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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 8, 1999
Advanta Conduit Receivables, Inc., as Sponsor
on behalf of Advanta Revolving Home Equity Loan Trust 1999-B
(Exact name of registrant as specified in its charter)
Delaware 333-75295-02 88-0360305
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
Advanta Conduit Receivables, Inc.
(Exact name of registrant as specified in its charter)
Nevada 333-75295 88-0360305
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
Attention: General Counsel
10790 Rancho Bernardo Road
San Diego, California 92127
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number,
including area code: (619) 674-1800
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes 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
Advanta Revolving Home Equity Loan Asset Backed Notes 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 Revolving Home Equity Loan Trust 1999-B (the "Trust") which issued
$275,000,000 in aggregate principal amount of its Revolving Home Equity Loan
Asset Backed Notes (the "Notes"), on September 28, 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 September 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-B.
The primary assets of the Trust are pool of adjustable-rate
home equity revolving credit line loans (the "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, secured primarily by mortgages on single-family
residences (which may be detached, part of a two- to four-family dwelling, 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 dated August 10, 1999, the
Preliminary Prospectus Supplement dated September 15, 1999 filed pursuant to
Rule 424(b)(3) of the Act with the Commission and the Prospectus Supplement
dated September 21, 1999 filed pursuant to Rule 424(b)(2) of the Act with the
Commission.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not applicable
(b) Not applicable
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(c) Exhibits:
1.1 Underwriting Agreement, dated September 21, 1999, between
the Sponsor and Morgan Stanley & Co. Incorporated, as Representative of the
Underwriters.
4.1 Indenture, dated as of September 1, 1999, between Advanta
Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California,
N.A., as Indenture Trustee.
4.2 Trust Agreement, dated as of September 1, 1999, between
the Sponsor, and Wilmington Trust Company, as Owner Trustee, relating to the
formation of Advanta Holding Trust 1999-B.
4.3 Trust Agreement, dated as of September 1, 1999, among the
Sponsor, Advanta Holding Trust 1999-B and Wilmington Trust Company, as Owner
Trustee, relating to the formation of Advanta Revolving Home Equity Loan Trust
1999-B.
4.4 Sale and Servicing Agreement, dated as of September 1,
1999, among the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta
Holding Trust 1999-B, Advanta Revolving Home Equity Loan Trust 1999-B, as
Issuer, and Bankers Trust Company of California, N.A., as Indenture Trustee.
4.5 Certificate Guaranty Insurance Policy, dated September 28,
1999, and issued and delivered by Ambac Assurance Corporation.
5.1 Opinion of Dewey Ballantine LLP regarding legality, dated
September 28, 1999.*
8.1 Opinion of Dewey Ballantine LLP regarding tax matters,
dated September 28, 1999.*
10.1 Purchase Agreement, dated as of September 1, 1999,
between Advanta National Bank and Advanta Finance Corp., as Originators, on one
hand, and Advanta Conduit Receivables, Inc., as Purchaser, on the other hand.
10.2 Indemnification Agreement, dated September 28, 1999,
among Morgan Stanley & Co. Incorporated and Banc of America Securities LLC, as
Underwriters, and Ambac Assurance Corporation, as Insurer.
10.3 Guaranty to Ambac Assurance Corporation and Morgan
Stanley & Co. Incorporated, as Representative of the Underwriters, issued by
Advanta Mortgage Holding Company.
10.4 Guaranty to Ambac Assurance Corporation and Advanta
Revolving Home Equity Loan Trust 1999-B, as Issuer, issued by Advanta Mortgage
Holding Company.
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23.1 Consent of KPMG LLP regarding financial statements of
Ambac Assurance Corporation and their report.*
23.2 Consent of Arthur Andersen LLP.*
* Previously filed on Form 8-K with the Securities and
Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
By: Advanta Conduit Receivables, Inc.
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: October 8, 1999
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EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement, dated September 21, 1999, between the
Sponsor, as Originators, and Morgan Stanley & Co.
Incorporated, as Representative of the Underwriters.
4.1 Indenture, dated as of September 1, 1999, between Advanta
Revolving Home Equity Loan Trust 1999-B and Bankers Trust
Company of California, N.A., as Indenture Trustee.
4.2 Trust Agreement, dated as of September 1, 1999, between the
Sponsor, and Wilmington Trust Company, as Owner Trustee,
relating to the formation of Advanta Holding Trust 1999-B.
4.3 Trust Agreement, dated as of September 1, 1999, among the
Sponsor, Advanta Holding Trust 1999-B and Wilmington Trust
Company, as Owner Trustee, relating to the formation of
Advanta Revolving Home Equity Loan Trust 1999-B.
4.4 Sale and Servicing Agreement, dated as of September 1, 1999,
among the Sponsor, Advanta Mortgage Corp. USA, as Master
Servicer, Advanta Holding Trust 1999-B, Advanta Revolving Home
Equity Loan Trust 1999-B, as Issuer, and Bankers Trust Company
of California, N.A., as Indenture Trustee.
4.5 Certificate Guaranty Insurance Policy, dated September 28,
1999, and issued and delivered by Ambac Assurance Corporation.
10.1 Purchase Agreement, dated as of September 1, 1999, between
Advanta National Bank and Advanta Finance Corp., as
Originators, on one hand, and Advanta Conduit Receivables,
Inc., as Purchaser, on the other hand.
10.2 Indemnification Agreement, dated September 28, 1999, among
Morgan Stanley & Co. Incorporated and Banc of America
Securities LLC, as Underwriters, and Ambac Assurance
Corporation, as Insurer.
10.3 Guaranty to Ambac Assurance Corporation and Morgan Stanley &
Co. Incorporated, as Representative of the Underwriters,
issued by Advanta Mortgage Holding Company.
10.4 Guaranty to Ambac Assurance Corporation and Advanta Revolving
Home Equity Loan Trust 1999-B, as Issuer, issued by Advanta
Mortgage Holding Company.
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Exhibit 1.1
EXECUTION COPY
ADVANTA CONDUIT RECEIVABLES, INC.
ADVANTA REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES,
SERIES 1999-B
ADJUSTABLE RATE NOTES
UNDERWRITING AGREEMENT
September 21, 1999
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(for itself and the other Underwriter
named in Schedule I hereto)
Ladies and Gentlemen:
Advanta Conduit Receivables, Inc., as Sponsor (the "Sponsor"), has
authorized the issuance and sale of Advanta Revolving Home Equity Loan
Asset-Backed Notes, Series 1999-B (the "Notes"). The Notes will be issued
pursuant to an indenture (the "Indenture"), dated as of September 1, 1999,
between Advanta Revolving Home Equity Loan Trust 1999-B (the "Trust") and
Bankers Trust Company of California, N.A., as Indenture Trustee (the "Indenture
Trustee"). The Trust will be formed pursuant to a trust agreement (the "Trust
Agreement"), dated as of September 1, 1999, among the Sponsor, Advanta Holding
Trust 1999-B ("Holding") and Wilmington Trust Company, as Owner Trustee. The
Notes will be secured by certain adjustable rate home equity revolving credit
line loans (the "Mortgage Loans") made pursuant to certain home equity revolving
credit line loan agreements (the "Credit Line Agreements") to be transferred or
caused to be transferred by the Sponsor to Holding and by Holding to the Trust
pursuant to a sale and servicing agreement (the "Sale and Servicing Agreement"),
dated as of September 1, 1999, among the Sponsor, Holding, the Trust, Advanta
Mortgage Corp. USA, as Master Servicer (the "Master Servicer"), and the
Indenture Trustee. The beneficial ownership interests of Holding will initially
be held by Advanta National Bank (the "Bank") and Advanta Finance Residual Corp.
("AFRC"), a special-purpose finance subsidiary of Advanta Finance Corp. ("AFC"
together with the Bank, the "Originators"). Such beneficial ownership interests
in Holding will represent the remaining undivided interest in the assets of the
Trust (the "Residual Interest"), and may be sold or pledged at any
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time, subject to certain conditions specified in the Trust Agreement. The Notes
will be issued on or about September 28, 1999 (the "Closing Date") in the
aggregate original principal amount of $275,000,000. The Notes and the Residual
Interest are more fully described in a registration statement which the Sponsor
has furnished or will furnish to the underwriters named in Schedule I hereto
(the "Underwriters").
On or prior to the date of issuance of the Notes, the Sponsor will obtain
a 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 Noteholders the timely payment of
interest on and ultimate payment of principal of the Notes, excluding certain
amounts as specified in the Documents (as defined below). Concurrently
therewith, the Sponsor will enter into an Insurance and Indemnity Agreement (the
"Insurance Agreement"), dated as of September 28, 1999 among the Sponsor, the
Insurer, the Master Servicer, Holding, the Trust, the Indenture Trustee and the
Owner Trustee, governing certain matters relating to the issuance of the Policy.
The Sponsor will also enter into an Indemnification Agreement, dated as of
September 28, 1999 (the "Indemnification Agreement"), among the Sponsor, the
Underwriters and the Insurer.
As used herein, the "Documents" shall mean the Indenture, the Trust
Agreement, the Holding Trust Agreement, the Sale and Servicing Agreement, the
Underwriting Agreement, the Insurance Agreement and the Indemnification
Agreement. Capitalized terms used but not defined herein shall have the meanings
given to them in the Sale and Servicing Agreement.
SECTION 1. Representations and Warranties of the Sponsor The
Sponsor represents and warrants to, and agrees with each Underwriter that:
A. The Sponsor has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement (No. 333-75295) on Form S-3
for the registration under the Securities Act of 1933, as amended (the
"Act"), of Mortgage Loan Asset Backed Certificates and Notes (issuable in
series), which registration statement, as amended at the date hereof, has
become effective. Such registration statement, as amended to the date of
this Agreement, meets the requirements set forth in Rule 415(a)(1)(vii)
under the Act and complies in all other material respects with such Rule.
The Sponsor proposes to file with the Commission pursuant to Rule
424(b)(3) under the Act a preliminary prospectus supplement dated
September 15, 1999 and pursuant to Rule 424(b)(2), a prospectus supplement
dated September 21, 1999 to the prospectus dated August 10, 1999 relating
to the Notes and the method of distribution thereof and has previously
advised or will advise you of all further information (financial and
other) with respect to the Notes to be set forth therein. Such
registration statement, including the exhibits thereto, as amended at the
date hereof, is hereinafter called the "Registration Statement"; such
prospectus dated August 10, 1999, in the form in which it will be filed
with the Commission pursuant to Rule 424(b) under the Act is hereinafter
called the "Basic Prospectus"; such preliminary prospectus supplement
dated September 15, 1999, in the form in
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which it will be filed with the Commission pursuant to Rule 424(b)(3)
under the Act is hereinafter called the "Preliminary Prospectus
Supplement"; such prospectus supplement dated September 21, 1999 to the
Basic Prospectus, in the form in which it will be filed with the
Commission pursuant to Rule 424(b)(2) of the Act, is hereinafter called
the "Prospectus Supplement"; and the Basic Prospectus, the Preliminary
Prospectus Supplement and the Prospectus Supplement together are
hereinafter called the "Prospectus." The Sponsor will file with the
Commission (i) promptly after receipt from each Underwriter of any
Computational Materials (as defined herein) (and in any event no later
than the Business Day on which the Prospectus Supplement is made available
to the Underwriter), a Form 8-K incorporating such Computational Materials
and (ii) within fifteen days of the issuance of the Notes a report on Form
8-K setting forth specific information concerning the related Mortgage
Loans (the "8-K").
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 Act and the rules and regulations of the Commission
thereunder. The Registration Statement, as of the Effective Date thereof
and of any amendment thereto, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, as of its date and as amended or supplemented as of the
Closing Date (as hereinafter defined), does not and will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, 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 Sponsor in writing by the Underwriters expressly for use therein. As
used in this Agreement, "Effective Time" means the date and the time as of
which such Registration Statement, 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.
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 Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when
such documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder and will not contain an untrue
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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 Sponsor, except as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Sponsor 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 the Documents to which it is a party, 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 Sponsor is a party or of which any of its properties is the
subject (a) which if determined adversely to the Sponsor would have a
material adverse effect on the business or financial condition of the
Sponsor, (b) which asserts the invalidity of the Documents or the Notes,
(c) which seeks to prevent the issuance of the Notes or the consummation
by the Sponsor of any of the transactions contemplated by the Documents to
which it is a party or (d) which might materially and adversely affect the
performance by the Sponsor of its obligations under, or the validity or
enforceability of, the Documents to which it is a party or the Notes.
G. The Documents, when executed and delivered as contemplated hereby
and thereby, will have been duly authorized, executed and delivered by the
Sponsor and will constitute legal, valid and binding instruments
enforceable against the Sponsor, 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, the Indemnification Agreement and the Insurance Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of the Documents by the
Sponsor and the consummation of the transactions contemplated hereby and
thereby, 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 Sponsor is a party, by which the Sponsor is bound or to which any of
the property or assets of the Sponsor or any
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of their respective subsidiaries are subject, nor will such actions result
in any violation of the provisions of the articles of incorporation or
by-laws of the Sponsor or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Sponsor or any of their respective properties or assets.
I. Arthur Andersen LLP are independent public accountants with
respect to the Sponsor as required by the Act and the Rules and
Regulations.
J. The direction by the Sponsor to the Indenture Trustee to execute,
authenticate, issue and deliver the Notes has been or will be duly
authorized by the Sponsor, 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 Sponsor of the
other transactions contemplated by the Documents, 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. At the time of execution and delivery of the Sale and Servicing
Agreement, the Sponsor will or cause the Trust to: (i) have good title to
the interest in the Mortgage Loans and the other rights and properties to
be conveyed by the Sponsor thereunder, free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other security
interest (collectively, "Liens"); (ii) except as provided in the
Documents, not have assigned to any person any of its right, title or
interest in the Mortgage Loans, in the Sale and Servicing Agreement or in
the Notes being issued pursuant thereto; and (iii) have the power and
authority to sell its interest in the Mortgage Loans or cause the sale of
the Mortgage Loans to Holding and to sell the Notes to the Underwriters.
Upon execution and delivery of the Sale and Servicing Agreement and the
Indenture by the respective parties thereto, the Indenture Trustee will
have acquired all of the Sponsor's right, title and interest in and to the
Mortgage Loans (excluding any payments of interest collected prior to the
Cut-Off Date). Upon delivery to the Underwriters of the Notes, the
Underwriters will have good title to the Notes, free of any Liens.
M. As of opening of business on September 1, 1999 (the "Cut-Off
Date"), each of the Mortgage Loans identified on the Closing Date will
meet the eligibility criteria described in the Prospectus Supplement and
will conform to the descriptions thereof contained in the Prospectus
Supplement.
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N. None of the Sponsor, Holding or the Trust is an "investment
company" within the meaning of such term under the Investment Company Act
of 1940 (the "1940 Act") and the rules and regulations of the Commission
thereunder.
O. At the Closing Date, the Notes and the Indenture will conform in
all material respects to the descriptions thereof contained in the
Prospectus.
P. At the Closing Date, the Notes shall have been rated in the
highest rating category by at least two nationally recognized rating
agencies.
Q. Any applicable taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Documents and
the Notes have been paid or will be paid at or prior to the Closing Date.
R. At the Closing Date, each of the representations and warranties
of the Sponsor set forth in the Sale and Servicing Agreement, the
Insurance Agreement and the Indemnification Agreement will be true and
correct in all material respects.
Any certificate signed by an officer of the Sponsor and delivered to the
Underwriters 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 Sponsor agrees to
instruct the Trust to issue and agrees to sell to the Underwriters and each
Underwriter agrees (except as provided in Sections 6 and 10 hereof) to purchase
from the Sponsor, the Notes in the aggregate initial principal amount or amounts
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 Sponsor and a non-defaulting Underwriter shall be as set forth in Section 13
hereof.
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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 Brown
& Wood llp, One World Trade Center New York, New York 10048-0557, at 10:00 A.M.
New York City time on the Closing Date or at such other time or date as shall be
agreed upon in writing by the Underwriters and the Sponsor. Payment shall be
made to the Sponsor by wire transfer of same day funds payable to such accounts
as they shall designate in writing. Delivery of the Notes shall be made to each
Underwriter against payment of the purchase price thereof. The Notes shall be in
such denominations and registered in such names as the Underwriters may request
in writing at least two business days prior to the Closing Date. The Notes will
be made available for examination by the Underwriters no later than 4:00 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 proposes to offer
the Notes for sale to the public as set forth in the Prospectus.
SECTION 5. Covenants of the Sponsor With respect to the issuance of
the Notes, the Sponsor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriter
and to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second business day
following the first use of the Prospectus; to make no further amendment or
any supplement to the Registration Statement or to the Prospectus prior to
the Closing Date except as permitted herein; to advise the Underwriters,
promptly after they receive 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 Underwriters with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Sponsor 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, to promptly advise the
Underwriters of its receipt of notice of the issuance by the Commission of
any stop order or of: (i) any order preventing or suspending the use of
the Prospectus; (ii) the suspension of the qualification of the Notes for
offering or sale in any jurisdiction; (iii) the initiation of or threat of
any proceeding for any such purpose; (iv) any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information. In the event of the issuance of
any stop order or of any order preventing or suspending the use of the
Prospectus or suspending any such qualification, the Sponsor promptly
shall use its best efforts to obtain the withdrawal of such order or
suspension.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with
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the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the
following documents as the Underwriters 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 Act or the Exchange Act, the Sponsor shall notify the
Underwriters and, upon the Underwriters' 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 Underwriters 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 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
Underwriters but at the expense of the Underwriters, the Sponsor shall
prepare and deliver to the Underwriters as many copies as the Underwriters
may reasonably request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the 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 Sponsor or the Underwriters,
be required by the 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 furnish a copy thereof to the
Underwriters and counsel for the Underwriters and obtain the consent of
the Underwriters to the filing.
F. To use their best efforts, in cooperation with the Underwriters,
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
Underwriter may designate, and maintain or cause to be maintained such
qualifications in effect for as long as may be required for the
distribution of the Notes. The Sponsor will file
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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.
G. Not, without the Underwriters' prior written consent, to publicly
offer or sell or contract to sell any mortgage pass-through securities,
collateralized mortgage obligations or other similar securities
representing interests in or secured by other mortgage-related assets
originated or owned by the Sponsor for a period of 5 business days
following the commencement of the offering of the Notes to the public.
H. So long as the Notes shall be outstanding, to deliver to the
Underwriters as soon as such statements are furnished to the Indenture
Trustee the annual statement as to compliance delivered to the Indenture
Trustee pursuant to Section 3.9 of the Indenture.
I. To apply the net proceeds from the sale of the Notes in the
manner set forth in the Prospectus.
SECTION 6. Conditions to the Obligations of the Underwriters The
obligation of the Underwriters to purchase the Notes pursuant to this Agreement
is subject to: (i) the accuracy as of the Closing Date of the representations
and warranties on the part of the Sponsor herein contained; (ii) the performance
by the Sponsor its obligations hereunder; and (iii) the following conditions as
of the Closing Date:
A. The Underwriters 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. The Underwriters shall not have discovered and disclosed to the
Sponsor 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
Brown & Wood LLP, 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 the Documents, 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
Sponsor shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
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D. The Underwriters shall have received the favorable opinion of
Dewey Ballantine LLP, special counsel to the Sponsor with respect to the
following items, dated the Closing Date, to the effect that:
1. The Sponsor has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, and is qualified to do business in each state necessary to
enable it to perform its obligations as Sponsor under the Documents to
which it is a party. The Sponsor has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and
perform and observe the conditions of the Documents to which it is a
party.
2. The Documents to which the Sponsor is a party have been duly and
validly authorized, executed and delivered by the Sponsor and all
requisite corporate action by the Sponsor has been taken with respect
thereto, and the Notes constitute the valid, legal and binding agreement
of the Trust.
3. Neither the transfer of the Mortgage Loans to the Trust, the
issuance or sale of the Notes nor the execution, delivery or performance
by the Sponsor of the Documents to which it is a party (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 by-laws of the Sponsor; (ii) any
term or provision of any material agreement, contract, instrument or
indenture, to which the Sponsor 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 Sponsor and known to such counsel; or (B) results in, or will
result in the creation or imposition of any lien, charge or encumbrance
upon any of the Trust's assets or upon the Notes, except as otherwise
contemplated by the Sale and Servicing Agreement.
4. With respect to the Mortgage Loans, the endorsement and delivery
of each Credit Line Agreement, and the preparation, delivery and recording
of an Assignment, in each case with respect to each Mortgage, is
sufficient to fully transfer to the Indenture Trustee for the benefit of
the Noteholders all right, title and interest of the Sponsor or its
affiliates in the Credit Line Agreement and Mortgage, as noteholder and
mortgagee or assignee thereof, subject to any exceptions set forth in such
opinion, and will be sufficient to permit the Indenture Trustee to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Sponsor and to prevent any other
sale, transfer, assignment, pledge or other encumbrance of the Mortgage
Loans by the Sponsor from being enforceable, subject to any exceptions set
forth in such opinion.
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
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performance of the Documents or the offer, issuance, sale or delivery of
the Notes or the consummation of any other transaction contemplated
thereby by the Sponsor, except such which have been obtained.
6. There are no actions, proceedings or investigations, to such
counsel's knowledge, pending or threatened against the Sponsor before any
court, governmental agency or body or other tribunal (i) asserting the
invalidity of the Documents to which the Sponsor is a party or the Notes,
(ii) seeking to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by the Documents or (iii) which would
materially and adversely affect the performance by the Sponsor of
obligations under, or the validity or enforceability of, the Notes or the
Documents to which the Sponsor is a party.
7. To the best 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 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.
10. 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 the Mortgage Loans," to the extent that they
constitute matters of federal, New York or California law, or federal, New
York or California legal conclusions provide a fair and accurate summary
of such law or conclusions.
11. 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.
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12. Such other matters as the Underwriters 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 Sponsor
and the Originators, 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 Sponsor and the Originators.
E. The Underwriters 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 Underwriters and
counsel for the Underwriters, to the effect that they have performed
certain specified procedures requested by the Underwriters with respect to
the information set forth in the Prospectus and certain matters relating
to the Master Servicer.
F. The Notes shall have been rated in the highest rating category by
Standard & Poor's Ratings Services and by Moody's Investors Service, Inc.,
and such ratings shall not have been rescinded or downgraded. The
Underwriters and counsel for the Underwriters shall have received copies
of any opinions of counsel supplied to the rating organizations relating
to any matters with respect to the 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 Underwriters shall have received from the Sponsor a
certificate, signed by the president, a senior vice president or a vice
president of the Sponsor, dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the Registration
Statement, 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 Sponsor in this
Agreement, as of the Closing Date, and in the Sale and Servicing
Agreement, the Insurance Agreement, and in all related agreements, as of
the date specified in such agreements, are true and correct, and the
Sponsor 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 Sponsor which if adversely determined,
individually or in the aggregate, would be reasonably likely to adversely
affect the Sponsor's obligations under the Documents to which it is a
party in any material way; and no merger, liquidation, dissolution or
bankruptcy of the Sponsor is pending or contemplated;
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3. the information contained in the Registration Statement and the
Prospectus relating to the Sponsor, 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 by-laws of the Sponsor since June 30, 1999,
and no such amendment has been authorized. No event has occurred since
June 30, 1999, which has affected the good standing of the Sponsor under
the laws of the State of Delaware;
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 Sponsor and its subsidiaries,
taken as a whole, from June 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, in the rating, if any, accorded the Sponsor or in any
rating accorded any securities of the Sponsor, if any, by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of the Act; and
8. each person who, as an officer or representative of the Sponsor,
signed or signs the Registration Statement, the Documents 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 Documents 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 Sponsor shall attach to such certificate a true and correct copy
of its certificate or articles of incorporation, as appropriate, and
by-laws 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.
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H. The Underwriters shall have received a favorable opinion of
counsel to the Indenture Trustee, dated the Closing Date and in form and
substance satisfactory to the Underwriters, 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 Documents to which it is a party to;
2. the Documents to which the Indenture Trustee is a party have been
duly authorized, executed and delivered by the Indenture Trustee and such
Documents constitute the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms, except as enforceability thereof may be limited by (A)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, as such laws would apply in
the event of a bankruptcy, insolvency or reorganization or similar
occurrence affecting the Indenture Trustee, and (B) general principles of
equity regardless of whether such enforcement is sought in a proceeding at
law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of
the Indenture Trustee in connection with its execution and delivery of the
Documents to which it is a party 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 Documents to which it is a party do
not conflict with or result in a violation of any statute or regulation
applicable to the Indenture Trustee, or the charter or by-laws 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 Sponsor, 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 Underwriters 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 Sale and Servicing Agreement, the
Indenture or any other document delivered
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pursuant hereto, on the date hereof or on the Closing Date, in connection
with the transactions described in the Sale and Servicing Agreement and
the Indenture was, at the respective times of such signing and delivery,
and is now, duly elected or appointed, qualified and acting as such
officer or representative, and the signatures of such persons appearing on
such documents are their genuine signatures.
J. The Policy relating to the Notes shall have been duly executed
and issued at or prior to the Closing Date and shall conform in all
material respects to the description thereof in the Prospectus.
K. The Underwriters shall have received a favorable opinion of
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 an insurance corporation, duly incorporated and
validly existing under the laws of its state of incorporation. The Insurer
is validly licensed to do business in New York and is authorized to issue
the Policy and perform its obligations under the Policy in accordance with
the terms thereof.
2. The execution and delivery by the Insurer of the Policy, the
Insurance Agreement and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all necessary
corporate action on the part of the Insurer; the Policy has been duly
executed and is the valid and binding obligation of the Insurer
enforceable in accordance with its terms except that the enforcement of
the Policy may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
3. The Insurer is authorized to deliver the Indemnification
Agreement and the Insurance Agreement and such agreements have been duly
executed and delivered and constitute the legal, valid and binding
obligations of the Insurer enforceable in accordance with its terms except
that the enforcement of the Insurance Agreement may be limited by laws
relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights generally
and by general principles of equity and, in the case of the
Indemnification Agreement, subject to principles of public policy limiting
the right to enforce the indemnification provisions contained therein
insofar as such provisions relate to indemnification for liabilities
arising under securities laws.
4. No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of
the Insurer, the lack of which would adversely affect the validity or
enforceability of the Policy; to the extent required by applicable legal
requirements that would adversely affect validity or enforceability of the
Policy, the form of the Policy has been filed with,
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and approved by, all governmental authorities having jurisdiction over the
Insurer in connection with the Policy.
5. The execution and delivery of the Insurance Agreement, the
Indemnification Agreement and the Policy, and the compliance with the
terms and provisions thereof, will not conflict with, result in a breach
of or constitute a default under any of the terms, provisions or
conditions of the Restated Charter or By-Laws of the Insurer. The
execution, delivery and performance by the Insurer of its obligations
under the policy do not, to the extent that either of the following would
effect the validity or enforceability of the Policy, (a) contravene any
law or government regulation or order presently binding on the Insurer or
(b) contravene any provision of or constitute a default under any
indenture, contract or other instrument to which the Insurer is a party or
by which the Insurer is bound.
6. The Policy is not required to be registered under the Act.
7. The information set forth under the caption "The Insurer and the
Policy" in the Prospectus Supplement, insofar as such statements
constitute a description of the Policy, accurately summarizes the Policy.
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Sponsor, the
Indenture Trustee, the Insurer and public officials. Such opinion may
assume the due authorization, execution and delivery of the instruments
and documents referred to therein by the parties thereto other than the
Insurer.
L. Since June 30, 1999, 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 Sponsor or in any rating
accorded any securities of the Sponsor, if any, by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of the Act.
M. On or prior to the Closing Date, there shall not have occurred
any downgrading, nor shall any notice have been given of (A) any intended
or potential downgrading or (B) any review or possible change in rating
the direction of which has not been indicated, in the rating accorded the
Insurer's claims paying ability by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the Act.
N. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since June 30, 1999, of (A) the Sponsor
and any subsidiaries or (B) the Insurer, that is in the Underwriters'
judgment material and adverse and that makes it in the Underwriters'
judgment impracticable to market the Notes on the terms and in the manner
contemplated in the Prospectus.
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O. The Underwriters shall have received from the Insurer a
certificate, signed by the president, a senior vice president or a vice
president of the Insurer, dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the Policy, the
Insurance Agreement, the Indemnification Agreement and the related
documents and that, to the best of his or her knowledge based on
reasonable investigation:
1. There are no actions, suits, proceedings or investigations
pending or, to the best of Insurer's knowledge, threatened against it at
law or in equity before or by any court, governmental agency, board or
commission or any arbitrator which, if adversely determined, individually
or in the aggregate, would materially and adversely affect the Insurer's
condition (financial or otherwise) or operations or which would materially
and adversely effect its ability to perform its obligations under the
Policy, the Insurance Agreement or the Indemnification Agreement;
2. The information contained in the Prospectus Supplement under the
caption "The Insurer and the Policy" (the "Insurer Information") is
limited and does not purport to provide the scope of disclosure required
to be included in a prospectus for a registrant under the Act, in
connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, the Insurer
Information does not contain any untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
3. The tables regarding the Insurer's capitalization set forth under
the heading "The Insurer and the Policy" in the Prospectus Supplement
presents accurately and fairly the capitalization of the Insurer as of
June 30, 1999;
4. The consolidated financial statements of the Insurer as of
December 31, 1998 and December 31, 1997, and for each of the years in the
three-year period ended December 31, 1998, together with the related
opinion of an independent certificated public accountant, copies of which
are incorporated by reference in the Prospectus Supplement, fairly present
in all material respects the financial condition of the Insurer as of such
date and for the period covered by such statements in accordance with
generally accepted accounting principles consistently applied; the
unaudited consolidated financial statements of the Insurer 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, fairly present in all material respects the
financial condition of the Insurer as of such date and for the period
covered by such statements in accordance with generally accepted
accounting principles applied consistently with those principles applied
in preparing the December 31, 1998 audited statements;
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5. No material adverse change in such the financial condition of the
Insurer which would materially and adversely affect its ability to perform
its obligations under the Policy.
6. The execution and delivery of the Insurance Agreement, the
Indemnification Agreement and the Policy and the compliance with the terms
and provisions thereof will not conflict with, result in a breach of, or
constitute a default under any of the terms, provisions or conditions of,
the Restated Charter of By-Laws of the Insurer, or any agreement,
indenture or other instrument to which the Insurer is a party.
7. The issuance of the Policy and the execution, delivery and
performance of the Indemnification Agreement and the Insurance Agreement
have been duly authorized by all necessary corporate proceedings. No
further approvals or filings of any kind, including, without limitation,
any further approvals of or further filing with any governmental agency or
other governmental authority, or any approval of the Insurer's board of
directors or stockholders, are necessary for the Policy, the
Indemnification Agreement and the Insurance Agreement to constitute the
legal, valid and binding obligations of the Insurer.
8. To the best knowledge of such officer, since June 30, 1999, no
material adverse change has occurred in the financial position of the
Insurer other than as may be set forth in the Prospectus Supplement.
The officer of the Insurer certifying to items 5-8 shall be an
officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and correct copy
of its certificate or articles of incorporation, as appropriate, and its
by-laws, all of which are in full force and effect on the date of such
certificate.
P. The Underwriters shall have received from Dewey Ballantine LLP,
special counsel to the Sponsor, a survey in form and substance
satisfactory to the Underwriters, 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
shall have complied with all such requirements.
Q. The Underwriters shall have received from Brown & Wood LLP,
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 Underwriters shall
reasonably require.
R. The Underwriters shall have received from Dewey Ballantine LLP,
special counsel to the Sponsor, such opinion or opinions, dated the
Closing Date, with respect to certain tax matters.
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S. The Underwriters and counsel for the Underwriters shall have
received copies of any opinions of counsel to the Sponsor or the Insurer
supplied to the Indenture Trustee relating to matters with respect to the
Notes or the Policy. 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.
T. The Underwriters shall have received such further information,
certificates and documents as the Underwriters may reasonably have
requested not later than the business day prior to the Closing Date.
U. There shall have been executed and delivered by Advanta Mortgage
Holding Company, the indirect corporate parent of the Sponsor and direct
corporate parent of the Master Servicer ("AMHC"), a letter agreement with
the Trust and the Insurer substantially in the form of Exhibit A hereto.
V. There shall have been executed and delivered by AMHC a letter
agreement with the Underwriters and the Insurer substantially in the form
of Exhibit B hereto.
W. 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 Originators
in connection with the issuance and sale of the Notes as herein
contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
X. 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; (i) a banking moratorium shall
have been declared by Federal or state authorities; (ii) 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
(iii) 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 Underwriters,
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.
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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
Underwriters by notice to the Sponsor 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 Notes 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 Sponsor 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 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
costs of reproducing and distributing this Agreement; (e) the fees and expenses
of qualifying the Notes under the securities laws of the several jurisdictions
as provided in Section 5(F) hereof and of preparing, printing and distributing
any Blue Sky Memorandum or Legal Investment Survey (including related fees and
expenses of counsel to the Underwriters); (f) any fees charged by securities
rating services for rating the Notes; (g) any amounts in excess of $50,000 of
the total of the costs and expenses of Brown & Wood LLP; and (h) all other costs
and expenses incident to the performance of the obligations of the Sponsor;
provided, however, that, except as provided in this Section 7, the Underwriters
shall pay its own costs and expenses, including an amount not to exceed $50,000
of the total of the costs and expenses of Brown & Wood LLP, any transfer taxes
on the Notes which they may sell and the expenses of marketing any offering of
the Notes made by the Underwriters (including expenses incident to the
preparation, printing and distribution of Computational Materials and other
Derived Information).
If this Agreement is terminated by the Underwriters, in accordance with
the provisions of Section 6 or Section 10, the Sponsor shall reimburse the
Underwriters for their respective reasonable out-of-pocket expenses, including
fees and disbursements of Brown & Wood LLP.
SECTION 8. Indemnification and Contribution
A. The Sponsor agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls the respective
Underwriter within the meaning of Section 15 of the Act from and against
any and all loss, claim, damage or liability, severally but not jointly,
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 each such Underwriter or any such controlling person may
become subject, under the Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any
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<PAGE> 21
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, (iii) any untrue statement
or alleged untrue statement of a material fact contained in the Prospectus
or (iv) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and shall reimburse each 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 Sponsor 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 Sponsor
by the Underwriters specifically for inclusion therein. For purposes of
the last proviso to the immediately preceding sentence, the term
"Prospectus" shall not be deemed to include the documents incorporated
therein by reference, and the Underwriters shall not be obligated to send
or give any supplement or amendment to any document incorporated therein
by reference to any person other than a person to whom the Underwriters
have delivered such incorporated document or documents in response to a
written request therefor. The foregoing indemnity agreement is in addition
to any liability which the Sponsor may otherwise have to any Underwriter
or any controlling person of any Underwriter.
B. Each Underwriter severally but not jointly will indemnify and
hold harmless the Sponsor, its directors, its officers who signed the
Registration Statement, and each person, if any, who controls the Sponsor
within the meaning of Section 15 of the Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Sponsor or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (iii) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or
(iv) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information (excluding any
Derived Information which is covered in paragraph (E) below) furnished to
the Sponsor by or on behalf of the Underwriters specifically for inclusion
therein, and shall
21
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reimburse the Sponsor, and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Sponsor
or any director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which the
Underwriters may otherwise have to the Sponsor 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, however, 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
22
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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 such Underwriter, if
the indemnified parties under this Section 8 consist of such Underwriter
or any of its controlling persons, or by the Sponsor if the indemnified
parties under this Section 8 consist of the Sponsor or any of the
Sponsor'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 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 Sponsor a copy of its
Derived Information no later than one (1) business day prior to the date
such information is required to be filed, pursuant to the No-Action
Letters (as defined herein), with the Commission on Form 8-K.
E. Each Underwriter agrees, assuming all Sponsor-Provided
Information (defined below) is accurate and complete in all material
respects, to severally and not jointly indemnify and hold harmless the
Sponsor, each of the Sponsor's officers and directors and each person who
controls the Sponsor within the meaning of Section 15 of the Act against
any and all losses, claims, damages or liabilities, joint or several, to
which they may become subject under the 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 and when read in conjunction with the Prospectus, 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
23
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incurred. The obligations of the Underwriters under this Section 8(E)
shall be in addition to any liability which the respective Underwriters
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 Sponsor
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 Sponsor-Provided Information; and
(iii) is of the type of information defined as Collateral term
sheets, Structural term sheets or Computational Materials (as such
terms are interpreted in the No-Action Letters).
"Sponsor-Provided Information" means any computer tape furnished to the
Underwriters by the Sponsor concerning the Mortgage Loans comprising the
Trust.
The terms "Collateral term sheet" and "Structural term sheet" shall
have the respective meanings assigned to them in the February 13, 1995
letter (the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf
of the Public Securities Association (which letter, and the SEC staff's
response thereto, were publicly available February 17, 1995). The term
"Collateral term sheet" as used herein includes any subsequent Collateral
term sheet that reflects a substantive change in the information
presented. The term "Computational Materials" has the meaning assigned to
it in the May 17, 1994 letter (the "Kidder letter" and together with the
PSA Letter, the "No-Action Letters") of Brown & Wood LLP 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 (i) 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, in such proportion as shall be appropriate to
reflect the relative benefits received by the Sponsor 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 Sponsor on the one hand and the
24
<PAGE> 25
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 Sponsor on the one hand and the
Underwriters on the other shall be deemed to be in such proportion as the
total net proceeds from the offering (before deducting expenses) received
by the Sponsor to the total underwriting discounts and commissions.
The relative fault of the Underwriters and the Sponsor 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 Sponsor or by the
Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement
or omission and other equitable considerations.
The Sponsor 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.
For purposes of this Section 8, in no case shall each 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 Sponsor 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.
H. The Underwriters confirm that the information set forth in the
third, fourth, fifth, sixth, seventh and ninth paragraphs 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 Sponsor 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 Sponsor submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of such Underwriter or controlling
persons thereof, or by or on behalf of the Sponsor and shall survive delivery of
any Notes to the Underwriters.
25
<PAGE> 26
SECTION 10. Termination of Agreement The Underwriters may terminate
this Agreement immediately upon notice to the Sponsor at any time at or prior to
the Closing Date if any of the events or conditions described in Section 6(X) of
this Agreement shall occur and be continuing. In the event of any such
termination, the covenant set forth in the provisions of Section 7, the
indemnity agreement set forth in Section 8, and the provisions of Sections 9 and
13 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 Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036; and
B. if to the Sponsor, 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: 858-676-3046).
SECTION 12. Persons Entitled to the Benefit of this Agreement This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Sponsor 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 controls such Underwriter within the meaning of Section 15 of the
Act, and for the benefit of directors of the Sponsor, officers of the Sponsor
who have signed the Registration Statement and any person controlling the
Sponsor within the meaning of Section 15 of the 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 Notes"), the remaining
Underwriter (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 Notes 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 Sponsor shall have
the right to postpone the Closing Date for a period not exceeding seven days in
order to effect any
26
<PAGE> 27
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 Sponsor 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 on which the New York Stock
Exchange, Inc. is open for trading.
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.
[Signature Page Follows]
27
<PAGE> 28
If the foregoing correctly sets forth the agreement between the Sponsor
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
ADVANTA CONDUIT RECEIVABLES,
INC.
By:_________________________________
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
(for itself and for the other Underwriter
set forth on Schedule I)
By:__________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
Advanta Revolving Home Equity Loan Asset Backed Notes, Series 1999-B,
INDENTURE
Dated as of September 1, 1999
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
<PAGE> 2
Table of Contents
<TABLE>
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ARTICLE I.
Definitions and Incorporation by Reference
SECTION 1.1. Definitions................................................................................ 2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act...................................... 2
SECTION 1.3. Rules of Construction...................................................................... 2
SECTION 1.4. Action by or Consent of Noteholders........................................................ 3
SECTION 1.5. Conflict with TIA.......................................................................... 3
ARTICLE II.
The Notes
SECTION 2.1. Form....................................................................................... 3
SECTION 2.2. Execution, Authentication and Delivery..................................................... 3
SECTION 2.3. Registration; Registration of Transfer and Exchange........................................ 4
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes................................................. 5
SECTION 2.5. Persons Deemed Owners...................................................................... 6
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest...................................... 6
SECTION 2.7. Cancellation............................................................................... 8
SECTION 2.8. Release of Trust Estate.................................................................... 8
SECTION 2.9. Book-Entry Notes........................................................................... 8
SECTION 2.10. Notices to Clearing Agency................................................................. 9
SECTION 2.11. Definitive Notes........................................................................... 9
ARTICLE III.
Covenants
SECTION 3.1. Payment of Principal and Interest.......................................................... 10
SECTION 3.2. Maintenance of Office or Agency............................................................ 10
SECTION 3.3. Money for Payments to be Held in Trust..................................................... 10
SECTION 3.4. Existence.................................................................................. 11
SECTION 3.5. Protection of Trust Estate................................................................. 11
SECTION 3.6. Opinions as to Trust Estate................................................................ 12
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.................................... 12
SECTION 3.8. Negative Covenants......................................................................... 13
SECTION 3.9. Annual Statement as to Compliance.......................................................... 14
SECTION 3.10. Trust May Not Consolidate or Transfer Assets............................................... 15
SECTION 3.11. No Other Business.......................................................................... 15
SECTION 3.12. No Borrowing............................................................................... 15
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities.......................................... 15
SECTION 3.14. Capital Expenditures....................................................................... 15
SECTION 3.15. Compliance with Laws....................................................................... 15
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<TABLE>
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SECTION 3.16. Restricted Payments........................................................................ 15
SECTION 3.17. Notice of Rapid Amortization Events, Events of Default and Events of
Servicing Termination...................................................................... 16
SECTION 3.18. Further Instruments and Acts............................................................... 16
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
SECTION 4.1. Satisfaction and Discharge of Indenture.................................................... 16
SECTION 4.2. Application of Trust Money................................................................. 18
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.............................................. 18
ARTICLE V.
Rapid Amortization Events and Events of Default
SECTION 5.1. Rapid Amortization Events.................................................................. 18
SECTION 5.2. Consequences of Rapid Amortization Event................................................... 20
SECTION 5.3. [Reserved]................................................................................. 20
SECTION 5.4. Events of Default. ........................................................................ 20
SECTION 5.5. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.................. 21
SECTION 5.6. Remedies for Event of Default. ............................................................ 21
SECTION 5.7. Indenture Trustee May File Proofs of Claim................................................. 22
SECTION 5.8. Indenture Trustee May Enforce Claims Without Possession of Notes........................... 23
SECTION 5.9. Application of Money Collected............................................................. 23
SECTION 5.10. Limitation of Suits........................................................................ 24
SECTION 5.11. Unconditional Rights of Noteholders To Receive Principal and Interest...................... 25
SECTION 5.12. Restoration of Rights and Remedies......................................................... 25
SECTION 5.13. Rights and Remedies Cumulative............................................................. 25
SECTION 5.14. Delay or Omission Not a Waiver............................................................. 25
SECTION 5.15. Control by Noteholders..................................................................... 25
SECTION 5.16. Undertaking for Costs...................................................................... 26
SECTION 5.17. Waiver of Stay or Extension Laws........................................................... 26
SECTION 5.18. Action on Notes............................................................................ 26
SECTION 5.19. Performance and Enforcement of Certain Obligations......................................... 26
SECTION 5.20. Subrogation................................................................................ 27
SECTION 5.21. Preference Claims.......................................................................... 27
ARTICLE VI.
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee................................................................ 28
</TABLE>
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<TABLE>
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SECTION 6.2. Rights of Indenture Trustee................................................................ 30
SECTION 6.3. Individual Rights of Indenture Trustee..................................................... 31
SECTION 6.4. Indenture Trustee's Disclaimer............................................................. 31
SECTION 6.5. Notice of Defaults......................................................................... 31
SECTION 6.6. Reports by Indenture Trustee to Noteholders................................................ 31
SECTION 6.7. Compensation and Indemnity................................................................. 32
SECTION 6.8. Replacement of Indenture Trustee........................................................... 32
SECTION 6.9. Successor Indenture Trustee by Merger...................................................... 34
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.......................... 34
SECTION 6.11. Eligibility: Disqualification.............................................................. 35
SECTION 6.12. Preferential Collection of Claims Against Trust............................................ 36
SECTION 6.13. Appointment and Powers..................................................................... 36
SECTION 6.14. Performance of Duties...................................................................... 36
SECTION 6.15. Limitation on Liability.................................................................... 36
SECTION 6.16. Reliance Upon Documents.................................................................... 37
SECTION 6.17. Representations and Warranties of the Indenture Trustee.................................... 37
SECTION 6.18. Waiver of Setoffs.......................................................................... 37
SECTION 6.19. Control by the Controlling Party........................................................... 37
SECTION 6.20. Trustee May Enforce Claims Without Possession of Notes..................................... 37
SECTION 6.21. Suits for Enforcement...................................................................... 38
SECTION 6.22. Mortgagor Claims........................................................................... 38
ARTICLE VII.
Noteholders' Lists and Reports
SECTION 7.1. Trust To Furnish To Indenture Trustee Names and Addresses of Noteholders................... 39
SECTION 7.2. Preservation of Information; Communications to Noteholders................................. 39
SECTION 7.3. Reports by Trust........................................................................... 39
SECTION 7.4. Reports by Indenture Trustee............................................................... 40
ARTICLE VIII.
Payments and Statements to Noteholders and Certificateholders; Accounts, Disbursements and
Releases
SECTION 8.1. Collection of Money........................................................................ 40
SECTION 8.2. Release of Trust Estate.................................................................... 41
SECTION 8.3. Establishment of Accounts.................................................................. 41
SECTION 8.4. The Payments Under the Policy.............................................................. 41
SECTION 8.5. Pre-Funding Account and Capitalized Interest Account....................................... 42
SECTION 8.6. Flow of Funds.............................................................................. 42
SECTION 8.7. Investment of Accounts..................................................................... 44
SECTION 8.8. Eligible Investments....................................................................... 45
SECTION 8.9. Reports by Indenture Trustee............................................................... 46
SECTION 8.10. Additional Reports by Indenture Trustee.................................................... 48
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<TABLE>
<S> <C>
SECTION 8.11. Opinion of Counsel......................................................................... 49
ARTICLE IX.
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders..................................... 49
SECTION 9.2. Supplemental Indentures with Consent of Noteholders........................................ 50
SECTION 9.3. Execution of Supplemental Indentures....................................................... 52
SECTION 9.4. Effect of Supplemental Indenture........................................................... 52
SECTION 9.5. Conformity With Trust Indenture Act........................................................ 52
SECTION 9.6. Reference in Notes to Supplemental Indentures.............................................. 53
ARTICLE X.
Redemption of Notes
SECTION 10.1. Redemption................................................................................. 53
SECTION 10.2. Surrender of Notes......................................................................... 54
SECTION 10.3. Form of Redemption Notice.................................................................. 55
SECTION 10.4. Notes Payable on Redemption Date........................................................... 55
ARTICLE XI.
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc.................................................. 55
SECTION 11.2. Form of Documents Delivered to Indenture Trustee........................................... 56
SECTION 11.3. Acts of Noteholders........................................................................ 57
SECTION 11.4. Notices, etc. to Indenture Trustee, Trust and Rating Agencies.............................. 57
SECTION 11.5. Notices to Noteholders; Waiver............................................................. 58
SECTION 11.6. Alternate Payment and Notice Provisions.................................................... 59
SECTION 11.7. Conflict with Trust Indenture Act.......................................................... 59
SECTION 11.8. Effect of Headings and Table of Contents................................................... 59
SECTION 11.9. Successors and Assigns..................................................................... 59
SECTION 11.10. Separability............................................................................... 59
SECTION 11.11. Benefits of Indenture...................................................................... 59
SECTION 11.12. Legal Holidays............................................................................. 59
SECTION 11.13. Governing Law.............................................................................. 60
SECTION 11.14. Counterparts............................................................................... 60
SECTION 11.15. Recording of Indenture..................................................................... 60
SECTION 11.16. Trust Obligation........................................................................... 60
SECTION 11.17. No Petition................................................................................ 60
SECTION 11.18. Inspection................................................................................. 61
SECTION 11.19. Limitation of Liability.................................................................... 61
SECTION 11.20. Rights of the Insurer to Exercise Rights of Noteholders.................................... 61
SECTION 11.21. Consent and Direction of Insurer........................................................... 62
SECTION 11.22. Rules by Indenture Trustee................................................................. 62
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SCHEDULE AND EXHIBITS
Schedule I Schedule of Mortgage Loans
Exhibit A Form of Note
Annex 1 Defined Terms
v
<PAGE> 7
INDENTURE dated as of September 1, 1999, between ADVANTA
REVOLVING HOME EQUITY LOAN TRUST 1999-B, a Delaware business trust (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
Revolving Home Equity Loan Asset Backed Notes, Series 1999-B (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
assign the Trust Estate (as defined below) to the Indenture Trustee for the
benefit of the Noteholders and the Insurer.
Ambac Assurance Corporation (the "Insurer") has issued and
delivered the certificate guaranty insurance policy, dated as of the Closing
Date (the "Policy"), pursuant to which the Insurer guarantees the Insured Amount
with respect to the Notes.
The Trust and the Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of September 28, 1999 (as amended
from time to time, the "Insurance Agreement"), among the Insurer, Advanta
Holding Trust 1999-B, Advanta Mortgage Corp. USA, the Trust, Advanta Conduit
Receivables, Inc. and the Indenture Trustee.
GRANTING CLAUSE
The Trust hereby Grants to the Indenture Trustee at the
Closing Date, for the benefit of the Noteholders and the Insurer, all of the
Trust's right, title and interest in and to the following (collectively, the
"Trust Estate"): (i) certain adjustable-rate home equity revolving credit line
loans (the "Mortgage Loans") (including any Additional Balances) made or to be
made under certain Credit Line Agreements and conveyed to the Trust; (ii) all
principal and interest collected in respect of the Mortgage Loans on and after
the related Cut-Off Date; (iii) property that secured a Mortgage Loan to the
extent that it has been acquired by foreclosure or deed in lieu of foreclosure;
(iv) all rights acquired by the Trust under any Mortgage Insurance Policies
covering the Mortgaged Properties; (v) the Policy; (vi) all amounts on deposit
from time to time in the Note Account (excluding investment earnings thereon);
(vii) all amounts on deposit from time to time in the Principal and Interest
Account (excluding any investment earnings thereon); (viii) all rights of the
Sponsor under the Purchase Agreement assigned to the Trust pursuant to the Sale
and Servicing Agreement (including all of the Sponsor's rights and remedies in
the event of certain breaches by the Originators of their respective
representations and warranties under the Purchase Agreement); (ix) all rights of
the Trust under the Sale and Servicing Agreement; (x) all Mortgage Files and
other documents relating to the foregoing; (xi) all amounts on deposit in the
Pre-Funding Account; (xii) all amounts on deposit in the Capitalized Interest
Account (excluding
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any investment earnings thereon), and (xiii) any and all proceeds of the
foregoing except as otherwise provided herein.
The foregoing Grant is made in trust to the Indenture Trustee,
for the benefit of the Noteholders and the 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 1.1. Definitions. Except as otherwise specified herein, capitalized
terms are used in this Indenture as defined in Annex 1. Defined terms that are
used only in one section or only in another definition may be omitted from the
list of defined terms in Annex 1. Defined terms include, as appropriate, all
genders and the plural as well as the singular.
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the 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 1.3. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
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(iii) "or" is not exclusive;
(iv) "including" means "including without limitation"; and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4. Action by or Consent of Noteholders. Whenever any provision of this
Indenture refers to action to be taken, or consented to, by Noteholders, such
provision shall be deemed to refer to the Noteholder of record as of the Record
Date immediately preceding the date on which such action is to be taken, or
consent given, by Noteholders.
SECTION 1.5. Conflict with TIA. If any provision hereof limits, qualifies or
conflicts with a provision of the TIA that is required under the TIA to be part
of and govern this Indenture, the latter provision shall control and all
provisions required by the TIA are hereby incorporated by reference. If any
provision of this Indenture modifies or excludes any provision of the TIA that
may be so modified or excluded, the latter provisions shall be deemed to apply
to this Indenture as so modified or to be excluded, as the case may be.
ARTICLE II.
The Notes
SECTION 2.1. 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 2.2. 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.
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The Indenture Trustee, upon receipt of a written Issuer Order,
shall authenticate and deliver the Notes for original issue in an aggregate
principal amount of $275,000,000. The Notes outstanding at any time may not
exceed such amounts except as provided in Section 2.6.
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 2.3. 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 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 3.2, and
if the requirements of Section 8-401(a) 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
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surrendered for exchange, and if the requirements of Section 8-401(a) 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 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 2.4 or
9.6 not involving any transfer.
The Note Registrar shall not register the transfer of a Note
unless the transferee has delivered a representation letter in form and
substance satisfactory to the Note Registrar to the effect that either (i) the
transferee is not an employee benefit plan or other retirement plan or
arrangement subject to Title I of ERISA or Section 4975 of the Code and is not
acting on behalf of or investing the assets of any such plan or arrangement or
(ii) the transferee's acquisition and continued holding of the Note qualifies
for exemptive relief under a prohibited transaction class exemption issued by
the U.S. Department of Labor. Each transferee of a Book-Entry Note shall be
deemed to make one of the foregoing representations.
SECTION 2.4. 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, Indenture Trustee and the
Insurer such security or indemnity as may be required by it to hold the Trust,
the Sponsor, the Indenture Trustee and the 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
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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.
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 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,
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 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 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 2.5. Persons Deemed Owners. Prior to due presentment for registration of
transfer of any Note, the Trust, the Indenture Trustee and the Insurer and any
agent of the Trust, the Indenture Trustee and the Insurer may 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, if any, on such Note and for all other purposes whatsoever, whether or
not such Note be overdue, and none of the Trust, the Insurer, the Indenture
Trustee nor any agent of the Trust, the Insurer or the Indenture Trustee shall
be affected by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided herein, and such amount
shall be due and payable on each Payment Date as specified herein. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the 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, except that, unless Definitive Notes have been issued pursuant to
Section 2.11, with respect to Notes
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registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee and except for the final installment of principal payable with respect
to such Note on a Payment Date or on the related Final Scheduled Payment Date
(and except for the Redemption Price for any Note called for redemption pursuant
to Section 10.1(a)) which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.3.
On each Interest Determination Date, the Indenture Trustee
shall determine the London interbank offered rate for one-month U.S. dollar
deposits ("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 am London time;
second, if the rate does not appear on Telerate Screen Page
3750 as of 11:00 am 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) 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 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 10.2.
(c) If the Trust defaults in a payment of interest on the Notes, the
Trust shall pay interest on such defaulted interest at the applicable Note
Interest 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 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 Insurer to the extent not previously
cancelled or destroyed.
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SECTION 2.7. Cancellation. Subject to Section 2.6(f), 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 canceled by the Indenture Trustee. Subject to
Section 2.6(f), 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 canceled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. Subject to
Section 2.6(f), all canceled 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 2.8. 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 2.8 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 11.1.
SECTION 2.9. 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 (the "Definitive Notes")
have been issued to Note Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest
on the Notes and the giving of instructions or directions
hereunder) as the sole Noteholder, and shall have no
obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by
law and agreements between such Note Owners and the Clearing
Agency and/or the Clearing Agency Participants.
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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;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders
evidencing a specified percentage of the Outstanding Amount 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
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request,
together with a certification that they are Note Owners and
payment of reproduction and postage expenses associated with
the distribution of such reports, from the Indenture Trustee
at the Corporate Trust Office.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until 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 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 a Rapid Amortization Event, Note Owners representing
beneficial interests aggregating at least a majority of the Outstanding Amount
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.
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ARTICLE III.
Covenants
SECTION 3.1. 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 laws by any Person from a payment to any Noteholder
of interest and/or principal shall be considered as having been paid by the
Trust to such Noteholder for all purposes of this Indenture.
SECTION 3.2. 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 3.3. 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 Insurer an instrument in which such Note Paying Agent
shall agree with the Indenture Trustee (and if the Indenture Trustee acts as
Note Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums
to such Persons as herein provided;
(ii) give the Indenture Trustee written notice of any default by
the 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;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Note
Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the
payment of 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
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(v) 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 the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Indenture Trustee or any Note Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Trust; and the 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 3.4. 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 3.5. 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 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:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Trustee for the
benefit of the Noteholders and the Insurer created by this
Indenture or carry out more effectively the purposes hereof;
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(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Trust Estate;
(v) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee in such Trust Estate against the
claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The 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; 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 3.5 or the adequacy of any financing statement,
continuation statement or other instrument prepared by the Trust.
SECTION 3.6. Opinions as to Trust Estate.
(a) On the Closing Date, the Trust shall furnish to the Indenture
Trustee and the Insurer an Opinion of Counsel addressed to the Insurer 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
Insurer, created by this Indenture.
(b) Within 90 days after the beginning of each calendar year, beginning
with the year 2000, the Trust shall furnish to the Indenture Trustee and the
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 3.7. 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
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would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except as ordered by any bankruptcy or other court or as expressly
provided in this Indenture, the Operative Documents or such other instrument or
agreement.
(b) The Trust may contract with other Persons acceptable to the 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 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 Operative Documents
and in the instruments and agreements included in the Trust Estate, including,
but not limited to, preparing (or causing to be prepared) and filing (or causing
to be filed) all UCC financing statements and continuation statements required
to be filed by the terms of this Indenture and the 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
Insurer, the Noteholders representing at least a majority of the Outstanding
Amount of the Notes or the Indenture Trustee (with the prior written consent of
the 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 Event of Servicing Termination under the
Insurance Agreement, the Trust shall promptly notify the Indenture Trustee, the
Insurer and the Rating Agencies thereof in accordance with Section 11.4, 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
Insurer or (y) the Insurer has consented in writing to such waiver but the
effect thereof would adversely affect the Noteholders.
SECTION 3.8. Negative Covenants. So long as any Notes are Outstanding, the Trust
shall not:
(i) except as expressly permitted by this Indenture or the
Operative Documents, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Trust,
including those included in the Trust Estate, without the
prior written
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consent of the Insurer (provided, that if an Insurer Default
has occurred and is continuing, the Noteholders representing
at least 51% of the Note Balance may direct the Indenture
Trustee to sell or dispose of the Trust Estate in accordance
with Section 5.6).
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code)
or assert any claim against any present or former Noteholder
or the Insurer by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on a Mortgaged Property and
arising solely as a result of an action or omission of the
related Mortgagor), (C) permit the lien of this Indenture not
to constitute a valid first priority (other than with respect
to any such tax, mechanics' or other lien) security interest
in the Trust Estate or (D) amend, modify or fail to comply
with the provisions of the Operative Documents without the
prior written consent of the Insurer, which consent may not be
unreasonably withheld.
SECTION 3.9. Annual Statement as to Compliance. The Trust will deliver to the
Indenture Trustee and the Insurer, within 90 days after the end of each fiscal
year of the Trust (commencing with the fiscal year ended December 31, 1999), and
otherwise in compliance with the requirements of TIA Section 314(a)(4) an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that
(i) a review of the activities of the Trust during such year and
of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the 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.
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SECTION 3.10. Trust May Not Consolidate or Transfer Assets.
(a) The Trust may not consolidate or merge with or into any other
Person.
(b) Except as otherwise provided in the Sale and Servicing Agreement,
and unless the 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 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 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 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 continently 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 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
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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 Operative Documents.
SECTION 3.17. Notice of Rapid Amortization Events, Events of Default 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
Insurer and the Rating Agencies prompt written notice of each Rapid Amortization
Event, 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 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.
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 11.1 of the Trust Agreement to eliminate the
requirements thereunder that the Indenture Trustee, the 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 4.1. 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 3.3, 3.4, 3.5, 3.8, 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 6.7 and the obligations of the
Indenture Trustee under Section 4.2) and (vi) the rights of Noteholders and the
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 a 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
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(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.4 and (ii) 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 3.3) have been delivered to the Indenture Trustee for
cancellation and the Policy has terminated and been returned to the Insurer for
cancellation and all amounts owing to the Insurer have been paid in full; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their
respective Final Scheduled Payment Dates
within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the
Indenture Trustee for the giving of notice
of redemption by the Indenture Trustee in
the name, and at the expense, of the Trust,
and in the case of (i), (ii) or (iii) above
(A) 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 respective Final
Scheduled Payment Dates or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1(a)), as the case may be;
(B) the Trust has paid or caused to be paid
all amounts due the Insurer and the Indenture Trustee; and
(C) the Trust has delivered to the Indenture
Trustee and the Insurer an Officer's Certificate, an Opinion of Counsel
and if required by the TIA, the Indenture Trustee or the Insurer an
Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.1(a) and each
stating that all conditions precedent herein provided relating to the
satisfaction and discharge of this Indenture have been complied with.
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 Insurer pursuant to the terms of the Policy shall be paid by the Insurer
pursuant to the Policy, the Notes shall remain
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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 Insurer,
and the Insurer shall be subrogated to the rights of such Noteholders.
SECTION 4.2. Application of Trust Money. All monies deposited with the Indenture
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the 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 with the
Indenture Trustee.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the 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 3.3
and thereupon such Note Paying Agent shall be released from all further
liability with respect to such monies.
ARTICLE V.
Rapid Amortization Events and Events of Default
SECTION 5.1. Rapid Amortization Events.
The following shall constitute "Rapid Amortization Events":
(a) failure on the part of the Master Servicer or Sponsor (i) to make a
payment or deposit required under the Sale and Servicing Agreement within five
Business Days after the date such payment or deposit is required to be made or
(ii) to observe or perform in any material respect any other covenants or
agreements of the Sponsor set forth in the Sale and Servicing Agreement, which
failure continues unremedied for a period of 60 days after written notice;
(b) any representation or warranty made by the Sponsor in the Sale and
Servicing Agreement proves to have been incorrect in any material respect when
made and continues to be incorrect in any material respect for a period of 60
days after written notice and as a result of which the interests of the
Noteholders or the Insurer are materially and adversely affected: provided,
however, that a Rapid Amortization Event shall not be deemed to occur if such
representation or warranty relates to a Mortgage Loan and the Sponsor has
reacquired or made a substitution for such Mortgage Loan during such period (or
within an additional 60 days with the prior written consent of the Insurer) in
accordance with the provisions of the Sale and Servicing Agreement;
(c) either (1) the entry of a decree or order for relief by a court
having jurisdiction in respect of one of the Originators, or the Sponsor, in an
involuntary case under the federal
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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 either of the Originators or the Sponsor 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 a period of 60 consecutive days; or
(2) the commencement by one of the Originators or the Sponsor,
of a voluntary 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 the consent by either of the Originators or the Sponsor to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Originators or
the Sponsor or of any substantial part of its property or the making by the
Originators or the Sponsor of an assignment for the benefit of creditors or the
failure by the Originators or the Sponsor generally to pay its debts as such
debts become due or the taking of corporate action by the Originators or the
Sponsor in furtherance of any of the foregoing;
(d) 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;
(e) the occurrence of an Event of Servicing Termination;
(f) a draw is made under the Policy; and
(g) a default in the payment of any interest when the same becomes due
and payable and the continuance of such default for a period of five days or a
default in the payment in full of the Note Balance on the Final Scheduled
Payment Date.
In the case of any event described in clause (a) through (f),
a Rapid Amortization Event will be deemed to have occurred only if, after the
applicable grace period, if any, described herein or in the Indenture or the
Sale and Servicing Agreement either (i)(A) the Insurer or (B) the Indenture
Trustee or Noteholders evidencing at least 51% of the Note Balance, in each
case, with the prior written consent of the Insurer, by written notice to the
Insurer, the Sponsor, the Originators, the Rating Agencies, and the Master
Servicer (and to the Indenture Trustee, if given by the Noteholders or the
Insurer; provided that, in the event such a declaration is made by the Insurer,
the Insurer shall give notice thereof to the Indenture Trustee and the Indenture
Trustee shall forward such notice to each of the above-mentioned parties)
declare that a Rapid Amortization Event has occurred as of the date of such
notice, or (ii) in the case of any event described in clause (g), the Indenture
Trustee or Noteholders evidencing at least 51% of the Note Balance by such
written notice declare that a Rapid Amortization Event has occurred as of the
date of such notice. Within 15 days, the Indenture Trustee will publish a notice
of the occurrence of such event.
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SECTION 5.2. Consequences of Rapid Amortization Event. If a Rapid Amortization
Event shall have occurred and be continuing, (a) the Rapid Amortization Period
shall immediately commence and the Noteholders shall be entitled on each Payment
Date thereafter to an amount equal to the Maximum Principal Payment less the
Overcollateralization Reduction Amount and (b) if the Rapid Amortization Event
is one described in 5.1(c) above, on the day of any such filing or appointment
no further Additional Balances will be transferred to the Trust, and such
Originator will promptly give notice to the Indenture Trustee and the Insurer of
any such filing or appointment.
SECTION 5.3. [Reserved]
SECTION 5.4. Events of Default.
(a) The following occurrences shall constitute an "Event of Default":
(i) a default in the payment of any interest when the same
becomes due and payable and the continuance of such default for a period of five
days or a default in the payment in full of the Note Balance on the Final
Scheduled Payment Date;
(ii) failure on the part of the Trust to perform in any
material respect any covenant or agreement under the Indenture (other than a
covenant in clause (i) hereof) or the breach of a representation or warranty of
the Trust, which continues for a period of thirty days after notice thereof is
given; and
(iii) 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 a period of
60 consecutive days, or
(b) If an Event of Default shall have occurred and be continuing, with
the prior written consent of the Insurer, the Indenture Trustee may, and at the
direction of the Insurer or of Noteholders representing not less than 51% of the
Note Balance (with the prior written consent of the 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 Amount of the Notes, together
with accrued and unpaid interest thereon to the date of such acceleration, shall
become immediately due and payable, all subject to the prior written consent of
the Insurer.
(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 as hereinafter in this Article;
provided, the Insurer or the Noteholders representing at least 51% of the Note
Balance, with the prior written consent of the Insurer, by
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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 Notes that have become due
solely by such acceleration, have been cured or waived.
No such recission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.5. Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee. Subject to the following sentence, if an Event of Default with respect
to the Notes occurs and is continuing, the Indenture Trustee may, with the prior
written consent of the Insurer, and shall, at the written direction of the
Insurer, proceed to protect and enforce its rights and the rights of the
Noteholders and the 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 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 5.6. Remedies for Event of Default.
(a) 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
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rescinded and annulled, the Indenture Trustee, at the written direction of the
Insurer, may, for the benefit of the Noteholders and the Insurer, do one or more
of the following:
(i) 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;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales
called and conducted in any manner permitted by law;
(iii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the
Trust Estate;
(iv) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture
Trustee or the Noteholders and the Insurer hereunder; and
(v) refrain from selling the Trust Estate and apply all Monthly
Remittance Amounts pursuant to Section 5.9.
SECTION 5.7. 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 whether the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Trust for the payment of any
overdue principal or interest) shall, at the direction of the 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 Insurer allowed in such Proceeding; and
(b) 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
Insurer to make such payments to the Indenture Trustee and, in the event that
the Indenture Trustee shall consent to the making of such payments directly to
the Noteholders and the 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.
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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 Insurer any plan of reorganization, arrangement, adjustment or
composition affecting any of the Notes or the rights of any Noteholder, or the
Insurer, or to authorize the Indenture Trustee to vote in respect of the claim
of any Noteholder or the Insurer in any such Proceeding. Any plan of
reorganization, arrangement, adjustment or composition relative to the Trust or
any other obligor 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 Insurer
under this Indenture or the Insurance Agreement must be acceptable to the
Insurer and, as long as no Insurer Default exists and is continuing, the Insurer
shall be entitled to exercise the voting rights of the Noteholders regarding
such plan, reorganization, arrangement, adjustment or composition.
SECTION 5.8. 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
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 Insurer in respect of which such judgment has been recovered
after payment of amounts required to be paid pursuant to clause (i) of Section
5.9.
SECTION 5.9. Application of Money Collected. If the 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 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:
(i) to the Indenture Trustee and the Owner Trustee, any unpaid
Indenture Trustee Fee 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;
(ii) to the Insurer, any unpaid Premium Amount, then due and
payable pursuant to the Insurance Agreement;
(iii) 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;
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(iv) to the payment of the Interest Distribution Amount and Note
Interest Shortfall then due and unpaid upon the Outstanding
Amount of the Notes through the day preceding the date upon
which such payment is made;
(v) to the payment of the Note Balance then due and unpaid on the
Outstanding Amount of the Notes;
(vi) to the Insurer, all amounts due pursuant to the Insurance
Agreement;
(vii) to the Noteholders, the Net Funds Cap Carry-Forward Amount;
(viii) to the Master Servicer, any unreimbursed Servicing Advances,
including Nonrecoverable Advances; and
(ix) to the Certificateholders, any amount remaining on deposit in
the Note Account.
SECTION 5.10. 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:
(i) the Noteholders of not less than 25% of the Note Balance have
made a 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; and
(ii) the 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; and
(iii) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
such proceedings; and
(iv) 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 Note Balance; and
(v) an Insurer Default shall 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
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the Note Balance, the Indenture Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Indenture.
SECTION 5.11. 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.
SECTION 5.12. 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 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
Insurer and the Noteholders shall continue as though no such proceeding had been
instituted.
SECTION 5.13. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the related
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 5.14. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, 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 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 Insurer
or by the Noteholders, as the case may be.
SECTION 5.15. Control by Noteholders. If the Indenture Trustee is the
Controlling Party, the Noteholders of a majority of the Note Balance, with the
prior written consent of the Insurer, shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such
direction;
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provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any related Noteholders not consenting
to such action.
SECTION 5.16. 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 the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by the Insurer, any Noteholder, or
group of Noteholders with the prior written consent of the Insurer, in each case
holding in the aggregate more than 10% of the Note Balance 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 5.17. 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 5.18. 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 Insurer or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee or the 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 5.19. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee (at the
direction of the 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
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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 Note Balance 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 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 5.20. Subrogation. The Indenture Trustee shall receive as
attorney-in-fact of each Noteholder any Insured Payment from the 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 Insurer shall, to the extent it makes any payment with respect to
the 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 Insurer, the Indenture Trustee shall
assign to the 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 Insurer. In addition to the rights of the Insurer set forth
in Section 11.20 hereof, the 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 5.21. Preference Claims.
(a) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any payment on a Note has been
avoided in whole or in part as a preference payment under applicable bankruptcy
law, the Indenture Trustee shall so notify the Insurer, shall comply with the
provisions of the Policy to obtain payment by the Insurer of such avoided
payment, and shall, at the time it provides notice to the 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 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
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.
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(b) The Indenture Trustee shall promptly notify the 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 Insurer Default shall not have occurred and be continuing,
the 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 Insurer, but
subject to reimbursement as provided in the Insurance Agreement. In addition,
and without limitation of the foregoing, as set forth in Section 5.20, the
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, 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.
ARTICLE VI.
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and 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.
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(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer unless it is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant to
Section 5.15; and
(iv) the Indenture Trustee shall not be charged with
knowledge of any failure by the Master Servicer to comply with
the obligations of the Master Servicer referred to in clauses
(i) and (ii) of Section 5.1 of the 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 Insurer or the Noteholders evidencing
Voting Rights aggregating not less than 51%.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
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 and to the provisions of the
TIA.
(g) The Indenture Trustee shall, upon two Business Days' prior written
notice to the Indenture Trustee, permit any representative of the 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.
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(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.
SECTION 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document reasonably believed
by it to be genuine and to have been signed or presented by the proper person.
The Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel 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 as defined in
the Sale and Servicing Agreement (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.
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(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 Insurer or
by the Noteholders evidencing not less than 25% of the Note Balance; 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 making such request, or, if
paid by the Indenture Trustee shall be reimbursed by the Person making such
request upon demand.
(h) The Indenture Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions hereunder of
the Master Servicer until such time as, and only to the extent that, the
Indenture Trustee may be required to act as Master Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of 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 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Trust Estate or the 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 6.5. Notice of Defaults. If an Event of Default, a Rapid Amortization
Event, 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 Insurer of such
event within 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 6.6. 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.
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SECTION 6.7. Compensation and Indemnity. Pursuant to Section 8.6(c)(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 8.6(c)(xii) 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 4.5(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 6.8. Replacement of Indenture Trustee. The Indenture Trustee may resign
at any time by so notifying the Trust and the Insurer by written notice. Upon
receiving such notice of resignation, the Trust shall promptly appoint a
successor Indenture Trustee (approved in writing by the 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
Trustee. The Trust may (with the prior written consent of the Insurer) and, at
the request of the Insurer shall, remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, shall have
entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation
of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now
or hereafter in effect, or another present or future federal
or state bankruptcy, insolvency or similar law is commenced
with respect to the Indenture Trustee and such case is not
dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or consents
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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
(v) 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 as the retiring Indenture Trustee), the
Trust shall promptly appoint a successor Indenture Trustee acceptable to the
Insurer. If the Trust fails to appoint such a successor Indenture Trustee, the
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 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
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee acceptable to the 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 Insurer.
Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section shall not become effective until acceptance of appointment by
the successor Indenture Trustee pursuant to Section 6.8.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Trust's and the Master Servicer's indemnity
obligations under Section 6.7 shall continue for the benefit of the retiring
Indenture Trustee and the Master Servicer shall pay any amounts owing to the
Indenture Trustee.
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SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Indenture Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the 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.
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 prior written consent of the 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 Insurer, such title to
the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-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 6.8 hereof.
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;
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(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
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.
(e) The Master Servicer shall be responsible for the fees of any
co-trustee or separate trustee appointed hereunder, and such fees shall not be a
responsibility of the Trust.
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 Insurer or, in the event of an
Insurer Default, the Sponsor and having (x) short-term, unsecured debt rated at
least A-1 by Moody's (or such lower rating as may be acceptable to Moody's and
the 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 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
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,
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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 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 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 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 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 6.7 hereof. 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).
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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 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 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. 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
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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 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
Operative Documents shall occur and be continuing, the Indenture Trustee, if the
Controlling Party has given is prior written consent (and if not the Controlling
Party, with the prior written consent of the Insurer), may proceed to protect
and enforce its rights and the rights of the Noteholders and the 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 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:
(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 Insurer, the Sponsor, or holders of the Notes in their defense of
legal actions by Mortgagors to recover affirmative claims if such cooperation
and assistance is not contrary to the interests of the Indenture Trustee as a
party to such legal actions and if the Indenture Trustee is satisfactorily
indemnified for all liability, costs and expenses arising therefrom.
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(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 7.1. 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 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 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 Insurer or the Trust in writing
upon their written request and at such other times as the Insurer or the Trust
may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.1 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 7.1 upon receipt of a new list so
furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Trust, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.3. Reports by Trust.
(a) The Trust shall:
(i) file with the Indenture Trustee, within 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
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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 7.3(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 7.4. Reports by Indenture Trustee. If required by TIA Section 313(a),
within 60 days after each December 31, beginning with December 31, 1999, the
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
stock exchange, if any, on which the Notes are listed. The Trust shall notify
the Indenture Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII.
Payments and Statements to Noteholders and Certificateholders;
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money. Except as otherwise expressly provided herein,
the Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture and the 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 Insurer, and shall,
at the direction of the 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.
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SECTION 8.2. Release of Trust Estate.
(a) Subject to Section 8.11 and the payment of its fees and expenses
pursuant to Section 6.7, the Indenture Trustee may, and when required by the
Trust and the provisions of this Indenture shall (in each case, with the prior
written consent of the Insurer), 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 6.7 and
all Reimbursement Amounts due to the Insurer pursuant to the Insurance Agreement
have been paid and confirmed in writing by the 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 8.2(b) only
upon receipt 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 11.1, and the prior written consent of the Insurer.
(c) The foregoing notwithstanding, the Indenture Trustee shall release
Mortgage Loans from the lien of this Indenture pursuant to the Sale and
Servicing Agreement.
SECTION 8.3. 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 Insurer, as their interests may
appear.
SECTION 8.4. The Payments Under the Policy.
(a) On 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
Insurer no later than 12:00 noon 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
Insurer on behalf of the Noteholders, the Indenture Trustee shall deposit such
payments in the Note Account and
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shall distribute such payments, or the proceeds thereof, in accordance with
Section 8.6(c) hereof to the Noteholders.
(d) The Indenture Trustee shall (i) receive payments made pursuant to
the Policy as attorney-in-fact for each Noteholder and (ii) disburse such
Insured Payment to the Noteholders as set forth in Section 8.6(c) hereof. The
Insurer shall be entitled to receive the Reimbursement Amount pursuant to
Section 8.6(c)(viii) hereof with respect to each Insured Payment made by the
Insurer. The Indenture Trustee hereby agrees on behalf of each Noteholder and
the Trust for the benefit of the Insurer that it recognizes that to the extent
the Insurer makes payments pursuant to the Policy, either directly or indirectly
(as by paying through the Indenture Trustee), to the Noteholders, the Insurer
will be subrogated to the Noteholders and will be entitled to receive such
Reimbursement Amount.
SECTION 8.5. Pre-Funding Account and Capitalized Interest Account.
(a) On the Closing Date, the Indenture Trustee will deposit, on behalf
of the Noteholders, the Pre-Funded Amount in the Pre-Funding Account and the
Capitalized Interest Amount in the Capitalized Interest Account from the
proceeds of the sale of the Notes.
(b) On any Subsequent Transfer Date, the Sponsor shall instruct the
Indenture Trustee in writing pursuant to the Subsequent Transfer Agreement to
withdraw from the Pre-Funding Account an amount equal to 100% of the aggregate
Principal 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 2.6 of the Sale
and Servicing Agreement.
(c) On each Payment Date during the Pre-Funding Period, the Indenture
Trustee shall transfer the Pre-Funding Earnings and the Capitalized Interest
Requirement, if any, for such Payment Date from the Pre-Funding Account or
Capitalized Interest Account, respectively, to the Note Account.
(d) On the Payment Date immediately following the end of the
Pre-Funding Period, the Indenture Trustee shall withdraw any amounts remaining
on deposit in the Pre-Funding Account and deposit such amounts in the Note
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 transfer on such Payment Date described in clause
(c) above) shall be paid to the Master Servicer, and the Capitalized Interest
Account shall be closed.
SECTION 8.6. Flow of Funds.
(a) The Indenture Trustee shall deposit to the Note Account, without
duplication, immediately upon receipt, (i) any Insured Payments, (ii) the
proceeds of any final liquidation of the assets of the Trust, (iii) the Monthly
Remittance Amount remitted by the Master Servicer or any Sub-Servicer, (iv) on
each Payment Date occurring in the Pre-Funding Period, the Pre-
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Funding Earnings and the Capitalized Interest Requirement for such Payment Date,
and (v) at the end of the Pre-Funding Period, any Pre-Funded Amount remaining in
the Pre-Funding Account in accordance with Section 8.5(d).
(b) [Reserved].
(c) On each Payment Date, the Indenture Trustee shall, from funds on
deposit in the Note Account (other than funds on deposit relating to any Insured
Payments), make the following allocations, disbursements and transfers 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. Insured Payments shall be applied to
payments specified under clauses (iii), (iv) and (vii) below and in the case of
the Final Scheduled Payment Date, clause (v) below:
(i) to the Indenture Trustee, the Indenture Trustee Fee then due
and to the Owner Trustee, the Owner Trustee Fee then due;
(ii) to the Insurer, the Premium Amount then due;
(iii) to the Noteholders, the Interest Distribution Amount;
(iv) the Note Interest Shortfall, if any;
(v) to the Noteholders, the Scheduled Principal Distribution
Amount for such Payment Date;
(vi) on the Payment Date following the end of the Pre-Funding
Period, to the Noteholders, as a distribution of principal,
any Pre-Funded Amount remaining in the Pre-Funding Account;
(vii) to the Noteholders, as a distribution of principal, the
Overcollateralization Deficit for such Payment Date;
(viii) to the Insurer, the Reimbursement Amount, if any, then due to
it;
(ix) to the Noteholders, the Accelerated Principal Payment with
respect to the Notes;
(x) to the Noteholders, the amount of any Net Funds Cap
Carry-Forward Amount then due;
(xi) to the Master Servicer, reimbursement for Servicing Advances
to the extent not previously reimbursed and reimbursement for
Servicing Advances which have been deemed Nonrecoverable
Advances;
(xii) to the Indenture Trustee and the Owner Trustee, for the
reimbursement of expenses of the Indenture Trustee and the
Owner Trustee not reimbursed pursuant
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to (c)(i) above which expenses were incurred in connection
with its duties and obligations hereunder; and
(xiii) to the Certificateholders, any Available Funds remaining on
deposit in the Note Account.
(d) On any Payment Date during the continuance of any Insurer Default
no Premium Amount shall be paid to the Insurer (unless the 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 Insurer as Premium Amounts shall be retained in the Note Account but
segregated from Available Funds. On any Payment Date wherein such Insurer
Default has been cured, the Premium Amounts shall be paid to the Insurer.
SECTION 8.7. Investment of Accounts.
(a) So long as no event described in Section 5.1(a) 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 earnings thereon) held by the Indenture Trustee shall be invested and
reinvested by the Indenture Trustee in the name of the Indenture Trustee for the
benefit of the Noteholders and the Insurer as directed in writing by the Master
Servicer, in one or more Eligible Investments bearing interest or sold at a
discount. During the continuance of an event described in Section 5.1(a) of the
Sale and Servicing Agreement and following any removal of the Master Servicer,
the 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 clause (i) of Section 8.8
upon the occurrence of either of the following events:
(i) the Master Servicer or the Insurer shall have failed to give
investment directions to the Indenture Trustee; or
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(ii) the Master Servicer or the Insurer shall have failed to give
investment directions to the Indenture Trustee by 5:00 PM
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
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 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 as realized.
SECTION 8.8. 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.
(c) FHLMC participation certificates and senior debt obligations.
(d) Federal Home Loan Banks' consolidated senior debt obligations.
(e) FNMA 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 Insurer provided:
1. The agreement is with a bank or insurance company
which has an unsecured, uninsured and unguaranteed obligation (or
claims-paying ability) rated Aa2 or better by Moody's and AA or better
by 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
2. Monies invested thereunder may be withdrawn
without any penalty, premium or charge upon not more than one day's
notice (provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
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4. The same guaranteed interest rate will be paid on
any future deposits made pursuant to such agreement, and
5. The Indenture Trustee and the 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 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 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 8.9. Reports by Indenture Trustee.
(a) On each Payment Date, to the extent that the related report
described in Section 4.3 of the Sale and Servicing Agreement has been received
by the Indenture Trustee, the Indenture Trustee shall provide to each
Noteholder, the Master Servicer, the Insurer, each Underwriter, the Sponsor, S&P
and Moody's a written report setting forth, among other things, the following
information:
(i) the total amount of the distribution with respect to the Notes
and the Certificates;
(ii) the amount of such distributions allocable to principal;
(iii) the amount of such distributions allocable to interest;
(iv) the amount of any Note Interest Shortfall in such
distribution;
(v) the amount of any Insured Payment included in the amounts
distributed on such Payment Date;
(vi) information furnished by the Sponsor pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated
thereunder to assist the Noteholders in computing their market
discount;
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(vii) the total of any Substitution Amounts and any Loan
Reacquisition Price amounts included in such distribution;
(viii) the amounts, if any, of any Realized Losses for the related
Remittance Period;
(ix) the Servicing Fee for the related Remittance Period;
(x) the Note Balance and the Pool Factor, each after giving effect
to such distribution;
(xi) the Pool Principal Balance as of the end of the preceding
Remittance Period;
(xii) the Note Interest Rate applicable to the distribution on the
following Payment Date;
(xiii) the number and principal balances of any Mortgage Loans
reacquired by the Sponsor pursuant to Sections 2.2(b), 2.5,
3.3(c) and 3.4 of the Sale and Servicing Agreement;
(xiv) the Overcollateralization Deficit;
(xv) the amount of any Net Funds Cap Carry-Forward Amount;
(xvi) the amount of any Overcollateralization Reduction Amount; and
(xvii) the current level of the Overcollateralization Amount.
(xviii) the total number, aggregate Principal Balance and the
percentage (based on the Pool Principal Balance) of all
Mortgage Loans that are (a) 30-59 days Delinquent, (b) 60-89
days Delinquent and (c) 90 or more days Delinquent;
(xix) the total number, aggregate Principal Balance and percentage
(based on the Pool Principal Balance) of all Mortgage Loans in
foreclosure proceedings (and whether any such Mortgage Loans
are also included in any of the statistics described in the
foregoing clause (xviii));
(xx) the total number, aggregate Principal Balance and percentage
(based on the Pool Principal Balance) of all Mortgage Loans
relating to Mortgagors in bankruptcy proceedings (and whether
any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (xviii)); and
(xxi) during the Pre-Funding Period, (1) the remaining Pre-Funded
Amount, (2) Capitalized Interest Amount, and (3) the aggregate
Principal Balance of Subsequent Mortgage Loans purchased by
the Trust during the related Remittance Period and
cumulatively.
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Items (i) through (iii) above shall, with respect to
each Note, be presented on the basis of a Note having a $1,000
denomination. In addition, by January 31 of each calendar year
following any year during which the Notes are outstanding, the
Indenture Trustee shall furnish a report to each holder of record at
any time during each calendar year as to the aggregate of amounts
reported pursuant to (i), (ii) and (iii) with respect to the Notes for
such calendar year. If the Notes are then in book-entry form, DTC will
supply such reports to the Noteholders as are in accordance with its
procedures.
SECTION 8.10. Additional Reports by Indenture Trustee.
(a) The Indenture Trustee shall report to the Sponsor, the Master
Servicer and the Insurer with respect to the amount then held in each Account
(including investment earnings accrued or scheduled to accrue) held by the
Indenture Trustee and the identity of the investments included therein, as the
Sponsor, the Master Servicer or the 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 Insurer, transmit
promptly to the Sponsor, the Master Servicer and the Insurer copies of the
Servicer Report in respect of the Mortgage Loans furnished to it by the Master
Servicer pursuant to Section 4.3 of the Sale and Servicing Agreement and shall
notify the Sponsor, the Master Servicer and the Insurer if any such receipts
have not been received by the Indenture Trustee.
(b) From time to time, at the request of the Insurer, the Indenture
Trustee shall report to the Insurer with respect to its actual knowledge,
without independent investigation, of any breach of any of the representations
or warranties relating to individual Mortgage Loans set forth in Section 3.3(a)
of the Sale and Servicing Agreement. On the date that is eighteen months after
the Closing Date, the Indenture Trustee shall provide the Insurer with a written
report of all of such inaccuracies to such date of which it has actual
knowledge, without independent investigation, and of the action taken by the
Sponsors under Section 3.4(b) of the Sale and Servicing Agreement with respect
thereto.
(c) The Sponsor and the Master Servicer, on behalf of Noteholders and
the Trust (the "Trust Parties") may authorize the Indenture Trustee to include
the loan level information with respect to the Mortgage Loans, excluding any
information relating to the fees or amounts due to the Insurer, contained in
reports provided to the Insurer or the Indenture Trustee by the Master Servicer
and, if so directed by an Authorized Officer of the Sponsor in writing to the
Indenture Trustee, the monthly report to the Noteholders 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 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. In the event
the Sponsor and the Master Servicer authorizes the release of the Information,
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 it's affiliates' respective agents,
representatives, directors, officers or employees (collectively, the "Designated
Parties"),
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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 Trustee's negligence or willful misconduct). The
Trust Parties waive their rights to assert any such claims against the
Designated Parties and fully and finally release the Designated Parties from any
and all such claims, demands, obligations, actions and liabilities (other than
in connection with such Designated Parties' negligence or willful misconduct).
The Indenture Trustee makes no representations or warranties, expressed or
implied, of any kind whatsoever with respect to the accuracy, adequacy,
timeliness, completeness, merchantability or fitness for any particular purpose
of any Information in any form or manner. The authorizations, covenants and
obligations of the Trust Parties under this section shall be irrevocable and
shall survive the termination of this Indenture.
SECTION 8.11. Opinion of Counsel. The Indenture Trustee shall receive at least
seven days' notice when requested by the Trust to take any action pursuant to
Section 8.2(a), accompanied by copies of any instruments involved, and the
Indenture Trustee shall also require as a condition to such action, an Opinion
of Counsel, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of the
Noteholders or the Insurer in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX.
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Noteholders but with the prior written
consent of the 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
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;
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(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 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;
(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 (2) or as evidenced in writing by the Rating
Agencies, 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, also without the consent of any of the Noteholders but with the
prior written consent of the 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) as evidenced in writing by the
Rating Agencies, delivered to the Indenture Trustee and the Insurer, reduce the
then-current rating on the Notes or (2) as evidenced by an Opinion of Counsel
addressed to the Insurer and the Indenture Trustee, materially and adversely
affect the interests of any Noteholder.
SECTION 9.2. 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
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Agencies, with the prior written consent of the Insurer and with the consent of
the Noteholders of at least 51% of the Note Balance, 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 Insurer
under the Operative Documents, no such supplemental indenture shall, without the
consent of the Noteholder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the Redemption Price
with respect thereto, change the provision of this Indenture
relating to the application of collections on, or the proceeds
of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where,
or the coin or currency in which, any Note or the interest
thereon is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of
funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption,
on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount 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;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Trust
to sell or liquidate the Trust Estate pursuant to Section 5.6;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain
additional provisions of this Indenture or the Operative
Documents cannot be modified or waived without the consent of
the Noteholder of each Note affected thereby;
(vii) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date
(including the calculation of any of the individual components
of such calculation); or
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(viii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any
part of the Trust Estate or, except as otherwise permitted or
contemplated herein or in any of the Operative Documents,
terminate the lien of this Indenture on any property at any
time subject hereto or deprive the 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 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, 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 Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or permitting
the additional trusts created by, any supplemental indenture permitted by this
Article IX or the modifications thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive, and subject to Sections 6.1
and 6.2, shall be fully protected in relying upon, an Opinion of Counsel (and,
if requested, an Officer's Certificate) stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the 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 9.5. Conformity With Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
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SECTION 9.6. 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 10.1. 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 Insurer and
(B) the earliest of (i) the transfer, under the conditions specified in Section
10.1(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 5.6 hereof) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and (iii) the Payment Date in January 2024; provided, however, that (x) no such
redemption shall occur unless all amounts due and owing to the 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 10.1(a), the
Indenture Trustee shall execute such documents and instruments of transfer
presented by the Sponsor, in each case without recourse, representation or
warranty, and take such other actions as the Sponsor may reasonably request to
effect the transfer of the Mortgage Loan to the Sponsor.
(b) The 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 Balance has been reduced to an amount less than or equal
to 10% of the Original Note Balance and all amounts due and owing to the 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 Balance and accrued and unpaid interest
thereon at the Note Interest Rate through the day preceding the final Payment
Date plus all related Reimbursement Amounts (such amount, 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.
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(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 Section 10.1(b), 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 five 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 10.2.
SECTION 10.2. 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 (1st) day of the month preceding the month of such final distribution) to
the Insurer and to the Master Servicer and by letter to Noteholders mailed not
earlier than the first (1st) day and not later than the tenth (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
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.
(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 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 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 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).
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SECTION 10.3. Form of Redemption Notice. Notice of redemption supplied to the
Indenture Trustee by the Master Servicer under Section 10.1(a) shall be given by
the Indenture Trustee by facsimile or by first-class mail, postage prepaid,
transmitted or mailed prior to the applicable Redemption Date to each Noteholder
of record, as of the close of business on the date which is not less than 5 days
prior to the applicable Redemption Date, at such Noteholder's address appearing
in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only
upon presentation and surrender of such 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 3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
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 10.4. Notes Payable on Redemption Date. The Notes to be redeemed shall,
following notice of redemption as required by Section 10.2, on the Redemption
Date become due and payable at the related Redemption Price and (unless the
Trust shall default in the payment of the related Redemption Price) no interest
shall accrue on such Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating such Redemption
Price.
ARTICLE XI.
Miscellaneous
SECTION 11.1. 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 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 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, except that, in the case of any such application or request as to which
the furnishing of such documents is
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specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that, 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
(ii) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
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 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
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foregoing shall not, however, be construed to affect the Indenture Trustee's
right to conclusively rely upon the truth and accuracy of any statement or
opinion contained in any such document as provided in Article VI.
SECTION 11.3. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the 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 6.1) conclusive in
favor of the Indenture Trustee and the Trust, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved 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 any 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 11.4. Notices, etc. to Indenture Trustee, Trust and Rating Agencies. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other 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-B and any notice
delivered by facsimile shall be addressed to the Corporate Trust Office,
telecopy number (949) 253-7577.
(b) The Trust by the Indenture Trustee or by any Noteholder addressed
to: Advanta Revolving Home Equity Loan Trust 1999-B, 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 the Trust. The Trust
shall promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee.
(c) The Insurer by the Trust or the Indenture Trustee as follows:
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To the Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department -MBS
Fax: (212) 363-1459
Confirmation: (212) 668-0340
In each case in which notice or other communication to the
Insurer refers to an Event of Servicing Termination, a claim on the Policy or
with respect to which failure on the part of the 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".
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 State Street, New York, New York 10041, Attention:
Asset Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of
the foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture provides for
notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Noteholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
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Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the 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.
SECTION 11.7. Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts with another provision hereof that is required to be
included in this indenture by any of the provisions of the Trust Indenture Act,
such required provision shall control.
The provisions of TIA Sections 310 through 317 that
impose duties on any person (including the provisions automatically deemed
included herein unless expressly excluded by this Indenture) are a part of and
govern this Indenture, whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements in this
Indenture and the 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 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 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 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)
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payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
nominally due, and no interest shall accrue for the period from and after any
such nominal date.
SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject to recording
in any appropriate public recording offices, such recording is to be effected by
the 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 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-B, the Trust, or any Certificateholder or join in any institution
against the Sponsor, Advanta Holding Trust, the Trust or any
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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 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
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
SECTION 11.19. Limitation of Liability. It is expressly understood and agreed by
the parties hereto that (a) this 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 11.20. Rights of the Insurer to Exercise Rights of Noteholders. By
accepting its Notes, each Noteholder agrees that unless an Insurer Default
exists, the 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:
(i) the right to direct the actions of the Indenture Trustee
during the continuance of a an Event of Default; and
(ii) the right to vote on proposed amendments to this Indenture.
In addition, each Noteholder agrees that, unless an Insurer
Default exists, any rights may be exercised by the Noteholders only with the
prior written consent of the Insurer.
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Notwithstanding any provision in this Indenture to the
contrary, so long as an Insurer Default has occurred and is continuing, the
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 Insurer.
SECTION 11.21. Consent and Direction of Insurer. Unless otherwise specified,
with respect to (i) each action which requires the consent of the Insurer, such
consent shall only be required if no Insurer Default shall have occurred and be
continuing and (ii) each action which the Insurer may take or direct another
party to take, such action or direction may only be taken or given if no Insurer
Default shall have occurred and be continuing.
SECTION 11.22. Rules by Indenture Trustee.
The Indenture Trustee may make reasonable rules for any
meeting of Noteholders.
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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 REVOLVING HOME EQUITY LOAN TRUST 1999-B,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee,
By:
-------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not in
its individual capacity but solely as
Indenture Trustee
By:
-------------------------------------------
Name:
Title:
<PAGE> 70
EXHIBIT A
[Form of Note]
REGISTERED $__________
No. A-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. __________
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Trust or
its agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
NOTES
Advanta Revolving Home Equity Loan Trust 1999-B, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Trust"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of _______________________
($__________), 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 8.6 of the Indenture; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
January 2024 Payment Date (the " Final Scheduled Payment Date"). Until the
principal of this Note is paid in full 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
preceding 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
A-1
<PAGE> 71
Date (in the case of the October 1999 Payment Date, from and including the
Closing Date) to but excluding the current Payment Date. Interest will be
computed on the basis of 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.
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
"Insurer"), pursuant to which the 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
A-2
<PAGE> 72
benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose.
A-3
<PAGE> 73
IN WITNESS WHEREOF, the Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: September 28, 1999 ADVANTA REVOLVING HOME EQUITY LOAN TRUST
1999-B
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: September 28, 1999 BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as
Indenture Trustee,
By:__________________________________________
Name:
Title:
A-4
<PAGE> 74
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Trust, designated as the Advanta Revolving Home Equity Loan Asset Backed Notes,
Series 1999-B, (herein called the "Notes"), all issued under an Indenture dated
as of September 1, 1999 (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Trust and Bankers Trust Company of
California, N.A., as 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 October 25, 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 10.1(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
A-5
<PAGE> 75
Record Date preceding such Payment Date by notice mailed prior to such Payment
Date and the amount then due and payable shall be payable only upon presentation
and surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in The City of New York.
The Trust shall pay interest on overdue installments of
interest at the Note Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture, in whole, but not in part, at the
option of the Master Servicer or any Master Servicer Affiliate, on any Payment
Date following the Payment Date on which the Note Balance has been reduced to
10% or less of the Original Note Balance.
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 Operative Documents.
Prior to the due presentment for registration of transfer of
this Note, the Trust, the Indenture Trustee and the Insurer and any agent of the
Trust, the Indenture Trustee or the Insurer may 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.
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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 of the Noteholders under the Indenture
at any time by the Trust with the prior written consent of the Insurer and of
the Noteholders representing a majority of the Note Balance at the time
Outstanding. Any such consent or waiver by the Noteholder (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 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 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.
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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: ________________ ___________________________________*
Signature Guaranteed:
Dated: ________________ ___________________________________
*NOTICE: 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 whatever.
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ANNEX 1 TO THE INDENTURE
Defined Terms
"Accelerated Principal Payments": With respect to any Payment
Date, a payment to be paid from Excess Cashflow received as a payment of
principal by the Noteholders, for the purpose of increasing the
Overcollateralization Amount to the Specified Overcollateralization Amount
applicable to such Payment Date, and equal to the lesser of (x) the amount of
such Excess Cashflow and (y) the Overcollateralization Deficiency Amount.
"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 Mortgaged Properties are located.
"Account": The Note Account, the Principal and Interest
Account, the Pre-Funding Account or the Capitalized Interest Account, each of
which shall be established at a Designated Depository Institution in accordance
with Section 8.3 of the Indenture or, with respect to the Principal and Interest
Account, Section 4.9 of the Sale and Servicing Agreement.
"Act": has the meaning specified in Section 11.3(a) of the
Indenture.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 2.6(b) of the Sale and Servicing
Agreement, the notice (which shall be given not later than two Business Days
prior to the related Transfer Date), of the Sponsor's designation of Subsequent
Mortgage Loans to be sold to the Trust, such notice shall include the aggregate
Principal Balance and the approximate weighted average Coupon Rate of such
Subsequent Mortgage Loans.
"Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws by the related Mortgagor conveyed to the Trust
pursuant to Section 2.1 of the Sale and Servicing Agreement, it being understood
that the Trust shall not be required to fund any Additional Balances.
"Advanta Bank Corp.": A Utah industrial loan corporation,
including any successors and assigns.
"Advanta Finance Corp.": A Nevada corporation, including any
successors and assigns.
"Advanta Holding Trust": Advanta Holding Trust 1999-B, a
Delaware business trust created pursuant to the Holding Trust Agreement.
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"Advanta National Bank": A national banking association
located in Delaware.
"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": As to any Mortgaged Property, the value
established by a drive-by inspection, a full appraisal or a statistical property
valuation of such Mortgaged Property.
"Assignee": With respect to any Person, any direct or indirect
assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee for the benefit of the Noteholders
and the Insurer.
"Assignor": With respect to any Person, any immediate or
mediate assignor, pledgor or other transferor to such Person of any right, title
or interest in or to any property of any kind whatsoever.
"Authorized Newspapers": Any of the following, The Wall Street
Journal, the New York Times, the Washington Post, the Los Angeles Times or such
other newspaper determined by the Indenture Trustee in its sole judgment.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Indenture,
and whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Available Funds": With respect to any Payment Date, the
amount then on deposit in the Note Account, after taking into account the
deposits thereto made pursuant to Sections 8.5 and 8.6(a) of the Indenture
(exclusive of the amount of any related Insured Payment then on deposit in the
Note Account), less the sum of the amounts described in clauses (i) and (ii) of
Section 8.6(c) of the Indenture on such Payment Date.
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"Billing Cycle": With respect to any Mortgage Loan and
Remittance Period, the billing period specified in the related Credit Line
Agreement and with respect to which amounts billed are received during such
Remittance Period.
"Book Entry Notes": Means 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 2.9 of the Indenture.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which any of the Insurer, the Master Servicer or the Sponsor is
closed or commercial banking institutions in the State of New York 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.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 8.3 of the Indenture and
maintained by the Indenture Trustee.
"Capitalized Interest Amount": The amount on deposit in the
Capitalized Interest Account, which shall initially be $1,529,038.92.
"Capitalized Interest Requirement": As to any Payment Date, an
amount equal to the product of (x) the sum of the Note Interest Rate and the
rate at which the Insurer premium is calculated and (y) the amount on deposit in
the Pre-Funding Account as of the preceding Payment Date (or as of the Closing
Date, in the case of the first Payment Date), less investment earnings on the
amounts on deposit in the Pre-Funding Account.
"Certificateholders": The holders of the Certificates issued
pursuant to the Trust Agreement.
"Certificates": The trust certificates evidencing the
beneficial ownership interests in Holding or the Trust, as applicable.
"Charged-Off Mortgage Loan": Any Mortgage Loan that has been
Delinquent for a period of 180 consecutive days (irrespective of any grace
periods). The Trust will be entitled to recoveries from all Charged-Off Mortgage
Loans and such recoveries shall be treated as interest.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"Clean-Up Call Date": The first date on which the Notes may be
redeemed pursuant to Section 10.1(b) of the Indenture.
"Clearing Agency Participant": Means 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.
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"Clearing Agency": Means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Closing Date": September 28, 1999.
"Code": The Internal Revenue Code of 1986, as amended, and any
successor statute.
"Combined Loan-to-Value Ratio": With respect to any Mortgage
Loan as of any date, the percentage equivalent of a fraction, the numerator of
which is the sum of (A) the Credit Limit and (B) as of the date of execution of
the related Credit Line Agreement (or as of any subsequent date, in connection
with an increase in the Credit Limit for such Mortgage Loan) the sum of the
outstanding principal balance of any mortgage loan or mortgage loans that are
senior in priority to the Mortgage Loan and which are secured by the same
Mortgaged Property and the denominator of which is the lesser of (C) the
Appraised Value of the related Mortgaged Property as set forth in the Mortgage
File on such date of execution or on such subsequent date, if any, or (D) in the
case of a Mortgaged Property purchased within one year of the date of execution
of the Credit Line Agreement, the purchase price thereof.
"Controlling Party": Means (i) the Insurer, so long as no
Insurer Default shall have occurred and be continuing, or (ii) the Indenture
Trustee, for so long as an Insurer Default shall have occurred and be
continuing; provided, however, that the Insurer's rights as Controlling Party
shall be immediately reinstated following the cure of any Insurer Default.
"Corporate Trust Office": The Indenture Trustee's office at 3
Park Plaza, 16th Floor, Irvine, California 92614.
"Coupon Rate": With respect to any Mortgage Loan and as of any
day, the per annum rate of interest, as specified in the related Credit Line
Agreement, applicable to the calculation of interest on the related Principal
Balance.
"Coupon Rate Cap": With respect to each Mortgage Loan, the
lesser of (i) the Lifetime Rate Cap specified in the Credit Line Agreement, if
any, or (ii) the Highest Lawful Rate.
"Credit Limit": As to any Mortgage Loan, the maximum principal
balance stated under the terms of the related Credit Line Agreement.
"Credit Limit Utilization Rate": As to any Mortgage Loan, at
any time during the Draw Period, the percentage equivalent of a fraction, the
numerator of which is the outstanding Principal Balance and the denominator of
which is the related Credit Limit.
"Credit Line Agreement": With respect to any Mortgage Loan,
the related home equity line of credit agreement or promissory note executed by
the related Mortgagor and any amendment or modification thereof.
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"Cut-Off Date": With respect to each (i) Initial Mortgage
Loan, the Initial Cut-Off Date, (ii) Qualified Replacement Mortgage Loan, the
related Replacement Cut-Off Date or (iii) Subsequent Mortgage Loan, the related
Subsequent Cut-Off Date.
"Cut-Off Date Pool Balance": The sum of (x) the aggregate
Cut-Off Date Principal Balance of the Initial Mortgage Loans ($184,200,196.99),
and (y) the initial Pre-Funded Amount ($105,273,487.30), which sum is
$289,473,684.21.
"Cut-Off Date Principal Balance": With respect to any Mortgage
Loan, (a) the unpaid principal balance thereof as of the related Cut-Off Date
and (b) for Mortgage Loans originated after the Cut-Off Date but prior to the
Closing Date, the unpaid principal balance of such Mortgage Loans as of its
origination date.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Minimum Monthly Payment
due on such Mortgage Loan.
"Deficiency Amount": As defined in the Policy.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Principal Balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the United
States Bankruptcy Code.
"Definitive Notes": Has the meaning specified in Section 2.9
of the Indenture.
"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, 7 Hanover Square,
New York, New York 10004 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to any
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 A or better by S&P or A2 or better by Moody's and in the
short-term rating 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 Insurer and
each of 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
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in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, and, in each case acting or designated by the Master
Servicer or the Indenture Trustee as the depository institution for the any
Account; provided, however, that any such institution or association shall have
combined capital, surplus and undivided profits of at least $100,000,000.
Notwithstanding the foregoing, the Principal and Interest Account may be held by
an institution otherwise meeting the preceding requirements except that the only
applicable rating requirement shall be that the unsecured and uncollateralized
debt obligations thereof shall be rated Baa3 or better by Moody's or BBB or
better by S&P and has a short-term rating of A-1 by S&P or better. If such
institution has trust powers the Account must be held in its trust capacity and
not in its commercial capacity.
"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date or such earlier day as shall be
agreed to by the Insurer and Indenture Trustee.
"Document Delivery Requirements": The Sponsor's obligations to
deliver certain legal documents, to prepare and record certain Assignments of
Mortgage or to deliver certain opinions relating to Assignments of Mortgage, in
each case with respect to the Mortgage Loans and upon certain conditions as set
forth in Section 2.1 of the Sale and Servicing Agreement.
"Draw": With respect to any Mortgage Loan, an additional
borrowing by the Mortgagor in accordance with the related Credit Line Agreement
subsequent to the related Cut-Off Date
"Draw Period": With respect to any Mortgage Loan, the period
of time specified in the related Credit Line Agreement whereby a Mortgagor may
make a Draw. The Draw Period may be extended pursuant to the terms of the Credit
Line Agreement (provided that any such extension shall be in accordance with the
provisions set forth herein with respect to Mortgage Loan modifications) and the
Sale and Servicing Agreement, and will be limited by the provisions set forth in
Section 2.2 of the Sale and Servicing Agreement.
"Eligible Investments": Those investments so designated
pursuant to Section 8.8 of the Indenture.
"ERISA": Means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default": As defined in Section 5.4 of the
Indenture.
"Event of Servicing Termination": As defined in Section 5.1 of
the Sale and Servicing Agreement.
"Excess Cashflow": With respect to any Payment Date, the
Available Funds with respect to such Payment Date which remain on deposit in the
Note Account after taking into account the distributions listed in clauses (i)
through (viii) of Section 8.6(c) of the Indenture on such Payment Date.
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"Exchange Act": Means the Securities Exchange Act of 1934, as
amended.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"Final Scheduled Payment Date": The Payment Date in January
2024.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Mortgaged Property.
"Fixed Allocation Percentage": With respect to the Mortgage
Loans, 95%.
"FNMA": The Federal National Mortgage Association, a federally
chartered and privately owned corporation existing under the Federal National
Mortgage Association Charter Act as amended, and any successor thereto.
"Foreclosure Profit": With respect to a Liquidated Mortgage
Loan, the amount, if any, by which (x) the aggregate of its Net Liquidation
Proceeds exceeds (y) the sum of (i) the related Principal Balance and (ii)
accrued and unpaid interest thereon at the applicable Coupon Rate from the date
interest was last paid through the date of receipt of the final Liquidation
Proceeds.
"Formula Rate": For any Interest Accrual Period, (x) with
respect to any Payment Date which occurs on or prior to the Clean-Up Call Date,
LIBOR plus 0.37% per annum and (y) for any Payment Date thereafter, LIBOR plus
0.74% per annum.
"Grant": Means mortgage, pledge, bargain, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the 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.
"Guaranties": The Letter Agreement, dated as of September 28,
1999, between the Underwriters, the Insurer and AMHC and the Letter Agreement,
dated as of September 28, 1999, among the Insurer, the Indenture Trustee and
AMHC.
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"Highest Lawful Rate": As defined in Section 7.12 of the Sale
and Servicing Agreement.
"Holding": Advanta Holding Trust 1999-B, a Delaware business
trust.
"Holding Trust Agreement": The trust agreement, dated as of
September 1, 1999, between the Sponsor and the Owner Trustee, relating to the
formation of Holding.
"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 September 28, 1999 among the Insurer and the Underwriters.
"Indenture": The Indenture dated as of September 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 this Indenture at 3 Park Plaza, 16th
Floor, Irvine, California 92614, not in its individual capacity but solely as
Indenture Trustee under the Indenture, and any successor thereunder.
"Indenture Trustee Fee": 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": 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
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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, trustee,
partner, director or Person performing similar functions.
"Independent Certificate": A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, prepared by an Independent appraiser or other expert appointed
pursuant to a Issuer Order, and such opinion or certificate shall state that the
signer has read this definition of "Independent" and that the signer is
Independent within the meaning thereof.
"Initial Cut-Off Date": The close of business on August 31,
1999.
"Initial Mortgage Loans": Shall mean the Mortgage Loans
conveyed to Holding by the Sponsor and to the Trust by Holding on the Closing
Date.
"Insurance Agreement": The agreement defined in the Preamble
of the Indenture.
"Insurance Agreement Event of Servicing Termination": An Event
of Servicing Termination as defined in the Insurance Agreement.
"Insured Amounts": With respect to the Notes and any Payment
Date, the Deficiency Amount for such Payment Date.
"Insured Payments": With respect to the Notes and any Payment
Date, the aggregate amount actually paid by the Insurer to the Indenture Trustee
in respect of (i) Insured Amounts for such Payment Date and (ii) Preference
Amounts for any given Business Day.
"Insurer": Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation, or any successor thereto, as issuer of the Policy.
"Insurer Default": Means the failure and the continuance of
such failure by the Insurer to make a payment required under the Policy in
accordance with the terms thereof.
"Interest Accrual Period": With respect to any Payment Date,
the period from and including the prior Payment Date (or, in the case of the
first Payment Date, from and including the Closing Date) to, but excluding, the
current Payment Date.
"Interest Collections": With respect to any Remittance Date,
the sum of all payments by or on behalf of Mortgagors and any other amounts
constituting interest collected by the Master Servicer under the Mortgage Loans
during the related Remittance Period, including the portion of Net Liquidation
Proceeds allocated to interest and all recoveries with respect to Charged-Off
Mortgage Loans. The terms of the related Credit Line Agreement shall determine
the portion of each payment that constitutes interest.
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"Interest Determination Date": With respect to any Interest
Accrual Period, the second LIBOR Business Day preceding the first day of such
Interest Accrual Period.
"Interest Distribution Amount": With respect to any Payment
Date, the product of (x) the Note Interest Rate times the actual number of days
in the Interest Accrual Period divided by 360 days and (y) the Note Balance
immediately prior to such Payment Date.
"Interest Remittance Amount": With respect to any Remittance
Date, the sum, without duplication, of (i) Interest Collections for such
Remittance Period less the Servicing Fee for the related Remittance Period,
except that with respect to Prepaid Installments, interest shall be remitted in
the related Remittance Period, (ii) without duplication, the portion of the Loan
Reacquisition Price and the Substitution Amount relating to interest on the
Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate to interest) and (iv) any Pre-Funding
Earnings.
"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.
"Junior Mortgage Loan": A Mortgage Loan which constitutes a
junior priority mortgage lien with respect to the related Mortgaged Property.
"Late Payment Rate": As defined in the Insurance Agreement.
"LIBOR": As defined in Section 2.6(b) of the Indenture.
"LIBOR Business Day": Any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the State of New York or
in the city of London, England are required or authorized by law to be closed.
"Lifetime Rate Cap": With respect to each Mortgage Loan for
which the related Credit Line Agreement provides for a lifetime rate cap, the
maximum Coupon Rate permitted at any time under the terms of the related Credit
Line Agreement.
"Liquidated Mortgage Loan": A defaulted Mortgage Loan which
(i) the Master Servicer, in its reasonable good faith business judgment, has
determined that it has recovered all amounts it expects to recover, or (ii)
becomes a Charged-Off Mortgage Loan, whichever is the first to occur. A Mortgage
Loan which is reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or
3.4 of the Sale and Servicing Agreement is not a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, include, without limitation, legal fees
and expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.10 and 4.13 of the Sale and
Servicing Agreement with respect to the related Mortgage Loan.
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"Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan, any amounts (including the proceeds of any Mortgage Insurance
Policy but excluding any amounts drawn on the Policy) recovered by the Master
Servicer, whether through trustee's sale, foreclosure sale or otherwise.
"Liquidation Report": As defined in Section 4.13(b) of the
Sale and Servicing Agreement.
"Loan Reacquisition Price": With respect to any Mortgage Loan
reacquired from the Trust on a Remittance Date pursuant to Section 2.2(b),
3.3(c) or 3.4 of the Sale and Servicing Agreement, an amount, without
duplication, equal to (i) the outstanding Principal Balance of such Mortgage
Loan as of the date of reacquisition, (ii) one month's interest on (if not
already deposited in the Principal and Interest Account) the outstanding
Principal Balance thereof as of the beginning of the preceding Remittance Period
computed at the Coupon Rate, (iii) all Servicing Advances theretofore made with
respect to such Mortgage Loan and not subsequently recovered from the related
Mortgage Loan, including Nonrecoverable Advances and (iv) any Reimbursement
Amount relating to such Mortgage Loan.
"Losses": Any and all out-of-pocket losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
directly incurred by any person specified in this Agreement, resulting from
transactions entered into under this Agreement (other than liability for taxes).
Losses must be accounted for and presented for reimbursement and documented in
reasonable detail and within a reasonable time.
"Managed Amortization Period": The period commencing on the
Closing Date ending on the earlier to occur of (x) the end of the Remittance
Period related to the October 2002 Payment Date and (y) the end of the
Remittance Period related to the Payment Date which immediately precedes the
occurrence of a Rapid Amortization Event.
"Margin": With respect to each Mortgage Loan, the fixed
percentage amount set forth in the related Credit Line Agreement which amount is
added to the index specified in the related Credit Line Agreement to determine
the Coupon Rate for such Mortgage Loan, subject to any maximum or minimum.
"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, (ii) which is
qualified to service residential mortgage loans, and (iii) is subservicing the
Mortgage Loans.
"Master Servicer's Trust Receipt": The Master Servicer's trust
receipt in the form set forth as Exhibit F to the Sale and Servicing Agreement.
"Maximum Principal Payment": With respect to any Payment Date,
the Fixed Allocation Percentage of the Principal Collections relating to such
Payment Date.
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"Minimum Monthly Payment": With respect to any Mortgage Loan
and any month, the minimum amount required to be paid by the related Mortgagor
in accordance with the Credit Line Agreement.
"Monthly Remittance Amount": With respect to each Remittance
Date, the sum of the Principal Remittance Amount and the Interest Remittance
Amount.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien in real property securing each Credit Line
Agreement.
"Mortgage Files": For each Mortgage Loan:
(a) The original Credit Line Agreement, or a certified copy
thereof, bearing all intervening endorsements, endorsed either (i) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse" or (ii) "Pay
to the order of Bankers Trust Company of California, N.A., as custodian or
trustee under the applicable custody or trust agreement, without recourse,
Advanta as Master Servicer," or (iii) "Pay to the order of Bankers Trust Company
of California, N.A., as custodian or trustee" by [Seller, signature, name,
title] and signed in the name of the previous owner by an authorized 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]", (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 Credit Line Agreement should be accompanied by any rider made in
connection with the origination of the related Mortgage Loan;
(b) The original of any guaranty executed in connection with
the Credit Line Agreement;
(c) The original Mortgage with evidence of recording thereon
or copies certified by the related recording office or if the original Mortgage
has not yet been returned from the recording office, a certified copy of the
Mortgage;
(d) The originals of any assumption, modification,
consolidation or extension agreements;
(e) The original Assignment of Mortgage of each Mortgage Loan
to (1) "Bankers Trust Company of California, N.A., as custodian or trustee," (2)
"Bankers Trust Company of California, N.A. as trustee or custodian on behalf of
the Advanta Conduit", (3) "Bankers Trust Company of California, N.A., as
trustee" or (4) in blank. In the event that the Mortgage Loan was acquired by
the previous owner in a merger, the Assignment of Mortgage must be the
"(previous owner), successor by merger to (names of predecessor)"; and in the
event
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that the Mortgage Loan was acquired or originated by the previous owner while
doing business under another name, the Assignment of Mortgage must be by the
"(previous owner), formerly known as (previous name)"; and
(f) The originals of all intervening Assignments of Mortgage,
if applicable, showing a complete chain of assignment from origination to the
related Seller, including warehousing assignments, with evidence of recording
thereon (or, if an original intervening assignment has not been returned from
the recording office, a certified copy thereof).
"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 Insurance Proceeds": Proceeds paid by any insurer
pursuant to any Mortgage Insurance Policy covering a Mortgage Loan, or amounts
required to be paid by the Master Servicer pursuant to the last sentence of the
first paragraph of Section 4.11(b) of the Sale and Servicing Agreement, or the
penultimate sentence of Section 4.11(c) of the Sale and Servicing Agreement, net
of any component thereof (i) covering any Liquidation Expenses incurred by or on
behalf of the Master Servicer in connection with obtaining such proceeds, (ii)
that is applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures, or (iv) required to be paid to any holder of a mortgage
senior to such Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trust pursuant to Section 2.1 or Section 2.6 of the Sale and Servicing
Agreement, together with any Qualified Replacement Mortgage Loans substituted
therefor in accordance with the Sale and Servicing Agreement, and Subsequent
Mortgage Loans as from time to time are held as a part of the Trust Estate. The
term "Mortgage Loan" includes any Mortgage Loan which is Delinquent, which
relates to a foreclosure or which relates to a Mortgaged Property that is REO
Property prior to such Mortgaged Property's disposition by the Trust and any
Mortgage Loan the related Mortgagor of which is in bankruptcy. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Sponsor, in fact
was not transferred and assigned to the Trust for any reason whatsoever shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
"Mortgaged Property": The underlying property securing a
Mortgage Loan.
"Mortgagor": The obligor under a Credit Line Agreement.
"Net Funds Cap Carry-Forward Amount": With respect to any
Payment Date, the sum of (i) the excess of the amount of interest accrued during
the related Interest Accrual Period based on the Formula Rate, over the interest
accrued during the related Interest Accrual Period based on the Net Funds Cap
Rate, (ii) any such amounts described in clause (i) for prior Interest Accrual
Periods and not previously reimbursed, and (iii) interest on the amounts
described in clauses (i) and (ii) at the then-applicable Formula Rate.
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"Net Funds Cap Rate": The per annum rate equal to (x)(A) the
product of (i) twelve and (ii) the interest paid on the Mortgage Loans at the
applicable coupon rate during the prior Remittance Period (net of the related
Servicing Fee, the Indenture Trustee Fee, the Owner Trustee Fee and the Premium
Amount) divided by (B) the Pool Principal Balance as of the opening of such
prior Remittance Period, less (y) 0.50%.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses
other than any such expenses reflected in the calculation of Mortgage Insurance
Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances
incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and
unpaid Servicing Fees with respect to such Mortgage Loan through the date of
liquidation. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Mortgage Loan be less than zero.
"Net Principal Collections": With respect to any Remittance
Period, the excess of (x) Principal Collections over (y) the aggregate amount of
all Additional Balances arising during such Remittance Period; provided,
however, that, in no event will Net Principal Collections be less than zero with
respect to any Payment Date.
"Nonrecoverable Advance": With respect to any Mortgage Loan,
any Servicing Advance previously made and not reimbursed pursuant to Section
4.10 of the Sale and Servicing Agreement or any Servicing Advance proposed to be
made in respect of a Mortgage Loan, either of which, in the good faith business
judgment of the Master Servicer would not be ultimately recoverable.
"Note": Any note executed and authenticated by the Indenture
Trustee substantially in the form set forth in Exhibit A to the Indenture.
"Note Account": The Note Account established in accordance
with Section 8.3 of the Indenture and maintained by the Indenture Trustee.
"Note Balance": As of any date of determination, the Original
Note Balance, less any amounts actually distributed as principal to the
Noteholders on all prior Payment Dates.
"Note Interest Rate": As to any Payment Date, the lesser of
(i) the Formula Rate and (ii) the Net Funds Cap Rate.
"Note Interest Shortfall": As of any Payment Date, the sum of
(i) the amount by which the Interest Distribution Amount for such Payment Date
exceeds the amount actually distributed to the Noteholders on such Payment Date
and (ii) any unreimbursed Note Interest Shortfalls from prior Payment Dates
together with interest accrued thereon at the Note Interest Rate.
"Note Owner": Means, 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 Notes.
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"Note Paying Agent": Means 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 Register": The register maintained by the Indenture
Trustee in accordance with Section 2.3 of the Indenture, in which the names of
the Noteholders are set forth.
"Note Registrar": The Indenture Trustee, acting in its
capacity as Note Registrar appointed pursuant to Section 2.3 of the Indenture,
or any duly appointed and eligible successor thereto.
"Noteholder": A Person in whose name a Note is registered in
the Note Register.
"Officer's Certificate": A certificate signed by any
Authorized Officer of the Trust, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture and TIA Section 314.
"Operative Documents": Collectively, the Indenture, the
Guaranties, the Trust Agreement, the Holding Trust Agreement, the Sale and
Servicing Agreement, the Subsequent Transfer Agreements, the Policy, the Notes,
the Purchase Agreement, the Indemnification Agreement and the Insurance
Agreement.
"Opinion of Counsel": Means one or more opinions of counsel
who may, except as otherwise expressly provided in this Indenture, be employees
of or counsel to the Trust or Sponsor and which shall comply with any applicable
requirements of Section 11.1 of the Indenture.
"Original Note Balance": $275,000,000.
"Original Principal Amount": With respect to any particular
Note, an amount equal to the product of (i) the Percentage Interest of such Note
and (ii) the Original Note Balance.
"Originators": Advanta National Bank, and Advanta Finance
Corp.
"Outstanding": With respect to all Notes, as of any date of
determination, all such 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;
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(iii) Notes in exchange for or in lieu of which other
Notes have been executed and delivered pursuant to this Indenture,
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser; and
(iv) Notes alleged to have been destroyed, lost or
stolen for which replacement Notes have been issued as provided for in
Section 2.4 of the Indenture;
provided, however, that to the extent of any payments made under the Policy by
the Insurer and not reimbursed, such Notes shall be deemed to be "Outstanding"
for all purposes, not defeased or otherwise satisfied and not be considered paid
by the Trust.
"Outstanding Amount": The aggregate principal amount of all
Notes that are Outstanding at the date of determination.
"Overcollateralization Amount": As of any Payment Date, the
excess, if any, of (x) the Pool Principal Balance at the end of the related
Remittance Period over (y) the Note Balance (after taking into account the
payment of principal to the Noteholders on such Payment Date).
"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 Balance, after taking
into account the payment of principal to the Noteholders on such Payment Date,
exceeds (ii) the Pool Principal Balance at the end of the related Remittance
Period.
"Overcollateralization Reduction Amount": With respect to any
Payment Date, the lesser of (i) the excess of (x) the Overcollateralization
Amount, after taking into account all payments of principal (without taking into
account any Overcollateralization Reduction Amount) that were applied as a
reduction in the Note Balance on such Payment Date, over (y) the Specified
Overcollateralization Amount for such Payment Date and (ii) the Scheduled
Principal Distribution Amount (without taking into account any
Overcollateralization Reduction Amount).
"Owner Trustee": Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement or the
Holding Trust Agreement (as applicable), its successors in interest or any
successor Owner Trustee under the Trust Agreement or the Holding Trust Agreement
(as applicable).
"Owner Trustee 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
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month following the Closing Date or, if such day is not a Business Day, then on
the next succeeding Business Day.
"Percentage Interest": As to any Note and as of any date of
determination, that amount, expressed as a percentage, equal to a fraction, the
numerator of which is the then-outstanding principal balance of such Note and
the denominator of which is the Note Balance; and as to any Certificate, the
percentage interest set forth on such Certificate.
"Person": Any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy": The certificate guaranty insurance policy (No.
AB0299BE) with respect to the Notes, dated September 28, 1999, issued by the
Insurer to the Indenture Trustee for the benefit of the Noteholders.
"Pool Certification": As defined in Exhibit E attached hereto.
"Pool Factor": A seven-digit decimal which the Indenture
Trustee shall compute monthly expressing the Note 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 Balance. On the Closing Date, the Pool
Factor will be 1.0000000.
"Pool Principal Balance": With respect to any date of
determination, the aggregate of the Principal Balances of the Mortgage Loans as
of such date plus any Pre-Funded Amount.
"Predecessor Note": means, with respect to any particular
Note, every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.4 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.
"Pre-Funded Amount": The amount on deposit in the Pre-Funding
Account, which shall initially be $105,273,487.30.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.
"Pre-Funding Earnings": With respect to each Payment Date
during the Pre-Funding Period, the investment earnings on the Pre-Funding
Account during the related Interest Accrual Period.
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"Pre-Funding Period": The period commencing on the Closing
Date and ending on the earliest to occur of (i) the date on which the Pre-Funded
Amount (exclusive of any investment earnings) is less than $100,000, (ii) the
date on which any Event of Default or Rapid Amortization Event occurs, and (iii)
January 17, 2000.
"Preliminary Prospectus Supplement": The preliminary version
of the Prospectus Supplement dated September 15, 1999
"Premium Amount": As defined in the Policy.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment.
"Prepayment": Any payment of principal of a Mortgage Loan
which is received by the Master Servicer in advance of the scheduled due date
for the payment of such principal (other than the principal portion of any
Prepaid Installment). The proceeds of any Mortgage Insurance Policy or credit
life insurance which are to be applied as a payment of principal on the related
Mortgage Loan in advance of the scheduled payment shall be deemed to be
Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior
to the liquidation thereof, including, without limitation, expenditures for real
estate property taxes, hazard insurance premiums, property restoration or
preservation.
"Prime": The prime rate on which the interest charged on a
Mortgage Loan from time to time is based, as set forth in the related Credit
Line Agreement.
"Principal and Interest Account": Collectively, each principal
and interest account created by the Master Servicer or any Sub-Servicer pursuant
to Section 4.9(a) of the Sale and Servicing Agreement, or pursuant to any
Sub-Servicing Agreement.
"Principal Balance": As to any Mortgage Loan, other than a
Liquidated Mortgage Loan, and as of any date, the related Cut-Off Date Principal
Balance, plus (i) any Additional Balance, minus (ii) all collections credited as
principal against the Principal Balance of any Mortgage Loan prior to such day
in accordance with the Credit Line Agreement. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance of 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.
"Principal Collections": With respect to any Payment Date and
any Mortgage Loan, the sum of all payments by or on behalf of Mortgagors and any
other amounts constituting principal (including, but not limited to, any portion
of Mortgage Insurance Proceeds or Net Liquidation Proceeds allocable to
principal, but excluding Foreclosure Profits and any recoveries in respect of
Charged-Off Mortgage Loans) collected by the Master Servicer during the related
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Remittance Period. The terms of the related Credit Line Agreement shall
determine the portion of each payment in respect of a Mortgage Loan that
constitutes principal and the priority of payment.
"Principal Remittance Amount": With respect to any Remittance
Date, the sum, without duplication, of (i) Principal Collections for such
Remittance Period, except that with respect to Prepaid Installments, principal
shall be remitted in the scheduled Remittance Period, (ii) without duplication,
the portion of the Loan Reacquisition Price and the Substitution Amount relating
to principal on the Mortgage Loans reacquired, (iii) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
principal) and (iv) the amount, if any, of the Pre-Funded Amount deposited in
the Note Account.
"Proceeding": Means any suit in equity, action at law or other
judicial or administrative proceeding.
"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 September 21, 1999, describing the Notes issued by the Trust.
"Purchase Agreement": Means the Purchase Agreement dated as of
September 1, 1999 between the Originators and the Sponsor with respect to the
Mortgage Loans.
"Qualified Replacement Mortgage Loan": As defined in Section
2.3 of the Sale and Servicing Agreement.
"Rapid Amortization Period": The period which follows the
earlier to occur of (x) the end of the Managed Amortization Period and (y) the
occurrence of a Rapid Amortization Event.
"Rating Agency": Means 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 Insurer,
notice of which designation shall be given by the Insurer to the Indenture
Trustee, and the Indenture Trustee shall give such notice to each of the Master
Servicer and the Sponsor. References herein to the highest short term unsecured
rating category of a Rating Agency shall mean 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.
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"Realized Loss": As to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance as of the date of liquidation is
in excess of Net Liquidation Proceeds allocable to the Principal Balance
thereof.
"Record Date": With respect to each Payment Date, so long as
the Notes are Book Entry Notes, the day preceding such Payment Date, and
otherwise the last Business Day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs.
"Redemption Date": Means, in the case of a redemption of the
Notes pursuant to Section 10.1(a) of the Indenture, the Payment Date specified
by the Master Servicer or the Trust pursuant to Section 10.2(a) of the
Indenture.
"Redemption Price": As defined in Section 10.1(b) of the
Indenture.
"Reference Banks": Bankers Trust Company, Barclay's Bank PLC,
The Bank of Tokyo and National Westminster Bank PLC; or such banks as are
selected by the Indenture Trustee after consultation with the Master Servicer
which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Sponsors
or any affiliate thereof, (iii) whose quotations appear on the Telerate Screen
Page 3750 on the relevant Interest Determination Date and (iv) which have been
designated as such by the Indenture Trustee.
"Registration Statement": The Registration Statement (No.
333-75295) filed by the Sponsor with the Securities and Exchange Commission,
including all amendments thereto and including the Prospectus, the Preliminary
Prospectus Supplement and the Prospectus Supplement relating to the Notes.
"Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all payments made pursuant to the Policy by the Insurer and in each case
not previously repaid to the Insurer pursuant to Section 8.6(c)(viii) of the
Indenture plus (ii) interest accrued on each such payment made pursuant to the
Policy calculated at the Late Payment Rate from the date the Insurer made the
payment up to but excluding the date repaid and (y)(i) any other amounts then
due and owing to the Insurer under the Insurance Agreement plus (ii) interest on
such amounts at the Late Payment Rate. The Insurer shall notify the Indenture
Trustee and the Sponsor of the amount of any Reimbursement Amount at least two
Business Days prior to the Payment Date.
"Relief Act Shortfall": With respect to any Remittance Period
and any Mortgage Loan for which there has been a reduction in the amount of
interest collectible thereon as a result of the application of the Civil Relief
Act, the amount by which (i) interest collectible on such Mortgage Loan is less
than (ii) one month's interest on the Principal Balance of such Mortgage Loan at
the Coupon Rate.
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"Remittance Date": With respect to any Payment Date, the date
on which the Master Servicer is required to remit monies on deposit in the
Principal and Interest Account to the Indenture Trustee for deposit into the
Note Account, which shall be the 18th day of each month or, if such day is not a
Business Day, the next succeeding Business Day, commencing in the month
following the Closing Date.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage Loan, the first day of the calendar month in which such
Qualified Replacement Mortgage Loan is conveyed to the Trust.
"Representation Letter": Shall mean letters to, or agreements
with, the Depository to effectuate a book entry system with respect to the Notes
registered in the Register under the nominee name of the Depository.
"Reserve Interest Rate": Means 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 lending banks in
the London interbank market or, in the event that the Indenture 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.
"S&P": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Sale and Servicing Agreement": Means the Sale and Servicing
Agreement, including the Exhibits thereto, dated as of September 1, 1999, among
Holding, the Trust, the Sponsor, the Master Servicer and the Indenture Trustee,
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.
"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 hereof, which may be amended from time to time.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans
attached hereto as Schedule I, as the same may be supplemented or amended from
time to time in connection with substitutions of Qualified Replacement Mortgage
Loans and the addition of Subsequent
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Mortgage Loans. The information contained on the Schedule of Mortgage Loans
shall be delivered to the Indenture Trustee in an electronic medium.
"Scheduled Principal Distribution Amount": On any Payment Date
(A) during the Managed Amortization Period, the excess of (x) the lesser of (i)
the Maximum Principal Payment and (ii) the Net Principal Collections over (y)
the Overcollateralization Reduction Amount, if any, with respect to such Payment
Date and (B) during the Rapid Amortization Period, the excess of (x) the Maximum
Principal Payment over (y) the Overcollateralization Reduction Amount, if any,
with respect to such Payment Date. In no event will the Scheduled Principal
Distribution Amount on any Payment Date be (x) less than zero or (y) greater
than the then outstanding Note Balance.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Junior Mortgage Loan, the
mortgage loan(s) relating to the corresponding Mortgaged Property having a
senior priority lien.
"Servicing Advance": As defined in Section 4.10 and Section
4.13 of the Sale and Servicing Agreement.
"Servicing Fee": With respect to any Remittance Period, the
product of (i) Servicing Fee Rate and (ii) the aggregate Principal Balance of
the Mortgage Loans as of the opening of business on the first day of the related
Remittance Period.
"Servicing Fee Rate": 0.75% per annum.
"Servicing Officer": Any officer of the Master Servicer or a
Sub-Servicer.
"Specified Overcollateralization Amount": The amount specified
in the Insurance Agreement.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada
corporation.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loan, the opening of business on the first day of the calendar month in
which such Subsequent Mortgage Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans transferred
and assigned to the Trust pursuant to Section 2.6 of the Sale and Servicing
Agreement, which shall be listed on the Schedule of Mortgage Loans attached to
the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement executed by the Owner Trustee and the Sponsor substantially in the
form of Exhibit H to the Sale and Servicing Agreement, by which Subsequent
Mortgage Loans are transferred and assigned to the Trust.
A-22
<PAGE> 100
"Subsequent Transfer Date": Means, with respect to any
Subsequent Mortgage Loans transferred to the Trust, the date set forth in the
related Subsequent Transfer Agreement.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies any requirements set
forth in Section 4.5 of the Sale and Servicing Agreement in respect of the
qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract reasonably
acceptable to the Insurer between the Master Servicer and any Sub-Servicer
(other than an affiliated Sub-Servicer) relating to the servicing and/or
administration of certain Mortgage Loans as permitted by Section 4.5 of the Sale
and Servicing 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 applicable Replacement Cut-Off
Date is less than the related Principal Balance of the Mortgage Loan being
replaced, an amount equal to such difference together with accrued and unpaid
interest on such amount calculated at the Coupon Rate, net of the Servicing Fee,
of the Mortgage Loan being replaced.
"Telerate Screen Page 3750": The display designated as page
3750 on the Telerate Service (or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks).
"Termination Date": Means the latest of (i) the termination of
the Policy and the return of the Policy to the Insurer for cancellation, (ii)
the date on which the Insurer shall have received indefeasible payment of all
amounts owed to it under the Insurance Agreement and (iii) the date on which the
Indenture Trustee and the Noteholders shall have received payment of all amounts
owed to them under the Indenture.
"Transfer Date": With respect to (i) a Qualified Replacement
Mortgage Loan, the date that such Mortgage Loan is delivered to the Indenture
Trustee on behalf of the Trust, (ii) a Mortgage Loan that is reassigned to the
Sponsor pursuant to Section 2.5 of the Sale and Servicing Agreement, the date
that is specified therein, and (iii) a Subsequent Mortgage Loan, the date
specified in the related Subsequent Transfer Agreement.
"Transfer Notice Date": As defined in Section 2.5 of the Sale
and Servicing Agreement.
"Trust": Advanta Revolving Home Equity Loan Trust 1999-B
created by the Trust Agreement.
"Trust Agreement": The Trust Agreement dated as of September
1, 1999 among the Owner Trustee, the Sponsor and Holding relating to the
formation of the Trust.
"Trust Estate": As defined in the Granting Clause of the
Indenture.
A-23
<PAGE> 101
"Trust Indenture Act" or "TIA": Means the Trust Indenture Act
of 1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"UCC": Unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"Underwriters": Morgan Stanley & Co. Incorporated and Banc of
America Securities LLC.
"Unqualified Mortgage Loan": A Mortgage Loan which is subject
to repurchase or substitution pursuant to Section 2.1(b) or Section 3.4(b) of
the Sale and Servicing Agreement.
"Warehouse Trust": Any trust established by the Sponsor or any
affiliate to temporarily finance the mortgage loans.
A-24
<PAGE> 1
EXHIBIT 4.2
EXECUTION COPY
TRUST AGREEMENT
between
ADVANTA CONDUIT RECEIVABLES, INC.
Sponsor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of September 1, 1999
<PAGE> 2
<TABLE>
<CAPTION>
Table of Contents
Page
----
ARTICLE I.
Definitions
<S> <C> <C>
SECTION 1.1 Capitalized Terms......................................................................1
Section 1.2 Other Definitional Provisions..........................................................4
Section 1.3 Action by or Consent of Noteholders and Certificateholders.............................4
ARTICLE II.
Organization
Section 2.1 Names..................................................................................5
Section 2.2 Office.................................................................................5
Section 2.3 Purposes and Powers....................................................................5
Section 2.4 Appointment of Owner Trustee...........................................................5
Section 2.5 Initial Capital Contribution of Trust Estate...........................................5
Section 2.6 Declaration of Trust...................................................................6
Section 2.7 Liability..............................................................................6
Section 2.8 Title to Trust Property................................................................6
Section 2.9 Situs of Trust.........................................................................6
Section 2.10 Representations and Warranties of the Sponsor..........................................7
Section 2.11 Covenants of the Sponsor...............................................................8
Section 2.12 Covenants of the Certificateholders....................................................8
Section 2.13 Investment Company.....................................................................9
ARTICLE III.
Certificates and Transfer of Interests
Section 3.1 Initial Ownership......................................................................9
Section 3.2 The Certificates......................................................................10
Section 3.3 Authentication of Certificates........................................................10
Section 3.4 Registration of Transfer and Exchange of Certificates.................................10
Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.....................................10
Section 3.6 Persons Deemed Certificateholders.....................................................11
Section 3.7 Access to List of Certificateholders' Names and Addresses.............................11
Section 3.8 Maintenance of Office or Agency.......................................................11
Section 3.9 ERISA.................................................................................11
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>
ARTICLE IV.
Voting Rights and Other Actions
<S> <C> <C>
Section 4.1 Prior Notice to Holders with Respect to Certain Matters...............................13
Section 4.2 Action by Certificateholders with Respect to Certain Matters..........................14
Section 4.3 Action by Certificateholders with Respect to Bankruptcy...............................15
Section 4.4 Restrictions on Certificateholders' Power.............................................15
Section 4.5 Majority Control......................................................................16
Section 4.6 Rights of Insurer.....................................................................16
Section 4.7 Separateness..........................................................................16
ARTICLE V.
Certain Duties
Section 5.1 Accounting and Records to the Noteholders, Certificateholders, the Internal
Revenue Service and Others............................................................17
ARTICLE VI.
Authority and Duties of Owner Trustee
Section 6.1 General Authority.....................................................................17
Section 6.2 General Duties........................................................................18
Section 6.3 Action upon Instruction...............................................................18
Section 6.4 No Duties Except as Specified in this Agreement or in Instructions....................19
Section 6.5 No Action Except under Specified Documents or Instructions............................19
Section 6.6 Restrictions..........................................................................19
ARTICLE VII.
Concerning the Owner Trustee
Section 7.1 Acceptance of Trust and Duties........................................................19
Section 7.2 Furnishing of Documents...............................................................21
Section 7.3 Representations and Warranties........................................................21
Section 7.4 Reliance; Advice of Counsel...........................................................21
Section 7.5 Not Acting in Individual Capacity.....................................................22
Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans...........................22
Section 7.7 Owner Trustee May Own Certificates and Notes..........................................22
Section 7.8 Payments from Owner Trust Estate......................................................22
Section 7.9 Doing Business in Other Jurisdictions.................................................23
ARTICLE VIII.
Compensation of Owner Trustee
Section 8.1 Owner Trustee's Fees and Expenses.....................................................23
Section 8.2 Indemnification.......................................................................23
Section 8.3 Payments to the Owner Trustee.........................................................24
Section 8.4 Non-recourse Obligations..............................................................24
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE IX.
Termination of Trust Agreement
<S> <C> <C>
Section 9.1 Termination of Trust Agreement........................................................24
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
Section 10.1 Eligibility Requirements for Owner Trustee............................................25
Section 10.2 Resignation or Removal of Owner Trustee...............................................26
Section 10.3 Successor Owner Trustee...............................................................26
Section 10.4 Merger or Consolidation of Owner Trustee..............................................27
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.............................27
ARTICLE XI.
Miscellaneous
Section 11.1 Supplements and Amendments............................................................29
Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders............................30
Section 11.3 Limitations on Rights of Others.......................................................30
Section 11.4 Notices...............................................................................30
Section 11.5 Severability..........................................................................30
Section 11.6 Separate Counterparts.................................................................31
Section 11.7 Assignments; Insurer..................................................................31
Section 11.8 No Petition...........................................................................31
Section 11.9 No Recourse...........................................................................31
Section 11.10 Headings..............................................................................31
Section 11.11 Governing Law.........................................................................31
Section 11.12 Master Servicer.......................................................................31
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 September 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 1.1 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.
"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 3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the
beneficial ownership interest of a Certificateholder in 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 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Insurer 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 and the Sponsor).
<PAGE> 6
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"ERISA" shall have the meaning assigned to such term in
Section 3.9.
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"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 September 28, 1999 among the Insurer, Morgan Stanley & Co.
Incorporated and Banc of America Securities LLC.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Indenture" shall mean the Indenture dated as of September 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 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement dated as of September 28, 1999 among the Insurer, the Sponsor, the
Issuer, Advanta Holding Trust 1999-B, the Master Servicer and the Indenture
Trustee.
"Insurer" shall mean Ambac Assurance Corporation, or its
successor in interest.
"Issuer" shall mean Advanta Revolving Home Equity Loan Trust
1999-B.
"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.
"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
Underwriter and the Issuer, the AMHC Guaranty to the
2
<PAGE> 7
Insurer and the Issuer, the Purchase Agreement and the other documents and
certificates delivered in connection therewith.
"Originators" shall mean Advanta National Bank and Advanta
Finance Corp.
"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 Trust 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 September 28, 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-B, Advanta Revolving Home
Equity Loan Trust 1999-B, as Issuer, the Sponsor, Advanta Mortgage Corp. USA, as
Master Servicer, and the Indenture Trustee, dated as of September 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.
"Trust Accounts" shall have the meaning ascribed thereto in
the Sale and Servicing Agreement.
3
<PAGE> 8
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to them in 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 1.3 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 2.1 Names. There is hereby formed a trust to be known as
"Advanta Holding Trust 1999-B," 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 2.2 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 2.3 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
Revolving Home Equity Loan Trust 1999-B, 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 Revolving Home Equity Loan Trust 1999-B 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 Revolving Home Equity
Loan Trust 1999-B;
(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 2.4 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 2.5 Initial Capital Contribution of Trust Estate. The Sponsor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of
5
<PAGE> 10
$1. The Owner Trustee hereby acknowledges receipt in trust from the Sponsor, as
of the date hereof, of the foregoing contribution, which shall constitute the
initial Owner Trust Estate and shall be deposited in the Certificate Account. On
or prior to the Closing Date, the Owner Trustee will also, upon receipt thereof,
acknowledge on behalf of the Trust, receipt of the Mortgage Loans pursuant to
the Sale and Servicing Agreement. The Sponsor shall pay organizational expenses
of the Trust as they may arise.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
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 2.7 Liability. No Holder shall have any personal liability for
any liability or obligation of the Trust.
SECTION 2.8 Title to Trust Property. (a) Legal title to all of the
Owner Trust Estate shall be vested at all times in 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 2.9 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
contemplated by this Agreement or any of the Operative Documents, (C) seeking
any
7
<PAGE> 12
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
9.1(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 Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto.
8
<PAGE> 13
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 9.1(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, 8.2 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 3.1 Initial Ownership. Upon the formation of the Trust by the
contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of the Trust, to the Originators, 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 names of Advanta National
Bank and Advanta Finance Residual Corp. 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
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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 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of 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 3.4.
SECTION 3.3 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 3.4 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and the 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, 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
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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 3.6 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 3.7 Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Sponsor or the 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 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Insurer of any change in the location of the Certificate Register or any
such office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any 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.
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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 2.1, 2.2, 2.3, 2.4, 3.3 and 3.4 of the Sale and Servicing
Agreement, Section 7.1 of the Indenture and under the Credit Line Agreements 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, 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 Revolving Home Equity Loan Trust 1999-B being subject to tax at the
entity level for federal or applicable state tax purposes, (c) such transfer
will not have any material adverse impact on the federal or applicable state
income taxation of a Noteholder and (d) such transfer will not result in the
arrangement created by this Agreement or any "portion" of
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the Advanta Revolving Home Equity Loan Trust 1999-B, being treated as a taxable
mortgage pool as defined in Section 7701(i) of the Code; (v) all filings and
other actions necessary to continue the perfection of the interest of 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 4.1 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
of the Note Registrar, Paying Agent, Indenture Trustee or Certificate
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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 2.3 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.
SECTION 4.2 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
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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 4.3 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 Policies have terminated and the Indenture
Trustee has surrendered the Policies 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 4.4 Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Operative
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than the 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 6.3 and unless
a Certificateholder previously shall have given to the Owner Trustee a written
notice of default and of the continuance thereof, as provided in this Agreement,
and also unless Certificateholders evidencing not less than 25% by Percentage
Interest shall have made written request upon the Owner Trustee to institute
such action, suit or proceeding in its own name as Owner Trustee under this
Agreement and shall have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Owner Trustee, for 30 days after its receipt of such
notice, request, and offer of indemnity, shall
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have neglected or refused to institute any such action, suit, or proceeding, and
during such 30-day period no request or waiver inconsistent with such written
request has been given to the Owner Trustee pursuant to and in compliance with
this Section or Section 6.3; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5 Majority Control. No Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of 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 4.6 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 11.1 of this Agreement.
SECTION 4.7 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
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itself out as a separate identity; and (xiv) maintain adequate capital in light
of its contemplated business operation.
ARTICLE V.
Certain Duties
SECTION 5.1 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
5.1(b)(iii) and 5.1(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 5.1(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 5.1 and any other returns as may be required by
law, and in doing so shall rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Sponsor or the Master
Servicer. The Owner Trustee shall elect under Section 1278 of the Code on behalf
of the Trust to include in income currently any market discount that accrues
with respect to the Mortgage Loans.
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which 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 $275,000,000. 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.
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SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer 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 6.3 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 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
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Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Operative
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for 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 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Operative Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
that is inconsistent with the purposes of the Trust set forth in Section 2.3.
The Certificateholders shall not direct the Owner Trustee to take action that
would violate the provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts
the trust hereby created and agrees to perform its duties hereunder with respect
to such trust but only upon the terms of this Agreement. The Owner Trustee also
agrees to disburse all monies actually received by it constituting part of the
Owner Trust Estate upon the terms of the Operative Documents and this Agreement.
The Owner Trustee shall not be answerable or accountable hereunder or under any
Operative Document under any circumstances, except (i) for its own willful
misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its
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individual capacity, (iii) for liabilities arising from the failure of the Owner
Trustee to perform obligations expressly undertaken by it in the last sentence
of Section 6.4 hereof, (iv) for any investments issued by the Owner Trustee or
any branch or affiliate thereof in its commercial capacity or (v) for taxes,
fees or other charges on, based on or measured by, any fees, commissions or
compensation received by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment,
not constituting gross negligence, made by a Responsible Officer of the Owner
Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it if such action or omission is in accordance
with the instructions of the Instructing Party, the Sponsor, the Master Servicer
or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the 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,
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and the Owner Trustee shall not be answerable for other than its negligence, bad
faith or willful misconduct in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Operative Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants, in its individual capacity, to the Sponsor and the
Holders (which shall have relied on such representations and warranties in
issuing the Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
Section 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of
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any such counsel, accountants or other such persons and according to such
opinion not contrary to this Agreement or any Operative Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided in
this 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 7.6 Owner Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Sponsor and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the 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 representation or any action of the Indenture Trustee or the Master
Servicer or any Sub-Servicer taken in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates and Notes. Subject to
the provisions of Section 3.1 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 7.8 Payments from Owner Trust Estate. All payments to be made
by the Owner Trustee under this Agreement or any of the Operative Documents to
which 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.
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SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Wilmington Trust Company or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware ; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Wilmington Trust Company (or any successor
thereto); or (iii) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Sponsor and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder and under the
Operative Documents.
SECTION 8.2 Indemnification. The Sponsor shall be liable as primary
obligor for, and 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
7.1. The indemnities contained in this Section and the rights under Section 8.1
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Sponsor which
approval shall not be unreasonably withheld.
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SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Operative Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for 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 9.1 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 10.1(b) 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
8.2 and the rights under Section 8.1 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 9.1. 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, 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 10.1 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.
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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 8.6(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.
(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 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & 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, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in SECTION 10.2.
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SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Sponsor, the Insurer and the Master
Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly
appoint a successor Owner Trustee, meeting the qualifications set forth in
Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the 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 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
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 10.1
herein, by written instrument, in duplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed, one copy to the 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 10.3 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 4.2(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 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Sponsor, the Master Servicer, the Insurer and to its predecessor Owner Trustee
an instrument accepting such
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appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Sponsor and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Master Servicer shall mail notice of the successor
of such Owner Trustee to all Certificateholders, the Indenture Trustee, 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.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies and the Insurer.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
the Master Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the 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
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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 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3, 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.
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.
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<PAGE> 33
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be
amended by the Sponsor and the Owner Trustee, with the prior written consent of
the 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 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, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Mortgage Loans or distributions that shall be required to be made
for the benefit of the 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.
29
<PAGE> 34
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 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Section 11.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to the
extent expressly provided herein, the 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 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor,
addressed to Advanta 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 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
30
<PAGE> 35
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Assignments; 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 11.8 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 11.9 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 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
31
<PAGE> 36
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.
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:________________________________
Name:
Title:
ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor
By:________________________________
Name:
Title:
<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
<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 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING
AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE
AGREEMENTS 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
REVOLVING HOME
<PAGE> 40
EQUITY LOAN TRUST 1999-B BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR
FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT
HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE
INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT
IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF
THE ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, BEING TREATED AS A
TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(i) OF THE CODE; (V)
ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF
THE INTEREST OF 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.
<PAGE> 41
ADVANTA HOLDING TRUST 1999-B
CERTIFICATE
Percentage Interest: [ ]%
Cut-Off Date:
Close of business August 31, 1999
First Payment Date: Issue Date: September 28, 1999
October 25, 1999
No. 1
ADVANTA NATIONAL BANK
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as
of September 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
Revolving Home Equity Loan Trust 1999-B (the "Issuer") was created pursuant to a
Trust Agreement dated as of September 1, 1999 (the "Trust Agreement") between
Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B
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-B "Certificates." Pursuant to the Trust
Agreement, there is also issued duly authorized Certificates designated as
Advanta Revolving Home Equity Loan Trust 1999-B "Asset Backed Certificates".
Pursuant to the Indenture dated as of September 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 Revolving
Home Equity 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 home
equity revolving credit line loans secured by first or junior 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 October 25, 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
<PAGE> 42
"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 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.
<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: September 28, 1999 ADVANTA HOLDING TRUST 1999-B
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
<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
<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.
<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.
<PAGE> 47
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 COUNSEL ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE
SPONSOR THAT SUCH
<PAGE> 48
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 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING
AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE
AGREEMENTS 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
REVOLVING HOME EQUITY LOAN TRUST 1999-A BEING SUBJECT TO TAX AT THE
ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH
<PAGE> 49
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 REVOLVING HOME EQUITY LOAN TRUST 1999-B,
BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(i)
OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE
THE PERFECTION OF THE INTEREST OF 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.
<PAGE> 50
ADVANTA HOLDING TRUST 1999-B
CERTIFICATE
Percentage Interest: [ ]%
Cut-Off Date:
Close of business August 31, 1999
First Payment Date: Issue Date: September 28, 1999
October 25, 1999
No. 1
ADVANTA FINANCE RESIDUAL CORP.
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as
of September 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
Revolving Home Equity Loan Trust 1999-B (the "Issuer") was created pursuant to a
Trust Agreement dated as of September 1, 1999 (the "Trust Agreement") between
Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B
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-B "Certificates." Pursuant to the Trust
Agreement, there is also issued duly authorized Certificates designated as
Advanta Revolving Home Equity Loan Trust 1999-B "Asset Backed Certificates".
Pursuant to the Indenture dated as of September 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 Revolving
Home Equity 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 home
equity revolving credit line loans secured by first or junior 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 October 25, 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
<PAGE> 51
"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 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.
<PAGE> 52
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: September 28, 1999 ADVANTA HOLDING TRUST 1999-B
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
<PAGE> 53
(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
<PAGE> 54
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.
<PAGE> 55
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
Signature Guaranteed:
*
- ------------------
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE> 56
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA HOLDING TRUST 1999-B
This Certificate of Trust of Advanta Holding Trust 1999-B (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-B.
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 September 28,
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-B,
Depositor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of September 1, 1999
<PAGE> 2
Table of Contents
Page
ARTICLE I.
Definitions
Section 1.1 Capitalized Terms ..........................................1
Section 1.2 Other Definitional Provisions ..............................4
Section 1.3 Action by or Consent of Noteholders and Certificateholders .4
ARTICLE II.
Organization
Section 2.1 Names ......................................................4
Section 2.2 Office .....................................................5
Section 2.3 Purposes and Powers ........................................5
Section 2.4 Appointment of Owner Trustee ...............................5
Section 2.5 Initial Capital Contribution of Trust Estate ...............5
Section 2.6 Declaration of Trust .......................................6
Section 2.7 Liability ..................................................6
Section 2.8 Title to Trust Property ....................................6
Section 2.9 Situs of Trust .............................................6
Section 2.10 Representations and Warranties of the Sponsor and the
Depositor .................................................7
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 3.1 Initial Ownership .........................................11
Section 3.2 The Certificates ..........................................11
Section 3.3 Authentication of Certificates ............................12
Section 3.4 Registration of Transfer and Exchange of Certificates .....12
Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates .........12
Section 3.6 Persons Deemed Certificateholders .........................12
Section 3.7 Access to List of Certificateholders' Names and Addresses..13
Section 3.8 Maintenance of Office or Agency ...........................13
Section 3.9 ERISA .....................................................13
Section 3.10 Restrictions on Transfer of Certificates ..................13
Section 3.11 Acceptance of Obligations .................................15
Section 3.12 Payments on Certificates ..................................15
i
<PAGE> 3
ARTICLE IV.
Voting Rights and Other Actions
Section 4.1 Prior Notice to Holders with Respect to Certain Matters ........15
Section 4.2 Action by Certificateholders with Respect to Certain Matters ...16
Section 4.3 Action by Certificateholders with Respect to Bankruptcy ........17
Section 4.4 Restrictions on Certificateholders' Power ......................17
Section 4.5 Majority Control ...............................................18
Section 4.6 Rights of Insurer ..............................................18
Section 4.7 Separateness ...................................................18
ARTICLE V.
Certain Duties
Section 5.1 Accounting and Records to the Noteholders, Certificateholders,
the Internal Revenue Service and Others ........................18
Section 5.2 Signature on Returns; Tax Matters Partner ......................19
ARTICLE VI.
Authority and Duties of Owner Trustee
Section 6.1 General Authority ..............................................19
Section 6.2 General Duties .................................................20
Section 6.3 Action upon Instruction ........................................20
Section 6.4 No Duties Except as Specified in this Agreement or in
Instructions ..................................................21
Section 6.5 No Action Except under Specified Documents or Instructions .....21
Section 6.6 Restrictions ...................................................21
ARTICLE VII.
Concerning the Owner Trustee
Section 7.1 Acceptance of Trust and Duties .................................21
Section 7.2 Furnishing of Documents ........................................23
Section 7.3 Representations and Warranties .................................23
Section 7.4 Reliance; Advice of Counsel ....................................23
Section 7.5 Not Acting in Individual Capacity ..............................24
Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans ....24
Section 7.7 Owner Trustee May Own Certificates and Notes ...................24
Section 7.8 Payments from Owner Trust Estate ...............................24
Section 7.9 Doing Business in Other Jurisdictions ..........................25
ii
<PAGE> 4
ARTICLE VIII.
Compensation of Owner Trustee
Section 8.1 Owner Trustee's Fees and Expenses .........................25
Section 8.2 Indemnification ...........................................25
Section 8.3 Payments to the Owner Trustee .............................26
Section 8.4 Non-recourse Obligations ..................................26
ARTICLE IX.
Termination of Trust Agreement
Section 9.1 Termination of Trust Agreement ............................26
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
Section 10.1 Eligibility Requirements for Owner Trustee ................27
Section 10.2 Resignation or Removal of Owner Trustee ...................28
Section 10.3 Successor Owner Trustee ...................................28
Section 10.4 Merger or Consolidation of Owner Trustee ..................29
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee .29
ARTICLE XI.
Miscellaneous
Section 11.1 Supplements and Amendments ................................31
Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders 32
Section 11.3 Limitations on Rights of Others ...........................32
Section 11.4 Notices ...................................................32
Section 11.5 Severability ..............................................32
Section 11.6 Separate Counterparts .....................................33
Section 11.7 Assignments; Insurer ......................................33
Section 11.8 No Petition ...............................................33
Section 11.9 No Recourse ...............................................33
Section 11.10 Headings ..................................................33
Section 11.11 Governing Law .............................................33
Section 11.12 Master Servicer ...........................................33
Section 11.13 No Borrowing ..............................................34
Section 11.14 Nonpetition Covenant ......................................34
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
<PAGE> 5
TRUST AGREEMENT dated as of September 1, 1999 between ADVANTA
CONDUIT RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), ADVANTA HOLDING
TRUST 1999-B, 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 1.1 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.
"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 3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the
beneficial ownership interest of a Certificateholder in 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 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Insurer, the
Depositor and the Sponsor, or the principal corporate trust
<PAGE> 6
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-B in its
capacity as Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in
Section 3.9.
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"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 September 28, 1999 among the Insurer, Morgan Stanley & Co.
Incorporated and Banc of America Securities LLC.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Indenture" shall mean the Indenture dated as of September 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 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement dated as of September 28, 1999 among the Insurer, the Sponsor, the
Trust, Advanta Holding Trust 1999-B, 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 Purchase Agreement, the AMHC Guaranty to the Underwriter 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 and Advanta
Finance Corp.
"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 Trust 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 September 28, 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-B, Advanta Revolving Home
Equity Loan Trust 1999-B, as Issuer, Advanta Conduit Receivables, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and the Indenture
Trustee, dated as of September 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.
"Trust Accounts" shall have the meaning ascribed thereto in
the Sale and Servicing Agreement.
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Section 1.2 Other Definitional Provisions. (a) Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in 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 1.3 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 2.1 Names. There is hereby formed a trust to be known
as "Advanta Revolving Home Equity Loan Trust 1999-B," in which name the Owner
Trustee may conduct
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the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.2 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 2.3 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 2.4 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 2.5 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
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Owner Trustee will also, upon receipt thereof, acknowledge on behalf of the
Trust, receipt of the Mortgage Loans pursuant to the Sale and Servicing
Agreement. The Sponsor shall pay organizational expenses of the Trust as they
may arise.
Section 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, 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 income tax purposes, the Trust shall be
treated as a branch; provided, however, that in the event Certificates are owned
by more than one Certificateholder, it is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall then be
treated as a partnership 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 2.7 Liability. No Holder shall have any personal
liability for any liability or obligation of the Trust.
Section 2.8 Title to Trust Property. (a) Legal title to all of
the Owner Trust Estate shall be vested at all times in 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 2.9 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.
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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 Policies.
(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,
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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.
(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 Policies.
(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,
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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
(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;
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(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 9.1(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
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(d) until the completion of the events specified in Section
9.1(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, 8.2 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 3.1 Initial Ownership. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of 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 3.2 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
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Certificateholder hereunder, upon due registration of such Certificate in such
transferee's name pursuant to Section 3.4.
Section 3.3 Authentication of Certificates. Concurrently with
the initial sale of the Mortgage Loans to 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 Certificate without the
prior written consent of the Insurer.
Section 3.4 Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
shall be delivered to the Certificate Registrar, the Owner Trustee and the
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, 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 3.6 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
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Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the
Insurer shall be bound by any notice to the contrary.
Section 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Master Servicer, the Sponsor or the 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 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain in Wilmington, Delaware an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Insurer of any change in the location of the Certificate Register or any
such office or agency.
Section 3.9 ERISA. The Certificates may not be acquired by or
for the account of (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to the provisions of Title I of ERISA, (ii) a plan as (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
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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 2.1, 2.2, 2.3, 2.4, 3.3 and 3.4 of the Sale and Servicing
Agreement, Section 7.1 of the Indenture and under the Credit Line Agreements 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.
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(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.
ARTICLE IV.
Voting Rights and Other Actions
Section 4.1 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;
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(g) perform any act which would make it impossible to carry on
the ordinary business of the Trust as described in Section 2.3 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.
Section 4.2 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
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reasonable method for collecting responses to such request and shall tabulate
and report the results thereof to the Certificateholders and the Sponsor. The
Owner Trustee shall have no responsibility or duty to determine if any such
proposed action or consent is permitted under the terms of this Agreement or
applicable law.
Section 4.3 Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the 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 Policies have terminated and
the Indenture Trustee has surrendered the Policies 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 4.4 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 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than the 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 6.3 and unless
a Certificateholder previously shall have given to the Owner Trustee a written
notice of default and of the continuance thereof, as provided in this Agreement,
and also unless Certificateholders evidencing not less than 25% by Percentage
Interest shall have made written request upon the Owner Trustee to institute
such action, suit or proceeding in its own name as Owner Trustee under this
Agreement and shall have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Owner Trustee, for 30 days after its receipt of such
notice, request, and offer of indemnity, shall have neglected or refused to
institute any such action, suit, or proceeding, and during such 30-day period no
request or waiver inconsistent with such written request has been given to the
Owner Trustee pursuant to and in compliance with this Section or Section 6.3; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4,
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each and every Certificateholder and the Owner Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 4.5 Majority Control. No Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of 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 4.6 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 11.1 of this Agreement.
Section 4.7 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 5.1 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
5.1(b)(iii) and 5.1(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
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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 5.1(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
5.1 and any other returns as may be required by law, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Sponsor or the Master Servicer. The Owner Trustee
shall elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Mortgage Loans. The Owner
Trustee shall not make the election provided under Section 754 of the Code.
Section 5.2 Signature on Returns; Tax Matters Partner.
(a) Notwithstanding the provisions of Section 5.1 and in the event that 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 6.1 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
$275,000,000. 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.
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Section 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and to administer 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 6.3 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 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
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within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Operative
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
Section 6.4 No Duties Except as Specified in this Agreement or
in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for 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 6.5 No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Operative
Documents and (iii) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.3.
Section 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 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.
ARTICLE VII.
Concerning the Owner Trustee
Section 7.1 Acceptance of Trust and Duties. The Owner Trustee
accepts the trust hereby created and agrees to perform its duties hereunder with
respect to such trust but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of the Operative Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Operative Document under any circumstances, except (i)
for its own willful misconduct, bad faith or gross negligence, (ii) in the case
of the inaccuracy
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of any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment, not constituting gross negligence, made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it if such action or omission is in
accordance with the instructions of the Instructing Party, the Sponsor, the
Master Servicer or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the 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
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discretionary act enumerated in this Agreement or in any Operative Document
shall not be construed as a duty, and the Owner Trustee shall not be answerable
for other than its negligence, bad faith or willful misconduct in the
performance of any such act.
Section 7.2 Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Operative Documents.
Section 7.3 Representations and Warranties. The Owner Trustee
hereby represents and warrants, in its individual capacity, to the Sponsor and
the Holders (which shall have relied on such representations and warranties in
issuing the 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 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 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer,
secretary or other authorized officers of the relevant party, as to such fact or
matter, and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the
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written opinion or advice of any such counsel, accountants or other such persons
and according to such opinion not contrary to this Agreement or any Operative
Document.
Section 7.5 Not Acting in Individual Capacity. Except as
provided in this 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 7.6 Owner Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Sponsor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the 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 representation or any action of the Indenture Trustee or the Master
Servicer or any Sub-Servicer taken in the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own Certificates and Notes.
Subject to the provisions of Section 3.1 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 7.8 Payments from Owner Trust Estate. All payments to
be made by the Owner Trustee under this Agreement or any of the Operative
Documents to which 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.
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Section 7.9 Doing Business in Other Jurisdictions.
Notwithstanding anything contained to the contrary, neither Wilmington Trust
Company or any successor thereto, nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5 hereof, (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by Wilmington Trust Company (or
any successor thereto); or (iii) subject Wilmington Trust Company (or any
successor thereto) to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company (or any successor
thereto) or the Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
Section 8.1 Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Sponsor and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Sponsor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder and under the Operative Documents.
Section 8.2 Indemnification. The Sponsor shall be liable as
primary obligor for, and 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
7.1. The indemnities contained in this Section and the rights under Section 8.1
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Sponsor which
approval shall not be unreasonably withheld.
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Section 8.3 Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part
of the Owner Trust Estate immediately after such payment.
Section 8.4 Non-recourse Obligations. Notwithstanding anything
in this Agreement or any Operative Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for 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 9.1 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 10.1(b) and Section 10.1(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 8.2 and the rights under
Section 8.1 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 9.1. 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 10.1 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
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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 8.6(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 Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
Section 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation (i) satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & 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, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
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Section 10.2 Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Sponsor, the Insurer and the
Master Servicer. Upon receiving such notice of resignation, the Sponsor shall
promptly appoint a successor Owner Trustee, meeting the qualifications set forth
in Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the 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 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
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 10.1
herein, by written instrument, in duplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed, one copy to the 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 10.3 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 4.2(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 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor
Owner Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the
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predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Sponsor and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Master Servicer shall mail notice of the successor
of such Owner Trustee to all Certificateholders, the Indenture Trustee, 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.
Section 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies and the Insurer.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, the Master Servicer and the Owner Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee and the 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
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such appointment. No co-trustee or separate trustee under this Agreement shall
be required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3, 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.
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.
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ARTICLE XI.
Miscellaneous
Section 11.1 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 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, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Mortgage Loans or distributions that shall be required to be made
for the benefit of the 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.
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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 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
Section 11.3 Limitations on Rights of Others. Except for
Section 11.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to
the extent expressly provided herein, the 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 11.4 Notices. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor,
addressed to Advanta 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-A, 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 11.5 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
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and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.7 Assignments; 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 11.8 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 11.9 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 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
33
<PAGE> 38
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.
34
<PAGE> 39
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:_______________________________________________
Name:
Title:
ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor
By:_______________________________________________
Name:
Title:
ADVANTA HOLDING TRUST 1999-B, as Depositor
By: WILMINGTON TRUST COMPANY, in its capacity as
Owner Trustee
By:_______________________________________________
Name:
Title:
<PAGE> 40
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
A-1
<PAGE> 41
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, 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 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING
AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE
AGREEMENTS 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
A-2
<PAGE> 42
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 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> 43
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
ASSET BACKED CERTIFICATE
Percentage Interest: 100%
Cut-Off Date:
Close of business on August 31, 1999
First Payment Date: Issue Date: September 28, 1999
October 25, 1999
No. 1
ADVANTA HOLDING TRUST 1999-B
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as
of September 1, 1999 (the "Trust Agreement"), between Advanta Conduit
Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B (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 Revolving Home Equity Loan Trust 1999-B "Asset Backed
Certificates." Also issued under the Indenture dated as of September 1, 1999
(the "Indenture") between the Trust and Bankers Trust Company of California,
N.A., as indenture trustee (the "Indenture Trustee") are the Advanta Revolving
Home Equity 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-adjustable-rate home equity revolving
credit line loans secured by first or second deeds of trust or Mortgages on
primarily one-to-four family residential properties.
Under the Trust Agreement, there will be distributed on the
25th day of each month or, if such 25th day is not a Business Day, the next
Business Day (the "Payment Date"), commencing on October 25, 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> 44
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> 45
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: September 28, 1999 ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-B
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> 46
(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
A-7
<PAGE> 47
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 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> 48
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> 49
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
This Certificate of Trust of Advanta Revolving Home Equity
Loan Trust 1999A (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 Revolving Home Equity Loan Trust 1999-B.
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 September 28,
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
EXECUTION COPY
SALE AND SERVICING AGREEMENT
Among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B,
Trust,
ADVANTA HOLDING TRUST 1999-B,
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 September 1, 1999
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<S> <C>
Parties...................................................................................................1
Recitals..................................................................................................1
ARTICLE I. DEFINITIONS; RULES OF CONSTRUCTION.......................................................1
Section 1.1 Definitions................................................................1
Section 1.2 Use of Words and Phrases...................................................1
Section 1.3 Captions; Table of Contents................................................2
Section 1.4 Opinions...................................................................2
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS............................................................2
Section 2.1 Conveyance of the Mortgage Loans...........................................2
Section 2.2 Acceptance by Indenture Trustee; Certain Substitutions of Mortgage
Loans; Certification by Indenture Trustee..................................8
Section 2.3 Qualified Replacement Mortgage Loans.......................................10
Section 2.4 Cooperation Procedures.....................................................12
Section 2.5 Retransfers of Mortgage Loans at Election of Sponsor or the Related
Originator.................................................................12
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER.......16
Section 3.1 Representations and Warranties of the Sponsor..............................16
Section 3.2 Representations and Warranties of the Master Servicer......................18
Section 3.3 Representations and Warranties of the Sponsor with Respect to the
Mortgage Loans; Retransfer of Certain Mortgage Loans.......................20
Section 3.4 Covenants of Sponsor to Take Certain Actions with Respect to the
Mortgage Loans In Certain Situations.......................................27
ARTICLE IV. SERVICING AND ADMINISTRATION OF MORTGAGE LOANS..........................................28
Section 4.1 Master Servicer and Sub-Servicers..........................................28
Section 4.2 Modifications..............................................................30
Section 4.3 Servicer Report............................................................32
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4.4 Liability of Master Servicer...............................................32
Section 4.5 Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.........33
Section 4.6 Successor Sub-Servicers....................................................34
Section 4.7 No Contractual Relationship Between Sub-Servicer and Indenture
Trustee or the Noteholders.................................................34
Section 4.8 Assumption or Termination of Sub-Servicing Agreement by Indenture
Trustee....................................................................34
Section 4.9 Principal and Interest Account.............................................34
Section 4.10 Servicing Advances.........................................................36
Section 4.11 Maintenance of Insurance...................................................37
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements................38
Section 4.13 Realization Upon Defaulted Mortgage Loans..................................39
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files..................40
Section 4.15 Servicing Compensation.....................................................41
Section 4.16 Annual Statement as to Compliance..........................................42
Section 4.17 Annual Independent Certified Public Accountants' Reports...................42
Section 4.18 Access to Certain Documentation and Information Regarding the
Mortgage Loans.............................................................42
Section 4.19 Assignment of Agreement....................................................43
Section 4.20 Resignation of the Master Servicer.........................................43
ARTICLE V. SERVICING TERMINATION....................................................................43
Section 5.1 Events of Servicing Termination............................................43
Section 5.2 Inspections by Insurer; Errors and Omissions Insurance.....................47
Section 5.3 Merger, Conversion, Consolidation or Succession to Business of
Master Servicer............................................................47
Section 5.4 Notification to Noteholders................................................48
Section 5.5 Notices of Material Events.................................................48
ARTICLE VI. ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.............................................49
Section 6.1 Administrative Duties with Respect to the Indenture........................49
Section 6.2 Records....................................................................51
Section 6.3 Additional Information to be Furnished to the Trust........................51
ARTICLE VII. MISCELLANEOUS..........................................................................51
Section 7.1 Compliance Certificates and Opinions.......................................51
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7.2 Form of Documents Delivered to the Indenture Trustee.......................52
Section 7.3 Acts of Noteholders........................................................52
Section 7.4 Notices, etc. to Indenture Trustee.........................................53
Section 7.5 Notices and Reports to Noteholders; Waiver of Notices......................53
Section 7.6 Successors and Assigns.....................................................54
Section 7.7 Severability...............................................................54
Section 7.8 Benefits of Agreement......................................................54
Section 7.9 Legal Holidays.............................................................54
Section 7.10 Governing Law..............................................................55
Section 7.11 Counterparts...............................................................55
Section 7.12 Usury......................................................................55
Section 7.13 Amendment..................................................................55
Section 7.14 The Insurer................................................................56
Section 7.15 Notices....................................................................57
Section 7.16 Limitation of Liability....................................................58
SCHEDULE I -- Schedule of Mortgage Loans
EXHIBIT A -- [Reserved]
EXHIBIT B -- [Reserved]
EXHIBIT C -- [Reserved]
EXHIBIT D -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT E -- Form of Certification
EXHIBIT F -- Form of Master Servicer's Trust Receipt
EXHIBIT G -- Form of Power of Attorney
EXHIBIT H -- Form of Subsequent Transfer Agreement
ANNEX 1 -- Copy of Annex 1 to the Indenture
</TABLE>
iii
<PAGE> 5
SALE AND SERVICING AGREEMENT, dated as of September 1, 1999, by and
among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, a Delaware business trust
(the "Trust"), ADVANTA HOLDING TRUST 1999-B, a Delaware business trust
("Holding"), 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, Holding desires to purchase a portfolio of Mortgage Loans (as
defined herein) originated by the Originators (as defined herein);
WHEREAS, the Sponsor is willing to sell or cause or direct to be sold
such Mortgage Loans to Holding;
WHEREAS, Holding desires to transfer such Mortgage Loans to the Trust
and the Trust desires to acquire such Mortgage Loans from Holding;
WHEREAS, the Master Servicer has agreed to service such Mortgage Loans,
which constitute the principal assets of the Trust Estate;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sponsor, the Master Servicer, the Trust,
Holding and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1 Definitions.Except as otherwise specified herein,
capitalized terms used in this Agreement are defined in Annex 1 to the
Indenture, dated as of September 1, 1999 (the "Indenture"), between Advanta
Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California,
N.A., as Indenture Trustee. A copy of Annex 1 of the Indenture is attached to
this Agreement. Defined terms that are used only in one section or only in
another definition may be omitted from the list of defined terms in Annex 1.
Defined terms include, as appropriate, all genders and the plural as well as the
singular.
Section 1.2 Use of Words and Phrases. "Herein," "hereby," "hereunder,"
"hereof," "hereinbefore," "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used. Whenever used in this Agreement, any pronoun
shall be deemed to include both singular and plural and to cover all genders. As
used herein, any form of the word "include" shall be deemed to be followed by
the words "without limitation."
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Section 1.3 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.4 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or 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 2.1 Conveyance of the Mortgage Loans
(a) The Sponsor, concurrently with the execution and delivery hereof,
hereby sells, assigns, transfers, sets over and otherwise conveys or shall
request or cause to be transferred, sold, assigned, set over and otherwise
conveyed to Holding, and Holding hereby purchases and acquires, without recourse
(subject to the Sponsor's obligations herein), all right, title and interest of
the Sponsor in and to: (i) all Mortgage Loans listed on the Schedule of Mortgage
Loans, and their respective Principal Balances (including all Additional
Balances) and all principal and interest collections in respect thereof on or
after the respective Cut-Off Date; (ii) all Mortgaged Properties to the extent
that they are acquired by foreclosure or deed in lieu of foreclosure; (iii) all
of the Sponsor's rights under any Mortgage Insurance Policies covering the
Mortgaged Properties; (iv) all of the Sponsor's rights and benefits, but none of
its obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and 4.04
(other than the fourth paragraph thereof) of the Purchase Agreement, including
all of the Sponsor's rights and remedies in the event of certain breaches by the
Originators of their respective representations and warranties under Sections
4.01 and 4.02 of the Purchase Agreement; (v) all Mortgage Files and other
documents relating to the foregoing; (vi) all amounts held in the Accounts
(excluding net investment earnings on the Principal and Interest Account, the
Note Account and the Capitalized Interest Account); (vii) all proceeds with
respect to the foregoing; and (viii) all other assets included or to be included
in the Trust Estate created under the Indenture for the benefit of Noteholders
and the Insurer; provided, however, that neither
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Holding nor any of its Assignees (including the Trust and the Indenture Trustee)
shall assume any obligation under any Credit Line Agreement that provides for
the funding of future advances to the Mortgagor thereunder, it being understood
that neither Holding nor any of its Assignees (including the Trust and the
Indenture Trustee) shall be required or permitted to fund any such future
advances.
On or before the Closing Date, the Sponsor will cause the Insurer to
deliver the Policy to the Indenture Trustee for the benefit of the Noteholders
of the Notes.
As full consideration for the Sponsor's sale, assignment, transfer,
set-over and conveyance to Holding of all of its right, title and interest in
and to the Mortgage Loans and the other rights and properties specified above,
Holding shall (A) 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 and other transaction costs (including the cost of
obtaining the Policy as described above and the expenses referred to in Section
2.01 of the Purchase Agreement), and (B) direct the issuance of one or more
Certificates evidencing in the aggregate 100% of the beneficial ownership
interest in Holding to or upon the order of the Sponsor or its designees, all in
such amounts as the Sponsor shall determine on or before the Closing Date.
(b) It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans (including the related Mortgage Files and the other rights
and properties described in Section 2.1(a) above) by the Sponsor to Holding as
contemplated by Section 2.1(a) be construed as a sale of the Mortgage Loans by
the Sponsor to Holding. It is not the intent of the parties that such conveyance
be deemed a pledge of the Mortgage Loans by the Sponsor to Holding or any of
Holding's Assignees (including the Indenture Trustee) to secure a debt or other
obligation of the Sponsor or any Assignor of the Sponsor. 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 related Mortgage Files and the other
rights and properties described in Section 2.1(a) above) are held to be property
of the Sponsor or 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 Holding of a first priority security
interest in all of the Sponsor's right, title and interest in and to
the Mortgage Loans (including the related Mortgage Files and the other
rights and properties described in Section 2.1(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 the Accounts (excluding net investment
earnings on the Principal and Interest Account, the Note Account and
the Capitalized Interest Account), whether in the form of cash,
instruments, securities or other property;
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(iii) the possession by Holding or any of its Assignees or
their respective 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 Holding 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 Holding or any of its Assignees (including the
Trust) to pay 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 Owner
Trustee, the Insurer and the Certificateholders, all in accordance with
and otherwise subject to the Operative Documents (including the
Indenture).
Any assignment or other transfer of the interest of Holding under any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. Each of the Sponsor and Holding 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 and the Indenture. The Sponsor
also covenants not to pledge, assign or grant any security interest to any third
party in any Mortgage Loan conveyed to Holding hereunder.
(c) Upon Holding's request, the Sponsor shall perform (or cause to be
performed) such further acts and execute, acknowledge and deliver (or cause to
be executed, acknowledged and delivered) to Holding such further documents as
Holding 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 as debtor and Holding as secured party and any
continuation statements relating thereto).
(d) Holding, immediately after the purchase and sale described in
Section 2.1(a) above but otherwise concurrently with the execution and delivery
hereof, hereby transfers, sets over and otherwise conveys, to the Trust, and the
Trust hereby acquires without recourse (subject to Holding's obligations
herein), all right, title and interest of Holding in and to: (i) all Mortgage
Loans listed on the Schedule of Mortgage Loans including their respective
Principal Balances (including all Additional Balances) and all principal and
interest collected on or after the Cut-Off Date; (ii) all Mortgaged Properties
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to the extent that they are acquired by foreclosure or deed in lieu of
foreclosure; (iii) all of the Sponsor's rights under any Mortgage Insurance
Policies covering the Mortgaged Properties; (iv) all of the Sponsor's rights and
benefits, but none of its obligations or burdens, under Sections 2.03, 2.05,
4.01, 4.02 and 4.04 (other that the fourth paragraph thereof) of the Purchase
Agreement, including all of the Sponsor's rights and remedies in the event of
certain breaches by the Originators of their respective representations and
warranties under Sections 4.01 and 4.02 of the Purchase Agreement (all of which
rights and benefits were assigned to Holding pursuant to Section 2.1(a) above);
(v) all Mortgage Files and other documents relating to the foregoing; (vi) all
amounts held in the Accounts (excluding net investment earnings on the Principal
and Interest Account, the Note Account and the Capitalized Interest Account);
(vii) all proceeds with respect to the foregoing; and (viii) all other assets
included or to be included in the Trust Estate created under the Indenture for
the benefit of Noteholders and the Insurer; provided, however, that neither the
Trust nor any of its Assignees (including the Indenture Trustee) shall assume
any obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, it being understood that neither
the Trust nor any of its Assignees (including the Indenture Trustee) shall be
required or permitted to fund any such future advances. In addition, on or
before the Closing Date, Holding will cause the Policy to be delivered to the
Indenture Trustee for the benefit of the Noteholders. As full consideration for
Holding's transfer, set-over and conveyance to the Trust of all of its right,
title and interest in and to the Mortgage Loans and the other rights and
properties specified above, the Trust shall (x) pay to or upon the order of
Holding 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 as described above and the expenses
referred to in Section 2.01 of the Purchase Agreement), and (y) issue to Holding
one or more Certificates evidencing in the aggregate 100% of the beneficial
ownership interest in the Trust.
(e) It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans (including the related Mortgage Files and the other rights
and properties described in Section 2.1(d) above) by Holding to the Trust as
contemplated by Section 2.1(d) be construed as a sale of the Mortgage Loans by
Holding to the Trust for certain non-tax purposes. It is, further, not the
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by Holding to the Trust or any of the Trust's Assignees (including the
Indenture Trustee) to secure a debt or other obligation of Holding or any
Assignor of Holding. 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 related Mortgage Files and the other rights and properties
described in Section 2.1(d) above) are held to be property of Holding 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 Holding to the
Trust of a first priority security interest in all of Holding' right, title and
interest in and to the Mortgage Loans (including the related Mortgage Files and
the other rights and properties described in Section 2.1(a) above) and all
amounts payable to the holder of the Mortgage Loans and/or such rights or
properties in
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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 the
Accounts (excluding net investment earnings on the Principal and Interest
Account, the Note Account and the Capitalized Interest Account), whether in the
form of cash, instruments, securities or other property; (iii) the possession by
the Trust or any of its Assignees or their respective 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 California
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 Trust 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 or
any of its Assignees to pay 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 Owner Trustee, the Insurer
and the Certificateholders, all in accordance with and otherwise subject to the
Operative Documents (including the Indenture). Any assignment or other transfer
of the interest of the Trust under any provision hereof shall also be deemed to
be an assignment of any security interest created hereby. Each of Holding and
the Trust 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 and the
Indenture. Holding also covenants not to pledge, assign or grant any security
interest to any third party in any Mortgage Loan conveyed to the Trust
hereunder.
(f) Upon the Trust's request, Holding 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 Trust such further documents as
the Trust 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 filing UCC-1
financing statements naming Holding as debtor and the Trust as secured party and
any continuation statements relating thereto).
(g) In connection with the transfer and assignment of the Mortgage
Loans, the Sponsor and Holding agree to:
(i) cause to be delivered without recourse to the
Indenture Trustee, on the Closing Date with respect to the Initial
Mortgage Loans, on the Transfer Date with respect to any Qualified
Replacement Mortgage Loan, or the Subsequent Transfer Date with respect
to any Subsequent Mortgage Loans, the items listed in the definition of
"Mortgage Files";
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(ii) cause, within 75 Business Days following the Closing
Date, the Subsequent Transfer Date or the Transfer Date (as
applicable), Assignments of Mortgage to be (x) prepared and copies
delivered to the Indenture Trustee and (y) originals submitted for
recording in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of or
purchasers from the Sponsor to the Indenture Trustee; provided,
however, that Assignments of Mortgage shall not be required to be
submitted for recording with respect to any Mortgage Loan as to which
the recordholder is an Originator unless (A) the related Mortgaged
Property is not located in a jurisdiction in which, as evidenced by an
Opinion of Counsel acceptable to the Rating Agencies and the Insurer
and delivered to the Indenture Trustee and the Insurer within 30
Business Days following the Closing Date, recordation of such
Assignment of Mortgage is not necessary to perfect the lien of the
Indenture Trustee in the related Mortgage Loan or (B) provided that an
Event of Servicing Termination or a Rapid Amortization Event shall have
occurred or the long-term unsecured debt of Advanta Corp. shall have
been assigned a rating of less than BBB by S&P or less than Baa2 by
Moody's, the existence of circumstances discussed in Section 2.1(j)
below, or the Insurer otherwise directs the Sponsor in writing; and
(iii) cause, within one year after the Closing Date, the
Subsequent Transfer Date or the Transfer Date (as applicable), to be
delivered to the Indenture Trustee and the Insurer evidence of the
recording of such Assignments of Mortgage (provided that such recording
is otherwise required pursuant to clause (ii) above).
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage, the assignment of a Mortgage or
the intervening assignments of the Mortgage after it has been recorded, the
Sponsor shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments and any Assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
Within 30 days after the Closing Day, the Master Servicer shall deliver
to the Indenture Trustee for signature powers of attorney for execution,
substantially in the form of Exhibit G, authorizing the Master Servicer on
behalf of the Indenture Trustee to record the Assignments of Mortgage as
provided in clause (ii) above. 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.
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(h) If an Assignment of Mortgage 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 or cause to be prepared a substitute
assignment or cure such defect, as the case may be, and thereafter cause each
such assignment to be duly recorded.
(i) The Sponsor shall reflect on its records that the Mortgage Loans
have been sold to Holding.
(j) If the ultimate consolidating parent of the Master Servicer's
shareholders' equity calculated pursuant to generally accepted accounting
principles, as evidenced by the Financial Statements (as defined in the
Insurance Agreement, and which the Master Servicer hereby agrees to provide to
the Insurer on a quarterly basis as requested by the Insurer), falls below
$5,000,000, then the Sponsor shall promptly prepare and deliver to the Indenture
Trustee Assignments of Mortgage. Upon the direction of the Insurer, the
Indenture Trustee shall submit such Assignments of Mortgage for recording in the
appropriate jurisdictions. The Master Servicer shall pay the anticipated
recording costs to the Indenture Trustee on the date of delivery of such
Assignments of Mortgage to the Indenture Trustee, and if the Master Servicer
fails to do so or the actual recording costs exceed the anticipated recording
costs then the Indenture Trustee shall pay such costs and shall be entitled to
reimbursement therefor from amounts otherwise distributable to the
Certificateholders.
(k) To the extent that the ratings, if any, then assigned to the
unsecured debt of the Advanta National Bank or of its ultimate corporate parent
are satisfactory to the Insurer, Moody's and S&P, then any of the Document
Delivery Requirements described above may be waived by an instrument signed by
the Insurer, S&P and Moody's (or any documents theretofore delivered to the
Indenture Trustee returned to Advanta National Bank) on such terms and subject
to such conditions as the Insurer, Moody's and S&P may permit.
Section 2.2 Acceptance by Indenture Trustee; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee.
(a) The Indenture Trustee hereby acknowledges its receipt of the Policy
and agrees to execute and deliver on the Closing Date and each Subsequent
Transfer Date and each Transfer Date an acknowledgment of receipt of the Credit
Line Agreements delivered by the Sponsor and declares that it will hold such
documents and any amendments, replacement or supplements thereto, as well as any
other assets of the Trust Estate and delivered to the Indenture Trustee, as
Indenture Trustee in trust upon and subject to the conditions set forth herein,
for the benefit of the Noteholders and the Insurer. The Indenture Trustee
further agrees to review any other documents delivered by the Sponsor within 90
days after the Closing Date, the Subsequent Transfer Date or the Transfer Date,
as applicable, and to deliver to the Sponsor, the Master Servicer and the
Insurer a Pool Certification to the effect that, as to each Mortgage Loan listed
in the Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or
any Mortgage Loan specifically identified in such Pool Certification as not
covered by such Pool
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Certification), (i) all documents described in the definition of "Mortgage
Files" and required to be delivered to it pursuant to this Agreement are in its
possession and (ii) such documents have been reviewed by it and have not been
damaged, torn or physically altered and on their face appear to relate to such
Mortgage Loan; provided, however, that such Pool Certification shall not be
required to be delivered prior to 90 days after the Closing Date. The Indenture
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to verify the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of same or to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face, nor shall the Indenture Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period from the Closing
Date, the Subsequent Transfer Date or the Transfer Date, as applicable, finds
any document constituting a part of a Mortgage File which is not properly
executed, has not been received within the specified period, or is unrelated to
the Mortgage Loans identified in the Schedule of Mortgage Loans, or that any
Mortgage Loan does not conform in a material respect to the description thereof
as set forth in the Schedule of Mortgage Loans, the Indenture Trustee shall
promptly so notify the Sponsor and the 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. It is understood
that the scope of the Indenture Trustee's review of the items delivered by the
Sponsor pursuant to Section 2.1(g)(i) is limited solely to confirming that the
documents listed in Section 2.1(g)(i) have been executed and received, on their
face, appear to relate to the Mortgage Files identified in the Schedule of
Mortgage Loans and conform materially to the description thereof in the Schedule
of Mortgage Loans with regard to Mortgagor name and original Credit Limit.
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 to it respecting such defect the Sponsor has not
remedied or caused to be remedied the defect and the defect materially and
adversely affects the interest in the related Mortgage Loan of the Indenture
Trustee, Noteholders or of the Insurer, the Sponsor will then on the next
succeeding Business Day (i) substitute in lieu of such Mortgage Loan a Qualified
Replacement Mortgage Loan pursuant to Section 2.3 and, deliver the Substitution
Amount applicable thereto to the Master Servicer for deposit in the Principal
and Interest Account or (ii) reacquire such Mortgage Loan at a purchase price
equal to the Loan Reacquisition Price thereof, which reacquisition price shall
be delivered to the Master Servicer for deposit in the Principal and Interest
Account.
Upon receipt of any Qualified Replacement Mortgage Loan and written
notification of the Substitution Amount, if any, or of written notification
signed by a Servicing Officer to the effect that the Loan Reacquisition Price in
respect of a
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Unqualified Mortgage Loan has been deposited into the Principal and Interest
Account, then within 10 Business Days, the Indenture Trustee shall, at the
direction of the Master Servicer, execute such documents and instruments of
transfer including preparing an endorsement and assignment of documents, 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 Unqualified Mortgage Loan to the Sponsor or its designee.
It is understood and agreed that the obligation of the Sponsor to
accept a transfer of a Unqualified Mortgage Loan and to either convey a
Qualified Replacement Mortgage Loan or to make a deposit of any related Loan
Reacquisition Price into the Principal and Interest Account shall constitute the
sole remedy available to Noteholders, the Insurer and the Indenture Trustee
against the Sponsor.
The Sponsor, promptly following the transfer of an Unqualified Mortgage
Loan from the Trust pursuant to this Section, shall deliver an amended Schedule
of Mortgage Loans to the Indenture Trustee and the Insurer and shall make
appropriate entries in its general account records to reflect such transfer. The
Master Servicer shall, following such reacquisition, appropriately mark its
records to indicate that it is no longer servicing such Mortgage Loan on behalf
of the Trust. The Sponsor, promptly following such transfer, shall appropriately
mark its electronic ledger and make appropriate entries in its general account
records to reflect such reacquisition.
Section 2.3 Qualified Replacement Mortgage Loans
(a) A "Qualified Replacement Mortgage Loan" is a Mortgage Loan that
substitutes for another pursuant to Section 2.2(b), 3.3 or 3.4 hereof, which
with respect to the Mortgage Loan being replaced and as of the Replacement
Cut-Off Date (i) has the same interest rate index, a margin over such index and
a maximum interest rate at least equal to those applicable to the Mortgage Loan
being replaced, (ii) is of the same or better property type and the same or
better occupancy status as the replaced Mortgage Loan, (iii) is of the same or
better credit quality classification (determined in accordance with the relevant
Originator's credit underwriting guidelines), (iv) shall mature no later than
the Payment Date occurring in January 2023, (v) has a Combined Loan-to-Value
Ratio no higher than that of the replaced Mortgage Loan, (vi) has a Principal
Balance equal to or less than that of the replaced Mortgage Loan, (vii) is in
the same lien position or better, (viii) is not Delinquent, and (ix) complies
with the representations and warranties set forth in Section 3.3(a). Except with
respect to clause (vii) above, in the event that one or more mortgage loans are
proposed to be substituted for one or more Mortgage Loans, the Insurer may allow
the foregoing tests to be met on a weighted average basis or other aggregate
basis acceptable to the Insurer, as evidenced by a written approval delivered to
the Indenture Trustee and the Sponsor by the Insurer.
(b) Each Unqualified Mortgage Loan that is required to be repurchased
or substituted pursuant to the provisions of this Agreement or the Purchase
Agreement shall, upon such reacquisition or substitution in accordance with the
provisions hereof, be
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released from the Trust and from the lien created by the Indenture. As to each
Mortgage Loan released from the Trust in connection with the reacquisition
thereof or the conveyance of a Qualified Replacement Mortgage Loan therefor, the
Indenture Trustee will transfer, assign, set over and otherwise convey without
recourse, to or upon the order of the Sponsor, all of its right, title and
interest in and to such released Mortgage Loan and all the Trust's right, title
and interest to principal and interest collected on such released Mortgage Loan
on and after the first day of the calendar month in which such Mortgage Loan is
released; as applicable; provided, however, that the Trust shall reserve and
retain all right, title and interest in and to payments of principal and
interest collected on such released Mortgage Loan prior to such date.
(c) 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 on the date of conveyance of such Qualified Replacement Mortgage
Loan, to the Sponsor, the Mortgage File, properly endorsed without recourse to
the Sponsor.
(d) 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.
(e) As to any Qualified Replacement Mortgage Loan, the Sponsor shall,
if required to deliver any such Qualified Replacement Mortgage Loan, 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 with Section 2.2. 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 the Sponsor shall
deposit 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
Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by
the Master Servicer in the Principal and Interest Account. Upon such
substitution, the 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 or Loans, as
of the date of substitution, the covenants, representations and warranties set
forth in Section 3.3 and (ii) to have certified that such Mortgage Loan(s)
is/are Qualified Replacement Mortgage Loan(s). 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 Insurer.
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Section 2.4 Cooperation Procedures.
The Sponsor, the Master Servicer and the Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
Section 2.5 Retransfers of Mortgage Loans at Election of Sponsor
or the Related Originator.
Subject to the conditions set forth below, the Sponsor or the related
Originator, may, but shall not be obligated to (except the Sponsor or the
related Originator shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans held by the Trust as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor or the related Originator shall give the Indenture Trustee,
the Insurer and the Master Servicer a notice of the proposed reassignment that
contains a list of the Mortgage Loans to be reassigned. Such reassignment of
Mortgage Loans shall be permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred or will occur
as a result of such removal;
(ii) On the Transfer Notice Date the Overcollateralization
Amount (after giving effect to the removal from the Trust of the
Mortgage Loans proposed to be retransferred) is at least equal to the
Specified Overcollateralization Amount;
(iii) On or before the Transfer Date, the Sponsor or the
related Originator shall have delivered to the Indenture Trustee, the
Insurer and the Rating Agencies a revised Schedule of Mortgage Loans,
reflecting the proposed retransfer (including any Qualified Replacement
Mortgage Loans proposed to be transferred) and the Transfer Date, and
the Master Servicer shall have marked its servicing records to show
that the Mortgage Loans reassigned to the Sponsor or the related
Originator are no longer owned by the Trust;
(iv) The Sponsor or the related Originator shall represent
and warrant that random selection procedures were used in selecting the
Mortgage Loans and no other selection procedures were used which are
adverse to the interests of the Noteholders or the Insurer were
utilized in selecting the Mortgage Loans to be removed from the Trust;
and
(v) The Sponsor or the related Originator shall have
delivered to the Indenture Trustee and the Insurer an Officer's
Certificate certifying that the items
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set forth in subparagraphs (i) through (v), inclusive, have been
performed or are true and correct, as the case may be. The Indenture
Trustee may conclusively rely on such Officer's Certificate, shall have
no duty to make inquiries with regard to the matters set forth therein
and shall incur no liability in so relying.
Upon receiving the requisite information from the Sponsor or the
related Originator, the Master Servicer shall perform in a timely manner those
acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Indenture Trustee shall deliver, or cause
to be delivered, to the Sponsor or the related Originator (or their designee)
the Mortgage File for each Mortgage Loan being so reassigned, and the Indenture
Trustee shall execute and deliver (at the Sponsor's or the related Originator's
direction) to the Sponsor or the related Originator such other documents as
shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor or
the related Originator. Any such transfer of the Trust's right, title and
interest in and to Mortgage Loans shall be without recourse, representation or
warranty by or of the Indenture Trustee or the Trust to the Sponsor or the
related Originator.
Section 2.6 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 on deposit in the
Pre-Funding Account, the Sponsor shall sell, transfer, assign, set over and
otherwise convey, or shall request or cause the Trust to acquire from a
Warehouse Trust all right, title and interest 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. In addition, the Sponsor
shall transfer, assign and set over all right, title and interest in and to
principal and interest collected 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 its right, title and interest in and to principal and
interest collected on each such Subsequent Mortgage Loan prior to the related
Subsequent Cut-Off Date. The transfer 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 and all parties hereto to be treated as a sale by the
Sponsor or such Warehouse Trust. The amount released from the Pre-Funding
Account shall be equal to the aggregate Principal Balances of the Subsequent
Mortgage Loans so transferred.
(b) The Sponsor shall transfer or cause to be transferred to the Trust
the Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date.
(i) the Sponsor shall have provided the Indenture Trustee,
the Insurer and the Rating Agencies with an Addition Notice and shall
have provided information with respect to the Subsequent Mortgage Loans
in an electronic data file and in a form agreeable to the foregoing
parties;
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(ii) the Sponsor shall have delivered to the Indenture
Trustee a duly executed written assignment (including an acceptance by
the Indenture Trustee) in substantially the form of Exhibit H (the
"Subsequent Transfer Agreement"), which shall include a Schedule of
Mortgage Loans listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) as of each Subsequent Transfer Date, the Sponsor
shall have deposited in the Principal and Interest Account all
principal and interest collections in respect of the Subsequent
Mortgage Loans received on or after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, none of the
related Originator, 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 addition 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 this paragraph (b) and paragraphs (c)
and (d) below, and in the related Subsequent Transfer Agreement;
(viii)the Sponsor shall have delivered to the Rating
Agencies, the Insurer, and the Indenture Trustee, Opinions of Counsel
with respect to bankruptcy, corporate and tax matters relating to the
Subsequent Mortgage Loans (which opinions may have already been
delivered on the Closing Date); and
(ix) the Insurer shall have approved the transfer.
(c) The obligation of the Trust to purchase a Subsequent Mortgage Loan
on any Subsequent Transfer Date is subject to the following requirements:
(i) with respect to any individual Subsequent Mortgage
Loan:
(a) such Subsequent Mortgage Loan may not be 59 or
more days contractually delinquent as of the related
Subsequent Cut-Off Date;
(b) the maturity date of such Subsequent Mortgage
Loan may not be later than January 2023;
(c) such Subsequent Mortgage Loan may not have a
combined loan-to-value ratio ("CLTV") in excess of 125%;
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(d) such Subsequent Mortgage Loan may not have a
Principal Balance in excess of $200,000;
(e) the Coupon Rate of such Subsequent Mortgage Loan
may not be below 7.25% per annum;
(f) the Margin of such Subsequent Mortgage Loan may
not be below 1.00%; and
(ii) following the purchase of Subsequent Mortgage Loans,
the Mortgage Loans in the aggregate:
(a) will have a weighted average Coupon Rate of at
least 12.50%;
(b) will have a weighted average CLTV of not more
than 99.25%;
(c) no more than 32.25% by aggregate Principal
Balance of the Mortgage Loans will have a CLTV of 100% or
greater;
(d) no more than 1.00% by aggregate Principal Balance
of the Mortgage Loans will be 30 to 59 days delinquent;
(e) no more than 0.5% by aggregate Principal Balance
of the Mortgage Loans will be secured by Mortgaged Properties
within a single zip code;
(f) no more than 15.0% by aggregate Principal Balance
of the Mortgage Loans will be secured by Mortgaged Properties
in California;
(g) no more than 96.0% by aggregate Principal Balance
of the Mortgage Loans will be in a second lien position;
(h) the weighted average FICO score (excluding
Mortgage Loans without scores) will be not less than 635;
(i) the weighted average Margin will be not less than
4.40% per annum; and
(j) the weighted average remaining term to scheduled
maturity of the Mortgage Loans will be not more than 275
months.
The Insurer may waive or modify any of the above requirements or
specify any additional criteria provided that any such modification shall not
materially and adversely affect the Sponsor.
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(d) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Sponsor agrees to satisfy the conditions set forth in
Sections 2.1(g)-(k).
(e) In connection with each Subsequent Transfer Date and on the Payment
Dates occurring in October 1999, November 1999, December 1999 and January 2000,
the Master Servicer and the Indenture Trustee shall co-operate in determining
(i) the amount and correct dispositions of the Capitalized Interest Requirement,
the Pre-Funding Earnings and the amount then on deposit in the Pre-Funding
Account, and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
Section 3.1 Representations and Warranties of the Sponsor.
The Sponsor hereby represents, warrants and covenants to the Indenture
Trustee, the Master Servicer, the 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
respective 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 respective properties, to carry out its
respective business as presently conducted and as proposed to be conducted and
to enter into and discharge its respective 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,
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moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law).
(d) The Sponsor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which might have consequences that would materially and
adversely affect the condition (financial or other) or operations of the Sponsor
or its properties or might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or 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 such
statements do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make such statements not misleading. Other than with respect to the statements
referred to in the preceding sentence, 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 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
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Sponsor of its respective obligations under this Agreement and such of the other
Operative Documents to which it is a party.
It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the Mortgage Loans to the
Indenture Trustee.
Section 3.2 Representations and Warranties of the Master Servicer.
The Master Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Sponsor, the 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, in
compliance with the laws of each state in which any Mortgaged 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 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 direct parent, AMHC, equity of at least $5,000,000, as determined
in accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Master Servicer and will not
violate the Master Servicer's Articles of Incorporation or Bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which the Master Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Master Servicer is a party, assuming due authorization, execution and delivery
by the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Master Servicer, enforceable against it in accordance
with the terms hereof, except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the
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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) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Master Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the execution and
delivery by the Master Servicer of the Operative Documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending proceedings
or appeals (administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Master Servicer
and the performance by the Master Servicer of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
(g) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Master Servicer contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(h) 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 statement
contained therein with respect to the Master Servicer not misleading. Other than
with respect to the statements referred to in the preceding sentence, to the
best of the Master Servicer's knowledge and belief, the Registration Statement
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
contained therein not misleading.
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(i) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Master Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Mortgage Loans.
(j) The collection practices used by the Master Servicer with respect
to the Mortgage Loans directly serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage loan servicing
business.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Master Servicer.
(l) The terms of each existing Sub-Servicing Agreement and each
designated Sub-Servicer are acceptable to the Master Servicer and any new
Sub-Servicing Agreements or Sub-Servicers will comply with the provisions of
Section 4.1.
It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Initial Mortgage Loans
and the Subsequent Mortgage Loans to the Indenture Trustee.
Upon discovery by the Master Servicer, the Sponsor or the Indenture
Trustee of a breach of any of the representations and warranties set forth in
this Section 3.2 which materially and adversely affects the interests of the
Noteholders or of the Insurer, the party discovering such breach shall give
prompt written notice to the other parties. Within 60 days of its discovery or
its receipt of notice of breach, the Master Servicer shall cure such breach in
all material respects; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Insurer.
Section 3.3 Representations and Warranties of the Sponsor with Respect
to the Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor makes the following representations and warranties, and
Holding makes the representations and warranties set forth in (iv)(b) below, as
to each Mortgage Loan, on which the Trust relies in accepting the Mortgage Loan
and on which the Insurer relies in issuing the Policy. Such representations and
warranties speak as of the Closing Date, in the case of the Initial Mortgage
Loans, the Subsequent Transfer Date, in the case of the Subsequent Mortgage
Loans, and the Transfer Date, in the case of the Qualified Replacement Mortgage
Loans, but shall survive the transfer of the Mortgage Loans to the Trust and the
pledge thereof to the Indenture Trustee pursuant to the Indenture:
(i) All of the original or certified documentation set
forth in the definition of Mortgage File and in Section 2.1(g)(i)
(including all material documents related thereto) with respect to each
Mortgage Loan has been or will
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be delivered to the Indenture Trustee on the Closing Date, the
Subsequent Transfer Date or the Transfer Date, as applicable. All such
documentation is true and accurate in all material respects. Each of
the documents and instruments specified to be included therein has been
duly executed and in due and proper form, and each such document or
instrument is in a form generally acceptable to prudent mortgage
lenders that regularly originate, purchase or sell mortgage loans
comparable to the Mortgage Loans.
(ii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate.
(iii) The information set forth in the Schedule of Mortgage
Loans (as amended for Qualified Replacement Mortgage Loans and
Subsequent Mortgage Loans) for each Mortgage Loan listed is true and
correct in all material respects.
(iv) (a) Immediately prior to the transfers and assignments
herein contemplated, the Sponsor held good and indefeasible title to,
and was the sole owner of, each Mortgage Loan conveyed by the Sponsor
to Holding pursuant to Section 2.1 hereof, all monies due or to become
due with respect thereto, and all proceeds of such Cut-Off Date
Principal Balances with respect to such Mortgage Loans subject to no
liens, charges, mortgages, encumbrances or rights of others except
liens which will be released simultaneously with such transfers and
assignments; and immediately upon the transfers and assignments herein
contemplated, the Trust will hold good and indefeasible title to, and
be the sole owner of, each Mortgage Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except liens which will be
released simultaneously with such transfers and assignments and (b)
immediately prior to the transfers and assignments herein contemplated,
Holding held good and indefeasible title to, and was the sole owner of,
each Mortgage Loan (including its Cut-Off Date Principal Balance)
conveyed by Holding to the Trust pursuant to Section 2.1 hereof, all
monies due or to become due with respect thereto, and all proceeds of
such Cut-Off Date Principal Balances with respect to such Mortgage
Loans subject to no liens, charges, mortgages, encumbrances or rights
of others except liens which will be released simultaneously with such
transfers and assignments; and immediately upon the transfers and
assignments herein contemplated, the Trust will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan
subject to no liens, charges, mortgages, encumbrances or rights of
others except liens which will be released simultaneously with such
transfers and assignments.
(v) There is no valid offset, defense or counterclaim of
any obligor under any Credit Line Agreement or Mortgage. Neither the
operation of any of the terms of any such Credit Line Agreement or any
such Mortgage nor the exercise of any right thereunder will render
either such Credit Line Agreement or such Mortgage unenforceable, in
whole or in part, nor subject to any right of rescission, set-off,
claim, counterclaim or defense, including, without limitation,
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the defense of usury and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(vi) As of the Initial Cut-Off Date and with respect to the
Initial Mortgage Loans, no Minimum Monthly Payment is more than 59 days
Delinquent (measured on a contractual basis) and no more than 0.60% (by
aggregate Cut-Off Date Principal Balance) of the Initial Mortgage Loans
were 30-59 days Delinquent (measured on a contractual basis).
(vii) Each Credit Line Agreement and each Mortgage relating
to the Mortgage Loans is an enforceable obligation of the related
Mortgagor, except as the enforceability thereof may be limited by the
bankruptcy, insolvency or similar laws affecting creditors' rights
generally.
(viii)With respect to each Mortgage Loan, on each date that
the Coupon Rates have been adjusted, interest rate adjustments on such
Mortgage Loans were made in compliance with the related Mortgage and
Credit Line Agreement and applicable law.
(ix) Each Mortgaged Property is improved by a single
(one-to-four) family residential dwelling, which may include
manufactured homes, condominiums and townhouses.
(x) As of the Initial Cut-Off Date, no Initial Mortgage
Loan had a Combined Loan-to-Value Ratio in excess of 125.00%.
(xi) Each Mortgage is a valid and subsisting first or
junior lien of record on the Mortgaged Property (subject in the case of
any Junior Mortgage Loan only to one or more Senior Liens on such
Mortgaged Property) and subject in all cases to the exceptions to title
set forth in the title insurance policy or title search, with respect
to the related Mortgage Loan, which exceptions are generally acceptable
to banking institutions in connection with their regular mortgage
lending activities, and except for liens for (i) real estate taxes and
special assessments not yet delinquent, (ii) income taxes not yet due,
(iii) any covenants, conditions and restrictions, rights of way,
easements, and other matters of public record and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage.
(xii) To the best of the Sponsor's knowledge, there is no
delinquent tax or assessment lien or mechanic's lien on any Mortgaged
Property relating to a Mortgage Loan, and each such Mortgaged Property
is free of substantial damage and is in good repair.
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(xiii) Each Mortgage Loan at the time it was made complied
in all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, real estate
settlement procedure, usury, equal credit opportunity, disclosure and
recording laws.
(xiv) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of the Sponsor's knowledge, with
respect to each Mortgage Loan that is a Junior Mortgage Loan, (i) a
lender's title insurance policy, issued in standard California Land
Title Association form or American Land Title Association form, or
other form acceptable in a particular jurisdiction by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, was issued on the date of
origination of such Mortgage Loan, and as of the Closing Date, the
Subsequent Transfer Date or the Transfer Date, as applicable, each such
policy is valid and remains in full force and effect, or (ii) a title
search or guaranty of title customary in the relevant jurisdiction was
obtained with respect to any Mortgage Loan as to which no title
insurance policy or binder was issued.
(xv) Each Credit Line Agreement is the legal, valid,
binding and enforceable obligation of the maker thereof and is
enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(xvi) The terms of each Credit Line Agreement and each
related Mortgage have not been impaired, cancelled, subordinated,
rescinded, altered or modified in any material respect (except as
reflected in the Mortgage File and in the Mortgage Loan Schedule), and
the related Mortgaged Property has not been released from the lien of
the related Mortgage, in whole or in part and no instrument has been
executed that would effect such release, cancellation, subordination or
rescission, except by a written instrument which (if such instrument is
secured by real property) has been recorded, if necessary, to protect
the interest of the Noteholders and which has been delivered to the
Indenture Trustee. The substance of any other alteration or
modification of a Credit Line Agreement and related Mortgaged Property
is reflected on the related Schedule of Mortgage Loans.
(xvii) Except as otherwise required by law or the terms of
the Credit Line Agreement, pursuant to the statute under which the
related Mortgage Loan was made, the related Credit Line Agreement is
not and has not been secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage.
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(xviii) Each Mortgaged Property is located in the state
identified in the Schedule of Mortgage Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon.
(xix) To the best of the Sponsor's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently
occurring, and each such Mortgaged Property is undamaged by waste,
fire, earthquake or earth movement, flood, tornado or other casualty,
so as to affect adversely the value of such Mortgaged Property as
security for the related Mortgage Loan or the use for which the
premises were intended.
(xx) To the best of the Sponsor's knowledge, with respect
to each Mortgage Loan that is a Junior Mortgage Loan, either (A) no
consent for such Mortgage Loan was required by the holder of the
related Senior Lien(s) prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related Mortgage
File.
(xxi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption
available which materially interferes with the right to sell the
related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage.
(xxii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or Credit Line Agreement and
no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and the Sponsor has not
waived any default, breach, violation or event of acceleration;
provided, however, that the foregoing shall not apply to the extent
that the relevant default, breach, violation or other event relates to
one or more of the Delinquent Mortgage Loans.
(xxiii) To the best of the Sponsor's knowledge, all parties
to each Credit Line Agreement and the related Mortgage had legal
capacity to execute such Credit Line Agreement and the related Mortgage
and each such Credit Line Agreement and the related Mortgage have been
duly and properly executed by such parties.
(xxiv) No selection procedures reasonably believed by the
Sponsor to be adverse to the interests of the Noteholders or the
Insurer was utilized in selecting the Mortgage Loans.
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(xxv) No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been
approved by the applicable title insurer (to the extent required by
such title insurer) and which is part of the related Mortgage File
delivered to the Indenture Trustee.
(xxvi) To the best of the Sponsor's knowledge, at the time
of origination of each Mortgage Loan that is not a First Mortgage Loan,
the related senior lien was not more than 30 days delinquent.
(xxvii) To the best of the Sponsor's knowledge, all
required inspections, licenses and certificates with respect to the use
and occupancy of all occupied portions of all property securing the
Mortgages have been made, obtained or issued, as applicable.
(xxviii) With respect to each Mortgage Loan that is not a
First Mortgage Loan, the related senior lien does not provide for
negative amortization.
(xxix) With respect to each Mortgage Loan that is not a
First Mortgage Loan, the maturity date of the Mortgage Loan is prior to
the maturity date of the related senior lien if such senior lien
provides for a balloon payment.
(xxx) With respect to each Mortgage Loan, (1) the
improvements upon each related Mortgaged Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Master Servicer that provides for fire and extended
coverage representing coverage not less than (a) the Credit Limit of
such Mortgage Loan or (b) the maximum insurable value of the related
Mortgaged Property, or (2) the Master Servicer has obtained and will
maintain a blanket policy insuring against fire, flood and hazards of
extended coverage with respect to all of the Mortgage Loans.
(xxxi) With respect to any Mortgage Loan which is a First
Mortgage Loan, the Sponsor has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Master Servicer and the Indenture Trustee in any
Mortgage Insurance Policies applicable to such Mortgage Loan,
including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Trust
and its assignees in care of the Indenture Trustee.
(xxxii) To the best of the Sponsor's knowledge, each
Mortgage Loan was underwritten in all material respects in accordance
with the credit underwriting guidelines of the related Originator as
set forth in the related Originator's underwriting guidelines, as in
effect on the date of origination or acquisition.
(xxxiii) The Sponsor has received no notice of default of
any First Mortgage Loan secured by any Mortgaged Property that also
secures a Mortgage
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Loan which has not been cured by a party other than the Sponsor or the
Master Servicer.
(xxxiv) As of the respective Cut-Off Date, no Mortgagor had
been identified on the records of the Sponsor as being the subject of a
current bankruptcy proceeding.
(xxxv) To the best of the Sponsor's knowledge, the related
Originator, the Master Servicer, the Sponsor and any related Warehouse
Trust, is (or, during the period in which such party held and disposed
of its interest in a Mortgage Loan, was) in substantial compliance with
any and all applicable licensing requirements of the law of the state
wherein the property securing the Mortgage Loan is located.
(xxxvi) To the best of the Sponsor's knowledge, with
respect to the Mortgage Loans, the documents, instruments and
agreements submitted by each Mortgagor for loan underwriting were not
falsified and contain no untrue statement of a material fact and do not
omit to state a material fact required to be stated therein or
necessary to make the information and the statements contained therein
not misleading.
(xxxvii) Except as previously disclosed in writing to the
Indenture Trustee and the Insurer, there is only one originally
executed Mortgage and Credit Line Agreement not stamped as a duplicate.
(xxxviii) Each Mortgage Loan conforms, and all the Mortgage
Loans, in the aggregate, conform, in all material respects to the
description thereof set forth in the Registration Statement.
(xxxix) During the period from origination to Closing Date,
each Mortgage Loan has been serviced in accordance with applicable
laws.
(b) [Reserved]
(c) Upon the discovery by the Master Servicer, any Sub-Servicer, the
Sponsor or the Indenture Trustee of a breach of any of the representations and
warranties made in respect of any Mortgage Loan which materially and adversely
affects the interests of the Noteholders or of the 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 Sponsor of such
breach and request that the Sponsor cure such breach or take the actions
described in Section 3.4(b) hereof within the time periods required thereby, and
the Sponsor shall cure such breach or take such actions; provided, however, that
the cure for any breach of a representation and warranty relating to the
characteristics of the Mortgage Loans in the aggregate shall be a reassignment
of, or substitution for, only those Mortgage Loans necessary to cause such
characteristics to be in compliance with the related representation and
warranty, unless the Insurer shall waive such breach. Upon accepting such
transfer and making any required deposit into the Principal and Interest
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Account or substitution of a Qualified Replacement Mortgage Loan, as the case
may be, the Sponsor shall be entitled to receive an instrument of assignment or
transfer from the Indenture Trustee to the same extent as set forth in Section
2.2 with respect to the transfer of Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Sponsor to
accept a transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to deposit the Loan Reacquisition Price in the Principal and
Interest Account or to substitute an Qualified Replacement Mortgage Loan, and
deposit the Substitution Amount in the Principal and Interest Account, as the
case may be, shall constitute the sole remedy against the Sponsor respecting
such breach available to Noteholders, the Indenture Trustee on behalf of the
Noteholders and the Insurer.
Section 3.4 Covenants of Sponsor to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations.
(a) With respect to the representations and warranties set forth in
Section 3.3 that are made to the best of the Sponsor's knowledge or as to which
the Sponsor has no knowledge, if it is discovered by the Sponsor, the Master
Servicer, the Indenture Trustee or any Sub-Servicer that the substance of such
representation or warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan then, notwithstanding
the Sponsor's lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty and the Sponsor shall cure such breach, repurchase
the related Mortgage Loan at the Loan Reacquisition Price or substitute a
Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b), 3.3(c)
or 3.4 hereof.
(b) With the provisos and limitations as to remedies set forth in this
Section 3.4, upon the discovery by Sponsor, the Master Servicer, the Insurer,
any Sub-Servicer or the Indenture Trustee that the representations and
warranties set forth in Section 3.3 of this Agreement were untrue in any
material respect as of the Closing Date and such breaches of the representations
and warranties materially and adversely affect the interests of the Noteholders
or of the 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 Mortgaged Property constitutes a
breach of a representation or warranty which materially and adversely affects
the interests of the Noteholders or of the Insurer in such Mortgage Loan.
(c) 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 Insurer
or such time as a breach of any representation and warranty materially and
adversely affects the interests of
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the Noteholders or the Insurer as set forth above, the Sponsor hereby covenants
and warrants that it shall cure such breach in all material respects within 30
days or it shall (or shall cause an affiliate of the Sponsor to), subject to the
further requirements of this paragraph, regardless of whether or not it had
knowledge of such breach, on the second Remittance Date next succeeding such
discovery, receipt of notice or such other time (i) substitute in lieu of each
Mortgage Loan which has given rise to the requirement for action by the Sponsor
a Qualified Replacement Mortgage Loan and deliver the Substitution Amount
applicable thereto to the Master Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Mortgage Loan from the Trust at the Loan
Reacquisition 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,
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 Insurer against the Sponsor, except as otherwise provided in the
Insurance Agreement.
(d) In the event that any Qualified Replacement Mortgage Loan is
delivered by the Sponsor to the Trust pursuant to Section 2.2(b), Section 3.3(c)
or Section 3.4 hereof, the Sponsor shall be obligated to take the actions
described in Section 3.4(b) with respect to such Qualified Replacement Mortgage
Loan upon the discovery by any of the Noteholders, the Master Servicer, the
Sponsor, the Insurer, or the Indenture Trustee that the representations and
warranties set forth in Section 3.3(a) 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 Insurer in the related
Qualified Replacement Mortgage Loan are materially and adversely affected.
(e) It is understood and agreed that the covenants set forth in this
Section 3.4 shall survive the pledge of the Mortgage Loans (including the
Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of the
Trust.
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.1 Master Servicer and Sub-Servicers.
(a) Advanta Mortgage Corp. USA agrees to act as the Master Servicer and
to perform all servicing duties under this Agreement subject to the terms
hereof.
(b) The Master Servicer shall service and administer the Mortgage Loans
on behalf of the Indenture Trustee and the Insurer and shall have full power and
authority, acting alone or through one or more Sub-Servicers, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer, in its own name or
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the name of a Sub-Servicer, may, and is hereby authorized and empowered by the
Indenture Trustee to, execute and deliver, on behalf of itself, the Noteholders,
the Insurer and the Indenture Trustee or any of them, 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 the related
Mortgaged Properties, the Mortgage Insurance Policies and Accounts related
thereto and the properties subject to the Mortgages in accordance with the terms
of this Agreement. Upon the execution and delivery of this Agreement, and from
time to time as may be required thereafter, the Indenture Trustee shall furnish
the Master Servicer or its Sub-Servicers with any powers of attorney and such
other documents as may be necessary or appropriate to enable the Master Servicer
to carry out its servicing and administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Master Servicer
shall employ procedures consistent with Accepted Servicing Practices and in a
manner consistent with recovery under any Mortgage Insurance Policy required to
be maintained by the Master Servicer pursuant to this Agreement.
Costs incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on the property securing a Credit Line
Agreement and foreclosure costs may be added by the Master Servicer to the
amount owing under such Credit Line Agreement where the terms of such Credit
Line Agreement so permit; provided, however, that the addition of any such cost
shall not be taken into account for purposes of calculating the principal amount
of the Credit Line Agreement and the Mortgage Loan secured by the Credit Line
Agreement or distributions to be made to Noteholders. Such costs shall be
recoverable by the Master Servicer pursuant to Section 4.10 and 4.13.
(c) [reserved]
(d) The relationship of the Master Servicer (and of any successor to
the Master Servicer as servicer under this Agreement) to the Indenture Trustee
under this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer may
(with the written consent of the Insurer), to the extent permitted by applicable
law, terminate the existing Sub-Servicer arrangements with any Sub-Servicer or
assume the terminated Master Servicer's rights under such Sub-Servicing
arrangements (with the written consent of the Insurer), which termination or
assumption will not violate the terms of such arrangements.
(e) Subject to Sections 4.13 and 4.14, the Master Servicer, in its own
name, or a Sub-Servicer, in its own name, may be authorized and empowered by the
Indenture Trustee, (i) to institute foreclosure proceedings or obtain a deed in
lieu of foreclosure so as to effect owner of any Mortgaged Property on behalf of
the Indenture Trustee and (ii) to hold title to any Mortgaged Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Indenture Trustee;
provided, however, that Section
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4.14(a) shall constitute a power of attorney from the Indenture Trustee to the
Master 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 furnish the Master Servicer and any
Sub-Servicer with any powers of attorney and other documents as the Master
Servicer or such Sub-Servicer shall reasonably request to enable the Master
Servicer and such Sub-Servicer to carry out their respective servicing and
administrative duties hereunder.
(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 Mortgaged Property shall be recoverable by the Master
Servicer or such Sub-Servicer to the extent described in Section 4.10 herein and
in Section 8.6(b)(ix) of the Indenture.
Section 4.2 Modifications.
The Master Servicer may consent to any modification of the terms of any
Credit Line Agreement 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 Mortgaged Property, the timing of receipt of any
payments required hereby or the interests of Noteholders or the Insurer, unless
the Insurer consents in writing, provided, however, that, if the Insurer has not
given its written consent within five (5) Business Days after notice from the
Master Servicer, the Insurer shall be deemed to have given its consent to such
modification; provided, however, that such notice and consent shall not be
required in the event that the Master Servicer determines, in its reasonable
discretion that such modification is legally required to be made prior to such
five day period in which case the Master Servicer shall give the Insurer
immediate notice of such action.
In accordance with Accepted Servicing Practices and subject to the
limitations set forth in Section 4.1, the Master Servicer may in its discretion:
(a) waive any assumption fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or the fees which may
be collected in the ordinary course of servicing the Mortgage Loans,
(b) 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 be permitted to reschedule the payment of
delinquent payments more than one time in any twelve consecutive months with
respect to any Mortgagor and such modifications shall not be made in excess of
10% of the aggregate of the Cut-Off Date
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Pool Balance without the prior written consent of the Insurer; provided,
however, that, if the Insurer has not given its written consent within five (5)
Business Days after notice from the Master Servicer, the 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 reasonable
discretion that such modification is legally required to be made prior to such
five day period, in which case the Master Servicer shall give the Insurer
immediate notice of such action.
(c) 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 comparable mortgage loans subject to
the Civil Relief Act,
(d) extend the maturity date of any Mortgage Loan in connection with
the extension of the related Draw Period (provided, however, that in no event
may any such maturity date be extended to a date which is more than 12 months
after the original maturity date without the Insurer's written approval or to a
date which is later than the Payment Date occurring in January 2023).
(e) [reserved]
(f) The Master Servicer may, without prior approval from the Rating
Agencies or the Insurer (but subject to the 10% limitation described below),
increase the Credit Limits on Mortgage Loans provided that (i) new appraisals
are obtained and the Combined Loan-to-Value Ratios of the Mortgage Loans after
giving effect to such increase are less than or equal to the Combined
Loan-to-Value Ratios of the Mortgage Loans as of the related Cut-Off Date, (ii)
such increases are consistent with the applicable Originator's underwriting
policies, (iii) the related Mortgagor has made Draws on the Credit Line
Agreement in the past twelve months and has made timely payments and (iv) the
Master Servicer receives verbal verification of employment of the related
Mortgagor. In addition, the Master Servicer may increase the Credit Limits on
Mortgage Loans having aggregate balances of up to 5% of the Pool Principal
Balance without obtaining new appraisals provided that (i) the increase in the
Credit Limit does not cause the Combined Loan-to-Value Ratios of the Mortgage
Loans to exceed 100%, (ii) the increase is consistent with the applicable
Originator's underwriting policies, (iii) the related Mortgagor has used the
Credit Line Agreement in the past twelve months and has made timely payments,
(iv) the Master Servicer receives verbal verification of employment of the
related Mortgagor and (v) the 10% limitation described below is satisfied.
(g) The Master Servicer or the related Originator acting on behalf of
the Master Servicer may, without prior approval from the Insurer, solicit
Mortgagors for a reduction in Coupon Rates of no more than 0.50%; provided that
the Master Servicer can only reduce such Coupon Rates in accordance with the 10%
limitations described below. Any such solicitations shall not result in a
reduction in the weighted average Coupon Rate of the Mortgage Loans by more than
2.5 basis points after taking into account any such prior reductions.
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(h) Subject to the 10% limitations on modifications described below,
the Master Servicer shall have the right to approve applications of Mortgagors
for consent to partial releases of Mortgages (with the written consent of the
Insurer), alterations to Mortgaged Properties; and removal, demolition or
division of Mortgaged Properties. If the Insurer has not given its written
consent within five (5) Business Days after notice from the Master Servicer, the
Insurer shall be deemed to have given its consent to such modification;
provided, however, that such notice and consent shall not be required in the
event that the Master Servicer determines, in its reasonable discretion that
such modification is legally required to be made prior to such five day period,
in which case the Master Servicer shall give the Insurer immediate notice of
such action.
No application for approval shall be considered by the Master Servicer
unless: (x) the provisions of the related Credit Line Agreement and Mortgage
have been complied with; (y) the Combined Loan-to-Value Ratio (which may, for
this purpose, be determined at the time of any such action in a manner
reasonably acceptable to the Insurer) and the Mortgagor's debt-to-income ratio
after any release does not exceed the maximum Combined Loan-to-Value Ratio and
debt-to-income ratio specified as the then-current maximum levels under the
related Originator's underwriting guidelines for a similar credit grade borrower
and (z) the lien priority of the related Mortgage is not adversely affected.
(i) The Master Servicer shall have the right to sell, in whole-loan,
third-party sales, any Delinquent Mortgage Loan if the Master Servicer believes
that such means of disposition will provide the largest recovery.
Except as otherwise permitted under this Agreement, the Master Servicer
may not, without the prior written consent of the Insurer (which consent shall
not be unreasonably delayed), forgive any Mortgage Loan payments, impair any
lien position on the Mortgage Loans or extend the maturity of any Mortgage Loan.
In addition, unless the Insurer consents in writing, the Master Servicer may not
modify Mortgage Loans having an aggregate Principal Balance in excess of 10% of
the Cut-Off Date Pool Balance.
Section 4.3 Servicer Report
On the tenth day of each month, the Master Servicer shall send to the
Indenture Trustee a report (the "Servicer Report"), in the form of a computer
tape, detailing the aggregate 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.
Section 4.4 Liability of Master Servicer.
(a) The Master Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Sub-Servicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Sub-Servicer or otherwise, and the Master Servicer shall
be obligated to the same extent
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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 or any
Sub-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, Holding 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, Holding 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
4.4(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, Holding and the
Trust pursuant to this Section 4.4(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 4.4(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 4.4(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, Holding or the Trust
pursuant to this Section 4.4(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 8.2 of the Trust Agreement and the
Holding Trust Agreement.
Section 4.5 Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
The Master Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution (including
affiliates) which is
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acceptable to the Insurer and is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub-Servicing
Agreement. By delivery of the Policy, the Insurer is deemed to have approved the
respective Originators as Sub-Servicers hereunder. The Master Servicer shall
give notice to the Indenture Trustee, the Insurer and the Rating Agencies of the
appointment of any Sub-Servicer and shall furnish to the Insurer and the Rating
Agencies a copy of the Sub-Servicing Agreement (unless the Sub-Servicer is an
affiliate of the Master Servicer). For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on Mortgage Loans when any
Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement.
Section 4.6 Successor Sub-Servicers.
The Master Servicer may terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and to
either directly service the related Mortgage Loans itself or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under
Section 4.5.
Section 4.7 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 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 4.8.
Section 4.8 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, 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.
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.
Section 4.9 Principal and Interest Account.
(a) The Master Servicer and/or each Sub-Servicer, as applicable, shall
establish in the name of the Trust for the benefit of the Noteholders and the
Insurer and maintain at
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one or more Designated Depository Institutions the Principal and Interest
Account, which may be separate accounts or a single account with sub-accounts.
Subject to Subsections (c) and (e) below, the Master Servicer and any
Sub-Servicer shall deposit all receipts related to the Mortgage Loans to the
Principal and Interest Account on a daily basis (but no later than the second
Business Day after receipt). Such receipts shall include Net Liquidation
Proceeds, including net recoveries from the disposition or other turning to
account of Charged-Off Mortgage Loans.
On the Closing Date, the Sponsor shall cause the Master Servicer to
deposit within five Business Days after the Closing Date to the Principal and
Interest Account all principal and interest collected on the Mortgage Loans on
and after the related Cut-Off Dates.
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
Credit Line Agreement.
(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 (as defined in the Indenture). 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 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. The Master
Servicer shall deposit the amount of any investment losses immediately into the
Principal and Interest Account as realized.
(c) Subject to Subsection (e) below, the Master Servicer shall deposit
to the Principal and Interest Account all principal and interest collected on
the Mortgage Loans received on or after the related Cut-Off Dates, including any
Prepayments and Net Liquidation Proceeds, all Loan Reacquisition Prices and
Substitution Amounts received or paid by the Master Servicer with respect to the
Mortgage Loans and other recoveries or amounts related to the Mortgage Loans
received by the Master Servicer, together with any amounts which are
reimbursable from the Principal and Interest Account, but net of (i) the
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the Mortgage Loans prior to the
related Cut-Off Dates, (iii) interest collected on the Mortgage Loans prior to
the related Cut-Off Dates and (iv) Foreclosure Profits.
(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;
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(b) to pay to itself from any funds in the Principal
and Interest Account with respect to the Mortgage Loans any
accrued and unpaid Servicing Fees with respect to Mortgage
Loans and reimburse itself pursuant to Section 4.10 hereof for
unreimbursed Servicing Advances and Servicing Advances which
have been deemed Nonrecoverable Advances;
(c) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
(d) to withdraw amounts that have been deposited to
the Principal and Interest Account in error;
(e) to clear and terminate the Principal and Interest
Account following the termination of the Trust Estate pursuant
to Article X or XII of the Indenture; and
(f) to invest in Eligible Investments.
(ii) On each Remittance Date the Master Servicer shall
remit to the Indenture Trustee by wire transfer, or otherwise make
funds available in immediately available funds, the Interest Remittance
Amount and the Principal Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to the
unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are satisfactory to the Insurer, Moody's and S&P, then the
requirement to maintain the Principal and Interest Account at a Designated
Depository Institution may be waived by an instrument signed by the Insurer, S&P
and Moody's, and the Master Servicer may be allowed to co-mingle with its
general funds the amounts otherwise required to be deposited to the Principal
and Interest Account and make monthly deposits to the Note Account on such terms
and subject to such conditions as the Insurer, Moody's and S&P may permit.
Section 4.10 Servicing Advances.
The Master Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) the cost of any
enforcement or judicial proceedings, including (a) foreclosures, and (b) other
legal actions and costs associated herewith that potentially affect the
existence, validity, priority, enforceability or collectibility of the Mortgage
Loans, including collection agency fees and costs of pursuing or obtaining
personal judgments, garnishments, levies, attachment and similar actions, (iii)
the cost of the conservation, management, liquidation, sale or other disposition
or any Mortgaged Property acquired in satisfaction of the related Mortgage Loan
including reasonable fees paid to any independent contractors in connection
therewith, and (iv) advances to keep senior liens current, unless with respect
to any of the foregoing the Master Servicer has determined that such advance
would constitute a Nonrecoverable Advance. Each such
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amount so paid will constitute a "Servicing Advance." The Master Servicer may
recover Servicing Advances (x) from the Mortgagors to the extent permitted by
the Mortgage Loans, from Liquidation Proceeds realized upon the liquidation of
the related Mortgage Loan and from Mortgage Insurance Proceeds, and (y) as
provided in Section 8.6(c)(x) of the Indenture.
Section 4.11 Maintenance of Insurance.
(a) The Master Servicer shall cause to be maintained with respect to
each Mortgage Loan a hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage which may be in the form of a
blanket policy as described in clause (c) below, 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
Credit Limit of the Mortgage Loan or (ii) the maximum insurable value of the
Mortgaged Property.
(b) If any Mortgage Loan at the time of origination relates to a
Mortgaged Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Master Servicer
will cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier (which may be in the form of
a blanket policy as described in clause (c) below) in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Trust of Mortgage Insurance Proceeds relating to such Mortgage Loan of not
less than the least of (i) the Credit Limit of the Mortgage Loan or (ii) 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
Insurer out of the Master Servicer's own funds for any loss to the Trust and the
Insurer resulting from the Master Servicer's failure to maintain the insurance
required by this Section; provided, however, that in no event shall the Master
Servicer be required to maintain a flood insurance policy in an amount greater
than 100% of the value of the related Mortgaged Property.
It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Any cost incurred by the Master Servicer in maintaining
any such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Credit Line Agreement so permit; provided, however, that
the addition of any such cost shall not be taken into account for purposes of
calculating the principal amount of the Credit Line Agreements or the
distributions to be made to the Noteholders. Such costs shall be considered a
Servicing Advance and shall be recoverable by the Master Servicer pursuant to
Section 4.10.
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(c) In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against fire, flood and hazards of extended coverage on
all of the Mortgage Loans as set forth above, then, to the extent such policy
names the Master Servicer as loss payee and provides coverage in an amount equal
to the aggregate Credit Limit 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, hazard and flood insurance coverage under this Section 4.11, it
being understood and agreed that such blanket policy may contain a deductible
clause, in which case the Master Servicer shall, in the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with the preceding paragraphs of this Section 4.11, and there shall have been a
loss which would have been covered by such policy, deposit in the Principal and
Interest Account from the Master Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy complying with
the preceding paragraphs of this Section 4.11 and the amount paid under such
blanket policy. Upon the request of the Indenture Trustee or the Insurer, the
Master Servicer shall cause to be delivered to the Indenture Trustee or the
Insurer, a certified true copy of such policy.
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
Except as provided in Section 4.14(b), when a Mortgaged 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 Credit Line
Agreement; 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 materially and adversely affect the interest of the Noteholders or of the
Insurer. In such event, the Master Servicer shall enter into an assumption and
modification agreement (the terms of which will be consistent with the 10%
limitation on modifications described in Section 4.2(h) above) with the person
to whom such property has been or is about to be conveyed, pursuant to which
such person becomes liable under the Credit Line Agreements and, unless
prohibited by applicable law or this Agreement or any of the agreements,
guaranties or assignments relating to the Mortgage Loans contained in the
Mortgage Files, 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 Credit Line Agreement; 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 Insurer.
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
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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 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 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 anything in this Section 4.12 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 the Mortgaged Properties relating
to defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of Delinquent payments. If the Master Servicer determines not to
bring or to terminate foreclosure proceedings, it will determine in accordance
with the Accepted Servicing Practices whether or not to seek a judgment against
the Mortgagor. In connection with such foreclosure or other conversion, the
Master Servicer shall follow Accepted Servicing Practices. Any amounts advanced
pursuant to this Section 4.13 shall constitute "Servicing Advances" within the
meaning of Section 4.10 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 a Mortgaged Property in
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determining whether to foreclose upon or otherwise comparably convert the
ownership of such Mortgaged Property.
(b) The Master Servicer shall determine, with respect to each defaulted
Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall
become a "Liquidated Mortgage Loan" and shall promptly deliver to the Insurer
the Master Servicer's customary liquidation report (each, a "Liquidation
Report") with respect to such Mortgage Loan. Any net recoveries from a
Liquidated Mortgage Loan shall constitute property of the Trust and shall be
deposited by the Master Servicer in the Principal and Interest Account, all in
accordance with the provisions of this Agreement.
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of the Principal Balance 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 of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer shall deliver to the Indenture
Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, in trust to (i) the Master Servicer, or (ii) an escrow
agent for the Master Servicer. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Master
Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee
and the mortgagee under the Mortgage which secured the Credit Line Agreement, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Master Servicer 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; in such event, the Indenture Trustee shall execute and
acknowledge such satisfaction or assignment, as the case may be, and deliver the
same with the related 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, upon request of the Master
Servicer and delivery to the Indenture Trustee of a Master Servicer's Trust
Receipt in the form of Exhibit F hereto, release the related Mortgage File to
the Master Servicer and shall execute such documents as shall be
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necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to the Master
Servicer; provided, that there shall not be released and unreturned at any one
time more than 25 Mortgage Files. The Indenture Trustee shall complete in the
name of the Indenture Trustee any endorsement in blank on any Credit Line
Agreement prior to releasing such Credit Line Agreement to the Master Servicer.
Such receipt shall obligate the Master Servicer to return the Mortgage File to
the Indenture Trustee when the need therefor by the Master Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of the liquidation information, in physical or electronic form, a copy of the
Master Servicer's Trust Receipt shall be released by the Indenture Trustee to
the Master 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 Subsections (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be given by
the Insurer, Moody's and S&P pursuant to Section 2.1(k) 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) within
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
above 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, or approved, as applicable, 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
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 seven 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 pursuant to the provisions of this Agreement. Additional servicing
compensation in the form of prepayment charges, Termination Fees, release fees,
bad check charges, assumption fees,
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late payment charges, or any other servicing-related fees, Foreclosure Profits,
Net Liquidation Proceeds not required to be deposited in the Principal and
Interest Account pursuant to Section 4.9(c) 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, Insurer, S&P and Moody's, on or before the fifteenth of April of each
year, commencing in 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 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 fifteenth of April of each year, commencing in 2000,
the Master Servicer, at its own expense, shall cause to be delivered to the
Indenture Trustee, the Insurer, S&P and Moody's a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Insurer stating that such firm has, with respect to the Master
Servicer's overall servicing operations (i) performed applicable tests in
accordance substantially in compliance with the testing procedures as set forth
in Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees, (ii) examined such operations substantially in compliance with the
requirements of the Uniform Single Attestation 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 Insurer
and the agents and examiners of each of the foregoing (when accompanied by each
of the foregoing) access to the documentation regarding the Mortgage Loans
required by applicable state and federal regulations, such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Master Servicer.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such
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computer tape to the Indenture Trustee and the Insurer at such other times as
the Indenture Trustee or the Insurer may reasonably request.
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 Insurer, which such consent shall not be
unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 5.1(f) 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 any affiliate. Notice of
any such assignment shall be given by the Master Servicer to the Indenture
Trustee, the Insurer, Moody's and S&P.
Section 4.20 Resignation of the Master Servicer.
Subject to Section 5.1(c), the Master Servicer shall not resign from
the obligations and duties hereby imposed on it except by mutual written consent
of the Sponsor, the Master Servicer, the Insurer and the Indenture Trustee or
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
Insurer.
ARTICLE V
SERVICING TERMINATION
Section 5.1 Events of Servicing Termination.
(a) If any one of the following events ("Event of Servicing
Termination") shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the
Indenture Trustee any proceeds or required payment, which failure
continues unremedied for three Business Days following written notice
to an Authorized Officer of the Master Servicer from the Indenture
Trustee or from the Insurer or Noteholders evidencing Percentage
Interests aggregating not less than 25%.
(ii) The Master Servicer shall (I) apply for or consent to
the appointment of a receiver, Indenture Trustee, liquidator or
custodian or similar entity with respect to itself or its property,
(II) admit in writing its inability to pay its debts generally as they
become due, (III) make a general assignment for the benefit of
creditors, (IV) be adjudicated a bankrupt or insolvent, (V) commence a
voluntary case under the federal bankruptcy laws of the United States
of America
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or file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing.
(iii) If without the application, approval or consent of
the Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a Indenture Trustee, receiver, liquidator or custodian
or similar entity with respect to the Master Servicer or of all or any
substantial part of its assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is
being contested by the Master Servicer in good faith, the same shall
(A) result in the entry of an order for relief or any such adjudication
or appointment or (B) continue undismissed or pending and unstayed for
any period of seventy-five (75) consecutive days; or
(iv) The Master Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.2 or
perform any covenants hereunder, which failure materially and adversely
affects the interests of the Noteholders or Insurer for a period of 30
days after the Master Servicer's discovery or receipt of notice thereof
from the Indenture Trustee, the Insurer, or Noteholders evidencing not
less than 25% of the Note Balance; provided, however, that if the
Master Servicer can demonstrate to the reasonable satisfaction of the
Insurer that it is diligently pursuing remedial action, then the cure
period may be extended with the written consent of the Insurer.
(v) The Master Servicer shall fail to make any required
Servicing Advance which failure continues for thirty (30) days or more
after written notice from the Insurer if such failure has a material
and adverse affect on Net Liquidation Proceeds, in the sole
determination of the Insurer.
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee or the Noteholders evidencing not less than 51% of the Note
Balance in each case with the written consent of the Insurer, or the Insurer, by
notice then given in writing to the Master Servicer (and to the Indenture
Trustee if given by the Insurer of the Noteholders) may terminate all of the
rights and obligations of the Master Servicer as servicer under this Agreement.
Any such notice to the Master Servicer shall also be given to each Rating Agency
and the Insurer. On and after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Notes or the Mortgage Loans or otherwise, shall pass
to and be vested in the Indenture Trustee pursuant to and under this Section 5.1
and, without
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limitation, the Indenture Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan and related documents, or otherwise. The Master Servicer agrees to
cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Note Account, or that have been deposited by the
Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1 shall
be paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Nothing herein shall relieve the Master Servicer from using its best
efforts to perform its respective obligations in a timely manner in accordance
with the terms of this Agreement and the Master Servicer shall provide the
Indenture Trustee, the Sponsor, the Insurer and the Noteholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Master Servicer shall immediately notify the Indenture Trustee and the Insurer
in writing of any Events of Servicing Termination.
(b) In addition to the foregoing, the Insurer may remove the Master
Servicer upon the occurrence of an "Insurance Agreement Event of Servicing
Termination" under the Insurance Agreement.
(c) No removal or resignation of the Master Servicer shall become
effective until the Indenture Trustee or a successor servicer acceptable to the
Insurer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with this Section.
(d) Upon removal or resignation of the Master Servicer, the Master
Servicer also shall promptly deliver or cause to be delivered to a successor
servicer or the Indenture Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Master Servicer has
maintained for the Mortgage Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Master Servicer's possession.
(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
Trustee (x) may solicit bids for a successor servicer as described below, and
(y) pending the
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appointment of a successor Master Servicer as a result of soliciting such bids,
shall serve as Master Servicer. The Indenture Trustee shall, if it is unable to
obtain a qualifying bid and is prevented by law from acting as Master Servicer,
appoint, or petition a court of competent jurisdiction to appoint, any housing
and home finance institution, bank or mortgage servicing institution which has
shareholders' equity of not less than $5,000,000, as determined in accordance
with generally accepted accounting principles, and acceptable to the 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 4.9 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 Originator.
(g) In the event the Indenture Trustee solicits bids as provided above,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor Master Servicer shall be entitled to the full amount of the
aggregate Servicing Fees as servicing compensation, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.9 and 4.15. Within thirty days after any
such public announcement, the Indenture Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory bid. The
Indenture Trustee shall deduct from any sum received by the Indenture Trustee
from the successor to the Master Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum shall be paid by the Indenture
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the Master Servicer's successor.
(h) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Indenture Trustee
and any successor Master Servicer in effecting the termination of the Master
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Indenture Trustee or such successor Master Servicer, as applicable,
all documents and records reasonably requested by it to enable it to assume the
Master Servicer's functions hereunder and shall promptly also transfer to the
Indenture Trustee or such successor Master Servicer, as applicable, all amounts
which then have been or should have been deposited in the Principal and Interest
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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.
(i) The Master Servicer which is being removed or is resigning shall
give notice to the Mortgagors and to Moody's and S&P of the transfer of the
servicing to the successor.
(j) The Indenture Trustee shall give notice to the Insurer, Moody's and
S&P and to the Noteholders of the occurrence of any event specified in Section
5.1(a) of which the Indenture Trustee has actual knowledge.
(k) The Indenture Trustee or any other successor Master Servicer, upon
assuming the duties of Master Servicer hereunder, shall immediately make all
Servicing Advances which the Master Servicer has theretofore failed to pay 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 Servicing Advances if, in the Indenture Trustee's reasonable
good faith judgment, such Servicing Advances will ultimately be recoverable from
the related Mortgage Loans.
Section 5.2 Inspections by Insurer; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the 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.
(b) The Master Servicer agrees to maintain errors and omissions
coverage and a fidelity bond, each at least to the extent generally maintained
by prudent mortgage loan servicers having servicing portfolios of a similar
size.
Section 5.3 Merger, Conversion, Consolidation or Succession to Business
of Master Servicer.
Any corporation into which the Master Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Master Servicer shall
be a party, or any corporation succeeding to all or substantially all of the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto provided that such corporation meets the
qualifications set forth in Section 5.1(f).
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Section 5.4 Notification 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 Insurer and each Rating Agency.
Section 5.5 Notices of Material Events.
The Master Servicer shall give prompt notice to the Insurer, the
Indenture Trustee, Moody's and S&P of the occurrence of any of the following
events:
(a) Any default or any fact or event which results in the occurrence of
a default by the Sponsor, any Originator or the Master Servicer under any
Operative Document or would constitute a material breach of a representation,
warranty or covenant under any Operative Document.
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against any Originator,
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 of such Originator's,
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 any Originator,
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 such
Originator, 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 Originator's, the Sponsor's, the Master
Servicer's or AMHC's business that such Originator, the Sponsor, the Master
Servicer or AMHC is to cease and desist, or to undertake any practice, program,
procedure or policy employed by such Originator, 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 such
Originator's, 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 such Originator, the Sponsor, the Master Servicer or
AMHC.
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ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
Section 6.1 Administrative Duties with Respect to the Indenture
The Master Servicer shall perform all its duties and the duties of the
Trust 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 and shall advise the Owner Trustee when action is
necessary to comply with the Trust's duties under the Indenture. 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 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 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
Certificateholders' interest in the Trust 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.
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(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 5.1(a), (b), (c) and (d) of the Trust Agreement
with respect to, among other things, accounting and reports with
respect to the Certificateholders' interest in the Trust.
(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 Insurer) and shall be, in the Master
Servicer's opinion, no less favorable to the Trust or the 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 within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Insurer of the proposed action and the Owner
Trustee and the Insurer shall have consented in writing thereto 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 appointment of Successor Servicers or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(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 to the
Originator under the Operative Documents, (2) sell the Trust Property pursuant
to Section 5.6 of the Indenture, (3) take any other action that the Trust
directs the Master Servicer not to take on its behalf (unless the Insurer so
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directs) or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(d) Responsibility. The Indenture Trustee or any successor Master
Servicer shall not be responsible for any obligations or duties of the Master
Servicer under this Section 6.1.
Section 6.2 Records
The Master Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Trust and the
Indenture Trustee at any time during normal business hours.
Section 6.3 Additional Information to be Furnished to the Trust
The Master Servicer shall furnish to the Trust, the Indenture Trustee
and the Insurer from time to time such additional information regarding the
Mortgage Loans as the Trust, the Indenture Trustee or the Insurer shall
reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Compliance Certificates and Opinions.
Upon any application or request by the Sponsor, the Insurer or the
Noteholders to the Indenture Trustee to take any action under any provision of
this Agreement, the Sponsor or the Noteholders, as the case may be, shall
furnish to the Indenture Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of any documents is specifically required
by any provision of this Agreement relating to such particular application or
request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto.
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
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(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 7.2 Form of Documents Delivered to the Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture Trustee may
be based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 7.3 Acts of 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 the Insurer has consented thereto in
writing, and, where it is hereby expressly required, to the Sponsor.
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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.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of the Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Noteholder shall bind the Noteholder of every Note
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 7.4 Notices, etc. to Indenture Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Noteholders 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 Noteholder, the Insurer or by the Sponsor shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Indenture Trustee at its Corporate Trust Office as set forth
in the Indenture.
Section 7.5 Notices and Reports to 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 Note 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.
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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 7.6 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 7.7 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 7.8 Benefits of Agreement.
Nothing in this Agreement or in the Notes, expressed or implied, shall
give to any Person, other than the Noteholders, the Insurer and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 7.9 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.
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Section 7.10 Governing Law.
THIS AGREEMENT 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 7.11 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 7.12 Usury.
The amount of interest payable or paid on any Note under the terms of
this Agreement shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the State of New
York or any applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws, which could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Trust stipulates that such excess amount will be deemed to have been paid to
the Noteholder inadvertently in error by the Indenture Trustee acting on behalf
of the Trust and the Noteholder 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 Noteholder, apply the excess to the payment of principal of such Note, if
any, remaining unpaid in any event, the Indenture Trustee shall not be
responsible for any repayment of such excess payments. In addition, all sums
paid or agreed to be paid to the Indenture Trustee for the benefit of
Noteholders of Notes 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 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 approval of the Insurer
but without the giving of notice to or the receipt of the consent of the
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of (i) curing any ambiguity, or correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or to add provisions hereto which are not inconsistent with
the provisions hereof, or (ii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder; provided, however, that any
such action shall not, (i) as evidenced in writing from the Rating Agencies
delivered to the Indenture Trustee, reduce the then-current rating on the Notes
or (ii) as
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evidenced by an opinion of counsel delivered to the Indenture Trustee,
materially and adversely affect the interests of any Noteholder (without its
written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer may, at
any time and from time to time, with the prior written approval of the Insurer
but without the giving of notice to or the receipt of the consent of the
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of changing the definition of "Specified
Overcollateralization Amount" (as defined in the Insurance Agreement); provided,
however, that no such change shall affect the weighted average life of the Notes
(assuming an appropriate prepayment speed as determined by the Underwriters as
evidenced in writing) by more than five percent, as determined by the
Underwriters.
(c) In addition to (a) and (b) 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 Insurer and not less than a
majority of the Percentage Interest represented by the Notes then Outstanding,
for the purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the 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 such Noteholder or (b) reduce the aforesaid percentages of Percentage
Interests which are required to consent to any such amendments, without the
consent of all Noteholders then Outstanding.
(d) The Insurer, the Noteholders, Moody's and S&P 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 Insurer.
The Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Insurer shall be suspended during any period in which the
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 any
period of suspension the Insurer's rights hereunder shall vest in the
Noteholders of the Notes 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 Insurer has been
reimbursed for all payments made pursuant to the Policy to which it is entitled
hereunder, the Insurer's rights hereunder shall terminate. Except at such time
as an Insurer Default has occurred and is continuing, the Insurer shall be
deemed the 100% Noteholder for purposes of all voting rights, consents,
directions, notices and waivers hereunder.
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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.
3 Park Plaza
Irvine, CA 92614
Attention: ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 1999-B
Tel: (949) 253-7575
Fax: (949) 253-7577
The Sponsor: Advanta Conduit Receivables, Inc.
10790 Rancho Bernardo Drive
San Diego, CA 92127
Attention:
Tel: (858) 676-3099
Fax: (858) 676-3024
with a copy addressed to the attention of
the General Counsel at the same address.
The Master Servicer: Advanta Mortgage Corp. USA
10790 Rancho Bernardo Drive
San Diego, CA 92127
Attention: Senior Vice President, Loan
Service
Tel: (858) 676-3099
Fax: (858) 674-676-3024
The Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department-MBS
Fax: (212) 363-1459
Confirmation: (212) 668-0340
In each case in which notice or other communication to the Insurer
refers to an Event of Servicing Termination, a claim on the Policy or with
respect to which failure on
57
<PAGE> 62
the part of the 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".
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity
Monitoring Department
S&P: Standard & Poor's Ratings Group
55 Water Street
New York, New York 10041
Attention: Mortgage Surveillance Group
The Trust: Advanta Revolving Home Equity Loan
Trust 1999-B
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.
[Signature Page Follows]
58
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto 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.
By:_____________________________________________
Name:
Title:
ADVANTA MORTGAGE CORP. USA
By:_____________________________________________
Name:
Title:
ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-B,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:_____________________________________________
Name:
Title:
ADVANTA HOLDING TRUST 1999-B
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:_____________________________________________
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
not in its individual capacity but solely as Indenture Trustee
By:_____________________________________________
Name:
Title:
C-1
<PAGE> 64
EXHIBIT B
[Reserved]
B-1
<PAGE> 65
EXHIBIT C
[Reserved]
C-1
<PAGE> 66
EXHIBIT D
FORM OF 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 September 1, 1999
(the "Sale and Servicing Agreement"), by and among 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-B,
Advanta Revolving Home Equity Loan Trust 1999-B, as Trust, and the Indenture
Trustee, hereby acknowledges receipt of the items delivered to it by the Sponsor
with respect to the Mortgage Loans.
The Schedule of Mortgage Loans is attached to this Receipt.
The Indenture Trustee hereby additionally acknowledges that it
shall review such items as required by Section 2.2(a) of the Sale and Servicing
Agreement and shall otherwise comply with Section 2.2(b) of the Sale and
Servicing Agreement as required thereby.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Indenture Trustee
By:___________________________________
Name:
Title:
Dated:______________
D-1
<PAGE> 67
EXHIBIT E
FORM OF CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust
Company of California, N.A., a national banking association, acting in its
capacity as indenture trustee (the "Indenture Trustee") of a certain pool of
mortgage loans (the "Pool") heretofore conveyed in trust to the Indenture
Trustee, pursuant to that certain Sale and Servicing Agreement, dated as of
September 1, 1999 (the "Sale and Servicing Agreement"), by and among 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-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Trust,
and the Indenture Trustee; and
WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2(a)
of the Sale and Servicing Agreement, to review the Files relating to the Pool
within a specified period following the Closing Date and Transfer Date and to
notify the Sponsor promptly of any defects with respect to the Pool, and the
Sponsor is required to remedy such defects or take certain other action, all as
set forth in Section 2.2(b) of the Sale and Servicing Agreement; and
WHEREAS, Section 2.2(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, the Indenture Trustee has determined that as to each
Mortgage Loan listed in the Schedule of Mortgage Loans (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it (contained in a Mortgage File) pursuant to this
Agreement are in its possession and (ii) such documents have been reviewed by it
and on their face appear to relate to such Mortgage Loan. The Indenture Trustee
makes no certification hereby, however, with respect to any intervening
assignments or assumption and modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:_______________________
Name:
Title:
Date:_______________
E-1
<PAGE> 68
EXHIBIT F
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.
Three Park Plaza, 16th Floor
Irvine, California 92614
Attn: Corporate Trust
Date: _________________
In connection with the administration of the mortgage loans held by you
as Indenture Trustee under that certain Sale and Servicing Agreement dated as of
September 1, 1999 by and among Advanta Conduit Receivables, Inc., a Nevada
corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as
Master Servicer, Advanta Holding Trust 1999-B, Advanta Revolving Home Equity
Loan Trust 1999-B, as Trust, and you (the "Agreement"), the Master Servicer
hereby requests a release of the File held by you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all amounts received in
connection with the loan have been or will be credited to the Note Account
(whichever is applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan reacquired pursuant to Section 3.3(c), 3.4,
or 2.2(b) of the Agreement.
(The Master Servicer hereby certifies that the Loan
Reacquisition 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.)
_______ 4. The Mortgage Loan is being foreclosed.
F-1
<PAGE> 69
_______ 5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
be returned to you, except if the Mortgage Loan has been paid in full, or
purchased or substituted for by a Qualified Replacement Mortgage Loan (in which
case the Mortgage File will be retained by us permanently) and except if the
Mortgage Loan 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:
F-2
<PAGE> 70
EXHIBIT G
FORM OF POWER OF ATTORNEY
G-1
<PAGE> 71
EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement (this "Agreement"),
dated as of __________, _____, among Advanta Conduit Receivables, Inc., a Nevada
corporation (the "Sponsor"), Advanta Holding Trust 1999-B ("Holding") and
Advanta Revolving Home Equity Loan Trust 1999-B (the "Trust"), the Sponsor,
Holding and the Trust agree to the sale by the Sponsor to Holding, and the
simultaneous sale by Holding to the Trust, of the Mortgage Loans listed on the
attached schedule of Mortgage Loans (the "Subsequent Mortgage Loans").
Capitalized terms are used in this Agreement as defined in Annex 1 of
the Indenture, dated as of September 1, 1999 (the "Indenture"), between the
Trust and Bankers Trust Company of California, N.A., as Indenture Trustee, which
meanings are incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1. Sale of Subsequent Mortgage Loans.
(a) The Sponsor does hereby sell, transfer, assign, set over and convey
to Holding, without recourse, all of its right, title and interest in and to the
Subsequent Mortgage Loans, and including all principal and interest collected on
the Subsequent Mortgage Loans on and after the Subsequent Cut-Off Date, and the
Mortgage File for each Subsequent Mortgage Loan. The Sponsor, contemporaneously
with the delivery of this Agreement, has delivered or caused to be delivered to
Holding the Mortgage File for each Subsequent Mortgage Loan.
Simultaneously with its acquisition of the Subsequent Mortgage Loans,
Holding does hereby sell, transfer, assign, set over and convey to the Trust,
without recourse, all of its right, title and interest in and to the Subsequent
Mortgage Loans, and including all principal and interest collected on the
Subsequent Mortgage Loans on and after the Subsequent Cut-Off Date, and the
Mortgage File for each Subsequent Mortgage Loan. Holding, contemporaneously with
the delivery of this Agreement, has delivered or caused to be delivered to the
Trust the Mortgage File for each Subsequent Mortgage Loan.
The transfer to the Trust of the Subsequent Mortgage Loans identified
on the Schedule of Subsequent Mortgage Loans shall be absolute and is intended
by the parties hereto to constitute a sale by the Sponsor to the Trust on the
Subsequent Transfer Date of all the Sponsor's right, title and interest in and
to the Subsequent Mortgage Loans, and other property as and to the extent
described above. In the event the transactions set forth herein shall be deemed
not to be a sale, the Sponsor hereby grants to the Trust as of the Subsequent
Transfer Date a security interest in all of the Sponsor's right, title and
interest in, to and under the Subsequent Mortgage Loans, and such other
property, to secure all of the Sponsor's obligations hereunder, and this
Agreement shall constitute a security agreement under applicable law. The
Sponsor agrees to take or cause to be taken such
H-1
<PAGE> 72
actions and to execute such documents, including without limitation the filing
of all necessary UCC-1 financing statements and any continuation statements with
respect thereto as are necessary to perfect and protect the Trust's interests in
each Subsequent Mortgage Loan and the proceeds thereof.
(b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans and this Agreement shall be borne by the Sponsor.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Sponsor hereby affirms the representations and warranties set
forth in Sections 3.1 and 3.3 of the Sale and Servicing Agreement that relate to
the Sponsor or the Subsequent Mortgage Loans as of the date hereof. The Sponsor
hereby confirms that each of the conditions set forth in Section 2.6 of the Sale
and Servicing Agreement are satisfied as of the date hereof and further
represents and warrants that each Subsequent Mortgage Loan complies with the
requirements of this Agreement and Section 2.6 of the Sale and Servicing
Agreement.
(b) The Sponsor is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder nor is it
aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Sponsor prior to the
date hereof.
(c) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.
Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in
which any or all of the properties subject to the related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction of the Insurer or Noteholders of at least 51% of the Note
Balance, but only when accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Noteholders or the Insurer or is necessary for the administration or servicing
of the Subsequent Mortgage Loans.
Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
G-2
<PAGE> 73
Section 5. Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an original
and together shall constitute one and the same instrument.
G-3
<PAGE> 74
Section 6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Sponsor, Holding, the Trust and their
respective successors and assigns.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By:_______________________________________
Name:
Title:
ADVANTA HOLDING TRUST 1999-B
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:_______________________________________
Name:
Title:
ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-B,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:_______________________________________
Name:
Title:
G-4
<PAGE> 1
EXHIBIT 4.5
[AMBAC letterhead]
Insured Obligations: Policy Number:
Advanta Revolving Home Equity Loan Trust 1999-B, AB0299BE
Advanta Revolving Home Equity Loan Asset
Backed Notes, Series 1999-B
Premium:
As specified in the
endorsement attached hereto
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: September 28, 1999 Authorized Representative
-------------------
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
PURCHASE AGREEMENT
Between
ADVANTA NATIONAL BANK
and
ADVANTA FINANCE CORP.
as the Originators
and
ADVANTA CONDUIT RECEIVABLES, INC.
as Purchaser
Dated as of September 1, 1999
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C>
Definitions...................................................................................................... 1
ARTICLE II
Procedures for Purchases of Mortgage Loans; Conditions Precedent; Settlements
Section 2.01. Purchase and Sale.............................................................................. 1
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans.............................................. 3
Section 2.03. Survival of Representations.................................................................... 3
Section 2.04. Proceeds of Mortgage Loans..................................................................... 3
Section 2.05. Repurchased Mortgage Loans..................................................................... 4
ARTICLE III
Protective Security Interest..................................................................................... 4
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of Originators.................................................. 5
Section 4.02. Representations and Warranties Regarding Mortgage Loans........................................ 7
Section 4.03. Representations and Warranties of Purchaser.................................................... 7
Section 4.04. Remedies for Breach of Representations and Warranties; Repurchase Obligation................... 8
ARTICLE V
Covenants and Warranties of Originators
Section 5.01. Affirmative Covenants.......................................................................... 9
Section 5.02. Negative Covenants............................................................................. 10
ARTICLE VI
Sale of Mortgage Loans by Purchaser.............................................................................. 10
ARTICLE VII
Additional Remedies.............................................................................................. 11
ARTICLE VIII
Term............................................................................................................. 11
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IX
Exclusive Benefit of Parties; Assignment......................................................................... 12
ARTICLE X
Amendment; Waivers............................................................................................... 12
ARTICLE XI
Execution in Counterparts........................................................................................ 12
ARTICLE XII
Effect of Invalidity of Provisions............................................................................... 12
ARTICLE XIII
Governing Law.................................................................................................... 13
ARTICLE XIV
Notices.......................................................................................................... 13
ARTICLE XV
Entire Agreement................................................................................................. 13
ARTICLE XVI
Indemnities...................................................................................................... 13
ARTICLE XVII
RESPA Obligations................................................................................................ 15
ARTICLE XVIII
Survival......................................................................................................... 15
ARTICLE XIX
Consent to Service............................................................................................... 15
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury.............................................................. 15
ARTICLE XXI
Construction..................................................................................................... 16
</TABLE>
iii
<PAGE> 4
ARTICLE XXII
<TABLE>
<S> <C>
Further Assurances............................................................................................... 16
ARTICLE XXIII
Third Party Beneficiary.......................................................................................... 16
ARTICLE XXIV
No Petition...................................................................................................... 16
SCHEDULES, EXHIBITS AND ANNEX
Schedule I: Schedule of Mortgage Loans............................................................... I-1
Exhibit A: Mortgage Loan Representations and Warranties.............................................. A-1
Exhibit B: Form of Subsequent Transfer Agreement..................................................... B-1
Annex 1: Copy of Annex 1 to the Indenture............................................................ 1-1
</TABLE>
iv
<PAGE> 5
THIS PURCHASE AGREEMENT (this "Agreement") is made as of
September 1, 1999 between Advanta National Bank, a national banking association
("ANB"), and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand,
and Advanta Conduit Receivables, Inc., a Nevada corporation ("Purchaser"), on
the other hand. ANB and AFC are sometimes individually referred to herein as an
"Originator" and sometimes collectively referred to herein as the "Originators."
WHEREAS, the Originators desire to sell to Purchaser, and
Purchaser desires to purchase from the Originators, the Mortgage Loans, all in
accordance with the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
promises herein made and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Except as otherwise specified herein, capitalized terms are used in
this Agreement as defined in Annex 1 of the Indenture, dated as of September 1,
1999 (the "Indenture"), between Advanta Revolving Home Equity Loan Trust 1999-B
and Bankers Trust Company of California, N.A., as Indenture Trustee. A copy of
Annex 1 of the Indenture is attached to this Agreement. Defined terms that are
used only in one section or only in another definition may be omitted from the
list of defined terms in Annex 1 of the Indenture. Defined terms include, as
appropriate, all genders and the plural as well as the singular.
ARTICLE II
Procedures for Purchases of Mortgage Loans;
Conditions Precedent; Settlements
Section 2.01 Purchase and Sale. (a) The Originators hereby
agree to sell, assign, transfer, convey and set over to Purchaser, and Purchaser
hereby agrees to purchase and acquire from the Originators, without recourse
(subject to the Originators' obligations herein, including any obligation to
fund Additional Balances with respect to the Initial Mortgage Loans), on the
Closing Date, all of the Originators' respective right, title and interest in
and to (a) each Initial Mortgage Loan, including its Principal Balance as of the
Initial Cut-Off Date and all principal and interest collections in respect of
such Initial Mortgage Loan on or after the Initial Cut-Off Date (excluding any
payments of principal and interest collected prior to the Initial Cut-Off Date);
(b) each related Mortgaged Property that is acquired by foreclosure or deed in
lieu of foreclosure; (c) all rights under any Mortgage Insurance Policies
covering each related Mortgaged Property; (d) all proceeds with respect to the
foregoing; and (e) the Mortgage File and other documents relating to the
foregoing; provided, however, that neither Purchaser nor any of its Assignees
(including the Trust and the Indenture Trustee) shall be deemed to assume
1
<PAGE> 6
any obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, it being understood that any such
obligation shall remain with the Originators and that neither Purchaser nor any
of its Assignees (including the Trust and the Indenture Trustee) shall be
required or permitted to fund any such future advances. As full consideration
for the Originators' sale, transfer, assignment and conveyance to Purchaser of
all of their respective right, title and interest in and to the Initial Mortgage
Loans and other properties specified above, on the Closing Date, Purchaser shall
(x) pay to or upon the order of the Originators that amount in immediately
available funds equal to the Originators' pro rata share of the proceeds of the
sale of the Notes, net of any underwriting discounts and other transaction
costs, and (y) direct the issuance of the Certificates to or upon the order of
the Originators, all in such relative proportions as the Originators shall
jointly determine on or before the Closing Date.
(b) The Originators hereby agree to sell, assign, transfer, convey and
set over to Purchaser, and the Purchaser, subject to the satisfaction of the
conditions set forth in Section 2.6 of the Sale and Servicing Agreement, hereby
agrees to purchase and acquire from the Originators, without recourse (subject
to the Originators' obligations herein, including any obligation to fund
Additional Balances with respect to the Subsequent Mortgage Loans), on each
Subsequent Transfer Date, all of the Originators' respective right, title and
interest in and to (a) each Subsequent Mortgage Loan, including its Principal
Balance as of the Subsequent Cut-Off Date and all principal and interest
collections in respect of such Subsequent Mortgage Loan on or after the
Subsequent Cut-Off Date (excluding any payments of principal and interest
collected prior to the Subsequent Cut-Off Date); (b) each related Mortgaged
Property that is acquired by foreclosure or deed in lieu of foreclosure; (c) all
rights under any Mortgage Insurance Policies covering each related Mortgaged
Property; (d) all proceeds with respect to the foregoing; and (e) the Mortgage
File and other documents relating to the foregoing; provided, however, that
neither Purchaser nor any of its Assignees (including the Trust and the
Indenture Trustee) shall be deemed to assume any obligation under any Credit
Line Agreement that provides for the funding of future advances to the Mortgagor
thereunder, it being understood that any such obligation shall remain with the
Originators and that neither Purchaser nor any of its Assignees (including the
Trust and the Indenture Trustee) shall be required or permitted to fund any such
future advances. As full consideration for the Originators' sale, transfer,
assignment and conveyance to Purchaser of all of their respective right, title
and interest in and to the Subsequent Mortgage Loans and other properties
specified above, on each Subsequent Transfer Date, Purchaser shall direct the
Indenture Trustee to pay from funds on deposit in the Pre-Funding Account to or
upon the order of the Originators that amount in immediately available funds
equal to one-hundred percent (100%) of the aggregate Principal Balance thereof
as of the Subsequent Cut-Off Date, all in such relative proportions as the
Purchaser and the Originators shall jointly determine on or before each
Subsequent Transfer Date.
2
<PAGE> 7
Section 2.02 Delivery of Documents; Purchase of Mortgage
Loans. Prior to the purchase of the Initial Mortgage Loans and Subsequent
Mortgage Loans:
(a) Each Originator shall have delivered to Purchaser or any
agent appointed by Purchaser the Mortgage File for each of the Mortgage Loans.
(b) Purchaser shall have received copies of the Mortgage Loan
Schedules.
(c) On the Closing Date, Purchaser shall have received copies
of the resolutions of the Board of Directors of each Originator, certified by
its Secretary, approving this Agreement.
(d) On the Closing Date, Purchaser shall have received copies
of the articles of incorporation, articles of association or charter of each
Originator.
(e) On the Closing Date, Purchaser shall have received from
each Originator (i) a certificate of the Secretary or Assistant Secretary of
such Originator certifying the names and signatures of the officers authorized
on its behalf to execute this Agreement and any other documents to be delivered
by it hereunder and (ii) a copy of such Originator's by-laws.
(f) On the Closing Date, Purchaser shall have received an
opinion of counsel to each Originator as to the due authorization, execution and
delivery by such Originator of this Agreement and as to the validity and
enforceability of the transfers contemplated hereunder and addressing such other
matters as Purchaser may reasonably request.
(g) Purchaser shall be permitted to perform its standard loan
review of each Mortgage Loan to be purchased.
(h) On the Closing Date, UCC-1 financing statements duly
executed by each Originator as debtor shall have been filed naming Purchaser as
secured party and, if Purchaser so requests, the Indenture Trustee on behalf of
the Trust as assignee.
Section 2.03 Survival of Representations. The terms and
conditions of the purchase and sale of each Mortgage Loan shall be as set forth
in this Agreement. Each Originator will be deemed on the Closing Date and each
Subsequent Transfer Date to have made to Purchaser the representations and
warranties set forth in Article IV hereof, and such representations and
warranties of such Originator shall be true and correct on and as of the Closing
Date and each Subsequent Transfer Date . In addition, such Originator will be
deemed to have reaffirmed the representations and warranties contained in
Article IV hereof on the date of disposition of the Mortgage Loans by Purchaser
pursuant to the Sale and Servicing Agreement.
Section 2.04 Proceeds of Mortgage Loans. The sale, assignment,
transfer and conveyance hereby of all of the Originators' respective right,
title and interest in and to each Mortgage Loan shall include all proceeds,
products and profits derived
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therefrom, including all payments of principal of and interest on such Mortgage
Loan and other amounts due or payable or to become due or payable in respect
thereof and proceeds thereof, including all monies, goods and other tangible or
intangible property received upon the liquidation or sale thereof, except any
payments in respect of interest collected prior to the Cut-Off Date.
Section 2.05 Repurchased Mortgage Loans. If any Mortgage Loan
sold by an Originator hereunder is re-transferred to Purchaser pursuant to
Section 2.2(b) of the Sale and Servicing Agreement, the Originator shall, at
Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan
Purchase Price therefor or (b) substitute in lieu thereof a Qualified
Replacement Mortgage Loan (provided that the Originator has any such loans
available for sale at the time) and deliver to or upon the order of Purchaser
the related Substitution Amount, all in accordance with and subject to the
applicable terms and conditions of the Sale and Servicing Agreement.
ARTICLE III
Protective Security Interest
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.01 hereof) by the Originators
to Purchaser as contemplated by this Agreement be construed as a sale of the
Mortgage Loans by the Originators to Purchaser. It is, further, not the intent
of the parties that such conveyance be deemed a pledge of the Mortgage Loans by
the Originators to Purchaser or any of its Assignees (including the Trust and
the Indenture Trustee) to secure a debt or other obligation of the Originators.
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 related Mortgage
Files and the other rights and properties described in Section 2.01 hereof) are
held to be property of either or both of the Originators, then (i) this
Agreement shall also be deemed to be a security agreement within the meaning of
Article 9 of the New York Uniform Commercial Code; (ii) the conveyance provided
for herein shall be deemed to be a grant by the Originators to Purchaser of a
first priority security interest in all of the Originators' right, title and
interest in and to the Mortgage Loans (including the related Mortgage Files and
the other rights and properties described in Section 2.01 hereof) 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 the Accounts (excluding any investment earnings on the Note Account,
the Principal and Interest Account and the Capitalized Interest Account),
whether in the form of cash, instruments, securities or other property; (iii)
the possession by Purchaser or any of its Assignees or their respective 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 Uniform Commercial Code; (iv) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be
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deemed notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of Purchaser 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
(ii) above shall be deemed to include any and all obligations of Purchaser or
any of its Assignees (including the Trust and the Indenture Trustee) to pay 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 Owner Trustee, the Insurer and the Certificateholders,
all in accordance with and otherwise subject to the Operative Documents
(including the Indenture). Any assignment or other transfer of the interest of
Purchaser under any provision hereof shall also be deemed to be an assignment of
any security interest created hereby. Each of the Originators and Purchaser
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 Sale and
Servicing Agreement and the Indenture. Each of the Originators also covenants
not to pledge, assign or grant any security interest to any third party in any
Mortgage Loan conveyed to Purchaser hereunder.
Upon Purchaser's request, each Originator shall perform (or
cause to be performed) such further acts and execute, acknowledge and deliver
(or cause to be executed, acknowledged and delivered) to Purchaser such further
documents as Purchaser 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 such Originator as debtor and
Purchaser as secured party and any continuation statements relating thereto).
ARTICLE IV
Representations and Warranties
Section 4.01 Representations and Warranties of Originators.
Each of the Originators represents, warrants and covenants to Purchaser as of
the Closing Date and each Subsequent Transfer Date that:
(a) Such Originator is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by such Originator in any state in which a Mortgaged
Property is located to the extent necessary to ensure the enforceability of each
Mortgage Loan in accordance with the terms of this Agreement.
(b) Such Originator has the full corporate power and authority
to originate the Mortgage Loans conveyed by it hereunder and to execute, deliver
and perform, and to enter into and consummate the transactions contemplated by,
this
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Agreement; the execution, delivery and performance of this Agreement by such
Originator has been duly authorized by all necessary corporate action on the
part of such Originator; and this Agreement, assuming the due authorization,
execution and delivery thereof by Purchaser, constitutes a legal, valid and
binding obligation of such Originator, enforceable against such Originator in
accordance with its respective terms, except to the extent that (i) the
enforceability thereof may be limited by federal or state bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) The execution and delivery of this Agreement by such
Originator, the consummation by such Originator of the transactions herein
contemplated, and the fulfillment by such Originator of or compliance by such
Originator with the terms hereof will not (i) result in a breach of any term or
provision of the charter or by-laws of such Originator or (ii) conflict with,
result in a breach, violation or acceleration of, or result in a default under,
the terms of any other material agreement or instrument to which such Originator
is a party or by which it may be bound, or any statute, order or regulation
applicable to such Originator of any court, regulatory body, administrative
agency or governmental body having jurisdiction over such Originator, which
breach, violation, default or non-compliance would have a material adverse
effect on the business, operations, financial condition, properties or assets of
such Originator taken as a whole or the ability of such Originator to perform
its obligations under this Agreement; and such Originator is not a party to,
bound by, or in breach or violation of any material indenture or other material
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it, which materially and adversely affects or, to
such Originator's knowledge, would in the future reasonably be expected to
materially and adversely affect, the ability of such Originator to perform its
obligations under this Agreement or the business, operations, financial
condition, properties or assets of such Originator taken as a whole.
(d) Such Originator is, and currently intends to remain, in
good standing and qualified to do business in each jurisdiction where failure to
be so qualified or licensed would have a material adverse effect on (i) the
business, operations, financial condition, properties or assets of such
Originator taken as a whole or (ii) the enforceability of any Mortgage Loan in
accordance with the terms of this Agreement.
(e) There is no litigation pending or, to such Originator's
actual knowledge, overtly threatened against such Originator that would
materially and adversely affect the execution, delivery or enforceability of
this Agreement or the ability of such Originator to perform any of its other
obligations hereunder in accordance with the terms hereof.
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by such Originator of, or compliance by such Originator with, this
Agreement or the
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consummation of the transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, such Originator has obtained the
same.
(g) Such Originator has caused to be performed any and all
acts required to preserve the rights and remedies of Purchaser in any Mortgage
Insurance Policies of such Originator applicable to the Mortgage Loans conveyed
by such Originator hereunder.
Section 4.02 Representations and Warranties Regarding Mortgage
Loans. Each Originator represents and warrants to Purchaser as of the Closing
Date and the Subsequent Transfer Date that, with respect to each Mortgage Loan
conveyed by such Originator hereunder on such date, each representation and
warranty set forth in Exhibit A hereto is true and correct.
Section 4.03 Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and warranties, each of
which representations and warranties (i) is material and being relied upon by
the Originators and (ii) is true in all respects as of the Closing Date and the
Subsequent Transfer Date:
(a) Purchaser has been duly organized and is validly existing
as a corporation under the laws of the State of Nevada.
(b) Purchaser has the requisite power and authority and legal
right to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement to be performed
by it.
(c) This Agreement has been duly authorized and executed by
Purchaser, is valid, binding and enforceable against Purchaser in accordance
with its terms, and the execution, delivery and performance by Purchaser of this
Agreement does not conflict with any material term or provision of any other
agreement to which Purchaser is a party or any term or provision of the
Certificate of Incorporation or the By-laws of Purchaser, or any law, rule,
regulation, order, judgment, writ, injunction or decree applicable to Purchaser
of any court, regulatory body, administrative agency or governmental body having
jurisdiction over Purchaser.
(d) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required under applicable law in connection with the execution and delivery by
Purchaser of this Agreement.
(e) To the best knowledge of Purchaser, there is no action,
proceeding or investigation pending or threatened against Purchaser before any
court, administrative agency or other tribunal (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (iii) which is likely to
materially and adversely affect the performance by Purchaser of its obligations
under, or the validity or enforceability of, this Agreement.
(f) The purchase of the Mortgage Loans hereunder shall
constitute a representation by Purchaser to each Originator that Purchaser
understands, and that
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Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of, its investment in the
relevant Mortgage Loans.
Section 4.04 Remedies for Breach of Representations and
Warranties; Repurchase Obligation. It is understood and agreed that the
representations and warranties set forth in Sections 4.01 and 4.02 shall survive
each sale of the Mortgage Loans to Purchaser and shall inure to the benefit of
Purchaser and its Assignees notwithstanding any restrictive or qualified
endorsement on any related Credit Line Agreement or Assignment of Mortgage or
the examination or failure to examine any Mortgage File. With respect to the
representations and warranties contained in Sections 4.01 and 4.02 which are
made to the best of an Originator's knowledge or to the actual knowledge of an
Originator, if it is discovered by such Originator or Purchaser that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or
Purchaser's or any Assignee's interest therein, then notwithstanding such
Originator's lack of knowledge with respect to the inaccuracy at the time the
representation or warranty was made, such Originator shall repurchase the
related Mortgage Loan in accordance with this Section 4.04 as if the applicable
representation or warranty was breached, subject to the terms and conditions of
the Sale and Servicing Agreement. Upon discovery by an Originator or Purchaser
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of any Mortgage Loan or Purchaser's
interest therein, the party discovering such breach shall give prompt written
notice to the others.
Within 60 days of the earlier of either discovery by or notice
to an Originator of any breach of a representation or warranty by such
Originator which materially and adversely affects the value of any Mortgage Loan
or Purchaser's or any Assignee's interest therein, such Originator shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured or is not cured or is not being diligently pursued as
evidenced by a notice acceptable to Purchaser, as evidenced by Purchaser's
agreement thereto, at the end of such 60-day period, Originator shall, at
Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan
Purchase Price therefor or (b) substitute in lieu thereof a Qualified
Replacement Mortgage Loan (provided that the Originator has any such loans
available for sale at the time) and deliver to or upon the order of Purchaser
the related Substitution Amount, all in accordance with and subject to the
applicable terms and conditions of the Sale and Servicing Agreement.
At the time of repurchase or substitution, Purchaser and such
Originator shall arrange for the assignment to such Originator of such Mortgage
Loan and the delivery to such Originator of the related Mortgage File.
Each Originator shall indemnify and hold harmless Purchaser
and its Assignees from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach by such
Originator of the representations and warranties contained in this Article IV
(notwithstanding any limitation in such representation and
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warranty as to such Originator's knowledge). It is understood and agreed that
the obligations of each Originator set forth in this Section 4.04 either to cure
or to repurchase or substitute a non-qualifying Mortgage Loan and to indemnify
and hold harmless Purchaser as provided in this Section 4.04 constitute the sole
remedies of Purchaser respecting a breach by such Originator of the foregoing
representations and warranties.
Any cause of action against an Originator relating to or
arising out of the breach by such Originator of any representations and
warranties made in Sections 4.01 and 4.02 shall accrue as to any Mortgage Loan
upon (i) discovery of such breach by Purchaser or notice thereof by the
Originator to Purchaser, (ii) failure by the Originator to cure such breach or
to repurchase or substitute such Mortgage Loan as specified above, and (iii)
demand upon the Originator by Purchaser for compliance with the relevant
provisions of this Agreement.
ARTICLE V
Covenants and Warranties of Originators
So long as this Agreement remains in effect or any Originator
has obligations hereunder, each Originator hereby covenants and agrees with
Purchaser as follows:
Section 5.01 Affirmative Covenants.
(a) Such Originator shall do all things necessary to remain
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and to maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted except
where failure to maintain such authority would not have a material adverse
effect on the ability of such Originator to conduct its business or to perform
its obligations under this Agreement.
(b) At all times during this Agreement, such Originator shall
possess sufficient net capital and liquid assets (or ability to access the same)
to satisfy its obligations as they become due in the normal course of business.
(c) Such Originator shall permit Purchaser, its Assignees and
their respective accountants, attorneys and other agents access to all of the
books and records relating to the Mortgage Loans purchased and retained by
Purchaser for inspection during normal business hours at all places where such
Originator conducts business.
(d) Such Originator shall be obligated to sell Additional
Balances to the Trust( to the extent such Additional Balances are related to the
Mortgage Loans).
(e) Such Originators will deliver or cause to be delivered the
Mortgage File with respect to each Mortgage Loan.
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Section 5.02 Negative Covenants.
(a) Such Originator shall not assign or attempt to assign this
Agreement or any rights hereunder, without first obtaining the specific written
consent of Purchaser.
(b) Such Originator shall not amend its articles of
incorporation, articles of association or charter or its by-laws if such
amendment shall have or is likely to have an adverse effect upon Purchaser or
its interests under this Agreement, without the prior written consent of
Purchaser.
(c) Such Originator shall not (i) dissolve or terminate its
existence or (ii) transfer any assets to any affiliate except in the ordinary
course of its business or as otherwise expressly permitted or contemplated
hereby.
(d) Such Originator will not commit any act in violation of
applicable laws or regulations promulgated pursuant thereto that relate to the
Mortgage Loans or that materially and adversely affect the operations or
financial conditions of such Originator.
ARTICLE VI
Sale of Mortgage Loans by Purchaser
It is the intent of the parties hereto that (i) immediately
after the sale of the Mortgage Loans by the Originators to Purchaser as provided
herein, pursuant to the Sale and Servicing Agreement, Purchaser will sell,
assign, transfer, convey and set over to Holding all of Purchaser's right, title
and interest in and to the Mortgage Loans (including the other rights and
properties conveyed to it hereunder), (ii) immediately after the sale of the
Mortgage Loans by Purchaser to Holding, pursuant to the Sale and Servicing
Agreement, Holding will sell, assign, transfer, convey and set over to the Trust
all of Holding's right, title and interest in and to the Mortgage Loans, and
(iii) immediately after the sale of the Mortgage Loans by Holding to the Trust
as described above, pursuant to the Indenture, the Trust will Grant to the
Indenture Trustee all of the Trust's right, title and interest in and to the
Mortgage Loans.
With respect to each such sale or other transfer, each
Originator hereby agrees:
(a) to cooperate fully with Purchaser, Purchaser's Assignees,
Holding, the Trust and the Indenture Trustee with respect to all reasonable
requests and due diligence procedures, including participating in meetings with
rating agencies, insurers and such other parties as Purchaser shall designate
and participating in meetings with Purchaser's Assignees, Holding and the Trust
and providing information reasonably requested by Purchaser's Assignees, Holding
and the Trust;
(b) to execute all other necessary documents to effect the
transactions contemplated therein;
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(c) to affirm the representations and warranties set forth
herein regarding such Originator and the Mortgage Loans as of the date of the
transfer to Holding and/or the Trust;
(d) to deliver to Purchaser for inclusion in any prospectus or
other offering material such publicly available information regarding (i) such
Originator, (ii) its financial condition, (iii) the mortgage loan delinquency,
foreclosure and loss experience of its portfolio as is customarily set forth in
a prospectus supplement with respect to a comparable mortgage pool, (iv) the
underwriting guidelines for mortgage loans, (v) the servicer, (vi) the servicing
and collection practices regarding mortgage loans, and (vii) any additional
information reasonably requested by Purchaser, or as is otherwise reasonably
requested by Purchaser and which such Originator is capable of providing without
unreasonable effort or expense, and to indemnify Purchaser and its Assignees for
material misstatements or omissions contained in such information;
(e) to deliver to Purchaser, and to any Person designated by
Purchaser, such legal documents and in-house opinions of counsel as are
customarily delivered by originators and reasonably determined by Purchaser or
its Assignees to be necessary in connection with the transactions contemplated
by the Sale and Servicing Agreement, it being understood that the cost of any
opinions of outside special counsel that may be required shall be the
responsibility of such Originator; and
(f) to cooperate fully with Purchaser and its Assignees with
respect to the preparation of Mortgage Loan documents and other documents and
with respect to servicing requirements reasonably requested by the rating
agencies and insurers.
ARTICLE VII
Additional Remedies
Upon the occurrence of a Rapid Amortization Event under the
Indenture due to an act or omission of an Originator, Purchaser and any of its
Assignees shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of any such Rapid
Amortization Event shall not deny to Purchaser or its Assignees any remedy to
which Purchaser or its Assignees may be otherwise appropriately entitled,
whether by statute or applicable law, at law or in equity.
ARTICLE VIII
Term
This Agreement shall terminate on the date of termination of
the Trust as set forth in Article IX of the Trust Agreement.
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ARTICLE IX
Exclusive Benefit of Parties; Assignment
This Agreement is for the exclusive benefit of the parties
hereto and their respective successors and assigns and shall not be deemed to
give any legal or equitable right to any other person except Holding, the Trust,
the Indenture Trustee, the Noteholders and the Insurer. Neither this Agreement
nor any rights hereunder may be assigned by any party hereto without the prior
written consent of the others and the Insurer except if assigned by the
Purchaser to Holding, the Trust and the Indenture Trustee.
ARTICLE X
Amendment; Waivers
This Agreement may be amended from time to time only by
written agreement of the Originators and Purchaser with the prior written
consent of the Insurer, which consent shall not be unreasonably withheld. Any
forbearance, failure, or delay by a party in exercising any right, power, or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by a party of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of a party
shall continue in full force and effect until specifically waived by it in
writing. No right, power or remedy shall be exclusive, and each such right,
power or remedy shall be cumulative and in addition to any other right, power or
remedy, whether conferred hereby or hereafter available at law or in equity or
by statute or otherwise.
ARTICLE XI
Execution in Counterparts
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Signatures may be exchanged by
facsimile, and each party hereto agrees to be bound by its own facsimile
signature and to accept the facsimile signature of the other party.
ARTICLE XII
Effect of Invalidity of Provisions
In case any one or more of the provisions contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall in no way be affected, prejudiced or disturbed thereby.
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ARTICLE XIII
Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its rules
regarding conflict of laws.
ARTICLE XIV
Notices
Any notices, consents, directions, demands and other
communications given under this Agreement (unless otherwise specified herein)
shall be in writing and shall be deemed to have been duly given when personally
delivered at or telecopied to the respective addresses or facsimile numbers, as
the case may be. If to the Purchaser, addressed to Advanta Conduit Receivables,
Inc., 10790 Rancho Bernardo Road, San Diego, California 92127; if to the AFC,
addressed to Advanta Finance Corp., 10790 Rancho Bernardo Road, San Diego,
California 92127, if to ANB, addressed to Advanta National Bank, One Righter
Parkway, Wilmington, Delaware 19803, or to such other address or facsimile
number as either party shall give notice to the other party pursuant to this
Article XIV. Notices, consents, and other communications may also be effected by
first class mail, postage prepaid sent to the foregoing addresses and will be
effective upon receipt by the intended recipient.
ARTICLE XV
Entire Agreement
This Agreement, including the Exhibits and Schedules hereto,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements between
them, whether oral or written, of any nature whatsoever with respect to the
subject matter hereof.
ARTICLE XVI
Indemnities
Without limiting any other rights which Purchaser or each
Originator may have hereunder or under applicable law, and in addition to any
other indemnity provided hereunder, each Originator hereby agrees to indemnify
Purchaser, its Assignees and their respective officers, directors, agents and
employees (each, an "Indemnified Party") from and against any and all Losses
incurred by any of them relating to or resulting from:
(a) Any representation or warranty made by such Originator (or
any officers, employees or agents of such Originator) under or in connection
with this Agreement, any periodic report required to be furnished hereunder or
any other information or document delivered by such Originator pursuant hereto,
which shall have been false or incorrect in any material respect when made or
deemed made;
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(b) The failure by such Originator to (i) comply with any
applicable law, rule or regulation with respect to any purchase and sale
hereunder or (ii) perform or observe any material obligation or covenant
hereunder; or
(c) The failure by such Originator (if so requested by
Purchaser) to execute and properly file, or any delay in executing and properly
filing, financing statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with respect to the
Mortgage Loans.
Promptly after receipt by an Indemnified Party under this
Article XVI of notice of the commencement of any action or other proceeding,
such Indemnified Party will, if a claim in respect thereof is to be made against
the indemnifying party under this Article XVI, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may have to
any Indemnified Party otherwise than under this Article XVI. In case any such
action is brought against any Indemnified Party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the Indemnified Party promptly after receiving the aforesaid notice
from such Indemnified Party, to assume the defense thereof, with counsel
satisfactory to such Indemnified Party; provided, however, that if the
defendants in any such action include both the Indemnified Party and the
indemnifying party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it and/or other Indemnified
Parties that are different from or additional to those available to the
indemnifying party, the Indemnified Party shall have the right to elect separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such Indemnified Party. Upon receipt of
notice from the indemnifying party to such Indemnified Party of its election so
to assume the defense of such action and approval by the Indemnified Party of
counsel, the indemnifying party will not be liable for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel representing the Indemnified Parties under this Article XVI who
are parties to such action), (ii) the indemnifying party shall have employed
counsel which is not satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the Indemnified Party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall only be in
respect of the counsel referred to in such clause (i) or (iii).
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ARTICLE XVII
RESPA Obligations
Each Originator agrees to discharge, on Purchaser's behalf,
all obligations, including all disclosure obligations, which Purchaser may have
under the Real Estate Settlement Procedures Act of 1974, as amended, in
connection with Purchaser's purchase from such Originator of the Mortgage Loans.
Purchaser agrees to provide the Originator with such information as is
reasonably necessary for the Originator to discharge such obligations and hereby
appoints the Originator as its agent in its name for the purposes of, and only
for the purposes of, performing such obligations. Each Originator hereby agrees
to indemnify Purchaser, its Assignees and their respective officers, directors,
agents and employees from any Losses suffered by any such party in connection
with the Originator's obligations under this provision.
ARTICLE XVIII
Survival
All indemnities and undertakings of Originator and Purchaser
hereunder shall survive the termination of this Agreement.
ARTICLE XIX
Consent to Service
Each party irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given
pursuant to Article XIV hereof.
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury
With respect to any claim arising out of this Agreement each
party irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough of
Manhattan, City of New York, and each party irrevocably waives any objection
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating hereto brought in any such court,
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process is made as set
forth in Article XIX hereof or by any other lawful means. To the extent
permitted by applicable law, Purchaser and the Originators each irrevocably
waive all right of trial by jury in any action, proceeding or counterclaim
arising out of or in connection with this Agreement or any matter arising
hereunder.
15
<PAGE> 20
ARTICLE XXI
Construction
The headings in this Agreement are for convenience only and
are not intended to influence its construction. References to Articles,
Sections, Schedules and Exhibits in this Agreement are to the Articles, Sections
of and Schedules and Exhibits to this Agreement. The Schedules and Exhibits are
hereby incorporated into and form a part of this Agreement. As used in this
Agreement, any form of the word "include" shall be deemed to be followed by the
words "without limitation," the words "and" and "or" are used in the conjunctive
or disjunctive as the sense and circumstances may require, the singular includes
the plural and vice-versa, and terms such as "herein," "hereof," "hereby" and
"hereunder" refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context clearly indicates otherwise.
Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding."
ARTICLE XXII
Further Assurances
Each party hereto agrees to execute, acknowledge and deliver
to the other parties and to Purchaser's Assignees such reasonable and
appropriate additional documents, instruments or agreements as any of the other
parties may be necessary or appropriate to effectuate the purposes of this
Agreement.
ARTICLE XXIII
Third Party Beneficiary
The Insurer shall be deemed to be an express third-party
beneficiary of this Agreement and shall be entitled to enforce the terms hereof
as if it were a party hereto.
ARTICLE XXIV
No Petition
The Originators, by entering into this Agreement, hereby
covenant and agree that they will not at any time institute against the Sponsor,
Holding or the Trust, or join in any institution against the Sponsor, Holding 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.
************
16
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized, all
as of the date first written above.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Purchaser
By:
----------------------------------------
Name:
Title:
ADVANTA NATIONAL BANK,
as an Originator
By:
----------------------------------------
Name:
Title:
ADVANTA FINANCE CORP.,
as an Originator
By:
----------------------------------------
Name:
Title:
<PAGE> 22
SCHEDULE I
SCHEDULE OF MORTGAGE LOANS
I-1
<PAGE> 23
EXHIBIT A
MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES
Each Originator makes the following representations and
warranties to Purchaser solely with respect to the Mortgage Loans conveyed by
such Originator hereunder. Such representations and warranties speak as of the
Closing Date for Initial Mortgage Loans or the Subsequent Transfer Date for
Subsequent Mortgage Loans, but shall survive the sale, transfer, and assignment
of such Mortgage Loans first to Holding and then to the Trust pursuant to the
Sale and Servicing Agreement and the pledge of such Mortgage Loans to the
Indenture Trustee pursuant to the Indenture:
(i) All of the original or certified documentation set forth
in the definition of Mortgage File and in Section 2.1(g)(i) of the Sale
and Servicing Agreement (including all material documents related
thereto) with respect to each Mortgage Loan has been or will be
delivered to the Indenture Trustee on the Closing Date for Initial
Mortgage Loans or the Subsequent Transfer Date for Subsequent Mortgage
Loans. All such documentation is true and accurate in all material
respects. Each of the documents and instruments specified to be
included therein has been duly executed and is in due and proper form,
and each such document or instrument is in a form generally acceptable
to prudent mortgage lenders that regularly originate or purchase or
sell mortgage loans comparable to the Mortgage Loans.
(ii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate.
(iii) During the period from origination to the Cut-Off Date
or Subsequent Cut-Off Date, as applicable, each Mortgage Loan has been
serviced in accordance with applicable law.
(iv) As of the Closing Date with respect to the Initial
Mortgage Loans, as of the Subsequent Cut-Off Date with respect to
Subsequent Mortgage Loans and as of the applicable Transfer Date with
respect to any Qualified Replacement Mortgage Loan, all action has been
taken to validly transfer and assign to the Purchaser all right, title
and interest of such Originator in and to such Mortgage Loans and all
other related property described in Section 2.01 (including the related
Additional Balances); and, in accordance with Article III, all action
has been taken to grant a security interest (as defined in the UCC as
in effect in New York) in such property to Purchaser, which, if the
Indenture Trustee maintains possession of the Mortgage File for each
such Mortgage Loan, shall constitute a first priority perfected
security interest in such property (to the extent that perfection can
be achieved by possession by or on behalf of a secured party), subject
to the effect of Section 9-306 of the UCC with respect to collections
on such Mortgage Loans that are deposited in the Accounts.
(v) As of the Closing Date with respect to the Initial
Mortgage Loans, as of the Subsequent Transfer Date with respect to
Subsequent Mortgage Loans and as of the
A-1
<PAGE> 24
applicable Transfer Date with respect to any Qualified Replacement
Mortgage Loan, the information set forth in the Schedule of Mortgage
Loans for each such Mortgage Loan is true and correct in all material
respects.
(vi) As of the Cut-Off Date, no more than 0.25% of the
aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans
is secured by Mortgaged Properties located within any single zip code
area.
(vii) The Mortgages and the Credit Line Agreements conveyed to
Purchaser by the Originators pursuant to Section 2.01 hereof have not
been assigned or pledged by such Originator, and such Originator is the
owner and holder of such Mortgages and such Credit Line Agreements free
and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any
nature, and has full right and authority, under all governmental and
regulatory bodies having jurisdiction over the holder of the related
Mortgage Loans, to sell, assign or transfer the same.
(viii) As of the Closing Date with respect to the Initial
Mortgage Loans, as of the Subsequent Transfer Date with respect to
Subsequent Mortgage Loans and as of the applicable Transfer Date with
respect to any Qualified Replacement Mortgage Loan, there is no valid
offset, defense or counterclaim of any obligor under any Credit Line
Agreement or Mortgage relating to each such Mortgage Loan. Neither the
operation of any of the terms of any such Credit Line Agreement or any
such Mortgage nor the exercise of any right thereunder will render
either such Credit Line Agreement or such Mortgage unenforceable, in
whole or in part, nor subject to any right of rescission, set-off,
claim, counterclaim or defense, including the defense of usury and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto.
(ix) As of the Cut-Off Date with respect to the Initial
Mortgage Loans, no Minimum Monthly Payment is more than 59 days
Delinquent (measured on a contractual basis) and no more than 0.60% (by
aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans)
were 30 to 59 days Delinquent (measured on a contractual basis).
(x) The weighted average remaining term to maturity of the
Initial Mortgage Loans as of the Cut-Off Date is approximately 272
months.
(xi) With respect to each Mortgage Loan, on each date that the
Coupon Rates have been adjusted, interest rate adjustments on such
Mortgage Loans were made in compliance with the related Mortgage and
Credit Line Agreement and applicable law. With respect to the Mortgage
Loans, the Coupon Rate over the term of each Mortgage Loan may not
exceed the related maximum Coupon Rate, if any.
(xii) As of the Cut-Off Date, each Mortgaged Property is
improved by a single (one-to-four) family residential dwelling, which
may include manufactured homes, condominiums and townhouses.
(xiii) No Mortgage Loan had a Combined Loan-to-Value Ratio in
excess of 125.00 at the time of origination.
A-2
<PAGE> 25
(xiv) As of the Cut-Off Date with respect to the Initial
Mortgage Loans, as of the Subsequent Cut-Off Date with respect to
Subsequent Mortgage Loans and as of the applicable Transfer Date with
respect to any Qualified Replacement Mortgage Loan, each Mortgage is a
valid and subsisting first or second lien of record on the Mortgaged
Property (subject in the case of any Junior Mortgage Loan only to a
Senior Lien on such Mortgaged Property) and subject in all cases to the
exceptions to title set forth in the title insurance policy or title
search with respect to the related Mortgage Loan, which exceptions are
generally acceptable to banking institutions in connection with their
regular mortgage lending activities, and except for liens for (i) real
estate taxes and special assessments not yet delinquent, (ii) income
taxes, (iii) any covenants, conditions and restrictions, rights of way,
easements, and other matters of public record and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage.
(xv) Each Mortgage Loan at the time it was made had no
delinquent tax or assessment lien or mechanic's lien on the related
Mortgaged Property, and each such Mortgaged Property is free of
substantial damage and is in good repair.
(xvi) Each Mortgage Loan at the time it was made complied in
all material respects with all applicable state and federal laws and
regulations, including the federal Truth-in-Lending Act and other
consumer protection laws, real estate settlement procedure, usury,
equal credit opportunity, disclosure and recording laws.
(xvii) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of such Originator's knowledge, with
respect to each Mortgage Loan that is a Junior Mortgage Loan, a
lender's title insurance policy, issued in standard California Land
Title Association form or American Land Title Association form, or
other form acceptable in a particular jurisdiction by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, was issued on the date of
origination of such Mortgage Loan, and as of the Closing Date with
respect to the Initial Mortgage Loans, as of the Subsequent Transfer
Date with respect to the Subsequent Mortgage Loans and as of each
applicable Transfer Date with respect to any Qualified Replacement
Mortgage Loan, each such policy is valid and remains in full force and
effect, or a title search or guaranty of title customary in the
relevant jurisdiction was obtained with respect to any Mortgage Loan as
to which no title insurance policy or binder was issued.
(xviii) As of the Closing Date with respect to the Initial
Mortgage Loans, as of the Subsequent Transfer Date with respect to each
Subsequent Mortgage Loans and as of the applicable Transfer Date with
respect to any Qualified Replacement Mortgage Loan, each Credit Line
Agreement is the legal, valid, binding and enforceable obligation of
the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law),
A-3
<PAGE> 26
and all parties to each Mortgage Loan had full legal capacity to
execute all documents relating to such Mortgage Loan and convey the
estate therein purported to be conveyed.
(xix) The terms of each Credit Line Agreement and each related
Mortgage have not been impaired, cancelled, subordinated, rescinded,
altered or modified in any material respect (except as set forth in the
Mortgage File or on the Schedule of Mortgage Loans), and the related
Mortgaged Property has not been released from the lien of the related
Mortgage, in whole or in part and no instrument has been executed that
would effect such release, cancellation, subordination or rescission,
except by a written instrument which (if such instrument is secured by
real property) has been recorded, if necessary, to protect the interest
of the Noteholders and which has been delivered to the Indenture
Trustee.
(xx) Except as otherwise required by law or the terms of the
Credit Line Agreement, pursuant to the statute under which the related
Mortgage Loan was made, the related Credit Line Agreement is not and
has not been secured by any collateral, pledged account or other
security except the lien of the corresponding Mortgage.
(xxi) Each Mortgaged Property relating to a Mortgage Loan is
located in the state identified in the Schedule of Mortgage Loans and
consists of one or more parcels of real property with a residential
dwelling erected thereon.
(xxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property relating to a
Mortgage Loan, nor is such a proceeding currently occurring, and each
such Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, flood, tornado or other casualty, so as to affect
adversely the value of such Mortgaged Property as security for the
related Mortgage Loan or the use for which the premises were intended.
(xxiii) With respect to each Mortgage Loan that is a Junior
Mortgage Loan, either (A) no consent for such Mortgage Loan was
required by the holder of any related Senior Lien prior to the making
of such Mortgage Loan or (B) such consent has been obtained and is
contained in the related Mortgage File.
(xxiv) Each Mortgage relating to a Mortgage Loan contains
customary and enforceable provisions which render the rights and
remedies of the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security, including
(A) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (B) otherwise by judicial foreclosure. To the best
of such Originator's knowledge, there is no homestead or other
exemption available which materially interferes with the right to sell
the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage.
(xxv) As of the Closing Date with respect to the Initial
Mortgage Loans, as of the Subsequent Transfer Date with respect to the
Subsequent Mortgage Loans, and as of the applicable Transfer Date with
respect to a Qualified Replacement Mortgage Loan, there is no default,
breach, violation or event of acceleration existing under any Mortgage
A-4
<PAGE> 27
or Credit Line Agreement relating thereto and no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and such Originator has not waived any default, breach,
violation or event of acceleration; provided, however, that the
foregoing shall not apply to the extent that the relevant default,
breach, violation or other event relates to one or more of the Mortgage
Loans being Delinquent.
(xxvi) No selection procedures reasonably believed by such
Originator to be adverse to the interests of the Noteholders or the
Insurer was utilized in selecting the Mortgage Loans.
(xxvii) As of the Closing Date with respect to the Initial
Mortgage Loans and as of the Subsequent Transfer Date with respect to
the Subsequent Mortgage Loans, no Mortgagor has been released, in whole
or in part, except in connection with an assumption agreement which has
been approved by the applicable title insurer (to the extent required
by such title insurer) and which is part of the related Mortgage File
delivered to the Indenture Trustee.
(xxviii) At the time of origination of each Mortgage Loan that
is not a First Mortgage Loan, the related prior lien was not more than
30 days delinquent.
(xxix) To the best of such Originator's knowledge, all
required inspections, licenses and certificates with respect to the use
and occupancy of all occupied portions of all property securing the
Mortgages relating to the Mortgage Loans have been made, obtained or
issued, as applicable.
(xxx) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related prior lien does not provide for negative
amortization.
(xxxi) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the maturity date of the Mortgage Loan is prior to the
maturity date of the related prior lien if such prior lien provides for
a balloon payment.
(xxxii) With respect to each Mortgage Loan, (1) the
improvements upon each related Mortgaged Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Master Servicer that provides for fire and extended
coverage representing coverage not less than (a) the Credit Limit of
such Mortgage Loan or (b) the maximum insurable value of the related
Mortgaged Property, or (2) the Master Servicer has obtained and will
maintain a blanket policy insuring against fire, flood and hazards of
extended coverage with respect to all of the Mortgage Loans
(xxxiii) With respect to any Mortgage Loan which is a Senior
Lien, such Originator has caused and will cause to be performed any and
all acts required to be performed to preserve the rights and remedies
of the Master Servicer and the Indenture Trustee in any Mortgage
Insurance Policies applicable to any such Mortgage Loan delivered by
such Originator hereunder, including any necessary notifications of
insurers, assignments of policies or interests therein and
establishments of co-insured, joint loss
A-5
<PAGE> 28
payee and mortgagee rights in favor of the Trust and its assignees in
care of the Master Servicer or the Indenture Trustee.
(xxxiv) To the best of such Originator's knowledge, each
Mortgage Loan was underwritten in all material respects in accordance
with the credit underwriting guidelines of such Originator as in effect
on the date of origination.
(xxxv) As of the Closing Date or Subsequent Transfer Date (as
applicable), to the best of such Originator's knowledge, such
Originator has received no notice of default of any First Mortgage Loan
secured by any Mortgaged Property that also secures a Mortgage Loan
which has not been cured by a party other than such Originator.
(xxxvi) At the Cut-Off Date or Subsequent Transfer Date (as
applicable) with respect to the Mortgage Loans, no Mortgagor had been
identified on the records of such Originator as being the subject of a
current bankruptcy proceeding.
(xxxvii) To the best of such Originator's knowledge, with
respect to the Mortgage Loans, the documents, instruments and
agreements submitted by each Mortgagor for loan underwriting were not
falsified and contain no untrue statement of a material fact and do not
omit to state a material fact required to be stated therein or
necessary to make the information and the statements contained therein
not misleading.
(xxxviii)Except as previously disclosed in writing to the
Indenture Trustee and the Insurer, with respect to each Mortgage Loan,
there is only one originally executed Mortgage and Credit Line
Agreement not stamped as a duplicate.
(xxxix) With respect to the Mortgage Loans as of the Cut-Off
Date, each such Mortgage Loan conforms, and all such Mortgage Loans in
the aggregate conform, in all material respects to the description
thereof set forth in the Registration Statement.
A-6
<PAGE> 29
EXHIBIT B
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement (this "Agreement"),
dated as of __________, _____, between Advanta National Bank, a national banking
association ("ANB"), and Advanta Finance Corp., a Nevada corporation ("AFC"), on
one hand, and Advanta Conduit Receivables, Inc., a Nevada corporation
("Purchaser"), on the other hand (ANB and AFC are sometimes individually
referred to herein as an "Originator" and sometimes collectively referred to
herein as the "Originators"), and pursuant to the purchase agreement dated as of
September 1, 1999 (the "Purchase Agreement"), among the Originators and the
Purchaser, the Originators and the Purchaser agree to the sale by the
Originators and the purchase by the Purchaser of the Mortgage Loans listed on
the attached schedule of Mortgage Loans (the "Subsequent Mortgage Loans").
Capitalized terms are used in this Agreement as defined in Annex 1 of
the Indenture, dated as of September 1, 1999 (the "Indenture"), between Advanta
Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California,
N.A., as Indenture Trustee, which meanings are incorporated by reference herein.
All other capitalized terms used herein shall have the meanings specified
herein.
Section 1. Sale of Subsequent Mortgage Loans.
(a) The Originators do hereby sell, transfer, assign, set over and
convey to the Purchaser, without recourse, all of their right, title and
interest in and to the Subsequent Mortgage Loans, and including all principal
and interest collected on the Subsequent Mortgage Loans on and after the
Subsequent Cut-Off Date, and all items with respect to the Subsequent Mortgage
Loans to be delivered pursuant to Section 2.02 of the Purchase Agreement;
provided, however, that the Originators reserves and retains all right, title
and interest in and to principal and interest collected on the Subsequent
Mortgage Loans prior to the Subsequent Cut-Off Date. The Originators,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Purchaser each item set forth in Section 2.02 of the
Purchase Agreement.
The transfer to the Purchaser by the Originators of the Subsequent
Mortgage Loans identified on the Schedule of Subsequent Mortgage Loans shall be
absolute and is intended by the parties hereto to constitute a sale by the
Originators to the Purchaser on the Subsequent Transfer Date of all the
Originators' right, title and interest in and to the Subsequent Mortgage Loans,
and other property as and to the extent described above. In the event the
transactions set forth herein shall be deemed not to be a sale, the Originators
hereby grant to the Purchaser as of the Subsequent Transfer Date a security
interest in all of the Originators' right, title and interest in, to and under
the Subsequent Mortgage Loans, and such other property, to secure all of the
Originators' obligations hereunder, and this Agreement shall constitute a
security agreement under applicable law. The Originators agree to take or cause
to be taken such actions and to execute such documents, including without
limitation the filing of all necessary UCC-1 financing statements and any
continuation statements with respect thereto as are necessary to perfect and
protect the Purchaser's interests in each Subsequent Mortgage Loan and the
proceeds thereof.
B-1
<PAGE> 30
(b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Purchase Agreement shall be borne by the
Originators.
Section 2. Representations and Warranties; Conditions Precedent.
(a) Each of the Originators hereby affirms the representations and
warranties set forth in Sections 4.01 and 4.02 of the Purchase Agreement that
relate to the Originators or the Subsequent Mortgage Loans as of the date
hereof. The Originators hereby confirms that each of the conditions set forth in
Section 2.02 of the Purchase Agreement are satisfied as of the date hereof and
further represents and warrants that each Subsequent Mortgage Loan complies with
the requirements of this Agreement and Section 2.01(b) of the Purchase
Agreement.
(b) Each of the Originators is solvent, is able to pay its debts as
they become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Agreement or by the performance of its obligations hereunder
nor is it aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against such Originator prior to the
date hereof.
(c) All terms and conditions of the Purchase Agreement are hereby
ratified and confirmed; provided, however, that in the event of any conflict the
provisions of this Agreement shall control over the conflicting provisions of
the Purchase Agreement.
Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in
which any or all of the properties subject to the related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction of the Insurer or Noteholders of at least 51% of the Note
Balance, but only when accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Noteholders or the Insurer or is necessary for the administration or servicing
of the Subsequent Mortgage Loans.
Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 5. Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an original
and together shall constitute one and the same instrument.
Section 6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Originators and the Purchaser and their
respective successors and assigns.
B-2
<PAGE> 31
ADVANTA CONDUIT RECEIVABLES, INC.,
as Purchaser
By:
------------------------------------------
Name:
Title:
ADVANTA NATIONAL BANK,
as an Originator
By:
------------------------------------------
Name:
Title:
ADVANTA FINANCE CORP.,
as an Originator
By:
------------------------------------------
Name:
Title:
B-3
<PAGE> 1
Exhibit 10.2
AMBAC ASSURANCE CORPORATION,
MORGAN STANLEY & CO. INCORPORATED
and
BANC OF AMERICA SECURITIES LLC
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
Dated as of September 28, 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.)
Page
----
INDEMNIFICATION AGREEMENT dated as of September 28, 1999 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as
Insurer, MORGAN STANLEY & CO. INCORPORATED and BANC OF AMERICA SECURITIES LLC.
Unless the context clearly requires otherwise, all capitalized terms used but
not defined herein shall have the respective meanings assigned to them in the
Sale and Servicing 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, modified or
supplemented from time to time) dated as of September 1, 1999 by and among the
Advanta Revolving Home Equity Loan Trust 1999-B 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 September
28, 1999 by and among the Advanta Conduit Receivables, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, the Insurer, Advanta Holding Trust
1999-B, the Trust, as Issuer and Bankers Trust Company of California, N.A., as
Indenture Trustee.
"Insurer" means Ambac Assurance Corporation, or any successor thereto, as
issuer of the Policy.
"Insurer Information" has the meaning given such term in Section 4.
"Notes" means any one of the Notes substantially in the form set forth in
Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated September 21,
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 September 1, 1999, relating to the Advanta Revolving Home Equity
Loan Asset Backed Notes, Series 1999-B, by and among Advanta Revolving Home
Equity Loan
<PAGE> 3
Trust 1999-B, Advanta Holding Trust 1999-B, 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.
"Underwriters" means Morgan Stanley & Co. Incorporated and Banc of America
Securities LLC.
"Underwriters' Information" has the meaning given such term in Section 3.
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."
The Underwriters represent, warrant and covenant as of the Closing Date as
follows:
(a) Compliance With Laws. The Underwriters will comply in all
material respects with all legal requirements in connection with offers
and sales of the Notes and will make such offers and sales in the
manner to be provided in the Offering Document.
(b) Offering Document. The Underwriters will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Notes unless such Offering
Document includes such information relating to the Insurer as has been
furnished by the Insurer for inclusion therein and has been approved by
the Insurer.
(c) 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 contained under the
heading "Underwriting" in the Offering Document.
<PAGE> 4
. The Insurer represents and warrants to the Underwriters as follows:
(a) Organization and Licensing. The Insurer is a duly
organized and licensed and validly existing Wisconsin stock insurance
company duly qualified to conduct an insurance business in the State of
New York.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policy and execute this Indemnification
Agreement and to perform all of its obligations hereunder and
thereunder.
(c) 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.
(d) Enforceability. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and
binding obligation of the Insurer, enforceable in accordance with its
terms, subject to insolvency, reorganization, moratorium, receivership
and other similar laws affecting creditors' rights generally and by
general principles of equity and subject to principles of public policy
limiting the right to enforce the indemnification provisions contained
therein and herein, insofar as such provisions relate to
indemnification for liabilities arising under federal securities laws.
(e) Financial Information. The consolidated financial
statements of the 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 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 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 Insurer
that would materially and adversely affect its ability to perform its
obligations under the Policy.
<PAGE> 5
(f) Insurer Information. The information in the Offering
Document as of the date hereof under the caption "The Insurer and The
Policy" (the "Insurer Information") is true and correct in all material
respects and does not contain any untrue statement of a material fact.
(g) Rating. The Insurer is not aware of any facts that if
disclosed to Moody's or S&P would be reasonably expected to result in a
downgrade of the rating of the financial strength of the Insurer by
either of such Rating Agencies.
(h) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policy or this Indemnification Agreement.
(i) 1933 Act Registration. The Policy is exempt from
registration under the Securities Act.
(a) The Underwriters hereby agree to pay, and to protect,
indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls
the Insurer within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act from and against, any
and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or by
reason of any untrue statement of a material fact or an omission to
state a material fact necessary in order to make the statements therein
in light of the circumstances in which they were made not misleading,
contained in the Underwriters' Information or a breach of any of the
representations, warranties and covenants of the Underwriters contained
in Section 3.
(b) The Insurer agrees to pay, and to protect, indemnify and
save harmless, the Underwriters and their respective officers,
directors, shareholders, employees, agents and each Person, if any, who
controls either of the Underwriters 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
<PAGE> 6
in the Insurer Information or a breach of any of the representations
and warranties of the Insurer contained in Section 4.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") in respect of which the indemnification provided
in this Section 5(a) or (b) may be sought from either of the
Underwriters, on the one hand, or the Insurer, on the other (each, an
"Indemnifying Party") hereunder, each such Indemnified Party shall
promptly notify the Indemnifying Party in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of
counsel 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; 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
<PAGE> 7
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.
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.
This Indemnification Agreement may be amended, modified, supplemented or
terminated only by written instrument or written instruments signed by the
parties hereto.
All demands, notices and other communications to be given hereunder shall be
in writing (except as otherwise specifically provided herein) and shall be
mailed by registered mail or personally delivered and telecopied to the
recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department - MBS
Telecopy No.: 212-363-1459
Confirmation: 212-668-0340
(b) To Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Jessica Bellamy
Telecopy No.: 212-761-0782
Confirmation: 212-761-2229
(b) To Banc of America Securities LLC:
<PAGE> 8
Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Robert Baldwin
Telecopy No.: 704-388-0622
Confirmation: 704-388-7508
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.
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.
This Indemnification Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
The Indemnification Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
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]
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Insurer
By:
---------------------------------------
Name:
Title:
<PAGE> 9
MORGAN STANLEY & CO. INCORPORATED
By:
---------------------------------------
Name:
Title:
BANC OF AMERICA SECURITIES LLC
By:
---------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.3
As of September 28, 1999
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(as Representative
of the Underwriters)
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Revolving Home Equity Loan Trust 1999-B
Underwriting Agreement and Insurance Agreement
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement dated September 21, 1999 (the
"Underwriting Agreement") between Advanta Conduit Receivables, Inc. (the
"Sponsor" or "ACRI") and Morgan Stanley & Co. Incorporated, as representative of
the underwriters named therein (the "Underwriters"), and the Insurance and
Indemnity Agreement dated September 28, 1999 (the "Insurance Agreement" and
together with the Underwriting Agreement, the "Designated Agreements") among the
Sponsor, Advanta Mortgage Corp. USA, Advanta Revolving Home Equity Loan Trust
1999-B and Ambac Assurance Corporation (the "Insurer"), ACRI has undertaken
certain financial obligations with respect to the indemnification of the
Underwriters and of the 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 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 Underwriter, the Insurer and AMHC do hereby agree
that:
4
<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.
5
<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:
-----------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED,
as of the date first above written:
AMBAC ASSURANCE CORPORATION
By:
-----------------------------
Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
By:
-----------------------------
Authorized Signatory
6
<PAGE> 1
EXHIBIT 10.4
As of September 28, 1999
Advanta Revolving Home
Equity Loan Trust 1999-B
c/o Bankers Trust Company of California, N.A.
Three Park Plaza, 16th Floor
Irvine, California 92714
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Revolving Home Equity Loan Trust 1999-B
Sale and Servicing Agreement
Ladies and Gentlemen:
Pursuant to the Sale and Servicing Agreement dated as of
September 1, 1999 (the "Agreement") among Advanta Conduit Receivables, Inc. as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer ("AMCUSA"), Advanta
Revolving Home Equity Loan Trust 1999-B (the "Trust"), Advanta Holding Trust
1999-B ("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
Reacquisition 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.
<PAGE> 2
Now, therefore, the Trust, the 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.
(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 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:_______________________________________
Authorized Signatory
ACKNOWLEDGED AND AGREED:
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 1999-B
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By:_______________________________________
Authorized Signatory
ACKNOWLEDGED:
AMBAC ASSURANCE CORPORATION
By:_______________________________________
Authorized Signatory
3
