsor. Upon discovery of
a breach of any of the foregoing representations and warranties which materially
and adversely affects the interests of the Affiliated Originator, the Affiliated
Originator shall give prompt written notice to the Sponsor. Within 30 days of
its receipt of notice of breach, the Sponsor shall cure such breach in all
material respects.
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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.
(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
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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;
(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;
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(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 (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)Ethe
outstanding principal balance of the Mortgage Loan, (ii)Ethe minimum
amount required to compensate for damage or loss on a replacement cost
basis and (iii)Ethe maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973;
(xvi) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Mortgage Loan had
full legal capacity to execute all documents relating to such Mortgage
Loan and convey the estate therein purported to be conveyed;
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(xvii) Each Affiliated Originator has caused and will cause to
be performed any and all acts required to be performed to preserve
the rights and remedies of the servicer in any Insurance Policies
applicable to any Mortgage Loans delivered by such Affiliated
Originator including, to the extent such Mortgage Loan is not
covered by a blanket policy described in the Advanta Pooling
Agreement, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the servicer;
(xviii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been recorded in the appropriate jurisdictions wherein
such recordation is necessary to perfect the lien thereof for the
benefit of the applicable Affiliated Originator, subject to the
provisions of Section 3.5(b) of the Advanta Pooling Agreement, (or
are in the process of being recorded);
(xix) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interest of the owners and which has been delivered to the Trustee.
The substance of any such alteration or modification is reflected on
the related Schedule of Mortgage Loans and has been approved by the
primary mortgage guaranty insurer, if any;
(xx) The proceeds of each Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee
to make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid;
(xxi) Except as otherwise required by law or pursuant to the
statute under which the related Mortgage Loan was made, the related
Note is not and has not been secured by any collateral, pledged
account or other security except the lien of the corresponding
Mortgage;
(xxii) No Mortgage Loan was originated under a buydown plan;
(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;
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(xxvi) Any advances made after the date of origination of a
Mortgage Loan but prior to the Cut-Off Date, have been consolidated
with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the
Schedule of Mortgage Loans. The consolidated principal amount does
not exceed the original principal amount of the related Mortgage
Loan. No Note permits or obligates the Master Servicer, the
Sub-Servicer or the Sponsor to make future advances to the related
Mortgagor at the option of the Mortgagor;
(xxvii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, earthquake or earth movement, flood, tornado or other
casualty, so as to affect adversely the value of the Property as
security for the Mortgage Loan or the use for which the premises
were intended;
(xxviii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and, if a title insurance policy exists with respect
to such Property, are stated in such title insurance policy and
affirmatively insured;
(xxix) No improvement located on or being part of any Property
is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire 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 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
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(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
(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
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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 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
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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.
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
15
<PAGE> 18
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.
16
<PAGE> 19
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 NATIONAL BANK
The Sellers and
ADVANTA CONDUIT RECEIVABLES, INC.
An Affiliate
By: /s/ Mark Dunsheath
-------------------------------------
Name: Mark Dunsheath
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee and not in its individual
capacity
By: /s/ Mark McNeill
-------------------------------------
Name: Mark McNeill
Title:
ADVANTA MORTGAGE CONDUIT SERVICES,
INC. as Sponsor
By: /s/ Mark Dunsheath
-------------------------------------
Name: Mark Dunsheath
Title: Vice President
ADVANTA FINANCE CORP.
By: /s/ Mark Dunsheath
-------------------------------------
Name: Mark Dunsheath
Title: Vice President
[MASTER LOAN TRANSFER AGREEMENT]
17
<PAGE> 20
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.
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.
A-1
<PAGE> 21
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> 22
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: Mark McNeill
Title: Vice President
ADVANTA FINANCE CORP.
By:
-----------------------------
Name: Mark Dunsheath
Title: Vice President
Dated:
A-3
<PAGE> 23
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:
Name Title
[Annette Aguirre] [Senior Vice President, General Counsel and
Secretary]
[Mark Dunsheath] [Treasurer]
The following are the Sponsor's Authorized Representatives for
purposes of the Agreement:
Name Title
[Annette Aguirre] [Senior Vice President, General Counsel and
Secretary]
[Mark Dunsheath] [Treasurer]
B-1
<PAGE> 1
Exhibit 10.2
AMBAC ASSURANCE CORPORATION,
and
MORGAN STANLEY & CO. INCORPORATED
INDEMNIFICATION AGREEMENT
ADVANTA MORTGAGE LOAN TRUST 1998-4A
ADVANTA MORTGAGE LOAN TRUST 1998-4B
ADVANTA MORTGAGE LOAN TRUST 1998-4C
Dated as of November 24, 1998
<PAGE> 2
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be part of this Indemnity Agreement. All capitalized terms used
in this Indemnity Agreement and not otherwise defined shall have the meanings
set forth in Article I of this Indemnity Agreement.)
Page
----
Section 1. Defined Terms................................................... 1
Section 2. Other Definitional Provisions................................... 1
Section 3. Representations and Warranties of the Underwriter............... 2
Section 4. Representations and Warranties of the Insurer................... 2
Section 5. Indemnification................................................. 3
Section 6. Amendments, Etc................................................. 5
Section 7. Notices......................................................... 5
Section 8. Severability.................................................... 6
Section 9. Governing Law................................................... 6
Section 10. Counterparts................................................... 6
Section 11. Headings....................................................... 6
(i)
<PAGE> 3
INDEMNIFICATION AGREEMENT dated as of November 24, 1998 (the "Indemnity
Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Insurer, and MORGAN
STANLEY & CO. INCORPORATED (the"Underwriter").
Section 1. Defined Terms. Unless the context clearly requires
otherwise, all capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Sale and Servicing Agreements, the
Insurance Agreement or the Policies. For purposes of this Indemnity Agreement,
the following terms shall have the following meanings:
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of November
24, 1998 by and among the Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, the Insurer and as Issuers.
"Insurer" means Ambac Assurance Corporation, or any successor thereto,
as issuer of the Policies.
"Insurer Information" has the meaning given such term in Section 4.
"Offering Document" means the Prospectus Supplement, dated November 20,
1997, in respect of the Notes, and any amendment or supplement thereto, and any
other offering document in respect of the Certificates that makes reference to
the Policies.
"Sale and Servicing Agreements" means the Trust A Sale and Servicing
Agreement, the Trust B Sale and Servicing Agreement and the Trust C Sale and
Servicing Agreement, each dated as of November 1, 1998, relating to the Advanta
Mortgage Backed Notes, Series 1998-4, by and among the Sponsor, the Master
Servicer and the Trustee (as may be amended, modified or supplemented from time
to time as set forth therein).
"Securities Act" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriter" means Morgan Stanley & Co. Incorporated
"Underwriter's Information" has the meaning given such term in Section
3.
Section 2. Other Definitional Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Indemnity
Agreement shall refer to this Indemnity Agreement as a whole and not to any
particular provision of this Indemnity Agreement, and Section, subsection,
Schedule and Exhibit references are to this Indemnity Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
"include" and "including" shall be deemed to be followed by the phrase "without
limitation."
<PAGE> 4
Section 3. Representations and Warranties of the Underwriter. The
Underwriter represents and warrants as of the Closing Date as follows:
(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers
and sales of the Notes and will make such offers and sales in the
manner to be provided in the Offering Document.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Notes unless such Offering
Document includes such information relating to the Insurer as has been
furnished by the Insurer for inclusion therein and has been approved by
the Insurer.
(c) Underwriter's Information. All material provided by the
Underwriter for inclusion in the Offering Document (as revised from
time to time) shall be true and correct in all material respects, it
being understood and agreed that the only such information furnished by
any Underwriter consists of the following information (collectively,
the "Underwriter's Information"): the information contained under the
heading "Underwriting" in the Offering Document.
Section 4. Representations and Warranties of the Insurer. The Insurer
represents and warrants to the Underwriter as follows:
(a) Organization and Licensing. The Insurer is a duly
organized and licensed and validly existing Wisconsin stock insurance
company duly qualified to conduct an insurance business in the State of
New York.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policies and execute this Indemnity Agreement
and to perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. Proceedings legally required for
the issuance of the Policies and the execution, delivery and
performance of this Indemnity Agreement have been taken and all
material licenses, orders, consents or other authorizations or
approvals of any governmental boards or bodies legally required for the
enforceability of the Policies have been obtained; any proceedings not
taken and any licenses, authorizations or approvals not obtained are
not material to the enforceability of the Policies.
(d) Enforceability. The Policies, when issued, and this
Indemnity Agreement will each constitute a legal, valid and binding
obligation of the Insurer, enforceable in accordance with its terms,
subject to insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity and subject to principles of public policy
limiting the right to enforce the indemnification provisions contained
therein and herein, insofar as such provisions relate to
indemnification for liabilities arising under federal securities laws.
<PAGE> 5
(e) Financial Information. The balance sheet of the Insurer as
of December 31, 1997 and the related statements of income,
stockholder's equity and cash flows for the two fiscal years ended
December 31, 1997, and the accompanying footnotes, together with an
opinion thereon dated January 29, 1998, of KPMG Peat Marwick,
independent certified public accountants, a copy of which is
incorporated by reference in the Offering Document, fairly present in
all material respects the financial condition of the Insurer as of such
dates and for the periods covered by such statements in accordance with
generally accepted accounting principles consistently applied. The
balance sheets of the Insurer as of September, 1997 and September, 1998
fairly present in all material respects the financial condition of the
Insurer as of such date in accordance with generally accepted
accounting principles consistently applied. Since September 30, 1998,
there has been no material change in such financial condition of the
Insurer that would materially and adversely affect its ability to
perform its obligations under the Policies.
(f) Insurer Information. The information in the Offering
Document as of the date hereof under the caption "THE INSURER AND THE
POLICIES" (the "Insurer Information") is true and correct in all
material respects and does not contain any untrue statement of a
material fact.
(g) Rating. The Insurer is not aware of any facts that if
disclosed to Moody's or Standard & Poor's would be reasonably expected
to result in a downgrade of the rating of the claims paying ability of
the Insurer by either of such Rating Agencies.
(h) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the 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 which, if
decided adversely, would result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policies or this Insurance Agreement.
(i) 1933 Act Registration. The Policies are exempt from
registration under the Act.
Section 5. Indemnification.
(a) The Underwriter hereby agrees to pay, and to protect,
indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls
the Insurer within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act from and against, any
and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or by
reason of any untrue statement of a material fact or an omission to
state a material fact necessary in order to make the statements therein
in light of the circumstances in which they were made not misleading,
contained in the Underwriter's Information or a breach of any of the
representations and warranties of the Underwriter contained in Section
3.
3
<PAGE> 6
(b) The Insurer agrees to pay, and to protect, indemnify and
save harmless, the Underwriter and its respective officers, directors,
shareholders, employees, agents and each Person, if any, who controls
such Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act from and
against, any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or expenses
(including reasonable fees and expenses of attorneys, consultants and
auditors and reasonable costs of investigations) of any nature arising
out of or by reason of any untrue statement of a material fact or an
omission to state a material fact necessary in order to make the
statements therein in light of the circumstances in which they were
made not misleading, contained in the Insurer Information or a breach
of any of the representations and warranties of the Insurer contained
in Section 4.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") in respect of which the indemnity provided in
this Section 5(a) or (b) may be sought from any Underwriter, on the one
hand, or the Insurer, on the other (each, an "Indemnifying Party")
hereunder, each such Indemnified Party shall promptly notify the
Indemnifying Party in writing, and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel satisfactory
to the Indemnified Party and the payment of all expenses. The
Indemnified Party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof at the
expense of the Indemnified Party; provided, however, that the fees and
expenses of such separate counsel shall be at the expense of the
Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
fees and expenses, (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel
reasonably satisfactory to the Indemnified Party in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party, and the Indemnified Party shall have been
advised by 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 (in which case, if the 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 behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings 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 at any time for the Indemnified
Parties, which firm shall be designated in writing by the Indemnified
Party). The Indemnifying Party shall not be liable for any settlement
of any such action or proceeding effected without its written consent
to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding with respect to which the Indemnifying Party shall have
received notice in accordance with this subsection (c), the
Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such
settlement or judgment.
4
<PAGE> 7
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party
(other than due to application of this Section), each Indemnifying
Party shall contribute to the losses incurred by the Indemnified Party
on the basis of the relative fault of the Indemnifying Party, on the
one hand, and the Indemnified Party, on the other hand provided, that
no Underwriter shall be liable for any amount in excess of (i) the
excess of the sales prices of the Offered Certificates to the public
over the prices paid therefor by the Underwriter over (ii) the
aggregate amount of any damages which the Underwriter have otherwise
been required to pay in respect of the same or any substantially
similar claim.
The relative fault of each Indemnifying Party, on the
one hand, and each indemnified Party, on the other, 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 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.
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.
Section 6. Amendments, Etc. This Indemnity Agreement may be amended,
modified, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department - MBS
Telecopy No.: 212-363-1459
Confirmation: 212-668-0340
5
<PAGE> 8
(b) To any Underwriter:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: [________________]
Telecopy No.: 212-[___-____]
Confirmation: 212-[___-____]
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
Indemnity Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnity Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
Section 10. Counterparts. The Indemnity Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 11. Headings. The headings of Sections and the Table of
Contents contained in this Indemnity Agreement are provided for convenience
only. They form no part of this Indemnity Agreement and shall not affect its
construction or interpretation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement, all as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Insurer
By: /s/ Thomas J. Adams
----------------------------------------
Name: Thomas J. Adams
-----------------------------------
Title: First Vice President
----------------------------------
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Val Kay
----------------------------------------
Name: Val Kay
-----------------------------------
Title: Vice President
----------------------------------
