<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 27, 1999
Advanta Mortgage Conduit Services, Inc., as Sponsor
on behalf of Advanta Revolving Home Equity Loan Trust 1999-A
(Exact name of registrant as specified in its charter)
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Delaware 333-77297-01 23-2723382
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Identification
Incorporation) No.)
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Advanta Conduit Receivables, Inc.
(Exact name of registrant as specified in its charter)
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Nevada 333-77927-01 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 executive (Zip Code)
offices)
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Registrant's Telephone Number,
including area code: (619) 674-1800
16875 West Bernardo Drive, San Diego California 92127
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
Advanta Mortgage Conduit Services, Inc. (the "Registrant")
registered an issuance of $765,000,000 in principal amount of Mortgage Loan
Asset-Backed Certificates on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, as amended (the "Act"), by the Registration
Statement on Form S-3 (File No. 333-77927) (the "Registration Statement").
Pursuant to the Registration Statement, Advanta Revolving Home Equity Loan Trust
1999-A (the "Trust") issued approximately $247,500,000 in aggregate principal
amount of its Advanta Revolving Home Equity Loan Asset Backed Notes, Series
1999-A (the "Notes"), on May 27, 1998 (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 May 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-A.
The primary assets of the Trust are a pool of mortgage loans
consisting of adjustable rate home equity revolving credit line loans secured by
first or junior mortgages or deeds of trust on residential property made under
certain home equity revolving credit line loan agreements.
The Notes have an aggregate principal amount of $247,500,000
and a variable interest rate.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated May 18, 1999, among Advanta
National Bank and Advanta Finance Corp., as Originators, Advanta Mortgage
Conduit Services, Inc., as Sponsor, and Bear, Stearns & Co. Inc., as
Underwriter.
4.1 Indenture, dated as of May 1, 1999, between Advanta
Revolving Home Equity Loan Trust 1999-A and Bankers Trust Company of California,
N.A., as Indenture Trustee.
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4.2 Trust Agreement, dated as of May 1, 1999, between Advanta
Mortgage Conduit Services, Inc., as Sponsor, and Wilmington Trust Company, as
Owner Trustee, relating to the formation of Advanta Holding Trust 1999-A.
4.3 Trust Agreement, dated as of May 1, 1999, among Advanta
Mortgage Conduit Services, Inc., as Sponsor, Advanta Holding Trust 1999-A and
Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta
Revolving Home Equity Loan Trust 1999-A.
4.4 Sale and Servicing Agreement, dated as of May 1, 1999
among Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta Mortgage
Corp. USA, as Master Servicer, Advanta Holding Trust 1999-A, Advanta Revolving
Home Equity Loan Trust 1999-A, as Issuer, and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.5 Certificate Guaranty Insurance Policy, dated May 27, 1999,
and issued and delivered by Ambac Assurance Corporation.
5.1 Opinion of Dewey Ballantine LLP regarding legality, dated
May 27, 1999.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters,
dated May 27, 1999.
10.1 Purchase Agreement, dated as of May 1, 1999, between
Advanta National Bank and Advanta Finance Corp., as Originators, on one hand,
and Advanta Mortgage Conduit Services, Inc., as Purchaser, on the other hand.
10.2 Indemnification Agreement, dated May 27, 1999, among
Bear, Stearns & Co. Inc. and Lehman Brothers Inc., as Underwriters, and Ambac
Assurance Corporation, as Insurer.
10.3 Guaranty to Ambac Assurance Corporation and Bear, Stearns
& Co. Inc., 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-A, as Issuer, issued by Advanta Mortgage
Holding Company.
23.1 Consent of KPMG LLP regarding financial statements of
Ambac Assurance Corporation and their report.*
* Previously filed on Form 8-K with the Securities and
Exchange Commission on May 26, 1999.
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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-A
By: Advanta Mortgage Conduit Services, 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: June 10, 1999
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EXHIBIT INDEX
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Exhibit No. Description
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1.1 Underwriting Agreement, dated May 18, 1999, among Advanta
National Bank and Advanta Finance Corp., as Originators,
Advanta Mortgage Conduit Services, Inc., as Sponsor, and
Bear, Stearns & Co. Inc., as Underwriter.
4.1 Indenture, dated as of May 1, 1999, between Advanta Revolving
Home Equity Loan Trust 1999-A and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.2 Trust Agreement, dated as of May 1, 1999, between Advanta
Mortgage Conduit Services, Inc., as Sponsor, and Wilmington
Trust Company, as Owner Trustee, relating to the formation of
Advanta Holding Trust 1999-A.
4.3 Trust Agreement, dated as of May 1, 1999, among Advanta
Mortgage Conduit Services, Inc., as Sponsor, Advanta Holding
Trust 1999-A and Wilmington Trust Company, as Owner Trustee,
relating to the formation of Advanta Revolving Home Equity
Loan Trust 1999-A.
4.4 Sale and Servicing Agreement, dated as of May 1, 1999,
among Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, Advanta
Holding Trust 1999-A, Advanta Revolving Home Equity Loan
Trust 1999-A, as Issuer, and Bankers Trust Company of
California, N.A., as Indenture Trustee.
4.5 Certificate Guaranty Insurance Policy, dated May 27, 1999,
and issued and delivered by Ambac Assurance Corporation.
5.1 Opinion of Dewey Ballantine LLP regarding legality, dated May
27, 1999.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated
May 27, 1999.
10.1 Purchase Agreement, dated as of May 1, 1999, between Advanta
National Bank and Advanta Finance Corp., as Originators, on
one hand, and Advanta Mortgage Conduit Services, Inc., as
Purchaser, on the other hand.
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10.2 Indemnification Agreement, dated May 27, 1999, among Bear,
Stearns & Co. Inc. and Lehman Brothers Inc., as Underwriters,
and Ambac Assurance Corporation, as Insurer.
10.3 Guaranty to Ambac Assurance Corporation and Bear, Stearns &
Co. Inc., 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-A, as Issuer, issued by Advanta
Mortgage Holding Company.
23.1 Consent of KPMG LLP regarding financial statements of Ambac
Assurance Corporation and their report.*
* Previously filed on Form 8-K with the Securities and
Exchange Commission on May 26, 1999.
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EXHIBIT 1.1
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EXECUTION COPY
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES,
SERIES 1999-A
VARIABLE RATE CLASS A NOTES
UNDERWRITING AGREEMENT
May 18, 1999
Bear, Stearns & Co. Inc.
(for itself and the other Underwriter
named in Schedule I hereto)
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
Advanta Mortgage Conduit Services, Inc., as Sponsor (the "Sponsor"),
has authorized the issuance and sale of Advanta Revolving Home Equity Loan
Asset-Backed Notes, Series 1999-A, Class A (the "Notes"). The Notes will be
issued pursuant to an indenture (the "Indenture"), dated as of May 1, 1999,
between Advanta Revolving Home Equity Loan Trust 1999-A (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 May 1, 1999, among the Sponsor, Advanta Holding Trust
1999-A ("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 May 1, 1999, among the Sponsor, Holding, the Trust, Advanta Mortgage
Corp. USA, as Master Servicer (the "Master Servicer"), and the Indenture
Trustee. Holding, whose beneficial ownership interests 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
represent the remaining undivided interest in the assets of the Trust (the
"Residual Interest"), and may be sold or pledged at any time,
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subject to certain conditions specified in the Trust Agreement. The Notes will
be issued on May 27, 1999 (the "Closing Date") in the aggregate original
principal amount (approximately) of $247,500,000. 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 Reimbursement Agreement
(the "Insurance Agreement"), dated as of May 1, 1999 among the Sponsor, the
Insurer, the Master Servicer, the Originators, 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 May 18, 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 and the
Originator. The Sponsor and the Originators each represent and warrant to, and
agree with each Underwriter that:
A. The Sponsor has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement (No. 333-77927)
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)(5) under the act a supplement dated
May 18, 1999 to the prospectus dated May 6, 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 May 6, 1999, in the form in which it will be filed
with the Commission pursuant to Rule 424(b)(5) under the Act is
hereinafter called the "Basic Prospectus"; such supplement dated May
18, 1999 to the Basic Prospectus, in the form in which it will be filed
with the Commission pursuant to Rule 424(b)(5) of
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the Act, is hereinafter called the "Prospectus Supplement"; and the
Basic Prospectus 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 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.
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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 or any of the Originators, except as set
forth or contemplated in the Prospectus as supplemented or amended as
of the Closing Date.
E. Each of the Sponsor and the Originators has been duly
incorporated and is validly existing as a corporation or national
banking association, as the case may be, 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 or national
banking association 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 or any Originator is a party or of which
any of its properties is the subject (a) which if determined adversely
to the Sponsor or such Originator would have a material adverse effect
on the business or financial condition of the Sponsor or such
Originator (as applicable), (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 or such Originator 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 or such Originator 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 or any Originator, as the case may be, and
will constitute legal, valid and binding instruments enforceable
against the Sponsor or such Originator in accordance with their
respective terms, subject as to enforceability to (x) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and (z) with respect to rights of indemnity under
this Agreement, the Indemnification Agreement, the Insurance Agreement
and the limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of the Documents by
the Sponsor and the Originators, as the case may be, 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
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which the Sponsor or any of the Originators is a party, by which the
Sponsor or any of the Originators is bound or to which any of the
property or assets of the Sponsor, any of the Originators or any 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 of the Originators 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 the Originators or any
of their respective properties or assets.
I. Arthur Andersen LLP are independent public accountants with
respect to the Sponsor and the Originators 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 or the Originators 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. Each Originator possesses all material licenses,
certificates, authorities or permits issued by the appropriate State,
Federal or foreign regulatory agencies or bodies necessary to conduct
the business now conducted by it and as described in the Prospectus,
and such Originator has not received notice of any proceedings relating
to the revocation or modification of any such license, certificate,
authority or permit which if decided adversely to such Originator
would, singly or in the aggregate, materially and adversely affect the
conduct of its business, operations or financial condition.
M. At the time of execution and delivery of the 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
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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.
N. As of opening of business on May 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.
O. None of the Sponsor, the Originators, 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.
P. At the Closing Date, the Notes and the Indenture will
conform in all material respects to the descriptions thereof contained
in the Prospectus.
Q. At the Closing Date, the Notes shall have been rated in the
highest rating category by at least two nationally recognized rating
agencies.
R. 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.
S. 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 or any of the
Originators 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.
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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, the Sponsor and the Originators.
Payment shall be made to the Sponsor and the Originators (in such proportions as
they shall jointly advise the Underwriters in writing) 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 and the Originators. With respect
to the issuance of the Notes, the Sponsor and the Originators agree 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 and
with respect to Advanta Mortgage Loan Trust 1999-2; 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.
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B. To furnish promptly to the Underwriters and to counsel for
the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and of each amendment thereto
filed with the Commission, including all consents and exhibits filed
therewith.
C. To deliver promptly to the 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. RESERVED
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G. 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 or
cause the filing of such statements and reports as may be required by
the laws of each jurisdiction in which the Notes have been so
qualified.
H. 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 other than the Sponsor's "Advanta Mortgage Loan
Trust 1999-2" Offering, to which the Underwriters specifically consent.
I. 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.
J. To apply the net proceeds from the sale of the Notes in the
manner set forth in the Prospectus.
SECTION 6. Conditions to the Obligations of the Underwriters. The
obligation of the Underwriters to purchase the Notes pursuant to this Agreement
is subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Sponsor and the Originators
herein contained; (ii) the performance by the Sponsor and the Originators of all
of their respective 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.
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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.
D. The Underwriters shall have received the favorable opinion
of Dewey Ballantine LLP, special counsel to the Sponsor and the
Originators with respect to the following items, dated the Closing
Date, to the effect that:
1. Each of the Sponsor and the Originators has been duly
organized and is validly existing as a corporation or national banking
association, as the case may be, 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 or
Originator, as the case may be, under the Documents to which it is a
party. Each of the Sponsor and the Originators 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 or any Originator is a
party have been duly and validly authorized, executed and delivered by
the Sponsor or such Originator, as the case may be, and all requisite
corporate action by the Sponsor or such Originator 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 or such Originator 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 or such Originator; (ii) any term or provision
of any material agreement, contract, instrument or indenture, to which
the Sponsor or such Originator 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 or such Originator 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
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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 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 and the Originators, 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 or
any Originator before any court, governmental agency or body or other
tribunal (i) asserting the invalidity of the Documents to which the
Sponsor or such Originator (as applicable) 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 or
such Originator of obligations under, or the validity or enforceability
of, the Notes or the Documents to which the Sponsor or such Originator
(as applicable) 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.
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10. The statements in the Prospectus and Prospectus Supplement
set forth under the captions "ERISA CONSIDERATIONS," "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES," and the statements in the Prospectus set
forth under the caption "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
AND RELATED MATTERS," to the extent that they constitute matters of
federal, New York or California law, or federal, New York or California
legal conclusions provide a fair and accurate summary of such law or
conclusions.
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.
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:
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<PAGE> 14
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;
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
March 31, 1999, and no such amendment has been authorized. No event has
occurred since March 31, 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 March 31, 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
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<PAGE> 15
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.
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
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<PAGE> 16
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
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).
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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, 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 Originators, 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 March 31, 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
any Originator or in any rating accorded
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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 March 31,
1999, of (A) the Sponsor, the Originators 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.
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 Securities Act of 1933, as amended, 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
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<PAGE> 19
presents accurately and fairly the capitalization of the Insurer as of
March 31, 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 March 31, 1999 and for the periods
ending March 31, 1999 and March 31, 1998 included in the Quarterly
Report on Form 10-Q of Ambac Financial Group Inc. for the period ended
March 31, 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;
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 March 31,
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.
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<PAGE> 20
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 and the Originators, 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 and the Originators 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 and the Originators, such opinion
or opinions, dated the Closing Date, with respect to certain tax
matters.
S. The Underwriters and counsel for the Underwriters shall
have received copies of any opinions of counsel to the Sponsor, the
Originators 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, Notes and documents as the Underwriters may reasonably
have requested not 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 Services ("AMHC"), a letter
agreement with the Trust and the Insurer substantially in the form of
Exhibit B hereto.
V. There shall have been executed and delivered by AMHC, the
indirect corporate parent of the Sponsor, a letter agreement with the
Underwriters and the Insurer substantially in the form of Exhibit A
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
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<PAGE> 21
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.
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 and each of the Originators 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 and the Originators agree
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(G) 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 $40,000 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 and the Originators; provided, however, that, except
as provided in this Section 7, the Underwriters shall pay
20
<PAGE> 22
its own costs and expenses, including an amount not to exceed $40,000 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 and the Originators 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 and the Originators each agree 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 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 neither the Sponsor
nor any of the Originators shall 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
21
<PAGE> 23
addition to any liability which the Sponsor or any of the Originators
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, the Originators, each of their
respective directors, each of their respective officers who signed the
Registration Statement, and each person, if any, who controls the
Sponsor or any of the Originators 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 such Originator 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 reimburse the Sponsor, such Originator and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Sponsor or such Originator 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, the Originators 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
22
<PAGE> 24
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.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by such Underwriter, if the indemnified
parties under this Section 8 consist of such Underwriter or any of its
controlling persons, or by the Sponsor or the Originators, as the case may be,
if the indemnified parties under this Section 8 consist of the Sponsor or the
Originators, as the case may be, 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.
23
<PAGE> 25
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 indemnify and hold harmless the Sponsor, the Originators,
each of the Sponsor's and the Originators' respective officers and
directors and each person who controls the Sponsor or the Originators
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 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 and the Originators 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
24
<PAGE> 26
Securities Association (which letter, and the SEC staff's response
thereto, were publicly available February 17, 1995). The term
"Collateral term sheet" as used herein includes any subsequent
Collateral term sheet that reflects a substantive change in the
information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "Kidder letter"
and together with the PSA Letter, the "No-Action Letters") of Brown &
Wood on behalf of Kidder, Peabody & Co., Inc. (which letter, and the
SEC staff's response thereto, were publicly available May 20, 1994).
G. If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(A) or (B) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, in such proportion as shall be
appropriate to reflect the relative benefits received by the Sponsor
and the Originators on the one hand and the Underwriters on the other
from the offering of the Notes or 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 and the Originators on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations.
The relative benefits of the Underwriters and the Sponsor 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 and the
Originators 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 and the Originators
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, the Originators 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.
25
<PAGE> 27
For purposes of this Section 8, in no case shall the 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 first sentences of 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
and the Originators 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 or any
Originator 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 or
the Originator and shall survive delivery of any Notes to the Underwriters.
SECTION 10. Termination of Agreement. The Underwriters may terminate
this Agreement immediately upon notice to the Sponsor and the Originators, 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 Bear, Stearns &
Co. Inc., 245 Park Avenue, New York, New York 10167, Attention: Asset Backed
Securities (Fax: 212-272-7294);
B. if to the Sponsor, shall be delivered or sent by mail,
telex or facsimile transmission to Advanta Mortgage Conduit Services,
Inc. 10790 Rancho Bernardo Road, San Diego, California 92127 Attention:
General Counsel (Fax: 619-674-3592); and
C. if to Advanta National Bank, shall be delivered or sent by
mail to Advanta National Bank, One Righter Parkway, Wilmington,
Delaware 19803 (Telephone: 302-266-5600); and
26
<PAGE> 28
D. if to Advanta Finance Corp., 10790 Rancho Bernardo Road,
San Diego, CA 92127, Attention: Secretary.
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, the Originators 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 or any of
the Originators, officers of the Sponsor who have signed the Registration
Statement and any person controlling the Sponsor or any of the Originators
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. Survival. The respective indemnities, representations,
warranties and agreements of the Sponsor, the Originators 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 14. 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 15. 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 16. 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 17. 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.
[Signature Page Follows]
27
<PAGE> 29
If the foregoing correctly sets forth the agreement among the Sponsor,
the Originators and the Underwriters, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
ADVANTA MORTGAGE CONDUIT
SERVICES INC.
By: /s/ Michael Coco
----------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA NATIONAL BANK
By: /s/ Michael Coco
----------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA FINANCE CORP.
By: /s/ Michael Coco
----------------------------------
Name: Michael Coco
Title: Vice President
CONFIRMED AND ACCEPTED
as of the date first above written:
BEAR, STEARNS & CO. INC.
(for itself and for the other Underwriter
set forth on Schedule I)
By: /s/ Thomas S. Dunstan
---------------------------------
Name: Thomas S. Dunstan
Title: Managing Director
<PAGE> 30
<TABLE>
<CAPTION>
===============================================================================================================================
SCHEDULE I
- -------------------------------------------------------------------------------------------------------------------------------
Purchase Price
to Underwriters
Initial Principal Amount of Notes disregarding
Class Purchased by the Underwriters accrued interest Note Rate
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bear, Stearns & Co. Inc. $148,500,000 99.75% LIBOR + .25%
- -------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Inc. $99,000,000 99.75% LIBOR + .25%
===============================================================================================================================
</TABLE>
S-1
<PAGE> 31
EXHIBIT A
As of May 18, 1999
Bear, Stearns & Co. Inc.
as Representative of the Underwriters
245 Park Avenue
New York, New York 10167
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Underwriting Agreement dated May 18, 1999 (the "Underwriting
Agreement") among Advanta National Bank and Advanta Finance
Corp. (together, the "Originators"), Advanta Mortgage Conduit
Services, Inc. (the "AMCSI") Bear, Stearns & Co. Inc. and
Lehman Brothers Inc. (the "Underwriters") and the Insurance
and Indemnity Agreement dated May 18, 1999 (the " Insurance
Agreement") among the Sponsor, the Master Servicer, the Trust
and Ambac Assurance Corporation (the "Insurer")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement and the Insurance Agreement
(together, the "Designated Agreements"), AMCSI 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 AMCSI 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 AMCSI under the
Designated Agreements (including the payment of money damages for a breach of
any of AMCSI'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 parent
corporation of AMCSI, to acknowledge its joint-and-several liability with AMCSI
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:
(i) AMHC hereby agrees to be absolutely and unconditionally
jointly and severally liable with AMCSI to the Underwriters for the
<PAGE> 32
payment of the Joint and Several Obligations under the Underwriting
Agreement.
(ii) AHMC hereby agrees to be absolutely and unconditionally
and jointly and severally liable with AMCSI to the Insurer for payment
of the Joint and Several Obligations under the Insurance Agreement.
(iii) 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 AMCSI 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.
<PAGE> 33
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
BEAR, STEARNS & CO. INC.
By:
--------------------------
Authorized Signatory
<PAGE> 34
EXHIBIT B
Advanta Revolving Home
Equity Loan Trust 1999-A
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: Sale and Servicing Agreement dated as of May 1, 1999 (the
"Agreement") among Advanta as Sponsor, Advanta Mortgage Corp.
USA, as Master Servicer ("USA"), Advanta Revolving Home Equity
Loan Trust 1999-A (the "Trust"), Advanta Holding Trust 1999-A
("Holding") and Bankers Trust Company of California, N.A. as
Indenture Trustee (the "Indenture Trustee")
Ladies and Gentlemen:
Pursuant to the Agreement, USA 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 USA 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 USA
and the Sponsor under the Agreement (including the payment of money damages for
a breach of any of USA'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 USA and the indirect
corporate parent of the Sponsor, to acknowledge its joint-and-several liability
with USA and the Sponsor for the payment of the Joint and Several Obligations
under the Agreement.
<PAGE> 35
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 USA
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 USA, 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.
<PAGE> 36
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-A
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By:
--------------------------
Authorized Signatory
ACKNOWLEDGED:
AMBAC ASSURANCE CORPORATION
By:
--------------------------
Authorized Signatory
Dated:
<PAGE> 1
EXHIBIT 4.1
<PAGE> 2
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A
Advanta Revolving Home Equity Loan Asset Backed Notes, Series 1999-A,
INDENTURE
Dated as of May 1, 1999
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
Definitions and Incorporation by Reference
<S> <C> <C>
SECTION 1.1. Definitions................................................................................ 2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act...................................... 20
SECTION 1.3. Rules of Construction...................................................................... 20
SECTION 1.4. Action by or Consent of Noteholders........................................................ 21
SECTION 1.5. Conflict with TIA.......................................................................... 21
ARTICLE II.
The Notes
SECTION 2.1. Form....................................................................................... 21
SECTION 2.2. Execution, Authentication and Delivery..................................................... 21
SECTION 2.3. Registration; Registration of Transfer and Exchange........................................ 22
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes................................................. 23
SECTION 2.5. Persons Deemed Owners...................................................................... 24
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest...................................... 24
SECTION 2.7. Cancellation............................................................................... 25
SECTION 2.8. Release of Collateral...................................................................... 25
SECTION 2.9. Book-Entry Notes........................................................................... 26
SECTION 2.10. Notices to Clearing Agency................................................................. 27
SECTION 2.11. Definitive Notes........................................................................... 27
ARTICLE III.
Covenants
SECTION 3.1. Payment of Principal and Interest.......................................................... 27
SECTION 3.2. Maintenance of Office or Agency............................................................ 27
SECTION 3.3. Money for Payments to be Held in Trust..................................................... 28
SECTION 3.4. Existence.................................................................................. 29
SECTION 3.5. Protection of Trust Estate................................................................. 29
SECTION 3.6. Opinions as to Trust Estate................................................................ 30
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.................................... 30
SECTION 3.8. Negative Covenants......................................................................... 31
SECTION 3.9. Annual Statement as to Compliance.......................................................... 32
SECTION 3.10. Trust May Not Consolidate or Transfer Assets............................................... 32
SECTION 3.11. No Other Business.......................................................................... 32
SECTION 3.12. No Borrowing............................................................................... 32
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities.......................................... 33
SECTION 3.14. Capital Expenditures....................................................................... 33
SECTION 3.15. Compliance with Laws....................................................................... 33
SECTION 3.16. Restricted Payments........................................................................ 33
</TABLE>
I
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<TABLE>
<S> <C> <C>
SECTION 3.17. Notice of Rapid Amortization Events, Events of Default and Events of Servicing
Termination................................................................................ 33
SECTION 3.18. Further Instruments and Acts............................................................... 33
SECTION 3.19. Amendments of Sale and Servicing Agreement and Trust Agreement............................. 34
SECTION 3.20. Income Tax Characterization................................................................ 34
ARTICLE IV.
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture.................................................... 34
SECTION 4.2. Application of Trust Money................................................................. 35
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.............................................. 35
ARTICLE V.
Rapid Amortization Events and Events of Default
SECTION 5.1. Rapid Amortization Events.................................................................. 36
SECTION 5.2. Consequences of Rapid Amortization Event................................................... 37
SECTION 5.3. [Reserved]................................................................................. 37
SECTION 5.4. Events of Default.......................................................................... 37
SECTION 5.5. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.................. 39
SECTION 5.6. Remedies for Event of Default.............................................................. 39
SECTION 5.7. Indenture Trustee May File Proofs of Claim................................................. 40
SECTION 5.8. Indenture Trustee May Enforce Claims Without Possession of Notes........................... 40
SECTION 5.9. Application of Money Collected............................................................. 41
SECTION 5.10. Limitation of Suits........................................................................ 41
SECTION 5.11. Unconditional Rights of Noteholders To Receive Principal and Interest...................... 42
SECTION 5.12. Restoration of Rights and Remedies......................................................... 42
SECTION 5.13. Rights and Remedies Cumulative............................................................. 43
SECTION 5.14. Delay or Omission Not a Waiver............................................................. 43
SECTION 5.15. Control by Noteholders..................................................................... 43
SECTION 5.16. Undertaking for Costs...................................................................... 43
SECTION 5.17. Waiver of Stay or Extension Laws........................................................... 44
SECTION 5.18. Action on Notes............................................................................ 44
SECTION 5.19. Performance and Enforcement of Certain Obligations......................................... 44
SECTION 5.20. Subrogation................................................................................ 44
SECTION 5.21. Preference Claims.......................................................................... 45
ARTICLE VI.
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee................................................................ 46
SECTION 6.2. Rights of Indenture Trustee................................................................ 47
SECTION 6.3. Individual Rights of Indenture Trustee..................................................... 49
</TABLE>
II
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 6.4. Indenture Trustee's Disclaimer............................................................. 49
SECTION 6.5. Notice of Defaults......................................................................... 49
SECTION 6.6. Reports by Indenture Trustee to Noteholders................................................ 49
SECTION 6.7. Compensation and Indemnity................................................................. 49
SECTION 6.8. Replacement of Indenture Trustee........................................................... 50
SECTION 6.9. Successor Indenture Trustee by Merger...................................................... 51
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.......................... 52
SECTION 6.11. Eligibility: Disqualification.............................................................. 53
SECTION 6.12. Preferential Collection of Claims Against Trust............................................ 53
SECTION 6.13. Appointment and Powers..................................................................... 53
SECTION 6.14. Performance of Duties...................................................................... 54
SECTION 6.15. Limitation on Liability.................................................................... 54
SECTION 6.16. Reliance Upon Documents.................................................................... 54
SECTION 6.17. Representations and Warranties of the Indenture Trustee.................................... 54
SECTION 6.18. Waiver of Setoffs.......................................................................... 55
SECTION 6.19. Control by the Controlling Party........................................................... 55
SECTION 6.20. Trustee May Enforce Claims Without Possession of Notes..................................... 55
SECTION 6.21. Suits for Enforcement...................................................................... 55
SECTION 6.22. Mortgagor Claims........................................................................... 56
ARTICLE VII.
Noteholders' Lists and Reports
SECTION 7.1. Trust To Furnish To Indenture Trustee Names and Addresses of Noteholders................... 57
SECTION 7.2. Preservation of Information; Communications to Noteholders................................. 57
SECTION 7.3. Reports by Trust........................................................................... 57
SECTION 7.4. Reports by Indenture Trustee............................................................... 58
ARTICLE VIII.
Payments and Statements to Noteholders and Certificateholders;
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money........................................................................ 58
SECTION 8.2. Release of Trust Estate.................................................................... 58
SECTION 8.3. Establishment of Accounts.................................................................. 59
SECTION 8.4. The Payments Under the Policy.............................................................. 59
SECTION 8.5. [Reserved]................................................................................. 60
SECTION 8.6. Flow of Funds.............................................................................. 60
SECTION 8.7. Investment of Accounts..................................................................... 61
SECTION 8.8. Eligible Investments....................................................................... 62
SECTION 8.9. Reports by Indenture Trustee............................................................... 63
SECTION 8.10. Additional Reports by Indenture Trustee.................................................... 65
SECTION 8.11. Opinion of Counsel......................................................................... 66
</TABLE>
iii
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<TABLE>
<S> <C> <C>
ARTICLE IX.
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders..................................... 66
SECTION 9.2. Supplemental Indentures with Consent of Noteholders........................................ 68
SECTION 9.3. Execution of Supplemental Indentures....................................................... 69
SECTION 9.4. Effect of Supplemental Indenture........................................................... 69
SECTION 9.5. Conformity With Trust Indenture Act........................................................ 70
SECTION 9.6. Reference in Notes to Supplemental Indentures.............................................. 70
ARTICLE X.
Redemption of Notes
SECTION 10.1. Redemption................................................................................. 70
SECTION 10.2. Surrender of Notes......................................................................... 71
SECTION 10.3. Form of Redemption Notice.................................................................. 72
SECTION 10.4. Notes Payable on Redemption Date........................................................... 72
ARTICLE XI.
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc.................................................. 72
SECTION 11.2. Form of Documents Delivered to Indenture Trustee........................................... 73
SECTION 11.3. Acts of Noteholders........................................................................ 74
SECTION 11.4. Notices, etc. to Indenture Trustee, Trust and Rating Agencies.............................. 74
SECTION 11.5. Notices to Noteholders; Waiver............................................................. 75
SECTION 11.6. Alternate Payment and Notice Provisions.................................................... 76
SECTION 11.7. Conflict with Trust Indenture Act.......................................................... 76
SECTION 11.8. Effect of Headings and Table of Contents................................................... 76
SECTION 11.9. Successors and Assigns..................................................................... 76
SECTION 11.10. Separability............................................................................... 76
SECTION 11.11. Benefits of Indenture...................................................................... 76
SECTION 11.12. Legal Holidays............................................................................. 77
SECTION 11.13. Governing Law.............................................................................. 77
SECTION 11.14. Counterparts............................................................................... 77
SECTION 11.15. Recording of Indenture..................................................................... 77
SECTION 11.16. Trust Obligation........................................................................... 77
SECTION 11.17. No Petition................................................................................ 78
SECTION 11.18. Inspection................................................................................. 78
SECTION 11.19. Limitation of Liability.................................................................... 78
SECTION 11.20. Rights of the Insurer to Exercise Rights of Noteholders.................................... 79
SECTION 11.21. Consent and Direction of Insurer........................................................... 79
SECTION 11.22. Rules by Indenture Trustee................................................................. 79
</TABLE>
SCHEDULE AND EXHIBITS
iv
<PAGE> 7
Schedule I Schedule of Mortgage Loans
Exhibit A Form of Note
Exhibit B [Reserved]
v
<PAGE> 8
INDENTURE dated as of May 1, 1999, between ADVANTA REVOLVING
HOME EQUITY LOAN TRUST 1999-A, 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-A (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 Collateral (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 May 27, 1999 (as amended from
time to time, the "Insurance Agreement"), among the Insurer, Advanta Holding
Trust 1999-A, Advanta Mortgage Corp. USA, the Trust, Advanta Mortgage Conduit
Services, Inc. and the Indenture Trustee.
<PAGE> 9
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
"Collateral"): (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; and (xi) 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 of 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, the following
terms have the respective meanings set forth below for all purposes of this
Indenture. In addition, other capitalized terms used herein and not defined
herein shall have their respective meanings as set forth in the Sale and
Servicing Agreement.
"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.
"Account": The Note Account or the Principal and Interest
Account, each of which shall be established at a Designated Depository
Institution.
"Act": has the meaning specified in Section 11.3(a).
2
<PAGE> 10
"Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws conveyed to the Trust pursuant to Section 2.1 of
the Sale and Servicing Agreement.
"Advanta Finance Corp.": A Nevada corporation, including any
successors and assigns.
"Advanta Holding Trust": Advanta Holding Trust 1999-A, a
Delaware business trust created pursuant to the Holding Trust Agreement.
"Advanta National Bank": A Delaware corporation, including any
successors and assigns.
"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 Mortgage Conduit Services, Inc.
"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 Section 8.6(a) hereof (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) on such
Payment Date.
"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.
3
<PAGE> 11
"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 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.
"Certificateholders": The holders of the Certificates issued
pursuant to the Trust Agreement.
"Certificates": As defined in the Trust Agreement.
"Charged-Off Mortgage Loan": As defined in the Sale and
Servicing Agreement.
"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) hereof.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"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.
"Closing Date": May 27, 1999.
"Code": The Internal Revenue Code of 1986, as amended, and any
successor statute.
"Collateral": As defined in the Recitals hereof.
"Combined Loan-to-Value Ratio": With respect to any 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) the outstanding principal
balance as of the date of execution of the related Credit Line Agreement (or as
of any subsequent date, if any, as of which such outstanding principal balance
may be determined in connection with an increase in the Credit Limit for such
Mortgage Loan) of any mortgage loans that are senior in priority to the Mortgage
Loan and which is 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 such date of execution, 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
4
<PAGE> 12
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.
"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, the
percentage equivalent of a fraction the numerator of which is the Principal
Balance for such Mortgage Loan 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 and promissory note executed by
the related Mortgagor and any amendment or modification thereof.
"Cut-Off Date": With respect to each Mortgage Loan, including
Mortgage Loans originated after May 1, 1999 but prior to the Closing Date, the
opening of business on May 1, 1999. With respect to each Qualified Replacement
Mortgage Loan, the Replacement Cut-off Date related to such Qualified
Replacement Mortgage Loan.
"Cut-Off Date Pool Balance": The actual aggregate Principal
Balances as of the Cut-Off Date of the Mortgage Loans pledged hereunder on the
Closing Date, which is equal to $256,078,403.01.
"Cut-Off Date Principal Balance": With respect to any Mortgage
Loan, (a) the unpaid principal balance thereof as of the related Cut-Off Date or
(b) with respect to each Mortgage Loan originated after the Cut-Off Date but
prior to the Closing Date, the unpaid principal balance 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.
5
<PAGE> 13
"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
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 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 or if such institution has trust
powers and such Account is held by such institution 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.
"Draw": With respect to any Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the
related Credit Line Agreement.
"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 under the related Credit Line Agreement, not to exceed five years
unless extended pursuant to such Credit Line Agreement and the Sale and
Servicing Agreement, such extension to be limited by the provisions set forth in
Section 2.2 of the Sale and Servicing Agreement.
6
<PAGE> 14
"Eligible Investments": Those investments so designated
pursuant to Section 8.8 hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default": As defined in Section 5.4.
"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 (vii) of Section 8.6(c) hereof on such Payment Date.
"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 February
2025.
"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, 96.75%.
"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.
"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 0.25% per annum and (y) for any Payment Date thereafter, LIBOR plus
0.50% 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 Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
7
<PAGE> 15
"Guaranties": The Letter Agreement, dated as of May 18, 1999,
between the Underwriters, the Insurer and AMHC and the Letter Agreement, dated
as of May 18, 1999, among the Insurer, the Indenture Trustee and AMHC.
"Holding Trust Agreement": The Trust Agreement, dated as of
May 1, 1999, between the Sponsor and the Owner Trustee, relating to the
formation of Advanta Holding Trust 1999-A.
"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 May 27, 1999 among the Insurer and the Underwriters.
"Indenture" means this Indenture as amended and supplemented
from time to time.
"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 this Indenture, and any successor hereunder.
"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 end of the immediately preceding Remittance Period.
"Indenture Trustee Fee Rate": 0.0015% 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 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.
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"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, 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 the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Insurance Agreement": The agreement defined in the Preamble.
"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
June 1999 Payment Date, from and including the Closing Date) to, but excluding,
the current Payment Date.
"Interest Collections": As defined in the Sale and Servicing
Agreement.
"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 product of the Note Interest Rate applicable to
such Payment Date 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": As defined in the Sale and
Servicing Agreement.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Trust by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Late Payment Rate": As defined in the Insurance Agreement.
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"LIBOR": With respect to any Interest Accrual Period for the
Notes, the rate determined by the Indenture Trustee on the related Interest
Determination Date appearing on the Telerate Screen Page 3750, as of 11:00 AM,
London Time, on the second LIBOR Business Day prior to the first day of such
Interest Accrual Period. If such rate does not appear on such page (or such
other page as may replace that page on that service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be selected by the Sponsor after consultation with the Indenture Trustee),
the rate will be the Reference Bank Rate.
"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.
"Liquidated Mortgage Loan": As defined in the Sale and
Servicing Agreement.
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, 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.
"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.
"Managed Amortization Period": The period commencing on June
25, 1999 and ending on the earlier to occur of (x) the end of the Remittance
Period related to the May 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 with an
adjustable Coupon Rate, 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.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer Affiliate": As defined in 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.
"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.
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"Monthly Remittance Amount": With respect to any Remittance
Date, the sum of (i) the Interest Remittance Amount for such Remittance Date and
(ii) the Principal Remittance Amount for such Remittance Date.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a senior or subordinate lien on real property securing a Mortgage Loan.
"Mortgage Files": As defined in the Sale and Servicing Agreement.
"Mortgage Insurance Policy": Any hazard, flood, title or
primary mortgage insurance policy relating to a Mortgage Loan, but shall not
include the Policy or any non-mortgage related credit life insurance policy.
"Mortgage Insurance Proceeds": Proceeds paid by any insurer
pursuant to any Mortgage Insurance Policy, 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": As defined in the Sale and Servicing
Agreement.
"Mortgagor": The obligor on 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.
"Net Funds Cap Rate": The per annum rate equal to (x)(A) the
product of (i) twelve and (ii) the interest due on the Mortgage Loans during the
prior Remittance Period, minus the amount of Prepayment Interest Shortfalls and
Relief Act Shortfalls for the related 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, (ii) unreimbursed Servicing Advances and (iii) accrued and unpaid
Servicing Fees through the date of liquidation. In no
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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.
"Note" means an Advanta Revolving Home Equity Loan Asset
Backed Note, Series 1999-A, substantially in the form attached hereto as Exhibit
A.
"Note Account": The Note Account established in accordance
with Section 8.3 hereof 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.
"Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"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.
"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 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" and "Note Registrar" have the respective
meanings specified in Section 2.3.
"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 and TIA
Section 314.
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"Operative Documents": Collectively, this Indenture, the
Guaranties, the Trust Agreement, the Holding Trust Agreement, the Sale and
Servicing Agreement, 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 and which shall comply with any applicable requirements
of Section 11.1.
"Original Note Balance": $247,500,000.
"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;
(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 hereof;
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 to the Noteholders of the Scheduled Principal Distribution Amount on
such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any
Payment Date, the difference, if any, between (i) the Specified
Overcollateralization Amount applicable to such Payment Date 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 to the
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<PAGE> 21
Noteholders of the Scheduled Principal Distribution Amount 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, assuming that 100% of the Scheduled Principal Distribution Amount for
such Payment Date (without taking into account any Overcollateralization
Reduction Amount) 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, its
successors or assigns.
"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 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.
AB0264BE) with respect to the Notes, dated May 27, 1999, issued by the Insurer
to the Indenture Trustee for the benefit of the Noteholders.
"Pool Factor": A seven-digit decimal which the Indenture
Trustee shall compute monthly expressing the related 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 for the related
Class. On the Closing Date, the Pool Factor will be 1.0000000. Thereafter, the
Pool Factor shall decline to reflect reductions in the related Note Balance
resulting from distributions of principal to the Notes.
"Pool Principal Balance": With respect to any date of
determination, the aggregate of the Principal Balances of the Mortgage Loans as
of such date.
"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,
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for the purpose of this definition, any Note authenticated and delivered under
Section 2.4 in lieu of a mutilated, lost, destroyed or stolen Note shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Note.
"Preference Amount": As defined in the Policy.
"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 with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan
which is received by the Master Servicer in advance of the scheduled due date
for the payment of such principal (other than the principal portion of any
Prepaid Installment), and the proceeds of any Mortgage Insurance Policy which
are to be applied as a payment of principal on the related Mortgage Loan shall
be deemed to be Prepayments for all purposes of this Indenture.
"Prepayment Interest Shortfall": With respect to any
Remittance Period, for each Mortgage Loan that was the subject of a Prepayment,
an amount equal to the excess, if any, of (i) 30 days' interest on the Principal
Balance of such Mortgage Loan as of the first day of such Remittance Period at a
per annum rate equal to the applicable Coupon Rate (or at such lower rate as may
be in effect for such Mortgage Loan as a result of any Deficient Valuation
and/or any Debt Service Reduction) minus the applicable Servicing Fee over (ii)
the amount of interest actually remitted by the Mortgagor in connection with
such Prepayment less the applicable Servicing Fee for such Mortgage Loan in such
month.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior
to the liquidation thereof, including, without limitation, expenditures for real
estate property taxes, hazard insurance premiums, property restoration or
preservation.
"Principal and Interest Account": Collectively, each principal
and interest account created by the Master Servicer or any Sub-Servicer pursuant
to Section 4.9(a) of the Sale and 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 in respect of such Mortgage Loan, minus
(ii) all collections credited as principal against the Principal Balance of any
such Mortgage Loan in accordance with the related Credit Line Agreement prior to
such day. 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": As defined in the Sale and Servicing
Agreement.
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"Principal Remittance Amount": As defined in the Sale and
Servicing Agreement.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Prospectus": That certain Prospectus dated May 6, 1999 naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement
dated May 18, 1999, describing the Notes issued by the Trust.
"Purchase Agreement" means the Purchase Agreement dated as of
May 1, 1999 between the Originators and the Sponsor with respect to the Mortgage
Loans.
"Rapid Amortization Event": As defined in Section 5.1.
"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.
"Realized Loss": As defined in the Sale and Servicing
Agreement.
"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), the Payment Date specified by the Master
Servicer or the Trust pursuant to Section 10.2(a).
"Redemption Price": As defined in Section 10.1(b) hereof.
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"Reference Bank Rate" shall be determined on the basis of the
rates at which deposits in U.S. Dollars are offered by the reference banks
(which shall be three major banks that are engaged in transactions in the London
interbank market, selected by the Sponsor after consultation with the Indenture
Trustee and the Insurer) as of 11:00 A.M., London time, on the day that is two
LIBOR Business Days prior to the immediately preceding Payment Date to prime
banks in the London interbank market for a period of one month in amounts
approximately equal to the principal amount of the Notes then outstanding. The
Indenture Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations.
If on such date fewer than two quotations are provided as requested, the rate
will be the arithmetic mean of the rates quoted by one or more major banks in
New York City, selected by the Sponsor after consultation with the Indenture
Trustee, as of 11:00 A.M., New York City time, on such date for loans in U.S.
Dollars to leading European banks for a period of one month in amounts
approximately equal to the principal amount of the Notes then outstanding. If no
such quotations can be obtained, the rate will be LIBOR for the prior Payment
Date.
"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 Sponsor after consultation with the Indenture Trustee which are
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) not
controlling, under the control of or under common control with the Originators
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.
333-77927) filed by the Sponsor with the Securities and Exchange Commission,
including all amendments thereto and including the Prospectus and the Prospectus
Supplement relating to the Notes constituting a part thereof.
"Reimbursement Amount": 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)(vii) hereof 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 related
payment 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 related Payment
Date.
"Relief Act Shortfall": With respect to any Remittance Period,
for any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Remittance Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan 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": The date on which the Master Servicer is
required to remit monies on deposit in the Principal and Interest Account to the
Indenture Trustee, which shall be the 18th day or, if such day is not a Business
Day, the next succeeding Business Day, of each month, commencing in the month
following the month in which the Closing Date occurs.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"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.
"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 dated as of May 1, 1999, among Advanta Holding Trust 1999-A, 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.
"Schedule of Mortgage Loans": The Schedule of Mortgage Loans,
attached hereto as Schedule I. The information contained on the Schedule of
Mortgage Loans shall be delivered to the Indenture Trustee in an electronic
medium.
"Scheduled Principal Distribution Amount": (A) On any Payment
Date 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) on any Payment Date 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.
"Servicing Advance": As defined in the Sale and Servicing
Agreement.
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"Servicing Fee": With respect to any Payment Date, the product
of (i) the Servicing Fee Rate and (ii) the Pool Principal Balance on the first
day of the Remittance Period preceding such Payment Date (or at the Cut-Off Date
with respect to the first Payment Date).
"Servicing Fee Rate": 0.50% per annum.
"Specified Overcollateralization Amount": The amount specified
in the Insurance Agreement.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"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 related
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.
"Trust": Advanta Revolving Home Equity Loan Trust 1999-A.
"Trust Agreement": The Trust Agreement, dated as of May 1,
1999, among the Sponsor, Advanta Holding Trust and the Owner Trustee.
"Trust Estate": Means the Collateral as defined in the
Recitals.
"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" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
"Underwriters": Bear, Stearns & Co. Inc. and Lehman Brothers
Inc.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Sale and Servicing Agreement or
the Trust Agreement.
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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;
(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.
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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.
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 $247,500,000. 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 $1000
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
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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 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.
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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 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.
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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 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.
(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
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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.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all
Notes surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. Subject to Section 2.6(d), the Trust may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Trust may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly 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(d), 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 Collateral. The Indenture Trustee
shall, on or after the Termination Date, release any remaining portion of the
Trust Estate from the lien created by this Indenture and deposit in the 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;
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(iv) the rights of Note Owners shall be exercised
only through the Clearing Agency and shall
be limited to those established by law and
agreements between such Note Owners and the
Clearing Agency and/or the Clearing Agency
Participants. Unless and until 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
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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.
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
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any time it ceases to meet the standards
required to be met by a Note Paying Agent at
the time of its appointment; and
(v) comply with all requirements of the Code 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;
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(ii) maintain or preserve the lien and security
interest (and the priority thereof) in favor
of the Indenture Trustee for the benefit of
the Noteholders and the Insurer created by
this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of any Grant made or to be made by
this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust
Estate and the rights of the Indenture
Trustee in such Trust Estate against the
claims of all persons and parties; and
(vi) pay all taxes or assessments levied or
assessed upon the Trust Estate when due.
The 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 first calendar year beginning more than six months after the
Closing Date, 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.
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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 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 Insurance Agreement 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:
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(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 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
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Indenture throughout such year, or, if there
has been a default in the compliance of any
such condition or covenant, specifying each
such default known to such Authorized
Officer and the nature and status thereof.
SECTION 3.10. Trust 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.
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SECTION 3.16. Restricted Payments. The Trust shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Trust or otherwise with respect to any ownership or equity interest or
security in or of the Trust or to the Master Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Trust may make, or cause to be made,
distributions to the Master Servicer, the Owner Trustee, the Indenture Trustee
and the Certificateholders as permitted by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement, this
Indenture, or Trust Agreement. The Trust will not, directly or indirectly, make
payments to or distributions from the Note Account except in accordance with
this Indenture and the 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
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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
(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
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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 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
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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 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) default in the payment of any interest due or principal at
maturity on any Note when the same becomes due and payable, and such default
continues for a period of five Business Days.
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
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as of the date of such notice. Within 15 days, the Indenture Trustee will
publish a notice of the occurrence of such event.
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 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":
(b) (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
(c) (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
(d) 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.
(e) 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
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Noteholders representing at least 51% of the Note Balance, with the prior
written consent of the Insurer, by written notice to the Trust and the Indenture
Trustee, may direct the Indenture Trustee to rescind and annul such declaration
and its consequences if:
(i) The Trust has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
(A) all payments of principal of, and interest
on, all Notes and all other amounts that
would then be due hereunder or upon such
Notes if the Event of Default giving rise to
such acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable
compensation, expenses, disbursements and
advances of the Indenture Trustee, its
agents and counsel; and
(ii) all Events of Default with respect to the
Notes, other than the nonpayment of the
principal of 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 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:
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(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.
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
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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;
(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;
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(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;
(vii) to the Master Servicer, any unreimbursed Servicing Advances,
including Nonrecoverable Advances; and
(viii) 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 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.
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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 manner directed by the Indenture
Trustee, including the transmission of notices of
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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.
(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
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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.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.15; 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 a 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.
(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,
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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.
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
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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)(xi) 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
to the appointment of or taking possession by a receiver,
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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.
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,
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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, however, that there shall be excluded from the
operation
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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 Collateral, and Bankers Trust Company of California, N.A. hereby accepts
such appointment and agrees to act as Indenture Trustee with respect to the
Trust Estate for the 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
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the Indenture Trustee without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and such proceeding
instituted by the Indenture Trustee shall be brought in its own name or in its
capacity as Indenture Trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursement and
advances of the Indenture Trustee, its agents and counsel, be for the ratable
benefit of the Noteholders and the 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
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the Indenture Trustee as a party to such legal actions and if the Indenture
Trustee is satisfactorily indemnified for all liability, costs and expenses
arising therefrom.
(f) The Trust hereby agrees to cause the Master Servicer to indemnify,
hold harmless and defend the Indenture Trustee from and against any and all
liability, loss, costs and expenses of the Indenture Trustee resulting from any
affirmative claims for recovery asserted or collected by Mortgagors under the
Mortgage Loans and such amounts shall not be a responsibility of the Trust.
ARTICLE VII.
Noteholders' Lists and Reports
SECTION 7.1. 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
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portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the
Trust may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to
time by the Commission such additional information, documents
and reports with respect to compliance by the Trust with the
conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents
and reports required to be filed by the Trust pursuant to
clauses (i) and (ii) of this Section 7.3(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 as may be
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appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate proceedings.
SECTION 8.2. Release of Trust Estate.
(a) Subject to Section 8.11 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 a Note Account 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
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Account and 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)(vii) 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. [Reserved].
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, and (iii) the
related Monthly Remittance Amount remitted by the Master Servicer or any
Sub-Servicer.
(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 (vi) 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 as a distribution of principal, the
Scheduled Principal Distribution Amount for such Payment Date;
(vi) to the Noteholders, as a distribution of principal, the
Overcollateralization Deficit for such Payment Date;
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(vii) to the Insurer, the Reimbursement Amount, if any, then due to
it;
(viii) to the Noteholders, the Accelerated Principal Payment with
respect to the Notes;
(ix) to the Noteholders, the amount of any Net Funds Cap
Carry-Forward Amount then due;
(x) 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;
(xi) to the Indenture Trustee and the Owner Trustee, for the
reimbursement of expenses of the Indenture Trustee and the
Owner Trustee not reimbursed pursuant to (c)(i) above which
expenses were incurred in connection with its duties and
obligations hereunder; and
(xii) 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.
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(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
(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.
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(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
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:
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(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;
(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) [Reserved];
(xvi) the amount of any Net Funds Cap Carry-Forward Amount;
(xvii) the amount of any Overcollateralization Reduction Amount; and
(xviii) the current level of the Overcollateralization Amount.
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(xix) the total number of Mortgage Loans, and the Principal Balances
thereof, together with the number, aggregate Principal
Balances of such Mortgage Loans and the percentage (based on
the Pool Principal Balance) (a) 30-59 days Delinquent, (b)
60-89 days Delinquent and (c) 90 or more days Delinquent;
(xx) the number, aggregate Principal Balances of all Mortgage Loans
and percentage (based on the Pool Principal Balance) in
foreclosure proceedings (and whether any such Mortgage Loans
are also included in any of the statistics described in the
foregoing clause (xix)); and
(xxi) the number, aggregate Principal Balances of all Mortgage Loans
and percentage (based on the Pool Principal Balance) 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 (xix)).
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.
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(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"), 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.
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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;
(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
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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 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
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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
(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
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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.
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 or the Insurer
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 February 2025;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the date of death of the last surviving
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the
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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.
(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) The Originators may not participate in any purchase described in
this Section 10.1(b) above, or fund any portion of the purchase price.
(e) If the Notes are to be redeemed pursuant to this Section 10.1(a),
the Master Servicer or the Trust shall furnish notice of such election to the
Indenture Trustee not later than 45 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 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 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Payment Date
upon which final distribution of the 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
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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).
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.
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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 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
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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 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,
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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-A 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-A, 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:
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, 26 Broadway (10th Floor), New York, New York 10004, Attention: Asset
Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later
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than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the 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.
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<PAGE> 83
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) 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
76
<PAGE> 84
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-A, the Trust, or any Certificateholder or join in any
institution against the Sponsor, Advanta Holding Trust, the Trust or any
Certificateholder of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the Operative Documents.
SECTION 11.18. Inspection. The Trust agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or of the
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
77
<PAGE> 85
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.
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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<PAGE> 86
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-A,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ Donald G. MacKelcan
-----------------------------------
Name: Donald G. MacKelcan
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely
as Indenture Trustee
By: /s/ Mark M. McNeil
---------------------------------------
Name: Mark M. McNeil
Title: Assistant Secretary
[Signature Page of Indenture]
<PAGE> 87
EXHIBIT A
[Form of Note]
REGISTERED $__________
No. A-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. __________
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trust or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A
NOTES
Advanta Revolving Home Equity Loan Trust 1999-A, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________________ ($__________),
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 February 2025
Payment Date (the " Final Scheduled Payment Date"). The Trust will pay interest
on this Note at the rate per annum provided in the Indenture on each Payment
Date until the principal of this Note is paid or made available for payment, on
the principal amount of this Note outstanding on the preceding Payment Date
(after giving effect to all payments of principal made on the preceding Payment
Date). Interest on this Note will accrue for each Payment Date during the period
from and including the preceding Payment Date (in the case of the June 1999
Payment Date, from and including the Closing Date) to but
A-1
<PAGE> 88
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 benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-2
<PAGE> 89
IN WITNESS WHEREOF, the Trust has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: May __, 1999 ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-A
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: May __, 1999 BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but
solely as Indenture Trustee,
By: ______________________________________
Name:
Title:
A-3
<PAGE> 90
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-A, (herein called the "Notes"), all issued under an Indenture dated as of
May 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 collateral 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 June 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 due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Noteholder (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Payment Date
shall be binding upon all future Noteholders and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Trust, will notify the Person who was the Noteholder hereof as of
the Record Date preceding such Payment Date by notice mailed prior to such
Payment Date and the amount then
A-4
<PAGE> 91
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 less
than or equal to 10% 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 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.
A-5
<PAGE> 92
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.
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,
A-6
<PAGE> 93
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on, or performance of, or omission to perform, any
of the covenants, obligations or indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Trust for the sole purposes of binding
the interests of the Trust in the assets of the Trust. The Noteholder by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Operative Documents, in the case of an Event of Default under the Indenture,
the Noteholder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Trust for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
A-7
<PAGE> 94
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.
A-8
<PAGE> 95
EXHIBIT B
[RESERVED]
<PAGE> 1
Exhibit 4.2
<PAGE> 2
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Sponsor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of May 1, 1999
1
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
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........................................................................ 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
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Holders with Respect to Certain Matters...................... 13
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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
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ARTICLE IX.
Termination of Trust Agreement
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
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TRUST AGREEMENT dated as of May 1, 1999 between ADVANTA
MORTGAGE CONDUIT SERVICES, INC., a Delaware 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> 7
"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 May 27, 1999 among the Insurer, Bear Stearns & Co. Inc.
and Lehman Brothers Inc.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Indenture" shall mean the Indenture dated as of May 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 May 27, 1999 among the Insurer, the Sponsor, the Issuer,
Advanta Holding Trust 1999-A, 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-A.
"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
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<PAGE> 8
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 May 27, 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-A, Advanta Revolving Home
Equity Loan Trust 1999-A, as Issuer, the Sponsor, Advanta Mortgage Corp. USA, as
Master Servicer, and the Indenture Trustee, dated as of May 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 Mortgage Conduit Services, Inc.
in its capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" 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.
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<PAGE> 10
ARTICLE II.
Organization
SECTION 2.1 Names. There is hereby formed a trust to be known as
"Advanta Holding Trust 1999-A," 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-A, 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-A 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-A;
(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
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<PAGE> 11
$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 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.
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<PAGE> 12
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> 13
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.
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<PAGE> 14
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
9
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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 $1000 in excess thereof. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. A transferee of a Certificate shall become a Certificateholder,
and shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder, upon due registration of such Certificate in such
transferee's name pursuant to Section 3.4.
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-A being subject to tax at the
entity level for federal or applicable state tax purposes, (c) such transfer
will not have any material adverse impact on the federal or applicable state
income taxation of a 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-A, being treated as a taxable
mortgage pool as defined in Section 7701(i) of the Code; (v) all filings and
other actions necessary to continue the perfection of the interest of 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
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Registrar or the consent to the assignment of the Note Registrar, Paying Agent,
Indenture Trustee or Certificate Registrar of its obligations under the
Indenture or this Trust Agreement, as applicable;
(d) the consent to the calling or waiver of any default under any
Operative Document;
(e) the consent to the assignment by the Indenture Trustee or Servicer
of their respective obligations under any Operative Document;
(f) perform any act that conflicts with any other Operative Document;
(g) perform any act which would make it impossible to carry on the
ordinary business of the Trust described in Section 2.3 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
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Owner Trustee, for 30 days after its receipt of such notice, request, and offer
of indemnity, shall have neglected or refused to institute any such action,
suit, or proceeding, and during such 30-day period no request or waiver
inconsistent with such written request has been given to the Owner Trustee
pursuant to and in compliance with this Section or Section 6.3; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4, each and every
Certificateholder and the Owner Trustee shall be entitled to such relief as can
be given either at law or in equity.
SECTION 4.5 Majority Control. No Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of 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
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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, (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 $100,000,000. 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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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.
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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 Mortgage Conduit Services, Inc., 107090 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: Stuctured 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> 36
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
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<PAGE> 37
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.
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<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY, as
Owner Trustee
By: /s/ Donald G. MacKelcan
------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
ADVANTA MORTGAGE CONDUIT
SERVICES, INC., as Sponsor
By: /s/ Michael Coco
------------------------------------
Name: Michael Coco
Title: Vice President
<PAGE> 39
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
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<PAGE> 40
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
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<PAGE> 41
EQUITY LOAN TRUST 1999-A BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR
APPLICABLE STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL
ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A
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-A, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION
7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE
PERFECTION OF THE INTEREST OF THE TRUST IN THE MORTGAGE LOANS AND THE OTHER
PROPERTY CONVEYED UNDER THE TRUST AGREEMENT SHALL HAVE BEEN TAKEN OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-3
<PAGE> 42
ADVANTA HOLDING TRUST 1999-A
CERTIFICATE
Percentage Interest: 89.49%
Date of Cut-Off Date:
May 1, 1999
First Payment Date: Issue Date: May 27, 1999
June 25, 1999
No. 1
ADVANTA NATIONAL BANK
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as
of May 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-A (the "Issuer") was created pursuant to a
Trust Agreement dated as of May 1, 1999 (the "Trust Agreement") between Advanta
Mortgage Conduit Services, Inc. (the "Sponsor"), Advanta Holding Trust 1999-A
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-A "Certificates." Pursuant to the Trust
Agreement, there is also issued duly authorized Certificates designated as
Advanta Revolving Home Equity Loan Trust 1999-A "Asset Backed Certificates".
Pursuant to the Indenture dated as of May 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
A-4
<PAGE> 43
Date"), commencing on June 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 Holding Trust Agreement, as
applicable.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a corporation. The Sponsor and any other Certificateholders, by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as equity
interests in a corporation. Each Certificateholder, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Sponsor, or join in any institution
against the Trust or the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Holding Trust
Agreement or any of the Operative Documents.
Distributions on this Certificate will be made as provided in
the Sale and Servicing Agreement and the Indenture by the Indenture Trustee by
wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the
Holding Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Holding Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
A-5
<PAGE> 44
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Certificate to be duly
executed.
Date: May [ ], 1999 ADVANTA HOLDING TRUST 1999-A
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner
Trustee
By: _______________________________________
Name:
Title:
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee
By:_____________________________
Authenticating Agent
A-6
<PAGE> 45
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, the Originators, the Sponsor, the Master Servicer, the Insurer, the
Owner Trustee or any Affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Holding Trust Agreement, the Indenture or the
Operative Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Mortgage Loans, as more specifically set
forth herein, in the Sale and Servicing Agreement and in the Indenture. A copy
of each of the Sale and Servicing Agreement and the Holding Trust Agreement may
be examined during normal business hours at the principal office of the Sponsor,
and at such other places, if any, designated by the Sponsor, by any
Certificateholder upon written request.
The Holding Trust Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Holding Trust Agreement at any time by the Sponsor and the Owner Trustee with
the prior written consent of the Insurer and with the consent of the holders of
the Notes and the Certificates evidencing not less than a majority of the
outstanding Notes and the Certificates. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Holding Trust Agreement also permits
the amendment thereof, in certain limited circumstances, without the consent of
the holders of any of the Certificates (other than the Sponsor or the Insurer).
As provided in the Holding Trust Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registrable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies of the Certificate Registrar
maintained by the Owner Trustee in the Corporate Trust Office, accompanied by a
written instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Holding Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Sponsor, the
Certificates are issuable only as registered Certificates without coupons in
denominations of $1,000 or integral multiples of $1,000 in excess thereof. As
provided in the Holding Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates in
authorized denominations evidencing the same aggregate denomination, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and
any agent of the Owner Trustee, the Certificate Registrar or the Insurer may
treat the person in whose name this
A-7
<PAGE> 46
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar, the Insurer nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Holding
Trust Agreement and the Trust created thereby shall terminate upon the payment
to Certificateholders of all amounts required to be paid to them pursuant to the
Holding Trust Agreement and the Sale and Servicing Agreement and the disposition
of all property held as part of the Trust.
The recitals contained herein shall be taken as the statements
of the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Holding Trust Agreement or the Sale and Servicing Agreement or
be valid for any purpose.
A-8
<PAGE> 47
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
_______________________________________ Attorney to transfer said Certificate on
the books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
___________________________________________*
Signature Guaranteed:
___________________________________________*
___________________
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-9
<PAGE> 48
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
A-10
<PAGE> 49
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
A-11
<PAGE> 50
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-A, BEING TREATED AS A TAXABLE MORTGAGE
POOL AS DEFINED IN SECTION 7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER
ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF 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-12
<PAGE> 51
ADVANTA HOLDING TRUST 1999-A
CERTIFICATE
Percentage Interest: 10.51%
Date of Cut-Off Date:
May 1, 1999
First Payment Date: Issue Date: May 27, 1999
June 25, 1999
No. 1
ADVANTA FINANCE RESIDUAL CORP.
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as
of May 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-A (the "Issuer") was created pursuant to a
Trust Agreement dated as of May 1, 1999 (the "Trust Agreement") between Advanta
Mortgage Conduit Services, Inc. (the "Sponsor"), Advanta Holding Trust 1999-A
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-A "Certificates." Pursuant to the Trust
Agreement, there is also issued duly authorized Certificates designated as
Advanta Revolving Home Equity Loan Trust 1999-A "Asset Backed Certificates".
Pursuant to the Indenture dated as of May 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
A-13
<PAGE> 52
Date"), commencing on June 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 Holding Trust Agreement, as
applicable.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a corporation. The Sponsor and any other Certificateholders, by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as equity
interests in a corporation. Each Certificateholder, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Sponsor, or join in any institution
against the Trust or the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Holding Trust
Agreement or any of the Operative Documents.
Distributions on this Certificate will be made as provided in
the Sale and Servicing Agreement and the Indenture by the Indenture Trustee by
wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the
Holding Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Holding Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
A-14
<PAGE> 53
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: May [ ], 1999 ADVANTA HOLDING TRUST 1999-A
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-15
<PAGE> 54
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, the Originators, the Sponsor, the Master Servicer, the Insurer, the
Owner Trustee or any Affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Holding Trust Agreement, the Indenture or the
Operative Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Mortgage Loans, as more specifically set
forth herein, in the Sale and Servicing Agreement and in the Indenture. A copy
of each of the Sale and Servicing Agreement and the Holding Trust Agreement may
be examined during normal business hours at the principal office of the Sponsor,
and at such other places, if any, designated by the Sponsor, by any
Certificateholder upon written request.
The Holding Trust Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Holding Trust Agreement at any time by the Sponsor and the Owner Trustee with
the prior written consent of the Insurer and with the consent of the holders of
the Notes and the Certificates evidencing not less than a majority of the
outstanding Notes and the Certificates. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Holding Trust Agreement also permits
the amendment thereof, in certain limited circumstances, without the consent of
the holders of any of the Certificates (other than the Sponsor or the Insurer).
As provided in the Holding Trust Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registrable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies of the Certificate Registrar
maintained by the Owner Trustee in the Corporate Trust Office, accompanied by a
written instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Holding Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Sponsor, the
Certificates are issuable only as registered Certificates without coupons in
denominations of $1,000 or integral multiples of $1,000 in excess thereof. As
provided in the Holding Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates in
authorized denominations evidencing the same aggregate denomination, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and
any agent of the Owner Trustee, the Certificate Registrar or the Insurer may
treat the person in whose name this
A-16
<PAGE> 55
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar, the Insurer nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Holding
Trust Agreement and the Trust created thereby shall terminate upon the payment
to Certificateholders of all amounts required to be paid to them pursuant to the
Holding Trust Agreement and the Sale and Servicing Agreement and the disposition
of all property held as part of the Trust.
The recitals contained herein shall be taken as the statements
of the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Holding Trust Agreement or the Sale and Servicing Agreement or
be valid for any purpose.
A-17
<PAGE> 56
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-18
<PAGE> 57
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA HOLDING TRUST 1999-A
This Certificate of Trust of Advanta Holding Trust 1999-A (the
"Trust") is being duly executed and filed by the undersigned, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code
Section 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is
Advanta Holding Trust 1999-A.
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 May 27,
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
<PAGE> 2
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Sponsor
ADVANTA HOLDING TRUST 1999-A,
Depositor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of May 1, 1999
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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............................. 6
Section 2.11 Federal Income Tax Allocations.............................................................. 9
Section 2.12 Covenants of the Sponsor.................................................................... 9
Section 2.13 Covenants of the Certificateholders......................................................... 10
Section 2.14 Investment Company.......................................................................... 11
ARTICLE III.
Certificates and Transfer of Interests
Section 3.1 Initial Ownership........................................................................... 11
Section 3.2 The Certificates............................................................................ 11
Section 3.3 Authentication of Certificates.............................................................. 11
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................................... 12
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
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
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..................................... 16
Section 4.4 Restrictions on Certificateholders' Power................................................... 17
Section 4.5 Majority Control............................................................................ 17
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.............................................................................. 19
Section 6.3 Action upon Instruction..................................................................... 19
Section 6.4 No Duties Except as Specified in this Agreement or in Instructions.......................... 20
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..................................................................... 22
Section 7.3 Representations and Warranties.............................................................. 22
Section 7.4 Reliance; Advice of Counsel................................................................. 23
Section 7.5 Not Acting in Individual Capacity........................................................... 23
Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans................................. 23
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....................................................... 24
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............................................................... 25
Section 8.4 Non-recourse Obligations.................................................................... 25
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
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..................................................... 27
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.................................................................. 30
Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders.................................. 31
Section 11.3 Limitations on Rights of Others............................................................. 32
Section 11.4 Notices..................................................................................... 32
Section 11.5 Severability................................................................................ 32
Section 11.6 Separate Counterparts....................................................................... 32
Section 11.7 Assignments; Insurer........................................................................ 32
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................................................................................ 33
Section 11.14 Nonpetition Covenant........................................................................ 33
</TABLE>
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
<PAGE> 6
TRUST AGREEMENT dated as of May 1, 1999 between ADVANTA MORTGAGE CONDUIT
SERVICES, INC., a Delaware corporation (the "Sponsor"), ADVANTA HOLDING TRUST
1999-A, 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> 7
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-A 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 May 27, 1999 among the Insurer, Bear Stearns & Co. Inc. and Lehman
Brothers Inc.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture dated as of May 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 May 27, 1999 among the Insurer, the Sponsor, the Trust, Advanta
Holding Trust 1999-A, 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 Indenture, the Purchase Agreement, the AMHC Guaranty to the
Underwriter and the Trust, the
2
<PAGE> 8
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 May 27, 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-A, Advanta Revolving Home Equity Loan Trust
1999-A, as Issuer, Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, and the Indenture Trustee, dated as of
May 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 Mortgage Conduit Services, Inc. in its
capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" or "Issuer" shall mean the trust established by this Agreement.
"Trust Accounts" shall have the meaning ascribed thereto in the Sale and
Servicing Agreement.
3
<PAGE> 9
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-A," 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 Owner Trustee will
also, upon receipt thereof, acknowledge on behalf of the Trust receipt of the
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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.
Section 2.10 Representations and Warranties of the Sponsor and the
Depositor.
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(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 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;
(ii) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals, in
all jurisdictions in which the ownership or lease of its property, the
conduct of its business and the performance of its obligations under this
Agreement and the Operative Documents requires such qualification;
(iii) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery and performance of this Agreement has been duly authorized by the
Sponsor by all necessary corporate action. The Sponsor has duly executed
this Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Sponsor enforceable against the Sponsor, in accordance
with its terms;
(iv) To the best knowledge of the Sponsor, no consent, license,
approval or authorization or registration or declaration with, any Person
or with any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this Agreement
and the Operative Documents, except for such as have been obtained,
effected or made;
(v) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the certificate
of incorporation or bylaws of the Sponsor, or any material indenture,
agreement or other instrument to which the Sponsor is a party or by which
it is bound; nor result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than pursuant to the Operative Documents); nor
violate any law or, to the best of the Sponsor's knowledge, any order, rule
or regulation applicable to the Sponsor of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Sponsor or its properties; and
(vi) There are no proceedings or investigations pending or, to its
knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
having jurisdiction over it or its properties (A) asserting the invalidity
of this Agreement or any of the Operative Documents, (B) seeking to prevent
the issuance of the Certificates or the Notes or the consummation of any of
the transactions
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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, 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,
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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;
(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
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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
(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
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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
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
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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 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
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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 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.
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(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.
(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.
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Section 3.11 Acceptance of Obligations. The Sponsor agrees to be bound by
and to perform all the duties of the Sponsor set forth in this Agreement.
Section 3.12 Payments on Certificates. The 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;
(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
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(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.
Section 4.3 (a) The Owner Trustee shall not have the power, except upon the
written direction of the Insurer or in the event that an Insurer Default shall
have occurred and is continuing, the Security Majority in accordance with the
Operative Documents, to (i) remove the Master Servicer under the Sale and
Servicing Agreement, (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Indenture, (iii)
institute proceedings to have the Trust declared or adjudicated to be bankrupt
or insolvent, (iv) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (v) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (vi) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vii) make any assignment for the benefit of the Trust's creditors, (viii) cause
the Trust to admit in writing its inability to pay its debts generally as they
become due, (ix) take any action or cause the Trust to take any action, in
furtherance of any of the foregoing clauses (iii) through (ix) (any of such
clauses, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect, no Certificateholder shall have the power to take,
and shall not take, any Bankruptcy Action with respect to the Trust or direct
the Owner Trustee to take any Bankruptcy Action with respect to the Trust. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Insurer or the Securityholders, as the
case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee by the Certificateholders.
(b) Upon the written request of any Certificateholder (a "Proposer"), the
Owner Trustee shall distribute promptly to all Certificateholders any request
for action or consent of Certificateholders submitted by such Proposer. The
Owner Trustee shall provide a reasonable method for collecting responses to such
request and shall tabulate and report the results thereof to the
Certificateholders and the Sponsor. The Owner Trustee shall have no
responsibility or duty to determine if any such proposed action or consent is
permitted under the terms of this Agreement or applicable law.
Section 4.3 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
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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 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.
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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 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
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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 $247,500,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Operative Documents. The
Owner Trustee is further authorized from time to time to take such action as the
Instructing Party recommends with respect to the Operative Documents so long as
such activities are consistent with the terms of the Operative Documents.
Section 6.2 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
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(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 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
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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 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;
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(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, 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.
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(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated hereby nor compliance by it
with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or 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
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
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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.
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.
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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.
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.
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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
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
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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.
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.
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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 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.
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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 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
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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.
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
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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.
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.
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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
Mortgage Conduit Services, Inc., 107090 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, 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.
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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 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
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized as of the
day and year first above written.
WILMINGTON TRUST COMPANY, as
Owner Trustee
By: /s/ Donald G. MacKelcan
---------------------------------------
Name: Donald G. Mackelcan
Title: Vice President
ADVANTA MORTGAGE CONDUIT
SERVICES, INC., as Sponsor
By: /s/ Michael Coco
---------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA HOLDING TRUST 1999-A, as Depositor
By: WILMINGTON TRUST COMPANY, in
its capacity as Owner Trustee
By: /s/ Donald G. MacKelcan
---------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
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Exhibit A
ASSET BACKED CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER
OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH
REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION
3.10 OF THE TRUST AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE PROVIDES A
REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER, TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, (ii) A
PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
OR (iii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN,
WHICH REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE
INSURER.
NO TRANSFER OF A CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH SAID ACT AND
LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF THE CERTIFICATE TO THE DEPOSITOR, THE
OWNER TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND
THE INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS
SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF
THE OWNER TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT
DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE SPONSOR THAT SUCH
TRANSFER MAY BE MADE PURSUANT TO AN
A-1
<PAGE> 42
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 STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL
ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE
A-2
<PAGE> 43
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> 44
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A
ASSET BACKED CERTIFICATE
Percentage Interest: 100%
Date of Cut-Off Date:
May 1, 1999
First Payment Date: Issue Date: May 27, 1999
June 25, 1999
No. 1
ADVANTA HOLDING TRUST 1999-A
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as of May 1, 1999
(the "Trust Agreement"), between Advanta Mortgage Conduit Services, Inc. (the
"Sponsor"), Advanta Holding Trust 1999-A (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-A "Asset Backed Certificates."
Also issued under the Indenture dated as of May 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 June 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> 45
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> 46
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: May 27, 1999 ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999A
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 withinmentioned Trust
Agreement.
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee
By:_____________________________
Authenticating Agent
A-6
<PAGE> 47
(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> 48
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> 49
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> 50
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999A
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 1999A.
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 May 27, 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
<PAGE> 2
EXECUTION
SALE AND SERVICING AGREEMENT
Among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A,
Trust,
ADVANTA HOLDING TRUST 1999-A,
Holding Trust,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of May 1, 1999
1
<PAGE> 3
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<CAPTION>
Page
<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................................. 15
Section 1.3 Captions; Table of Contents.............................. 15
Section 1.4 Opinions................................................. 15
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS.................................. 15
Section 2.1 Conveyance of the Mortgage Loans......................... 15
Section 2.2 Acceptance by Indenture Trustee; Certain
Substitutions of Mortgage Loans;Certification by
Indenture Trustee........................................ 21
Section 2.3 Qualified Replacement Mortgage Loans..................... 23
Section 2.4 Cooperation Procedures................................... 25
Section 2.5 Retransfers of Mortgage Loans at Election of
Sponsor or the Related Originator........................ 25
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND
THE MASTER SERVICER........................................... 26
Section 3.1 Representations and Warranties of the Sponsor............ 26
Section 3.2 Representations and Warranties of the Master Servicer.... 28
Section 3.3 Representations and Warranties of the Sponsor
with Respect to the Mortgage Loans; Retransfer of
Certain Mortgage Loans................................... 31
Section 3.4 Covenants of Sponsor to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations...... 38
ARTICLE IV. SERVICING AND ADMINISTRATION OF MORTGAGE LOANS................ 40
Section 4.1 Master Servicer and Sub-Servicers........................ 40
Section 4.2 Modifications............................................ 41
Section 4.3 Servicer Report.......................................... 44
Section 4.4 Liability of Master Servicer............................. 44
Section 4.5 Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers............................... 45
Section 4.6 Successor Sub-Servicers.................................. 45
Section 4.7 No Contractual Relationship Between Sub-Servicer
and Indenture Trustee or the Noteholders................. 45
Section 4.8 Assumption or Termination of Sub-Servicing
Agreement by Indenture Trustee........................... 45
Section 4.9 Principal and Interest Account........................... 46
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
Section 4.10 Servicing Advances....................................... 48
Section 4.11 Maintenance of Insurance................................. 48
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements............................................... 49
Section 4.13 Realization Upon Defaulted Mortgage Loans................ 50
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage
Files.................................................... 51
Section 4.15 Servicing Compensation................................... 53
Section 4.16 Annual Statement as to Compliance........................ 53
Section 4.17 Annual Independent Certified Public Accountants'
Reports.................................................. 53
Section 4.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans............................. 53
Section 4.19 Assignment of Agreement.................................. 54
Section 4.20 Resignation of the Master Servicer....................... 54
ARTICLE V. SERVICING TERMINATION........................................... 54
Section 5.1 Events of Servicing Termination.......................... 54
Section 5.2 Inspections by Insurer; Errors and Omissions
Insurance................................................ 58
Section 5.3 Merger, Conversion, Consolidation or Succession
to Business of Master Servicer........................... 58
Section 5.4 Notification to Noteholders.............................. 59
Section 5.5 Notices of Material Events............................... 59
ARTICLE VI. ADMINISTRATIVE DUTIES OF THE MASTER SERVICER................... 60
Section 6.1 Administrative Duties with Respect to the Indenture...... 60
Section 6.2 Records.................................................. 62
Section 6.3 Additional Information to be Furnished to the Trust...... 62
ARTICLE VII. MISCELLANEOUS................................................. 62
Section 7.1 Compliance Certificates and Opinions..................... 62
Section 7.2 Form of Documents Delivered to the Indenture
Trustee.................................................. 63
Section 7.3 Acts of Noteholders...................................... 63
Section 7.4 Notices, etc. to Indenture Trustee....................... 64
Section 7.5 Notices and Reports to Noteholders; Waiver of Notices.... 64
Section 7.6 Successors and Assigns................................... 65
Section 7.7 Severability............................................. 65
Section 7.8 Benefits of Agreement.................................... 65
Section 7.9 Legal Holidays........................................... 65
Section 7.10 Governing Law............................................ 65
Section 7.11 Counterparts............................................. 66
Section 7.12 Usury.................................................... 66
Section 7.13 Amendment................................................ 66
Section 7.14 The Insurer.............................................. 67
Section 7.15 Notices.................................................. 67
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
Section 7.16 Limitation of Liability.................................. 69
</TABLE>
SCHEDULE I.. -- Schedule of Mortgage Loans
EXHIBIT A -- [Reserved]
EXHIBIT B -- Form of Credit Line Agreements
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
iii
<PAGE> 6
SALE AND SERVICING AGREEMENT, dated as of May 1, 1999, by and among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A, a Delaware business trust (the
"Trust"), ADVANTA HOLDING TRUST 1999-A, a Delaware business trust ("Holding"),
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in its capacity
as Sponsor of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware
corporation, in its capacity as master servicer (the "Master Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, in
its capacity as 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.For all purposes of this Agreement, the following
terms shall have the meanings set forth below, unless the context clearly
indicates otherwise. In addition, capitalized terms used herein and not defined
herein shall have their respective meanings as set forth in the Indenture.
"Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
"Account": The Note Account and the Principal and Interest Account.
"Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws conveyed to the Trust pursuant to Section 2.1,
it being understood that the Trust shall not be required to fund any
Additional Balances.
<PAGE> 7
"Agreement": This Sale and Servicing Agreement, as it may be amended
from time to time in accordance with the terms hereof, and including the
Exhibits hereto.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation and
the corporate parent of Advanta Mortgage Corp. USA, and the indirect
corporate parent of Advanta Mortgage Conduit Services, Inc.
"Appraised Value": As to any Mortgaged Property, the value established
by a drive-by inspection, a full appraisal of such Mortgaged Property or a
statistical property valuation.
"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 Officer": With respect to any Person, any person who is
authorized to act for such Person in matters relating to this Agreement, and
whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Bill of Sale and Assignment": The bill of sale and assignment between the
Warehouse Trust, as seller, and Holding, as buyer, dated as of May 1, 1999,
pursuant to which Holder acquired a portion of the Mortgage Loans.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which the Insurer, the Master Servicer or the Sponsor is closed or commercial
banking institutions in the State of New York, State of 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.
"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.
2
<PAGE> 8
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Closing Date": May 27, 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.
"Coupon Rate": With respect to any Mortgage Loan and as of any date,
the per annum rate of interest specified under the related Credit Line
Agreement to the calculation of interest on the Principal Balance of such
Mortgage Loan.
"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,
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 executed by the related Mortgagor and any
amendment or modification thereof a form of which is set forth as Exhibit B
attached hereto.
"Cut-Off Date": With respect to each Mortgage Loan, including Mortgage
Loans originated after May 1, 1999 but prior to the Closing Date, the opening of
business on May 1, 1999. With respect to each Qualified Replacement Mortgage
Loan, the Replacement Cut-off Date related to such Qualified Replacement
Mortgage Loan.
"Cut-Off Date Pool Balance": As defined in the Indenture.
"Cut-Off Date Principal Balance": As defined in the Indenture.
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"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.
"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.
"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": As defined in the Indenture.
"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 hereof.
"Draw": With respect to any Mortgage Loan, an additional borrowing by
the Mortgagor subsequent to the related Cut-Off Date in accordance with the
related Credit Line Agreement.
"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 under such Credit Line Agreement; unless extended at the option of the
Master Servicer pursuant to the terms hereof and 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).
"Event of Servicing Termination": As defined in Section 5.1 hereof.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
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"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.
"First Mortgage Loan": A Mortgage Loan which constitutes a first
priority mortgage lien with respect to any Mortgaged Property.
"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 of such
Liquidated Mortgage Loan immediately prior to the final recovery of its
Liquidation Proceeds.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the
Federal National Mortgage Association Charter Act, as amended, or any
successor thereof.
"Highest Lawful Rate": As defined in Section 7.12.
"Holding": Advanta Holding Trust 1999-A, a Delaware business trust.
"Holding Trust Agreement": The trust agreement dated as of May 1, 1999
between the Sponsor and Wilmington Trust Company, as Owner Trustee, relating
to the formation of Holding.
"Indemnification Agreement": As defined in the Indenture.
"Indenture": The Indenture dated as of May 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 Agreement at 3 Park Plaza, 16th Floor, Irvine,
California 92614, not in its individual capacity but solely as Indenture Trustee
under this Agreement, and any successor hereunder.
"Indenture Trustee Fee": As defined in the Indenture.
"Insurance Agreement": As defined in the Indenture.
"Insurer": Ambac Assurance Corporation, or any successor thereto, as
issuer of the Policy.
"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
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recoveries with respect to Charged-Off Mortgage Loans. The terms of the related
Credit Line Agreement shall determine the portion of each payment in respect of
a Mortgage Loan that constitutes interest.
"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 during the related Remittance Period, and (iii) the
proceeds of any liquidation of the Trust Estate (to the extent such proceeds
relate to interest).
"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.
"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, a form of which is set forth in Exhibit B hereto.
"Liquidated Mortgage Loan": A defaulted Mortgage Loan (i) which the Master
Servicer has determined that it has recovered all amounts it expects to recover
from or on account of such defaulted Mortgage Loan 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 hereof is
not a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the Master Servicer
or any Sub-Servicer in connection with the liquidation of any defaulted Mortgage
Loan, such expenses, including, without limitation, legal fees and expenses, and
any unreimbursed Servicing Advances expended by the Master Servicer or any
Sub-Servicer pursuant to Section 4.10 with respect to the related Mortgage Loan.
"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 in connection
with such Liquidated Mortgage Loan, whether through trustee's sale, foreclosure
sale or otherwise.
"Liquidation Report": As defined in Section 4.13(b).
"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
hereof, 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,
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(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.
"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.
"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 hereto.
"Minimum Monthly Payment": With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in
that month.
"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
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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 (if any).
(c) The original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage.
(d) The originals of 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 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)."
(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 (other than
the 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), or the penultimate sentence
of Section 4.11(c), net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures, or (iv) required to be paid to
any holder of a mortgage in a senior lien position to such Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trust
pursuant to Section 2.1 hereof, together with any Qualified Replacement Mortgage
Loans substituted therefor in accordance with this Agreement, as from time to
time are held as a part of the Trust Estate, the Mortgage Loans originally so
held being identified in the Schedule of Mortgage Loans. The term "Mortgage
Loan" includes the terms "First
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<PAGE> 14
Mortgage Loan" and "Junior Mortgage Loan." 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 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.
"Nonrecoverable Advance": With respect to any Mortgage Loan, any Servicing
Advance previously made and not reimbursed pursuant to Section 4.10 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 designated as a "Note" on the face thereof, in
substantially the form of 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.
"Noteholder": The Person in whose name a Note is registered on the
Note Register.
"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.
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"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered in accordance
with the terms of this Agreement.
"Operative Documents": As defined in the Indenture.
"Original Note Balance": $247,500,000.
"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, a national banking association,
and Advanta Finance Corp., a Nevada corporation.
"Outstanding": As defined in the Indenture.
"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).
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Noteholders, which shall be the 25th day of each
month, commencing in the month following the Closing Date or, if such day is not
a Business Day, then on the next succeeding Business Day.
"Percentage Interest": As defined in the Indenture.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government
"Policy": As defined in the Indenture.
"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. Thereafter, the Pool Factor shall decline to reflect
reductions in the Note Balance resulting from distributions of principal to the
Noteholders.
"Pool Principal Balance": With respect to any date of determination,
the aggregate of the Principal Balances of the Mortgage Loans as of such date.
"Preference Amount": As defined in the Policy.
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"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received prior to the scheduled due
date for such installment, intended by the Mortgagor as an early payment thereof
and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment), and the proceeds of any Mortgage Insurance Policy 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 of interest charged from time to time 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) hereof, 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 Mortgage Loan in accordance with the related Credit Line
Agreement prior to such day. 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, 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 of the applicable
Mortgage Loan, but excluding Foreclosure Profits and any recoveries in respect
of Charged-Off Mortgage Loans) collected by the Master Servicer under the
Mortgage Loans during the related 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.
"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 related Remittance Period, (ii) without duplication, the portion
of the Loan Reacquisition Price and the Substitution Amount relating to
principal on the Mortgage Loans reacquired during the
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related Remittance Period and (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate thereon).
"Prospectus": That certain Prospectus dated May 6, 1999, naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated May
18, 1999, describing the Notes issued by the Trust.
"Purchase Agreement": The purchase agreement, dated as of May 1, 1999,
among the Sponsor, Advanta National Bank and Advanta Finance Corp.
"Qualified Replacement Mortgage Loan": As defined in Section 2.3.
"Realized Loss": As to any Liquidated Mortgage Loan, the amount, if any,
by which the Principal Balance thereof as of the date of liquidation is in
excess of Net Liquidation Proceeds allocable to the Principal Balance thereof
realized thereon.
"Record Date": As defined in the Indenture.
"Registration Statement": The Registration Statement (No. 333-77927)
filed by the Sponsor with the Securities and Exchange Commission, including
all amendments thereto and including the Prospectus and the Prospectus
Supplement relating to the Notes constituting a part thereof.
"Reimbursement Amount": As of any Payment Date and with respect to the
Policy, the sum of (x)(i) all payments made pursuant to the Policy previously
received by the Indenture Trustee and all Preference Amounts previously paid to
the Indenture Trustee by the Insurer and in each case not previously repaid to
the Insurer pursuant to Section 8.6(b)(vi) of the Indenture plus (ii) interest
accrued on each such payment made pursuant to the Policy not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related payment made pursuant to the Policy 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.
"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 in the Note Account, which
shall be the 18th day or, if such day is not a Business Day, the next succeeding
Business Day, of each month, commencing in the month following the month in
which the Closing Date occurs.
"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
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"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": Collectively, the letters to, or the
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.
"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.
The information contained on the Schedule of Mortgage Loans shall be delivered
to the Indenture Trustee in an electronic medium.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Junior Mortgage Loan, the mortgage
loan relating to the corresponding Mortgaged Property having a senior
priority lien.
"Servicing Advance": As defined in Section 4.10 and Section 4.13 hereof.
"Servicing Fee": With respect to any Remittance Period, the product of (i)
Servicing Fee Rate and (ii) the Pool Principal Balance of as of the opening of
business on the first day of the related Remittance Period (or the Cut-Off Date
Pool Balance with respect to the first Payment Date).
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer or of an agent or
independent contractor through which all or part of the Master Servicer's
servicing responsibilities are carried out, involved in, or responsible for, the
administration and servicing of the Mortgage Loans.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"S&P": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage Loan, if the outstanding principal amount of such Qualified
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Replacement Mortgage Loan as of the applicable Replacement Cut-Off Date is less
than the 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.
"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 hereof 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.
"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 Fees": With respect to Mortgage Loans which prepay in
full or in part and are secured by Mortgaged Properties in certain
jurisdictions, termination fee as specified in the related Credit Line
Agreement.
"Transfer Date": With respect to a Qualified Replacement Mortgage Loan,
the date that such Mortgage Loan is delivered to the Indenture Trustee on behalf
of the Trust, and with respect to a Mortgage Loan that is reassigned to the
Sponsor pursuant to Section 2.5, the date that is specified therein.
"Transfer Notice Date": As defined in Section 2.5 herein.
"Trust": Advanta Revolving Home Equity Loan Trust 1999-A created by
the Trust Agreement until a successor acceptable to the Insurer replaces it,
and thereafter, such successor.
"Trust Agreement": The Trust Agreement dated as of May 1, 1999 among
the Owner Trustee, the Sponsor and Holding relating to the formation of the
Trust.
"Trust Estate": As defined in the Indenture.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"Underwriters": Bear, Stearns & Co. Inc. and Lehman Brothers Inc.
"Unqualified Mortgage Loan": A Mortgage Loan which is subject to
repurchase or substitution pursuant to Section 2.1(b) or Section 3.4(b).
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"Warehouse Trust": Any trust established by the Sponsor or any
affiliate to finance the origination of mortgage loans, including Advanta
Mortgage Funding Trust, a Delaware business trust.
Section 1.2 Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.1 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders. As used herein, any form of
the word "include" shall be deemed to be followed by the words "without
limitation.".
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 acquired by the Sponsor pursuant
to the Purchase Agreement 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
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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 Principal and
Interest Account and the Note 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 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 any Warehouse Trust or any of their respective 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;
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(ii) the conveyance provided for herein shall be deemed to be a
grant by the Sponsor and the Warehouse Trusts to Holding of a
first priority security interest in all of the Sponsor's and
the Warehouse Trusts' 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 Note Account, or the Principal
and Interest Account, whether in the form of cash,
instruments, securities or other property;
(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, the Warehouse Trusts 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,
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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 (which includes the Mortgage Loans acquired by
Holding from the Warehouse Trust pursuant to the Bill of Sale and Assignment),
including their respective Principal Balances (including all Additional
Balances) and all principal and interest collections in respect thereof on or
after the 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
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
Principal and Interest Account and the Note 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 of the Notes. 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
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2.1(d) be construed as a sale of the Mortgage Loans by Holding to the Trust. 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 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 Note Account or the Principal and 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
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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 Mortgage Loans or on the
Transfer Date with respect to any Qualified Replacement Mortgage Loan, the
items listed in the definition of "Mortgage File";
(ii) cause, within 75 Business Days following the Closing Date
or 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 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.
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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 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.
(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 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
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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 (or within 90 days with
respect to any Qualified Replacement Mortgage Loan after the Transfer Date) 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 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 or Transfer Date, respectively, 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
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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 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 February 2024, (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
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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 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
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in selecting each Qualified Replacement Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Noteholders or the
Insurer.
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
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(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 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.
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
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which the Sponsor is a party or by which the Sponsor is bound, or violate
any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Sponsor or
any of its properties.
(c) This Agreement and the other Operative Documents to which the
Sponsor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Sponsor enforceable against it in accordance
with the terms hereof and thereof, except as the enforcement hereof and
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law).
(d) The Sponsor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Sponsor or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or any
other Operative Document to which it is a party or 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
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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 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
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of any court, governmental agency or body or other tribunal having
jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Master Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Master Servicer or its properties or might
have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
litigation might have consequences that would prohibit its entering into
this Agreement or any other Operative Document to which it is a party or
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
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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.
(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 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.
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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 (vi)(b) and
(xv)(b) below, as to the Mortgage Loans on which the Trust relies in accepting
the Mortgage Loans and on which the Insurer relies in issuing the Policy. Such
representations and warranties speak as of the Closing Date, 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 be delivered to the Indenture Trustee on the Closing Date.
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 or purchase mortgage loans comparable to the
Mortgage Loans for sale to prudent investors in the secondary market that
invest in mortgage loans such as the Mortgage Loans.
(ii)Each Mortgage Loan is being serviced by the Master Servicer or
a Master Servicer Affiliate.
(iii) [reserved]
(iv)As of the Closing Date with respect to the Mortgage Loans and
as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, the information set forth in the Schedule of
Mortgage Loans for such Mortgage Loans is true and correct in all material
respects.
(v) As of the Closing Date, no more than 0.02% of the Cut-Off Date
Pool Balance of the Mortgage Loans is secured by Mortgaged Properties
located within any single zip code area.
(vi)(a) The Mortgages and the Credit Line Agreements conveyed to
Holding by the Sponsor pursuant to Section 2.1 hereof have not been
assigned or pledged by the Sponsor, and the Sponsor is the sole 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, and (b) the Mortgages and the Credit
Line Agreements conveyed by Holding to the Trust pursuant to Section 2.1
hereof have not been assigned or pledged by Holding, and Holding is the
sole owner and holder of such Mortgages and such Credit Line Agreements
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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.
(vii) As of the Closing Date with respect to the 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.
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, the defense of usury and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(viii) As of the Cut-Off Date with respect to the Mortgage Loans,
no Minimum Monthly Payment is more than 59 days Delinquent (measured on a
contractual basis) and no more than 0.52% (by the Cut-Off Date Pool
Balance) of the Mortgage Loans were 30-59 days Delinquent (measured on a
contractual basis).
(ix)As of the Cut-Off Date with respect to the Mortgage Loans and
as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Credit Line Agreement and each Mortgage
relating to such 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.
(x) 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.
(xi)With respect to the Mortgage Loans, as of the Cut-Off Date,
(i) the Coupon Rate over the term of each Mortgage Loan may not exceed the
related Lifetime Rate Cap, if any, (ii) the maximum Coupon Rates range
between 15.750% and 24.500%, (iii) the margins range between 0.0% and
8.750%, (iv) the weighted average margin is approximately 4.548%, (v) the
current Coupon Rates range between 7.750% and 16.500%, (vi) the weighted
average Coupon Rate is approximately 12.30%, (vii) the Credit Limits range
between $8,000 and $420,000, (viii) the average Credit Limit is
approximately $30,418, (ix) no Mortgage Loan had a Principal Balance in
excess of approximately $417,000 and (x) the average Principal Balance of
the Mortgage Loans is approximately $29,489.
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(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 but shall not include
cooperatives or property which constitutes other than real property under
applicable state law.
(xiii) As of the Cut-Off Date, no Mortgage Loan had a Combined
Loan-to-Value Ratio in excess of 125.00%.
(xiv) As of the Cut-Off Date with respect to the 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 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.
(xv)(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 (including its Cut-Off Date Principal
Balance) 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,
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encumbrances or rights of others except liens which will be released
simultaneously with such transfers and assignments
(xvi) 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.
(xvii) 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.
(xviii) 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 with respect to the Mortgage Loans and 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 (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.
(xix) As of the Closing Date with respect to the 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).
(xx)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, 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
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Agreement and related Mortgaged Property is reflected on the related
Schedule of Mortgage Loans.
(xxi) 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.
(xxii) 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.
(xxiii) 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 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.
(xxiv) 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.
(xxv) 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. 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.
(xxvi) As of the Closing Date with respect to the 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 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 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.
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(xxvii) To the best knowledge of the Sponsor, 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.
(xxviii) 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.
(xxix) As of the Closing Date with respect to the 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.
(xxx) 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.
(xxxi) 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
relating to the Mortgage Loans have been made, obtained or issued, as
applicable.
(xxxii) As of the Cut-Off Date, no more than 90.55% of the
Mortgage Loans are Junior Mortgage Loans.
(xxxiii) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related senior lien does not provide for negative
amortization.
(xxxiv) 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.
(xxxv) Each Mortgage Loan is secured by a property having an
appraised value of not more than $1,526,384.
(xxxvi) 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.
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(xxxvii) 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 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.
(xxxviii) 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.
(xxxix) As of the Closing Date, the Sponsor 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 the Sponsor.
(xl)At the Cut-Off Date with respect to the Mortgage Loans, no
Mortgagor had been identified on the records of the Sponsor as being the
subject of a current bankruptcy proceeding.
(xli) [Reserved]
(xlii) To the best of the Sponsor's knowledge, each party which
had any interest in a Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise (including the Sponsor), is (or, during the period in
which such party held and disposed of such interest, 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.
(xliii) 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.
(xliv) 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.
(xlv) As of the Cut-Off Date 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.
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(xlvi) During the period from origination to the Cut-Off 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 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.
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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.
(b) Upon the earliest to occur of the Sponsor's discovery, its receipt of
notice of breach from any one of the other parties hereto or from the Insurer or
such time as a breach of any representation and warranty materially and
adversely affects the interests of 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.
(c) 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.
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(d) 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 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]
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(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 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
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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 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 February 2024).
(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
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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.
(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) [reserved]
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.
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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 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
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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 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
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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 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 and after the Cut-Off
Date.
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
and may only be withdrawn from the Principal and Interest Account by the Master
Servicer immediately following the remittance of the Monthly Remittance Amounts
by the Master Servicer. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings. 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 Cut-Off Date, 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
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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
Cut-Off Date, (iii) interest collected on the Mortgage Loans prior to the
Cut-Off Date 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;
(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.
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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 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.
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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.
(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
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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 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
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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 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
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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 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
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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, 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,
the FDIC and the supervisory agents and examiners of each of the foregoing
access to the documentation regarding the Mortgage Loans required by applicable
state and federal
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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 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%.
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(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 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
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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 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.
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(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
Trustee (x) may solicit bids for a successor servicer as described below, and
(y) pending the appointment of a successor Master Servicer as a result of
soliciting such bids, shall serve as Master Servicer. The Indenture Trustee
shall, if it is unable to obtain a qualifying bid and is prevented by law from
acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$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
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and rights hereunder and shall promptly provide the Indenture Trustee or such
successor Master Servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume the Master Servicer's functions hereunder
and shall promptly also transfer to the Indenture Trustee or such successor
Master Servicer, as applicable, all amounts which then have been or should have
been deposited in the Principal and Interest Account by the Master Servicer or
which are thereafter received with respect to the Mortgage Loans. Neither the
Indenture Trustee nor any other successor Master Servicer shall be held liable
by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Master
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Master Servicer.
(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
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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).
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.
(iii) Notwithstanding anything in this Agreement or the Operative
Documents to the contrary, the Master Servicer shall be responsible for
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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
directs) or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
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(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
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
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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. 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
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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.
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.
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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.
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.
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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 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
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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.
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-A
Tel: (949) 253-7575
Fax: (949) 253-7577
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The Sponsor: Advanta Mortgage Conduit Services, Inc.
10790 Rancho Bernardo Drive
San Diego, CA 92127
Attention:
Tel: (619) 674-3356
Fax: (619) 674-3666
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: (619) 674-3356
Fax: (619) 674-3666
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".
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
26 Broadway, 10th Floor
New York, New York 10004
Attention: Mortgage Surveillance Group
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The Trust: Advanta Revolving Home Equity Loan
Trust 1999-A
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]
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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 MORTGAGE CONDUIT SERVICES, INC.
By: /s/ Michael Coco
-------------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA MORTGAGE CORP. USA
By: /s/ Michael Coco
-------------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-A,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: /s/ Donald G. MacKelcan
---------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
ADVANTA HOLDING TRUST 1999-A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: /s/ Donald G. MacKelcan
--------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
not in its individual capacity but solely as
Indenture Trustee
By: /s/ Mark M. McNeil
-------------------------------------------
Name: Mark M. McNeil
Title: Assistant Secretary
[Signature Page of Sale and Servicing Agreement]
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EXHIBIT B
FORM OF CREDIT LINE AGREEMENTS
[Attached]
B-1
<PAGE> 77
EXHIBIT C
[Reserved]
C-1
<PAGE> 78
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 May 1, 1999 (the
"Sale and Servicing Agreement"), by and among Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp.
USA, a Delaware corporation, as Master Servicer, Advanta Holding Trust 1999-A,
Advanta Revolving Home Equity Loan Trust 1999-A, 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: May __, 1999
D-1
<PAGE> 79
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 May 1, 1999 (the "Sale
and Servicing Agreement"), by and among Advanta Mortgage Conduit Services, Inc.,
a Delaware corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA,
a Delaware corporation, as Master Servicer, Advanta Holding Trust 1999-A,
Advanta Revolving Home Equity Loan Trust 1999-A, 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> 80
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
May 1, 1999 by and among Advanta Mortgage Conduit Services, Inc., a Delaware
corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as
Master Servicer, Advanta Holding Trust 1999-A, Advanta Revolving Home Equity
Loan Trust 1999-A, 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.
_______ 5. Other. (Describe)
<PAGE> 81
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:
<PAGE> 1
EXHIBIT 4.5
<PAGE> 2
[Ambac Letterhead]
Ambac
Certificate Guaranty Insurance Policy
Insured Obligations: Policy Number:
$247,500,000 Advanta Revolving AB0264BE
Home Equity Loan Trust 1999-A,
Advanta Revolving Home Equity Premium:
Loan Asset Backed Notes, Series Calculated as set forth in the
1999-A, Variable Pass-Through Rate Certificate Guaranty Insurance Policy
Endorsement attached hereto and made
a part hereof
AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/ P. Lassiter /s/ Stephen D. Cooke
President Secretary
[Seal]
/s/ Warren K. Tong
Effective Date: May 27,1999 Authorized Representative
<PAGE> 3
CERTIFICATE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #ABO264BE May 27, 1999
issued to:
Bankers Trust Company
of California, N.A.,
as Indenture Trustee for the Holders of
Advanta Revolving Home Equity Loan Asset Backed
Notes, Series 1999-A
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement dated as of May
1, 1999 among Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Bankers Trust Company of California,
N.A., as Indenture Trustee, Advanta Holding Trust 1999-A, as Holding Trust and
Advanta Revolving Home Equity Loan Trust 1999-A, as the Trust, as such Agreement
may be amended, modified or supplemented from time to time as set forth in the
Agreement.
"Deficiency Amount" means the excess, if any, of Required Payments over
the Net Available Distribution Amount for such Payment Date.
"Due for Payment" shall mean the Business Day immediately preceding the
Payment Date on which Insured Amounts are due.
"First Payment Date" shall mean June 25, 1999.
"Holder" shall mean any person who is the registered owner or
beneficial owner of any Notes.
"Indenture" shall mean the Indenture between Advanta Revolving Home
Equity Loan Trust 1999-A, as Issuer and Bankers Trust Company of California,
N.A. as Indenture Trustee, dated May 1, 1998.
<PAGE> 4
-2-
"Indenture Trustee" shall mean Bankers Trust Company of California,
N.A. or its successor-in-interest, in its capacity as Indenture Trustee under
the Indenture, or if any successor indenture trustee or any co-trustee shall be
appointed as provided therein, then "Indenture Trustee" shall also mean such
successor trustee or such co-trustee, as the case may be, subject to the
provisions thereof.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement,
dated as of May 27, 1999, among Advanta Mortgage Conduit Services, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company
of California, N.A., as Indenture Trustee, Ambac Assurance Corporation, as
Insurer, Advanta Holding Trust 1999-A, as Depositor and the Advanta Revolving
Home Equity Loan Trust 1999-A, as Issuer as such Agreement may be amended,
modified or supplemented from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts
for any given Business Day.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Policy.
"Late Payment Rate" shall mean for any Payment Date, the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on
the Notes. The Late Payment Rate shall be computed on the basis of a year of 360
days and the actual number of days elapsed. In no event shall the Late Payment
Rate exceed the maximum rate permissible under any applicable law limiting
interest rates.
"Net Available Distribution Amount" means, with respect to any Payment
Date, the amount of Available Funds on such Payment Date minus the Owner
Trustee's Fee, the Indenture Trustee's Fee and the Premium Amount.
"Nonpayment" shall mean, with respect to any Payment Date, a Deficiency
Amount owing in respect of such Payment Date.
"Note Account" shall mean the account created and maintained with the
Indenture Trustee for the benefit of the Holders and the Insurer pursuant to
Section 8.3 of the Indenture.
"Note Balance" shall mean 96.75% of the Pool Principal Balance as of
the Cut-off Date minus the aggregate amounts actually distributed as principal
to the Holders.
"Policy" shall mean this Certificate Guaranty Insurance Policy together
with each and every endorsement hereto.
<PAGE> 5
-3-
"Notes" shall mean any one of the Notes substantially in the form set
forth in Exhibit A to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Payment Date.
"Overcollateralization Deficit" for any Payment Date shall be the
amount by which the Note Balance (after giving effect to all other amounts
distributable and allocable to principal on the Notes on such Payment Date)
exceeds the aggregate of the Principal Balances of all of the Mortgage Loans as
of such Payment Date.
"Payment Date" shall mean the 25th day of any month (or if such 25th
day is not a Business Day, the first Business Day immediately following)
beginning with the First Payment Date.
"Preference Amount" means any payment on a Note which has become Due
for Payment and which is made to a Holder by or on behalf of the Indenture
Trustee which has been deemed a preferential transfer and theretofore recovered
from its Holder pursuant to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a court of competent jurisdiction.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of
(x) (i) all Insured Payments paid by the Insurer, but for which the Insurer has
not been reimbursed prior to such Payment Date pursuant to Section 8.6(c)(vii)
of the Indenture, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related Insured
Payments, and (y) without duplication (i) any amounts then due and owing to the
Insurer under the Insurance Agreement plus (ii) interest on such amounts at the
Late Payment Rate.
"Required Payments" shall mean, as of any Payment Date, the sum of (a)
the Interest Distribution Amount plus any Interest Shortfall Amount, (b) for any
Payment Date, any shortfalls in Available Funds to pay the Overcollateralization
Deficit and (c) on the Final Scheduled Payment Date, any shortfall of Available
Funds to pay the outstanding Note Balance.
"Trust Agreement" shall mean the Trust Agreement between Advanta
Mortgage Conduit Services, Inc., as Sponsor, Advanta Holding Trust 1999-A, as
Depositor and Wilmington Trust Company, as Owner Trustee, dated as of May 1,
1999 relating to the creation of the Advanta Revolving Home Equity Loan Trust
1999-A.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement or the Indenture.
<PAGE> 6
-4-
As provided by the Policy, the Insurer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Insurer of a
Notice; provided that, if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice is not in proper form or is otherwise
insufficient for the purpose of making a claim under the Policy, it shall be
deemed not to have been received for purposes of this paragraph, and the Insurer
shall promptly so advise the Indenture Trustee and the Indenture Trustee may
submit an amended Notice.
The Insurer shall pay any Preference Amount when due to be paid
pursuant to the Order referred to below, but in any event no earlier than the
third Business Day following receipt by the Insurer of (i) a certified copy of a
final, non-appealable order of a court or other body exercising jurisdiction in
such insolvency proceeding to the effect that the Holder is required to return
such Preference Amount paid during the term of this Policy because such payments
were avoided as a preferential transfer or otherwise rescinded or required to be
restored by the Holder (the "Order"), (ii) a certificate by or on behalf of the
Holder that the Order has been entered and is not subject to any stay, (iii) an
assignment, in form and substance satisfactory to the Insurer, duly executed and
delivered by the Holder, irrevocably assigning to the Insurer all rights and
claims of the Holder relating to or arising under the Indenture against the
estate of the Indenture Trustee or otherwise with respect to such Preference
Amount and (iv) a Notice of Nonpayment (attached hereto as Exhibit A)
appropriately completed and executed by the Holder. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order, and not to the Holder directly, unless the Holder
has made a payment of the Preference Amount to the court or such receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order,
in which case the Insurer will pay the Holder, subject to the delivery of (a)
the items referred to in clauses (i), (ii), (iii) and (iv) above to the Insurer
and (b) evidence satisfactory to the Insurer that payment has been made to such
court or receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order.
The Insurer hereby agrees that if it shall be subrogated to the rights
of Holders by virtue of any previous payment under this Policy, no recovery of
such payment will occur unless the full amount of the Holders' allocable
distributions for such Payment Date can be made. In so doing, the Insurer does
not waive its rights to seek full payment of all Reimbursement Amounts owed to
it under the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as
provided in Section 8.6(c)(ii) of the Indenture, beginning with the First
Payment Date, in an amount equal to the Premium Amount.
<PAGE> 7
-5-
In the event the Insurer were to become insolvent, any claims arising
under the Policy would be excluded from coverage by the California Insurance
Guaranty Association established pursuant to the laws of the State of California
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy to which this Endorsement is attached and of which it forms
a part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York.
<PAGE> 8
IN WITNESS WHEREOF, the Ambac Assurance Corporation has caused this
Endorsement to the Policy to be signed by its duly authorized officers.
/s/ Warren K. Tong /s/ Stephan D. Cooke
First Vice President Assistant Secretary
<PAGE> 9
A-1
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. _____________
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
ABO264BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Indenture Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date is due to
be received on __________________________________ under the
Indenture, in an amount equal to $______________________.
4. There is an Insured Amount of $______________________________
in respect of the Notes, which amount is an Insured Amount
pursuant to the terms of the Indenture.
5. The sum of $____________________ is the Insured Amount that is
Due For Payment.
6. The Indenture Trustee has not heretofore made a demand for the
Insured Amount in respect of the Payment Date.
7. The Indenture Trustee hereby requests the payment of the
Insured Amount that is Due For Payment be made by Ambac under
the Policy and directs that
<PAGE> 10
A-2
payment under the Policy be made to the following account by
bank wire transfer of federal or other immediately available
funds in accordance with the terms of the Policy to:
__________________________________ Indenture Trustee's account
number.
8. The Indenture Trustee hereby agrees that, following receipt of
the Insured Payment from Ambac, it shall (a) hold such amounts
in trust and apply the same directly to the distribution of
payment on the Notes when due; (b) not apply such funds for
any other purpose; (c) deposit such funds to the Note Account
and not commingle such funds with other funds held by Trustee
and (d) maintain an accurate record of such payments with
respect to each Note and the corresponding claim on the Policy
and proceeds thereof.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE
COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SHALL ALSO BE SUBJECT TO A CIVIL
PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM
FOR EACH SUCH VIOLATION.
By:______________________________
Indenture Trustee
Title:__________________________
(Officer)
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
[LETTERHEAD OF DEWEY BALLANTINE LLP]
May 27, 1999
To the Addressees Listed on the Appendix hereto:
Re: Advanta Revolving Home Equity Loan Trust 1999-A
Ladies and Gentlemen:
We have acted as special counsel to Advanta National Bank, a
national banking association ("ANB"), Advanta Finance Corp. ("AFC"), a Nevada
corporation (ANB and AFC together being the "Originators"), Advanta Mortgage
Corp. USA, a Delaware corporation (the "Master Servicer"), Advanta Mortgage
Conduit Services, Inc., a Delaware corporation (the "Sponsor"), and Advanta
Mortgage Holding Corporation ("AMHC") in connection with the issuance and sale
of $247,500,000 aggregate principal amount of Revolving Home Equity Loan
Asset-Backed Notes, Series 1999-A, (the " Notes") by the Advanta Revolving Home
Equity Loan Trust 1999-A (the "Trust") and the execution and delivery of the
following documents:
(i) Sale and Servicing Agreement dated as of May 1, 1999 (the
"Sale and Servicing Agreement") among the Sponsor, the Master Servicer,
Advanta Holding Trust 1999-A (the "Holding Trust"), the Trust and
Bankers Trust Company of California, N.A., a national banking
association, as Indenture Trustee (the "Indenture Trustee");
(ii) Underwriting Agreement dated May 18, 1999 (the
"Underwriting Agreement") among the Sponsor, the Originators and Bear
Stearns & Co. Inc and Lehman Brothers Inc., as the Underwriters (the
"Underwriters");
(iii) Indenture dated as of May 1, 1999 (the "Indenture")
between the Trust and the Indenture Trustee;
(iv) Trust Agreement dated as of May 1, 1999 (the "Holding
Trust Agreement") between the Sponsor and Wilmington Trust Company, as
Owner Trustee (the "Owner Trustee");
(v) Trust Agreement dated as of May 1, 1999 (the "Trust
Agreement") among the Sponsor, the Holding Trust, as depositor, and
Wilmington Trust Company, as Owner Trustee (the "Owner Trustee");
(vi) Insurance and Indemnity Agreement dated as of May 27,
1999 (the "Insurance Agreement") among the Sponsor, the Indenture
Trustee, the Trust, the Holding Trust, the Master Servicer and Ambac
Assurance Corporation, as Insurer (the "Insurer");
<PAGE> 3
(vii) Indemnification Agreement dated as of May 27, 1999 (the
"Indemnification Agreement") among the Underwriters and the Insurer;
(viii) Purchase Agreement dated as of May 1, 1999 (the
"Purchase Agreement") among the Originators and the Sponsor;
(ix) The Bill of Sale and Assignment dated as of May 1, 1999
(the "Bill of Sale"), between Advanta Mortgage Funding Trust (the
"Warehouse Trust") and the Holding Trust;
(x) Two letter agreements executed and delivered by AMHC, one
of which is dated May 27, 1999 and is addressed to the Underwriters and
the Insurer, and one of which is dated May 27, 1999 and is addressed to
the Trust and the Insurer, pursuant to which AMHC acknowledges its
joint-and-several liability with respect to certain of the Sponsor's
obligations to the Underwriters, the Trust and the Insurer
(collectively, the "AMHC Guaranties").
Capitalized terms used herein, but not defined, shall have the
meanings assigned to them in the Sale and Servicing Agreement.
We have examined executed copies of the Sale and Servicing
Agreement, the Indenture, the Holding Trust Agreement, the Trust Agreement, the
Purchase Agreement, the Bill of Sale, the Underwriting Agreement, the
Indemnification Agreement and the Insurance Agreement (collectively, the
"Documents") and of the AMHC Guaranties. We have also examined a copy of the
executed Notes. We have also examined the Registration Statement (333 77927)
filed with the Securities and Exchange Commission (the "Commission") on Form
S-3, in the form in which such Registration Statement was declared effective,
the Prospectus dated May 6, 1999 and the Prospectus Supplement dated May 18,
1999 (together, the "Prospectus") relating to the Notes.
We have also examined originals or photostatic or certified
copies of all such corporate records of the Sponsor, the Master Servicer, the
Originators, and AMHC and such certificates of public officials, certificates of
corporate officers, and other documents, and such questions of law, as we have
deemed relevant and necessary as a basis for the opinions hereinafter expressed.
As to certain issues of fact material to the opinions expressed herein, we have,
with your consent, relied to the extent we deemed appropriate upon certificates
and representations of officers of the Sponsor, the Master Servicer, the
Originators and AMHC. In making our examinations and rendering the opinions
herein expressed, we have made the following assumptions:
(1) each party to each of the Documents (other than the
Sponsor, the Master Servicer, the Originators and AMHC, as applicable)
has the corporate power to enter into and perform all of its
obligations thereunder;
(2) the due authorization, execution and delivery of the
Documents by all parties thereto (other than the Sponsor, the Master
Servicer, the Originators and AMHC, as applicable) and the validity and
binding effect on all parties (other than the Sponsor, the Master
Servicer, the Originators and AMHC, as applicable or as otherwise
expressed herein) of each of the Documents;
<PAGE> 4
(3) the genuineness of all signatures;
(4) the authenticity of all documents submitted to us as
originals and the conformity to originals of all documents submitted to
us as copies; and
(5) as to Paragraph 22 below, we assume that the parties to
the Documents have and will perform their respective obligations
thereunder, including the delivery to the Indenture Trustee of the
Credit Line Agreements relating to the Mortgage Loans following payment
of legal and sufficient consideration therefor, without any such Credit
Line Agreement having been discharged or the related Mortgage satisfied
or released and without the Indenture Trustee having actual or
constructive notice of the existence with respect to the Credit Line
Agreements and Mortgages of any claim, lien, charge, mortgage, security
interest, encumbrance or right of the Sponsor, the Originators, or
creditors of the Sponsor, the Originators or others. Further we have
assumed the absence of any defense against enforcement of, or right of
offset against, each such Credit Line Agreement and the related
Mortgage. We have undertaken no independent review of the Mortgage
Loans, including the Credit Line Agreements and the Mortgages and have
relied solely upon the representations of the Sponsor and of the
Originators in the Sale and Servicing Agreement and the Purchase
Agreement that they have title to the Mortgage Loans.
We have further assumed that the Mortgages and rights to
receive payment under the Mortgage Loans are not subject to any right, lien or
interest of any government or any agency or instrumentality thereof (including
without limitation any federal or state tax lien, or lien arising under Title IV
of ERISA) and that they are not subject to any lien arising by operation of law
or any judicial lien.
The opinions expressed in paragraphs 5, 7, 9, 11 and 13 with
respect to the enforceability of certain agreements are subject to the following
additional qualifications:
(a) The effect of bankruptcy, insolvency, reorganization,
moratorium, receivership, or other similar laws of general
applicability relating to or affecting creditors' rights generally or
the rights of creditors of national banking associations in the event
of bankruptcy, insolvency, reorganization, moratorium or receivership.
(b) The application of general principles of equity,
including, but not limited to, the right of specific performance
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
In addition, we wish to advise you that the enforceability of
certain provisions set forth in the Underwriting Agreement which purport to
provide for indemnification for losses due to securities laws violations may be
limited by public policy considerations.
We are admitted to the Bars of the States of New York and
California, and we express no opinion as to the laws of any other jurisdiction
except as to matters that are governed by federal law. All opinions expressed
herein are based on laws, regulations and policy guidelines currently in force
and may be affected by future regulations. Furthermore, no opinion is expressed
herein regarding the applicable state Blue Sky, legal investment or real estate
syndication laws.
<PAGE> 5
Based upon the foregoing and subject to the last paragraph
hereof, we are of the opinion that:
1. The Sponsor has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, and is qualified to do business in each state necessary to
enable it to perform its obligations under the Purchase Agreement, the
Sale and Servicing Agreement, the Trust Agreement, the Holding Trust
Agreement, the Insurance Agreement and the Underwriting Agreement. 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 Purchase Agreement, the Sale and Servicing Agreement,
the Trust Agreement, the Holding Trust Agreement, the Insurance
Agreement and the Underwriting Agreement.
2. The Master Servicer has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, and is qualified to do business in each state necessary to
enable it to perform its obligations under the Insurance Agreement and
the Sale and Servicing Agreement. The Master Servicer has the requisite
power and authority to execute and deliver, engage in the transactions
contemplated by, and perform and observe the conditions of the Sale and
Servicing Agreement and the Insurance Agreement.
3. Each Originator has been duly organized and is validly
existing and 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 under the Documents to which
they are a party. Each Originator 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 they are a
party.
4. Each of the Purchase Agreement, the Sale and Servicing
Agreement, the Insurance Agreement, the Holding Trust Agreement, the
Trust Agreement, the Indemnification Agreement and the Underwriting
Agreement has been duly and validly authorized, executed and delivered
by the Sponsor, all requisite corporate action having been taken with
respect thereto.
5. Each of the Sale and Servicing Agreement, the Purchase
Agreement, the Insurance Agreement, the Holding Trust Agreement, the
Trust Agreement, the Indemnification Agreement and the Underwriting
Agreement constitutes the valid, legal and binding agreement of the
Sponsor, and is enforceable against the Sponsor in accordance with its
terms.
6. Each of the Sale and Servicing Agreement and the Insurance
Agreement has been duly and validly authorized, executed and delivered
by the Master Servicer, all requisite corporate action having been
taken with respect thereto.
7. Each of the Sale and Servicing Agreement and the Insurance
Agreement constitutes the valid, legal and binding agreement of the
Master Servicer, and is enforceable against the Master Servicer, in
accordance with its terms.
<PAGE> 6
8. Each of the Documents to which they are a party has been
duly and validly authorized, executed and delivered by each Originator,
all requisite corporate action having been taken with respect thereto.
9. Each of the Documents to which they are a party constitutes
the legal, valid and binding agreement of the Originators and is
enforceable against the Originators in accordance with its terms.
10. AMHC has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware,
and is qualified to do business in each state necessary to enable it to
perform its obligations under the AMHC Guaranties and where the conduct
of its business requires qualification AMHC has the requisite power and
authority to execute and deliver, engage in the transactions
contemplated by, and perform and observe the conditions of, the AMHC
Guaranties.
11. Each of the Documents to which they are a party
constitutes the legal, valid and binding agreement of the Trust, the
Holding Trust and the Warehouse Trust, respectively, and is enforceable
against the Trust, the Holding Trust and the Warehouse Trust,
respectively, in accordance with its terms.
12. The AMHC Guaranties have been duly and validly authorized,
executed and delivered by AMHC, all requisite corporate action having
been taken with respect thereto.
13. Each of the AMHC Guaranties constitutes the valid, legal
and binding agreement of AMHC, and is enforceable against AMHC in
accordance with its terms.
14. The Notes, assuming the due execution by the Trust and due
authentication by the Indenture Trustee and payment therefor, are
validly issued and outstanding and is entitled to the benefits of the
Indenture.
15. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority
or court is required under federal laws or the laws of the States of
New York, Delaware and California, for the execution, delivery and
performance of either the Sale and Servicing Agreement or of the
Insurance Agreement or the consummation of any other transaction
contemplated thereby by the Master Servicer, except such which have
been obtained.
16. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority
or court is required under federal laws or the laws of the States of
New York, Delaware and California, for the execution, delivery and
performance of any of the Sale and Servicing Agreement, the
Underwriting Agreement, the Holding Trust Agreement, the Trust
Agreement, the Purchase Agreement, the Indemnification Agreement and
the Insurance Agreement or the consummation of any other transaction
contemplated thereby by the Sponsor, except such which have been
obtained.
17. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority
or court is required under federal laws or the laws of
<PAGE> 7
the States of New York, Delaware and California, for the execution,
delivery and performance of the Documents to which they are a party or
the offer, issuance, sale or delivery of the Notes or the consummation
of any other transaction contemplated thereby by the Originators,
except such which have been obtained.
18. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority
or court is required under federal laws or the laws of the States of
New York, Delaware and California, for the execution, delivery and
performance of the AMHC Guaranties, except such which have been
obtained.
19. To the best of our knowledge, following due inquiry made
of the appropriate officers of the Sponsor, the Master Servicer and the
Originators, there are no actions, proceedings or investigations
pending or, to our knowledge, threatened against the Sponsor, the
Master Servicer or the Originators before any court, governmental
agency or body or other tribunal (a) asserting the invalidity of the
Documents or the Notes, (b) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by
the Documents, or (c) which would materially and adversely affect the
performance by the Sponsor, the Master Servicer or the Originators, as
applicable, of obligations under, or the validity or enforceability of,
the Documents or the Notes.
20. 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 Master Servicer of the Sale and Servicing Agreement
and the Insurance Agreement (a) conflicts or will conflict with or
results or will result in a breach of, or constitutes or will
constitute a default under (i) any term or provision of the certificate
of incorporation or bylaws of the Master Servicer; (ii) any term or
provision of any material agreement, contract, instrument or indenture,
to which the Master Servicer, is a party or is bound which has been
identified to us by an officer or representative of the Master
Servicer; (iii) any order, judgment, writ, injunction or decree of any
court or governmental agency or body or other tribunal having
jurisdiction over the Master Servicer which has been identified to us
by an officer or representative of the Master Servicer; or (iv) any
law, rule or regulation of the States of New York, California or
Delaware or the federal government (including, without limitation, any
bulk sales law), or (b) results in, or will result in, the creation or
imposition of any lien, charge or encumbrance upon the Trust Estate or
upon the Notes, except as otherwise contemplated by the Agreement.
21. Neither the transfer of the Mortgage Loans to the Trust,
the issuance or sale of the Notes, nor the execution, delivery or
performance by either Originator of the Documents to which either of
them 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
bylaws of either Originator; (ii) any term or provision of any material
agreement, contract, instrument or indenture, to which either
Originator is a party or is bound, which has been identified to us by
appropriate officers of either Originator; (iii) any order, judgment,
writ, injunction or decree of any court or governmental agency or body
or other tribunal having jurisdiction over either Originator, which has
been identified to us by appropriate officers of either Originator; or
(iv) any law, rule or regulation of the States of New York, California
or Delaware or the federal
<PAGE> 8
government, or (b) results or will result in the creation or imposition
of any lien, charge or encumbrance upon the Trust Estate, except as
otherwise contemplated by the Indenture.
22. 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 Sale and Servicing Agreement, the
Purchase Agreement, the Holding Trust Agreement, the Trust Agreement,
the Insurance Agreement, the Indemnification Agreement and the
Underwriting Agreement (a) conflicts or will conflict with or results
or will result in a breach of, or constitutes or will constitute a
default under (i) any term or provision of the certificate of
incorporation or bylaws of the Sponsor; (ii) any term or provision of
any material agreement, contract, instrument or indenture, to which the
Sponsor is a party or is bound, which has been identified to us by
appropriate officers of the Sponsor; (iii) any order, judgment, writ,
injunction or decree of any court or governmental agency or body or
other tribunal having jurisdiction over the Sponsor, which has been
identified to us by appropriate officers of the Sponsor; or (iv) any
law, rule or regulation of the States of New York, California or
Delaware or the federal government, or (b) results or will result in
the creation or imposition of any lien, charge or encumbrance upon the
Trust Estate, except as otherwise contemplated by the Indenture.
23. 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 Holding Trust 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 organization documents of the Holding Trust;
(ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Holding Trust is a party or is
bound, which has been identified to us by appropriate officers of the
Holding Trust; (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having
jurisdiction over the Holding Trust, which has been identified to us by
appropriate officers of the Holding Trust; or (iv) any law, rule or
regulation of the States of New York or Delaware or the federal
government, or (b) results or will result in the creation or imposition
of any lien, charge or encumbrance upon the Trust Estate, except as
otherwise contemplated by the Indenture.
24. 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 Warehouse Trust 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 organization documents of the Warehouse Trust;
(ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Warehouse Trust is a party or is
bound, which has been identified to us by appropriate officers of the
Warehouse Trust; (iii) any order, judgment, writ, injunction or decree
of any court or governmental agency or body or other tribunal having
jurisdiction over the Warehouse Trust, which has been identified to us
by appropriate officers of the Warehouse Trust; or (iv) any law, rule
or regulation of the States of New York or Delaware or the federal
government, or (b) results or will result in the creation or imposition
of any lien, charge or encumbrance upon the Trust Estate, except as
otherwise contemplated by the Indenture.
<PAGE> 9
25. The execution, delivery or performance by AMHC of the AMHC
Guaranties does not conflict with or will not conflict with and does
not result or will not result in a breach of, and does not constitute
or will not constitute a default under, (i) any term or provision of
the certificate of incorporation or bylaws of AMHC; (ii) any term or
provision of any material agreement, contract, instrument or indenture,
to which AMHC is a party or is bound, which have been identified to us
by appropriate officers of AMHC; (iii) any order, judgment, writ,
injunction or decree of any court or governmental authority having
jurisdiction over AMHC, which have been identified to us by appropriate
officers of AMHC; or (iv) any law, rule or regulation of the States of
New York, Delaware or California or the federal government.
26. To the best of our knowledge, following due inquiry made
of the appropriate officers of AMHC, there are no actions, proceedings
or investigations pending or to our knowledge threatened against AMHC
before any court, administrative agency or other tribunal (a) asserting
the invalidity of the AMHC Guaranties, (b) seeking to prevent the
consummation of any of the transactions contemplated by the AMHC
Guaranties, or (c) which would materially and adversely affect the
performance by AMHC of obligations of the AMHC Guaranties.
27. The Registration Statements and the Prospectus (other than
the financial and statistical data included therein, as to which we are
not called upon to express any opinion), including the Incorporated
Documents, at the time the Registration Statements became effective and
as of the date of execution of the Underwriting Agreement comply as to
form in all material respects with the requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and the rules and regulations
thereunder, and the Exchange Act and the rules and regulations
thereunder, and we do not know of any amendment to the Registration
Statements 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 Statements or required to be described in the
Registration Statements or the Prospectus, which has not been filed or
described as required.
28. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended. Neither the Holding Trust nor the
Trust is required to be registered pursuant to the Investment Company
Act of 1940, as amended.
29. The Indenture, upon execution and delivery, is effective
to create a valid and enforceable security interest in favor of the
Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, in all of the Trust's right, title and interest in the
Mortgage Loans.
30. The security interest in favor of the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer, will
constitute a first perfected security interest upon the delivery of the
Mortgage Files to the Indenture Trustee, on behalf of the Indenture
Trustee, and the recording of instruments in accordance with the
provisions of the Sale and Servicing Agreement; provided, however, that
we express no opinion (a) as to the continuation of a security interest
in the Mortgage Loans in the event that the Indenture Trustee
relinquishes possession of the Credit Line Agreements, (b) as to the
continuation of a security interest in
<PAGE> 10
the Credit Line Agreements or the Mortgages in the event the related
Originator or the Warehouse Trust discharges or releases the Credit
Line Agreements or the Mortgages prior to delivery of the Credit Line
Agreements to the Indenture Trustee and the recording of instruments of
assignment in respect of the Mortgages in the appropriate recording
offices, (c) as to title in any Mortgaged Property or the existence of
priority in any lien with respect to such property or as the to the
enforceability of any remedy that may be dependent on that title or
such lien, or (d) as to the priority of any security interest against
any liens, claims or other interest that by operation of law take
priority over previously perfected security interest (including, in
certain circumstances, certain federal and state tax liens, liens
arising under the Employee Retirement Income Security Act of 1974, as
amended, and certain claims of the United States Government). Our
conclusion that the security interest described in above would be a
"first perfected security interest" is based upon (x) the Indenture
Trustee's certification, delivered on the date hereof, to the effect
that the Indenture Trustee has received the endorsed Credit Line
Agreements, (y) the mortgage assignment recording requirements of the
Sale and Servicing Agreement, and (z) representations of the
Originators in the Sale and Servicing Agreement. We further note that,
until such time as assignments of mortgage are recorded in the name of
the Indenture Trustee in the appropriate jurisdictions, (x) the
Indenture Trustee may not, in certain jurisdictions, be independently
able to enforce the Mortgage against the related Mortgaged Property or
the related Mortgagor, (y) the Originators or the Warehouse Trust, as
applicable, could record an assignment of a Mortgage in the name of a
third party or record a discharge and satisfaction of a Mortgage and
(z) any notices which may be given to the record holder of a Mortgage
would be given to the Originators or the Warehouse Trust, as
applicable.
31. Except as to any financial or statistical data contained
in the Registration Statements, the statements set forth in the
Prospectus under the caption "The Insurer and the Policy" and Annex I
to the Prospectus, as to which we are not called upon to express any
opinion or belief, to the best of our knowledge, the Registration
Statement does 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 the statements therein not misleading.
32. The statements in the Prospectus set forth under the
captions "Description of the Notes" and "Certain Provisions of the
Indenture and the Sale and Servicing Agreement," to the extent such
statements purport to summarize certain provisions of the Notes or of
the Indenture or the Sale and Servicing Agreement, are fair and
accurate in all material respects.
33. The statements in the Prospectus set forth under the
captions "ERISA Considerations," "Certain Federal Income Tax
Consequences" and "Legal Matters," to the extent that they constitute
matters of federal, New York or California law, or federal, New York or
California legal conclusions, provide a fair and accurate summary of
such law or conclusions.
34. To the best of our knowledge, the Commission has not
issued any stop order suspending the effectiveness of the Registration
Statement or any order directed to any prospectus or prospectus
supplement relating to the Notes (including the Prospectus), and has
not initiated or threatened any proceeding for that purpose.
<PAGE> 11
35. The provision in the Sale and Servicing Agreement which
provides for the laws of New York to be the governing law would be
upheld by a court applying New York or California law, or, if not
upheld, then such court applying New York or California law would hold
that California law is the governing law for the Sale and Servicing
Agreement.
We have rendered legal advice and assistance to the
Originators, the Sponsor and the Master Servicer in the course of the
preparation of the Registration Statement, the Prospectus, the Prospectus
Supplement, and other matters relating to the sale of the Notes. Rendering such
assistance involved, among other things, discussions and inquiries concerning
various legal and related subjects and reviews of certain records, documents,
opinions and certificates in accordance with instructions of the Originators,
the Sponsor and the Master Servicer. We also participated with the Originators,
the Sponsor and the Master Servicer in conference with representatives of the
Underwriters and its counsel during which the contents of the Registration
Statement, the Prospectus, the Prospectus Supplement and related matters were
discussed. Although we are not passing upon, and do not assume responsibility
for, the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Prospectus and the Prospectus Supplement, in the
course of our examination of the Registration Statement, the Prospectus, the
Prospectus Supplement and certain other documents and our participation in the
discussions hereinabove mentioned, no facts have come to our attention which
lead us to believe that the Registration Statement, the Prospectus and the
Prospectus Supplement (other than the financial statements and other financial
and statistical data contained therein, as to which we are not called upon to
express any belief), at the time the Registration Statement became effective,
contained any untrue statement of material fact or omitted to state a material
fact necessary in order to make the statements therein not misleading, or that
the Prospectus and the Prospectus Supplement (other than the financial
statements and other financial and statistical data contained therein, as to
which we are not called upon to express any belief) as of its date and on the
date hereof contain or contains any untrue statement of a material fact, or
omits to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
This opinion is furnished by us as special counsel to the
Sponsor, the Originators, the Master Servicer and AMHC and is solely for the
benefit of the addressees hereof and their respective counsel. It may not be
relied upon by any other person or for any other purpose without our prior
written consent.
Very truly yours,
/s/ Dewey Ballantine LLP
<PAGE> 12
APPENDIX
Advanta Mortgage Conduit
Services, Inc.
10790 Rancho Bernardo Drive
San Diego, California 92127
Advanta Mortgage Corp. USA
10790 Rancho Bernardo Drive
San Diego, California 92127
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Moody's Investors Service, Inc.
99 Church Street
New York, NY 10007
Advanta National Bank
Brandywine Corporate Center
650 Naamans Road
Claymont, DE 19703
Advanta Revolving Home Equity
Loan Trust 1999-A
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Wilmington Trust Company,
as Owner Trustee
Rodney Square North
1108 North Market Street
Wilmington, Delaware 19890-0001
Advanta Finance Corp.
10790 Rancho Bernardo Drive
San Diego, California 92127
Bear Stearns & Co. Inc.
as Representative of the Underwriters
245 Park Avenue
New York, New York 10167
Bankers Trust Company of
California, N.A.,
as Indenture Trustee
Three Park Plaza
16th Floor
Irvine, California 92714
Standard & Poor's
Ratings Services
25 Broadway
New York, New York 10004
<PAGE> 1
EXHIBIT 8.1
<PAGE> 2
[LETTERHEAD OF DEWEY BALLANTINE LLP]
May 27, 1999
To the Addressees Listed
on Schedule I hereto
Re: Advanta Revolving Home Equity Loan Trust 1999-A
Revolving Home Equity Loan Asset-Backed Notes
Series 1999-A
Ladies and Gentlemen:
We have acted as special tax counsel in connection with the
issuance and delivery of the certain asset-backed notes denominated Advanta
Revolving Home Equity Loan Trust 1999-A, Revolving Home Equity Loan Asset-Backed
Notes, Series 1999-A, (the " Notes") pursuant to an Indenture dated as of May 1,
1999 (the "Indenture) between Advanta Revolving Home Equity Loan Trust 1999-A
(the "Trust") and Bankers Trust Company of California N.A., as Indenture Trustee
(the "Indenture Trustee").
As special tax counsel, we have examined such documents as we
deemed appropriate for the purposes of rendering the opinions set forth below,
including the following: (a) Prospectus dated May 6, 1999 and Prospectus
Supplement dated May 18, 1999 (together the "Prospectus") with respect to the
Notes, and (b) an executed copy of the Indenture and the exhibits attached
thereto.
We have examined the question of whether the issuance by the
Trust of the Notes will be treated as indebtedness by the Trust for federal
income tax purposes. Our analysis is based on provisions of the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations promulgated thereunder as
in effect on the date hereof and on existing judicial and administrative
interpretations thereof. These authorities are subject to change and to
differing interpretations, which could apply retroactively. The opinion of
special tax counsel is not binding on the courts or the Internal Revenue Service
("IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a transaction constitutes the issuance of
indebtedness for federal income tax purposes, which we have reviewed as they
apply to this transaction.
<PAGE> 3
Based on the foregoing, and such legal and factual
investigations as we have deemed appropriate, we are of the opinion that (a) for
federal income tax purposes the Notes will be treated as indebtedness because
(i) the characteristics of the transaction strongly indicate that in economic
substance, the Notes are indebtedness, and (ii) the parties have stated
unambiguously their intention to treat the Notes as indebtedness for tax
purposes and (b) the trust will not be treated as an association taxable as a
corporation (or a publicly traded partnership) or a taxable mortgage pool.
Capitalized terms used in this opinion letter and not defined
herein shall have their respective meanings as set forth in the Sale and
Servicing Agreement.
We express no opinion on any matter not discussed in this
letter. This opinion letter is rendered as of the Closing Date, at the request
of the Sponsor, for the sole benefit of each addressees hereof, and no other
person or entity is entitled to rely hereon without our prior written consent.
Copies of this opinion letter may not be furnished to any other person or entry,
nor may any portion of this opinion letter be quoted, circulated or referred to
in any other document, without our prior written consent.
Very truly yours,
/s/ Dewey Ballantine LLP
<PAGE> 4
SCHEDULE I
<TABLE>
<CAPTION>
<S> <C>
Bear Stearns & Co. Inc. Ambac Assurance Corporation
as Representative of the Underwriters One State Street Plaza
245 Park Avenue New York, New York 10504
New York, New York 10167
Advanta Mortgage Corp. USA Moody's Investors Service, Inc.
10790 Rancho Bernardo Drive 99 Church Street
San Diego, California 92127 New York, New York 10007
Advanta Mortgage Conduit Services, Inc. Bankers Trust Company of California, N.A.,
10790 Rancho Bernardo Drive as Indenture Trustee
San Diego, California 92127 Three Park Plaza, 16th Floor
Irvine, California 92714
Standard & Poor's Ratings Services, Advanta Revolving Home Equity
25 Broadway Loan Trust 1999-A
New York, New York 10004 c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
</TABLE>
<PAGE> 1
Exhibit 10.1
<PAGE> 2
PURCHASE AGREEMENT
Between
ADVANTA NATIONAL BANK
and
ADVANTA FINANCE CORP.
as the Originators
and
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
as Purchaser
Dated as of May 1, 1999
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions....................................................................................................... 1
ARTICLE II
Procedures for Purchases of Mortgage Loans; Conditions Precedent; Settlements
Section 2.01. Purchase and Sale............................................................................... 5
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans............................................... 5
Section 2.03. Survival of Representations..................................................................... 6
Section 2.04. Proceeds of Mortgage Loans...................................................................... 6
Section 2.05. Repurchased Mortgage Loans...................................................................... 7
ARTICLE III
Protective Security Interest...................................................................................... 7
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of Originators................................................... 8
Section 4.02. Representations and Warranties Regarding Mortgage Loans......................................... 10
Section 4.03. Representations and Warranties of Purchaser..................................................... 10
Section 4.04. Remedies for Breach of Representations and Warranties; Repurchase Obligation.................... 11
ARTICLE V
Covenants and Warranties of Originators
Section 5.01. Affirmative Covenants........................................................................... 12
Section 5.02. Negative Covenants.............................................................................. 13
ARTICLE VI
Sale of Mortgage Loans by Purchaser............................................................................... 13
ARTICLE VII
Additional Remedies............................................................................................... 14
ARTICLE VIII
Term.............................................................................................................. 14
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX
Exclusive Benefit of Parties; Assignment.......................................................................... 15
ARTICLE X
Amendment; Waivers................................................................................................ 15
ARTICLE XI
Execution in Counterparts......................................................................................... 15
ARTICLE XII
Effect of Invalidity of Provisions................................................................................ 15
ARTICLE XIII
Governing Law..................................................................................................... 16
ARTICLE XIV
Notices........................................................................................................... 16
ARTICLE XV
Entire Agreement.................................................................................................. 16
ARTICLE XVI
Indemnities....................................................................................................... 16
ARTICLE XVII
RESPA Obligations................................................................................................. 18
ARTICLE XVIII
Survival.......................................................................................................... 18
ARTICLE XIX
Consent to Service................................................................................................ 18
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury............................................................... 18
ARTICLE XXI
Construction...................................................................................................... 19
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XXII
Further Assurances................................................................................................ 19
ARTICLE XXIII
Third Party Beneficiary........................................................................................... 19
ARTICLE XXIV
No Petition....................................................................................................... 19
SCHEDULES AND EXHIBITS
Schedule I: Schedule of Mortgage Loans.................................................................. I-1
Exhibit A: Mortgage Loan Representations and Warranties................................................. A-1
</TABLE>
<PAGE> 6
THIS PURCHASE AGREEMENT (this "Agreement") is made as of May
1, 1999 between Advanta National Bank, a national banking association ("ANB"),
and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand, and
Advanta Mortgage Conduit Services, Inc., a Delaware 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 (as
defined below), 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
Capitalized terms not defined herein shall have the meanings
set forth in the Sale and Servicing Agreement or, if not defined therein, the
Indenture. As used in this Agreement, the following terms shall have the
following meanings:
"Additional Balance": With respect to any Mortgage Loan as of
any date of determination, the aggregate amount of all Draws by the related
Mortgagor subsequent to the Cut-Off Date.
"Assignee": With respect to any Person, any immediate or
mediate assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan,
any assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction in which 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.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which the Trust, the Master Servicer or the Sponsor is closed or
commercial banking institutions in the States 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.
"Certificates": The trust certificates evidencing the
beneficial ownership interests in Holding, substantially in the form of Exhibit
A to the Holding Trust Agreement.
"Charged-off Loan": Any Mortgage Loan that (i) has been
Delinquent for a period of 180 consecutive days (irrespective of any grace
periods).
<PAGE> 7
"Class A Note": Any note executed and authenticated by the
Indenture Trustee substantially in the form set forth in Exhibit A to the
Indenture.
"Class A Noteholder" or "Noteholder": A Person in whose name a
Class A Note is registered in the Note Register.
"Closing Date": May 27, 1999.
"Coupon Rate": As defined in the Sale and Servicing Agreement.
"Credit Line Agreement": With respect to any Mortgage Loan,
the related home equity line of credit agreement, security instrument and
promissory note executed by the related Mortgagor and any amendment or
modification thereof in accordance with the Operative Documents.
"Cut-Off Date": With respect to each Mortgage Loan (including
Mortgage Loans originated after May 1, 1999 but prior to the Closing Date other
than a Qualified Replacement Mortgage Loan), the opening of business on May 1,
1999. With respect to each Qualified Replacement Mortgage Loan, the related
Replacement Cut-Off Date.
"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.
"Draw": With respect to any Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the
related Credit Line Agreement.
"Holding": Advanta Holding Trust 1999-A, a Delaware business
trust.
"Holding Trust Agreement": The trust agreement dated as of May
1, 1999 between the Sponsor and Wilmington Trust Company, as owner trustee,
relating to the formation of Holding.
"Indenture": The Indenture dated as of May 1, 1999 between the
Trust and the Indenture Trustee.
"Indenture Trustee": Bankers Trust Company of California, N.A.
or any successor Indenture Trustee appointed in accordance with the Indenture
that has accepted such appointment in accordance with the Indenture.
"Liquidated Loan": A Mortgage Loan with respect to which (i)
the related Mortgage Property has been acquired, liquidated or foreclosed upon
or (ii) the Master Servicer, in its reasonable good faith business judgment, has
determined that all Liquidation Proceeds that it expects to recover have been so
recovered (exclusive of the possibility of any deficiency judgment). A Mortgage
Loan which is purchased from the
<PAGE> 8
Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale and Servicing
Agreement is not a "Liquidated 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.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien in real property securing a Credit Line
Agreement.
"Mortgage File": As defined in the Sale and Servicing
Agreement.
"Mortgage Loans": Each adjustable rate home equity revolving
credit line secured by a first or junior mortgage or deed of trust on Mortgaged
Property and identified in the Schedule of Mortgage Loans attached hereto,
together with any Qualified Replacement Mortgage Loans substituted therefor in
accordance with this Agreement or the Sale and Servicing Agreement. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Mortgaged Property which is REO Property
prior to such Mortgaged Property's disposition by the Trust. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned by an Originator to Purchaser, by
Purchaser to Holding and by Holding to the Trust, in fact was not so transferred
and assigned 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 on the related Credit Line Agreement.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Indenture Trustee.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Class A Noteholders, which shall be the
25th day of each month, commencing in the month following the Closing Date or,
if such day is not a Business Day, then on the succeeding Business Day.
"Principal Balance": As to any Mortgage Loan, other than a
Charged-off Loan, and as of any date, the related Cut-Off Date Principal
Balance, plus (i) any Additional Balance in respect of such Mortgage Loan, minus
(ii) all collections credited as principal against the Principal Balance of such
Mortgage Loan in accordance with the
<PAGE> 9
related Credit Line Agreement or prior to such date. For purposes of this
definition, a Charged-off 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 Charged-off Loan and at all times
thereafter.
"Qualified Replacement Mortgage Loan": A Mortgage Loan
substituted for another pursuant to Section 2.2(b), 3.3 or 3.4 of the Sale and
Servicing Agreement, which (i) bears a variable rate of interest, (ii) 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, (iii) is
of the same or better property type and the same or better occupancy status as
the replaced Mortgage Loan, (iv) is of the same or better credit quality
classification (determined in accordance with the relevant Originator's credit
underwriting guidelines) as the Mortgage Loan being replaced, (v) shall mature
no later than the Payment Date occurring in February 2024, (vi) has a Combined
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Combined Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (vii)
has a Principal Balance as of the related Replacement Cut-Off Date equal to or
less than the Principal Balance of the replaced Mortgage Loan as of such
Replacement Cut-Off Date, (viii) is in the same lien position or better, (ix) is
not then Delinquent as of the Transfer Date, and (x) complies with the
representations and warranties set forth in Section 3.3(a) of the Sale and
Servicing Agreement. Except with respect to clause (vi) 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 by the
Insurer.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage Loan is conveyed to the Trust.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of May 1, 1999 among the Sponsor, Holding, the Trust, the
Master Servicer and the Indenture Trustee.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans
attached hereto as Schedule I, as the same may be revised or amended from time
to time in connection with substitutions of Qualified Replacement Mortgage Loan.
The information contained on the Schedule of Mortgage Loans shall be delivered
to the Indenture Trustee on an electronic media.
<PAGE> 10
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"Trust": Advanta Home Equity Loan Trust 1999-A, a Delaware
business trust.
"Trust Agreement": The trust agreement dated as of May 1, 1999
among the Sponsor, Holding and Wilmington Trust Company, as owner trustee,
relating to the formation of the Trust.
ARTICLE II
Procedures for Purchases of Mortgage Loans;
Conditions Precedent; Settlements
Section 2.01. Purchase and Sale. 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 Mortgage Loans), on the Closing
Date, all of the Originators' respective right, title and interest in and to (a)
each Mortgage Loan, including its Principal Balance as of the Cut-Off Date and
all principal collections and interest accrued in respect of such Mortgage Loan
on or after the Cut-Off Date (excluding any payments of interest collected prior
to the Cut-Off Date); (b) each Mortgaged Property that is acquired by
foreclosure or deed in lieu of foreclosure; (c) all rights under any Mortgage
Insurance Policies covering a 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 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.
Section 2.02. Delivery of Documents; Purchase of Mortgage
Loans. Prior to the purchase of the 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.
<PAGE> 11
(b) Purchaser shall have received copies of the Mortgage Loan
Schedules.
(c) Purchaser shall have received copies of the resolutions of
the Board of Directors of each Originator, certified by its Secretary, approving
this Agreement.
(d) Purchaser shall have received copies of the articles of
incorporation, articles of association or charter of each Originator.
(e) 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) 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) Each Originator shall have instructed the applicable
debtor, trustee, paying agent, authenticating agent, transfer agent, registrar,
predecessor in interest, owner (if any of the Mortgage Loans are in the form of
a security agreement) or servicer, if any, in respect of the related Mortgage
Loans to reflect on their books and records the transfer of such Mortgage Loans
to Purchaser, as owner or secured party (if any of the Mortgage Loans are in the
form of a security agreement).
(h) [Reserved]
(i) Purchaser shall be permitted to perform its standard loan
review of each Mortgage Loan to be purchased.
(j) 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 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. 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 therefrom, including all scheduled
payments of principal of and interest on such Mortgage Loan and other amounts
due or payable or to become due or payable in respect
<PAGE> 12
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 Note Account or the Principal and Interest Account (excluding
any investment earnings thereon), 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 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
<PAGE> 13
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 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 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,
<PAGE> 14
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 consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, such Originator has
obtained the same.
<PAGE> 15
(g) Such Originator has caused to be performed any and all
acts required to preserve the rights and remedies of Purchaser in any 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 that, with respect to each Mortgage Loan conveyed by such
Originator hereunder, 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 date of this
Agreement:
(a) Purchaser has been duly organized and is validly existing
as a corporation under the laws of the State of Delaware.
(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 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.
<PAGE> 16
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 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
<PAGE> 17
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 and copying 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.
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.
<PAGE> 18
(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 and the Trust 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;
(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;
<PAGE> 19
(d) to deliver to Purchaser for inclusion in any prospectus or
other offering material such publicly available information regarding such
Originator, its financial condition and 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, the
underwriting of mortgage loans, the servicer, the servicing and collection of
mortgage loans, lending activities and loan sales of the servicer, regulatory
matters and delinquency and loss experience and 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.
<PAGE> 20
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 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.
<PAGE> 21
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 Mortgage Conduit
Services, 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;
<PAGE> 22
(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 not have employed
counsel 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).
<PAGE> 23
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.
<PAGE> 24
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.
************
<PAGE> 25
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 MORTGAGE CONDUIT
SERVICES, INC., as Purchaser
By: /s/ Michael Coco
-------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA NATIONAL BANK,
as an Originator
By: /s/ Michael Coco
-------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA FINANCE CORP.,
as an Originator
By: /s/ Michael Coco
-------------------------------
Name: Michael Coco
Title: Vice President
<PAGE> 26
SCHEDULE I
SCHEDULE OF MORTGAGE LOANS
<PAGE> 27
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, 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. 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 or purchase mortgage loans comparable
to the Mortgage Loans for sale to prudent investors in the secondary
market that invest in mortgage loans such as the Mortgage Loans.
(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,
each Mortgage Loan has been serviced in accordance with applicable law.
(iv) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, this Agreement constitutes a valid transfer
and assignment to Purchaser of all right, title and interest of such
Originator in and to the related Cut-Off Date Principal Balances with
respect to such Mortgage Loans, all monies due or to become due with
respect thereto (excluding payments in respect of interest collected
prior to the related Cut-Off Date), and all proceeds of the related
Cut-Off Date Principal Balances with respect to such Mortgage Loans and
such funds relating to such Mortgage Loans as are from time to time
deposited in the Accounts (excluding any investment earnings on the
amounts from time to time deposited in the Principal and Interest
Account) and all other related property specified in the definition of
"Mortgage Loan" and, moreover, will constitute a valid transfer and
assignment to Purchaser of all right, title and interest of such
Originator in and to the related Additional Balances, all monies due or
to become due with respect thereto, and all proceeds of such Additional
Balances and all other property specified in the definition of
"Mortgage Loans" relating to such Additional Balances. However, if this
Agreement is not deemed to be a valid transfer and assignment to
Purchaser of such right, title and interest, this Agreement shall in
any event constitute a grant of a security interest (as defined in the
UCC as in effect in New York) in such property to Purchaser. If this
Agreement constitutes the grant of a security interest to Purchaser in
such property,
<PAGE> 28
and if the Indenture Trustee maintains possession of the Mortgage File
for each such Mortgage Loan, Purchaser shall have 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 Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, the information set forth in the Schedule of
Mortgage Loans for such Mortgage Loans is true and correct in all
material respects.
(vi) As of the Cut-Off Date, no more than 0.02% of the related
Cut-Off Date Pool Balance is secured by Mortgaged Properties located
within any single zip code area.
(vii) (a) The Mortgages and the Credit Line Agreements
conveyed to Purchaser by the Originators pursuant to Section 2.1 hereof
have not been assigned or pledged by such Originator, and such
Originator is the sole 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 and (b) the Mortgages and the Credit Line Agreements conveyed
by such Originator to the Purchaser pursuant to Section 2.01 hereof
have not been assigned or pledged by such Originator, and Originator is
the sole 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 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 such Mortgage Loans. 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 Mortgage
Loans, no Minimum Monthly Payment is more than 59 days Delinquent
(measured on a contractual basis) and no more than 0.52% (by the
related Cut-Off Date Pool Balance) of the Mortgage Loans were 30-59
days Delinquent (measured on a contractual basis).
<PAGE> 29
(x) As of the Cut-Off Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Credit Line Agreement and each Mortgage
Loan relating to such 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.
(xi) The weighted average remaining term to maturity of the
Mortgage Loans on a contractual basis as of the Cut-Off Date is
approximately 269 months. 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.
With respect to the Mortgage Loans as of the Cut-Off Date, (i) the
maximum Coupon Rates range between 15.750% and 24.500%, (ii) the
margins range between 0.000% and 8.750% and the weighted average margin
is approximately 4.548%, and (iii) the current Coupon Rates range
between 7.750% and 16.500% and the weighted average Coupon Rate is
approximately 12.300%.
(xii) The Credit Limits on the Mortgage Loans range between
$8,000.00 and $420,000.00 with an average of approximately $30,418.
(xiii) 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 but shall
not include cooperatives or property which constitutes other than real
property under applicable state law.
(xiv) As of the Cut-Off Date, no Mortgage Loan had a Combined
Loan-to-Value Ratio in excess of 125.00%.
(xv) As of the Cut-Off Date with respect to the 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.
(xvi) (a) Immediately prior to the transfers and assignments
herein contemplated, such Originator held good and indefeasible title
to, and was the sole owner of, each Mortgage Loan conveyed by such
Originator (including its Cut-Off Date Pool
<PAGE> 30
Balance) conveyed by such Originator to the Purchaser pursuant to
Section 2.01 hereof, all monies due or to become due with respect
thereto, and all proceeds of such Cut-Off Date Pool 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, Purchaser 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, such Originator held
good and indefeasible title to, and was the sole owner of, each
Mortgage Loan (including its Cut-Off Date Principal Balance) conveyed
by such Originator to the Purchaser 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 Purchaser 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
(xvii) 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.
(xviii) 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.
(xix) 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 Mortgage Loans and 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.
(xx) As of the Closing Date with respect to the 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
<PAGE> 31
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), and
all parties to each Mortgage Loan had full legal capacity to execute
all documents relating to such Mortgage Loan and convey the estate
therein purported to be conveyed.
(xxi) 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, 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.
(xxii) 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.
(xxiii) 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.
(xxiv) 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.
(xxv) 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.
(xxvi) 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.
(xxvii) As of the Closing Date with respect to the Mortgage
Loans and as of the applicable Transfer Date with respect to a
Qualified Replacement Mortgage Loan,
<PAGE> 32
there is no default, breach, violation or event of acceleration
existing under any Mortgage 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.
(xxviii) To the best knowledge of such Originator, 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.
(xxix) 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.
(xxx) As of the Closing Date with respect to the 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.
(xxxi) 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.
(xxxii) 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.
(xxxiii) As of the Cut-Off Date, no more than 90.55% of the
Mortgage Loans are Junior Mortgage Loans.
(xxxiv) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related prior lien does not provide for negative
amortization.
(xxxv) 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.
(xxxvi) Each Mortgage Loan is secured by a property having an
appraised value of not more than $1,526,384.
(xxxvii) 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
<PAGE> 33
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
(xxxviii)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 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 payee and mortgagee rights in
favor of the Trust and its assignees in care of the Master Servicer or
the Indenture Trustee.
(xxxix) 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 set forth
in such Originator's underwriting guidelines, as in effect on the date
of origination.
(xi) As of the Closing Date, 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.
(xii) At the Cut-Off Date 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.
(xiii) Reserved.
(xiii) To the best of such Originator's knowledge, each party
which had any interest in a Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise (including such Originator), is (or,
during the period in which such party held and disposed of such
interest, 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.
(xiv) 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.
(xv) 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.
(xvi) 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.
<PAGE> 1
EXHIBIT 10.2
<PAGE> 2
AMBAC ASSURANCE CORPORATION,
and
BEAR, STEARNS & CO. INC.
and
LEHMAN BROTHERS INC.
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A
Dated as of May 27, 1999
<PAGE> 3
\ 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
----
Section 1. Defined Terms.................................................. 1
Section 2. Other Definitional Provisions.................................. 1
Section 3. Representations, Warranties and Covenants of the Underwriters.. 2
Section 4. Representations and Warranties of the Insurer.................. 2
Section 5. Indemnification................................................ 3
Section 6. Amendments, Etc................................................ 5
Section 7. Notices........................................................ 5
Section 8. Severability................................................... 6
Section 9. Governing Law.................................................. 6
Section 10. Counterparts.................................................. 6
Section 11. Headings...................................................... 6
<PAGE> 4
INDEMNIFICATION AGREEMENT dated as of May 27, 1999 (the "Indemnification
Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Insurer, BEAR, STEARNS
& CO. INC. and LEHMAN BROTHERS INC.
Section 1. Defined Terms. Unless the context clearly requires otherwise,
all capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Sale and Servicing 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 May 1, 1999 by and among the Advanta
Revolving Home Equity Loan Trust 1999-A and Bankers Trust Company of California,
N.A., as Indenture Trustee.
"Insurance Agreement" means the Insurance and Indemnification Agreement (as
may be amended, modified or supplemented from time to time) dated as of May 27,
1999 by and among the Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, the Insurer, Advanta Holding
Trust 1999-A, 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 May 18, 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 May 1, 1999, relating to the Advanta Home Equity Loan Asset Backed
Notes, Series 1999-A, by and among Advanta Revolving Home Equity Loan Trust
1999-A, Advanta Holding Trust 1999-A, 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 Bear, Stearns & Co. Inc. and Lehman Brothers Inc.
"Underwriters' Information" has the meaning given such term in Section 3.
<PAGE> 5
Section 2. Other Definitional Provisions. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. Representations, Warranties and Covenants of the Underwriters.
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 third,
fourth, fifth, sixth, seventh and ninth paragraphs under the heading
"UNDERWRITING" in the Offering Document.
Section 4. Representations and Warranties of the Insurer. 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.
2
<PAGE> 6
(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 March 31, 1999 and for the periods ending
March 31, 1999 and March 31, 1998 included in the Quarterly Report on Form
10-Q of Ambac Financial Group, Inc. for the period ended March 31, 1999
(which was filed with the Commission on May 12, 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 March 31, 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.
(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 Standard & Poor's 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.
Section 5. Indemnification.
3
<PAGE> 7
(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 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
4
<PAGE> 8
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate
firm of attorneys at any time for the Indemnified Parties, which firm shall
be designated in writing by the Indemnified Party). The Indemnifying Party
shall not be liable for any settlement of any such action or proceeding
effected without its written consent to the extent that any such settlement
shall be prejudicial to the Indemnifying Party, but, if settled with its
written consent, or if there is a final judgment for the plaintiff in any
such action or proceeding with respect to which the Indemnifying Party
shall have received notice in accordance with this subsection (c), the
Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such
settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party (other
than due to application of this Section), each Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the basis of
the relative fault of the Indemnifying Party, on the one hand, and the
Indemnified Party, on the other hand provided, that neither of the
Underwriters shall be liable for any amount in excess of (i) the excess of
the sales prices of the Notes to the public over the prices paid therefor
by the Underwriters over (ii) the aggregate amount of any damages which the
Underwriters have otherwise been required to pay in respect of the same or
any substantially similar claim.
The relative fault of each Indemnifying Party, on the one hand,
and each indemnified Party, on the other, shall be determined by reference
to, among other things, whether the breach of, or alleged breach of, any of
its representations, warranties or covenants set forth herein was within
the control of, the Indemnifying Party or the Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such breach.
No person guilty of fraudulent misrepresentation (within the
meaning of Section (11)f of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 6. Amendments, Etc. This Indemnification Agreement may be amended,
modified, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
5
<PAGE> 9
(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 Bear, Stearns & Co. Inc.:
Bear, Stearns & Co. Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Bear Stearns Asset-Backed Securities Group
Telecopy No.: 212-272-7294
Confirmation: 212-272-2000
(b) To Lehman Brothers Inc.:
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285-1200
Attention: Aadit Seshasayee
Telecopy No.: 212-526-7209
Confirmation: 212-526-7000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
Indemnification Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnification Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
Section 10. Counterparts. The Indemnification Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
6
<PAGE> 10
Section 11. Headings. The headings of Sections and the Table of Contents
contained in this Indemnification Agreement are provided for convenience only.
They form no part of this Indemnification Agreement and shall not affect its
construction or interpretation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Insurer
By: /s/ Warren K. Tong
----------------------------------
Name: Warren K. Tong
Title: First Vice President
BEAR, STEARNS & CO. INC.
By: /s/ Thomas S. Dunstan
----------------------------------
Name: Thomas S. Dunstan
Title: Managing Director
LEHMAN BROTHERS INC.
By: /s/ Samir Tabet
----------------------------------
Name: Samir Tabet
Title: Senior Vice President
<PAGE> 1
EXHIBIT 10.3
<PAGE> 2
As of May 18, 1999
Bear, Stearns & Co. Inc.
as Representative of the Underwriters
245 Park Avenue
New York, New York 10167
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Underwriting Agreement dated May 18, 1999 (the "Underwriting
Agreement") among Advanta National Bank and Advanta Finance Corp.
(together, the "Originators"), Advanta Mortgage Conduit Services,
Inc. (the "AMCSI") Bear, Stearns & Co. Inc. and Lehman Brothers
Inc. (the "Underwriters") and the Insurance and Indemnity
Agreement dated May 18, 1999 (the "Insurance Agreement") among
the Sponsor, the Master Servicer, the Trust and Ambac Assurance
Corporation (the "Insurer")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement and the Insurance Agreement
(together, the "Designated Agreements"), AMCSI 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 AMCSI 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 AMCSI under the
Designated Agreements (including the payment of money damages for a breach of
any of AMCSI'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 parent
corporation of AMCSI, to acknowledge its joint-and-several liability with AMCSI
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:
(i) AMHC hereby agrees to be absolutely and unconditionally
jointly and severally liable with AMCSI to the Underwriters for the
payment of the Joint and Several Obligations under the Underwriting
Agreement.
<PAGE> 3
(ii) AHMC hereby agrees to be absolutely and unconditionally
and jointly and severally liable with AMCSI to the Insurer for payment
of the Joint and Several Obligations under the Insurance Agreement.
(iii) 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 AMCSI 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.
<PAGE> 4
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Designated Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING
COMPANY
By: /s/ Michael Coco
----------------------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED,
as of the date first above written:
AMBAC ASSURANCE CORPORATION
By: /s/ Warren K. Tong
-----------------------------------------
Authorized Signatory
BEAR, STEARNS & CO. INC.
By: /s/ Thomas S. Dunstan
-----------------------------------------
Authorized Signatory
<PAGE> 1
EXHIBIT 10.4
<PAGE> 2
Advanta Revolving Home
Equity Loan Trust 1999-A
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: Sale and Servicing Agreement dated as of May 1, 1999 (the
"Agreement") among Advanta as Sponsor, Advanta Mortgage Corp.
USA, as Master Servicer ("USA"), Advanta Revolving Home Equity
Loan Trust 1999-A (the "Trust"), Advanta Holding Trust 1999-A
("Holding") and Bankers Trust Company of California, N.A. as
Indenture Trustee (the "Indenture Trustee")
Ladies and Gentlemen:
Pursuant to the Agreement, USA 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 USA 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 USA
and the Sponsor under the Agreement (including the payment of money damages for
a breach of any of USA'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 USA and the indirect corporate
parent of the Sponsor, to acknowledge its joint-and-several liability with USA
and the Sponsor for the payment of the Joint and Several Obligations under the
Agreement.
<PAGE> 3
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 USA 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 USA, 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.
<PAGE> 4
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING COMPANY
By: /s/ Michael Coco
---------------------------------
Authorized Signatory
ACKNOWLEDGED AND AGREED:
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 1999-A
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By: /s/ Donald G. MacKelcan
----------------------------------
Authorized Signatory
ACKNOWLEDGED:
AMBAC ASSURANCE CORPORATION
By: /s/ Warren K. Tong
----------------------------------
Authorized Signatory
Dated: May 27, 1999
