<PAGE> 1
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 17, 1999
Advanta Conduit Receivables, Inc., as Sponsor
on behalf of Advanta Mortgage Loan Trust 1999-4
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Nevada 333-75295-03 88-0360305
------ ------------ ----------
<S> <C> <C>
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
</TABLE>
Advanta Conduit Receivables, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Nevada 333-75295 88-0360305
------ --------- ----------
<S> <C> <C>
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
</TABLE>
Attention: General Counsel
10790 Rancho Bernardo Drive
San Diego, California 92127
- --------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including area code (858) 676-3099
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
Advanta Conduit Receivables, Inc. (the "Registrant" or the
"Sponsor") registered an issuance of $1,699,051,007.20 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. 333-75295) (the
"Registration Statement").
Pursuant to the Registration Statement, the Sponsor formed
Advanta Mortgage Loan Trust 1999-4 (the "Trust") which issued $200,000,000 in
aggregate principal amount of its Mortgage Loan Asset-Backed Notes (the
"Notes"), on November 17, 1999 (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 Notes were issued pursuant to an Indenture (the
"Indenture") attached hereto as Exhibit 4.1, dated as of November 1, 1999,
between the Trust and Bankers Trust Company of California, N.A., in its capacity
as Indenture Trustee (the "Indenture Trustee"). The Notes evidence indebtedness
of the Trust. Also issued, but not offered, by the Trust are Certificates
("Certificates") evidencing the ownership interest in the Trust. The
Certificates will initially be retained by Advanta Holding Trust 1999-4.
The primary assets of the Trust is a pool of closed-end
mortgage loans ("Mortgage Loans"), used predominantly to refinance an existing
mortgage loan on more favorable terms, to consolidate debt or to obtain cash
proceeds by borrowing against the related borrower's equity in the real property
and improvements pledged to secure the related Mortgage Loan. The Mortgage Loans
are secured primarily by mortgages on single-family residences (which may be
detached, a condominium unit or a unit in a planned unit development) which were
conveyed to the Trust on the Closing Date. As of the Closing Date, the Mortgage
Loans had the characteristics described in the Prospectus Supplement dated
November 5, 1999 filed pursuant to Rule 424(b)(5) of the Act with the
Commission.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not applicable
(b) Not applicable
<PAGE> 3
(c) Exhibits:
1.1 Underwriting Agreement, dated November 5, 1999, between
the Sponsor and Bear, Stearns & Co. Inc., as Representative of the Underwriters.
4.1 Indenture, dated as of November 1, 1999 between the Trust
and the Indenture Trustee.
4.2 Trust Agreement, dated as of November 1, 1999, between the
Sponsor, and Wilmington Trust Company, as Owner Trustee (the "Owner Trustee"),
relating to the formation of Advanta Holding Trust 1999-4.
4.3 Trust Agreement, dated as of November 1, 1999, among the
Sponsor, Advanta Holding Trust 1999-4 and Wilmington Trust Company, as Owner
Trustee, relating to the formation of Advanta Mortgage Loan Trust 1999-4.
4.4 Sale and Servicing Agreement, dated November 1, 1999,
among the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and Bankers
Trust Company of California, N.A., as Trustee.
4.5 Certificate Insurance Policy, dated November 17, 1999, and
issued and delivered by Ambac Assurance Corporation.
5.1 Opinion of Dewey Ballantine LLP regarding legality of the
registered securities, dated as of November 17, 1999.*
8.1 Opinion of Dewey Ballantine LLP regarding tax matters,
dated as of November 17, 1999.*
10.1 Indemnification Agreement, dated November 5, 1999, among
Bear, Stearns & Co. Inc., and SG Cowen Securities Corporation as Underwriters
(the "Underwriters") and Ambac Assurance Corporation, as Note Insurer.
10.2 Guaranty, dated November 17, 1999, to Ambac Assurance
Corporation and Bear, Stearns & Co. Inc., as Representative of the Underwriters,
issued by Advanta Mortgage Holding Company.
10.3 Guaranty, dated November 17, 1999, to Ambac Assurance
Corporation and Advanta Mortgage Loan Trust 1999-4 issued by Advanta Mortgage
Holding Company.
23.1 Consent of KPMG Inc. regarding financial statements of
Ambac Assurance Corporation, and their report.*
23.2 Consent of Arthur Andersen LLP.*
* Previously filed on Form 8-K filed with the Securities and
Exchange Commission.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Current Report to be signed on its
behalf by the undersigned thereunto duly authorized.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor on behalf of
Advanta Mortgage Loan Trust 1999-4
By: /s/ Michael Coco
---------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA CONDUIT RECEIVABLES, INC.
By: /s/ Michael Coco
---------------------------------
Name: Michael Coco
Title: Vice President
Dated: November 17, 1999
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1.1 Underwriting Agreement, dated November 5, 1999, between the
Sponsor and Bear, Stearns & Co. Inc., as Representative of the
Underwriters.
4.1 Indenture, dated as of November 1, 1999 between the Trust and
the Indenture Trustee
4.2 Trust Agreement, dated as of November 1, 1999, between the
Sponsor, and Wilmington Trust Company, as Owner Trustee (the
"Owner Trustee"), relating to the formation of Advanta Holding
Trust 1999-4
4.3 Trust Agreement, dated as of November 1, 1999, among the
Sponsor, Advanta Holding Trust 1999-4 and Wilmington Trust
Company, as Owner Trustee, relating to the formation of
Advanta Mortgage Loan Trust 1999-4.
4.4 Sale and Servicing Agreement, dated November 1, 1999, among
the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer,
and Bankers Trust Company of California, N.A., as Trustee.
4.5 Certificate Insurance Policy, dated November 17, 1999, and
issued and delivered by Ambac Assurance Corporation.
10.1 Indemnification Agreement, dated November 5, 1999, among Bear,
Stearns & Co. Inc., and SG Cowen Securities Corporation as
Underwriters (the "Underwriters") and Ambac Assurance
Corporation, as Note Insurer.
10.2 Guaranty, dated November 17, 1999, to Ambac Assurance
Corporation and Bear, Stearns & Co. Inc., as Representative of
the Underwriters, issued by Advanta Mortgage Holding Company.
10.3 Guaranty, dated November 17, 1999, to Ambac Assurance
Corporation and Advanta Mortgage Loan Trust 1999-4 issued by
Advanta Mortgage Holding Company.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
ADVANTA CONDUIT RECEIVABLES, INC.
Mortgage Loan Asset-Backed Notes,
Series 1999-4
UNDERWRITING AGREEMENT
November 5, 1999
BEAR, STEARNS & CO. INC.
As Representative of the Underwriters (the "Representative") named in Schedule I
245 Park Avenue, New York, NY 10167
Ladies and Gentlemen:
Advanta Conduit Receivables, Inc. (the "Company") has authorized the
issuance and sale by Advanta Mortgage Loan Trust 1999-4, a Delaware business
trust (the "Trust"), of Mortgage Loan Asset-Backed Notes, Series 1999-4 (the
"Notes") and Trust Certificates (the "Trust Certificates", and together with the
Notes, the "Securities"). Only the Notes are offered by the Underwriters.
The Notes will be issued by the Trust, and will be secured by the
trust estate (the "Trust Estate") which will consist primarily of a pool of
closed-end adjustable-rate, first lien sub-prime residential mortgage loans (the
"Mortgage Loans"), amounts on deposit with Bankers Trust Company of California,
N.A., as Indenture Trustee of the Trust (the "Indenture Trustee") in an account
to be used to acquire additional mortgage loans following the Closing Date (as
hereinafter defined) for the Trust (the "Pre-Funding Account") and certain
related property. The Mortgage Loans shall have, on or about November 17, 1999
(the "Closing Date"), an aggregate principal balance of approximately
$133,943,952 and the Pre-Funding Account shall have approximately $71,100,000,
which amount may be applied to the purchase of additional loans during the
period from the Closing Date to on or before February 29, 1999.
The Notes are to be issued pursuant to an Indenture, to be dated as
of November 1, 1999 (the "Indenture"), between the Trust and the Indenture
Trustee. The Trust, the Indenture Trustee, Advanta Holding Trust 1999-4 (the
"Holding Trust"), the Company and Advanta Mortgage Corp. USA, as Master Servicer
will also enter into a Sale and Servicing Agreement, dated as of November 1,
1999 (the "Sale and Servicing Agreement").
On or prior to the date of issuance of the Notes, the Company will
obtain a financial guaranty insurance policy (the "Policy") issued by Ambac
Assurance Corporation (the "Insurer") which will unconditionally and irrevocably
guarantee to the Indenture Trustee for the benefit of the holders of the Notes
an amount equal to the Insured Amount (as defined in the Annex A to the Sale and
Servicing Agreement).
<PAGE> 2
The Notes are more fully described in a Registration Statement which
the Company has furnished to the Underwriters. Capitalized terms used but not
defined herein shall have the meanings given to them in the Annex A to the Sale
and Servicing Agreement.
Simultaneously with the execution of the Indenture and the Sale and
Servicing Agreement, the Company will enter into a conveyance agreement pursuant
to the Mortgage Loan Transfer Agreement dated on or about November 1, 1999 among
the Company and the Originators named therein (together, the "Purchase
Agreement"), pursuant to which the Originators will transfer to the Company all
of their right, title and interest in and to the Mortgage Loans as of the
Closing Date.
The Company will also enter into a Trust Agreement (the "Trust
Agreement"), dated as of November 1, 1999, among the Wilmington Trust Company,
as Owner Trustee (the "Owner Trustee"), the Holding Trust and the Company,
pursuant to which the Trust will be formed.
The Company will also enter into an Indemnification Agreement (the
"Indemnification Agreement") dated as of November 5, 1999 among the Underwriters
and the Insurer.
Section 1. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with the Underwriters that:
a. A Registration Statement on Form S-3 (registration
statement number 333-75295), as amended by Post-Effective Amendments
thereto, has (i) been prepared by the Company in conformity with the
requirements of the Securities Act of 1933 (the "Securities Act") and the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the respective 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 Statement has been delivered by the Company to the
Underwriters. As used in this Agreement, "Effective Time" means the date
and the time as of which such Registration Statements, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time;
"Registration Statement" means such registration statement, 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 each Prospectus
included in such Registration Statement or amendments thereof and any
prospectus filed with the Commission by the Company with the consent of
the Underwriters pursuant to Rule 424(a) of the Rules and Regulations and
as supplemented by a final prospectus supplement (the "Prospectus
Supplement") relating to the 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 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 Prospectus, as the case may be, and any
2
<PAGE> 3
reference to any amendment or supplement to the Prospectus shall be deemed
to refer to and include any document filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") after the date of such
Prospectus, as the case may be, and incorporated by reference in such
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. 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 Statement.
The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
To the extent that any Underwriter (i) has provided to the
Company Collateral Term Sheets (as hereinafter defined) that such
Underwriter has provided to a prospective investor, the Company has filed
such Collateral Term Sheets as an exhibit to a report on Form 8-K within
two business days of its receipt thereof, or (ii) has provided to the
Company Structural Term Sheets or Computational Materials (each as defined
below) that such Underwriter has provided to a prospective investor, the
Company will file or cause to be filed with the Commission a report on
Form 8-K containing such Structural Term Sheet and Computational
Materials, as soon as reasonably practicable after the date of this
Agreement, but in any event, not later than the date on which the
Prospectus is filed with the Commission pursuant to Rule 424 of the Rules
and Regulations.
b. The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act, the Trust Indenture 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
Underwriters expressly for use therein.
c. The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material
3
<PAGE> 4
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 Sale and
Servicing Agreement, an Insurance and Indemnity Agreement, dated as of
November 17, 1999, between the Insurer, Advanta Mortgage Corp. USA, as
Master Servicer , the Company, the Trust, the Holding Trust and the
Indenture Trustee (the "Insurance Agreement"), the Trust Agreement, and
the Purchase Agreement, and to cause the Notes to be issued.
f. There are no actions, proceedings or investigations pending
before or threatened by any court, administrative agency or other tribunal
to which the Company is a party or of which any of its properties is the
subject (a) which if determined adversely to the Company would have a
material adverse effect on the business or financial condition of the
Company, (b) which asserts the invalidity of this Agreement, the Sale and
Servicing Agreement, the Insurance Agreement, the Purchase Agreement, the
Trust Agreement or the Notes, (c) which seeks to prevent the issuance of
the Notes or the consummation by the Company of any of the transactions
contemplated by the Indenture, the Sale and Servicing Agreement, the
Insurance Agreement, the Purchase Agreement, the Trust Agreement or this
Agreement, as the case may be, or (d) which might materially and adversely
affect the performance by the Company of its obligations under, or the
validity or enforceability of, the Sale and Servicing Agreement, the
Insurance Agreement, the Purchase Agreement, the Trust Agreement, this
Agreement or the Notes.
g. This Agreement has been, and the Sale and Servicing
Agreement, the Insurance Agreement, the Trust Agreement and the Purchase
Agreement when executed and delivered as contemplated hereby and thereby
will have been, duly authorized, executed and delivered by the Company,
and this Agreement constitutes, the Sale and Servicing Agreement, the
Insurance Agreement, the Trust Agreement and the
4
<PAGE> 5
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 Sale and Servicing Agreement, the Insurance Agreement, the Trust
Agreement and the Purchase Agreement by the Company and the consummation
of the transactions contemplated hereby, thereby and in the Indenture, and
the issuance and delivery of the 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.
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 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 Indenture, the
Notes will be validly issued and outstanding and will be entitled to the
benefits provided by the Indenture.
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 Notes and the sale of
the Notes to the Underwriters, or the consummation by the Company of the
other transactions contemplated by this Agreement, the Indenture, the Sale
and Servicing Agreement, the Insurance Agreement, the Trust Agreement and
the Purchase Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities
or Blue Sky laws in connection with the purchase and distribution of the
Notes by the Underwriters or as have been obtained.
l. The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now
conducted by it and as described in the Prospectus, and the Company has
not received notice of any proceedings
5
<PAGE> 6
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 Indenture and
the Sale and Servicing Agreement, the Company will or will cause the Trust
to: (i) have good title to the interest in the Mortgage Loans, 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 Indenture, in the Sale and Servicing
Agreement, in the Trust Agreement or in the Notes being issued pursuant
thereto; and (iii) have the power and authority to sell its interest in or
cause the sale of the Mortgage Loans to the Indenture Trustee, on behalf
of the Trust, and to sell the Notes to the Underwriters. Upon execution
and delivery of the Sale and Servicing Agreement by the Trust, the Trust
will have acquired beneficial ownership of all of the Company's right,
title and interest in and to the Mortgage Loans. Upon delivery to the
Underwriters of the Notes, the Underwriters will have good title to the
Notes, free of any Liens.
n. The Trust's pledge of the Mortgage Loans to the Indenture
Trustee pursuant to the Indenture will vest in the Indenture Trustee, for
the benefit of the Noteholders, a first priority perfected security
interest therein, subject to no prior lien, mortgage, security interest,
pledge, adverse claim, charge or other encumbrance.
o. As of the opening of business on November 1, 1999 (the
"Cut-Off Date"), and on each Subsequent Cut-Off Date (as defined in the
Annex A to the Sale and Servicing Agreement) 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.
p. None of the Company, the Holding Trust or the Trust is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended (the "1940 Act") and the rules and
regulations of the Commission thereunder.
q. At the Closing Date, the Notes, the Indenture and the Sale
and Servicing Agreement will conform in all material respects to the
descriptions thereof contained in the Prospectus.
r. At the Closing Date, the Notes shall have been rated in the
highest rating category by at least two nationally recognized rating
agencies.
s. Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement,
the Indenture, the Sale and Servicing Agreement, the Insurance Agreement,
the Indemnification Agreement, the
6
<PAGE> 7
Purchase Agreement, the Trust Agreement and the Securities have been paid
or will be paid at or prior to the Closing Date.
t. At the Closing Date, each of the representations and
warranties of the Company set forth in the Sale and Servicing Agreement
will be true and correct in all material respects.
Any certificate signed by an officer of the Company and delivered to
the Representative or counsel for the Underwriters in connection with an
offering of the 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 1 are made.
Section 2. Purchase and Sale. The commitment of the Underwriters to
purchase the 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 Underwriters,
and the Underwriters agree (except as provided in Sections 10 and 11 hereof) to
purchase from the Company the aggregate initial principal amounts of Notes set
forth on Schedule A, at the purchase price or prices set forth in Schedule A.
The obligations of the Underwriters hereunder to purchase the Notes
shall be several and not joint. Each Underwriter's obligation shall be to
purchase the aggregate principal amount of Notes as is indicated with respect to
each Underwriter under the caption "Underwriting" in the Prospectus. The rights
of the Company and a non-defaulting Underwriter shall be as set forth in Section
13 hereof.
Section 3. Delivery and Payment. Delivery of and payment for the Notes
to be purchased by the Underwriters 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 Representative and the Company at 10:00
A.M. New York City time on November 17, 1999 or at such other time or date as
shall be agreed upon by the Representative 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 Notes shall be made to the Representative for the
accounts of the Underwriters against payment of the purchase price thereof. The
Notes shall be in such denominations and registered in such names as the Company
and the Representative have agreed upon at least two business days prior to the
Closing Date. The Notes will be made available for examination by the
Representative no later than 2:00 p.m. New York City time on the first business
day prior to the Closing Date.
Section 4. Offering by the Underwriters. It is understood that, subject
to the terms and conditions hereof, the Underwriters propose to offer the Notes
for sale to the public as set forth in the Prospectus.
7
<PAGE> 8
Section 5. Covenants of the Company. The Company agrees as follows:
a. (i) To prepare the Prospectus Supplement in a form approved
by the Representative and to file such Prospectus Supplement 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; (ii) 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; (iii) to advise the Representative, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Representative with copies
thereof; (iv) 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 Notes; and (v) to
promptly advise the Representative of its receipt of notice of the issuance by
the Commission of any stop order or of: (w) any order preventing or suspending
the use of the Prospectus; (x) the suspension of the qualification of the Notes
for offering or sale in any jurisdiction; (y) the initiation of or threat of any
proceeding for any such purpose; (z) 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 the Prospectus or suspending any such
qualification, the Company promptly shall use its best efforts to obtain the
withdrawal of such order or suspension.
b. To furnish promptly to the Representative and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
c. To deliver promptly to the Representative such number of
the following documents as the Representative shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including exhibits); (ii)
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 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
8
<PAGE> 9
the Representative and, upon the Representative's request, shall file such
document and prepare and furnish without charge to the Underwriters and to any
dealer in securities as many copies as the Representative may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which corrects such statement or omission or effects such compliance, and in
case any of the Underwriters are required to deliver a Prospectus in connection
with sales of any of the Notes at any time nine months or more after the
Effective Time, upon the request of the Representative but at the expense of
such Underwriter, the Company shall prepare and deliver to such Underwriter as
many copies as such Underwriter may reasonably request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Securities Act.
d. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representative, be required by
the Securities Act or requested by the Commission.
e. Prior to filing with the Commission any (i) amendment to
the Registration Statement or supplement to the Prospectus, or document
incorporated by reference in the Prospectus, or (ii) Prospectus pursuant to Rule
424 of the Rules and Regulations, to give at least three business days prior
notification to the Representative and to furnish a copy thereof to the
Representative and counsel for the Underwriters, provided, however, that if any
of the foregoing filings referred to in (i) or (ii), relate to the Notes, the
Company shall obtain the consent of the Representative to such filing, which
consent shall not be unreasonably withheld.
f. [Reserved].
g. To use its best efforts, in cooperation with the
Representative, to qualify the Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Representative may designate, and maintain or cause to be maintained such
qualifications in effect for as long as may be required for the distribution of
the 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 Notes
have been so qualified.
h. The Company shall not, without the Representative's prior
written consent, which consent shall not be unreasonably withheld, 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 Notes to the public.
i. So long as the Notes shall be outstanding, to deliver to
the Representative 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 Article IV of the Sale and Servicing Agreement; (ii) the
annual statement of a firm of
9
<PAGE> 10
independent public accountants furnished to the Indenture Trustee
pursuant to Article IV of the Sale and Servicing Agreement; and
(iii) the Monthly Statement furnished to the Noteholders pursuant to
Article VIII of the Indenture.
j. To apply the net proceeds from the sale of the Notes in
the manner set forth in the Prospectus.
Section 6. Conditions to the Underwriters' Obligations. The
obligations of the Underwriters to purchase the 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 performance in all material respects by the Company of all of their
respective obligations hereunder; and (iii) the following conditions as of the
Closing Date:
a. The Representative shall have received confirmation of
the effectiveness of the Registration Statement. No stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission.
Any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus shall
have been complied with.
b. None of the Underwriters shall have discovered and
disclosed to the Company on or prior to the Closing Date that the
Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact or omits
to state a fact which, in the opinion of Fried, Frank, Harris,
Shriver & Jacobson, counsel for the Underwriters, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
c. All corporate proceedings and other legal matters
relating to the authorization, form and validity of this Agreement,
the Indenture, the Sale and Servicing Agreement, the Purchase
Agreement, the Insurance Agreement, the Indemnification Agreement,
the Trust Agreement, the 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 Underwriters, and the Company shall
have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such
matters.
d. The Representative shall have received the favorable
opinion of Dewey Ballantine 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 Nevada, and is qualified to do business in each state
necessary to enable it to perform its obligations as Sponsor
under the Sale and Servicing Agreement. The Company has the
requisite power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the
conditions of, this
10
<PAGE> 11
Agreement, the Sale and Servicing Agreement, the Insurance
Agreement, the Trust Agreement and the Purchase Agreement.
2. This Agreement, the Notes, the Sale and Servicing
Agreement, the Insurance Agreement, the Trust Agreement and the
Purchase Agreement have been duly and validly authorized, executed
and delivered by the Company, all requisite corporate action having
been taken with respect thereto, and each (other than the
Securities) constitutes the valid, legal and binding agreement of
the Company.
3. Neither the transfer of the Mortgage Loans to the
Trust Estate, the issuance or sale of the Notes nor the execution,
delivery or performance by the Company of the Sale and Servicing
Agreement, this Agreement, the Insurance Agreement, the Trust
Agreement or the Purchase Agreement (A) conflicts or will conflict
with or results or will result in a breach of, or constitutes or
will constitute a default under, (i) any term or provision of the
certificate of incorporation or bylaws of the Company; (ii) any term
or provision of any material agreement, contract, instrument or
indenture, to which the Company is a party or is bound and known to
such counsel; or (iii) any order, judgment, writ, injunction or
decree of any court or governmental agency or body or other tribunal
having jurisdiction over the Company and known to such counsel; or
(B) results in, or will result in the creation or imposition of any
lien, charge or encumbrance upon the Trust Estate or upon the Notes,
except as otherwise contemplated by the Indenture or the Sale and
Servicing Agreement.
4. With respect to the Mortgage Loans, the endorsement
and delivery of each Mortgage Note, and the preparation, delivery
and recording of an Assignment in each case with respect to each
Mortgage is sufficient to fully transfer to the Trust for the
benefit of the owners of the Notes all right, title and interest of
the Company in the Mortgage 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 Trust 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 Agreement, this Agreement, the Insurance
Agreement, the Purchase Agreement, the Trust 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.
11
<PAGE> 12
6. There are no actions, proceedings or investigations,
to such counsel's knowledge, pending or threatened against the
Company before any court, governmental agency or body or other
tribunal (i) asserting the invalidity of the Sale and Servicing
Agreement, the Insurance Agreement, this Agreement, the Purchase
Agreement, the Trust Agreement or the Notes, (ii) seeking to prevent
the issuance of the Notes or the consummation of any of the
transactions contemplated by the Indenture, the Sale and Servicing
Agreement, the Indemnification Agreement, the Insurance Agreement,
the Trust Agreement or this Agreement, or (iii) which would
materially and adversely affect the performance by the Company of
obligations under, or the validity or enforceability of, the Sale
and Servicing Agreement, the Insurance Agreement, the Notes, the
Purchase Agreement, the Trust 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
Securities 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 Indenture, when executed and delivered, will have
been duly qualified under the Trust Indenture Act. The registration
of the Trust under the Investment Company Act of 1940, as amended is
not presently required.
10. The Indenture, upon execution and delivery, is
effective to create a valid and enforceable security interest in
favor of the Indenture Trustee, for the benefit of the Noteholders
and the Insurer, in all of the Trust's right, title and interest in
the Mortgage Loans. The security interest in favor of the Indenture
Trustee, for the benefit of the Noteholders and the Insurer, will
constitute a first priority perfected security interest upon the
delivery of the Mortgage Files to the Indenture Trustee, on behalf
of the Noteholders, and the recording of instruments in accordance
with the provisions of the Sale and Servicing Agreement.
11. The statements in the Prospectus set forth under the
captions "DESCRIPTION OF THE SECURITIES," "THE AGREEMENTS" and
12
<PAGE> 13
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
Indenture or the Sale and Servicing Agreement, are fair and accurate
in all material respects.
12. The statements in the Prospectus and Prospectus
Supplement set forth under the captions "ERISA CONSIDERATIONS,"
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES," and the statements in
the Prospectus set forth under the caption "LEGAL ASPECTS OF
MORTGAGE LOANS," to the extent that they constitute matters of
federal, New York, California or Nevada law, or federal, New York,
California or Nevada legal conclusions provide a fair and accurate
summary of such law or conclusions.
13. The opinions of Dewey Ballantine LLP, special
counsel to the Company, expressed or referred to under the captions
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES" of the Prospectus and
Prospectus Supplement are hereby confirmed.
14. Such opinion shall also relate to comparable matters
with respect to the Originators and Advanta Mortgage Holding
Company.
15. No information has come to such counsel's attention
which causes them to believe that the Prospectus (other than the
financial statement and other financial and statistical data
contained therein, as to which such counsel need express no
opinion), as of the date thereof, contained any untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
16. Such other matters as the Representative may
reasonably request.
In rendering its opinions, the counsel described above may rely, as
to matters of fact, on certificates of responsible officers of the Company, the
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 Representative shall have received letters, including
bring-down letters, from Arthur Andersen LLP, dated on or before the
Closing Date, in form and substance satisfactory to the Representative and
counsel for the Underwriters, to the effect that they have performed
certain specified procedures requested by the Representative with respect
to the information set forth in the Prospectus and certain matters
relating to the Company.
f. The Notes shall have received the ratings listed on
Schedule A hereto, and such ratings shall not have been rescinded or
downgraded as of the Closing Date. The Representative and counsel for the
Underwriters shall have received copies of
13
<PAGE> 14
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 Underwriters or accompanied by
reliance letters to the Underwriters or shall state that the Underwriters
may rely upon them.
g. The Representative shall have received from the Company a
certificate, signed by the president, a senior vice president or a vice
president of the Company, dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the Registration
Statement, the Indenture, the Sale and Servicing Agreement and this
Agreement and that, to the best of his or her knowledge based upon
reasonable investigation:
1. the representations and warranties of the Company in
this Agreement, as of the Closing Date, and in the Sale and
Servicing Agreement, the Insurance Agreement, the Purchase
Agreement, the Trust Agreement and in all related agreements, as of
the date specified in such agreements, are true and correct, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
the Closing Date;
2. except as set forth in the Prospectus, 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 Sale and Servicing Agreement, the Insurance
Agreement, this Agreement, the Trust 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 Sale and Servicing
Agreement is true and correct in all material respects;
5. there has been no amendment or other document filed
affecting the articles of incorporation or bylaws of the Company
since December 31, 1998, and no such amendment has been authorized.
No event has occurred since September 30, 1999, which has affected
the good standing of the Company under the laws of the State of
Nevada;
14
<PAGE> 15
6. there has not occurred any material adverse change
or, except as set forth in the Prospectus, 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,
1999;
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, 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; and
8. each person who, as an officer or representative of
the Company, signed or signs the Registration Statement, the Sale
and Servicing Agreement, the Insurance Agreement, the Trust
Agreement, this Agreement, or any other document delivered pursuant
hereto, on the date of such execution, or on the Closing Date, as
the case may be, in connection with the transactions described in
the Indenture, the Sale and Servicing Agreement, the Insurance
Agreement, the Purchase Agreement, the Trust Agreement and this
Agreement was, at the respective times of such signing and delivery,
and is now, duly elected or appointed, qualified and acting as such
officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures.
The Company shall attach to such certificate a true and correct copy
of its certificate or articles of incorporation, as appropriate, and bylaws
which are in full force and effect on the date of such certificate and a
certified true copy of the resolutions of its Board of Directors with respect to
the transactions contemplated herein.
h. The Representative shall have received a favorable opinion
of counsel to the Indenture Trustee, dated the Closing Date and in form
and substance satisfactory to the Representative, 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
Indenture and the Sale and Servicing Agreement;
2. the Indenture and the Sale and Servicing Agreement
have been duly authorized, executed and delivered by the Indenture
Trustee and the Indenture and the Sale and Servicing Agreement
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
15
<PAGE> 16
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 Indenture and the Sale and Servicing Agreement
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 Indenture and the
Sale and Servicing Agreement 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 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 Representative 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 Indenture, the Sale and
Servicing Agreement or any other document delivered pursuant hereto, on
the date hereof or on the Closing Date, in connection with the
transactions described in the Indenture and the Sale and Servicing
Agreement was, at the respective times of such signing and delivery, and
is now, duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures.
j. The Representative shall have received a favorable opinion
of Richards, Layton & Finger, counsel to the Trust, dated the Closing Date
and in form and substance satisfactory to the Representative, to the
effect that:
1. The Trust has been duly formed and is validly
existing as a business trust under the laws of
the State of Delaware, 12 Del. C. Section 3801,
et seq., and has the power and
16
<PAGE> 17
authority to own its properties, to conduct its
business as described in the Trust Agreement, to
execute, deliver and perform the Indenture, the
Insurance Agreement and the Sale and Servicing
Agreement and to issue, execute and deliver the
Notes and the Certificate (as defined in the
Trust Agreement).
2. The Indenture, the Insurance Agreement and the
Sale and Servicing Agreement have been duly
authorized, executed and delivered by the Trust.
3. The Trust Agreement constitutes a legal, valid
and binding obligation of the Depositor (as
defined in the Trust Agreement), enforceable
against the Depositor, in accordance with its
terms.
4. The Trust has the power and authority to pledge
the Mortgage Loans as security for the Notes and
has duly authorized such pledge by all necessary
trust action. The Notes have been duly
authorized, executed and delivered by the Trust.
5. No consent, approval or other authorization of,
or registration, declaration or filing with, any
court or governmental agency or commission of
the State of Delaware is required by or with
respect to the Trust for the issuance and sale
of the Notes or the valid execution and delivery
of the Indenture, the Insurance Agreement and
the Sale and Servicing Agreement, or for the
validity or enforceability thereof, or for the
payment of any amounts by the Trust thereunder.
6. Neither the execution and delivery by the Trust
of the Indenture, the Insurance Agreement and
the Sale and Servicing Agreement, nor the
issuance, execution and delivery by the Trust of
the Notes, nor the consummation of the
transactions contemplated thereby, nor
compliance with the terms thereof, will (i)
conflict with or result in a breach of, or
constitute a default under the provisions of any
law, rule or regulation of the State of Delaware
applicable to the Trust or, to our knowledge,
without independent investigation, any judgment
or order applicable to the Trust or its
properties or, to our knowledge, without
independent investigation, any indenture,
mortgage, contract or other agreement or
instrument to which the Trust is a party or by
which it is bound or (ii) to our knowledge,
result in the
17
<PAGE> 18
creation or imposition of any lien, charge or
encumbrance upon the Trusts properties (other
than the lien of the Indenture).
7. To our knowledge, without independent
investigation, there are no pending or
threatened actions, suits or proceedings
affecting the Trust before any court or other
government authority which, if adversely
decided, would materially and adversely affect
the ability of the Trust to carry out the
transactions contemplated by the Indenture, the
Insurance Agreement and the Sale and Servicing
Agreement.
8. To our knowledge, the Trust is not required to
obtain any material permits, licenses,
authorizations and approvals necessary under the
laws of the State of Delaware to conduct its
activities as now conducted and as described in
the Trust Agreement and the Indenture.
k. The Representative shall have received a favorable opinion
of Richards, Layton & Finger, counsel to the Owner Trustee, dated the
Closing Date and in form and substance satisfactory to the Representative,
to the effect that:
1. Owner Trustee is duly incorporated and validly
existing as a banking corporation under the laws
of the State of Delaware and has the power and
authority to execute and deliver the Trust
Agreement.
2. The Trust Agreement has been duly authorized,
executed and delivered by the Owner Trustee, and
the Trust Agreement constitutes a legal, valid
and binding agreement of the Owner Trustee,
enforceable against the Owner Trustee, in
accordance with its terms.
3. No consent, approval or other authorization of,
or registration, declaration or filing with, any
court or governmental agency or commission of
the State of Delaware or the United States or
America, involving the banking and trust powers
of the Owner Trustee is required by or with
respect to the Owner Trustee for the valid
execution and delivery of the Trust Agreement or
for the validity or enforceability thereof.
4. Neither the execution and delivery by the Owner
Trustee of the Trust Agreement, nor the
consummation of the transactions contemplated
thereby, nor compliance with the terms thereof,
will (i) conflict with or result in a breach of,
18
<PAGE> 19
or constitute a default under the provisions of
the Trust Agreement or the certificate of
incorporation of the Owner Trustee or, any law,
rule or regulation of the State of Delaware
applicable to the Owner Trustee or, to our
knowledge, without independent investigation,
any judgment or order applicable to the Owner
Trustee or its properties or any indenture,
mortgage, contract or other agreement or
instrument to which the Owner Trustee is a party
or by which it is bound or (ii) to our
knowledge, without independent investigation,
result in the creation or imposition of any
lien, charge or encumbrance upon the Owner
Trustee's properties.
5. To our knowledge, without independent
investigation, there are no pending or
threatened actions, suits or proceedings
affecting the Owner Trustee before any court or
other government authority which, if adversely
decided, would materially and adversely affect
the ability of the Owner Trustee to carry out
the transactions contemplated by the Trust
Agreement.
l. The Policy relating to the 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.
m. The Representative shall have received a favorable opinion
of in-house counsel to the Insurer, dated the Closing Date and in form and
substance satisfactory to counsel for the Underwriters, to the effect
that:
1. The Insurer is a stock insurance company duly
organized and validly existing under the laws of the State of
Wisconsin and duly qualified to conduct an insurance business in the
State of California and the State of New York. The Insurer is
validly licensed and authorized to issue the Policy and perform its
obligations under the Policy in accordance with the terms thereof
under the laws of the State of California, State of New York and the
State of Wisconsin.
2. The Insurer has full corporate power and authority to
execute and deliver the Policy and the Policy has been duly
authorized, executed and delivered by the Insurer and constitutes a
legal, valid and binding obligation of the Insurer enforceable in
accordance with its terms except to the extent that the
enforceability (but not the validity) of such obligation may be
limited by any applicable bankruptcy, insolvency, liquidation,
rehabilitation or other similar law
19
<PAGE> 20
or enactment now or hereafter enacted affecting the enforcement of
creditors' rights and by general principles of equity.
3. The execution and delivery by the Insurer of the
Policy, the Insurance Agreement and the Indemnification Agreement
will not, and the consummation of the transactions contemplated
thereby and the satisfaction of the terms thereof will not, conflict
with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-Laws of the
Insurer, or any restriction contained in any contract, agreement or
instrument to which the Insurer is a party or by which it is bound
or constitute a default under any of the foregoing.
4. Proceedings legally required for the issuance of the
Policy, and the execution, delivery and performance of the Insurance
Agreement and the Indemnification Agreement have been taken by the
Insurer and licenses, orders, consents or other authorizations or
approvals of any governmental boards or bodies legally required for
the enforceability of the Policy have been obtained; any proceedings
not taken and any licenses, authorizations or approvals not obtained
are not material to the enforceability of the Policy, the Insurance
Agreement and the Indemnification Agreement.
5. The Policy is exempt from registration under the
Securities Act.
6. There is no action, suit or proceeding pending
against or affecting the Insurer in any court, or before or by any
governmental body, which is likely to affect or impair the validity
or enforceability of the Policy, the Insurance Agreement or the
Indemnification Agreement.
7. The statements contained in the Prospectus Supplement
under the heading "THE NOTE INSURER" and "THE POLICY", insofar as
such statements constitute summaries of the matters referred to
therein, accurately reflect and fairly present the information
purported to be shown and, insofar as such statements describe the
Insurer, fairly and accurately describe the Insurer, other than any
financial or statistical information contained or incorporated by
reference therein, as to which no opinion is expressed.
8. The Insurer is authorized to deliver the Insurance
Agreement and the Indemnification Agreement, and each of the
Insurance Agreement and the Indemnification Agreement has been duly
executed and is the valid and binding obligation of the Insurer
enforceable in accordance with its terms except to the extent that
the enforceability (but not the validity) of such obligation may be
limited by any applicable bankruptcy, insolvency, liquidation,
rehabilitation or other similar law or enactment now or hereafter
enacted affecting the enforcement of creditors' rights and by
general principles of equity and subject to principles of public
policy limiting the right to enforce the indemnification
20
<PAGE> 21
provisions contained therein insofar as such provisions relate to
indemnification for liabilities arising under the securities laws.
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.
The Insurer shall attach to such opinion 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.
n. 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.
o. 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 Securities Act.
p. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, since September 30, 1999, of
(A) the Company and its subsidiaries or (B) the Insurer, that is in the
Representative's judgment material and adverse and that makes it in the
Representative's judgment impracticable to market the Notes on the terms
and in the manner contemplated in the Prospectus.
r. The Representative shall have received from Dewey
Ballantine LLP, special counsel to the Company, a survey in form and
substance satisfactory to the Representative, indicating the requirements
of applicable local law which must be complied with in order to transfer
and service the Mortgage Loans pursuant to the Sale and Servicing
Agreement and the Indenture and the Company shall have complied with all
such requirements.
s. The Representative shall have received from Fried, Frank,
Harris, Shriver & Jacobson, special counsel to the Underwriters, such
opinion or opinions, dated the Closing Date, with respect to the issuance
and sale of the Notes, the Prospectus and such other related matters as
the Representative shall reasonably require.
t. The Representative and counsel for the Underwriters shall
have received copies of any opinions of counsel to the Company supplied to
the Indenture
21
<PAGE> 22
Trustee relating to matters with respect to the Notes. Any such opinions
shall be dated the Closing Date and addressed to the Underwriters or
accompanied by reliance letters to the Underwriters or shall state the
Underwriters may rely thereon.
u. The Representative shall have received such further
information, certificates and documents as the Representative may
reasonably have requested not fewer than three (3) full business days
prior to the Closing Date.
v. There shall have been executed and delivered by Advanta
Mortgage Holding Company, the indirect corporate parent of the Company
("AMHC"), a letter agreement with the Indenture Trustee and the Insurer,
pursuant to which AMHC agrees to become jointly and severally liable with
the Company and Advanta Mortgage Corp. USA for the payment of the Joint
and Several Obligations (as defined in such letter agreement).
w. There shall have been executed and delivered by AMHC, the
indirect corporate parent of the Company, a letter agreement with the
Underwriters and the Insurer, pursuant to which AMHC agrees to become
jointly and severally liable with the Company and Advanta Mortgage Corp.
USA for the payment of the Joint and Several Obligations (as defined in
such letter agreement).
x. Prior to the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the 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 Representative and
counsel for the Underwriters.
y. Subsequent to the execution and delivery of this Agreement
none of the following shall have occurred: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market by
the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium
shall have been declared by Federal or state authorities; (iii) the United
States shall have become engaged in hostilities, there shall have been an
escalation of hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States; or
(iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets of the United States
shall be such) as to make it, in the judgment of the Representative,
impractical or inadvisable to proceed with the public offering or delivery
of the Notes on the terms and in the manner contemplated in the
Prospectus.
22
<PAGE> 23
z. The Notes shall have received the ratings set forth on
Schedule A hereto.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representative by notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 7. Payment of Expenses. The Company agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the 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
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
fees and expenses of qualifying the Notes under the securities laws of the
several jurisdictions as provided in Section 5(g) hereof and of preparing,
printing and distributing a Blue Sky Memorandum and a Legal Investment Survey
(including related fees and expenses of counsel to the Underwriters); (e) any
fees charged by securities rating services for rating the Notes; (f) the costs
and expenses of Dewey Ballantine LLP, counsel to the Company; 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 7, the Underwriters
shall pay their own costs and expenses, including the costs and expenses of
Fried, Frank, Harris, Shriver & Jacobson, any transfer taxes on the Notes which
they may sell and the expenses of advertising any offering of the Notes made by
the Underwriters.
If this Agreement is terminated by the Representative, in accordance
with the provisions of Section 6 or Section 10, the Company shall reimburse the
Underwriters for their respective reasonable out-of-pocket expenses, including
fees and disbursements of Fried, Frank, Harris, Shriver & Jacobson, counsel for
the Underwriters.
Section 8. Indemnification and Contribution.
a. The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act from and against any and all loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Notes), to which such Underwriter or any
such controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or
23
<PAGE> 24
necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus or (iv) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and shall reimburse such Underwriter and each such controlling person promptly
upon demand for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in ,
the Prospectus or the Registration Statement in reliance upon and in conformity
with written information (including any Derived Information) furnished to the
Company through the Representative specifically for inclusion therein; and
provided, further, that as to any Collateral Term Sheets or Computational
Materials this indemnity shall not inure to the benefit of any Underwriter or
any controlling person on account of any loss, claim, damage, liability or
action arising from the sale of the Notes to any person by such Underwriter if
such Underwriter failed to send or give a copy of the Prospectus, as amended or
supplemented, to that person within the time required by the Securities Act, and
the untrue statement or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact in the Collateral Term
Sheets, Structural Term Sheets or Computational Materials was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company with
Section 5(c). The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to any Underwriters or any controlling
person of such Underwriter.
b. Each Underwriter agrees severally, and not jointly to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act against any and
all loss, claim, damage or liability, or any action in respect thereof, to which
the Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus, or (iv) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Underwriter specifically for
inclusion therein, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Company or any director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any
24
<PAGE> 25
liability which any Underwriter may otherwise have to the Company or any such
director, officer or controlling person.
c. Promptly after receipt by any indemnified party under this
Section 8 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 8, 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 8 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 8.
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 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriters, if the indemnified
parties under this Section 8 consist of the Underwriters or any of their
controlling persons, or by the Company, if the indemnified parties under this
Section 8 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 8(a) and (b), shall use its best efforts to cooperate with
the indemnifying party in the
25
<PAGE> 26
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
d. Each Underwriter agrees to deliver to the Company no later than
the date on which the Prospectus Supplement is required to be filed pursuant to
Rule 424 with a copy of its Derived Information (as defined below) for filing
with the Commission on Form 8-K.
e. Each Underwriter agrees, assuming all Company-Provided
Information (defined below) is accurate and complete in all material respects,
to severally and not jointly indemnify and hold harmless the Company, each of
the Company's officers and directors and each person who controls the Company
within the meaning of Section 15 of the Securities Act against any and all
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement of a material fact contained in the Derived
Information provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action as such
expenses are incurred. The obligations of each of the Underwriters under this
Section 8(e) shall be in addition to any liability which such Underwriter may
otherwise have.
The procedures set forth in Section 8(c) shall be equally applicable
to this Section 8(e).
f. For purposes of this Section 8, the term "Derived Information"
means such portion, if any, of the information delivered to the Company pursuant
to Section 8(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
26
<PAGE> 27
(iii) is of the type of information defined as
Collateral Term Sheets, Structural Term Sheets or
Computational Materials (as such terms are
interpreted in the No-Action Letters).
"Company-Provided Information" means any computer tape furnished to
the Underwriters by the Company concerning the Mortgage Loans comprising all or
a portion of the Trust Estate.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, were
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "Kidder letter" and
together with the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf
of Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response
thereto, were publicly available May 20, 1994).
g. If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the 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 8(c), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of the Underwriters and the Company shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions.
The relative fault of the Underwriters and the Company shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by one of the Underwriters, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and other equitable
considerations.
27
<PAGE> 28
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(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 8(g)
shall be deemed to include, for purposes of this Section 8(g), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
h. For purposes of this Section 8, in no case shall any Underwriter
be responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Notes over (y) the amount paid
by such Underwriter to the Company for the Notes purchased by such Underwriter
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
g. The Underwriters severally confirm that the information set forth
(i) in the Prospectus Supplement relating to market making and (ii) in the third
paragraph under the caption "Underwriting" in the Prospectus Supplement,
together with the Derived Information, is correct and constitutes the only
information furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
Section 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Company submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriters or controlling
persons thereof, or by or on behalf of the Company and shall survive delivery of
any Notes to the Underwriters.
Section 10. Termination of Agreement. The Representative may
terminate this Agreement immediately upon notice to the Company, at any time at
or prior to the Closing Date if any of the events or conditions described in
Section 6(y) of this Agreement shall occur and be continuing. In the event of
any such termination, the covenant set forth in Section 5(g), the provisions of
Section 7, the indemnity agreement set forth in Section 8, and the provisions of
Sections 8 and 9 shall remain in effect.
Section 11. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:
a. if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Bear, Stearns & Co., Inc., as
Representative of the Underwriters, Asset-Backed Securities Group, 245
Park Avenue, 4th Floor, New York, NY, 10167, Attention: General Counsel
(fax:(212) 272-7294);
28
<PAGE> 29
b. if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to Advanta Conduit Receivables, Inc.,
10790 Rancho Bernardo Road, San Diego, California 92127, Attention:
General Counsel (Fax: (858) 674-3592).
Section 12. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Company, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control the Underwriters within the meaning of Section 15 of the
Securities Act, and for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 12, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
Section 13. Default by One of the Underwriters. If one of the
Underwriters shall fail on the Closing Date to purchase the Notes which it is
obligated to purchase hereunder (the "Defaulted Securities"), the remaining
Underwriter(s) (the "Non-Defaulting Underwriter"), shall have the right, but not
the obligation within one (1) Business Day thereafter, to make arrangements to
purchase all, but not less than all, of the Defaulted Securities upon the terms
herein set forth; if, however, the Non-Defaulting Underwriter shall not have
completed such arrangements within such one (1) Business Day period, then this
Agreement shall terminate without liability on the part of the Non-Defaulting
Underwriter.
No action taken pursuant to this Section 13 shall relieve the
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting Underwriter or the
Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
Section 14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the 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 15. Definition of the Term "Business Day". For purposes of
this Agreement, "Business Day" means any day that is not a Saturday or Sunday or
other day on which any of the Insurer, Advanta Mortgage Corp. USA or the Company
is closed or commercial banking institutions in the States of New York,
California or Delaware 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.
29
<PAGE> 30
Section 16. 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 17. 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 18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
Section 19. Representations of Underwriters. The Representative will
act for the several Underwriters in connection with the transactions
contemplated by this Agreement, and any action under this Agreement taken by the
Representative will be binding upon all of the Underwriters.
30
<PAGE> 31
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
ADVANTA CONDUIT RECEIVABLES, INC.
By: /s/ Susan A. McVeigh
------------------------------
Name: Susan A. McVeigh
Title: Vice-President
CONFIRMED AND ACCEPTED, as of the date first above written:
BEAR, STEARNS & CO., INC.
as Representative of the Underwriters
By: /s/ Thomas S. Dunstan
-----------------------------
Name: Thomas S. Dunstan
Title: Managing Director
31
<PAGE> 32
<TABLE>
<CAPTION>
SCHEDULE A
- --------------------------------------------------------------------------------
INITIAL PURCHASE PRICE
PRINCIPAL TO UNDERWRITERS
REQUIRED AMOUNT OF NOTES DISREGARDING
NOTES RATINGS PURCHASED BY COUPON ACCRUED INTEREST
S&P/MOODY'S UNDERWRITERS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes AAA /Aaa $200,000,000 LIBOR $199,500,000
+.375%
(1),(2)
</TABLE>
(1) Notes are subject to the Available Funds Cap Rate as defined in the
Prospectus Supplement.
(2) Notes are subject to an increase in the note interest rate on the payment
date immediately following the month in which the clean-up call may first
be exercised, as defined in the Prospectus Supplement.
<PAGE> 33
SCHEDULE I
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT OF NOTES:
----------- --------------------------
<S> <C>
Bear, Stearns & Co. Inc. $120,000,000
SG Cowen Securities Corporation $ 80,000,000
------------
TOTAL FOR NOTES $200,000,000
</TABLE>
<PAGE> 1
Exhibit 4.1
INDENTURE
between
ADVANTA MORTGAGE LOAN TRUST 1999-4,
as Trust,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of November 1, 1999
Mortgage Loan Asset-Backed Notes, Series 1999-4
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..................................... 2
Section 1.01 Definitions............................................................ 2
Section 1.02 Incorporation by Reference of the Trust Indenture Act.................. 2
Section 1.03 Rules of Construction.................................................. 2
Section 1.04 Action by or Consent of Noteholders.................................... 3
Section 1.05 Conflict with TIA...................................................... 3
ARTICLE II THE NOTES..................................................................... 3
Section 2.01 Form................................................................... 3
Section 2.02 Execution, Authentication and Delivery................................. 3
Section 2.03 Registration; Registration of Transfer and Exchange.................... 4
Section 2.04 Mutilated, Destroyed, Lost or Stolen Notes............................. 5
Section 2.05 Persons Deemed Owners.................................................. 6
Section 2.06 Payment of Principal and Interest; Defaulted Interest.................. 6
Section 2.07 Cancellation........................................................... 7
Section 2.08 Release of Trust Estate................................................ 7
Section 2.09 Book-Entry Notes....................................................... 8
Section 2.10 Notices to Clearing Agency............................................. 8
Section 2.11 Definitive Notes....................................................... 8
Section 2.12 Calculation of LIBOR................................................... 9
ARTICLE III COVENANTS.................................................................... 9
Section 3.01 Payment of Principal and Interest...................................... 9
Section 3.02 Maintenance of Office or Agency........................................ 10
Section 3.03 Money for Payments to be Held in Trust................................. 10
Section 3.04 Existence.............................................................. 11
Section 3.05 Protection of Trust Estate............................................. 11
Section 3.06 Opinions as to Trust Estate............................................ 12
Section 3.07 Performance of Obligations; Servicing of Mortgage Loans................ 12
Section 3.08 Negative Covenants..................................................... 13
Section 3.09 Annual Statement as to Compliance...................................... 14
Section 3.10 Trust Shall Not Consolidate or Transfer Assets......................... 14
Section 3.11 No Other Business...................................................... 14
Section 3.12 No Borrowing........................................................... 14
Section 3.13 Guarantees, Loans, Advances and Other Liabilities...................... 15
Section 3.14 Capital Expenditures................................................... 15
Section 3.15 Compliance with Laws................................................... 15
Section 3.16 Restricted Payments.................................................... 15
Section 3.17 Notice of Event of Defaults and Events of Servicing Termination........ 15
Section 3.18 Further Instruments and Acts........................................... 15
</TABLE>
v
<PAGE> 3
<TABLE>
<S> <C>
Section 3.19 Amendments of Sale and Servicing Agreement and Trust Agreement......... 16
Section 3.20 Income Tax Characterization............................................ 16
ARTICLE IV SATISFACTION AND DISCHARGE.................................................... 16
Section 4.01 Satisfaction and Discharge of Indenture................................ 16
Section 4.02 Application of Trust Money............................................. 17
Section 4.03 Repayment of Monies Held by Note Paying Agent.......................... 17
ARTICLE V EVENTS OF DEFAULT; REMEDIES.................................................... 18
Section 5.01 Events of Default...................................................... 18
Section 5.02 Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee............................................................ 19
Section 5.03 Remedies for Events of Default......................................... 19
Section 5.04 Indenture Trustee May File Proofs of Claim............................. 20
Section 5.05 Indenture Trustee May Enforce Claims Without Possession of Notes....... 21
Section 5.06 Application of Money Collected......................................... 21
Section 5.07 Limitation of Suits.................................................... 22
Section 5.08 Unconditional Rights of Noteholders to Receive Principal and Interest.. 22
Section 5.09 Restoration of Rights and Remedies..................................... 23
Section 5.10 Rights and Remedies Cumulative......................................... 23
Section 5.11 Delay or Omission Not a Waiver......................................... 23
Section 5.12 Control by Noteholders................................................. 23
Section 5.13 Undertaking for Costs.................................................. 23
Section 5.14 Waiver of Stay or Extension Laws....................................... 24
Section 5.15 Action on Notes........................................................ 24
Section 5.16 Performance and Enforcement of Certain Obligations..................... 24
Section 5.17 Subrogation............................................................ 25
Section 5.18 Preference Claims...................................................... 25
Section 5.19 Waiver of Past Defaults................................................ 26
ARTICLE VI THE INDENTURE TRUSTEE......................................................... 26
Section 6.01 Duties of Indenture Trustee............................................ 26
Section 6.02 Rights of Indenture Trustee............................................ 28
Section 6.03 Individual Rights of Indenture Trustee................................. 29
Section 6.04 Indenture Trustee's Disclaimer......................................... 29
Section 6.05 Notice of Defaults..................................................... 29
Section 6.06 Reports by Indenture Trustee to Noteholders............................ 29
Section 6.07 Compensation and Indemnity............................................. 29
Section 6.08 Replacement of Indenture Trustee....................................... 30
Section 6.09 Successor Indenture Trustee by Merger.................................. 31
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee...... 32
Section 6.11 Eligibility: Disqualification.......................................... 33
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 6.12 Preferential Collection of Claims Against Trust........................ 33
Section 6.13 Appointment and Powers................................................. 33
Section 6.14 Performance of Duties.................................................. 34
Section 6.15 Limitation on Liability................................................ 34
Section 6.16 Reliance Upon Documents................................................ 34
Section 6.17 Representations and Warranties of the Indenture Trustee................ 34
Section 6.18 Waiver of Setoffs...................................................... 35
Section 6.19 Control by the Controlling Party....................................... 35
Section 6.20 Indenture Trustee May Enforce Claims Without Possession of Notes....... 35
Section 6.21 Suits for Enforcement.................................................. 35
Section 6.22 Mortgagor Claims....................................................... 35
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS............................................... 36
Section 7.01 Trust to Furnish to Indenture Trustee Names and Addresses of
Noteholders........................................................ 36
Section 7.02 Preservation of Information; Communications to Noteholders............. 37
Section 7.03 Reports by Trust....................................................... 37
Section 7.04 Reports by Indenture Trustee........................................... 37
ARTICLE VIII PAYMENTS AND STATEMENTS; ACCOUNTS, DISBURSEMENTS AND RELEASES............... 38
Section 8.01 Collection of Money.................................................... 38
Section 8.02 Release of Trust Estate................................................ 38
Section 8.03 Establishment of Accounts.............................................. 38
Section 8.04 The Policy............................................................. 39
Section 8.05 Pre-Funding Account and Capitalized Interest Account................... 39
Section 8.06 Flow of Funds.......................................................... 40
Section 8.07 Investment of Accounts................................................. 41
Section 8.08 Eligible Investments................................................... 42
Section 8.09 Reports by Indenture Trustee........................................... 44
Section 8.10 Additional Reports by Trustee.......................................... 46
Section 8.11 Opinion of Counsel..................................................... 47
ARTICLE IX SUPPLEMENTAL INDENTURES....................................................... 47
Section 9.01 Supplemental Indentures Without Consent of Noteholders................. 47
Section 9.02 Supplemental Indentures with Consent of Noteholders.................... 48
Section 9.03 Execution of Supplemental Indentures................................... 50
Section 9.04 Effect of Supplemental Indenture....................................... 50
Section 9.05 Conformity With Trust Indenture Act.................................... 50
Section 9.06 Reference in Notes to Supplemental Indentures.......................... 50
ARTICLE X REDEMPTION OF NOTES............................................................ 50
Section 10.01 Redemption............................................................. 50
Section 10.02 Surrender of Notes..................................................... 51
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Section 10.03 Form of Redemption Notice.............................................. 52
Section 10.04 Notes Payable on Redemption Date....................................... 52
ARTICLE XI MISCELLANEOUS................................................................. 53
Section 11.01 Compliance Certificates and Opinions, etc.............................. 53
Section 11.02 Form of Documents Delivered to Indenture Trustee....................... 53
Section 11.03 Acts of Noteholders.................................................... 54
Section 11.04 Notices, etc. to Indenture Trustee, Trust and Rating Agencies.......... 54
Section 11.05 Notices to Noteholders; Waiver......................................... 56
Section 11.06 Alternate Payment and Notice Provisions................................ 56
Section 11.07 Conflict with Trust Indenture Act...................................... 57
Section 11.08 Effect of Headings and Table of Contents............................... 57
Section 11.09 Successors and Assigns................................................. 57
Section 11.10 Separability........................................................... 57
Section 11.11 Benefits of Indenture.................................................. 57
Section 11.12 Legal Holidays......................................................... 57
Section 11.13 GOVERNING LAW.......................................................... 57
Section 11.14 Counterparts........................................................... 57
Section 11.15 Recording of Indenture................................................. 58
Section 11.16 Trust Obligation....................................................... 58
Section 11.17 No Petition............................................................ 58
Section 11.18 Inspection............................................................. 58
Section 11.19 Usury.................................................................. 59
Section 11.20 Limitation of Liability................................................ 59
Section 11.21 Rights of the Note Insurer to Exercise Rights of Noteholders........... 59
Section 11.22 Consent and Direction of Note Insurer.................................. 60
Section 11.23 Rules by Indenture Trustee............................................. 60
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A -- Form of Note
Exhibit B -- Form of Authentication Order
</TABLE>
iv
<PAGE> 6
ADVANTA MORTGAGE LOAN TRUST 1999-4
Reconciliation and Tie between the Indenture,
dated as of November 1, 1999, and the
Trust Indenture Act of 1939, as amended
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
<S> <C>
310(a)(1) 6.11
(a)(2) 6.11
(a)(3) 6.10
(a)(4) Not Applicable
(b) 6.08; 6.11
(c) Not Applicable
311(a) 6.12
(b) 6.12
312(a) 7.02
(b) 7.02
(c) 7.02
313(a) 7.04
(b)(1) 7.02; 7.04;
(b)(2) 7.04
(c) 7.04
(d) 7.04
314(a) 7.03; 8.09; 3.09
(b) Not Applicable
(c)(1) 11.01
(c)(2) 11.01
(c)(3) Not Applicable
(d) Not Applicable
(e) 11.01
(f) Not Applicable
315(a) 6.01
(b) 6.05
(c) 6.01
(d) 6.01
(e) 6.01
316(a) (last sentence) 1.04
(a)(1)(A) 7.17
(a)(1)(B) 5.04
317(a)(1) 5.03
(a)(2) 6.05
(b) Not Applicable
318(a) 11.07
(c) 11.07
</TABLE>
v
<PAGE> 7
INDENTURE, dated as of November 1, 1999 (this "Indenture"),
between ADVANTA MORTGAGE LOAN TRUST 1999-4, a Delaware business trust, as issuer
(the "Trust"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking
association, as indenture trustee (the "Indenture Trustee").
PREAMBLE
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Noteholders of the Advanta Mortgage
Loan Asset-Backed Notes, Series 1999-4 (the "Notes").
As security for the payment and performance by the Trust of its
obligations under this Indenture and the Notes, the Trust has agreed to pledge
the Trust Estate (as defined below) to the Indenture Trustee for the benefit of
the Noteholders and the Note Insurer.
Ambac Assurance Corporation (the "Note Insurer") has issued and
delivered the financial guaranty insurance policy (the "Policy") pursuant to
which the Note Insurer guarantees the Insured Amount with respect to the Notes.
The Note Insurer has executed and delivered the Insurance and
Indemnity Agreement, dated as of November 17, 1999 (as amended from time to
time, the "Insurance Agreement"), among the Note Insurer, Advanta Holding Trust
1999-4, Advanta Mortgage Corp. USA, as master servicer (the "Master Servicer"),
the Trust, Advanta Conduit Receivables, Inc., as sponsor (the "Sponsor"), and
the Indenture Trustee.
GRANTING CLAUSE
The Trust hereby Grants to the Indenture Trustee on the Closing
Date, for the benefit of the Noteholders and the Note Insurer, all of the
Trust's right, title and interest in and to 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 Noteholders, including
all proceeds thereof, including, without limitation, (i) the Mortgage Loans,
(ii) such amounts in all Accounts including principal collected and interest
accrued in respect of the Mortgage Loans on or after the Initial Cut-Off Date,
each Subsequent Cut-Off Date and each Replacement Cut-Off Date, as applicable,
including Eligible Investments, as may from time to time may be held in such
Accounts (except (x) any premium recapture, (y) interest accrued prior to the
Initial Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off
Date, as applicable, and (z) net investment earnings on the Principal and
Interest Account, the Capitalized Interest Account and the Note Account), (iii)
any Property, the ownership of which has been effected on behalf of the Trust as
a result of foreclosure or acceptance by the Master Servicer of a deed in lieu
of foreclosure and that has not been withdrawn from the Trust, (iv) any Mortgage
Insurance Policies relating to the Mortgage Loans and any rights of the Sponsor
or any Originator under any Mortgage Insurance Policies, (v) Net Liquidation
Proceeds with respect to any Liquidated Mortgage Loan, (vi) the rights of the
Indenture Trustee under the Policy, and (vii) the rights of the Sponsor against
any Originator pursuant to the Mortgage Loan Transfer Agreement (the foregoing,
collectively, the "Trust Estate").
<PAGE> 8
The foregoing Grant is made in trust to the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer. The Indenture Trustee
hereby acknowledges and accepts such Grant 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 1.01 Definitions. Capitalized terms used herein shall
have the meanings assigned to them in Annex A to the Sale and Servicing
Agreement, dated as of November 1, 1999, among the Trust, the Sponsor, Advanta
Mortgage Corp. USA, as master servicer (the "Master Servicer"), and the
Indenture Trustee.
Section 1.02 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 Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Trust.
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 1.03 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) 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;
(c) "or" is not exclusive;
(d) "including" means including without limitation; and
2
<PAGE> 9
(e) words in the singular include the plural and words in the
plural include the singular.
Section 1.04 Action by or Consent of Noteholders. Whenever any
provision of this Indenture refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to the Noteholders of
record as of the Record Date immediately preceding the date on which such action
is to be taken, or consent given, by Noteholders. Solely for the purposes of any
action to be taken, or consented to, by Noteholders, any Note registered in the
name of the Sponsor 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 Notes which the Owner Trustee or the Indenture
Trustee, respectively, knows to be so owned shall be so disregarded.
Section 1.05 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 NOTES
Section 2.01 Form. The Notes, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A hereto, 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 Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
Each Note shall be dated the date of its authentication. The
terms of the Note set forth in Exhibit A are part of the terms of this
Indenture.
Section 2.02 Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Trust by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be original or
facsimile.
Notes bearing the original or facsimile signature of individuals
who were at any time Authorized Officers of the Trust shall bind the Trust,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee, upon receipt from the Trust of a written
Authentication Order in the form of Exhibit B hereto, shall authenticate and
deliver Notes for original issue in an
3
<PAGE> 10
aggregate principal amount equal to the Original Note Principal Balance. The
Notes outstanding at any time may not exceed such amounts except as provided in
Section 2.06.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears attached to such
Note a certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Subject to Section 2.11, the Notes shall
be Book-Entry Notes.
Section 2.03 Registration; Registration of Transfer and Exchange.
The Trust shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Trust shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee, as an agent for the Trust, shall be "Note
Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. Upon any resignation of any Note Registrar, the Trust 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
Trust as Note Registrar, the Trust 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 Noteholders and the principal
amounts and number of such Notes.
Upon surrender for registration or transfer of any Note at the
office or agency of the Trust to be maintained as provided in Section 3.02, and
if the requirements of Section 8-401(1) of the UCC are met, the Trust shall
execute or cause the Indenture Trustee to authenticate one or more new Notes, in
any authorized denominations, of the same class and a like aggregate principal
amount. A Noteholder may also obtain from the Indenture Trustee, in the name of
the designated transferee or transferees one or more new 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 Trust with Section 8-401 of the UCC.
At the option of the Noteholder, Notes may be exchanged for other
Notes in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, and if the
requirements of Section 8-401(1) of the UCC are met, the Trust shall execute and
upon its request the Indenture Trustee shall authenticate the Notes which the
Noteholder making the exchange is entitled to receive. Such requirements shall
not be
4
<PAGE> 11
deemed to create a duty in the Indenture Trustee to monitor the compliance by
the Trust with Section 8-401 of the UCC.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Trust, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every 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
Noteholder or such Noteholder'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 Noteholder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment from a Noteholder 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 Notes, other than exchanges pursuant to Section 2.04 or
9.06 not involving any transfer.
The Note Registrar shall not register the transfer of any Note
(other than the transfer of 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 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 2.04 Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Note Registrar, or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Trust, the Sponsor, the Indenture
Trustee and the Note Insurer such security or indemnity as may be required by it
to hold the Trust, the Sponsor, the Indenture Trustee and the Note Insurer
harmless, then, in the absence of notice to the Trust, 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 Trust
shall execute and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note (such requirement shall not be deemed to create
a duty in the Indenture Trustee to monitor the compliance by the Trust with
Section 8-405); provided, however, that if any such destroyed, lost or stolen
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 Trust may,
instead of issuing a replacement Note, direct the Indenture Trustee, in writing,
to pay such destroyed, lost or stolen Note when so due or payable or upon the
Redemption Date without surrender thereof.
5
<PAGE> 12
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 Trust,
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 Trust or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section
2.04, the Trust may require the payment by the Noteholder 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 2.04 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Trust, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 2.04 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.05 Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Trust, the Indenture Trustee and the
Note Insurer and any agent of the Trust, the Indenture Trustee and the Note
Insurer shall treat the Person in whose name any Note is registered (as of the
related Record Date) as the owner of such Note for the purpose of receiving
payments of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Trust, the Note
Insurer, the Indenture Trustee nor any agent of the Trust, the Note Insurer or
the Indenture Trustee shall be affected by notice to the contrary.
Section 2.06 Payment of Principal and Interest; Defaulted
Interest. (a) The 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 payable on any Note which is punctually
paid or duly provided for by the Trust on the applicable Payment Date shall be
paid to the Person in whose name such Note (or one or more Predecessor 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;
provided, that, unless Definitive Notes have been issued pursuant to Section
2.11, with respect to 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 provided, further, that 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 10.01(a)) which
6
<PAGE> 13
shall be payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.
(b) Upon written notice from the Trust, 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 Trust
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 at least
five (5) Business Days prior to such final Payment Date and shall specify that
such final installment will be payable only upon presentation and surrender of
such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
(c) If the Trust defaults in a payment of interest on the Notes,
the Trust shall pay interest on such defaulted interest at the Note Formula Rate
to the extent lawful.
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the 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 any Notes under the Policy or otherwise which has not been reimbursed
to it, deliver such surrendered Notes to the Note Insurer to the extent not
previously cancelled or destroyed.
Section 2.07 Cancellation. Subject to Section 2.06(d), all 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 cancelled by the Indenture Trustee.
Subject to Section 2.06(d), the Trust may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Trust may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly cancelled by the Indenture Trustee. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section 2.07, except as expressly permitted by this
Indenture. Subject to Section 2.06(d), all cancelled 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 Trust shall direct by an
Issuer Order that they be destroyed or returned to it; provided, that such
Issuer Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
Section 2.08 Release of Trust Estate. 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 Note
Account any funds then on deposit in any other Account. The Indenture Trustee
shall release property from the lien created by this Indenture pursuant to this
Section 2.08 only upon receipt by it of an Issuer Order 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 11.01 or as provided in
Section 4.14 of the Sale and Servicing Agreement.
7
<PAGE> 14
Section 2.09 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company or its custodian, the
initial Clearing Agency, by, or on behalf of, the Trust. Such 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 Notes
have been issued to Note Owners pursuant to Section 2.11:
(a) the provisions of this Section 2.09 shall be in full force
and effect;
(b) 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
Notes and the giving of instructions or directions hereunder) as the
sole Noteholder, and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section 2.09
conflict with any other provisions of this Indenture, the provisions of
this Section 2.09 shall control;
(d) 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 Definitive 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 Notes to such
Clearing Agency Participants;
(e) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders evidencing a
specified percentage of the Outstanding Note Principal Balance of the
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
Notes and has delivered such instructions to the Indenture Trustee; and
(f) Note Owners may receive copies of any reports sent to the
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 Definitive 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 Noteholders to the Clearing
Agency, and shall have no obligation to the Note Owners.
Section 2.11 Definitive Notes. If (i) the Master Servicer advises
the Indenture Trustee in writing that the Clearing Agency is no longer willing
or able to properly discharge its
8
<PAGE> 15
responsibilities with respect to the Notes, and the Master Servicer is unable to
locate a qualified successor, (ii) the Master Servicer 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 an Event of
Default, if Note Owners representing beneficial interests aggregating at least a
majority of the Outstanding Note Principal Balance of the 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 Note or Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Trust shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Trust, 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 Definitive Notes as Noteholders.
Section 2.12 Calculation of LIBOR. (a) On each Interest
Determination Date, the Indenture Trustee shall determine LIBOR for the next
Interest Accrual Period as follows:
first: on the basis of offered rates for one-month United
States dollar deposits, as this rate appears on Telerate Screen Page
3750, as of 11:00 a.m. London time;
second: if the rate does not appear on Telerate Screen Page 3750
as of 11:00 a.m. London time, LIBOR shall be the arithmetic mean of the
offered quotations of two or more Reference Banks, rounded to the
nearest whole multiple of 1/16%; and
third: if on the Interest Determination Date fewer than two
Reference Banks provide offered quotations, LIBOR for the Interest
Accrual Period shall be the higher of (x) LIBOR as determined on the
previous Interest Determination Date and (y) the Reserve Interest Rate.
(b) The establishment of LIBOR on each Interest Determination
Date by the Indenture Trustee and the Indenture Trustee's calculation of the
rate of interest applicable to the Notes for the related Interest Accrual Period
will, in the absence of manifest error, be final and binding.
ARTICLE III
COVENANTS
Section 3.01 Payment of Principal and Interest. The Trust will
duly and punctually pay the principal of and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Amounts properly withheld under
the Code or any applicable state tax law by any Person from a payment to any
Noteholder of interest and/or principal shall be
9
<PAGE> 16
considered as having been paid by the Trust to such Noteholder for all purposes
of this Indenture.
Section 3.02 Maintenance of Office or Agency. The Trust will
maintain an office or agency where Notes may be surrendered for registration,
transfer or exchange of the Notes, and where notices and demands to or upon the
Trust in respect of the Notes and this Indenture may be served. The Trust hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. The Trust 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 Trust shall fail to maintain any such office or agency or
shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office and the Trust hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
Section 3.03 Money for Payments to be Held in Trust. The Trust
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 3.03, that such Note Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(b) give the Indenture Trustee written notice of any default by
the Trust (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect
to the Notes;
(c) 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;
(d) 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
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
(e) comply with all requirements of the Code and any applicable
state tax laws with respect to the withholding from any payments made by
it on any Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection
therewith.
The Trust 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
10
<PAGE> 17
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 (2) years after such amount has become due and payable shall be
discharged from such trust and be paid to the Trust; and the related Noteholder
shall thereafter, as an unsecured general creditor, look only to the Trust for
payment thereof (but only to the extent of the amounts so paid to the Trust),
and all liability of the Indenture Trustee or such Note Paying Agent with
respect to such trust money shall thereupon cease.
Section 3.04 Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Trust 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 Trust hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Trust 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 Notes, and each other
instrument or agreement included in the Trust Estate.
Section 3.05 Protection of Trust Estate. The Trust intends the
security interest granted pursuant to this Indenture in favor of the Indenture
Trustee to be prior to all other liens in respect of the Trust Estate, and the
Trust shall take all actions necessary to obtain and maintain, in favor of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, a
first lien on and a first priority, perfected security interest in the Trust
Estate. The Trust 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:
(a) Grant more effectively all or any portion of the Trust
Estate;
(b) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Trustee for the benefit of
the Noteholders and the Note Insurer created by this Indenture or carry
out more effectively the purposes hereof;
(c) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(d) enforce any of the Trust Estate;
(e) 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
(f) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
11
<PAGE> 18
The Trust 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
3.05; 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
Trust with respect to its duties under this Section 3.05 or the adequacy of any
financing statement, continuation statement or other instrument prepared by the
Trust.
Section 3.06 Opinions as to Trust Estate. (a) On the Closing
Date, the Trust shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel addressed to each 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 Noteholders and the Note Insurer,
created by this Indenture.
(b) Within 90 days after the beginning of each calendar year,
beginning with the calendar year 2001, the Trust shall furnish to the Indenture
Trustee and the Note Insurer, an Opinion of Counsel addressed to each 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 3.07 Performance of Obligations; Servicing of Mortgage
Loans. (a) The Trust 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 other Operative Documents or such other instrument or agreement.
(b) The Trust 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 Trust shall be deemed to be
action taken by the Trust. Initially, the Trust has contracted with the Master
Servicer to assist the Trust in performing its duties under this Indenture.
(c) The Trust will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Operative
Documents and in the instruments
12
<PAGE> 19
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 Sale and Servicing Agreement or any other
Operative Document in accordance with and within the time periods provided for
herein and therein. Except as otherwise expressly provided therein, the Trust
shall not waive, amend, modify, supplement or terminate any Operative Document
or any provision thereof without the prior written consent of the Note Insurer,
the Noteholders representing at least a majority of the Outstanding Note
Principal Balance of the Notes or the Indenture Trustee (with the prior written
consent of the Note Insurer).
(d) If an Authorized Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicing Termination under
the Sale and Servicing Agreement or of an Insurance Agreement Event of Servicing
Termination, the Trust shall promptly notify the Indenture Trustee, the Note
Insurer and the Rating Agencies thereof in accordance with Section 11.04, and
shall specify in such notice the action, if any, the Trust is taking in respect
of such default. If an Event of Servicing Termination or an Insurance Agreement
Event of Servicing Termination shall arise from the failure of the Master
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement or the Insurance Agreement with respect to the Mortgage
Loans, the Trust shall take all reasonable steps available to it to remedy (or
cause to be remedied) such failure.
(e) The Trust 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 written consent of the Note
Insurer or (y) the Note Insurer has consented in writing to such waiver but the
effect thereof would adversely affect the Noteholders of the Notes.
Section 3.08 Negative Covenants. So long as any Notes are
Outstanding, the Trust shall not:
(a) except as expressly permitted by this Indenture or the other
Operative Documents, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Trust, including those included
in the Trust Estate, without the prior written consent of the Note
Insurer (which consent may not be unreasonably withheld); provided, that
if a Note Insurer Default has occurred and is continuing, the
Noteholders representing at least 51% of the Outstanding Note Principal
Balance of the Notes may direct the Indenture Trustee to sell or dispose
of the Trust Estate in accordance with Section 5.03;
(b) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder or the Note Insurer
by reason of the payment of the taxes levied or assessed upon any part
of the Trust Estate; or
(c) (i) 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
13
<PAGE> 20
released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (ii)
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), (iii) 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 (iv) 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 3.09 Annual Statement as to Compliance. The Trust will
deliver to the Indenture Trustee and the Note Insurer, within 90 days after the
end of each fiscal year of the Trust (commencing with the fiscal year ended
December 31, 2000), 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
(a) a review of the activities of the Trust during such year and
of performance under this Indenture has been made under such Authorized
Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on
such review, the Trust 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 Trust Shall Not Consolidate or Transfer Assets. (a)
The Trust shall not consolidate or merge with or into any other Person.
(b) Except as otherwise provided in the Sale and Servicing
Agreement, and unless the Note Insurer has otherwise consented in writing, the
Trust 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 Trust 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 other
Operative Documents and activities incidental thereto.
Section 3.12 No Borrowing. The Trust shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the 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 except that
the Trust shall not incur any Indebtedness that would cause it, or any portion
thereof, to be treated as a "taxable mortgage pool" under Section 7701(i) of the
Code. The proceeds of the
14
<PAGE> 21
Notes shall be used exclusively to fund the Trust's purchase of the Mortgage
Loans and the other assets specified in the Sale and Servicing Agreement, to
fund the Pre-Funding Account and the Capitalized Interest Account and to pay the
Trust's organizational, transactional and start-up expenses.
Section 3.13 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Trust 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 Trust 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 Trust 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 Trust to perform its obligations under the Notes, this Indenture or any
other Operative Document.
Section 3.16 Restricted Payments. The Trust 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 Trust
or otherwise with respect to any ownership or equity interest or security in or
of the Trust 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 Trust 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 Sale and Servicing Agreement, this Indenture, or Trust
Agreement. The Trust will not, directly or indirectly, make payments to or
distributions from the Note Account except in accordance with this Indenture and
the other 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 Trust 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 Servicing Termination under the Sale and Servicing
Agreement.
Section 3.18 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer, the Trust 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.
15
<PAGE> 22
Section 3.19 Amendments of Sale and Servicing Agreement and Trust
Agreement. The Trust shall not agree to any amendment to Section 9.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Indenture Trustee, the Note
Insurer or the Noteholders 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
Trust will treat the Notes as indebtedness and hereby instructs the Indenture
Trustee to treat the Notes as indebtedness for federal and state tax reporting
purposes.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture. Upon
receipt by the Indenture Trustee of all amounts to satisfy all payment
obligations with respect to the Notes, this Indenture shall cease to be of
further effect with respect to the Notes except as to (i) rights of registration
of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or
stolen Notes, (iii) rights of Noteholders to receive payments of principal
thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12,
3.13 and 3.20, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi)
the rights of Noteholders and the Note Insurer 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 Trust, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when:
(a) either
(i) all Notes theretofore authenticated and delivered
(other than (x) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.04
and (y) Notes for which payment money has theretofore been
deposited in trust or segregated and held in trust by the Trust
and thereafter repaid to the Trust or discharged from such
trust, as provided in Section 3.03) have been delivered to the
Indenture Trustee for cancellation and the 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
(ii) all Notes not theretofore delivered to the
Indenture Trustee for cancellation:
(A) have become due and payable,
(B) will become due and payable at their Final
Scheduled Payment Date within one (1) year, or
16
<PAGE> 23
(C) are to be called for redemption within one
(1) 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 Trust,
and in the case of clauses (A), (B) or (C) above, the Trust, 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 Notes not theretofore delivered
to the Indenture Trustee for cancellation when due at their Final
Scheduled Payment Date or Redemption Date (if the Notes shall
have been called for redemption pursuant to Section 10.01(a) or
(b)), as the case may be;
(b) the Trust has paid or caused to be paid all amounts due the
Note Insurer and the Indenture Trustee; and
(c) the Trust 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 11.01(a) and each
stating that all conditions precedent herein provided relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding anything herein to the contrary, in the event
that the principal and/or interest due on the Notes or any other amounts payable
by the Note Insurer pursuant to the terms of the Policy shall be paid by the
Note Insurer pursuant to the Policy, the Notes shall remain Outstanding for all
purposes, not be defeased or otherwise satisfied and not be considered paid by
the Trust, and the assignment and pledge of the Trust Estate and all covenants,
agreements and other obligations of the Trust to the Noteholders shall continue
to exist and shall run to the benefit of the Note Insurer, and the Note Insurer
shall be subrogated to the rights of such Noteholders.
Section 4.02 Application of Trust Money. All monies deposited
with the Indenture Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Noteholders of the particular Notes
for the payment or redemption of which such monies have been deposited in the
Note Account by the Indenture Trustee.
Section 4.03 Repayment of Monies Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the 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
Notes shall immediately be paid to the Indenture Trustee to be held and applied
according to Section 3.03 and thereupon such Note Paying Agent shall be released
from all further liability with respect to such monies.
17
<PAGE> 24
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default. (a) The following occurrences
shall constitute "Events of Default":
(i) a default in the payment of the Interest Distribution Amount
on any Payment Date and the continuance of such default for a period of
five (5) days;
(ii) a default in the payment in full of the Outstanding Note
Principal Balance of the Notes on the Final Scheduled Payment Date;
(iii) failure on the part of the Trust to pay interest at the
Note Formula Capped Rate on any Payment Date;
(iv) failure on the part of the Trust to perform in any material
respect any covenant or agreement under the Indenture (other than a
covenant covered by clause (i) and (ii) above) or the breach of a
representation or warranty of the Trust, which continues for a period of
thirty (30) days after notice thereof is given;
(v) the Trust 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; or
(vi) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Trust, in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust, or of any
substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust and the continuance of any such
decree or order unstayed and in effect for period of 60 consecutive
days.
(b) If an Event of Default as described in subsection (a) above
shall have occurred and be continuing, with the prior written consent of the
Note Insurer, the Indenture Trustee may, and at the direction of the Note
Insurer or of Noteholders representing not less than 51% of the Outstanding Note
Principal Balance of the Notes (with the prior written consent of the Note
Insurer), shall, declare the Notes to be immediately due and payable by a notice
in writing to the Trust (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration such Notes, in an amount equal to the Outstanding
Note Principal Balance of the Notes, together with accrued and unpaid interest
thereon to the date of such acceleration, shall become immediately due and
payable.
(c) At any time after such a declaration of acceleration of
maturity of the Notes has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee, the Note Insurer or
the Noteholders representing at least 51% of the Outstanding Note Principal
Balance of the Notes, with the prior written consent of the
18
<PAGE> 25
Note Insurer, by written notice to the Trust and the Indenture Trustee, may
direct the Indenture Trustee to rescind and annul such declaration and its
consequences if:
(i) the Trust has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(A) all payments of principal of, and interest on, all
Notes and all other amounts that would then be due hereunder or
upon such 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
(ii) all Events of Default with respect to the Notes, other than
the nonpayment of the principal of the 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 5.02 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee. Subject to the following sentence, if an Event of Default
with respect the Notes occurs and is continuing, the Indenture Trustee may, with
the prior written consent of the Note Insurer and shall, at the written
direction of the Note Insurer, proceed to protect and enforce its rights and the
rights of the 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
Noteholders and the Note Insurer or any Noteholder against the Trust 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 Trust, other than the Trust Estate.
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 Notes may
be sought or obtained by the Indenture Trustee or any Noteholder against the
Trust. 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 5.03 Remedies for Events of Default. If an Event of
Default shall have occurred and be continuing and the Notes have been declared
due and payable and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee, at the written direction of the
Note Insurer shall, for the benefit of the Noteholders and the Note Insurer, do
one or more of the following:
19
<PAGE> 26
(a) institute proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Trust
moneys adjudged due;
(b) 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;
(c) institute proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(d) 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
Noteholders and the Note Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all Monthly
Remittance Amounts pursuant to Section 5.06.
Section 5.04 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 Trust upon any of the Notes or the property of the Trust, the Indenture
Trustee (irrespective of (i) whether the Notes shall then be due and payable as
therein expressed or by declaration or otherwise and (ii) whether the Indenture
Trustee shall have made any demand on the Trust 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:
(a) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the 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 Noteholders and
the Note Insurer allowed in such proceeding, and
(b) (i) 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 Noteholder and the Note Insurer to make such payments to the
Indenture Trustee and (ii) in the event that the Indenture Trustee shall
consent to the making of such payments directly to the 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
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any
Noteholder, or the Note Insurer, or to authorize the Indenture Trustee to vote
in respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding. Any plan of reorganization, arrangement, adjustment or composition
relative to the Trust or any other obligor
20
<PAGE> 27
upon any of the Notes or the property of the Trust or of such obligor or their
creditors and affecting the 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 Noteholders of the Notes
regarding such plan, reorganization, arrangement, adjustment or composition.
Section 5.05 Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or any
of the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the 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 Noteholders and the Note Insurer in respect of which
such judgment has been recovered after payment of amounts required to be paid
pursuant to Section 5.06(a).
Section 5.06 Application of Money Collected. If any Notes have
been declared due and payable following an Event of Default and such declaration
and its consequences have not been rescinded or annulled, any money collected by
the Indenture Trustee with respect to the Notes pursuant to this Article V or
otherwise and any other monies that may then be held or thereafter received by
the Indenture Trustee as security for the 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 Notes, upon presentation and surrender thereof:
(a) to the Indenture Trustee and the Owner Trustee, any unpaid
Indenture Trustee's Fees and unpaid Owner Trustee Fee, respectively,
then due and any other amounts payable and due to the Indenture Trustee
and the Owner Trustee under this Indenture and the Trust Agreement,
including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V;
(b) to the Note Insurer, any unpaid Premium Amount, then due and
payable pursuant to the Insurance Agreement;
(c) to the Master Servicer, any amounts required to pay the
Master Servicer for any unpaid Servicing Fees then due and any other
amounts payable and due to the Master Servicer;
(d) to the payment of the Interest Distribution Amount then due
and unpaid on the Notes through the day preceding the date upon which
such payment is made;
(e) to the payment of the Outstanding Note Principal Balance of
the Notes;
(f) to the payment of the Note Insurer, all amounts due pursuant
to the Insurance Agreement;
(g) to the Noteholders, the Available Funds Cap Carry-Forward
Amount;
21
<PAGE> 28
(h) to the Master Servicer, any unreimbursed Servicing Advances,
including Nonrecoverable Advances; and
(i) to the Certificateholders, any amount remaining on deposit
in the Note Account.
Section 5.07 Limitation of Suits. No Noteholder shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) the Noteholders of not less than 25% of the Outstanding Note
Principal Balance of the Notes have made written request to the
Indenture Trustee to institute such proceeding in respect of such Event
of Default in its own name as Indenture Trustee hereunder;
(b) such Noteholders 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;
(c) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
proceedings;
(d) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the
Noteholders of a majority of the Outstanding Note Principal Balance of
the Notes; and
(e) a Note Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Noteholders 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 Noteholders or to obtain or to seek to obtain priority or
preference over any other Noteholders 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 Noteholders, each
representing less than a majority of the Outstanding Note Principal Balance of
the 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 5.08 Unconditional Rights of Noteholders to Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
a Noteholder 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 Noteholder.
22
<PAGE> 29
Section 5.09 Restoration of Rights and Remedies. If the
Controlling Party or any Noteholder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, then and in every such case the Trust, the Note
Insurer, the Indenture Trustee and the Noteholders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Note Insurer and the Noteholders shall continue as though
no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Controlling Party or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not a Waiver. No delay or omission
of the Indenture Trustee, the Controlling Party or any Noteholder 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 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 Noteholders, as the case may be.
Section 5.12 Control by Noteholders. If the Indenture Trustee is
the Controlling Party, the Noteholders of a majority of the Outstanding Note
Principal Balance of the Notes 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 5.01 with respect to the Notes or exercising any
trust or power conferred on the Indenture Trustee; provided, that
(a) such direction shall not be in conflict with any rule of law
or with this Indenture;
(b) 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 6.01, 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
Noteholders not consenting to such action.
Section 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Noteholder by such Noteholder'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
23
<PAGE> 30
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.13 shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) any suit instituted by the Note
Insurer, any Noteholder, or group of Noteholders, with the prior written consent
of the Note Insurer, in each case holding in the aggregate more than 10% of the
Outstanding Note Principal Balance of the Notes or (c) any suit instituted by
any Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
Section 5.14 Waiver of Stay or Extension Laws. The Trust
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 Trust (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 Notes. The Indenture Trustee's right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee, the Note Insurer or the Noteholders
shall be impaired by the recovery of any judgment by the Indenture Trustee or
the Note Insurer against the Trust 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
Trust.
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 Trust
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 Trust 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 Trust 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 Controlling Party and if an
Event of Default has occurred and is continuing, the Indenture Trustee may, and,
at the written direction of the Noteholders of at least 51% of the Outstanding
Note Principal Balance of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Trust 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 Trust thereunder and to give any
24
<PAGE> 31
consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement, and any right of the Trust to take such action
shall be suspended.
Section 5.17 Subrogation. The Indenture Trustee shall receive as
attorney-in-fact of each Noteholder any Insured Payment from the Note Insurer
pursuant to the Policy. Any and all Insured Payments disbursed by the Indenture
Trustee from claims made under the 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 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 the 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 the 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 11.21, the Note Insurer may exercise any option,
vote, right, power or the like with respect to the Notes to the extent that it
has made payment pursuant to the 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 covered by the Policy 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 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
Noteholders by mail that, in the event that any Noteholder's payment is so
recoverable, such Noteholder will be entitled to payment pursuant to the terms
of the 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 Notes, if any, which have been made by
the Indenture Trustee and subsequently recovered from Noteholders, and the dates
on which such payments were made. Pursuant to the terms of the Policy, the Note
Insurer will make such payment on behalf of the Noteholder to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Final
Order (as defined in the Policy) and not to the Indenture Trustee or any
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 Notes.
Each Noteholder, by its purchase of 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 5.17, the Note Insurer shall be subrogated to, and each Noteholder and
the Indenture Trustee hereby delegate and assign, to the fullest extent
permitted by law, the rights of the Indenture Trustee and each Noteholder in the
conduct of any proceeding with respect to a Preference Claim, including,
25
<PAGE> 32
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
Noteholders representing at least 51% of the Outstanding Note Principal Balance
of the Notes on the Record Date may on behalf of the Noteholders of all of the
Notes, and with the consent of the Note Insurer, waive any past default
hereunder with respect to the Notes and its consequences, except a default in
the payment of principal or any installment of interest on any 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 6.01 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 Sale and Servicing Agreement.
(b) Except during the continuance of an Event of Default:
(i) The Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the 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 (c) does not limit the effect of paragraph
(b) of this Section 6.01;
26
<PAGE> 33
(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 5.12; 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
5.01(a) of the 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 Noteholders aggregating not less than
51% of the Outstanding Note Principal Balance of the Notes.
(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 Trust.
(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 6.01 and to the provisions of
the TIA.
(g) The Indenture Trustee shall, upon two (2) 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 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 Notes, with the Indenture
Trustee's officers and employees responsible for carrying out the Indenture
Trustee's duties with respect to the Notes.
(h) The Indenture Trustee shall, and hereby agrees that it will,
perform all of the obligations and duties required of it under the Sale and
Servicing Agreement.
(i) The Indenture Trustee shall, and hereby agrees that it will,
hold the Policy in trust, and will hold any proceeds of any claim on the 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.
27
<PAGE> 34
Section 6.02 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 selected by it with due care with respect to legal
matters relating to this Indenture and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture, at the request, order or direction of any of the Noteholders
or the Controlling Party, pursuant to the provisions of this Indenture, unless
such Noteholders or the Controlling 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 an Event of Default, Insurance
Agreement Event of Servicing Termination or Event of Servicing Termination (that
has not been cured or waived), exercise the rights and powers vested in it by
this Indenture or the 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 Noteholders evidencing not less than 25% of the
Outstanding Note Principal Balance of the Notes; provided, however, that if the
payment within a reasonable time to the Indenture Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Indenture Trustee, not reasonably assured to the
Indenture Trustee by the security afforded to it by the terms of this Indenture
or the 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
28
<PAGE> 35
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 6.03 Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Trust 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 6.04 Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Trust Estate or the Notes, it shall
not be accountable for the Trust's use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Trust in the Indenture or in
any document issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
Section 6.05 Notice of Defaults. If an Event of Default, an Event
of Servicing Termination or any other default 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 ten (10) days after such knowledge or notice occurs. Except in the case
of a default in payment of principal of or interest on any 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 Noteholders.
Section 6.06 Reports by Indenture Trustee to Noteholders. Upon
written request, the Note Paying Agent or the Master Servicer shall on behalf of
the Trust deliver to each Noteholder such information as may be reasonably
required to enable such Noteholder to prepare its Federal and state income tax
returns required by law.
Section 6.07 Compensation and Indemnity. Pursuant to Section
8.06(b)(i) and subject to Section 6.18 herein, the Trust shall, or shall cause
the Master Servicer to, pay to the Indenture Trustee, on each Payment Date,
reasonable compensation for its services rendered hereunder. The Indenture
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Pursuant to Section 8.06(b)(xiii) herein, the Trust
shall cause the Master Servicer to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it in accordance with any
provision of this Indenture (including the reasonable compensation and expenses
and disbursements of any of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct. The Indenture Trustee and any director, officer, employee or agent
of the Indenture Trustee shall be indemnified by the Master Servicer pursuant to
Section
29
<PAGE> 36
4.05(b) of the Sale and Servicing Agreement and held harmless against any loss,
liability, or expense incurred or paid to third parties in connection with the
acceptance or administration of its trusts hereunder or the Notes, other than
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of the Indenture Trustee's duties
hereunder or by reason of reckless disregard of the Indenture Trustee's
obligations and duties hereunder.
Section 6.08 Replacement of Indenture Trustee. The Indenture
Trustee may resign at any time by so notifying the Trust and the Note Insurer by
written notice. Upon receiving such notice of resignation, the Sponsor, on
behalf of the Trust, 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. The Trust may (with the prior written consent of the Note Insurer) and,
at the request of the Note Insurer, shall, remove the Indenture Trustee, if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under federal
or state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the Indenture
Trustee or for any substantial part of the Indenture Trustee's property,
or ordering the winding-up or liquidation of the Indenture Trustee's
affairs;
(c) 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;
(d) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, 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
(e) the Indenture Trustee otherwise becomes incapable or is
prohibited by law from 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
30
<PAGE> 37
as the retiring Indenture Trustee), the Trust shall promptly appoint a successor
Indenture Trustee acceptable to the Note Insurer. If the Trust 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 Trust. 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 Trust or the Noteholders of a majority in Outstanding
Note Principal Balance of the 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 6.08 shall not become effective until acceptance of appointment
by the successor Indenture Trustee pursuant to this Section 6.08.
Notwithstanding the replacement of the Indenture Trustee pursuant
to this Section, the Trust's and the Master Servicer's indemnity obligations
under Section 6.07 shall continue for the benefit of the retiring Indenture
Trustee and the Master Servicer shall pay any amounts owing to the Indenture
Trustee.
Section 6.09 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 Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
31
<PAGE> 38
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-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust (including, for purposes of this Section 6.10, all or any
part of the Trust Estate), and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders and the Note Insurer, such title
to the Trust, or any part hereof, and, subject to the other provisions of this
Section 6.10, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.08. The Indenture Trustee shall remain primarily liable for the
actions of any co-trustee.
(b) Every 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 Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture 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
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 trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, including acts or
omissions of predecessor or successor trustees; and
(iii) the Indenture Trustee and the Master Servicer acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee except that following the occurrence of an Event
of Servicing Termination, the Indenture Trustee acting alone may accept
the resignation of or remove any separate trustee or co-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 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 Indenture and
the conditions of this Article VI. 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
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
32
<PAGE> 39
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-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 Indenture on its behalf and in its name. If any separate trustee
or co-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 trustee.
Section 6.11 Eligibility: Disqualification. There shall at all
times be a trustee hereunder which shall be a corporation or association
organized and doing business under the laws of the United States of America or
of any State authorized under such laws to exercise corporate trust powers,
subject to supervision or examination by the United States of America or any
such State having a rating or ratings acceptable to the Note Insurer or, in the
event of an Note Insurer Default, the Sponsor and having (x) short-term,
unsecured debt rated at least P-1 by Moody's (or such lower rating as may be
acceptable to Moody's and the Note Insurer) and (y) a short-term deposit rating
of at least A-1 from S&P (or such lower rating as may be acceptable to S&P and
the Note Insurer). 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 Trust 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 Trust. 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 Noteholders and the Note Insurer hereby appoints
Bankers Trust Company of California, N.A. as the Indenture Trustee with respect
to the Trust Estate, 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 Noteholders and the Note Insurer, 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 Noteholder
and the Note Insurer hereby authorizes the Indenture Trustee to take such action
on its behalf, and to exercise such rights, remedies, powers and privileges
hereunder, as the Controlling 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 Controlling Party delivered
pursuant to this Indenture promptly following receipt of such written
33
<PAGE> 40
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 Controlling Party in accordance with this Indenture.
The Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction of the Controlling Party and with the
indemnification described in Section 6.07. The Indenture Trustee shall, and
hereby agrees that it will, perform all of the duties and obligations required
of it under the 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 Trust 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 Trust and to each
Noteholder and the Note Insurer 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
34
<PAGE> 41
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 Controlling Party. The Indenture
Trustee shall comply with notices and instructions given by the Trust or the
Noteholders only if accompanied by the written consent of the Controlling Party.
Section 6.20 Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the 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 and the Note
Insurer in respect of which such judgment has been recovered.
Section 6.21 Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Master Servicer or the Sponsor hereunder or
under the other Operative Documents shall occur and be continuing, the Indenture
Trustee, if the Controlling Party has given its prior written consent, may
proceed to protect and enforce its rights and the rights of the Noteholders and
the Note Insurer under this Indenture 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 Indenture or in aid of the execution of any power
granted in this Indenture or for the enforcement of any other legal, equitable
or other remedy, as the Indenture Trustee, being advised by counsel selected by
it with due care, shall deem most effectual to protect and enforce any of the
rights of the Indenture Trustee, the Note Insurer 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:
35
<PAGE> 42
(a) The Indenture Trustee is the holder of the Mortgage Loans
only as trustee on behalf of the holders of the 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 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 against the Trust.
(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 Notes.
(e) The Indenture Trustee will cooperate with and assist the
Master Servicer, the Sponsor, the Note Insurer or the Noteholders 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 Trust 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 and such amounts shall
not be a responsibility of the Trust.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01 Trust to Furnish to Indenture Trustee Names and
Addresses of Noteholders. The Trust will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five (5) 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 Noteholders 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
Trust of any such request, a list of similar form and content as of a date not
more than ten (10) days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Note Registrar, no such
list shall be required to be furnished. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Trust shall furnish to the Note
Insurer or the Trust in writing upon their written request and at such other
times as the Note Insurer or the Trust may request a copy of the list.
36
<PAGE> 43
Section 7.02 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 Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Trust, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
Section 7.03 Reports by Trust. (a) The Trust shall:
(i) file with the Indenture Trustee, within fifteen (15) days
after the Trust 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 Trust 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 Trust 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 Trust pursuant to clauses (i) and (ii) of
this Section 7.03(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Trust otherwise determines, the fiscal year of the
Trust shall end on December 31 of each year.
Section 7.04 Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each December 31, beginning with December
31, 2000, 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 Notes are listed. The Trust shall notify the
Indenture Trustee if and when the Notes are listed on any stock exchange.
37
<PAGE> 44
ARTICLE VIII
PAYMENTS AND STATEMENTS;
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Sale
and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture and the Sale and Servicing
Agreement. Except as otherwise expressly provided in this Indenture or in the
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, with the prior written consent of the Note
Insurer, and shall, at the direction of the Note Insurer, take such action
(after the applicable cure period) as may be appropriate to enforce such payment
or performance, including the institution and prosecution of appropriate
proceedings.
Section 8.02 Release of Trust Estate. (a) Subject to Section 8.11
and the payment of its fees and expenses pursuant to Section 6.07, the Indenture
Trustee may, and when required by the Trust 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 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
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section
6.07 and all Reimbursement Amounts due to the Note Insurer pursuant to the
Insurance Agreement have been paid and confirmed in writing by the Note Insurer,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture and release to the Trust 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
8.02(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 11.01.
(c) Notwithstanding the foregoing, the Indenture Trustee shall
release Mortgage Loans from the lien of this Indenture pursuant to the Sale and
Servicing Agreement.
Section 8.03 Establishment of Accounts. The Sponsor shall cause
to be established at a Designated Depository Institution, and the Indenture
Trustee shall maintain, the Note Account, the Pre-Funding Account and the
Capitalized Interest Account, each to be held by the Indenture Trustee in the
name of the Trust, for the benefit of the Noteholders and the Note Insurer, as
their interests may appear.
38
<PAGE> 45
Section 8.04 The Policy. (a) On or before each Determination Date
the Indenture Trustee shall calculate the Deficiency Amount, if any, with
respect to the immediately following Payment Date.
(b) If the Indenture Trustee determines pursuant to paragraph (a)
above that a Deficiency Amount would exist, the Indenture Trustee shall complete
a Notice in the form of Exhibit A to the Policy and submit such notice to the
Note Insurer no later than 12:00 p.m., New York City time on the second Business
Day preceding such Payment Date as a claim for a payment in an amount equal to
the Deficiency Amount.
(c) Upon receipt of payments made pursuant to the Policy from the
Note Insurer on behalf of Noteholders, the Indenture Trustee shall deposit such
payments in the Note Account and shall distribute such payments, or the proceeds
thereof, in accordance with Section 8.06(b) to the Noteholders.
(d) The Indenture Trustee shall (i) receive payments made
pursuant to a Policy as attorney-in-fact of each Noteholder receiving any
Insured Payment from the Note Insurer and (ii) disburse such Insured Payment to
the Noteholders as set forth in Section 8.06(b) hereof. The Note Insurer shall
be entitled to receive the Reimbursement Amount pursuant to Section
8.06(b)(viii) with respect to each Insured Payment made by the Note Insurer. The
Indenture Trustee hereby agrees on behalf of each 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 a Policy, either directly or indirectly (as
by paying through the Indenture Trustee), to the Noteholders, the Note Insurer
will be subrogated to the Noteholders and entitled to receive such Reimbursement
Amount.
Section 8.05 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 Notes, on behalf of the Noteholders and the Note
Insurer, (x) to the Pre-Funding Account, the Original Pre-Funded Amount and (y)
to the Capitalized Interest Account, the Capitalized Interest Account Deposit.
(b) On each Subsequent Transfer Date, the Sponsor shall instruct
the Indenture Trustee to withdraw from the Pre-Funding Account an amount equal
to 96.25% 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 2.04 of the Sale and Servicing Agreement with respect to such
transfer.
(c) On each Payment Date occurring during the Pre-Funding Period,
the Indenture Trustee shall transfer from the Pre-Funding Account to the Note
Account, the Pre-Funding Earnings, if any, for each such Payment Date.
(d) On each Payment Date during the Pre-Funding Period, the
Indenture Trustee shall transfer from the Capitalized Interest Account to (x)
the Note Account, the Capitalized Interest Requirement, if any, for each such
Payment Date and (y) the Master Servicer
39
<PAGE> 46
or its designee, any investment earnings with respect to amounts on deposit in
the Capitalized Interest Account.
(e) On the Payment Date immediately following the end of the
Pre-Funding Period, any amounts remaining in the 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 Certificates, and the Capitalized
Interest Account shall be closed.
(f) On the Payment Date immediately following the end of the
Pre-Funding Period, the Sponsor shall instruct the Indenture Trustee to withdraw
from the Pre-Funding Account and deposit to the Note Account any amounts
remaining on deposit in the Pre-Funding Account on such Payment Date for
distribution in accordance with Section 8.06(vii).
Section 8.06 Flow of Funds. (a) The Indenture Trustee shall
deposit to the Note Account, without duplication, upon receipt, (x) on each
Remittance Date, (A) the proceeds of any liquidation of the assets of the Trust
Estate and (B) the Monthly Remittance Amount remitted by the Master Servicer or
any Sub-Servicer, together with any Substitution Amounts and any Loan Purchase
Prices received by the Indenture Trustee, (y) on the Payment Dates occurring
during the Pre-Funding Period, (A) the Pre-Funding Earnings transferred by the
Indenture Trustee on such Payment Dates pursuant to Section 8.05(c) and (B) the
Capitalized Interest Requirement to be transferred on such Payment Dates from
the Capitalized Interest Account pursuant to Section 8.05(d) (collectively, the
"Total Available Funds"), and (z) on the Payment Date immediately following the
end of the Pre-Funding Period, the amount, if any, to be transferred on such
Payment Date from the Pre-Funding Account pursuant to Section 8.05(f). The
Indenture Trustee shall also deposit to the Note Account, upon receipt, any
Insured Payments made pursuant to the Policy.
(b) Subject to any superseding provisions of clause (c) below, on
each Payment Date, the Indenture Trustee shall make the following allocations,
disbursements and transfers from amounts then on deposit in the Note Account
(other than funds on deposit in the Note Account relating to Insured Payments,
which amounts shall be applied only to the payments specified in clauses (iv)
and (vi) and, in the case of the Final Scheduled Payment Date, clause (v) below)
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 Premium Amount then due to
the Note Insurer;
(iii) third, to the Master Servicer, an amount equal to any
previously unreimbursed Servicing Fees then due to it not theretofore
received by the Master Servicer pursuant to Section 4.08(c)(i) of the
Sale and Servicing Agreement, as reported by the Master Servicer to the
Indenture Trustee;
40
<PAGE> 47
(iv) fourth, to the Noteholders, the Interest Distribution
Amount for such Payment Date;
(v) fifth, to the Noteholders, as a distribution of principal,
the Scheduled Principal Distribution Amount for such Payment Date;
(vi) sixth, to the Noteholders, as a distribution of principal,
the Overcollateralization Deficit for such Payment Date;
(vii) seventh, if such Payment Date is the Payment Date
following the end of the Pre-Funding Period, to the Noteholders, as a
distribution of principal, any amount remaining on deposit in the
Pre-Funding Account;
(viii) eighth, to the Note Insurer, the Reimbursement Amount, if
any, then due to it;
(ix) ninth, to the Noteholders, as a distribution of principal,
an amount up to the Accelerated Principal Payment;
(x) tenth, to the Noteholders, the amount of any Available Funds
Cap Carry-Forward Amount for such Payment Date;
(xi) eleventh, 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 Servicing Fees as of such
Payment Date;
(xii) twelfth, to the Indenture Trustee and the Owner Trustee,
to the extent of any unreimbursed expenses owed to each of them;
(xiii) thirteenth, to the Certificateholders, any
Overcollateralization Reduction Amount; and
(xiv) fourteenth, to the Certificateholders, any amount
remaining on deposit in the Note Account.
(c) On any Payment Date during the continuance of any Note
Insurer Default, no Premium Amount shall be paid to the Note Insurer (unless the
Note Insurer or its custodian, trustee, agent, receiver, custodian, or similar
official continues to make payments required under the Policy) and any amounts
otherwise payable to the Note Insurer as Premium Amounts shall be retained in
the Note Account but segregated from Total Available Funds on deposit in the
Note Account. On any Payment Date wherein such Note Insurer Default has been
cured, the Premium Amount shall be paid to the Note Insurer.
Section 8.07 Investment of Accounts. (a) So long as no event
described in Section 5.01(a) or (b) of the 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 (excluding investment earning thereon)
held by the Indenture Trustee shall be invested and
41
<PAGE> 48
reinvested by the Indenture Trustee in the name of the Indenture Trustee for the
benefit of the 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 5.01(a) or
(b) of the Sale and Servicing Agreement and following any removal of the Master
Servicer, the Note Insurer may direct such investments. No investment in any
Account shall mature later than the Business Day immediately preceding the next
Payment Date.
(b) If any amounts are needed for disbursement from any Account
held by the 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 (except in
its capacity as obligor on any such investment) but shall be liable for loss of
investment earnings if the funds held in the Accounts are not invested in
accordance with this Indenture.
(d) The Indenture Trustee shall hold funds in the Accounts held
by the Indenture Trustee in Eligible Investments specified in Section 8.08(i)
upon the occurrence of either of the following events:
(i) the Master Servicer or the Note Insurer shall have failed to
give investment directions to the Indenture Trustee; or
(ii) the Master Servicer or the Note Insurer shall have failed
to give investment directions to the Indenture Trustee by 5:00 p.m.
California time (or such other time as may be agreed by the Master
Servicer and the Indenture Trustee) on the Business Day prior to receipt
of such funds. Any investment earnings on funds held in the Note Account
and the Capitalized Interest Account shall be for the account of the
Master Servicer and may only be withdrawn from the Note Account by the
Indenture Trustee to be remitted to the Master Servicer on each
respective Payment Date. Any references herein to amounts on deposit in
the Note Account and the Capitalized Interest Account shall refer to
amounts net of such investment earnings. The Master Servicer shall
deposit the amount of any investment losses immediately into the Note
Account and the Capitalized Interest Account as realized.
Section 8.08 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.
42
<PAGE> 49
(c) Freddie Mac participation certificates and senior debt
obligations.
(d) Federal Home Loan Banks' consolidated senior debt
obligations.
(e) Fannie Mae mortgage backed securities (other than stripped
mortgage securities which are valued greater than par on the portion of
unpaid principal) and senior debt obligations.
(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 S&P and "P-1" by
Moody's.
(g) Investment agreements approved by the Note Insurer;
provided, that:
(i) 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 S&P, or is the lead bank of a parent bank
holding company with an uninsured, unsecured and unguaranteed
obligation meeting such rating requirements, and
(ii) 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
(iii) the agreement is not subordinated to any other
obligations of such insurance company or bank, and
(iv) the same guaranteed interest rate will be paid on
any future deposits made pursuant to such agreement, and
(v) 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 S&P and "P-1" or better by Moody's.
(i) Investments in money market funds rated "AAAm" or "AAAm-G" by
S&P and "Aaa" or "P-1" by Moody's.
(j) Investments approved in writing by the Note Insurer and
acceptable to Moody's and S&P;
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
43
<PAGE> 50
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 8.09 Reports by Indenture Trustee. (a) On each Payment
Date, the Indenture Trustee shall provide to each Noteholder, to the Master
Servicer, to the Note Insurer, to the Representative, to the Sponsor and to each
Rating Agency a written report in substantially the form set forth as Exhibit C
hereto, as such form may be revised by the Indenture Trustee and the Master
Servicer from time to time, but in every case setting forth the following
information:
(i) the amount of the distribution with respect to the Notes;
(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 Available Funds Cap Carry-Forward Amount;
(v) the Outstanding Note Principal Balance of the Notes as of
such Payment Date, together with the principal amount of the Notes
(based on a Note in an original principal amount of $1,000) then
outstanding, in each case after giving effect to any payment of
principal on such Payment Date;
(vi) any Insured Amount included in the amounts distributed in
respect of the Notes;
(vii) the aggregate Loan Balance of all Mortgage Loans after
giving effect to any payment of principal on such Payment Date;
(viii) information furnished by the Sponsor pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Owners in computing their market discount;
(ix) the total of any Substitution Amounts and any Loan Purchase
Prices amounts included in such distribution;
(x) the weighted average Coupon Rate of the Mortgage Loans;
(xi) the Overcollateralization Amount after giving effect to any
payment of principal on such Payment Date;
(xii) the aggregate Loan Balances of all Mortgage Loans that
were repurchased during the related Remittance Period and any
repurchases pursuant to Section 4.10 of the Sale and Servicing
Agreement;
44
<PAGE> 51
(xiii) the amounts, if any, of any Realized Losses for the
related Remittance Period and the preceding six (6) Remittance Periods;
(xiv) the amount on deposit in the Pre-Funding Account and the
Capitalized Interest Account;
(xv) the amount of Pre-Funding Earnings;
(xvi) a number with respect the Notes (the "Pool Factor")
computed by dividing the Note Principal Balance of the Notes (after
giving effect to any distribution of principal to be made on such
Payment Date) by the Note Principal Balance of the Notes on the Closing
Date;
(xvii) whether a Servicer Termination Loss Trigger has occurred,
as such terms are defined in the Insurance Agreement.
Items (i) through (iii) above shall 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 Notes are outstanding, the Indenture
Trustee shall furnish a report to each Note Owner of record at any time during
each calendar year as to the aggregate of amounts reported pursuant to (i), (ii)
and (iii) with respect to the Notes for such calendar year. If the Notes are in
book-entry form, DTC will supply such reports to the Note Owners as are in
accordance with its procedures.
(b) In addition, on each Payment Date the Indenture Trustee will
distribute to each Note Owner, to the Note Insurer, to the Representative, to
the Master Servicer, to the Sponsor and to each Rating Agency, together with the
information described in subsection (a) preceding, the following information
with respect to the Mortgage Loans as of the close of business on the last
Business Day of the related Remittance Period, 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 and aggregate Loan Balances of Mortgage
Loans and the percentage (based on the aggregate Loan Balances) of the
aggregate Loan Balances of such Mortgage Loans which are (a) 30-59 days
Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days
Delinquent;
(ii) the number, aggregate Loan Balances and percentage (based
on the aggregate Loan Balances of the Mortgage Loans) 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 and percentage (based
on the aggregate Loan Balances of the Mortgage Loans) 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));
45
<PAGE> 52
(iv) the number, aggregate Loan Balances and percentage (based
on the aggregate Loan Balances of the Mortgage Loans) 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 book value of any REO Property.
(c) The Sponsor and the Master Servicer, on behalf of Noteholders
and the Trust (the "Trust Parties") hereby authorize the Indenture Trustee to
include the information, 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 to the Note Owners prepared by the Indenture Trustee
(the "Information") on The Bloomberg, an on-line computer based on-line
information network maintained by Bloomberg L.P. ("Bloomberg") or on any other
on-line computer based on-line information network or service ("Information
Network"), or in other electronic or print information services deemed
acceptable by the Sponsor or the Master Servicer as designated in writing to the
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 covenants and
obligations of the Trust Parties under this Section 8.09(c) shall be irrevocable
and shall survive the termination of this Indenture.
Section 8.10 Additional Reports by Trustee. (a) The Indenture
Trustee shall report to the Sponsor, the Note Insurer and the Master Servicer
with respect to the amount then held in each Account (including investment
earnings accrued or scheduled to accrue) held by the 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 Note Insurer and the Master Servicer copies of all accounting of
receipts in respect of the Mortgage Loans furnished to it by the Master Servicer
and shall notify the Sponsor, the Note Insurer and the Master Servicer if any
such receipts have not been received by the Indenture Trustee.
46
<PAGE> 53
(b) The Indenture Trustee shall immediately report to the Note
Insurer, Sponsor and Master Servicer with respect to its actual knowledge,
without independent investigation, of any breach of any of the representations
or warranties relating to individual Mortgage Loans set forth in the Mortgage
Loan Transfer Agreement or in Section 3.03(a) the Sale and Servicing Agreement.
Section 8.11 Opinion of Counsel. The Indenture Trustee shall
receive at least seven (7) days' notice when requested by the Trust to take any
action pursuant to Section 8.02(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 Notes
or the rights of the 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 9.01 Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Noteholders but with the prior
written consent of the Note Insurer (as evidenced to the Indenture Trustee), the
Trust 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 and the Note Insurer, 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 Trust, and the
assumption by any such successor of the covenants of the Trust herein
and in the Notes contained;
(iii) to add to the covenants of the Trust, for the benefit of
the Noteholders and the Note Insurer, or to surrender any right or power
herein conferred upon the Trust;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
47
<PAGE> 54
(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 (1) adversely affect the interests
of the Noteholders or (2) result in a reduction of the then current
rating on the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one 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 Trust and the Indenture Trustee, when authorized by an
Issuer Order, may, without the consent of any of the Noteholders but with the
prior written consent of the Note Insurer, 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 Noteholders under this Indenture;
provided, however, that such action shall not (1) reduce the then current rating
on the Notes or (2) as evidenced by an Opinion of Counsel addressed to the Note
Insurer and the Indenture Trustee, materially and adversely affect the interests
of any Noteholder.
Section 9.02 Supplemental Indentures with Consent of Noteholders.
The Trust and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior notice to the Rating Agencies, with the prior written consent of
the Note Insurer and with the consent of the Noteholders of at least 51% of the
Outstanding Note Principal Balance of the Notes, by Act of such Noteholders
delivered to the Trust 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 Noteholders 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 Noteholder of each Outstanding Note affected thereby:
(a) 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 Notes, or change any place of
payment where, or the coin or currency in which, any Note or the
interest thereon is payable;
48
<PAGE> 55
(b) 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 Notes on or after the respective due dates thereof
(or, in the case of redemption, on or after the Redemption Date);
(c) reduce the percentage of the Outstanding Note Principal
Balance of the Notes, the consent of the Noteholders of which is
required for any such supplemental indenture, or the consent of the
Noteholders 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;
(d) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(e) reduce the percentage of the Outstanding Note Principal
Balance of the Notes required to direct the Indenture Trustee to direct
the Trust to sell or liquidate the Trust Estate pursuant to Section
5.03;
(f) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Operative Documents cannot be
modified or waived without the consent of the Noteholder of each Note
affected thereby;
(g) 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
(h) 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 other Operative Documents, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the
Noteholder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may determine whether or not any 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 all Noteholders, 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 9.02 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 Trust and the Indenture
Trustee of any supplemental indenture pursuant to this Section 9.02, the
Indenture Trustee shall mail to the Noteholders 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
49
<PAGE> 56
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 9.03 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 6.01 and 6.02, 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 9.04 Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Trust and the Noteholders 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 9.05 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 9.06 Reference in Notes to Supplemental Indentures. 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 Trust or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Trust, to any such supplemental indenture may
be prepared and executed by the Trust and authenticated and delivered by the
Indenture Trustee in exchange for the Notes.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01 Redemption. (a) The 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 10.01(b), to the Master Servicer or
any Master Servicer Affiliate of the Trust Estate, (ii) 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
5.03) or the disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan and (iv) the Final Scheduled Payment
Date; provided, however, that (x) no such redemption shall
50
<PAGE> 57
occur unless all amounts due and owing to the Note Insurer as a Reimbursement
Amount have been paid and (y) 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 10.01(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 Notes shall be subject to optional redemption by the
Master Servicer or any Master Servicer Affiliate on any Payment Date after the
Payment Date on which the Note Principal Balance has been reduced to an amount
less than or equal to 10% of the Original Note Principal Balance and all amounts
due and owing to the Note Insurer as a Reimbursement Amount have been paid. Such
transfer shall only be permitted if the party exercising such option delivers to
the Indenture Trustee an amount equal to the sum of the Outstanding Note
Principal Balance of the Notes and accrued and unpaid interest thereon
(including any Available Funds Cap Carry Forward Amounts) at the Note Formula
Rate through the day preceding the final Payment Date plus all Reimbursement
Amounts (the "Redemption Price"). In connection with such purchase, the Master
Servicer shall remit to the Indenture Trustee all amounts then on deposit in the
Principal and Interest Account for deposit to the 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 Mortgage Files to the Master Servicer, or otherwise upon its
order, in a manner similar to that described in Section 4.14 of the Sale and
Servicing Agreement.
(d) If the Notes are to be redeemed pursuant to this Section
10.01, the Master Servicer or the Trust shall furnish notice of such election to
the Indenture Trustee not later than 15 days prior to the Redemption Date and
the Trust shall deposit with the Indenture Trustee in the Note Account the
Redemption Price of the Notes not less than three (3) Business Days prior to the
Redemption Date whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.02.
Section 10.02 Surrender of 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 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 1st day and not later
than the 10th day of the month of such final distribution specifying (i) the
Payment Date upon which final distribution of the Notes will be made upon
presentation and surrender of the 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
Notes at the office or agency of the Indenture Trustee therein specified.
51
<PAGE> 58
(b) Any money held by the Indenture Trustee in trust for the
payment of any amount due with respect to any Note and remaining unclaimed by
the related 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 Reimbursement Amounts, and second, to the Certificateholders; and such
Noteholder shall thereafter, as an unsecured general creditor, look only to the
Certificateholders for payment thereof (but only to the extent of the amounts so
paid to the Note Insurer or the 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 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 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 Noteholder).
Section 10.03 Form of Redemption Notice. (a) Notice of redemption
supplied to the Indenture Trustee by the Master Servicer under Section 10.01
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 Noteholder of record, as of the close of business on the date which is
not less than five (5) days prior to the applicable Redemption Date, at such
Noteholder's address appearing in the Note Register.
(b) 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 Notes at the place where such
Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Trust to be maintained as provided
in Section 3.02); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
(c) Notice of redemption of the Notes shall be given by the
Indenture Trustee in the name and at the expense of the Trust. Failure to give
notice of redemption, or any defect therein, to any Noteholder shall not impair
or affect the validity of the redemption of any other Note.
Section 10.04 Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.02, on
the Redemption Date become due and payable at the Redemption Price and (unless
the Trust shall default in the
52
<PAGE> 59
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 11.01 Compliance Certificates and Opinions, etc. Upon any
application or request by the Trust to the Indenture Trustee to take any action
under any provision of this Indenture, and where specified in this Indenture,
the Trust 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 addressed to the Indenture Trustee and the Note Insurer
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 11.01, 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:
(a) 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
(b) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such 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 Trust
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 Trust, stating that the information with
respect to such factual matters is in the possession of the Master Servicer, the
Sponsor or the
53
<PAGE> 60
Trust, stating that the information with respect to such factual matters is in
the possession of the Master Servicer, the Sponsor or the Trust, 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 Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust'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 Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
Section 11.03 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by 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 Trust. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Trust, if made in the
manner provided in this Section 11.03.
(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 Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholder shall bind the Noteholder 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 Trust in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04 Notices, etc. to Indenture Trustee, Trust and
Rating Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other
54
<PAGE> 61
communications provided or permitted by this Indenture to be made upon, given or
furnished to or filed shall be in writing and shall be deemed to be given when
delivered to:
(a) The Indenture Trustee by any Noteholder or by the Trust at
its Corporate Trust Office, Attention: Advanta Series 1999-4 and any
notice delivered by facsimile shall be addressed to the Corporate Trust
Office, telecopy number (714) 247-6475, or
(b) The Trust by the Indenture Trustee or by any Noteholder
addressed to: Advanta Mortgage Loan Trust 1999-4, in care of Wilmington
Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001 Attention: Corporate Trust
Administration, or at any other address previously furnished in writing
to the Indenture Trustee by Trust. The Trust shall promptly transmit any
notice received by it from the Noteholders to the Indenture Trustee.
(c) The Sponsor or the Master Servicer by the Indenture Trustee
addressed to:
In the case of the Sponsor:
Advanta Conduit Receivables, Inc.
Welsh & McKean Roads
Springhouse, PA 19477
Attn: Treasury, Structured Finace
In the case of the Master Servicer:
Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, CA 92127
Attn: Investor Reporting
or such other address previously furnished in writing to the Indenture
Trustee by Sponsor or Master Servicer.
(d) The Note Insurer by the Trust or the Indenture Trustee as
follows:
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structure Finance Department - MBS
Fax: (212) 363-1459
Confirmation: (212) 668-0340
In each case in which notice or other communication to the Note Insurer
refers to an Event of Servicing Termination, a claim on the Policy or
with respect to which failure on the part of the Note Insurer to respond
shall be deemed to constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to the
55
<PAGE> 62
attention of the general counsel (fax no. (212) 208-3558 and with the
same confirmation number as stated above) and should be marked "URGENT
MATERIAL ENCLOSED".
(e) Notices required to be given to the Rating Agencies by the
Trust, the Indenture Trustee or the Owner Trustee shall be sent by first
class mail 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 S&P, at the
following address: Standard & Poor's Ratings Group, 55 Water Street, New
York, New York 10041, Attention: Asset Backed Surveillance Department,
Fax No: (212) 438-2661; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
Section 11.05 Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder.
Section 11.06 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Trust may enter into any agreement with any Noteholder providing
for a method of payment, or notice by the Indenture Trustee or any Note Paying
Agent to such Noteholder, 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 Trust 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.
56
<PAGE> 63
Section 11.07 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 11.08 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 11.09 Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Trust 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 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 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
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 (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
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.
57
<PAGE> 64
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 Trust 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 Trust, the
Sponsor, the Originators, the Master Servicer, the Owner Trustee or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Sponsor, the Originators, the Master Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Trust or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Sponsor, the Originators, the Master
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Trust, the Sponsor, the Originators,
the Master Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Sponsor, the Originators, 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 Trust 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, Advanta
Holding Trust 1999-4, the Trust or any Certificateholder, or join in any
institution against the Sponsor, Advanta Holding Trust 1999-4, the Trust or any
Certificateholder 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 Notes, this Indenture or any of the Operative Documents.
Section 11.18 Inspection. The Trust agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or of
the Note Insurer, during the Trust's normal business hours, to examine all the
books of account, records, reports, and other papers of the Trust, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Trust's affairs, finances and
accounts with the Trust'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
58
<PAGE> 65
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 Usury. The amount of interest payable or paid on
any Note under the terms of this Indenture 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 Note exceeds the Highest Lawful Rate, the Trust stipulates that such excess
amount will be deemed to have been paid to the Note Owner as a result of an
error on the part of the Indenture Trustee acting on behalf of the Trust and the
Note Owner receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Indenture Trustee on behalf of the Trust,
refund the amount of such excess or, at the option of such Note Owner, apply the
excess to the payment of principal of such Note, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of Note Owners 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 Notes.
Section 11.20 Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Indenture is executed and
delivered by Wilmington Trust Company, not individually or personally but solely
as Owner Trustee of the Trust 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
Trust 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 Trust, (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 Indenture 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 Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Trust under this Indenture or any related documents.
Section 11.21 Rights of the Note Insurer to Exercise Rights of
Noteholders. By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, or as otherwise provided in this Indenture, the Note
Insurer shall have the right to exercise all rights of the Noteholders under
this Indenture without any further consent of the Noteholders, including,
without limitation:
(a) the right to direct the actions of the Indenture Trustee
during the continuance of a an Event of Default; and
(b) the right to vote on proposed amendments to this Indenture.
59
<PAGE> 66
In addition, each Noteholder agrees that, unless an Note Insurer
Default exists, any rights may be exercised by the Noteholders only with the
prior written consent of the Note Insurer.
Notwithstanding any provision in this Indenture to the contrary,
so long as an Note Insurer Default has occurred and is continuing, the Note
Insurer shall have no rights to exercise any voting rights of the Noteholders
hereunder, nor shall the Indenture Trustee be required to obtain the prior
written consent of, or act at the direction of, the Note Insurer.
Section 11.22 Consent and Direction of Note Insurer. Unless
otherwise specified, with respect to (i) each action which requires the consent
of the Note Insurer, such consent shall only be required if no Note Insurer
Default shall have occurred and be continuing and (ii) each action which the
Note Insurer may take or direct another party to take, such action or direction
may only be taken or given if no Note Insurer Default shall have occurred and be
continuing.
Section 11.23 Rules by Indenture Trustee. The Indenture Trustee
may make reasonable rules for any meeting of Noteholders.
[Remainder of Page Intentionally Left Blank]
60
<PAGE> 67
IN WITNESS WHEREOF, the Trust 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 1999-4
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee,
By: /s/ Donald G. MacKelcan
_____________________________________
Name: Donald G. MacKelcan
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity
but solely as Indenture Trustee,
By: /s/ Whitney Iger
_____________________________________
Name: Whitney Iger
Title: Assistant Vice President
<PAGE> 68
EXHIBIT A
[Form of Note]
REGISTERED $________
No. 1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. _________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Trust or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA MORTGAGE LOAN TRUST 1999-4
MORTGAGE LOAN ASSET-BACKED NOTES
Advanta Mortgage Loan Trust 1999-4, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ($___________), 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 $___________ and the denominator of which is
$___________ by (ii) the aggregate amount, if any, payable from the Note Account
in respect of principal on the Notes pursuant to Section 8.06 of the Indenture;
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the November 2029 Payment Date (the "Final Scheduled Payment
Date"). Until the principal of this Note is paid or made available for payment,
the Trust will pay interest on this Note at the rate per annum provided in the
Indenture on each Payment Date on the principal amount of this Note outstanding
on the day immediately preceding the related Payment Date (after giving effect
to all payments of principal on this Note made on the preceding Payment Date).
Interest on this Note will accrue for each Payment Date during the period from
and including the preceding Payment Date (or in the case of the December 1999
Payment Date, from and including the Closing Date) to but excluding the current
Payment Date. Interest will be computed on the actual number of days in the
related Interest Accrual Period divided by 360 days. Such principal of and
interest on this Note shall be paid in the manner specified on the reverse
hereof.
A-1-1
<PAGE> 69
The principal of and interest on this 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
Trust with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Policy") issued by Ambac Assurance Corporation (the "Note
Insurer"), pursuant to which the Note Insurer has unconditionally guaranteed
payments of the Insured Amounts on each Payment Date, all as more fully set
forth in the Indenture.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Trust will treat the Notes as
indebtedness and hereby instructs the Indenture Trustee to treat the Notes as
indebtedness for federal and state tax reporting purposes.
Each Noteholder or Note Owner, by acceptance of this Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
(1) to treat the Notes as indebtedness for purposes of federal income, state and
local income and franchise and any other income taxes and (2) that no recourse
may be taken, directly or indirectly, with respect to the obligations of the
Trust, the Owner Trustee or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Sponsor, the Originators, the Master Servicer, the Indenture
Trustee, or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Trust or (iii) any owner, beneficiary, agent,
officer, director or employee of the Sponsor, the Originators, the Master
Servicer, the Indenture Trustee, or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Trust, the Sponsor, the
Originators, the Master Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Sponsor, the Originators, 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 Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this 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.
Each Note Owner, by acceptance of a beneficial interest in 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 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
A-1-2
<PAGE> 70
Plan, or (ii) that its acquisition and continued holding of the Note will be
covered by a U.S. Department of Labor Prohibited Transaction Class Exemption.
A-1-3
<PAGE> 71
IN WITNESS WHEREOF, the Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: November __, 1999
ADVANTA MORTGAGE LOAN TRUST 1999-4
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By: __________________________________
Name:
Title:
A-1-4
<PAGE> 72
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: November __, 1999
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity
but solely as Indenture Trustee
By: _____________________________________
Authorized Signatory
A-1-5
<PAGE> 73
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Trust, designated as its Mortgage Loan Asset-Backed Notes, Series 1999-4 (herein
called the " Notes"), issued under an Indenture dated as of November 1, 1999
(such indenture, as supplemented or amended, is herein called the "Indenture"),
between the Trust, as issuer, and Bankers Trust Company of California, N.A., as
indenture trustee (the "Indenture Trustee", which term includes any successor
Indenture Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Trust, the Indenture Trustee and the
Noteholders. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be secured by the Trust Estate pledged as
security therefor as provided in the Indenture.
Principal of the 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 27, 1999. The term "Payment Date," shall be
deemed to include the Final Scheduled Payment Date.
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Final Scheduled Payment Date
and the Redemption Date, if any, pursuant to Section 10.01(a) of the Indenture.
Notwithstanding the foregoing, if an Event of Default has occurred and shall be
continuing the Notes may be declared immediately due and payable. All principal
payments on the Notes shall be made pro rata to the Noteholders entitled
thereto.
Payments of interest on this Note are due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
such payment is not the final payment of this Note, shall be made by check
mailed to the Person whose name appears as the Noteholder (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to 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 Note
be submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Payment Date shall be binding upon all future Noteholders and of any 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 Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Trust, will notify the Person who was the
Noteholder hereof as of the Record Date preceding such Payment Date by notice
mailed prior to such
A-1-6
<PAGE> 74
Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes.
The Trust shall pay interest on overdue installments of interest
at the Note Formula Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant
to Section 10.01(b) of the Indenture, in whole, but no in party, at the option
of the Master Servicer or any Master Servicer Affiliate, on any Payment Date
following the Payment Date on which the Outstanding Note Principal Balance of
the Notes has been reduced to an amount equal to 10% or less of the Original
Note Principal Balance of the Notes.
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the office
or agency designated by the Trust 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 Noteholder 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 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 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 Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Sponsor, or the Trust or join in any institution
against the Sponsor, or the Trust 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 Notes, the Indenture or the other Operative
Documents.
Prior to the due presentment for registration of transfer of this
Note, the Trust, the Indenture Trustee and the Note Insurer and any agent of the
Trust, the Indenture Trustee or the Note Insurer shall treat the Person in whose
name this Note (as of the day of determination or as of such other date as may
be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Trust, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trust and the rights
A-1-7
<PAGE> 75
of the Noteholders under the Indenture at any time by the Trust with the prior
written consent of the Note Insurer and of the Noteholders representing a
majority of the Outstanding Note Principal Balance of the Notes. Any such
consent or waiver by the Noteholder of this Note (or any one of more Predecessor
Notes) shall be conclusive and binding upon such Noteholder and upon all future
Noteholders of this Note and of any 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 Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Noteholders issued thereunder but with the
prior written consent of the Note Insurer.
The term "Trust" as used in this Note includes any successor to
the Trust under the Indenture.
The Notes are issuable only in registered form in denominations
as provided in the Indenture, subject to certain limitations therein set forth.
This Note and the 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
Note or of the Indenture shall alter or impair the obligation of the Trust,
which is absolute and unconditional, to pay the principal of and interest on
this 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 Indenture or the other Operative Documents, neither
Wilmington Trust Company in its individual capacity, any owner of a beneficial
interest in the Trust, 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 Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Trust for the sole purposes of binding
the interests of the Trust in the assets of the Trust. The Noteholder by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Operative Documents, in the case of an Event of Default under the Indenture,
the Noteholder 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 Trust for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
A-1-8
<PAGE> 76
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-1-9
<PAGE> 77
EXHIBIT B
FORM OF AUTHENTICATION ORDER
ORDER TO AUTHENTICATE THE NOTES
November 17, 1999
Bankers Trust Company of California, N.A.,
as Indenture Trustee
1761 E. St. Andrew Place
Santa Ana, California 92705
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Indenture, dated as of November
1, 1999 (the "Indenture"), between Advanta Mortgage Loan Trust 1999-4 (the
"Trust") and Bankers Trust Company of California, N.A., as indenture trustee
(the "Indenture Trustee"), the Trust hereby certifies that all conditions
precedent to the issuance of its Advanta Mortgage Loan Asset-Backed Notes in the
amount of $200,000,000 (CUSIP No. 00755W HC3) (the "Notes") have been satisfied
and hereby requests you to authenticate and deliver the Notes and to release the
Notes to CEDE & CO., or otherwise upon its order.
Very truly yours,
ADVANTA MORTGAGE LOAN TRUST 1999-4
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely in its
capacity as Owner Trustee under the
Trust Agreement
By: ________________________________________
Name:
Title:
B-1
<PAGE> 78
ANNEX A - DEFINED TERMS
"Accelerated Principal Payment": With respect to any Payment
Date, any payment of excess spread in the form of principal to the Noteholders
for the purpose of increasing the Overcollateralization Amount to the Specified
Overcollateralization Amount for such Payment Date.
"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.
"Account": Any account established in accordance with Section
8.03 of the Indenture or Section 4.08 of the Sale and Servicing Agreement, each
of which shall be established at a Designated Depository Institution.
"Act" has the meaning specified in Section 11.03(a) of the
Indenture.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 2.04(a) of the Sale and
Servicing Agreement, written notice which shall be given not later than two (2)
Business Days prior to the related Subsequent Transfer Date, of the Sponsor's
designation of Subsequent Mortgage Loans to be sold to the Trust. Such notice
shall include the approximate aggregate Loan Balance and the weighted average
Coupon Rate of such Subsequent Mortgage Loans.
"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.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation
and the corporate parent of Advanta Mortgage Corp. USA, and the indirect
corporate parent of Advanta Conduit Receivables, 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 the time of origination, if
the sales price is less than the appraised value.
"Authentication Order": The order in the form set forth as
Exhibit B to the Indenture and required to be delivered by the Trust on the
Closing Date pursuant to Section 2.02 of the Indenture.
Ann. A-1
<PAGE> 79
"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": (A) With respect to the Indenture Trustee,
the Sponsor, the Owner Trustee and the Master Servicer, those individuals whose
names appear on the lists of Authorized Officers delivered on the Closing Date,
as such lists may be amended or supplemented from time to time, and (B) with
respect to any other Person, any person who is authorized to act for such Person
in matters relating to the Operative Documents, and whose action is binding upon
such Person.
"Available Funds Cap Carry-Forward Amount": With respect to any
Payment Date, the sum of (i) the excess of (x) the Interest Distribution Amount
due on such Payment Date, calculated using the Note Formula Rate, over (y) the
Interest Distribution Amount due on such Payment Date, calculated using the
Available Funds Cap Rate and (ii) the Available Funds Cap Carry-Forward Amount,
if any, from the immediately preceding Payment Date, with interest thereon at
the Note Formula Rate.
"Available Funds Cap Rate": With respect to any Payment Date, an
amount, expressed as a per annum rate and calculated on the basis of a 360-day
year and the actual number of days elapsed in the related Interest Accrual
Period, equal to (a)(i) the aggregate amount of interest accrued and collected
(or advanced) at the Coupon Rates on all of the Mortgage Loans for the related
Remittance Period, minus (ii) the aggregate of the Servicing Fee, the Indenture
Trustee's Fee, the Owner's Trustee's Fee and the Premium Amount due 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 as of the beginning of the related Remittance
Period, divided by (b) the aggregate Loan Balances of the Mortgage Loans as of
the beginning of the related Remittance Period.
"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.
"Bankruptcy Code": Means the United States Bankruptcy Code (11
U.S.C.), as amended from time to time.
"Benefit Plan": As defined in Section 2.03 of the Indenture.
"Borrower" or "Borrowers": The obligor or obligors on a
Promissory Note
"Book-Entry Notes": A beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09 of the Indenture.
"Business Day": Any day that is not a Saturday, Sunday or other
day on which any of the Note Insurer, the Master Servicer or the Sponsor is
closed or commercial banking institutions in the States of New York, California
or Delaware or in the city in which the
Ann. A-2
<PAGE> 80
principal Corporate Trust Office of the Indenture Trustee is located, are
authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The capitalized interest account
for the Notes established in accordance with Section 8.03 of the Indenture and
maintained by the Indenture Trustee.
"Capitalized Interest Account Deposit": $845,803.72.
"Capitalized Interest Amount": With respect to any date of
determination, the amount on deposit in the Capitalized Interest Account.
"Capitalized Interest Requirement": With respect to any Payment
Date occurring during the Pre-Funding Period, an amount equal to (i) the product
of (x) the sum of the Note Interest Rate and the Premium Percentage for such
Payment Date and (y) the amount on deposit in the Pre-Funding Account as of the
immediately preceding Payment Date minus (ii) any Pre-Funding Earnings to be
transferred to the Note Account on such Payment Date pursuant to Section 8.06(c)
of the Indenture.
"Certificate": As defined in the Trust Agreement.
"Certificateholders": The holders of the Certificates issued
pursuant to the Trust Agreement.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act
of 1940, as amended from time to time.
"Clean-Up Call Date": The first date on which the Master Servicer
or any Master Servicer Affiliate is eligible to exercise its right of optional
redemption of the Notes pursuant to Section 10.01(b) of the Indenture.
"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 17, 1999.
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Compensating Interest": As defined in Section 4.09(b) of the
Sale and Servicing Agreement.
"Controlling Party": Means, (i) the Note Insurer, so long as no
Note Insurer Default has occurred and is continuing, and (ii) the Indenture
Trustee, for so long as a Note
Ann. A-3
<PAGE> 81
Insurer Default shall have occurred and be continuing; provided, that the Note
Insurer's rights as Controlling Party shall be immediately reinstated following
the cure of any Note Insurer Default.
"Corporate Trust Office": As of the Closing Date, the Indenture
Trustee's office at 1761 E. St. Andrew Place, Santa Ana, California 92705.
"Coupon Rate": The rate of interest borne by each Mortgage Note.
"Cut-Off Date": With respect to (x) any Initial Mortgage Loans,
the Initial Cut-Off Date, (y) any Subsequent Mortgage Loans, the Subsequent
Cut-Off Date, and (z) any Qualified Replacement Mortgage Loans, the Replacement
Cut-Off Date.
"Deficiency Amount": As defined in the Policy.
"Definitive Notes": Any Notes issued in definitive form without
coupons pursuant to Section 2.11 of the Indenture.
"Delinquency Advance": As defined in Section 4.09(a) of the 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 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.
"Depository": The Depository Trust Company, 55 Water Street, New
York, New York 10041 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 S&P and the
short-term deposits of which shall be rated "P-1" or better by Moody's and "A-1"
or better by S&P unless otherwise approved in writing by the Indenture Trustee,
the Note Insurer, Moody's and S&P, 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 and each Rating Agency and, in each case
acting or designated by the Master Servicer as the depository institution for
such Account; provided, however, that any such institution or association shall
have combined capital, surplus and undivided profits of at least $50,000,000.
Notwithstanding the foregoing, an Account may be held by an institution
otherwise meeting the preceding requirements except that the only applicable
rating requirement
Ann. A-4
<PAGE> 82
shall be that the unsecured and uncollateralized debt obligations thereof shall
be rated "Baa3" or better by Moody's or "BBB" or better by S&P if such
institution has trust powers and such Account is held by such institution in its
corporate trust department.
"Determination Date": With respect to any 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 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 2.01(c)
of the Sale and Servicing Agreement.
"Eligible Investments": As defined in Section 8.08 of the
Indenture.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": As defined in Section 5.01(a) of the
Indenture.
"Event of Servicing Termination": Any event described in Sections
5.01(a) and (b) of the Sale and Servicing Agreement.
"Excess Overcollateralization Amount": With respect to any
Payment Date, the amount by which (x) the Overcollateralization Amount after
taking into account the payment of the Scheduled Principal Distribution Amount
on such Payment Date, exceeds (y) the Specified Overcollateralization Amount for
such Payment Date.
"Exchange Act": 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.
"Final Scheduled Payment Date": The Payment Date occurring in
November 2029, on which the Noteholders will be entitled to receive a payment of
principal in an amount equal to the then Outstanding Note Principal Balance.
"First Mortgage Loan": Any Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
Ann. A-5
<PAGE> 83
"Foreclosed Loan": As of any Determination Date, any Loan that as
of the end of the preceding Remittance Period has been discharged as a result of
(i) the completion of foreclosure or comparable proceedings by the Servicer, on
behalf of the Issuer; (ii) the acceptance of the deed or other evidence of title
to the related Mortgaged Property in lieu of foreclosure or other comparable
proceeding; or (iii) the acquisition of title to the related Mortgaged Property
by operation of law.
"Foreclosure Property": Any real property securing a Foreclosed
Loan that has been acquired by the Master Servicer on behalf of the Issuer
through a foreclosure, deed in lieu of foreclosure or similar proceedings in
respect of the related Loan.
"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": To 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 the Indenture. A Grant of the Trust Estate 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 Trust Estate 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.
"Gross Margin": With respect to each Mortgage Loan with an
adjustable Coupon Rate, the fixed percentage amount set forth in the related
Mortgage Note which amount is added to the Index in accordance with the terms of
the related Mortgage Note to determine, on each Interest Rate Adjustment Date,
the Coupon Rate for such Mortgage Loan, subject to any maximum.
"Guaranties": The Letter Agreement, dated as of November 17,
1999, among the Representative, the Note Insurer and AMHC and the Letter
Agreement, dated as of November 17, 1999, among the Note Insurer, the Indenture
Trustee and AMHC.
"Highest Lawful Rate": Has the meaning specified in Section 11.19
of the Indenture.
"Holder" or "Noteholder": Means the Person in whose name a Note
is registered in the Register held by the Note Registrar.
"Holding Trust": The Advanta Holding Trust 1999-4, the trust
created under the Holding Trust Agreement.
Ann. A-6
<PAGE> 84
"Holding Trust Agreement": The Trust Agreement, dated as of
November 1, 1999, between the Owner Trustee and the Sponsor, as it may be
amended from time to time, pursuant to which the Holding Trust was created.
"Indebtedness": 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, 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.
"Indemnification Agreement": The Indemnification Agreement, dated
as of November 5, 1999, between the Note Insurer and the Underwriters.
"Indenture": The Indenture, dated as of November 1, 1999, between
the Trust and the Indenture Trustee, as the same may be amended and supplemented
from time to time in accordance with the terms thereof.
"Indenture Trustee": Bankers Trust Company of California, N.A.,
located on the date of execution of the Indenture at 1761 E. St. Andrew Place,
Santa Ana, California 92705, a national banking association, not in its
individual capacity but solely as Indenture Trustee under the Indenture, and any
successor thereunder.
"Indenture Trustee's Fees": With respect to any Payment Date, the
product of (x) one-twelfth of the Indenture Trustee Fee Rate and (y) the Pool
Principal Balance as of the opening of business on the first day of the related
Remittance Period, less any Pre-Funded Amount.
"Indenture Trustee Fee Rate": 1.5 basis points per annum.
"Independent": Means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Trust, any other
obligor upon the 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 Trust, any such other obligor, the Sponsor or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Trust, 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.
Ann. A-7
<PAGE> 85
"Independent Certificate": Means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture, 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 the Indenture and that
the signer is Independent within the meaning thereof.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in the Notes.
"Initial Cut-Off Date": The date as of which Initial Mortgage
Loans are transferred and assigned to the Trust, which date shall be the opening
of business, November 1, 1999.
"Initial Mortgage Loans": The Mortgage Loans delivered to the
Trust on the Closing Date.
"Insurance Agreement": The Insurance Agreement, dated as of
November 17, 1999, among the Sponsor, the Master Servicer, the Trust, the
Indenture Trustee and the Note Insurer, as it may be amended from time to time.
"Insurance Agreement Event of Servicing Termination": An "event
of servicing termination" under the Insurance Agreement.
"Insured Amount": As defined in the Policy.
"Insured Payment": As defined in the Policy.
"Interest Accrual Period": With respect to any Payment Date, the
period commencing on the immediately preceding Payment Date (or, in the case of
the December 1999 Payment Date, the Closing Date) to and including the day
immediately preceding such Payment Date.
"Interest Carry-Forward Amount": With respect to any Payment
Date, the sum of (A) the amount, if any, by which (x) the Interest Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution of interest made to the Noteholders on such immediately
preceding Payment Date and (B) interest on such amount at the Note Formula Rate,
calculated on the basis of the actual number of days elapsed in the related
Interest Accrual Period and a year of 360 days.
"Interest Determination Date": With respect to each Interest
Accrual Period, the second London Business Day preceding the first day of such
Interest Accrual Period or, with respect to the December 1999 Payment Date, the
second London Business Day preceding the Closing Date.
"Interest Distribution Amount": With respect to any Payment Date,
the sum of (i) the product of (x) the Note Interest Rate for such Payment Date,
(y) the Note Principal
Ann. A-8
<PAGE> 86
Balance immediately prior to such Payment Date and (z) the actual number of days
in the related Interest Accrual Period, divided by 360, plus (ii) the Interest
Carry-Forward Amount, minus (iii) any Relief Act Shortfalls for the related
Remittance Period.
"Interest Rate Adjustment Date": The date on which an adjustment
to the Coupon Rate on a Mortgage Note becomes effective.
"Interest Remittance Amount": With respect to any Remittance Date
or Payment Date, the sum, without duplication, of (i) all interest accrued
during the related Remittance Period (less the Servicing Fee with respect to
such Mortgage Loans) and actually collected prior to such Remittance Date, (ii)
all Delinquency Advances and all Special Advances made by the Master Servicer on
such Remittance Date, (iii) all Compensating Interest paid by the Master
Servicer on such Remittance Date, net of amounts allowed to be retained pursuant
to Section 4.08(c) of the Sale and Servicing Agreement, (iv) without
duplication, the portion of the Loan Purchase Prices and the Substitution
Amounts paid prior to such Remittance Date which relate to accrued and unpaid
interest on the Mortgage Loans, to the extent such Loan Purchase Prices or
Substitution Amounts are actually received by the Indenture Trustee, (v) 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 accrued and unpaid interest) and (vi) the
proceeds of any termination of the Trust received by the Indenture Trustee (to
the extent such proceeds relate to interest).
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Trust by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Late Payment Rate": The rate defined in the Insurance Agreement.
"LIBOR": The London interbank offered rate, which shall be
determined by the Indenture Trustee on each Interest Determination Date pursuant
to Section 2.12 of the Indenture.
"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 include, without limitation, legal fees and
expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.09 of the Sale and Servicing
Agreement.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to which
the related Property has been acquired, liquidated, sold to a third party, or
foreclosed and with respect to which the Master Servicer determines, in
accordance with Section 4.13(b) of the Sale and Servicing Agreement, that all
Liquidation Proceeds which it expects to recover from or on account of such
Mortgage Loan have been recovered. A Mortgage Loan which is purchased from the
Trust pursuant to Sections 3.03(b), 3.04(b), 2.02(b) or 4.10 of the Sale and
Servicing Agreement is not a "Liquidated Mortgage Loan".
"Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan, any amounts (including the proceeds of any Mortgage Insurance Policy)
recovered by the Master Servicer in connection with such Liquidated Mortgage
Loan, whether through trustee's sale, foreclosure sale, third party sale or
otherwise, including payments in connection with such
Ann. A-9
<PAGE> 87
Liquidated Mortgage Loan received from the related Mortgagor, other than the
amounts required to be paid to the Mortgagor pursuant to the terms of the
applicable Mortgage or to be applied otherwise pursuant to law.
"Loan": Any mortgage loan sold to the Trust hereunder and pledged
to the Indenture Trustee, which mortgage loan includes, without limitation, (i)
the Promissory Note and the related Mortgage and (ii) all right, title and
interest of the related Originator in and to the Mortgaged Property or
foreclosure property covered by such Mortgage.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof as of the related Cut-Off Date, less any
principal thereof previously deposited to the Principal and Interest Account;
provided, however, 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.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Sections 3.03(b),
3.04(b), 2.02(b) or 4.10 of the Sale and Servicing Agreement, an amount, without
duplication, equal to the Loan Balance of such Mortgage Loan as of the date of
reacquisition, plus one month's accrued interest on (if not already deposited in
the Principal and Interest Account) the outstanding Loan Balance as of the
beginning of the preceding Remittance Period, computed at the related Coupon
Rate less the Servicing Fee (expressed as an annual percentage rate), together
with, without duplication, the aggregate amount of (i) all Servicing Advances,
including Nonrecoverable Advances theretofore made and not subsequently
recovered from the related Mortgage Loan, (ii) all Delinquency Advances which
the Master Servicer or any Sub-servicer has theretofore failed to remit with
respect to such Mortgage Loan and (iii) any Reimbursement Amount relating to
such Mortgage Loan.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, the
percentage equal to the original Loan Balance of such Mortgage Loan, divided by
the Appraised Value of the related Property.
"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 and is acting as a Sub-Servicer pursuant
to Section 4.03 of the Sale and Servicing Agreement.
"Master Servicer's Trust Receipt": The Master Servicer's trust
receipt in the form set forth as Exhibit D to the Sale and Servicing Agreement.
Ann. A-10
<PAGE> 88
"Monthly Remittance Amount": With respect to any Remittance Date,
the sum of (i) the Interest Remittance Amount for such Remittance Date and (ii)
the Principal Remittance Amount for such Remittance Date.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien on an interest in real property securing a
Mortgage Note.
"Mortgage Files": For any Mortgage Loan, the items listed below:
(a) the original Mortgage Note, or , if such Mortgage Note is
lost, a certified copy thereof along with a Lost Note Affidavit in the
form of Exhibit E to the Sale and Servicing Agreement, 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 Mortgage Corp. USA 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 officer (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]" or (iv) "Pay to the
order of Bankers Trust Company of California, N.A., without recourse" or
(v) "Pay to the order of______________, without recourse". The original
Mortgage 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
Mortgage 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 or a copy of the Mortgage certified by
the related recording office in those instances where the original
recorded Mortgage has been lost;
(d) the originals of all assumption, modification, consolidation
or extension agreements;
(e) the originals of all intervening assignments of Mortgage,
showing a complete chain of assignment from origination to the related
Originator, 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);
Ann. A-11
<PAGE> 89
(f) the original assignment of Mortgage of each Mortgage Loan to
"Bankers Trust Company of California, N.A., as custodian or trustee",
"Bankers Trust Company of California, N.A. as trustee or "Pay to the
order of _______________." In the event that the Mortgage Loan was
acquired by the previous owner in a merger, the assignment of Mortgage
must be by 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
(g) any assignment of Mortgages required to be delivered under
Section 2.01(c) of the Sale and Servicing Agreement.
"Mortgage Insurance Policy": Any hazard, title or primary
mortgage insurance policy relating to a Mortgage Loan, but excluding any
non-mortgage related or credit life insurance policy. The term Mortgage
Insurance Policy shall not include the Policy.
"Mortgage Loan": Each of the mortgage loans transferred to the
Trust pursuant to Section 2.01(a) of the Sale and Servicing Agreement (including
Subsequent Mortgage Loans), together with any Qualified Replacement Mortgage
Loans substituted therefor in accordance with the Sale and Servicing Agreement,
and identified in the Schedule of Mortgage Loans. The term Mortgage Loan
includes any Mortgage Loan which is Delinquent, which relates to a foreclosure
or which relates to a Property which is REO Property prior to such Property's
disposition by the Trust. Any mortgage loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
to the Trust, in fact was not transferred and assigned to the Trust for any
reason whatsoever shall nevertheless be considered a Mortgage Loan for all
purposes of the Operative Documents. The term Mortgage Loan includes the terms
Initial Mortgage Loan, Subsequent Mortgage Loan and Qualified Replacement
Mortgage Loan.
"Mortgage Loan Transfer Agreement": The Mortgage Loan Transfer
Agreement, dated as of November 1, 1999, among the Sponsor, the Indenture
Trustee and the Originators named therein, together with any related Conveyance
Agreements (as defined therein).
"Mortgage Note": The note or other evidence of indebtedness of a
Mortgagor under a Mortgage Loan.
"Mortgaged Property": With respect to a Loan, the related
Borrower's fee and/or leasehold interest in the real property (and/or all
improvements, buildings, fixtures, building equipment and personal property
thereon (to the extent applicable) and all additions, alterations and
replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by the related Promissory
Note.
"Mortgagor": The obligor on a Mortgage 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
Ann. A-12
<PAGE> 90
the date of liquidation. 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 8.06(b)(xii) of the Indenture or Section 4.09 of the Sale
and Servicing Agreement, (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 8.06(b)(xii) of the Indenture or Section 4.09 of the Sale
and Servicing Agreement, or (c) any other advance identified as a Nonrecoverable
Advance in Section 4.09(d) of the Sale and Servicing Agreement.
"Note": Any of the Advanta Mortgage Loan Asset-Backed Notes
Series 1999-4.
"Note Account": The Note Account established in accordance with
Section 8.03 of the Indenture and maintained by the Indenture Trustee.
"Note Formula Capped Rate": Means, for any Payment Date, the
lesser of (x) the Note Formula Rate for such Payment Date, and (y) 6.375%.
"Note Formula Rate": With respect to any Payment Date which
occurs (x) on or prior to the Clean-Up Call Date, LIBOR plus 0.375% per annum
and (y) after the Clean-Up Call Date, LIBOR plus 0.750% per annum.
"Note Insurer": Ambac Assurance Corporation, or any successor
thereto, as issuer of the 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 Policy;
(b) the Note Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the 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 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,
Indenture
Ann. A-13
<PAGE> 91
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 Interest Rate": With respect to any Payment Date, the
lesser of (i) the Note Formula Rate for such Payment Date and (ii) the Available
Funds Cap Rate for such Payment Date.
"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
Notes, the registered owner of the Definitive 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 of the Indenture and is authorized by the Trust to make payments to
and distributions from the Note Account, including payment of principal of or
interest on the Notes on behalf of the Trust.
"Note Principal Balance": As of any date of determination, the
Original Note Principal Balance less any principal amounts actually distributed
in respect of the Notes on all prior Payment Dates pursuant to Section 8.06 of
the Indenture.
"Note Register" and "Note Registrar": Shall have the respective
meanings specified in Section 2.03 of the Indenture.
"Noteholder": The Person in whose name a Note is registered on
the Note Register.
"Officer's Certificate": A certificate signed by any Authorized
Officer of the Owner Trustee, on behalf of the Trust, under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture and TIA Section 314, and delivered to the
Indenture Trustee.
"Operative Documents": Collectively, the Mortgage Loan Transfer
Agreement, the Insurance Agreement, the Indemnification Agreement, the Sale and
Servicing Agreement, any Subsequent Transfer Agreements, the Trust Agreement,
the Policy, the Indenture, the Guaranties and the Notes.
"Opinion of Counsel": One or more opinions of counsel who may,
except as otherwise expressly provided in the Indenture, be employees of or
counsel to the Trust and, if addressed to the Note Insurer, satisfactory to the
Note Insurer, and which shall comply with any applicable requirements of Section
11.01 of the Indenture, and if addressed to the Note Insurer, satisfactory to
the Note Insurer.
"Original Note Principal Balance": $200,000,000.
"Original Pool Principal Balance": The aggregate Loan Balance of
the Initial Mortgage Loans as of the Closing Date, which equals $132,550,785.07,
plus the Original Pre-Funded Amount, which equals $72,419,869.37. The sum of
which equals $204,970,654.44.
Ann. A-14
<PAGE> 92
"Original Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Closing Date from the proceeds of the sale of the
Notes, which amount is $72,419,869.37.
"Originator": Advanta Mortgage Corp. USA, a Delaware corporation,
Advanta National Bank, a national banking association, and Advanta Finance
Corp., a Nevada corporation.
"Outstanding": With respect to the Notes, as of any date of
determination, all Notes theretofore executed and delivered hereunder except:
(i) Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) 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 Noteholders;
(iii) Notes in exchange for or in lieu of which other Notes have
been executed and delivered pursuant to the Indenture, unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser; and
(iv) Notes alleged to have been destroyed, lost or stolen for
which replacement Notes have been issued as provided for in Section 2.04
of the Indenture.
"Overcollateralization Amount": With respect to any Payment Date,
the excess, if any, of (i) the sum of (x) the Pool Principal Balance on such
Payment Date and (y) the Pre-Funded Amount as of such Payment Date over (ii) the
aggregate Note Principal Balance on such Payment Date, after taking into account
the distribution of principal to the Noteholders on such Payment Date from all
sources other than the Policy.
"Overcollateralization Deficiency Amount": With respect to any
Payment Date, the difference, if any, between (i) the Specified
Overcollateralization Amount and (ii) the Overcollateralization Amount.
"Overcollateralization Deficit": With respect to any Payment
Date, the amount, if any, by which (i) the aggregate Note Principal Balance,
after taking into account the distribution of principal to the Noteholders on
such Payment Date from all sources other than the Policy, exceeds (ii) the sum
of (x) the Pool Principal Balance and (y) the Pre-Funded Amount as of such
Payment Date.
"Overcollateralization Increase Amount": With respect to any
Payment Date, the lesser of (i) the Overcollateralization Deficiency Amount for
such Payment Date after taking into account the payment of the Scheduled
Principal Distribution Amount on such Payment Date and (ii) the amount of Total
Available Funds remaining to be allocated to the payment of a Accelerated
Principal Payment pursuant to Section 8.06(b) of the Indenture on such Payment
Date.
Ann. A-15
<PAGE> 93
"Overcollateralization Reduction Amount": With respect to any
Payment Date, the lesser of (x) the Excess Overcollateralization Amount for such
Payment Date and (y) the Principal Remittance Amount for such Payment Date.
"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": With respect to any Payment Date,
one-twelfth of $5,000 per annum.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the 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 next succeeding Business Day.
"Percentage Interest": With respect to any Note and any date of
determination, that percentage, expressed as a fraction, the numerator of which
is the Note Principal Balance of such Note and the denominator of which is the
Original Note Principal Balance of all Notes; and as to any Certificate, the
Percentage Interest for such Certificate, as determined pursuant to the Trust
Agreement.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy": The financial guaranty insurance policy number
AB0317BE, dated November 17, 1999, issued by the Note Insurer to the Indenture
Trustee, for the benefit of the Noteholders.
"Pool Factor": A seven-digit decimal which the Indenture Trustee
shall compute monthly expressing the 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 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 Note Principal Balance resulting from
distributions of principal to the Notes.
"Pool Principal Balance": Means, as of any date of determination,
the sum of the Loan Balances of the Mortgage Loans and the amount on deposit in
the Pre-Funding Account, if any.
"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 2.04 of the Indenture 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 Policy.
Ann. A-16
<PAGE> 94
"Preference Claim": As defined in Section 5.08(b) of the
Indenture.
"Pre-Funded Amount": With respect to any date of determination,
the amount on deposit in the Pre-Funding Account on such date.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.03 of the Indenture and maintained by the Indenture
Trustee.
"Pre-Funding Earnings": With respect to any Payment Date
occurring during the Pre-Funding Period, the net investment earnings on the
Pre-Funded Amount during the period from and including the immediately prior
Payment Date (or, in the case of the December 1999 Payment Date, the Closing
Date) through but excluding such Payment Date, as calculated by the Indenture
Trustee pursuant to Section 8.08 of the Indenture.
"Pre-Funding Period": The period commencing on the Closing Date
and ending on the earlier to occur of (i) the date on which the Pre-Funded
Amount (exclusive of any Pre-Funding Earnings) is less than $100,000, (ii)
February 29, 2000 or (iii) the occurrence of an Event of Default, an Event of
Servicing Termination or any Insurance Agreement Event of Servicing Termination.
"Premium": Any amount paid by an Originator to a third party
seller of a Loan in excess of the par value of the Loan.
"Premium Amount": With respect to any Payment Date, the product
of (x) the actual number of days elapsed in the period from the prior Payment
Date (or with respect to the first Payment Date, the Closing Date) to and
including the day prior to the applicable Payment Date, divided by 360, (y) the
Premium Percentage and (z) the Note Principal Balance on such Payment Date
before taking into account any distributions of the Scheduled Principal
Distribution Amount to be made on such Payment Date.
"Premium Percentage": As defined in the Insurance Agreement.
"Premium Recapture": Any portion of a Premium that an Originator
receives back from a third party seller of a Loan.
"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 on a Mortgage Loan which
is received by the Master Servicer in advance of the scheduled due date for such
payment (other than the principal portion of any Prepaid Installment), and the
proceeds of any Mortgage 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 the Operative Documents.
"Prepayment Interest Shortfall": As defined in Section 4.09(b) of
the Sale and Servicing Agreement.
Ann. A-17
<PAGE> 95
"Preservation Expenses": Expenditures made by the Master Servicer
or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": Collectively, each principal
and interest account created by the Master Servicer or any Sub-Servicer pursuant
to Section 4.08(a) of the Sale and Servicing Agreement, or pursuant to any
Sub-Servicing Agreement.
"Principal Distribution Amount": With respect to any Payment
Date, the lesser of:
(i) the excess of (a) the sum of (x) the Total Available Funds
for such Payment Date and (y) any Insured Payment for such Payment Date,
over (b) the Interest Distribution Amount for such Payment Date; and
(ii) the sum, without duplication, of:
(a) the Principal Remittance Amount for such Payment
Date,
minus
(b) any Overcollateralization Reduction Amount for such
Payment Date.
"Principal Remittance Amount": With respect to any Remittance
Date or Payment Date, the sum, without duplication, of (a) the principal
actually collected by the Master Servicer with respect to the Mortgage Loans
during the related Remittance Period, (b) the portion of the Loan Purchase Price
and the Substitution Amount paid prior to such Remittance Date which relate to
principal on the Mortgage Loans, to the extent such Loan Purchase Price or
Substitution Amount 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), and (e) the proceeds of any
termination of the Trust received by the Indenture Trustee (to the extent such
proceeds relate to principal).
"Promissory Note": With respect to a Loan, the original executed
promissory note or other evidence of indebtedness of the related Borrower or
Borrowers.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain prospectus, dated August 10, 1999,
naming Advanta Conduit Receivables, 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 5, 1999, describing the Notes issued by the Trust.
Ann. A-18
<PAGE> 96
"Qualified Replacement Mortgage Loan": Any Mortgage Loan
substituted for another Mortgage Loan pursuant to Sections 3.03(b), 3.04(b) or
2.02(b) of the Sale and Servicing Agreement.
"Rating Agency": Moody's and S&P. 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 S&P 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 S&P 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 or
disposition is in excess of realized Net Liquidation Proceeds.
"Record Date": With respect to the Notes and each Payment Date,
the business day immediately preceding that Payment Date; provided, that, if the
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 Notes
pursuant to Section 10.01 of the Indenture, the Payment Date specified by the
Master Servicer or a Master Servicer Affiliate pursuant to Section 10.02(a) of
the Indenture.
"Redemption Price": As defined in Section 10.01(b) of the
Indenture.
"Reference Banks": Leading banks which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market (1)
with an established place of business in London, (2) which have been designated
by the Indenture Trustee after consultation with the Master Servicer and (3)
which are not controlling, controlled by, or under common control with, the
Sponsor.
"Registration Statement": The Registration Statement (No.
333-75295) 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 Notes constituting a part thereof.
"Reimbursement Amount": With respect to any Payment Date, the sum
of (x)(i) all payments made pursuant to the 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 Sections 8.06(b)(vii) of the Indenture, plus (ii) interest
accrued on each such payment not previously repaid, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related payment
and (y)(i) any
Ann. A-19
<PAGE> 97
amounts then due and owing to the Note Insurer with respect to the Notes 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 Reimbursement Amount if such amount is greater than zero.
"Relief Act Shortfall": With respect to any Remittance Period,
for any Mortgage Loan as to which, as a result of the application of the Civil
Relief Act, the amount 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 Note
Interest Rate, and (b) the Indenture Trustee's Fee, the Owner Trustee's Fee, the
Servicing Fee and the Premium Amount applicable to such Mortgage Loan.
"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the 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 succeeding Business Day,
commencing in the month following the month in which the Closing Date occurs.
"Remittance Period": The calendar month immediately preceding the
month in which a Remittance Date occurs.
"REO Property": A Property acquired by the Master Servicer or any
Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage Loan, the first day of the calendar month in which such
Qualified Replacement Mortgage Loan is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book-entry system with respect to the Notes
registered in the Register under the nominee name of the Depository.
"Representative": Means Bear, Stearns & Co., Inc., as
representative of the Underwriters.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Indenture Trustee determines to
be either the arithmetic mean, rounded to the nearest whole multiple of 1/16%,
of the one-month U.S. dollar lending rates which New York City banks selected by
the Indenture Trustee are quoting on the Interest Determination Date to the
principal London offices of leading banks in the London interbank market or, in
the event that the trustee cannot determine the arithmetic mean, the lowest
one-month U.S. dollar lending rate which New York City banks selected by the
Indenture Trustee are quoting on the Interest Determination Date to leading
European banks.
"Sale and Servicing Agreement": The Sale and Servicing Agreement,
dated as of November 1, 1999, among the Trust, the Sponsor, the Master Servicer,
the Holding Trust and the Indenture Trustee, as the same may be amended or
supplemented from time to time.
Ann. A-20
<PAGE> 98
"SAS 70": Means the "Statement on Auditing Standards No. 70
Reports on the Processing of Transactions by Service Organizations" as in effect
as of the date of the Sale and Servicing Agreement, which may be amended from
time to time.
"Schedule of Mortgage Loans": The Schedule of Mortgage Loans,
attached to the Sale and Servicing Agreement as Schedule I, as it may be further
supplemented to include Subsequent Mortgage Loans or Qualified Replacement
Mortgage Loans. The information contained on the Schedule of Mortgage Loans
shall be delivered to the Indenture Trustee in an electronic media acceptable to
the Indenture Trustee.
"Scheduled Principal Distribution Amount": With respect to any
Payment Date, an amount equal to the lesser of (x) the Principal Distribution
Amount for such Payment Date and (y) the Outstanding Note Principal Balance on
such Payment Date.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer Termination Loss Trigger". As defined in the Insurance
Agreement.
"Servicing Advance": The amounts described in Sections 4.09(c)
and 4.13(a) of the Sale and Servicing Agreement.
"Servicing Fee": For any Remittance Period, the product of (x)
one-twelfth of 0.75% and (y) the aggregate Loan Balances of the Mortgage Loans
as of the opening of business on the first day of the Remittance Period
preceding such Payment Date. "Special Advance" Any advance made by the Master
Servicer pursuant to Section 4.09(d) of the Sale and Servicing Agreement.
"Specified Overcollateralization Amount": As defined in the
Insurance Agreement.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada
corporation.
"Standard & Poor's" or "S&P": Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loan, the first day of the month in which such Subsequent Mortgage Loan
is sold and assigned to the Trust.
"Subsequent Mortgage Loan": Any Mortgage Loan sold to the Trust
pursuant to Section 2.04 of the Sale and Servicing Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement, dated as of a Subsequent Transfer Date, executed by the Trust, the
Holding Trust, the Indenture Trustee and the Sponsor, substantially in the form
of Exhibit I to the Sale and Servicing Agreement, pursuant to which Subsequent
Mortgage Loans are sold and assigned to the Trust.
Ann. A-21
<PAGE> 99
"Subsequent Transfer Date": The date Subsequent Mortgage Loans
are sold and assigned to the Trust, as specified in each Subsequent Transfer
Agreement.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage Loan, if the outstanding principal amount of such
Qualified Replacement Mortgage Loan as of the related 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 is either a Master Servicer Affiliate
or who satisfies any requirements set forth in Section 4.03 of the Sale and
Servicing Agreement in respect of the qualification of a Sub-Servicer .
"Sub-Servicing Agreement": The written contract between the
Master Servicer and any Sub-Servicer (other than a Master Servicer Affiliate)
relating to servicing and/or administration of certain Mortgage Loans as
permitted by Section 4.03 of the Sale and Servicing Agreement.
"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": The latest of (i) the termination of the
Policy and the return of the Policy to the Note Insurer for cancellation, (ii)
the date on which the Note Insurer shall have received payment and performance
of all obligations owed to it by the Trust and (iii) the date on which the
Indenture Trustee shall have received payment and performance of all obligations
owed to it and to the Noteholders.
"Total Available Funds": As defined in Section 8.06(a) of the
Indenture.
"Trust": Advanta Mortgage Loan Trust 1999-4, the trust created
under the Trust Agreement.
"Trust Agreement": The Trust Agreement, dated as of November 1,
1999, between the Owner Trustee, the Holding Trust and the Sponsor, as it may be
amended from time to time, pursuant to which the Trust was created.
"Trust Estate": As defined in the Granting Clause of the
Indenture.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939,
as amended and as in force on the date of the Indenture, 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.
"Underwriters": Bear, Stearns & Co. Inc. and SG Cowen Securities
Corporation.
Ann. A-22
<PAGE> 1
EXHIBIT 4.2
TRUST AGREEMENT
between
ADVANTA CONDUIT RECEIVABLES, INC.
Sponsor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of November 1, 1999
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions
Section 1.01. Capitalized Terms....................................... 1
Section 1.02. Other Definitional Provisions........................... 4
Section 1.03. Action by or Consent of Noteholders and
Certificateholders...................................... 4
Article II
Organization
Section 2.01. Names................................................... 5
Section 2.02. Office.................................................. 5
Section 2.03. Purposes and Powers..................................... 5
Section 2.04. Appointment of Owner Trustee............................ 5
Section 2.05. Initial Capital Contribution of Trust Estate............ 5
Section 2.06. Declaration of Trust.................................... 6
Section 2.07. Liability............................................... 6
Section 2.08. Title to Trust Property................................. 6
Section 2.09. Situs of Trust.......................................... 6
Section 2.10. Representations and Warranties of the Sponsor........... 7
Section 2.11. Covenants of the Sponsor................................ 8
Section 2.12. Covenants of the Certificateholders..................... 8
Section 2.13. Investment Company...................................... 9
Article III
Certificates and Transfer of Interests
Section 3.01. Initial Ownership....................................... 9
Section 3.02. The Certificates....................................... 10
Section 3.03. Authentication of Certificates......................... 10
Section 3.04. Registration of Transfer and Exchange of
Certificates........................................... 10
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates...... 11
Section 3.06. Persons Deemed Certificateholders...................... 11
Section 3.07. Access to List of Certificateholders' Names and
Addresses.............................................. 11
Section 3.08. Maintenance of Office or Agency........................ 11
Section 3.09. 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
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article IV
Voting Rights and Other Actions
Section 4.01. Prior Notice to Holders with Respect to Certain
Matters................................................ 13
Section 4.02. Action by Certificateholders with Respect to
Certain Matters........................................ 15
Section 4.03. Action by Certificateholders with Respect to
Bankruptcy............................................. 15
Section 4.04. Restrictions on Certificateholders' Power.............. 15
Section 4.05. Majority Control....................................... 16
Section 4.06. Rights of Insurer...................................... 16
Section 4.07. Separateness........................................... 17
Article V
Certain Duties
Section 5.01. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others............................................. 17
Article VI
Authority and Duties of Owner Trustee
Section 6.01. General Authority...................................... 18
Section 6.02. General Duties......................................... 18
Section 6.03. Action upon Instruction................................ 18
Section 6.04. No Duties Except as Specified in this Agreement
or in Instructions..................................... 19
Section 6.05. No Action Except under Specified Documents or
Instructions........................................... 19
Section 6.06. Restrictions........................................... 20
Article VII
Concerning the Owner Trustee
Section 7.01. Acceptance of Trust and Duties......................... 20
Section 7.02. Furnishing of Documents................................ 21
Section 7.03. Representations and Warranties......................... 21
Section 7.04. Reliance; Advice of Counsel............................ 21
Section 7.05. Not Acting in Individual Capacity...................... 22
Section 7.06. Owner Trustee Not Liable for Certificates or
Mortgage Loans......................................... 22
Section 7.07. Owner Trustee May Own Certificates and Notes........... 23
Section 7.08. Payments from Owner Trust Estate....................... 23
Section 7.09. Doing Business in Other Jurisdictions.................. 23
Article VIII
Compensation of Owner Trustee
Section 8.01. Owner Trustee's Fees and Expenses...................... 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.02. Indemnification........................................ 24
Section 8.03. Payments to the Owner Trustee.......................... 24
Section 8.04. Non-recourse Obligations............................... 24
Article IX
Termination of Trust Agreement
Section 9.01. Termination of Trust Agreement......................... 24
Article X
Successor Owner Trustees and Additional Owner Trustees
Section 10.01. Eligibility Requirements for Owner Trustee............. 26
Section 10.02. Resignation or Removal of Owner Trustee................ 26
Section 10.03. Successor Owner Trustee................................ 27
Section 10.04. Merger or Consolidation of Owner Trustee............... 28
Section 10.05. Appointment of Co-Owner Trustee or Separate
Owner Trustee.......................................... 28
Article XI
Miscellaneous
Section 11.01. Supplements and Amendments............................. 29
Section 11.02. No Legal Title to Owner Trust Estate in
Certificateholders..................................... 30
Section 11.03. Limitations on Rights of Others........................ 30
Section 11.04. Notices................................................ 30
Section 11.05. Severability........................................... 31
Section 11.06. Separate Counterparts.................................. 31
Section 11.07. Assignments; Insurer................................... 31
Section 11.08. No Petition............................................ 31
Section 11.09. No Recourse............................................ 31
Section 11.10. Headings............................................... 32
Section 11.11. Governing Law.......................................... 32
Section 11.12. Master Servicer........................................ 32
Section 11.13. No Borrowing........................................... 32
Section 11.14. Nonpetition Covenant................................... 32
EXHIBITS
Exhibit A Form of Certificate..................................... A-1
Exhibit B Form of Certificate of Trust ........................... B-1
</TABLE>
iii
<PAGE> 5
TRUST AGREEMENT dated as of November 1, 1999 between ADVANTA CONDUIT
RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation as Owner Trustee.
Article I
Definitions
Section 1.01. Capitalized Terms. For the purposes of this Agreement,
the following terms shall have the meanings set forth below. All other
capitalized terms used herein but not defined shall have the meanings set forth
in the Sale and Servicing Agreement.
"Accounts" shall have the meaning ascribed thereto in Annex A to the
Sale and Servicing Agreement.
"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 Agreement, as the same may be
amended and supplemented from time to time.
"Benefit Plan Investor" shall have the meaning assigned to such term
in Section 3.09.
"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 the Trust, substantially in the
form of Exhibit A hereto.
"Certificate Account" shall mean the account designated as such as
established and maintained pursuant to the Indenture.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to be filed for the 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 3.04.
"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 Insurer and the
Sponsor, or the principal corporate trust office of any
<PAGE> 6
successor Owner Trustee (the address of which the successor owner trustee will
notify the Certificateholders, the Insurer 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
3.09.
"Expenses" shall have the meaning assigned to such term in
Section 8.02.
"Holder" or "Certificateholder" shall mean the Person in whose name
a Certificate is registered on the Certificate Register.
"Indemnification Agreement" shall mean the Indemnification
Agreement dated as of November 17, 1999 among the Insurer, Bear, Stearns &
Co. Inc. and SG Cowan Securities Corporation.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.02.
"Indenture" shall mean the Indenture dated as of November 1, 1999,
between the Issuer and Bankers Trust Company of California, N.A., as Indenture
Trustee, as the same may be amended and supplemented from time to time.
"Indenture Trustee" shall mean, initially 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 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 6.03.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement dated as of November 17, 1999 among the Insurer, the Sponsor, the
Issuer, Advanta Holding Trust 1999-4, the Master Servicer and the Indenture
Trustee.
"Insurer" shall mean Ambac Assurance Corporation, or its
successor in interest.
"Issuer" shall mean Advanta Mortgage Loan Trust 1999-4.
"Majority Certificateholder" shall mean more than 50% by principal
amount of the Certificateholders.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a
Delaware corporation.
"Notes" shall mean any one of the Notes issued pursuant to the
Indenture.
"Noteholders" shall mean the Holder of a Note.
2
<PAGE> 7
"Operative Documents" shall mean this Agreement, the Certificate of
Trust, the Sale and Servicing Agreement, the Indemnification Agreement, the
Insurance Agreement, the Indenture, the AMHC Guaranty to the Representative and
the Issuer, the AMHC Guaranty to the Insurer and the Issuer, the Mortgage Loan
Transfer Agreement and the other documents and certificates delivered in
connection therewith.
"Originators" shall mean Advanta National Bank, Advanta Finance
Corp and Avanta Mortgage Corp. USA.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Accounts and the Certificate Account and all other property of
the Trust from time to time, including any rights of the Owner Trustee and the
Trust pursuant to the 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.
"Policy" shall mean the certificate guaranty insurance policy with
respect to the Notes, dated November 17, 1999, issued by the Insurer to the
Indenture Trustee for the benefit of the Noteholders.
"Record Date" shall mean with respect to any Payment Date, (i) in
the case of the Certificates the close of business on the last Business Day
immediately preceding such Payment Date and (ii) in the case of the Notes as
defined in the Indenture.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among Advanta Holding Trust 1999-4, Advanta Mortgage Loan Trust
1999-4, as Issuer, the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer,
and the Indenture Trustee, dated as of November 1, 1999, as the same may be
amended and supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Security Majority" means a majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Conduit Receivables, 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" shall mean the trust established by this Agreement.
3
<PAGE> 8
Section 1.02. Other Definitional Provisions. (a) Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to them
in Annex A to the Sale and Servicing Agreement or, if not defined therein, in
the 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."
(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 1.03. Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or 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 Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of the Sponsor 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 Notes or Certificates which the Owner Trustee, or the Indenture
Trustee, respectively, knows to be so owned shall be so disregarded.
4
<PAGE> 9
Article II
Organization
Section 2.01. Names. There is hereby formed a trust to be known as
"Advanta Holding Trust 1999-4," in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the 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, the
Insurer and the Sponsor.
Section 2.03. Purposes and Powers. The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Certificates pursuant to this Agreement;
(ii) with the proceeds of the sale of the Notes by Advanta Mortgage
Loan Trust 1999-4, to pay the organizational, start-up and transactional
expenses of the Trust;
(iii) to assign, grant, transfer and convey the Owner Trust Estate
to the Advanta Mortgage Loan Trust 1999-4 and to hold, manage and
distribute to the Certificateholders pursuant to the terms of this
Agreement such distributions as the Trust may receive pursuant to its
beneficial interest in Advanta Mortgage Loan Trust 1999-4;
(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.
The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the Operative Documents.
Section 2.04. Appointment of Owner Trustee. The Sponsor hereby
appoints the Owner Trustee as trustee of the 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 2.05. 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
5
<PAGE> 10
and shall be deposited in the Certificate Account. On or prior to the Closing
Date, the Owner Trustee will also acknowledge on behalf of the Trust, receipt of
the Mortgage Loans by execution of the Sale and Servicing Agreement. The Sponsor
shall pay organizational expenses of the Trust as they may arise.
Section 2.06. 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 the Trust 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 tax purposes, the 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 Trust shall
file or cause to be filed any additional forms or documents as may be required
to make such election under 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 Trust.
The Owner Trustee shall file the Certificate of Trust with the Secretary of
State.
Section 2.07. Liability. No Holder shall have any personal liability
for any liability or obligation of the Trust.
Section 2.08. Title to Trust Property. (a) Legal title to all of the
Owner Trust Estate shall be vested at all times in the Trust during the time
that such Owner Trust Estate is owned by the 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 Holders shall not have legal title to any part of the Trust
Property. The Holders 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 2.09. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. Payments will be received by the Trust only in Delaware or
New York and payments will be made by the Trust only from Delaware or New York.
The 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 Master Servicer or any agent of the Trust from having employees
within or without the State of Delaware. The only office of the Trust will be at
the Corporate Trust Office in Delaware.
6
<PAGE> 11
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 Insurer relies in issuing the 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 the Trust and the Sponsor has duly authorized such sale and
assignment and deposit to the Trust 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 Notes or the consummation of any of the transactions
7
<PAGE> 12
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
Notes or the Certificates.
Section 2.11. Covenants of the Sponsor. The Sponsor agrees and
covenants for the benefit of each Certificateholder, the 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 the
Trust to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the 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 the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.01(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the 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
8
<PAGE> 13
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 the Trust, the
Owner Trustee, the 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 all corporate, federal, state and local income or
franchise tax returns filed on behalf of the Trust, and agree that, if requested
by the Trust, it will sign such tax returns on behalf of the 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 the 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 9.01(e),
not to, for any reason, institute proceedings for the Trust or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust, 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
the Trust or a substantial part of its property, or cause or permit the Sponsor
or the 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 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, 2.11, 2.12, 8.02 or elsewhere herein.
Section 2.13. Investment Company. Neither the Sponsor nor any
Holders 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 3.01. Initial Ownership. Upon the formation of the Trust by
the contribution by the Sponsor pursuant to Section 2.05, 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 the Trust, to the Originators, one or more Certificates,
representing in the aggregate a 100% interest in the Trust, and has registered
one such Certificate in the name of Advanta National Bank and two such
Certificates, representing the interests of Advanta Finance Corp. and Advanta
Mortgage Corp. USA, in the name of Advanta Finance Receivables Corporation on
the Certificate Register. Each such
9
<PAGE> 14
Certificate shall have the initial percentage interest set forth on the face
thereof, which percentage interest equals the percentage obtained by dividing
(x) the aggregate Loan Balance of the Initial Mortgage Loans transferred to the
Trust by the related Originator by (y) the aggregate Loan Balance of all Initial
Mortgage Loans. Thereafter, the percentage interest of each such Certificate, as
of any date of determination, shall equal the percentage obtained by dividing
(x) the aggregate Loan Balance of the Mortgage Loans transferred to the Trust by
the related Originator by (y) the aggregate Loan Balance of all of the Mortgage
Loans transferred to the Trust, in each case, as of such date of determination.
The Originators shall be the sole beneficiaries of the Trust. Such Certificates
are duly authorized, validly issued, and entitled to the benefits of this
Agreement. For so long as the Originators shall own such 100% interest in the
Trust, the Originators shall be the sole beneficial owners of the Trust. For so
long as any Notes remain outstanding, the Originators shall not transfer their
ownership interest in the Trust, in whole or in part, without the Insurer's
prior written consent.
Section 3.02. 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 the 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 the
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. 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 3.04.
Section 3.03. Authentication of Certificates. Concurrently with the
initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate to be
executed on behalf of the 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. The Trust shall not issue any other Certificates without the
prior written consent of the Insurer.
Section 3.04. 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 3.08, 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.
10
<PAGE> 15
Section 3.05. 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 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 the 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 3.05, 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 the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Certificateholders. 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
Insurer and any agent of the Owner Trustee, the Certificate Registrar and the
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 Sale and Servicing Agreement and the
Indenture and for all other purposes whatsoever, and none of the Owner Trustee,
the Certificate Registrar or the Insurer nor any agent of the Owner Trustee, the
Certificate Registrar or the Insurer shall be bound by any notice to the
contrary.
Section 3.07. 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 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 Holders of Certificates or one or more Holders of Certificates
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 Holder, 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 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 3.08. 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
11
<PAGE> 16
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 Insurer of any change in the location of
the Certificate Register or any such office or agency.
Section 3.09. 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 person acting on behalf of or using the assets of a plan described in
(i) or (ii) above (each, a "Benefit Plan Investor"). 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
Investor.
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 Certificates to the
Originators, 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 Insurer certifying to the Owner Trustee and the Insurer
the facts surrounding such transfer, which investment letter shall not be an
expense of the Owner Trustee or the 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 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
Insurer or the Sponsor. The Holder of a Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Sponsor, the Owner
Trustee and the 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 2.01, 2.02, 2.03, 2.04, 3.03 and 3.04 of the Sale and
Servicing Agreement, Section 7.01 of the Indenture and under the Mortgage Loans
and the Mortgage Notes; (ii) the person that acquires a Certificate shall
deliver to the Owner Trustee and the 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 Section 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,
12
<PAGE> 17
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 Insurer a letter from
each Rating Agency confirming that its rating of the Notes, after giving effect
to such transfer, will not be reduced or withdrawn without regard to the
Policies; (iv) the person that acquires a Certificate shall deliver to the Owner
Trustee and the Insurer an Opinion of Counsel to the effect that (a) such
transfer will not adversely affect the treatment of the Notes after such
transfer as debt for federal and applicable state income tax purposes, (b) such
transfer will not result in the Advanta Mortgage Loan Trust 1999-4 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 Noteholder and (d) such transfer will not
result in the arrangement created by this Agreement or any "portion" of the
Advanta Mortgage Loan Trust 1999-4, 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 the Trust in the
Mortgage Loans and the other property conveyed hereunder shall have been taken
or made and (vi) the prior written consent of Insurer has been obtained.
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 Insurer
shall have received a letter from each Rating Agency confirming that its rating
of the 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 Policy. Notwithstanding the foregoing, the
requirements set forth in this paragraph (c) shall not apply to the initial
issuance of the Certificates to the Originators.
(d) Except for the initial issuance of the Certificates to the
Originators, no transfer of a Certificate shall be made unless the Owner Trustee
and the Insurer shall have received a representation letter from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Owner Trustee and the Insurer, to the effect that such transferee is not a
Benefit Plan Investor, 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 Holders of the
Certificates will be entitled to distributions on each Payment Date, as provided
in the Indenture.
Article IV
Voting Rights and Other Actions
Section 4.01. Prior Notice to Holders 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 and
13
<PAGE> 18
the Insurer in writing of the proposed action and (i) the Insurer shall have
consented in writing thereto and (ii) 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, with the written
consent of the Insurer, provided alternative direction:
(a) the election by the 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 any Operative Document;
(c) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or, pursuant to this Trust
Agreement, of a successor Certificate Registrar or the consent to the assignment
of the Note Registrar, Paying Agent, Indenture Trustee or Certificate Registrar
of its obligations under the Indenture or this Trust Agreement, as applicable;
(d) the consent to the calling or waiver of any default under any
Operative Document;
(e) the consent to the assignment by the Indenture Trustee or
Servicer of their respective obligations under any Operative Document;
(f) perform any act that conflicts with any other Operative
Document;
(g) perform any act which would make it impossible to carry on the
ordinary business of the Trust described in Section 2.03 hereof;
(h) confess a judgment against the Trust;
(i) possess Trust assets or assign the Trust's right to property for
other than a Trust purpose;
(j) cause the Trust to lend any funds to any entity; or
(k) change the Trust's purpose and powers from those enumerated in
this Trust Agreement.
The Owner Trustee shall notify the Certificateholders and the Insurer in writing
of any appointment of a successor Note Registrar, or Certificate Registrar
within five Business Days thereof.
In addition, the Owner Trustee shall not (i) cause the Trust to
merge or consolidate with or into any other entity, or convey or transfer all or
substantially all of the Trust's assets to any other entity; (ii) cause the
Trust to incur, assume or guaranty any indebtedness other than as set forth in
this Trust Agreement; or (iii) except as provided in Article IX hereof,
dissolve, terminate or liquidate the Trust in whole or in part.
14
<PAGE> 19
Section 4.02. Action by Certificateholders with Respect to Certain
Matters. (a) The Owner Trustee shall not have the power, except upon the written
direction of the Insurer or in the event that an 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 Sale and
Servicing Agreement; (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Indenture; (iii)
institute proceedings to have the Trust declared or adjudicated to be bankrupt
or insolvent, (iv) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (v) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (vi) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vii) make any assignment for the benefit of the Trust's creditors, (viii) cause
the Trust to admit in writing its inability to pay its debts generally as they
become due, (ix) take any action or cause the Trust to take any action, in
furtherance of any of the foregoing clauses (iii) through (ix) (any of such
clauses, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect, no Certificateholder shall have the power to take,
and shall not take, any Bankruptcy Action with respect to the Trust or direct
the Owner Trustee to take any Bankruptcy Action with respect to the Trust. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Insurer or the Securityholders, 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 4.03. Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the 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 Insurer (unless
an Insurer Default shall have occurred and is continuing) or the Security
Majority upon an Insurer Default. Until one year and one day following the day
on which the Notes have been paid in full, all amounts due to the Insurer under
the Insurance Agreement have been paid in full, the Policy has terminated and
the Indenture Trustee has surrendered the Policy to the 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 the 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 Trust is insolvent.
Section 4.04. 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 Trust or the Owner Trustee
15
<PAGE> 20
under this Agreement or any of the Operative Documents or would be contrary to
Section 2.03 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 Originators) 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 6.03 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 6.03;
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 4.04, 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 4.05. Majority Control. No Certificateholder shall have any
right to vote or in any manner otherwise control the operation and management of
the Trust except as expressly provided in this Agreement. Except as 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 the Trust. Except as 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 the Trust at the time of the delivery of such notice.
Section 4.06. Rights of Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Insurer (or if an 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 the Trust or compromise any
claim, suit or proceeding brought by or against the Trust, other than with
respect to the enforcement of any Mortgage Loan or any rights of the Trust
thereunder, (iii) authorize the merger or consolidation of the Trust with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Indenture), (iv) amend the Certificate of Trust or (v) amend
this Agreement in accordance with Section 11.01 of this Agreement.
16
<PAGE> 21
Section 4.07. Separateness. The Trust shall (i) not commingle its
assets with those of any other entity; (ii) maintain its financial and
accounting books and records separate from those of any other entity; (iii)
maintain appropriate minutes or other records of all appropriate actions and
maintain books and records separate from any other entity; (iv) conduct its own
business in its own name; (v) except as expressly set forth herein, pay its
indebtedness, operating expenses and liabilities from its own funds; (vi) enter
into transactions with affiliates only on terms that are commercially reasonable
and on the same terms as would be available in an arm's length transaction;
(vii) not pay the indebtedness, operating expenses and liabilities of any other
entity; (viii) not hold out its credit as being available to satisfy the
obligation of any other entity; (ix) not make loans to any other entity or buy
or hold evidence of indebtedness issued by any other entity (except for cash and
investment-grade securities); (x) use separate stationery, invoices, and checks
bearing its own name; (xi) 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; (xii) not identify itself
as a division of any other entity; (xiii) hold itself out as a separate
identity; and (xiv) maintain adequate capital in light of its contemplated
business operation.
Article V
Certain Duties
Section 5.01. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
6.01(b)(iii) and 6.01(c) of the Sale and Servicing Agreement, the Sponsor shall
(a) maintain (or cause to be maintained) the books of the 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 the 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 and (d) collect or cause to be collected any
withholding tax as described in and in accordance with Section 6.01(b)(ii) of
the 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 5.01 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 on behalf
of the Trust to include in income currently any market discount that accrues
with respect to the Mortgage Loans.
17
<PAGE> 22
Article VI
Authority and Duties of Owner Trustee
Section 6.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which the 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 the 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, and
on behalf of the Trust, to direct the Indenture Trustee to authenticate and
deliver Notes in the aggregate principal amount of $200,000,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the 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 6.02. 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 the Trust 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 Sale and Servicing Agreement to perform any act or to
discharge any duty of the Trust 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 Sale and
Servicing Agreement.
Section 6.03. Action upon Instruction. (a) Subject to Article IV,
the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an 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 the 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
18
<PAGE> 23
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 6.04. 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 6.03; 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 the 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 6.05. 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 6.03.
19
<PAGE> 24
Section 6.06. Restrictions. The Owner Trustee shall not take any
action that is inconsistent with the purposes of the Trust set forth in Section
2.03. The Certificateholders shall not direct the Owner Trustee to take action
that would violate the provisions of this Section 6.06.
Article VII
Concerning the Owner Trustee
Section 7.01. 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 7.03
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 6.04 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 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
20
<PAGE> 25
liability, duty or obligation to the Sponsor, the 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 Insurer, the Indenture Trustee, 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 Indenture or
the Master Servicer under the 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 7.02. 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 7.03. 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 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 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request,
21
<PAGE> 26
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 7.05. Not Acting in Individual Capacity. Except as provided
in this Agreement, 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 7.06. 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 Notes (other
than the signature of the Owner Trustee on the 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 Noteholders under the 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 the Trust or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan; the compliance by the 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
22
<PAGE> 27
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 7.07. Owner Trustee May Own Certificates and Notes. Subject
to the provisions of Section 3.01 hereof, the Owner Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates or 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 7.08. 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 the 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 the
Owner 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 the Trust or the Owner Trustee is a party.
Section 7.09. 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 10.05 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 8.01. 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.
23
<PAGE> 28
Section 8.02. Indemnification. The Sponsor shall be liable as
primary obligor for, and the Master Servicer pursuant to the Sale and Servicing
Agreement shall be the secondary 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
7.01. The indemnities contained in this Section and the rights under Section
8.01 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 8.03. 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 8.04. 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 the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the 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 9.01. Termination of Trust Agreement. (a) This Agreement and
the Trust 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 Sponsor at its option of the corpus of the Trust as described
in Section 10.01(b) and Section 10.01(c) of the Indenture) and the subsequent
distribution of amounts in respect of such Mortgage Loans as provided in the
Operative Documents, (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Insurer of all amounts payable or reimbursable to it pursuant to the Sale and
Servicing Agreement and the Insurance Agreement and (iii) the termination of the
Indenture and the Insurance Agreement; provided, however, that the rights to
indemnification under Section 8.02 and the rights under Section 8.01 shall
survive the termination of the Trust. The Master Servicer shall promptly notify
the Owner Trustee and the Insurer of any prospective termination pursuant to
this Section 9.01. The bankruptcy, liquidation, dissolution, death or incapacity
of any Certificateholder shall not (x) operate to terminate this Agreement or
the Trust, nor (y) entitle such Certificateholder's legal
24
<PAGE> 29
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 the
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, any
Originator nor any other Certificateholder shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the 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 notice of such redemption from the Master Servicer
given pursuant to Section 10.01 of the 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 8.06(b)(xi) of the
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 the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the
Sponsor for payment.
(d) Any funds remaining in the 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 the 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) Notwithstanding any other provisions to the contrary herein, the
Trust shall not dissolve so long as any Notes are outstanding.
25
<PAGE> 30
(g) The Sponsor shall take all necessary steps to qualify the
termination of the 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 10.01. 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 & Poor's or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the 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 10.01, 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 10.02.
Section 10.02. 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 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 10.01 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 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 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 10.01 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
Insurer (so long as no 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
acceptable to the Insurer, meeting the qualifications set forth in Section 10.01
herein, by written instrument, in duplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so
26
<PAGE> 31
removed, one copy to the 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 the 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 10.03 and payment of all reasonable fees and
expenses owed to the outgoing Owner Trustee. The Master Servicer shall provide
notice of such resignation or removal of the Owner Trustee to each of the Rating
Agencies and the Insurer.
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 4.02(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in the Trust,
the Owner Trustee may be removed as Owner Trustee, subject to the consent of the
Insurer (so long as no 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 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Sponsor, the Master Servicer, the 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 10.01.
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, the Insurer and
the 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.
27
<PAGE> 32
Section 10.04. 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
10.01, 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 and the Insurer.
Section 10.05. 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 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 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 the 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 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 10.01 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.03,
except that notice to and written consent of, the Insurer shall be required for
the appointment of a co-trustee.
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 the 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.
28
<PAGE> 33
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 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 11.01. Supplements and Amendments. (a) This Agreement may be
amended by the Sponsor and the Owner Trustee, with the prior written consent of
the Insurer and prior written notice to the Rating Agencies (so long as no
Insurer Default shall have occurred and is continuing), without the consent of
any of the Noteholders (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 Insurer (so long as no 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 Noteholders, with the
consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in the Trust (which consent of any
Holder of a Certificate or Note given pursuant to this Section 11.01 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 Note and of any
Certificate or 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 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 Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Insurer under the
Operative Documents, such amendment shall not (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Mortgage Loans or
29
<PAGE> 34
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the 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 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 the Insurer, to each Certificateholder and the Indenture
Trustee.
It shall not be necessary for the consent of Certificateholders, the
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. The Owner Trustee shall furnish copies of any such
amendments to the Rating Agencies.
Section 11.02. 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 VIII of the Indenture and Article IX of this Agreement.
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 11.03. Limitations on Rights of Others. Except for Section
11.07, 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 Insurer, the Indenture Trustee and the
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 11.04. 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
30
<PAGE> 35
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 Conduit
Receivables, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127; if
to the Insurer, addressed to Insurer, Ambac Assurance Corporation, One State
Street Plaza, New York, New York 10004, Attention: Structured Finance Department
- - MBS, Telecopy No.: 212-363-1459, Confirmation No.: 212-668-0340, 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 11.05. 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 11.06. 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 11.07. Assignments; Insurer. 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 Insurer for so long as an 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 Insurer shall be for
the benefit of and run directly to the Insurer, and the 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 Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Policy) upon delivery of
a written notice to the Owner Trustee.
Section 11.08. No Petition. The Owner Trustee (in its individual
capacity and as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee, the
Originators, 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 the Trust, or join in any institution against the Sponsor or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law.
Section 11.09. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the
31
<PAGE> 36
Owner Trustee, the Indenture Trustee, the 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 the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the 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 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.
Section 11.13. No Borrowing. The Trust shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness
permitted by or arising under the Operative Documents except that the Trust
shall not incur any Indebtedness that would cause it, or any portion thereof, to
be treated as a "taxable mortgage pool" under Section 7701(i) of the Code. The
proceeds of the Notes shall be used exclusively to fund the Trust's purchase of
the Mortgage Loans and the other assets specified in the Sale and Servicing
Agreement and to pay the Trust's organizational, transactional and start-up
expenses.
Section 11.14. Nonpetition Covenant. (a) Until one year plus one day
shall have elapsed since the full discharge of all obligations under the
Indenture with respect to Noteholders in accordance with its terms, neither the
Sponsor nor any assignee of the Sponsor shall petition or otherwise invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust without the consent of the Owner Trustee.
(b) So long as any Notes remain outstanding, no voluntary petition
for the purpose of commencing or sustaining a case against the Trust under any
federal or state bankruptcy, insolvency or similar law shall be filed without
the consent of the Owner Trustee.
[Remainder of Page Intentionally Left Blank]
32
<PAGE> 37
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/ Donald G. MacKelcan
-----------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
ADVANTA CONDUIT RECEIVABLES, INC., as
Sponsor
By: /s/ Michael Coco
-----------------------------------------
Name: Michael Coco
Title: Vice President
<PAGE> 38
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 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 AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE PROVIDES A
REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER, TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, (ii) A
PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
OR (iii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN,
WHICH REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE
INSURER.
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 ORIGINATORS, 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 INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS
SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF
THE OWNER TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT
DELIVERED, A WRITTEN OPINION OF
A-1
<PAGE> 39
COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER
TRUSTEE, THE 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 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 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.
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 AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS
CONTAINED IN SECTIONS 2.01, 2.02, 2.03, 2.04, 3.03 AND 3.04 OF THE SALE AND
SERVICING AGREEMENT, SECTION 7.01 OF THE INDENTURE AND UNDER THE MORTGAGE LOANS
AND THE MORTGAGE NOTES; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL
DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING
THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF
THE TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10
OF THE 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 INSURER A LETTER FROM
EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT
TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE POLICY;
(IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE
AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH TRANSFER WILL
NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH TRANSFER AS DEBT FOR
FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT
RESULT IN THE ADVANTA MORTGAGE LOAN TRUST
A-2
<PAGE> 40
1999-4 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 NOTEHOLDER AND (D) SUCH
TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR
ANY "PORTION" OF THE ADVANTA MORTGAGE LOAN TRUST 1999-4, 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 THE
TRUST IN THE MORTGAGE LOANS AND THE OTHER PROPERTY CONVEYED UNDER THE 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.
A-3
<PAGE> 41
ADVANTA HOLDING TRUST 1999-4
CERTIFICATE
Initial Percentage Interest: [ ]% Cut-Off Date:
Opening of business November 1, 1999
First Payment Date: Issue Date: November 17, 1999
December 27, 1999
No. 1
-------------------
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as of
November 1, 1999 (the "Holding 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 Holding Trust Agreement. Also the Advanta
Mortgage Loan Trust 1999-4 (the "Issuer") was created pursuant to a Trust
Agreement dated as of November 1, 1999 (the "Trust Agreement") between Advanta
Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-4 and
Wilmington Trust Company, as Owner Trustee (the "Owner Trustee").
This Certificate is one of the duly authorized Certificates
designated as Advanta Holding Trust 1999-4 "Certificates." Pursuant to the Trust
Agreement, there is also issued duly authorized Certificates designated as
Advanta Mortgage Loan Trust 1999-4 "Asset Backed Certificates". Pursuant to the
Indenture dated as of November 1, 1999 (the "Indenture") between the Issuer and
Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture
Trustee") there is also issued the Advanta Mortgage Loan Asset Backed Notes (the
"Notes"). These Certificates are issued under and are subject to the terms,
provisions and conditions of the Holding Trust Agreement, to which Holding Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust consists of
the Asset Backed Certificates of the Issuer. The property of the Issuer includes
a pool of adjustable-rate mortgage loans secured by first deeds of trust or
Mortgages on primarily one-to-four family residential properties.
Under the Holding 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 27, 1999, 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.
A-4
<PAGE> 42
This Certificate shall have the initial Percentage Interest set
forth on the face hereof, which Percentage Interest equals the percentage
obtained by dividing (x) the aggregate Loan Balance of the Initial Mortgage
Loans transferred to the Trust by the related Originator by (y) the aggregate
Loan Balance of all Initial Mortgage Loans. Thereafter, the Percentage Interest
of this Certificate, as of any date of determination, shall equal the percentage
obtained by dividing (x) the aggregate Loan Balance of the Mortgage Loans
transferred to the Trust by the related Originator by (y) the aggregate Loan
Balance of all of the Mortgage Loans transferred to the Trust, in each case, as
of such date of determination.
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 Sale and Servicing
Agreement, the Indenture and the Holding Trust Agreement, as applicable.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the 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. Each Certificateholder, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Sponsor, or join in any institution
against the Trust 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 Holding Trust
Agreement or any of the Operative Documents.
Distributions on this Certificate will be made as provided in the
Sale and Servicing Agreement and the 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 Holding 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
Holding Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
A-5
<PAGE> 43
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.
Date: November 17, 1999 ADVANTA HOLDING TRUST 1999-4
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as
Owner Trustee
By:
-----------------------------------------
Name:
Title:
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
A-6
<PAGE> 44
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest
in, the Originators, the Sponsor, the Master Servicer, the 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 Holding Trust Agreement, the 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 Sale and Servicing Agreement and in the Indenture. A copy of each
of the Sale and Servicing Agreement and the Holding 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 Holding 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
Holding Trust Agreement at any time by the Sponsor and the Owner Trustee with
the prior written consent of the 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 Holding 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 Insurer).
As provided in the Holding 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 the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Holding Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Sponsor, 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
Holding 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 Insurer and any
agent of the Owner Trustee, the Certificate Registrar or the Insurer may treat
the person in whose name this
A-7
<PAGE> 45
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar, the Insurer nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Holding Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Holding Trust Agreement and the Sale and Servicing Agreement and the disposition
of all property held as part of the Trust.
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 Holding Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
A-8
<PAGE> 46
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
A-9
<PAGE> 47
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA HOLDING TRUST 1999-4
This Certificate of Trust of Advanta Holding Trust 1999-4 (the
"Trust") is being duly executed and filed by the undersigned, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code
Section 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is
Advanta Holding Trust 1999-4.
2. Delaware Trust. The name and business address of the Owner
Trustee of the 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 17, 1999.
IN WITNESS WHEREOF, the undersigned, in accordance with Section
3811(a) of the Act, has duly executed this Certificate of Trust.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee of the Trust
By:
-----------------------------------------
Name:
Title:
B-1
<PAGE> 1
EXHIBIT 4.3
TRUST AGREEMENT
between
ADVANTA CONDUIT RECEIVABLES, INC.
Sponsor
ADVANTA HOLDING TRUST 1999-4,
Depositor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of November 1, 1999
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions
Section 1.01. Capitalized Terms......................................................................... 1
Section 1.02. Other Definitional Provisions............................................................. 3
Section 1.03. Action by or Consent of Noteholders and Certificateholders................................ 4
ARTICLE II
Organization
Section 2.01. Names..................................................................................... 4
Section 2.02. Office.................................................................................... 4
Section 2.03. Purposes and Powers....................................................................... 5
Section 2.04. Appointment of Owner Trustee.............................................................. 5
Section 2.05. Initial Capital Contribution of Trust Estate.............................................. 5
Section 2.06. Declaration of Trust...................................................................... 5
Section 2.07. Liability................................................................................. 6
Section 2.08. Title to Trust Property................................................................... 6
Section 2.09. Situs of Trust............................................................................ 6
Section 2.10. Representations and Warranties of the Sponsor and the Depositor........................... 6
Section 2.11. Federal Income Tax Allocations............................................................ 9
Section 2.12. Covenants of the Sponsor.................................................................. 9
Section 2.13. Covenants of the Certificateholders...................................................... 10
Section 2.14. Investment Company....................................................................... 11
ARTICLE III
Certificates and Transfer of Interests
Section 3.01. Initial Ownership........................................................................ 11
Section 3.02. The Certificates......................................................................... 11
Section 3.03. Authentication of Certificates........................................................... 11
Section 3.04. Registration of Transfer and Exchange of Certificates.................................... 12
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates........................................ 12
Section 3.06. Persons Deemed Certificateholders........................................................ 12
Section 3.07. Access to List of Certificateholders' Names and Addresses................................ 12
Section 3.08. Maintenance of Office or Agency.......................................................... 13
Section 3.09. ERISA.................................................................................... 13
Section 3.10. Restrictions on Transfer of Certificates................................................. 13
Section 3.11. Acceptance of Obligations................................................................ 14
Section 3.12. Payments on Certificates................................................................. 14
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE IV
Voting Rights and Other Actions
Section 4.01. Prior Notice to Holders with Respect to Certain Matters.................................. 15
Section 4.02. Action by Certificateholders with Respect to Certain Matters............................. 16
Section 4.03. Action by Certificateholders with Respect to Bankruptcy.................................. 16
Section 4.04. Restrictions on Certificateholders' Power................................................ 17
Section 4.05. Majority Control......................................................................... 17
Section 4.06. Rights of Insurer........................................................................ 17
Section 4.07. Separateness............................................................................. 18
ARTICLE V
Certain Duties
Section 5.01. Accounting and Records to the Noteholders, Certificateholders,
the Internal Revenue Service and Others........................................... 18
Section 5.02. Signature on Returns; Tax Matters Partner................................................ 19
ARTICLE VI
Authority and Duties of Owner Trustee
Section 6.01. General Authority........................................................................ 19
Section 6.02. General Duties........................................................................... 19
Section 6.03. Action upon Instruction.................................................................. 19
Section 6.04. No Duties Except as Specified in this Agreement or in Instructions....................... 20
Section 6.05. No Action Except under Specified Documents or Instructions............................... 21
Section 6.06. Restrictions............................................................................. 21
ARTICLE VII
Concerning the Owner Trustee
Section 7.01. Acceptance of Trust and Duties........................................................... 21
Section 7.02. Furnishing of Documents.................................................................. 22
Section 7.03. Representations and Warranties........................................................... 22
Section 7.04. Reliance; Advice of Counsel.............................................................. 23
Section 7.05. Not Acting in Individual Capacity........................................................ 23
Section 7.06. Owner Trustee Not Liable for Certificates or Mortgage Loans.............................. 23
Section 7.07. Owner Trustee May Own Certificates and Notes............................................. 24
Section 7.08. Payments from Owner Trust Estate......................................................... 24
Section 7.09. Doing Business in Other Jurisdictions.................................................... 24
ARTICLE VIII
Compensation of Owner Trustee
Section 8.01. Owner Trustee's Fees and Expenses........................................................ 24
Section 8.02. Indemnification.......................................................................... 25
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.03. Payments to the Owner Trustee............................................................ 25
Section 8.04. Non-recourse Obligations................................................................. 25
ARTICLE IX
Termination of Trust Agreement
Section 9.01. Termination of Trust Agreement........................................................... 25
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
Section 10.01. Eligibility Requirements for Owner Trustee............................................... 27
Section 10.02. Resignation or Removal of Owner Trustee.................................................. 27
Section 10.03. Successor Owner Trustee.................................................................. 28
Section 10.04. Merger or Consolidation of Owner Trustee................................................. 29
Section 10.05. Appointment of Co-Owner Trustee or Separate Owner Trustee................................ 29
ARTICLE XI
Miscellaneous
Section 11.01. Supplements and Amendments............................................................... 30
Section 11.02. No Legal Title to Owner Trust Estate in Certificateholders............................... 31
Section 11.03. Limitations on Rights of Others.......................................................... 31
Section 11.04. Notices.................................................................................. 31
Section 11.05. Severability............................................................................. 32
Section 11.06. Separate Counterparts.................................................................... 32
Section 11.07. Assignments; Insurer..................................................................... 32
Section 11.08. No Petition.............................................................................. 32
Section 11.09. No Recourse.............................................................................. 32
Section 11.10. Headings................................................................................. 33
Section 11.11. Governing Law............................................................................ 33
Section 11.12. Master Servicer.......................................................................... 33
Section 11.13. No Borrowing............................................................................. 33
Section 11.14. Nonpetition Covenant..................................................................... 33
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
</TABLE>
iii
<PAGE> 5
TRUST AGREEMENT dated as of November 1, 1999 between ADVANTA CONDUIT
RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), ADVANTA HOLDING TRUST
1999-4, a Delaware business trust, as depositor (the "Depositor") and WILMINGTON
TRUST COMPANY, a Delaware banking corporation as Owner Trustee (the "Owner
Trustee").
ARTICLE I
Definitions
Section 1.01 Capitalized Terms. For the purposes of this Agreement,
the following terms shall have the meanings set forth below. All other
capitalized terms used herein but not defined shall have the meanings set forth
in the Indenture.
"Accounts" shall have the meaning ascribed thereto in Annex A to the
Sale and Servicing Agreement.
"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 Agreement, as the same may be
amended and supplemented from time to time.
"Benefit Plan Investor" shall have the meaning assigned to such term
in Section 3.09.
"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 the Trust, substantially in the
form of Exhibit A hereto.
"Certificate Account" shall mean the account designated as such as
established and maintained pursuant to the Indenture.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to be filed for the 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 3.04.
"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
<PAGE> 6
Certificateholders, the Insurer, the Depositor and the Sponsor, or the principal
corporate trust office of any successor Owner Trustee (the address of which the
successor owner trustee will notify the Certificateholders, the Insurer, the
Depositor and the Sponsor).
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"Depositor" shall mean Advanta Holding Trust 1999-4 in its capacity
as Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in Section
3.09.
"Expenses" shall have the meaning assigned to such term in
Section 8.02.
"Holder" or "Certificateholder" shall mean the Person in whose name
a Certificate is registered on the Certificate Register.
"Indemnification Agreement" shall mean the Indemnification
Agreement dated as of November 5, 1999 among the Insurer, Bear, Stearns &
Co. Inc. and SG Cowen Securities Corporation.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.02.
"Indenture" shall mean the Indenture dated as of November 1, 1999,
between the Trust and Bankers Trust Company of California, N.A., as Indenture
Trustee, as the same may be amended and supplemented from time to time.
"Indenture Trustee" shall mean, initially 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 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 6.03.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement dated as of November 17, 1999 among the Insurer, the Sponsor, the
Trust, Advanta Holding Trust 1999-4, the Master Servicer and the Indenture
Trustee.
"Insurer" shall mean Ambac Assurance Corporation, or its
successor in interest.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a
Delaware corporation.
"Notes" shall mean any of the Notes issued pursuant to the
Indenture.
"Noteholder" shall mean the holder of a Note.
"Operative Documents" shall mean this Agreement, the Certificate of
Trust, the Sale and Servicing Agreement, the Indemnification Agreement, the
Insurance Agreement, the
2
<PAGE> 7
Indenture, the Mortgage Loan Transfer Agreement, the AMHC Guaranty to the
Representative and the Trust, the AMHC Guaranty to the Insurer and the Trust and
the other documents and certificates delivered in connection therewith.
"Originators" shall mean Advanta National Bank, Advanta Finance
Corp. and Advanta Mortgage Corp. USA
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Accounts and the Certificate Account and all other property of
the Trust from time to time, including any rights of the Owner Trustee and the
Trust pursuant to the 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.
"Policy" shall mean the certificate guaranty insurance policy with
respect to the Notes, dated November 17, 1999, issued by the Insurer to the
Indenture Trustee for the benefit of the Noteholders.
"Record Date" shall mean with respect to any Payment Date, (i) in
the case of the certificates, the close of business on the last Business Day
immediately preceding such Payment Date and (ii) in the case of the Notes as
defined in the Indenture.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among Advanta Holding Trust 1999-4, Advanta Mortgage Loan Trust
1999-4, as Issuer, Advanta Conduit Receivables, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, and the Indenture Trustee, dated as of
November 1, 1999, as the same may be amended and
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Security Majority" means a majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Conduit Receivables, 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" or "Issuer" shall mean the trust established by this
Agreement.
Section 1.02 Other Definitional Provisions. (a) Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to them
in Annex A to the Sale and Servicing Agreement or, if not defined therein, in
the Indenture.
3
<PAGE> 8
(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."
(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 1.03 Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or 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 Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of the Sponsor 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 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 2.01 Names. There is hereby formed a trust to be known as
"Advanta Mortgage Loan Trust 1999-4," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 2.02 Office. The office of the 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 ,
the Insurer and the Sponsor.
4
<PAGE> 9
Section 2.03 Purposes and Powers. The purpose of the Trust is,
and the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, startup and transactional expenses of the Trust and to pay
the balance to the Sponsor pursuant to the 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
Noteholders and for the benefit of the Insurer and to hold, manage and
distribute to the Certificateholders pursuant to the terms of this
Agreement any portion of the Owner Trust Estate released from the Lien of,
and remitted to the Trust pursuant to, the 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
(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 Noteholders.
The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the Operative Documents.
Section 2.04 Appointment of Owner Trustee. The Sponsor hereby
appoints the Owner Trustee as trustee of the 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 2.05 Initial Capital Contribution of Trust Estate. The
Depositor hereby 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 Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Account. On or prior to the Closing Date, the Owner
Trustee will also acknowledge on behalf of the Trust, receipt of the Mortgage
Loans by execution of the Sale and Servicing Agreement. The Sponsor shall pay
organizational expenses of the Trust as they may arise.
Section 2.06 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 the Trust under the Operative Documents. It is the
intention of the parties hereto that the Trust constitute a
5
<PAGE> 10
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, the Trust shall be
treated as a branch (and not as an association or publicly traded partnership
taxable as a corporation); 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, the Trust shall then
be treated as a partnership (and not as an association or publicly traded
partnership taxable as a corporation) and that, unless otherwise required by
appropriate tax authorities, only after such time the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust 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 the Trust. The Owner Trustee shall file the Certificate of Trust
with the Secretary of State.
Section 2.07 Liability. No Holder shall have any personal liability
for any liability or obligation of the Trust.
Section 2.08 Title to Trust Property. (a) Legal title to all of the
Owner Trust Estate shall be vested at all times in the 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 Holders shall not have legal title to any part of the Trust
Property. The Holders 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 2.09 Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. Payments will be received by the Trust only in Delaware or
New York and payments will be made by the Trust only from Delaware or New York.
The 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 Master Servicer or any agent of the Trust from having employees
within or without the State of Delaware. The only office of the Trust will be at
the Corporate Trust Office in Delaware.
Section 2.10 Representations and Warranties of the Sponsor and the
Depositor.
(a) 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 Insurer relies in issuing the
Policy.
6
<PAGE> 11
(i) The Sponsor is duly organized and validly
existing as a Nevada 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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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 bylaws 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
(vi) 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 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
7
<PAGE> 12
affect the federal income tax or other federal, state or local tax
attributes of the Notes or the Certificates.
(b) The Depositor 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 Insurer relies in issuing the
Policy.
(i) The Depositor is duly organized and validly existing
as a Delaware business trust 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;
(ii) 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;
(iii) The Depositor has the corporate power and
authority to execute and deliver this Agreement and to carry out its
terms; the Depositor has full power and authority to convey and
assign the property to be conveyed and assigned to and deposited
with the Trust and the Depositor has duly authorized such conveyance
and assignment and deposit to the Trust by all necessary corporate
action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Depositor by all necessary
corporate action. The Depositor has duly executed this Agreement and
this Agreement constitutes a legal, valid and binding obligation of
the Depositor enforceable against the Depositor, in accordance with
its terms;
(iv) To the best knowledge of the Depositor, 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;
(v) 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 trust of the Depositor, or
any material indenture, agreement or other instrument to which the
Depositor 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 Depositor's knowledge, any
order, rule or regulation applicable to the Depositor of any court
or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Depositor or its properties; and
8
<PAGE> 13
(vi) 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 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 Notes or the Certificates.
Section 2.11 Federal Income Tax Allocations. In the event that the
Trust is treated as a partnership for Federal income tax purposes, net income of
the Trust 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 the Trust, 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 Originators, 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 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 the
Trust to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
9
<PAGE> 14
(c) it shall obtain from each counterparty to each Operative
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.01(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the 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 2.13 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 the Trust, the Owner Trustee, the 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 the Trust, if any, and agree that, if requested by the Trust, it will
sign such federal income tax information return in its capacity as holder of an
interest in the 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 the 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 1099B, 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 9.01(e),
not to, for any reason, institute proceedings for the Trust or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust, 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
the Trust or a substantial part of its property, or cause or permit the Sponsor
or the 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.
10
<PAGE> 15
Except as provided in 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, 2.11, 2.12, 8.02 or elsewhere herein.
Section 2.14 Investment Company. Neither the Sponsor, the Depositor
nor any Holder 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 3.01 Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.05, 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 the Trust, to the Depositor, one or more Certificates
representing in the aggregate a 100% interest in the Trust, and has registered
such Certificates on the Certificate Register in the name of the Depositor. The
Depositor shall be the sole beneficiary of the Trust. Such Certificates are duly
authorized, validly issued, and entitled to the benefits of this Agreement. For
so long as the Depositor shall own such 100% interest in the Trust, the
Depositor shall be the sole beneficial owner of the Trust. For so long as any
Notes remaining outstanding, the Depositor shall not transfer its ownership
interest in the Trust, in whole or in part, without the Insurer's prior written
consent.
Section 3.02 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1000 in excess thereof. The
Certificates shall be executed on behalf of the 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 the
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. 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 3.04.
Section 3.03 Authentication of Certificates. Concurrently with the
initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate to be
executed on behalf of the 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
11
<PAGE> 16
hereunder. All Certificates shall be dated the date of their authentication. The
Trust shall not issue any other Certificate without the prior written consent of
the Insurer.
Section 3.04 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 3.08, 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 3.05 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 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 the 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 3.05, 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 the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06 Persons Deemed Certificateholders. 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
Insurer and any agent of the Owner Trustee, the Certificate Registrar and the
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 Sale and Servicing Agreement and the
Indenture and for all other purposes whatsoever, and none of the Owner Trustee,
the Certificate Registrar or the Insurer nor any agent of the Owner Trustee, the
Certificate Registrar or the Insurer shall be bound by any notice to the
contrary.
Section 3.07 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 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 Holders of Certificates or one or more Holders of Certificates
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
12
<PAGE> 17
of Certificateholders. Each Holder, 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 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 3.08 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 Insurer of any change in the location of the Certificate Register or any
such office or agency.
Section 3.09 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 (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any person acting on behalf of or using the assets of a plan described in
(i) or (ii) (each, a "Benefit Plan Investor") above. 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
Investor.
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 Certificates to the
Depositor, 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 Insurer certifying to the Owner Trustee and the Insurer
the facts surrounding such transfer, which investment letter shall not be an
expense of the Owner Trustee or the 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 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
Insurer or the Sponsor. The Holder of a Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Sponsor, the Owner
Trustee and the 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
13
<PAGE> 18
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 2.01, 2.02, 2.03, 2.04, 3.03
and 3.04 of the Sale and Servicing Agreement, Section 7.01 of the Indenture and
under the Mortgage Loans and the Mortgage Notes; (ii) the person that acquires a
Certificate shall deliver to the Owner Trustee and the 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 Insurer a
letter from each Rating Agency confirming that its rating of the Notes, after
giving effect to such transfer, will not be reduced or withdrawn without regard
to the Policy; (iv) the person that acquires a Certificate shall deliver to the
Owner Trustee and the Insurer an Opinion of Counsel to the effect that (a) such
transfer will not adversely affect the treatment of the Notes after such
transfer as debt for federal and applicable state income tax purposes, (b) such
transfer will not result in the 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 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 the Trust
in the Mortgage Loans and the other property conveyed hereunder shall have been
taken or made and (vi) the prior written consent of the Insurer has been
obtained, which consent shall not be unreasonably withheld. 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 Insurer shall have
received a letter from each Rating Agency confirming that its rating of the
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 Policy. Notwithstanding the foregoing, the requirements
set forth in this paragraph (c) shall not apply to the initial issuance of the
Certificates to the Depositor.
(d) Except for the initial issuance of the Certificates to the
Depositor, no transfer of a Certificate shall be made unless the Owner Trustee
and the Insurer shall have received a representation letter from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Owner Trustee and the Insurer, to the effect that such transferee is not a
Benefit Plan Investor, 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 Holders of the
Certificates will be entitled to distributions on each Payment Date, as provided
in the Indenture.
14
<PAGE> 19
ARTICLE IV
Voting Rights and Other Actions
Section 4.01 Prior Notice to Holders 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 and the Insurer in writing of
the proposed action and (i) the Insurer shall have consented in writing thereto
and (ii) 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, with the written consent of the
Insurer, provided alternative direction:
(a) the election by the 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 any Operative Document;
(c) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or, pursuant to this Trust
Agreement, of a successor Certificate Registrar or the consent to the assignment
by the Note Registrar, Paying Agent, Indenture Trustee or Certificate Registrar
of its obligations under the Indenture or this Trust Agreement, as applicable;
(d) the consent to the calling or waiver of any default under any
Operative Document;
(e) the consent to the assignment by the Indenture Trustee or Master
Servicer of their respective obligations under any Operative Document;
(f) perform any act that conflicts with any other Operative
Document;
(g) perform any act which would make it impossible to carry on the
ordinary business of the Trust as described in Section 2.03 hereof;
(h) confess a judgment against the Trust;
(i) possess Trust assets or assign the Trust's right to property for
other than a Trust purpose;
(j) cause the Trust to lend any funds to any entity; or
(k) change the Trust's purpose and powers from those enumerated in
this Trust Agreement.
The Owner Trustee shall notify the Certificateholders and the
Insurer in writing of any appointment of a successor Note Registrar, or
Certificate Registrar within five Business Days thereof.
15
<PAGE> 20
In addition, the Owner Trustee shall not (i) cause the Trust to
merge or consolidate with or into any other entity, or convey or transfer all or
substantially all of the Trust's assets to any other entity; (ii) cause the
Trust to incur, assume or guaranty any indebtedness other than as set forth in
this Trust Agreement or (iii) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part.
Section 4.02 Action by Certificateholders with Respect to Certain
Matters. (a) The Owner Trustee shall not have the power, except upon the written
direction of the Insurer or in the event that an 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 Sale and
Servicing Agreement, (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Indenture, (iii)
institute proceedings to have the Trust declared or adjudicated to be bankrupt
or insolvent, (iv) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (v) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (vi) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vii) make any assignment for the benefit of the Trust's creditors, (viii) cause
the Trust to admit in writing its inability to pay its debts generally as they
become due, (ix) take any action or cause the Trust to take any action, in
furtherance of any of the foregoing clauses (iii) through (ix) (any of such
clauses, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect, no Certificateholder shall have the power to take,
and shall not take, any Bankruptcy Action with respect to the Trust or direct
the Owner Trustee to take any Bankruptcy Action with respect to the Trust. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Insurer or the Securityholders, 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 4.03 Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the 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 Insurer (unless
an Insurer Default shall have occurred and is continuing) or the Security
Majority upon an Insurer Default. Until one year and one day following the day
on which the Notes have been paid in full, all amounts due to the Insurer under
the Insurance Agreement have been paid in full, the Policy has terminated and
the Indenture Trustee has surrendered the Policy to the 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 the Trust without the
prior written consent of all of the Certificateholders and the delivery to the
Owner Trustee
16
<PAGE> 21
by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.
Section 4.04 Restrictions on Certificateholders' Power. (a) The
Certificate-holders 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 Trust or the Owner Trustee under this Agreement or any of the Operative
Documents or would be contrary to Section 2.03 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 Originators) 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 6.03 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 6.03;
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 4.04, 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 4.05 Majority Control. No Certificateholder shall have any
right to vote or in any manner otherwise control the operation and management of
the Trust except as expressly provided in this Agreement. Except as 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 the Trust. Except as 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 the Trust at the time of the delivery of such notice.
Section 4.06 Rights of Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Insurer (or if an 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 the Trust or compromise any
claim, suit or proceeding brought by or against the Trust, other than with
17
<PAGE> 22
respect to the enforcement of any Mortgage Loan or any rights of the Trust
thereunder, (iii) authorize the merger or consolidation of the Trust with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Indenture), (iv) amend the Certificate of Trust or (v) amend
this Agreement in accordance with Section 11.01 of this Agreement.
Section 4.07 Separateness. The Trust shall (i) not commingle its
assets with those of any other entity; (ii) maintain its financial and
accounting books and records separate from those of any other entity; (iii)
maintain appropriate minutes or other records of all appropriate actions and
maintain books and records separate from any other entity; (iv) conduct its own
business in its own name; (v) except as expressly set forth herein, pay its
indebtedness, operating expenses and liabilities from its own funds; (vi) enter
into transactions with affiliates only on terms that are commercially reasonable
and on the same terms as would be available in an arm's length transaction;
(vii) not pay the indebtedness, operating expenses and liabilities of any other
entity; (viii) not hold out its credit as being available to satisfy the
obligation of any other entity; (ix) not make loans to any other entity or buy
or hold evidence of indebtedness issued by any other entity (except for cash and
investment-grade securities); (x) use separate stationery, invoices, and checks
bearing its own name; (xi) 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; (xii) not identify itself
as a division of any other entity; (xiii) hold itself out as a separate
identity; and (xiv) maintain adequate capital in light of its contemplated
business operation.
Article V
Certain Duties
Section 5.01 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
6.01(b)(iii) and 6.01(c) of the Sale and Servicing Agreement, the Sponsor shall
(a) maintain (or cause to be maintained) the books of the Trust 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 K1, 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 the Trust (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 the Trust'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 6.01(b)(ii) of the 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
5.01 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
18
<PAGE> 23
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 5.02 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.01 and in the event that the Trust
is characterized as a partnership, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust 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 the Trust is characterized as a partnership,
the Depositor shall be the "tax matters partner" of the Trust pursuant to the
Code.
Article VI
Authority and Duties of Owner Trustee
Section 6.01 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which the 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 the 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, and
on behalf of the Trust, to direct the Indenture Trustee to authenticate and
deliver Notes in the aggregate principal amount of $200,000,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the 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 6.02 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 the Trust 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 Sale and Servicing Agreement to perform any act or to
discharge any duty of the Trust 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 Sale and
Servicing Agreement.
Section 6.03 Action upon Instruction. (a) Subject to Article IV, the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an 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 the 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.
19
<PAGE> 24
(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 6.04 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 6.03; 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 the 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
20
<PAGE> 25
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 6.05 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 6.03.
Section 6.06 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's 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 6.06.
Article VII
Concerning the Owner Trustee
Section 7.01 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 7.03
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 6.04 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
21
<PAGE> 26
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 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 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 Insurer, the Indenture Trustee, 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 Indenture or
the Master Servicer under the 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 7.02 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 7.03 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 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.
22
<PAGE> 27
(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 bylaws 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 7.04 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 7.05 Not Acting in Individual Capacity. Except as provided
in this Agreement, 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 7.06 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 Notes (other
than the signature of the Owner Trustee on the 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
23
<PAGE> 28
to be distributed to Certificateholders under this Agreement or the Noteholders
under the 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 the Trust or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the 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 7.07 Owner Trustee May Own Certificates and Notes. Subject
to the provisions of Section 3.01 hereof, the Owner Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates or 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 7.08 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 the 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 the
Owner 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 the Trust or the Owner Trustee is a party.
Section 7.09 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 10.05 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 8.01 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
24
<PAGE> 29
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 8.02 Indemnification. The Sponsor shall be liable as primary
obligor for, and the Master Servicer pursuant to the Sale and Servicing
Agreement shall be the secondary 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
7.01. The indemnities contained in this Section and the rights under Section
8.01 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 8.03 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 8.04 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 the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the 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 9.01 Termination of Trust Agreement. (a) This Agreement and
the Trust 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 Sponsor at its option of the corpus of the Trust as described
in Section 10.01(b) and Section 10.01(c) of the Indenture) and the subsequent
distribution of amounts in respect of such Mortgage Loans as provided in the
Operative Documents, (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Insurer of all amounts payable or reimbursable to it pursuant to the Sale and
Servicing Agreement and the Insurance Agreement and (iii) the termination of the
Indenture and the Insurance Agreement; provided, however, that the rights to
indemnification under Section 8.02 and the rights under
25
<PAGE> 30
Section 8.01 shall survive the termination of the Trust. The Master Servicer
shall promptly notify the Owner Trustee and the Insurer of any prospective
termination pursuant to this Section 9.01. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the 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 the 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, the
Depositor nor any other Certificateholder shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the 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 notice of such redemption from the Master Servicer
given pursuant to Section 10.01 of the 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 8.06(b)(xi) of the
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 the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the
Sponsor for payment.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Depositor.
(e) Notwithstanding any other provision to the contrary herein, the
Trust shall not dissolve or liquidate so long as any Notes are outstanding.
(f) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the
26
<PAGE> 31
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 10.01 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 & Poor's or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the 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 10.01, 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 10.02.
Section 10.02 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 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 10.01 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 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 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 10.01 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
Insurer (so long as no 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
acceptable to the Insurer, meeting the qualifications set forth in Section 10.01
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 Insurer
and one copy to the successor Owner
27
<PAGE> 32
Trustee and the Sponsor shall pay all fees owed to the outgoing Owner Trustee,
if not previously paid by the 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 10.03 and payment of all reasonable fees and
expenses owed to the outgoing Owner Trustee. The Servicer shall provide written
notice of such resignation or removal of the Owner Trustee to each of the Rating
Agencies and the Insurer.
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 4.02(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in the Trust,
the Owner Trustee may be removed as Owner Trustee, subject to the consent of the
Insurer (so long as no 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 10.03 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Sponsor, the Master Servicer, the 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 10.01.
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, the Insurer, and
the 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.
28
<PAGE> 33
Section 10.04 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
10.01, 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 and the Insurer.
Section 10.05 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 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 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 the 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 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 10.01 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.03,
except that notice to and written consent of, the Insurer shall be required for
the appointment of a co-trustee.
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 the 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 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.
29
<PAGE> 34
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 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 11.01 Supplements and Amendments. (a) This Agreement and
prior written notice to the Rating Agencies may be amended by the Sponsor and
the Owner Trustee, with the prior written consent of the Insurer (so long as no
Insurer Default shall have occurred and is continuing), without the consent of
any of the Noteholders (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 Insurer (so long as no 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 Noteholders, with the
consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in the Trust (which consent of any
Holder of a Certificate or Note given pursuant to this Section 11.01 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 Note and of any
Certificate or 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 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 Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Insurer under the
Operative Documents, such amendment shall not (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 Noteholders or the Certificateholders, (b) reduce the
aforesaid percentage of the Outstanding
30
<PAGE> 35
Amount of the 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 Notes and Holders of all outstanding Certificates or (c) cause the
Trust to be treated as an association or a publicly traded partnership taxable
as a corporation for federal income tax purposes.
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 the Insurer, to each Certificateholder and the Indenture
Trustee.
It shall not be necessary for the consent of Certificateholders, the
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. The Owner Trustee shall furnish copies of any such
amendments to the Rating Agencies.
Section 11.02 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 Article VIII of the Indenture and with Article IX of this Agreement.
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 11.03 Limitations on Rights of Others. Except for Section
11.07, 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 Insurer, the Indenture Trustee and the
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 11.04 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
31
<PAGE> 36
receipt, if to the Owner Trustee, addressed to the Corporate Trust Office; if to
the Sponsor, addressed to Advanta Conduit Receivables, Inc., 10790 Rancho
Bernardo Road, San Diego, California 92127, addressed to Insurer, Ambac
Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Structured Finance Department - MBS, Telecopy No.:212-363-1459,
Confirmation No.: 212-668-0340, if to the Depositor, Advanta Holding Trust
1999-4, c/o Wilmington Trust Company, as Owner Trustee, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890; 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 11.05 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 11.06 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 11.07 Assignments; Insurer. 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 Insurer for so long as an 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 Insurer shall be for
the benefit of and run directly to the Insurer, and the 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 Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Policy) upon delivery of
a written notice to the Owner Trustee.
Section 11.08 No Petition. The Owner Trustee (in its individual
capacity and as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee, the
Originators 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 the Trust or join in any institution against the Sponsor or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law.
Section 11.09 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Insurer or any Affiliate thereof and no recourse
32
<PAGE> 37
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 the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the 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 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.
Section 11.13 No Borrowing. The Trust shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness
permitted by or arising under the Operative Documents except that the Trust
shall not incur any Indebtedness that would cause it, or any portion thereof, to
be treated as a "taxable mortgage pool" under Section 7701(i) of the Code. The
proceeds of the Notes shall be used exclusively to fund the Trust's purchase of
the Mortgage Loans and the other assets specified in the Sale and Servicing
Agreement and to pay the Trust's organizational, transactional and start-up
expenses.
Section 11.14 Nonpetition Covenant. (a) Until one year plus one day
shall have elapsed since the full discharge of all obligations under the
Indenture with respect to Noteholders in accordance with its terms, neither the
Sponsor or Depositor nor any assignee of the Sponsor or Depositor shall petition
or otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust without the consent of the Owner
Trustee.
(b) So long as Notes remain outstanding, no voluntary petition for
the purpose of commencing or sustaining a case against the Trust under any
federal or state bankruptcy, insolvency or similar law shall be filed without
the consent of the Owner Trustee.
[Remainder of Page Intentionally Left Blank]
33
<PAGE> 38
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/ Donald G. MacKelcan
-----------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
ADVANTA CONDUIT RECEIVABLES, INC., as
Sponsor
By: /s/ Michael Coco
-----------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA HOLDING TRUST 1999-4, as
Depositor
By: WILMINGTON TRUST COMPANY, in its
capacity as Owner Trustee
By: /s/ Donald G. MacKelcan
-----------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
<PAGE> 39
Exhibit A
ASSET BACKED CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE 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 AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE PROVIDES A
REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER, TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, (ii) A
PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
OR (iii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN,
WHICH REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE
INSURER.
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 DEPOSITOR, 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 INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS
SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF
THE OWNER TRUSTEE OR THE 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 INSURER AND THE SPONSOR THAT SUCH
TRANSFER MAY BE MADE PURSUANT TO AN
A-1
<PAGE> 40
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 INSURER, THE DEPOSITOR OR THE SPONSOR. THE
HOLDER OF A CERTIFICATE DESIRING TO EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY
AGREE TO, INDEMNIFY THE SPONSOR, THE DEPOSITOR AND THE 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.
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 AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS
CONTAINED IN SECTIONS 2.01, 2.02, 2.03, 2.04, 3.03 AND 3.04 OF THE SALE AND
SERVICING AGREEMENT, SECTION 7.01 OF THE INDENTURE AND UNDER THE MORTGAGE LOANS
AND THE MORTGAGE NOTES; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL
DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING
THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF
THE TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10
OF THE 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 INSURER A LETTER FROM
EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT
TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE POLICY;
(IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE
AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH TRANSFER WILL
NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH TRANSFER AS DEBT FOR
FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT
RESULT IN THE 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
A-2
<PAGE> 41
INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE
ARRANGEMENT CREATED BY THE TRUST 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 THE TRUST IN THE MORTGAGE LOANS AND THE OTHER PROPERTY CONVEYED
UNDER THE 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.
A-3
<PAGE> 42
ADVANTA MORTGAGE LOAN TRUST 1999-4
ASSET BACKED CERTIFICATE
Percentage Interest: 100%
Cut-Off Date:
Opening of business on November 1, 1999
First Payment Date: Issue Date: November 17, 1999
December 27, 1999
No. 1
ADVANTA HOLDING TRUST 1999-4
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as of November 1, 1999
(the "Trust Agreement"), between Advanta Conduit Receivables, Inc. (the
"Sponsor"), Advanta Holding Trust 1999-4 (the "Depositor") 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 1999-4 "Asset Backed Certificates." Also issued
under the Indenture dated as of November 1, 1999 (the "Indenture") between the
Trust and Bankers Trust Company of California, N.A., as indenture trustee (the
"Indenture Trustee") are the Advanta Mortgage Loan Asset Backed Notes (the
"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 the Trust includes a pool of
adjustable-rate mortgage loans secured by first 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 27, 1999, 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.
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 Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.
A-4
<PAGE> 43
It is the intent of the Sponsor, the Master Servicer, and the Certificateholders
that, for purposes of Federal income taxes, the Trust 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, the Trust 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
the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust or the Sponsor, or join in any institution against the Trust 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 Sale and
Servicing Agreement and the 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 Sale and Servicing Agreement or be valid for any purpose.
A-5
<PAGE> 44
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date: November 17, 1999 ADVANTA MORTGAGE LOAN
TRUST 1999-4
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as
Owner Trustee
By:
--------------------------------------------
Name:
Title:
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
A-6
<PAGE> 45
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in, the
Originators, the Sponsor, the Master Servicer, the Insurer, the Depositor, 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 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 Sale and Servicing Agreement and in the Indenture. A copy of each
of the 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 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 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 the Trust 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 the Sponsor, 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 Insurer and any agent of the
Owner Trustee, the Certificate Registrar, the Insurer or the 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,
A-7
<PAGE> 46
the Certificate Registrar, the Insurer nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part of
the Trust
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 Sale and Servicing Agreement or be valid for any purpose.
A-8
<PAGE> 47
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.
A-9
<PAGE> 48
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA MORTGAGE LOAN TRUST 1999-4
This Certificate of Trust of Advanta Mortgage Loan Trust 1999-A (the
"Trust") is being duly executed and filed by the undersigned, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code
Section 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is
Advanta Mortgage Loan Trust 1999-4.
2. Delaware Trust. The name and business address of the Owner
Trustee of the 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 17, 1999.
IN WITNESS WHEREOF, the undersigned, in accordance with Section
3811(a) of the Act, has duly executed this Certificate of Trust.
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee of the Trust
By:
-----------------------------------------
Name:
Title:
B-1
<PAGE> 1
EXHIBIT 4.4
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST 1999-4,
as Trust,
ADVANTA HOLDING TRUST 1999-4,
as Holding Trust,
ADVANTA CONDUIT RECEIVABLES, 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, 1999
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.................................1
Section 1.01 Definitions...................................................1
Section 1.02 Use of Words and Phrases......................................1
Section 1.03 Captions; Table of Contents...................................1
Section 1.04 Opinions......................................................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS......................................2
Section 2.01 Conveyance of the Mortgage Loans..............................2
Section 2.02 Acceptance by the Trust; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee.........6
Section 2.03 Cooperation Procedures........................................8
Section 2.04 Conveyance of the Subsequent Mortgage Loans...................8
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SPONSOR AND THE MASTER SERVICER..............................11
Section 3.01 Representations and Warranties of the Sponsor................11
Section 3.02 Representations and Warranties of the Master Servicer........13
Section 3.03 Representations and Warranties of the Sponsor with
Respect to the Mortgage Loans.............................15
Section 3.04 Covenants of Sponsor to Take Certain Actions with
Respect to the Mortgage Loans In Certain
Situations................................................16
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS...................19
Section 4.01 Master Servicer and Sub-Servicers............................19
Section 4.02 Collection of Certain Mortgage Loan Payments.................20
Section 4.03 Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.............................................21
Section 4.04 Successor Sub-Servicers......................................21
Section 4.05 Liability of Master Servicer.................................21
Section 4.06 No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or the Noteholders......................22
Section 4.07 Assumption or Termination of Sub-Servicing Agreement
by Indenture Trustee......................................23
Section 4.08 Principal and Interest Account...............................23
Section 4.09 Delinquency Advances, Compensating Interest and
Servicing Advances........................................25
Section 4.10 Purchase of Mortgage Loans...................................26
Section 4.11 Maintenance of Insurance.....................................26
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements................................................27
Section 4.13 Realization Upon Defaulted Mortgage Loans....................28
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage
Files.....................................................29
i
<PAGE> 3
Section 4.15 Servicing Compensation.......................................30
Section 4.16 Annual Statement as to Compliance............................30
Section 4.17 Annual Independent Certified Public Accountants'
Reports...................................................31
Section 4.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans..............................31
Section 4.19 Assignment of Agreement......................................31
Section 4.20 Inspections by the Note Insurer and the Indenture
Trustee; Errors and Omissions Insurance...................31
Section 4.21 Merger, Conversion, Consolidation or Succession to
Business of Master Servicer...............................31
Section 4.22 Notices to Noteholders.......................................32
Section 4.23 Notices of Material Events...................................32
ARTICLE V SERVICING TERMINATION.............................................33
Section 5.01 Events of Servicer Termination...............................33
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.....................37
Section 6.01 Administrative Duties with Respect to the Indenture..........37
Section 6.02 Records......................................................39
Section 6.03 Additional Information to be Furnished to the Trust..........39
ARTICLE VII MISCELLANEOUS...................................................39
Section 7.01 Compliance Certificates and Opinions.........................39
Section 7.02 Form of Documents Delivered to the Indenture Trustee.........39
Section 7.03 Acts of Noteholders..........................................40
Section 7.04 Notices to Indenture Trustee.................................41
Section 7.05 Notices and Reports to Noteholders; Waiver of Notices........41
Section 7.06 Rules by Indenture Trustee and Sponsor.......................41
Section 7.07 Successors and Assigns.......................................42
Section 7.08 Severability.................................................42
Section 7.09 Benefits of Agreement........................................42
Section 7.10 Legal Holidays...............................................42
Section 7.11 Governing Law................................................42
Section 7.12 Counterparts.................................................42
Section 7.13 Amendment....................................................42
Section 7.14 The Note Insurer.............................................43
Section 7.15 Notices......................................................43
Section 7.16 Limitation of Liability......................................45
ii
<PAGE> 4
SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Notice of Establishment of Principal and Interest
Account
EXHIBIT B -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C -- Form of Indenture Trustee's Certification
EXHIBIT D -- Form of Master Servicer's Trust Receipt
EXHIBIT E -- Form of Lost Note Affidavit
EXHIBIT F -- Form of Power of Attorney
EXHIBIT G -- Form of Subsequent Transfer Agreement
iii
<PAGE> 5
SALE AND SERVICING AGREEMENT, dated as of November 1, 1999 (this
"Agreement"), by and among ADVANTA MORTGAGE LOAN TRUST 1999-4, a Delaware
business trust, as the trust (the "Trust"), ADVANTA HOLDING TRUST 1999-4, a
Delaware business trust, as the holding trust (the "Holding Trust"), ADVANTA
CONDUIT RECEIVABLES, INC., a Nevada corporation, in its capacity as sponsor
of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware
corporation, in its capacity as master servicer (the "Master Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association,
in its capacity as indenture trustee (the "Indenture Trustee").
WHEREAS, the Holding Trust desires to purchase a portfolio of
Mortgage Loans originated by the Originators;
WHEREAS, the Sponsor is willing to sell or cause or direct to be
sold such Mortgage Loans to the Holding Trust;
WHEREAS, the Holding Trust desires to transfer such Mortgage
Loans to the Trust and the Trust desires to acquire such Mortgage Loans from
the Holding Trust;
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 Trust and
the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions. Capitalized terms used herein shall
have their respective meanings as set forth in Annex A attached hereto.
Section 1.02 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 Annex A hereto 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 1.03 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.
1
<PAGE> 6
Section 1.04 Opinions. Each opinion with respect to the
validity, binding nature and enforceability of documents or Notes 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 2.01 Conveyance of the Mortgage Loans. (a) The
Sponsor, concurrently with the execution and delivery hereof, hereby
transfers, assigns, sets over and otherwise conveys or shall request or
cause to be transferred, sold, assigned, set over and otherwise conveyed,
without recourse, for good and valuable consideration, to the Holding Trust,
and the Holding Trust hereby transfers, assigns, sets over and otherwise
conveys, without recourse, for good and valuable consideration, to the
Trust, for pledge to the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, all right, title and interest of the Sponsor or the
Holding Trust, as the case may be, in and to (i) the Mortgage Loans, (ii)
such amounts in all Accounts including principal collected and interest
accrued in respect of the related Mortgage Loans on or after the Initial
Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off
Date, as applicable, including Eligible Investments, as may from time to
time may be held in such Accounts (except any Premium Recapture and interest
accrued prior to the Initial Cut-Off Date, each Subsequent Cut-Off Date and
each Replacement Cut-Off Date, as applicable and except for net investment
earnings on the Principal and Interest Account, the Capitalized Interest
Account and the Note Account), (iii) any Property, the ownership of which
has been effected on behalf of the Trust as a result of foreclosure or
acceptance by the Master Servicer of a deed in lieu of foreclosure and that
has not been withdrawn from the Trust, (iv) any Mortgage Insurance Policies
relating to the Mortgage Loans and any rights of the Sponsor or any
Originator under any Mortgage Insurance Policies, (v) Net Liquidation
Proceeds with respect to any Liquidated Mortgage Loan, (vii) the rights of
the Sponsor against any Originator pursuant to the Mortgage Loan Transfer
Agreement and (viii) any other assets included or to be included in the
Trust Estate for pledge to the Indenture Trustee on behalf of the
Noteholders and the Note Insurer. In addition, on or prior to the Closing
Date, the Sponsor shall cause the Note Insurer to deliver the Policy to the
Indenture Trustee, on behalf of the Noteholders. The transfer of the Initial
Mortgage Loans set forth on the Schedule of Mortgage Loans to the Trust is
absolute and is intended by the Sponsor, the Holding Trust, the Noteholders
and all parties hereto to be treated as a sale by the Sponsor to the Holding
Trust, and by the Holding Trust to the Trust.
(b) The Sponsor and the Holding Trust agree to take or cause
to be taken such actions and execute such documents as are necessary to
perfect and protect the Note Owners' and the Note Insurer's interests in
each Mortgage Loan and the proceeds thereof (including, without
2
<PAGE> 7
limitation, the filing of all necessary continuation statements for the
UCC-1 financing statements filed in the appropriate jurisdictions (which
shall have been filed within 90 days of the Closing Date or the Subsequent
Transfer Date, as the case may be)) and to file in the appropriate
jurisdictions any amendments to UCC-1 financing statements required to
reflect a change in the name or corporate structure of the debtor or
permitted assigns or the filing of any additional UCC-1 financing statements
due to a change in the principal office of the debtor or permitted assigns
(within 90 days of any event necessitating such filing)).
(c) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor and the Holding Trust agree to:
(i) cause to be delivered to the Indenture Trustee, without
recourse no later than the Closing Date or any Subsequent Transfer
Date or any date on which a Qualified Replacement Mortgage Loan is
transferred, as applicable, the items listed in the definition of
"Mortgage File"; provided, that the assignments of Mortgage listed in
such definition shall be delivered to the Indenture Trustee within 75
Business Days of the Closing Date, any Subsequent Transfer Date or
date on which a Qualified Replacement Mortgage Loan is transferred, as
applicable; and
(ii) cause, within 75 Business Days following the Closing
Date, any Subsequent Transfer Date or date on which a Qualified
Replacement Mortgage Loan is transferred, 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 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 only if
the Indenture Trustee, the Note Insurer and each Rating Agency has
received an Opinion of Counsel, satisfactory in form and substance to
the Note Insurer and to each Rating Agency to the effect that the
recordation of such assignments in any specific jurisdiction is not
necessary to protect the Indenture Trustee's interest in the related
Mortgage.
All recording required pursuant to this Section 2.01, shall be
accomplished at the expense of the Originators or of the Sponsor.
Notwithstanding anything to the contrary contained in this Section 2.01, 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 received by the Indenture
Trustee shall be kept in the related Mortgage File.
Such assignments of mortgage shall, in addition to the
requirements specified in the definition of " Mortgage File", be in
recordable form. On or before the Closing Date, any Subsequent Transfer Date
or date on which a Qualified Replacement Mortgage Loan is
3
<PAGE> 8
transferred, as applicable, the Sponsor shall deliver to the Indenture
Trustee an original executed power of attorney, from the current
recordholders of the related Mortgage substantially in the form of Exhibit
F, authorizing the Indenture Trustee and the Master Servicer on behalf of
the Indenture Trustee to record the assignments of mortgage as provided in
clause (ii) of this Section 2.01(c). Pursuant to such power of attorney, the
Indenture Trustee also may execute a new assignment of mortgage for any
Mortgage Loan if the original assignment of mortgage delivered by the
Sponsor to the Indenture Trustee is not in recordable form at such time as
the assignment of mortgage is to be recorded by the Indenture Trustee.
(d) As full consideration for the transfer, set-over and
conveyance by the Holding Trust to the Trust of all of its right, title and
interest in and to the Mortgage Loans and the other rights and properties
specified in Section 2.01(a), the Trust shall (x) pay to or upon the order
of the Holding Trust that amount in immediately available funds equal to the
proceeds of the sale of the Notes, net of any underwriting discounts and
other transaction costs (including the cost of obtaining the Policy), and
(y) issue to the Holding Trust one or more Certificates evidencing in the
aggregate 100% of the beneficial ownership interest in the Trust. As full
consideration for the transfer, set-over and conveyance by the Sponsor to
the Holding Trust of all of its right, title and interest in and to the
Mortgage Loans and the other rights and properties specified in Section
2.01(a), the Holding Trust shall (x) pay to or upon the order of the Sponsor
that amount in immediately available funds equal to the proceeds of the sale
of the Notes, net of any underwriting discounts, the Original Pre-Funded
Amount, the Capitalized Interest Account Deposit and other transaction costs
(including the cost of obtaining the Policy), and (y) issue to or at the
direction of the Sponsor one or more trust certificates evidencing in the
aggregate 100% of the beneficial ownership interest in the Holding Trust.
(e) The Sponsor (or any affiliate of the Sponsor) shall
transfer, sell, assign, set over and otherwise convey, without recourse, to
the Holding Trust, and the Holding Trust shall transfer, sell assign, set
over and otherwise convey, without recourse, to the Trust and for pledge to
the Indenture Trustee on behalf of the Noteholders all right, title and
interest of the Sponsor (or of such affiliate) or the Holding Trust, as the
case may be, in and to any Qualified Replacement Mortgage Loan delivered to
by the Sponsor to the Holding Trust and by the Holding Trust to the Trust
pursuant to Sections 2.02, 3.03 and 3.04 hereof and all its right, title and
interest to principal collected and interest accruing on such Qualified
Replacement Mortgage Loan on and after the applicable Replacement Cut-Off
Date; provided, however, that the Sponsor (or such affiliate) shall reserve
and retain all right, title and interest in and to payments of principal due
and interest accrued on such Qualified Replacement Mortgage Loan prior to
the applicable Replacement Cut-Off Date.
(f) 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.
(g) The Sponsor shall cause to be reflected on the applicable
records that the Mortgage Loans have been sold to the Holding Trust and the
Holding Trust shall cause to be reflected on the applicable records that the
Mortgage Loans have been sold to the Trust.
4
<PAGE> 9
(h) 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 Controlling Party and each Rating Agency then, any of
the Document Delivery Requirements described above may be waived by an
instrument signed by the Controlling Party and each Rating Agency (or any
documents theretofore delivered to the Indenture Trustee returned to the
Sponsor) on such terms and subject to such conditions as the Controlling
Party and each Rating Agency may permit.
(i) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including all other rights and properties
described in Section 2.01(a) above) by the Sponsor to the Holding Trust and
by the Holding Trust to the Trust be construed as a sale of the Mortgage
Loans by the Sponsor to the Holding Trust and a sale of the Mortgage Loans
by the Holding Trust to the Trust. It is, further, not the intent of the
parties that the conveyance from the Sponsor to the Holding Trust or from
the Holding Trust to the Trust be deemed a pledge of the Mortgage Loans by
the Sponsor to the Holding Trust to secure a debt or other obligation of the
Sponsor or any of its assignors or by the Holding Trust to the Trust to
secure a debt or other obligation of the Holding Trust or any of its
assignors. However, in the event and to the extent that, notwithstanding the
intent of the parties hereto, any or all of the Mortgage Loans (including
the other rights and properties described in Section 2.01(a) above) are held
to be property of the Sponsor or any of its assignors, or the Holding Trust
or any of its assignors, then
(i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the New York UCC;
(ii) the conveyance provided for herein shall be deemed to be
a grant by the Sponsor to the Holding Trust and by the Holding Trust
to the Trust of a first priority security interest in all of the
Sponsor's and the Holding Trust's, respectively, right, title and
interest in and to the Mortgage Loans (including the other rights and
properties described in Section 2.01(a) above) and all amounts payable
to the holder of the Mortgage Loans and/or such rights or properties
in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including all amounts from
time to time held or invested in any Account, whether in the form of
cash, instruments, securities or other property;
(iii) the possession by the Indenture Trustee or its bailees
or agents of items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the New York UCC;
(iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or
agents (as applicable) of the Indenture Trustee for the purpose of
perfecting such security interest under applicable law; and
(v) the obligations secured by the first priority security
interest described in clause (iii) above shall be deemed to include
any and all obligations of the Trust to pay
5
<PAGE> 10
the principal of and interest on the Notes to the Noteholders and to
pay the fees, expenses and other amounts required to be paid to the
Master Servicer, the Indenture Trustee, the Note Insurer and the
Noteholders, all in accordance with and otherwise subject to the
Operative Documents.
Any assignment or other transfer of the interest of the
Indenture Trustee under any provision hereof shall also be deemed to be an
assignment of any security interest created hereby. Each of the Sponsor, the
Holding Trust and the Master Servicer shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage
Loans, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and would be maintained as
such throughout the terms of this Agreement. The Sponsor and the Holding
Trust also covenant not to pledge, assign or grant any security interest to
any third party in any Mortgage Loan conveyed to the Trust hereunder.
Upon the Indenture Trustee's or the Note Insurer's request, the
Sponsor and/or the Holding Trust shall perform (or cause to be performed)
such further acts and execute, acknowledge and deliver (or cause to be
executed, acknowledged and delivered) to the Indenture Trustee such further
documents as the Indenture Trustee or the Note Insurer shall deem necessary
or advisable in order to evidence, establish, maintain, protect, enforce or
defend its rights in and to the Mortgage Loans and other rights and
properties transferred hereunder or otherwise to carry out the intent and
accomplish the purposes of this Agreement (including UCC-1 financing
statements naming the Sponsor or the Holding Trust as debtor and the
Indenture Trustee as secured party and any continuation statements relating
thereto).
Section 2.02 Acceptance by the Trust; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee. (a) The Indenture
Trustee, on behalf of the Trust, hereby acknowledges receipt of the Trust
Estate and agrees to execute and deliver no later than the Closing Date, on
any Subsequent Transfer Date and on any date on which a Qualified
Replacement Mortgage Loan is transferred to the Trust, as applicable, an
acknowledgment of receipt in the form attached as Exhibit B hereto of the
Mortgage Files delivered by the Sponsor to the Holding Trust and by the
Holding Trust to the Indenture Trustee, 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 Noteholders and the Note Insurer. On or before the tenth
Business Day after the Closing Date, any Subsequent Transfer Date, and any
date on which a Qualified Replacement Mortgage Loan is conveyed to the
Trust, the Indenture Trustee shall execute and deliver to the Note Insurer
and the Master Servicer an acknowledgement of receipt of the original
Mortgage Notes for each Mortgage Loan.
The Indenture Trustee further 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 Loan after the assignment thereof) and to deliver to the Sponsor,
the Holding Trust, the Master Servicer and the Note Insurer a Certification
in the form attached hereto as Exhibit C 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
6
<PAGE> 11
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 Mortgage File which (i) is not
properly executed, (ii) has not been received within the specified period,
(iii) is unrelated to the Mortgage Loans identified in the Schedules of
Mortgage Loans, (iv) 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
Master Servicer 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 Mortgage File of which it is so notified by the
Indenture Trustee. If, however, within 60 days after the Indenture Trustee's
notice respecting such defect the Sponsor has not remedied or caused to be
remedied the defect and the defect materially and adversely affects the
interest of the Noteholders or of the Note Insurer in the related Mortgage
Loan, the Sponsor will (or will cause the related Originator or an affiliate
of the Sponsor to) on the next succeeding Remittance Date (i) substitute in
lieu of such Mortgage Loan a Qualified Replacement Mortgage Loan and,
deliver the Substitution Amount or (ii) purchase such Mortgage Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be delivered to the Master Servicer for deposit in the Principal
and Interest Account.
Upon receipt of any Qualified Replacement Mortgage Loan or of
written notification signed by a Servicing Officer to the effect that the
Loan Purchase Price in respect of such Mortgage Loan has been deposited into
the 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 Trust of such Mortgage Loan
pursuant to this Section 2.02. It is understood and agreed that the
obligation of the Sponsor to accept a transfer of a Mortgage Loan and to
either convey a Qualified Replacement Mortgage Loan or to make a deposit of
any related Loan Purchase Price into the Principal and Interest Account
shall constitute the sole remedy respecting such defect available to
Noteholders, the Indenture Trustee, the Trust and the Note Insurer against
the Sponsor.
The Sponsor, promptly following the transfer of a Mortgage Loan
from or to the Trust pursuant to this Section 2.02(b), shall deliver an
amended Schedule of Mortgage Loans 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 the transfer of
a repurchased Mortgage Loan from the Indenture Trustee to the Sponsor,
appropriately mark its records to indicate that it is no longer servicing
such Mortgage Loan on behalf of the Trust.
(c) As to any Qualified Replacement Mortgage Loan, the
Sponsor shall deliver to the Indenture Trustee with respect to such
Qualified Replacement Mortgage Loan such documents and agreements as are
required to be held by the Indenture Trustee in accordance
7
<PAGE> 12
with this Section 2.02. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgage Loans, the Master
Servicer shall determine the Substitution Amount, which amount shall be
deposited by the Sponsor in the Principal and Interest Account at the time
of substitution. All amounts received in respect of the Qualified
Replacement Mortgage Loan 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
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 Mortgage Loan so removed by the Trust
Estate shall be deposited by the Master Servicer in the Principal and
Interest Account. Upon such substitution, each Qualified Replacement
Mortgage Loan 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 Loan, as of the date of substitution,
the covenants, representations and warranties set forth in Section 3.03 and
(ii) to have certified that such Mortgage Loan(s) is/are Qualified
Replacement Mortgage Loan(s).
Section 2.03 Cooperation Procedures. The Sponsor, the Master
Servicer and the Indenture Trustee covenant to provide each other and to the
Note Insurer 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 2.04 Conveyance of the Subsequent Mortgage Loans.
(a) On any Subsequent Transfer Date, subject to the conditions set forth in
paragraph (b) below, in consideration of the Indenture Trustee's delivery of
all or a portion of the balance of funds in the Pre-Funding Account, the
Sponsor shall sell, transfer, assign, set over and otherwise convey, without
recourse, to the Holding Trust or shall request or cause the Holding Trust
to acquire from the Sponsor or an affiliate of the Sponsor, and the Holding
Trust shall sell, transfer, assign, set over and otherwise convey to the
Trust, without recourse, for pledge to the Indenture Trustee on behalf of
the Noteholders and the Note Insurer all right, title and interest of the
Sponsor or such affiliate or the Holding Trust, as applicable, in and to
each Subsequent Mortgage Loan listed on the Schedule of Mortgage Loans
delivered by the Sponsor to the Indenture Trustee on such Subsequent
Transfer Date, all right, title and interest in and to principal collected
and interest accrued on each such Subsequent Mortgage Loan on and after the
related Subsequent Cut-Off Date and all right, title and interest in and to
all Mortgage Insurance Policies; provided, however, that the Sponsor
reserves and retains all of its right, title and interest in and to
principal collected and interest accrued on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-Off Date. Each of the transfer by
the Sponsor to the Holding Trust and by the Holding Trust to the Trust of
the Subsequent Mortgage Loans set forth on the Schedule of Mortgage Loans
shall be absolute and shall be intended by the Sponsor, the Holding Trust
the Noteholders and all parties hereto to be treated as a sale.
The amount released from the Pre-Funding Account shall be equal
to 96.25% of the aggregate Loan Balances of the Subsequent Mortgage Loans so
transferred.
The Sponsor shall transfer or cause to be transferred to the
Indenture Trustee, on behalf of the Trust, the Subsequent Mortgage Loans and
the other property and rights related
8
<PAGE> 13
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,
the Note Insurer and each Rating Agency with an Addition Notice and
any information in an electronic data file with respect to the
Subsequent Mortgage Loans;
(ii) the Sponsor and the Holding Trust 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 G (the "Subsequent Transfer Agreement"), which shall include a
Schedule of Mortgage Loans, listing the Subsequent Mortgage Loans and
any other exhibits listed thereon;
(iii) prior to or on the first Remittance Date following the
related Subsequent Transfer Date, the Sponsor shall have deposited in
the Principal and Interest Account all principal collected and
interest accrued (excluding premium recapture and interest accrued
prior to the related Subsequent Cut-Off Date) in respect of the
Subsequent Mortgage Loans on or after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, none of the related
Originators, the Master Servicer or 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 conveyance of Subsequent Mortgage Loans will not
result in a material adverse tax consequence to the Trust or the
Noteholders;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in paragraphs (b), (c) and (d) of this
Section 2.04 and in the related Subsequent Transfer Agreement.
(viii) the Rating Agencies, the Note Insurer, and the
Indenture Trustee shall have received, Opinions of Counsel with
respect to certain tax, true sale and bankruptcy matters related to
the transfer of the Subsequent Mortgage Loans (which Opinions of
Counsel may be delivered on the Closing Date); and
(ix) the Note Insurer shall have approved the Subsequent
Mortgage Loans to be transferred.
(b) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
requirements:
(i) for each Subsequent Mortgage Loan, as of the related
Subsequent Cut-Off Date:
(A) the applicable Gross Margin is at least 1.90%;
9
<PAGE> 14
(B) the final maturity date is not later than
February 29, 2030,
(C) the Loan-to-Value Ratio is not in excess of 100%;
(D) the Loan Balance is not in excess of $500,000.00;
and
(E) the Mortgage Loan is not more than 30 days
Delinquent; and
(ii) following the purchase of such Subsequent Mortgage Loans
by the Trust, the Mortgage Loans (by aggregate Loan Balance)
(including Subsequent Mortgage Loans):
(A) will have a weighted average Coupon Rate of at
least 9.25%;
(B) will have a weighted average Loan-to-Value Ratio
of not more than 81.00%;
(C) will have not more than 2.00% Mortgage Loans with
a Loan-to-Value Ratio of greater than 90.00%;
(D) will have at least 92.00% Mortgage Loans that are
considered "fully documented" loans;
(E) will have at least 87.00% Mortgage Loans that are
related to single family detached residences or
planned unit developments;
(F) will have 100.00% Mortgage Loans which are First
Mortgage Loans;
(G) will have at least 75.00% Mortgage Loans which
are classified "A-" or better;
(H) will have not more than 8.00% of Mortgage Loans
that are classified "C";
(I) will have not more than 1.50% of Mortgage Loans
that are classified "D";
(J) will have a weighted average Gross Margin of at
least 5.15%;
(K) will have not more than 15.00% of Mortgage Loans
for which the related Property is located in any
one state.
The Note Insurer may waive or modify any of the requirements in
this Section 2.04(c) or specify any additional criteria provided that
any such modification shall not materially and adversely affect the
Sponsor.
10
<PAGE> 15
(c) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy, or cause to be
satisfied, the conditions set forth in Sections 2.01(b), (c), (f), (g), (h)
and (i), 2.02 and 2.03 hereof and this Section 2.04.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
Section 3.01 Representations and Warranties of the Sponsor. The
Sponsor hereby represents, warrants and covenants to the Indenture Trustee,
the Note Insurer and to the 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 Nevada
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
11
<PAGE> 16
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 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
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 and are not reasonably expected to be 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 Trust.
12
<PAGE> 17
(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 Trust or the issuance of the Notes.
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 3.02 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 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
13
<PAGE> 18
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 might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative
Documents to which the Master Servicer is a party.
(f) No certificate of any an officer, statement furnished in
writing or report delivered pursuant to the terms hereof the by the
Master Servicer contains any untrue statement of a material fact or
omits to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which
the Master Servicer is responsible in accordance with the Operative
Documents or which are attributed to the Master Servicer therein are
true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact
with respect to the Master Servicer or omit to state a material fact
required to be stated therein or necessary to make the statements
contained therein with respect to the Master Servicer not misleading.
To the best of the Master Servicer's knowledge and belief, the
Registration Statement does not contain any untrue statement of a
material fact 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 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
reasonably expected to be 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.
14
<PAGE> 19
(i) 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.
(j) The transactions contemplated by this Agreement are in
the ordinary course of business of the Master Servicer.
(k) The terms of each existing Sub-Servicing Agreement are
acceptable to the Master Servicer and any new Sub-Servicing Agreements
or Sub-Servicers will comply with the provisions of Section 4.03.
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 3.02 which
materially and adversely affects the interests of the Noteholders or of the
Note Insurer, the party discovering such breach shall give prompt written
notice to the other parties. Within 30 days of its discovery or its receipt
of notice of breach, the Master Servicer shall cure such breach in all
material respects and, upon the Master Servicer's continued failure to cure
such breach, may thereafter be removed by the Indenture Trustee or the Note
Insurer pursuant to Section 5.01 hereof; provided, however, that, if the
Master Servicer can demonstrate to the reasonable satisfaction of the
Controlling Party that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the Controlling
Party.
Section 3.03 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 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 date upon which any
Qualified Replacement Mortgage Loan is added to the Trust, but shall in each
case survive the sale, transfer and assignment of the Mortgage Loans to the
Trust and the pledge of the Mortgage Loans to the Indenture Trustee pursuant
to the Indenture:
(i) The information with respect to each Mortgage Loan set
forth in the Schedule of Mortgage Loans is true and correct as of the
Initial Cut-Off Date, the Subsequent Cut-Off Date, or the Replacement
Cut-Off Date, as the case may be;
(ii) All of the original or certified documentation set forth
in Section 2.01 (including all material documents related thereto)
with respect to each Mortgage Loan has been or will be delivered to
the Indenture Trustee not later than the Closing Date, the related
Subsequent Transfer Date, or the date on which any Qualified
Replacement Mortgage Loan is added to the Trust, as the case may be,
or as otherwise provided in Section 2.01;
15
<PAGE> 20
(iii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate;
(iv) As of the Initial Cut-Off Date, no more than 0.30% of
the aggregate principal balances of the Initial Mortgage Loans are
30-59 days Delinquent and no Initial Mortgage Loan is 60 or more days'
Delinquent;
(v) All of the Mortgage Loan conform, in all material respects,
to the description thereof set forth in the Registration Statement;
(vi) 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 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 the Mortgage Loan Transfer Agreement. Insofar as
the Mortgage Loan 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 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 the Mortgage Loan Transfer Agreement
in respect of any Mortgage Loan which materially and adversely affects the
interests of the 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 3.04(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 3.04 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 3.04, 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 3.03 of this Agreement or in the Mortgage
Loan Transfer Agreement were untrue in any material respect as of the
Closing Date (or the Subsequent Transfer Date, as the case may be) and such
breaches of the representations and warranties materially and adversely
affect the interests of the 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 or (y) relating to enforceability of
the Mortgage Loan against the related Mortgagor or Property,
16
<PAGE> 21
constitutes breach of a representation or warranty which materially and
adversely affects the interests of the 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 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 or an Originator to),
subject to the further requirements of this paragraph, on the second
Remittance Date next succeeding such discovery, or receipt of notice (i)
substitute in lieu of each Mortgage Loan which has given rise to the
requirement for action by the Sponsor a Qualified Replacement Mortgage Loan
and deliver the Substitution Amount applicable thereto, together with the
aggregate amount of all Delinquency Advances and Servicing Advances
theretofore made with respect to such Mortgage Loan and not previously
reimbursed to the Master Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Mortgage Loan from the Trust at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall
be delivered to the Master Servicer for deposit in the Principal and
Interest Account. 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
Noteholders, the Indenture Trustee or the Note Insurer.
(c) In the event that any Qualified Replacement Mortgage Loan
is delivered by an Originator or by the Sponsor (or by an affiliate of the
Sponsor, as the case may be) to the Trust pursuant to Sections 3.03, 3.04 or
2.02 hereof, the related Originator and the Sponsor shall be obligated to
take the actions described in Section 3.04(b) with respect to such Qualified
Replacement Mortgage Loan upon the discovery by any of the 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
Mortgage Loan Transfer Agreement or in Section 3.03 above are untrue in any
material respect on the date such Qualified Replacement Mortgage Loan is
conveyed to the Trust such that the interests of the Noteholders or the Note
Insurer in the related Qualified Replacement Mortgage Loan are materially
and adversely affected.
(d) In the event that any Qualified Replacement Mortgage Loan
is delivered to the Trust, such Qualified Replacement Mortgage Loan must be
a Mortgage Loan which: (i) bears an adjustable rate of interest, (ii) has
the same interest rate index, a margin over such index and a maximum
interest rate equal to or greater than those applicable to the Mortgage Loan
being replaced, (iii) is of the same or better property type and the same or
better occupancy status as the replaced Mortgage Loan, (iv) shall be of the
same or better credit quality classification (determined in accordance with
the Originators' credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than February 29, 2030, (vi) has a
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
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 Loans as of such Replacement
Cut-Off Date, (viii) satisfies all of the representations and warranties set
forth in Section 3.03 as evidenced by an Officer's Certificate of the
Sponsor
17
<PAGE> 22
delivered to the Note Insurer, the Sponsor and the Indenture Trustee prior
to any such substitution and (ix) is a valid First 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 with respect to the Mortgage Loans only 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 clause (viii) hereof must be satisfied as to
each Qualified Replacement Mortgage Loan. The procedures applied by the
Sponsor in selecting each Qualified Replacement Mortgage Loan shall not be
materially adverse to the interests of the Indenture Trustee, the
Noteholders or the Note Insurer.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage Loan
therefor, the Indenture Trustee will transfer, assign, set over and
otherwise convey without recourse, all of its right, title and interest in
and to such released Mortgage Loan and all of the Trust's right, title and
interest to principal collected and interest accruing on such released
Mortgage Loan on and after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title
and interest in and to payments of principal collected and interest accrued
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 Loan to the Trust, the Sponsor agrees to
cause to be delivered to the Indenture Trustee the items described in
Section 2.01(c) on the date of such transfer and assignment or, if a later
delivery time is permitted by Section 2.01(c), then no later than such later
delivery time.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage Loan the
Indenture Trustee shall deliver no later than the date of conveyance of such
Qualified Replacement Mortgage Loan and on the order of the Sponsor (i) the
original Mortgage Note, or the certified copy, relating thereto, endorsed
without recourse, to the Sponsor and (ii) such other documents as
constituted the Mortgage File with respect thereto.
(h) The Sponsor shall, in connection with the delivery of
each Qualified Replacement Mortgage Loan to the Indenture Trustee, provide
the Indenture Trustee with the information set forth in the Schedule of
Mortgage Loans with respect to such Qualified Replacement Mortgage Loan.
(i) It is understood and agreed that the covenants set forth
in this Section 3.04 shall survive delivery of the respective Mortgage Loans
(including Subsequent Mortgage Loans and Qualified Replacement Mortgage
Loans) to the Indenture Trustee on behalf of the Trust.
18
<PAGE> 23
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.01 Master Servicer and Sub-Servicers. (a) Acting
directly or through one or more Sub-Servicers as provided in Section 4.03,
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 in accordance with Accepted Servicing
Practices, 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) With respect to the Mortgage Loans, the duties of the
Master Servicer shall include (i) collecting and posting of all payments,
(ii) responding to inquiries of Mortgagors or by federal, state or local
government authorities, (iii) investigating delinquencies, (iv) reporting
tax information to Mortgagors in accordance with its customary practices,
(v) accounting for collections, (vi) furnishing monthly and annual
statements to the Indenture Trustee and the Note Insurer, as applicable,
with respect to distributions, (vii) paying Compensating Interest and (viii)
making Delinquency Advances and Servicing Advances pursuant hereto. The
Master Servicer shall follow Accepted Servicing Practices 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.
(c) Without limiting the generality of the foregoing, the
Master Servicer (i) shall continue, and is hereby authorized and empowered
by the Indenture Trustee, to execute and deliver, on behalf of itself, the
Noteholders, the Note Insurer and the Indenture Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the related Properties; (ii) may consent to any
modification of the terms of any Mortgage 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, the
timing of receipt of any payments required hereby or the interest of the
Note Insurer.
(d) The Master Servicer shall, in accordance with Accepted
Servicing Practices, have the right 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 consent may be approved by the Master Servicer unless: (x)
the provisions of the related Note and Mortgage have been complied with; (y)
the Loan-to-Value Ratio (which may, for this purpose, be determined at the
time of any such action in a manner reasonably acceptable to the Indenture
Trustee) and the Mortgagor's debt-to-income ratio after any release does not
exceed the 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 in clauses (x), (y) and (z) shall not apply to
19
<PAGE> 24
any such situation described in this paragraph if such situation results
from any condemnation or easement activity by a governmental entity.
(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 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 and (iii) to
hold title to any Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Indenture Trustee; 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). Subject to Sections 4.13 and 4.14, the Indenture Trustee
shall agree in the Indenture to furnish the Master Servicer or any
Sub-Servicer with any powers of attorney and other documents as the Master
Servicer or such Sub-Servicer shall reasonably request to enable the Master
Servicer or any Sub-Servicer to carry out their respective servicing and
administrative duties hereunder.
(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 Trust or (ii) assert
jurisdiction over the Trust.
(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
4.09(c) and in Section 8.06(b)(xii) of the Indenture.
(h) The Master Servicer shall modify payments of monthly
principal and interest on any Mortgage Loan becoming subject to the terms of
the Civil Relief Act in accordance with the Master Servicer's general
policies of the comparable mortgage loans subject to the Civil Relief Act.
(i) The Master Servicer shall have the right to sell, in
whole-loan, third-party sales, any Mortgage Loan that is more than 90 days
delinquent if the Master Servicer believes that such means of disposition
will provide the largest recovery.
Section 4.02 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 Mortgage Insurance Policies, follow Accepted Servicing Practices.
The Master Servicer may in its discretion waive any assumption fees, late
payment
20
<PAGE> 25
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,
In addition, the Master Servicer may, 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; and, provided, further, that such modifications shall not be made
in excess of 10% of the Original Pool Principal Balance without the prior
written consent of the Note Insurer; provided, further, however, that, if
the Note Insurer has not given its consent within five (5) Business Days
after notice from the Master Servicer, the Note Insurer shall be deemed to
have given its consent to such modification or rescheduling for payments of
delinquent payments; provided, however, that such notice and consent shall
not be required in the event that the Master Servicer determines, in its
good faith business judgment that such modification is legally required to
be made prior to such five (5) day period, in which case the Master Servicer
shall give the Note Insurer immediate notice of such action.
(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 Mortgage Note.
Section 4.03 Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers. 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, which may be an Affiliate.
Pursuant to the foregoing, the Master Servicer may enter into Sub-Servicing
Agreements for any servicing and administration of Mortgage Loans with any
institution 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 that is not a Master Servicer
Affiliate. The Master Servicer shall also furnish to the Note Insurer and
the Indenture Trustee a copy of the Sub-Servicing Agreement, except when the
Sub-Servicer is a Master Servicer Affiliate. For purposes of this Agreement,
the Master Servicer shall be deemed to have received payments on Mortgage
Loans when any Sub-Servicer has received such payments. Any such
Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement.
By delivery of the Policy, the Note Insurer is deemed to have
approved Advanta National Bank and Advanta Finance Corp. as Sub-Servicers
hereunder.
Section 4.04 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 either directly service the
related Mortgage Loans itself or enter into a Sub-Servicing Agreement with a
successor Sub-Servicers that qualifies under Section 4.03.
Section 4.05 Liability of Master Servicer(a) . The Master
Servicer shall not be relieved of its obligations under this Agreement
notwithstanding any Sub-Servicing Agreement between the Master Servicer and
a Sub-Servicer or otherwise and the Master Servicer shall be
21
<PAGE> 26
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 Servicer by such Sub-Servicer and nothing
contained in such Sub-Servicing Agreement shall be deemed to limit or modify
this Agreement. The Trust shall not indemnify the Master Servicer for any
losses due to the Master Servicer's negligence.
(b) The Master Servicer shall defend, indemnify and hold
harmless the Indenture Trustee (including its officers, directors, employees
and agents), the Owner Trustee (including its officers, directors, employees
and agents), the Noteholders, the Holding Trust and the Trust from and
against any and all claims, damages, liabilities, losses, costs and expenses
(including the reasonable fees and expenses of counsel) to the extent that
such claims, damages, liabilities, losses, costs or expenses arose out of,
or were imposed upon the Indenture Trustee, the Owner Trustee, the
Noteholders, the Holding Trust or the Trust in connection with or by reason
of, (i) any failure by the Master Servicer to perform its duties under this
Agreement or any errors or omissions of the Master Servicer related to such
duties, including the making of any inaccurate representations or warranties
hereunder; or (ii) in the case of the Indenture Trustee or the Owner
Trustee, the performance of its duties hereunder or under the other
Operative Documents, except to the extent that such claim, damage,
liability, loss, cost or expense resulted from the Indenture Trustee's or
the Owner Trustee's gross negligence or willful misconduct. The provisions
of this Section 4.04(b) shall run directly to and be enforceable by each
injured party subject to the limitations hereof, and the indemnification
provided by the Master Servicer to the Indenture Trustee, the Owner Trustee,
the Noteholders, the Holding Trust and the Trust pursuant to this Section
4.04(b) shall survive the payment in full of the Notes, the termination of
the Indenture and the resignation or removal of the Indenture Trustee or the
Owner Trustee. The Master Servicer shall pay any amounts owing pursuant to
this Section 4.04(b) directly to the indemnified Person, and such amounts
shall not be deposited in either the Principal and Interest Account or the
Note Account. Indemnification under this Section 4.04(b) shall include
reasonable fees and expenses of counsel and expenses of litigation
reasonably incurred. If the Master Servicer has made any indemnity payments
to the Indenture Trustee, the Owner Trustee, the Noteholders, the Holding
Trust or the Trust pursuant to this Section 4.04(b) and such party
thereafter collects any of such amounts from others, such party will
promptly repay such amounts collected to the Master Servicer, without
interest.
(c) The Master Servicer shall be the secondary obligor in
respect of any Expenses (as defined in the Trust Agreement and the Holding
Trust Agreement) owing to any Indemnified Party (as defined in the Trust
Agreement and the Holding Trust Agreement) under Section 8.02 of the Trust
Agreement and the Holding Trust Agreement.
Section 4.06 No Contractual Relationship Between Sub-Servicer
and Indenture Trustee or the 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
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 4.07 hereof.
22
<PAGE> 27
Section 4.07 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 5.01, 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 4.08 Principal and Interest Account(a) . (a) The Master
Servicer and/or each Sub-Servicer, as applicable, shall establish and
maintain at one or more Designated Depository Institutions in the name of
the Trust for the benefit of the Noteholders and the Note Insurer, as their
interests may appear, the Principal and Interest Account. The establishment
of the Principal and Interest Account shall be evidenced by the Master
Servicer's delivery of a notice in the form of Exhibit A hereto, properly
completed.
Subject to paragraphs (c) and (e) below, the Master Servicer and
any Sub-Servicer shall deposit all receipts of principal and accrued
interest related to the Mortgage Loans (including, without limitation, Net
Liquidation Proceeds) to the Principal and Interest Account on a daily basis
(but no later than the second Business Day after receipt).
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC or (ii)
invested in Eligible Investments. The Principal and Interest Account shall
be held in trust in the name of the Trust and for the benefit of the
Noteholders and the Note Insurer. Any investment earnings on funds held in
the Principal and Interest Account shall be for the account of the Master
Servicer. Any references herein to amounts on deposit in the Principal and
Interest Account shall refer to amounts net of such investment earnings. Any
investment losses are at the expense of the Master Servicer and shall be
replaced on or prior to the Remittance Date.
(c) With respect to the Mortgage Loans and subject to
paragraph (e) below, the Master Servicer shall deposit to the Principal and
Interest Account all principal collected and interest accrued on or after
the Cut-Off Date, related Subsequent Cut-Off Date or Replacement Cut-Off
Date including any Prepaid Installments, Prepayments, Net Liquidation
Proceeds, all Loan Purchase Prices and Substitution Amounts received or paid
by the Master Servicer, other recoveries or amounts received by the Master
Servicer, Compensating Interest and Delinquency Advances together with any
amounts which are reimbursable from the Principal and Interest Account, but
net of (i) the Servicing Fee 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 Initial
Cut-Off Date, Subsequent Cut-Off Date or
23
<PAGE> 28
Replacement Cut-Off Date, (iii) interest accrued on the related Mortgage
Loans prior to the Initial Cut-Off Date, Subsequent Cut-Off Date or
Replacement Cut-Off Date and (iv) Net Liquidation Proceeds to the extent
such Net Liquidation Proceeds exceed the Loan Balance of the related
Mortgage Loan and accrued and unpaid interest thereon.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Indenture
Trustee of the Monthly Remittance Amount due on
the Remittance Date;
(B) to reimburse itself pursuant to Section 4.09(a)
hereof for unreimbursed Delinquency Advances and
Servicing Advances and Nonrecoverable Advances;
(C) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account if
such investment earnings have been deposited to
the Principal and Interest Account;
(D) to withdraw amounts that have been deposited to a
Principal and Interest Account in error;
(E) to clear and terminate each Principal and
Interest Account following the termination of the
Trust pursuant to Article X of the Indenture; and
(F) to invest in Eligible Investments.
(ii) On the tenth day of each month, the Master Servicer
shall send to the Indenture Trustee 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 three (3) Business Days written notice to
the Master Servicer. Upon any change in the format of the electronic
medium maintained by the Master Servicer in respect of the Mortgage
Loans, the Master Servicer shall deliver a copy of such electronic
medium to the Indenture Trustee.
(iii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer in immediately available
funds for deposit in the Note Account the amounts specified in Section
8.07(a) of the Indenture.
(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 and each
Rating Agency, then the requirement to maintain the Principal and Interest
Account and deposit of principal collections and accrued interest may be
waived by an instrument signed by the Note Insurer, each Rating Agency and
the Master Servicer may be allowed to co-mingle with its general funds the
amounts otherwise required to be deposited to
24
<PAGE> 29
the Principal and Interest Account, on such terms and subject to such
conditions as the Note Insurer and each Rating Agency may permit.
Section 4.09 Delinquency Advances, Compensating Interest and
Servicing Advances. (a) The Master Servicer is required, not later than
each Remittance Date, to deposit into the Principal and Interest Account an
amount equal to the sum of the interest portions accrued (net of the
Servicing Fees and certain other administrative amounts, if any) with
respect to Delinquent Mortgage Loans during the related Remittance Period
but not collected on or prior to such Remittance Date, but only if, in its
good faith business judgment, the Master Servicer reasonably believes that
such amount will ultimately be recoverable 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
subsequent collections on the related Mortgage Loan. The Master Servicer may
use funds deposited to the Principal and Interest Account subsequent to the
related Remittance Period and shall deposit into the Principal and Interest
Account with respect thereto (i) late collections from the Mortgagor whose
Delinquency gave rise to the shortfall which resulted in such Delinquency
Advance and (ii) Net Liquidation Proceeds recovered on account of the
related Mortgage Loan to the extent of the amount of aggregate Delinquency
Advances related thereto or (iii) from its own funds. If not therefore
recovered from the related Mortgagor or the related Liquidation Proceeds,
Delinquency Advances constituting Nonrecoverable Advances shall be
recoverable pursuant to Section 8.06(b)(xi) of the Indenture and Section
4.08(d) hereof.
(b) On or prior to each Remittance Date, the Master Servicer
shall deposit in the Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period
Compensating Interest out of its own funds, without any right of
reimbursement therefor. "Compensating Interest" shall equal the lesser of
(i) the aggregate of the Prepayment Interest Shortfalls for the related
Remittance Period and (ii) the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance
Period; in no event shall the Master Servicer 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. "Prepayment Interest Shortfall" for any prepaid Mortgage
Loan shall be 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) the interest (less the Servicing Fee) paid by the
Mortgagor with respect to the Mortgage Loan during such Remittance Period
(c) The Master Servicer will pay all "out-of-pocket" costs
and expenses incurred by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i)
Preservation Expenses (including the payment of flood insurance premiums),
(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
25
<PAGE> 30
of pursuing or obtaining personal judgments, garnishments, levies,
attachment and similar actions, (iii) the conservation, management,
liquidation, sale or other disposition of any Property acquired in
satisfaction of the related Mortgage Loan, including reasonable fees paid to
any independent contractor in connection therewith, and (iv) advances to
keep liens current; and with respect to any of the foregoing, the Master
Servicer is only required to pay such costs and expenses to the extent the
Master Servicer reasonably believes such costs and expense will be
recoverable from the related Mortgage Loan. Each such amount so paid will
constitute a "Servicing Advance". The Master Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the Mortgage
Notes, (y) from Liquidation Proceeds realized upon the liquidation of the
related Mortgage Loan and (z) as provided in Section 4.08(d) hereof. In no
case may the Master Servicer recover Servicing Advances from principal and
interest payments on any other Mortgage Loan or from any amount relating to
any other Mortgage Loan except as provided pursuant to Section 4.08(d)
hereof.
(d) On the first Remittance Date following the Closing Date,
the Master Servicer shall make an advance (a "Special Advance") equal to the
sum of (x) one-month's interest, calculated at the Note Interest Rate,
applicable to such Payment Date, with respect to all Mortgage Loans not
having a payment due prior to the December 1999 Remittance Date; the amounts
of such Special Advances shall be included in the Interest Remittance
Amount. Reimbursement of Special Advances shall be made only as provided in
Section 8.06(b)(xi) of the Indenture.
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 shall be purchased by the
Master Servicer on a Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest Account.
Section 4.11 Maintenance of Insurance. (a) The Master
Servicer shall cause to be maintained with respect to each Mortgage Loan
either a blanket insurance policy as described in Section 4.11(c) hereof or
a hazard insurance policy that provides for fire and extended coverage, and
which provides for a recovery by the Master Servicer on behalf of the Trust
of insurance proceeds relating to such Mortgage Loan in an amount not less
than the least of (i) the outstanding principal balance of the Mortgage
Loan, (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) Unless otherwise covered pursuant to Section 4.11(c)
hereof, 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 either a blanket
insurance policy as described in Section 4.11(c) hereof or a flood insurance
policy in a form meeting the requirements of the current guidelines of the
Federal Insurance Administration. Such policy shall provide for a recovery
by the Master Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance
26
<PAGE> 31
of the Mortgage Loan, (ii) the minimum amount required to compensate for
damage or loss on a replacement cost basis and (iii) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of 1973.
The Master Servicer shall indemnify the Trust and the Note Insurer out of
the Master Servicer's own funds for any loss to the Trust and the Note
Insurer resulting from the Master Servicer's failure to maintain the
insurance required by this Section 4.11.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket insurance 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, flood and hazard insurance
coverage under this 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 paragraphs (a)
and (b) of this Section 4.11, and there shall have been a loss which would
have been covered by such policy, deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between
the amount that would have been payable under a policy complying with
paragraphs (a) and (b) 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 or 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 Mortgage 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 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 Mortgage 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
Mortgage 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 Controlling 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 Mortgage File and which shall, for all
27
<PAGE> 32
purposes, be considered a part of such Mortgage 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 Trust of Properties relating to defaulted
Mortgage Loans as to which no satisfactory arrangements can be made for
collection of Delinquent payments and which the Master Servicer has not
purchased pursuant to Section 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 and insurance
premiums. Any amounts so advanced shall constitute "Servicing Advances"
within the meaning of Section 4.09(c) hereof.
Notwithstanding the generality of the foregoing provisions, the
Master Servicer shall manage, conserve, protect and operate each REO
Property for the 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 Noteholders, rent the same, or any part thereof, as the
Master Servicer deems to be in the best interest of the 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 an REO Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such REO
Property. With respect to any Mortgage Loan secured by a mixed use REO
Property, the Master Servicer shall, prior to foreclosing upon or otherwise
comparably effecting the ownership in the name of the Master Servicer on
behalf of the Trust, either (x) perform a "phase one environmental study" of
such REO Property or (y) repurchase such REO Property at the Loan Purchase
Price.
28
<PAGE> 33
(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 (exclusive of any possibility
of a deficiency judgement), whereupon such Mortgage Loan shall become a
Liquidated Mortgage Loan and, if requested, shall promptly deliver to the
Note Insurer, and to the Indenture Trustee, a related liquidation report
with respect to such Liquidated Mortgage Loan.
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage
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 D. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, as directed by the Master Servicer in the Master
Servicer's Trust Receipt. 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 Principal and Interest Account. In lieu of
executing any such satisfaction or assignment, 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 and deliver the same with the related Mortgage
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
Mortgage Insurance Policy, the Indenture Trustee shall (except in the case
of the payment or liquidation pursuant to which the related Mortgage 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 Mortgage File to the Master Servicer and shall execute
such documents as shall be necessary to the prosecution of any such
proceedings, including, without limitation, an assignment without recourse
of the related Mortgage to the Master Servicer; provided, that the Master
Servicer shall not have received and not returned at any one time more than
10% of the entire number of Mortgage Files. The Indenture Trustee shall
complete in the name of the Indenture Trustee any endorsement in blank on
any Note prior to releasing such Mortgage Note to the Master Servicer or any
Sub-Servicer. Such receipt shall obligate the Master Servicer or any
Sub-Servicer to return the Mortgage File to the Indenture Trustee when the
need therefor by the Master Servicer or any Sub-Servicer no longer exists
29
<PAGE> 34
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of
the liquidation information, in physical or electronic form acceptable to
the Master Servicer and the Indenture Trustee, a copy of 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 Trust.
(d) The provisions set forth in paragraphs (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be
given by the Controlling Party and the Rating Agencies pursuant to Section
2.01(h) 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
Mortgage File(s) no later than seven (7) Business Days of receipt of a
properly completed Master Servicer's Trust Receipt 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 shall be authorization to the Indenture
Trustee to release such Mortgage 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 Mortgage 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 Mortgage 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.
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 investment income on each Principal
and Interest Account, the Capitalized Interest Account, and on the Note
Account, prepayment charges, release fees, bad check charges, assumption
fees, late payment charges, any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Principal and
Interest Account pursuant to Section 4.08(c)(iv) 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 and the
Note Insurer, on or before the last day of March of each year, commencing in
the year 2000, 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
30
<PAGE> 35
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 March of each year, commencing in the
year 2000, the Master Servicer, at its own expense, shall cause to be
delivered to the Indenture Trustee and the Note Insurer a letter or letters
of a firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Controlling 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 or (iii) examined such operations in accordance with the
requirements of SAS 70.
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, 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.
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 5.01(g) hereof for a successor servicer; and provided,
further, that this Section 4.19 does not apply to the appointment of
Sub-Servicers or to the assignment to a Master Servicer Affiliate. Notice of
any such assignment shall be given by the Master Servicer to the Indenture
Trustee, the Note Insurer and each Rating Agency.
Section 4.20 Inspections by the Note Insurer and the Indenture
Trustee; Errors and Omissions Insurance. (a) At any reasonable time during
business hours and from time to time upon five (5) Business Day's 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
reasonable costs and expenses incurred by the Master Servicer 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 4.21 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
31
<PAGE> 36
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
upon notice to the Note Insurer, 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 is a housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less
the $10,000,000, as determined in accordance with generally accepted
accounting principles.
Section 4.22 Notices to 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
Noteholders at their respective addresses appearing in the Note Register,
the Note Insurer and each Rating Agency.
Section 4.23 Notices of Material Events. The Master Servicer
shall give prompt notice to the Note Insurer, the Indenture Trustee, and
each Rating Agency of the occurrence of any of the following events:
(a) Any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in the
occurrence of a default by the Sponsor, or the Master Servicer under
any Operative Document, or would constitute a material breach of a
representation, warranty or covenant under any Operative Document,
which default would have a material adverse effect on the Noteholders
or the Note Insurer;
(b) The submission of any claim or the initiation of any
legal process, litigation or administrative or judicial investigation
against the Sponsor, the Master Servicer or AMHC in any federal, state
or local court or before any governmental body or agency, or before
any arbitration board, or any such proceedings threatened by any
governmental agency, which, if adversely determined, would have a
material adverse effect upon any the Sponsor's, the Master Servicer's
or AMHC's ability to perform its obligations under any Operative
Document;
(c) The commencement of any proceedings by or against the
Sponsor, the Master Servicer or AMHC under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official shall have been, or may
be, appointed or requested for the Sponsor, the Master Servicer or
AMHC; and
(d) The receipt of notice from any agency or governmental
body having authority over the conduct of any of the Sponsor's the
Master Servicer's or the AMHC's business that the Sponsor, the Master
Servicer or AMHC is to cease and desist, or to undertake any practice,
program, procedure or policy employed by the Sponsor, the Master
Servicer or AMHC in the conduct of the business of any of them, and
such cessation or undertaking will materially adversely affect the
conduct of the Sponsor's, the Master Servicer's or AMHC's business or
its ability to perform under the Operative Documents or materially
adversely affect the financial affairs of the Sponsor, the Master
Servicer or AMHC.
32
<PAGE> 37
ARTICLE V
SERVICING TERMINATION
Section 5.01 Events of Servicer Termination. (a) The Indenture
Trustee, with the consent of the Note Insurer (or the Noteholders, if a Note
Insurer Default shall have occurred and be continuing) may remove the Master
Servicer upon the occurrence of any of the following events (each, an "Event of
Servicing Termination"):
(i) The Master Servicer shall fail to deliver to the
Indenture Trustee any proceeds or required payment, which failure
continues unremedied for five (5) Business Days following written
notice to an Authorized Officer of the Master Servicer from the
Indenture Trustee, the Note Insurer or from Noteholders evidencing
Percentage Interests aggregating not less than 25%.
(ii) The Master Servicer shall (A) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (B) admit in
writing its inability to pay its debts generally as they become due,
(C) make a general assignment for the benefit of creditors, (D) be
adjudicated a bankrupt or insolvent, (E) 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 (F) 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.
(iv) The Master Servicer shall fail to perform any one or
more of its obligations hereunder other than the obligations
contemplated by subsection 5.01(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 Controlling Party that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Controlling Party; or
33
<PAGE> 38
(v) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.02 which
materially and adversely affects the interests of the 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 Controlling Party that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Controlling Party.
(b) The Note Insurer also may remove the Master Servicer as
set forth in the Insurance Agreement or upon the occurrence of any of the
following events:
(i) upon the making of any Insured Payment; provided,
however, that the Note Insurer shall have no right to remove the
Master Servicer under this clause (i) if the Master Servicer can
demonstrate to the reasonable satisfaction of the Note Insurer that
such event was due to circumstances beyond the control of the Master
Servicer; or
(ii) the failure by the Master Servicer to make any required
Servicing Advance; or
(iii) the failure by the Master Servicer to perform any one
or more of its material obligations hereunder or under the Insurance
Agreement, which failure materially and adversely affects the
interests of the Note Insurer and the Indenture Trustee; or
(iv) the failure by the Master Servicer to make any required
Delinquency Advance, any Special Advance or to pay any Compensating
Interest; or
(v) the occurrence of a Servicer Termination Loss Trigger or
of a Servicer Termination Delinquency Trigger, as such terms are
defined in the Insurance Agreement; or
(vi) the enactment of any law by a legislative body that
declares, or any finding or ruling by a court of competent
jurisdiction, that the Insurance Agreement or this Agreement is not
valid and binding on the Sponsor or the Master Servicer.
provided, however, with respect to clause (iv), if the Master Servicer
can demonstrate to the reasonable satisfaction of the Note Insurer
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;
provided, further, however, that (x) prior to any removal of the
Master Servicer by the Note Insurer pursuant to clauses (ii) or (iii)
of this Section 5.01(b), the Master Servicer shall first have been
given by the Note Insurer and by registered or certified mail, notice
of the occurrence of one or more of the events set forth in clauses
(ii) or (iii) above and the Master Servicer shall not have remedied,
or shall not have taken actions satisfactory to the Note Insurer to
remedy, such event or events within 30 days (60 days with respect to
clause (iii)) after the Master Servicer's receipt of such notice
(provided, however, that if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer
34
<PAGE> 39
that it is diligently pursuing remedial action, then the cure period
in each case may be extended with the written approval of the Note
Insurer) and (y) in the event of the refusal or inability of the
Master Servicer to make any required Delinquency Advance or Special
Advance or to pay any Compensating Interest (as described in clause
(iv)) or Monthly Remittance Amount, such removal shall be effective
(without the requirement of any action on the part of the Note Insurer
or of the Indenture Trustee) at 4:00 p.m. on the second Business Day
following the day on which the Indenture Trustee or the Note Insurer
notifies an Authorized Officer of the Master Servicer that a required
Delinquency Advance or Special Advance or any Compensating Interest or
Monthly Remittance Amount has not been received by the Indenture
Trustee. Upon the Indenture Trustee's determination that a required
Delinquency Advance or Special Advance or any Compensating Interest or
Monthly Remittance Amount has not been made by the Master Servicer,
the Indenture Trustee shall so notify in writing an Authorized Officer
of the Master Servicer and the Note Insurer as soon as is reasonably
practical.
(c) The Master Servicer shall not resign from the obligations
and duties hereby imposed on it, except upon determination that its duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by
it, the other activities of the Master Servicer so causing such a conflict
being of a type and nature carried on by the Master Servicer at the date of
this Agreement. Any such determination permitting the resignation of the
Master Servicer shall be evidenced by an opinion of counsel to such effect
which shall be delivered to the Indenture Trustee and the Note Insurer.
(d) 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 Agreement. If no successor servicer is available, the
Indenture Trustee shall act as successor servicer and perform all of the
obligations of this Agreement, including, without limitation, making
Delinquency Advances, Servicing 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.
(e) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the 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.
(f) 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.
(g) 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
35
<PAGE> 40
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 4.08 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.
(h) 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 compensation set forth in clause (g) above. Within thirty
(30) 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.
(i) 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 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.
36
<PAGE> 41
(j) 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 only be
required to make Delinquency Advances (including the Delinquency Advances
required to be made by the predecessor Master Servicer but not so deposited)
if, in the Indenture Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related
Mortgage Loans.
(k) The Master Servicer that is being removed or is resigning
shall give notice to the Mortgagors and to each Rating Agency of the
transfer of the servicing to the successor.
(l) The Indenture Trustee shall give notice to the Note
Insurer, each Rating Agency and to the Note Owners of the occurrence of any
event specified in Section 5.01(a) of which the Indenture Trustee has
knowledge.
(m) Notwithstanding anything herein to the contrary, upon
termination of the Master Servicer hereunder, any liabilities of the Master
Servicer which accrued prior to such termination shall survive such
termination.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
Section 6.01 Administrative Duties with Respect to the
Indenture. The Master Servicer shall perform all its duties and the duties
of the Trust pursuant to 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 Trust under the Indenture. The
Master Servicer shall monitor the performance of the Trust. The Master
Servicer shall prepare for execution by the Trust 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 Trust 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 Trust to take pursuant to the Indenture.
(a) Duties with Respect to the Trust.
(i) In addition to the duties of the Master Servicer
set forth in this Agreement or any of the Operative Documents,
the Master Servicer shall perform such calculations and shall
prepare for execution by the Trust 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 Trust 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
Trust to take pursuant to this Agreement or any of
37
<PAGE> 42
the Operative Documents. In accordance with the directions of
the Trust 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 Trust 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 Trust's payments (or allocations of income)
with respect to the Notes 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 Trust or the
Sponsor set forth in Section 5.01(a), (b), (c) and (d) of the
Trust Agreement with respect to, among other things, accounting
and reports with respect to the Notes.
(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
Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Trust (with the written consent of
the Note Insurer) and shall be, in the Master Servicer's
opinion, no less favorable to the Trust or the Note Insurer 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, 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:
(i) the amendment of or any supplement to the
Indenture;
(ii) the initiation of any claim or lawsuit by the
Trust and the compromise of any action, claim or lawsuit brought
by or against the Trust (other than in connection with the
collection of the Mortgage Loans);
(iii) the amendment, change or modification of this
Agreement or any of the Operative Documents;
(iv) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees
pursuant to the Indenture or the
38
<PAGE> 43
appointment of Successor Servicers or the consent to the
assignment by the Note Registrar, Note Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(v) 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 Estate
pursuant to Section 5.01 of the Indenture, (3) take any other action
that the Trust directs the Master Servicer not to take on its behalf
(unless the Note Insurer so directs) 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 this Section 6.01.
Section 6.02 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 Trust and the Indenture Trustee at any time during normal
business hours.
Section 6.03 Additional Information to be Furnished to the
Trust. The Master Servicer shall furnish to the Trust, the Indenture Trustee
and the Note Insurer from time to time such additional information regarding
the Mortgage Loans as the Trust, the Indenture Trustee and the Note Insurer
shall reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Compliance Certificates and Opinions. Upon any
application or request by the Sponsor, the Note Insurer or the Noteholders
to the Indenture Trustee to take any action under any provision of this
Agreement, the Sponsor, the Note Insurer or the Noteholders, as the case may
be, shall furnish to the Indenture Trustee a certificate stating that all
conditions precedent, if applicable, 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.
Section 7.02 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 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
39
<PAGE> 44
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 7.03 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Agreement to be given or taken by the Noteholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by 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 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 Trust, if made in the
manner provided in this Section 7.03.
(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.
40
<PAGE> 45
(c) The ownership of Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholders shall bind the
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 Trust in reliance
thereon, whether or not notation of such action is made upon such Notes.
Section 7.04 Notices to Indenture Trustee. Any request, demand,
authorization, direction, notice, consent, waiver or act of the 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 Notes, the
Note Insurer or by the Sponsor shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to and received by
the Indenture Trustee at its corporate trust office as set forth in the
Indenture.
Section 7.05 Notices and Reports to Noteholders; Waiver of
Notices. Where this Agreement provides for notice to Noteholders of any
event or the mailing of any report to Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Noteholder affected by such
event or to whom such report is required to be mailed, at the address of
such 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 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 Noteholder shall affect the sufficiency of such
notice or report with respect to other 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 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 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 Notes, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 7.06 Rules by Indenture Trustee and Sponsor. The
Indenture Trustee may make reasonable rules for any meeting of Noteholders.
The Sponsor may make reasonable rules and set reasonable requirements for
its functions.
41
<PAGE> 46
Section 7.07 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 7.08 Severability. In case any provision in this
Agreement or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 7.09 Benefits of Agreement. Nothing in this Agreement or
in the Notes, expressed or implied, shall give to any Person, other than the
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 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 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 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 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 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 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 each other and of the Note Insurer but without
the giving of notice to or the receipt of the consent of each other and of
the Noteholders, and subject to Section 6.01(b) hereof 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 of the
Operative Documents, or to add provisions hereto which are not inconsistent
with the provisions hereof, or (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 Noteholder (without its written consent).
42
<PAGE> 47
(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 each other party hereto and the Note Insurer but without the
giving of notice to or the receipt of the consent of the Noteholders, and
subject to Section 6.01(b) hereof, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of changing the
definitions of "Specified Overcollateralization Amount"; provided, however,
that no such change shall affect the weighted average life of the Notes
(assuming an appropriate prepayment speed as determined by the
Representative) by more than five percent (5%), as determined by the
Representative.
(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 Notes then
Outstanding, and subject to Section 6.01(b) hereof 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
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 Noteholder without the consent of the
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 Notes, without
the consent of the Noteholders of the then Outstanding Notes.
(d) The Note Insurer, the Noteholders, the Owner Trustee, the
Indenture Trustee, and the Rating Agencies 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 7.14 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 Policy, except with respect to amendments
to this Agreement pursuant to Section 7.13. During the continuance of a Note
Insurer Default, the Note Insurer's rights hereunder shall vest in the
Indenture Trustee on behalf of the Noteholders and shall be exercisable by
the Noteholders of at least a majority in Percentage Interest of the Notes
then Outstanding. At such time as the Notes are no longer Outstanding
hereunder and the Note Insurer has been reimbursed for all Reimbursement
Amounts to which it is entitled hereunder, under the Indenture and under the
Insurance Agreement and the Policy has expired, the Note Insurer's rights
hereunder shall terminate.
Section 7.15 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.
1761 E. St. Andrew Place
Santa Ana, California 92705
Attention: Advanta 1999-4
43
<PAGE> 48
Tel: (714) 247-6286
Fax: (714) 247-6475
The Sponsor: Advanta Conduit Receivables, Inc.
10790 Rancho Bernardo Road
San Diego, California 92127
Tel: (858) 674-3317
Fax: (858) 674-3666
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, California 92127
Tel: (858) 674-3317
Fax: (858) 674-3666
Attention: Investor Reporting
The Note Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department
Advanta Mortgage Loan Trust
1999-4
In each case in which notice or other communication to the Note
Insurer refers to an Event of Servicing Termination, a claim on the Policy
or with respect to which failure on the part of the Note Insurer to respond
shall be deemed to constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to the attention of the
general counsel (fax no. 212-208-3558 and with the same confirmation number
as stated above) and should be marked "URGENT MATERIAL ENCLOSED".
44
<PAGE> 49
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
55 Water Street
New York, New York 10041
Attention: Manager, Structured Finance
Operations Group
Representative: Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Asset-Backed Securities Group
The Trust: Advanta Mortgage Loan Trust 1999-4
c/o Wilmington Trust Company, as Owner
Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Section 7.16 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 Trust 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 Trust 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 Trust, (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 Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaking by the Trust under this Agreement or any
related documents.
[Remainder of Page Intentionally Left Blank]
45
<PAGE> 50
IN WITNESS WHEREOF, the Sponsor, the Trust, the Master Servicer,
the Holding Trust 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 CONDUIT RECEIVABLES, INC.,
as Sponsor
By: /s/ Michael Coco
-----------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: /s/ Michael Coco
-----------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA MORTGAGE LOAN
TRUST 1999-4, as the Trust
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ Donald G. MacKelcan
-----------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
ADVANTA HOLDING TRUST 1999-4, as the
Holding Trust
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ Donald G. MacKelcan
-----------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Indenture Trustee
By: /s/ Whitney Iger
-----------------------------------------
Name: Whitney Iger
Title: Assistant Vice President
<PAGE> 51
SCHEDULE 1
SCHEDULE OF MORTGAGE LOANS
<PAGE> 52
EXHIBIT A
EVIDENCE OF THE ESTABLISHMENT OF
PRINCIPAL AND INTEREST ACCOUNT
Advanta Mortgage Loan Trust 1999-4
c/o Wilmington Trust Company, as Owner Trustee
One Rodney Square
Wilmington, Delaware 19801
Ladies & Gentlemen:
In accordance with Section 8.03 of the Indenture, dated as of
November 1, 1999, among Advanta Mortgage Loan Trust 1999-4 and Bankers Trust
Company of California, N.A., as indenture trustee (the "Indenture Trustee"),
please be advised that the Indenture Trustee has caused the following
Principal and Interest Account to be established in the name of the
Indenture Trustee for the benefit of the Noteholders:
Principal and Interest Account # Institution
________________________________ ___________
________________________________ ___________
Very truly yours,
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Indenture Trustee
By: ______________________________
Name:
Title:
Dated: November 17, 1999
A-1
<PAGE> 53
EXHIBIT B
FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as indenture trustee (the "Indenture Trustee")
under that certain Sale and Servicing Agreement dated as of November 1, 1999
(the "Sale and Servicing Agreement") by and among Advanta Mortgage Loan
Trust 1999-4, Advanta Conduit Receivables, Inc., a Nevada corporation, as
sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware corporation,
as master servicer, Advanta Holding Trust 1999-4, as holding trust and the
Indenture Trustee, hereby acknowledges receipt of the items delivered to it
by the Sponsor with respect to the Mortgage Loans listed on Schedule 1 of
the Sale and Servicing Agreement, except as set forth on the exception
report (the "Exception Report") attached hereto.
The Indenture Trustee hereby additionally acknowledges that it
shall review such items (i) to confirm that an original Note is contained in
the file within 10 Business Days after the Startup Day and (ii) as required
by Section 2.02(a) of the Sale and Servicing Agreement, during the period
specified therein, and shall otherwise comply with Section 2.02(b) of the
Sale and Servicing Agreement as required thereby.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Indenture Trustee
By:_________________________________
Name:
Title:
Dated: _______________________
B-1
<PAGE> 54
SCHEDULE TO EXHIBIT B
EXCEPTION REPORT
B-2
<PAGE> 55
EXHIBIT C
FORM OF INDENTURE TRUSTEE'S 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
Trustee, pursuant to that certain Sale and Servicing Agreement dated as of
November 1, 1999 (the "Sale and Servicing Agreement") by and among Advanta
Mortgage Loan Trust 1999-4, Advanta Conduit Receivables, Inc., a Nevada
corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a
Delaware corporation, as master servicer, Advanta Holding Trust 1999-4, as
holding trust and the Indenture Trustee; and
WHEREAS, the Indenture Trustee is required, pursuant to Section
2.02(a) of the Sale and Servicing Agreement, to review the Mortgage Files
relating to the Pool within a specified period following the Startup Day 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 2.02(b) of the Sale and Servicing Agreement; and
WHEREAS, Section 2.02(a) of the 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 2.01 of the 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 2.01(a) of the Sale and Servicing Agreement. In
the event that such documents have not been executed and received or do not
relate to the Initial Mortgage Loans, any remedial action by the Sponsor
pursuant to Section 2.02(b) of the 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., as indenture trustee
By: ______________________________________
Name:
Title:
C-1
<PAGE> 56
EXHIBIT D
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company
of California, N.A.
7601 E. St. Andrew Place
Santa Ana, California 92705
Attn: Corporate Trust
Date:
In connection with the administration of the Mortgage Loans held
by you as Indenture Trustee under a certain Sale and Servicing Agreement
dated as of November 1, 1999 by and among Advanta Mortgage Loan Trust
1999-4, Advanta Holding Trust 1999-4, Advanta Mortgage Corp. USA, as master
servicer (the "Master Servicer"), Advanta Conduit Receivables, Inc., as
sponsor, and you, as indenture trustee (the "Agreement"), the Master
Servicer hereby requests a release of the Mortgage File held by you as
Indenture Trustee with respect to the following 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 Note Account
(whichever is applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan repurchased pursuant to Section 2.02(b), 3.03,
3.04, or 4.10 of the Agreement.
(The Master Servicer hereby certifies that the Loan
Purchase Price has been or will be paid to the Note
Account pursuant to the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a
Qualified Replacement Mortgage Loan has been or will
be assigned and delivered to you along with the
related Mortgage File pursuant to the Agreement.)
D-1
<PAGE> 57
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will
be held by the Master Servicer in accordance with the provisions of the
Agreement and will be returned to you, unless the Mortgage Loan has been (i)
paid in full, (ii) repurchased, (iii) substituted by a Qualified Replacement
Mortgage (in which case the Mortgage File will be retained by us
permanently) or (iv) is being foreclosed, in which case the Mortgage 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:
D-2
<PAGE> 58
EXHIBIT E
FORM OF LOST NOTE AFFIDAVIT
AFFIDAVIT OF LOST NOTE
Loan # : Note Date:
Current Borrower(s) :
I, ___________________, being duly sworn, do hereby state under oath that:
1. I, as [Title] of _________________ (the "Lender"), am authorized to make
this affidavit.
2. The Lender is the payee under the mortgage note ("Note"). A mortgage/deed
of trust ("Security Instrument") signed by the Borrower(s) refers to the
note made of even date. The Security Instrument is attached as Exhibit 1.
3. The Lender is the lawful owner of the Note and has good title to the Note
and has the right to convey good title thereto, and the Lender has not
canceled, altered, assigned or hypothecated the Note except to the
Sponsor and the Indenture trustee.
4. The Note was not located after a thorough and diligent search which
consisted of the following actions:
Searching of all servicing and collateral loan files
Querying the loan servicing employees
5. Attached hereto as Exhibit 1 is a true and correct copy of the Security
Instrument with an original note endorsement in blank by Lender.
6. This Affidavit is intended to be relied on by [Advanta entity], its
successors, and assigns.
7. Following the assignment of the Note to the Indenture trustee, the
Indenture trustee will be entitled to enforce the Note pursuant to
Section 3-309 of the Uniform Commercial Code.
Executed this ___ day of ______, _____, on behalf of the Lender by:
By: ____________________________
Name:
Title:
E-1
<PAGE> 59
ON THIS ____ DAY OF ____________, _____, BEFORE ME APPEARED
_____________________________, to me personally known, who being duly sworn
did say that he is the [Title] of ___________________________, and that said
Affidavit of Lost Note was signed and sealed in behalf of such corporation
as Lender and said __________________________ acknowledged this instrument
to be the free act and deed of said corporation.
________________________________________________________________
Notary Public in and for the State of ____________
My commission expires _____________________________________
E-2
<PAGE> 60
EXHIBIT F
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, _____________,
______________ of Advanta Conduit Receivables, Inc. (the "Sponsor"), do
hereby constitute and appoint Bankers Trust Company of California, N.A., as
the true and lawful attorney, for the Sponsor and in its name, place and
stead, to record the assignments of mortgage with respect to the Mortgage
Loans transferred to the Bankers Trust Company of California, N.A., as
indenture trustee (the "Indenture Trustee"), under that Sale and Servicing
Agreement dated as of November 1, 1999 by and among the Advanta Mortgage
Loan Trust 1999-4 (the "Trust"), Advanta Holding Trust (the "Holding
Trust"), the Sponsor, the Indenture Trustee and Advanta Mortgage Corp. USA,
as master servicer, and to do and perform all other things and acts relating
to such assignments of mortgage as may be necessary to effectuate the
transfer of such Mortgage Loans to the Indenture trustee, including the
execution and delivery of new assignments of mortgage where necessary to
comply with applicable real estate recording laws at the time of
recordation.
This power of attorney is irrevocable and is coupled with an
interest in the Mortgage Loans, and it may at all times be relied upon by
any person, firm or corporation dealing with the attorney named herein as
remaining in full force and effect, and such person, firm or corporation
shall have no liability to the Sponsor with respect thereto.
WITNESS the following signature this ____ day of ___________
_____.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
STATE OF PENNSYLVANIA
COUNTY OF MONTGOMERY
I, _____________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that _______________, who acknowledged himself
to be the _______________ of Advanta Conduit Receivables, Inc., a Nevada
corporation, personally appeared before me in the jurisdiction aforesaid and
that he as such ______________ executed the foregoing instrument on behalf
of said corporation for the purposes therein contained.
Witness my hand and official seal this _____ day of _________________.
____________________________ (SEAL)
Notary Public
My Commission Expires:
F-1
<PAGE> 61
EXHIBIT G
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT
Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta
Holding Trust 1999-4, Advanta Mortgage Loan Trust 1999-4, and Bankers Trust
Company of California, N.A., as indenture trustee (the "Indenture Trustee"),
of the Advanta Mortgage Loan Trust 1999-4 (the "Trust"), pursuant to the
Sale and Servicing Agreement dated as of November 1, 1999 among Advanta
Mortgage Loan Trust 1999-4, Advanta Mortgage Corp. USA, as master servicer
(the "Master Servicer"), Advanta Holding Trust 1999-4, the Sponsor and the
Indenture trustee (the "Sale and Servicing Agreement"), hereby confirm their
understanding with respect to the acquisition by the Trust of those Mortgage
Loans listed on the attached Schedule of Mortgage Loans (the "Subsequent
Mortgage Loans").
Conveyance of Subsequent Mortgage Loans. The Sponsor does hereby
irrevocably transfer, assign, set over and otherwise convey to the Holding
Trust, and the Holding Trust does hereby irrevocably transfer, assign, set
over and otherwise convey to the Trust, without recourse (except as
otherwise explicitly provided for herein) all of their respective right,
title and interest in and to the Subsequent Mortgage Loans listed on the
attached Schedule of Mortgage Loans, including specifically, without
limitation, the Mortgages, the Mortgage Files and all other documents,
materials and properties appurtenant thereto, including all principal
collected and interest accrued on or after __________, _____ (the
"Subsequent Cut-Off Date") and any Mortgage Insurance Policies relating
thereto. The Sponsor shall deliver or cause to be delivered the original
Mortgage or Mortgage assignment with evidence of recording thereon (except
as otherwise provided by the Sale and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Section
2.04(b) of the Sale and Servicing Agreement.
The costs relating to the delivery of the documents specified in
this Subsequent Transfer Agreement and the Sale and Servicing Agreement
shall be borne by the Sponsor.
The Sponsor hereby affirms the representations and warranties
set forth in the Sale and Servicing Agreement that relate to itself and to
the Subsequent Mortgage Loans as of the date hereof.
All terms and conditions of the 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 Sale and Servicing
Agreement.
G-1
<PAGE> 62
Terms and capitalized and not defined herein shall have their
respective meanings as set forth in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the parties have executed this Subsequent
Transfer Agreement as of this ____ day of ____________, ______.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By: _______________________________________
Name:
Title:
ADVANTA MORTGAGE LOAN
TRUST 1999-4
By: Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
ADVANTA HOLDING TRUST 1999-4
By: Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
G-2
<PAGE> 63
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Indenture Trustee
By: _______________________________________
Name:
Title:
Dated:
Attachments
A. Addition Notice.
B. Schedule of Mortgage Loans.
C. Officer's Certificate.
D. Indenture Trustee's Certificate.
E. Conveyance Agreement.
G-3
<PAGE> 1
Exhibit 4.5
Ambac Assurance Corporation
c/o CT Corporation
44 East Mifflin Street, Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, New York 10004
Telephone: (212) 668-0340
AMBAC
CERTIFICATE GUARANTY INSURANCE POLICY
Insured Obligations: $200,000,000 Policy Number: AB0317BE
Advanta Mortgage Loan Trust 1999-4
Mortgage Loan Asset-Backed Notes, Series 1999-4
Premium: Calculated as set forth in 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/ Stephen D. Cooke
- ----------------------------- --------------------------------
President Secretary
/s/ [Authorized Representative]
--------------------------------
Effective Date: November 17, 1999 Authorized Representative
<PAGE> 1
Exhibit 10.1
AMBAC ASSURANCE CORPORATION,
BEAR, STEARNS & CO. INC.
and
SG COWEN SECURITIES CORPORATION
INDEMNIFICATION AGREEMENT
ADVANTA MORTGAGE LOAN TRUST 1999-4
Dated as of November 5, 1999
<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 Indemnification Agreement. All capitalized
terms used in this Indemnification Agreement and not otherwise defined shall
have the meanings set forth in Article I of this Indemnification Agreement.)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Defined Terms 1
Section 2. Other Definitional Provisions 1
Section 3. Representations, Warranties and Covenants of the Underwriters. 2
Section 4. Representations and Warranties of the Note 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
</TABLE>
<PAGE> 3
INDEMNIFICATION AGREEMENT dated as of November 5, 1999 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Note
Insurer, and BEAR, STEARNS & CO. INC. and SG COWEN SECURITIES CORPORATION (the
"Underwriters").
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 Annex A to the Sale and Servicing
Agreement, the Insurance Agreement or the Policy. For purposes of this
Indemnification Agreement, the following terms shall have the following
meanings:
"Indenture" means the Indenture (as may be amended or supplemented from
time to time) dated as of November 1, 1999, by and among Advanta Mortgage Loan
Trust 1999-4, as Trust and Bankers Trust Company of California, N.A., as
Indenture Trustee.
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of November
17, 1999 by and among the Note Insurer, Advanta Conduit Receivables, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta Holding Trust
1999-4, the Trust, as Issuer and Bankers Trust Company of California, N.A., as
Trustee.
"Note Insurer" means Ambac Assurance Corporation, or any successor
thereto, as issuer of the Policy.
"Note Insurer Information" has the meaning given such term in Section
4.
"Notes" means any of the Notes substantially in the form set forth in
Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated November 5,
1999, in respect of the Notes, and any amendment or supplement thereto, and any
other offering document in respect of the Notes that makes reference to the
Policy.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of November 1, 1999, by and among the Trust, Advanta Holding Trust
1999-4, the Sponsor, the Master Servicer and the Indenture 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.
<PAGE> 4
"Underwriters" means Bear, Stearns & Co. Inc. and SG Cowen Securities
Corporation, severally.
<PAGE> 5
"Underwriters' 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 Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
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."
Section 3. Representations, Warranties and Covenants of the
Underwriters. Each Underwriter severally represents, warrants and covenants as
of the Closing Date as follows:
() Compliance With Laws. Such 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. Such 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 Note Insurer as has
been furnished by the Note Insurer for inclusion therein and has been
approved by the Note Insurer.
(c) Underwriters' Information. All material provided by the
Underwriters 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
the Underwriters consists of the following information (collectively,
the "Underwriters' Information"): the information regarding the
Underwriters contained under the heading "Underwriting" in the Offering
Document.
Section 4. Representations and Warranties of the Note Insurer. The Note
Insurer represents and warrants to each Underwriter as follows:
() Organization and Licensing. The Note 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.
() Corporate Power. The Note Insurer has the corporate power
and authority to issue the Policy and execute this Indemnification
Agreement and to perform all of its obligations hereunder and
thereunder.
<PAGE> 6
() Authorization; Approvals. Proceedings legally required for
the issuance of the Policy and the execution, delivery and performance
of this Indemnification 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 Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to
the enforceability of the Policy.
() Enforceability. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and
binding obligation of the Note 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.
() Financial Information. The consolidated financial
statements of the Note Insurer and subsidiaries as of December 31, 1998
and December 31, 1997, and for each of the years in the three-year
period ended December 31, 1998, prepared in accordance with generally
accepted accounting principles, included in the Annual Report on Form
10-K of Ambac Financial Group, Inc. (which was filed with the
Commission on March 30, 1999; Commission File Number 1-10777) and the
unaudited consolidated financial statements of the Note Insurer and
subsidiaries as of June 30, 1999 and for the periods ending June 30,
1999 and June 30, 1998 included in the Quarterly Report on Form 10-Q of
Ambac Financial Group, Inc. for the period ended June 30, 1999 (which
was filed with the Commission on August 13, 1999), which are
incorporated by reference in the Offering Document, fairly present in
all material respects the financial condition of the Note Insurer as of
such dates and for the periods covered by such statements in accordance
with generally accepted accounting principles consistently applied.
Since June 30, 1999, there has been no material change in such
financial condition of the Note Insurer that would materially and
adversely affect its ability to perform its obligations under the
Policy.
() Note Insurer Information. The information in the Offering
Document as of the date hereof under the captions "The Note Insurer"
and "The Policy" (together, the "Note Insurer Information") is true and
correct in all material respects and does not contain any untrue
statement of a material fact.
() Rating. The Note Insurer is not aware of any facts that if
disclosed to Moody's or S&P would be reasonably expected to result in a
downgrade of the rating of the financial strength of the Note Insurer
by either of such Rating Agencies.
() No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Note Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any
<PAGE> 7
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 Policy or this Indemnification
Agreement.
() 1933 Act Registration. The Policy is exempt from
registration under the Securities Act.
Section 5. Indemnification.
(a) The Underwriters hereby severally agree to pay, and to
protect, indemnify and save harmless, the Note Insurer and its
officers, directors, shareholders, employees, agents and each Person,
if any, who controls the Note 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 Underwriters'
Information or a breach of any of the representations, warranties and
covenants of the Underwriters contained in Section 3.
(b) The Note Insurer agrees to pay, and to protect, indemnify
and save harmless, each Underwriter and their respective officers,
directors, shareholders, employees, agents and each Person, if any, who
controls either of 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 Note Insurer
Information or a breach of any of the representations and warranties of
the Note 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 indemnification provided
in this Section 5(a) or (b) may be sought from either of the
Underwriters, on the one hand, or the Note 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 reasonably 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;
<PAGE> 8
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.
(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
neither of the Underwriters shall be liable for any amount in excess of
(i) the excess of the sales prices of the Notes to the public over the
prices paid therefor by the Underwriters over (ii) the aggregate amount
of any damages which the Underwriters 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, warranties or covenants set
forth herein was 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.
<PAGE> 9
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 6. Amendments, Etc. This Indemnification 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 Note 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
(b) To the Representative of the Underwriters:
Bear, Stearns & Co. Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Asset-Backed Securities Group
Telecopy No.: 212-272-7294
Confirmation: 212-272-2000
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
Indemnification 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 Indemnification Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
<PAGE> 10
Section 10. Counterparts. The Indemnification 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 Indemnification Agreement are provided for
convenience only. They form no part of this Indemnification Agreement and shall
not affect its construction or interpretation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 11
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 Note Insurer
By: /s/ Thomas J. Adams
-------------------------------------
Name: Thomas J. Adams
---------------------------------
Title: First Vice President
---------------------------------
BEAR, STEARNS & CO. INC.
By: /s/ Thomas S. Dunstan
-------------------------------------
Name: Thomas S. Dunstan
---------------------------------
Title: Managing Director
---------------------------------
SG COWEN SECURITIES CORPORATION
By: /s/ Edward A. Lascala
-------------------------------------
Name: Edward A. Lascala
---------------------------------
Title: Director
---------------------------------
<PAGE> 1
As of November 17, 1999
Exhibit 10.2
Bear, Stearns & Co., Inc.
245 Park Avenue
New York, New York 10167
(as Representative
of the Underwriters)
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Mortgage Loan Trust 1999-4
Underwriting Agreement and Insurance Agreement
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement dated November 5, 1999
(the "Underwriting Agreement") between Advanta Conduit Receivables, Inc. (the
"Sponsor" or "ACRI") and Bear, Stearns & Co., Inc., as representative of the
underwriters named therein (the "Underwriters"), and the Insurance and Indemnity
Agreement dated November 17, 1999 (the "Insurance Agreement" and together with
the Underwriting Agreement, the "Designated Agreements") among the Sponsor,
Advanta Mortgage Corp. USA, Advanta Holding Trust 1999-4, Advanta Mortgage Loan
Trust 1999-4 and Ambac Assurance Corporation (the "Insurer"), ACRI has
undertaken certain financial obligations with respect to the indemnification of
the Underwriters and of the Note Insurer with respect to the Registration
Statement, the Prospectus and the Prospectus Supplement described in the
Designated Agreements. Any financial obligations of ACRI under the Designated
Agreements, whether or not specifically enumerated in this paragraph, are
hereinafter referred to as the "Joint and Several Obligations"; provided,
however, that "Joint and Several Obligations" shall mean only the financial
obligations of ACRI under the Designated Agreements (including the payment of
money damages for a breach of any of ACRI's obligations under the Designated
Agreements, whether financial or otherwise) but shall not include any
obligations not relating to the payment of money.
As a condition of their respective executions of the
Underwriting Agreement and of the Insurance Agreement, the Underwriters and the
Note Insurer have required the undersigned, Advanta Mortgage Holding Company
("AMHC"), the indirect parent corporation of ACRI, to acknowledge its
joint-and-several liability with ACRI for the payment of the Joint and Several
Obligations under the Designated Agreements.
Now, therefore, the Representative, the Note Insurer and AMHC
do hereby agree that:
<PAGE> 2
AMHC hereby agrees to be absolutely and unconditionally jointly and severally
liable with ACRI to the Underwriters for the payment of the Joint and Several
Obligations under the Underwriting Agreement.
AHMC hereby agrees to be absolutely and unconditionally and
jointly and severally liable with ACRI to the Insurer for payment of the Joint
and Several Obligations under the Insurance Agreement.
AMHC may honor its obligations hereunder either by direct
payment of any Joint and Several Obligations or by causing any Joint and Several
Obligations to be paid to the Underwriters or to the Insurer, by ACRI or another
affiliate of AMHC.
Capitalized terms used herein and not defined herein shall
have their respective meanings set forth in the Designated Agreements.
This letter and the respective obligations and rights
hereunder and thereunder shall not be delegated or assigned by you without the
prior written consent of the Insurer. This letter may not be amended or
otherwise modified except pursuant to a writing signed by each of the parties
hereto. This letter may be executed by the signatories hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF OR IN
CONNECTION WITH, THIS LETTER, AND ANY OTHER COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE
UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH.
2
<PAGE> 3
Capitalized terms used herein and not defined herein shall
have their respective meanings as set forth in the Designated Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING
COMPANY
By: /s/ Michael Coco
-------------------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED,
as of the date first above written:
AMBAC ASSURANCE CORPORATION
By: /s/ Thomas J. Adams
-----------------------------------
Authorized Signatory
BEAR, STEARNS & CO., INC.
By: /s/ Thomas S. Dunstan
-----------------------------------
3
<PAGE> 1
Exhibit 10.3
As of November 17, 1999
Advanta Mortgage Loan Trust 1999-4
c/o Wilmington Trust Company,
as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Mortgage Loan Trust 1999-4
Sale and Servicing Agreement
Ladies and Gentlemen:
Pursuant to the Sale and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among Advanta Conduit Receivables, Inc., as
sponsor, Advanta Mortgage Corp. USA, as master servicer ("AMCUSA"), Advanta
Mortgage Loan Trust 1999-4 (the "Trust"), Advanta Holding Trust 1999-4
("Holding") and Bankers Trust Company of California, N.A. as indenture trustee
(the "Indenture Trustee"), AMCUSA in its capacity as Master Servicer, has
undertaken certain financial obligations with respect to its servicing of the
Mortgage Loans, including, but not limited to, the making of Servicing Advances.
In addition, the Sponsor has, in the Agreement undertaken certain financial
obligations, including, but not limited to, the payment of the Loan Purchase
Price relating to the repurchase of non-qualifying Mortgage Loans, the payment
of Substitution Amounts in connection with the substitution of Qualified
Replacement Mortgage Loans and the payment of certain expenses of the Trust. Any
financial obligations of AMCUSA or the Sponsor under the Agreement, whether or
not specifically enumerated in this paragraph, are hereinafter referred to as
the "Joint and Several Obligations"; provided, however, that "Joint and Several
Obligations" shall mean only the financial obligations of AMCUSA and the Sponsor
under the Agreement (including the payment of money damages for a breach of any
of AMCUSA's or the Sponsor's obligations under the Agreement, whether financial
or otherwise) but shall not include any obligations not relating to the payment
of money (e.g., the obligation to service the Mortgage Loans).
The Insurer has required the undersigned, Advanta Mortgage
Holding Company ("AMHC"), the parent corporation of AMCUSA and the indirect
corporate parent of the Sponsor, to acknowledge its joint-and-several liability
with AMCUSA and the Sponsor for the payment of the Joint and Several Obligations
under the Agreement.
Now, therefore, the Trust, the Note Insurer and AMHC do hereby
agree that:
(i) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with
AMCUSA and the Sponsor to the Trust and the Insurer
for the payment of the Joint and Several Obligations
under the Agreement.
<PAGE> 2
(ii) AMHC may honor its obligations hereunder either by
direct payment of any Joint and Several Obligations
or by causing any Joint and Several Obligations to be
paid to the Trust and the Insurer by AMCUSA, the
Sponsor, or another affiliate of AMHC.
This letter and the respective obligations and rights
hereunder and thereunder shall not be delegated or assigned by you without the
prior written consent of the Note Insurer. This letter may not be amended or
otherwise modified except pursuant to a writing signed by each of the parties
hereto. This letter may be executed by the signatories hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF OR IN
CONNECTION WITH, THIS LETTER, AND ANY OTHER COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE
UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH.
2
<PAGE> 3
Capitalized terms used herein and not defined herein shall
have their respective meanings as set forth in the Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING COMPANY
By: /s/ Michael Coco
_______________________________________
Authorized Signatory
ADVANTA MORTGAGE LOAN TRUST 1999-4
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By: /s/ Donald G. MacKelcan
_______________________________________
Authorized Signatory
AMBAC ASSURANCE CORPORATION
By: /s/ Thomas J. Adams
_______________________________________
Authorized Signatory
