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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 27, 2000
Advanta Conduit Receivables, Inc., as Sponsor
on behalf of Advanta Revolving Home Equity Loan Trust 2000-A
(Exact Name of Registrant as Specified in Charter)
Nevada 333-92669-01 88-0360305
(State or Other Jurisdiction of (Commission File (IRS Employer
Incorporation) Number) Identification Number)
Advanta Conduit Receivables, Inc.
(Exact Name of Registrant as Specified in Charter)
Nevada 333-92669 88-0360305
(State or Other Jurisdiction of (Commission File (IRS Employer
Incorporation) Number) Identification Number)
Attention: General Counsel
10790 Rancho Bernardo Road
San Diego, California 92127
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number,
including area code: (858) 676-3099
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Description of the Notes and the Mortgage Loans.
Advanta Conduit Receivables, Inc. (the "Registrant" or the
"Sponsor") registered an issuance of $2,000,000,000 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. 333-92669) (the
"Registration Statement").
Pursuant to the Registration Statement, the Sponsor formed
Advanta Revolving Home Equity Loan Trust 2000-A (the "Trust") which issued
$400,000,000 in aggregate principal amount of its Revolving Home Equity Loan
Asset Backed Notes (the "Notes"), on April 27, 2000 (the "Closing Date").
This Current Report 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 primary assets of the Trust are a pool of adjustable rate
revolving home equity credit line loans (the "Mortgage Loans"), each used
predominantly to refinance an existing mortgage loan on more favorable terms, to
consolidate debt or to obtain cash proceeds by borrowing against the related
borrower's equity in the real property and improvements pledged to secure the
related Mortgage Loan. The Mortgage Loans are secured primarily by mortgages on
single-family residences (which may be detached, part of a two- to four-family
dwelling, a condominium unit or a unit in a planned unit development) which were
conveyed to the Trust on the Closing Date. As of the Closing Date, the Mortgage
Loans had the characteristics described in the Prospectus dated December 28,
1999, and the Prospectus Supplement dated April 18, 2000 filed pursuant to Rule
424(b)(5) of the Act with the Commission.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) Not applicable.
(b) Not applicable
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(c) Exhibits:
1.1 Underwriting Agreement, dated April 18, 2000, between the
Sponsor and Bear, Stearns & Co. Inc., as Representative of the Underwriters.
4.1 Indenture, dated as of April 1, 2000, between Advanta
Revolving Home Equity Loan Trust 2000-A and Bankers Trust Company of California,
N.A., as Indenture Trustee.
4.2 Trust Agreement, dated as of April 1, 2000, between the
Sponsor and Wilmington Trust Company, as Owner Trustee, relating to the
formation of Advanta Revolving Home Equity Loan Trust 2000-A.
4.3 Sale and Servicing Agreement, dated as of April 1, 2000,
among the Advanta Revolving Home Equity Loan Trust 2000-A, the Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, and Bankers Trust Company of California,
N.A., as Indenture Trustee.
4.4 Certificate Guaranty Insurance Policy (No. AB0358BE),
dated April 27, 2000, and issued and delivered by Ambac Assurance Corporation.
5.1 Opinion of Wolf, Block, Schorr and Solis-Cohen LLP
regarding legality of the registered securities, dated April 27, 2000.*
8.1 Opinion of Wolf, Block, Schorr and Solis-Cohen LLP
regarding tax matters, dated April 27, 2000.*
10.1 Purchase Agreement, dated as of April 1, 2000, among
Advanta Bank Corp., Advanta National Bank and Advanta Finance Corp., as
Originators, on the one hand, and Advanta Conduit Receivables, Inc., as
Purchaser, on the other hand.
10.2 Indemnification Agreement, dated April 18, 2000, between
Bear, Stearns & Co., Inc., as Representative of the 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 2000-A issued by Advanta Mortgage Holding
Company.
23.1 Consent of KPMG LLP regarding financial statements of
Ambac Assurance Corporation and their report.*
23.2 Consent of Arthur Andersen LLP.*
*Previously filed on Form 8-K with the Securities and Exchange
Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: April 27, 2000 ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-A
By: Advanta Conduit Receivables, Inc.
By: /s/ Michael Coco
-------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA CONDUIT RECEIVABLES, INC.
By: /s/ Michael Coco
-------------------------------------
Name: Michael Coco
Title: Vice President
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EXECUTION COPY
ADVANTA CONDUIT RECEIVABLES, INC.
ADVANTA REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES,
SERIES 2000-A
ASSET-BACKED NOTES
UNDERWRITING AGREEMENT
April 18, 2000
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(for itself and the other Underwriters
named in Schedule I hereto)
Ladies and Gentlemen:
Advanta Conduit Receivables, Inc., as Sponsor (the "Sponsor"), has
authorized the issuance and sale of Advanta Revolving Home Equity Loan
Asset-Backed Notes, Series 2000-A (the "Notes"). The Notes will be issued
pursuant to an indenture (the "Indenture"), dated as of April 1, 2000, between
Advanta Revolving Home Equity Loan Trust 2000-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 April 1, 2000, among the Sponsor 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
revolving home equity credit line loan agreements (the "Credit Line Agreements")
to be transferred or caused to be transferred by the Sponsor to the Trust
pursuant to a sale and servicing agreement (the "Sale and Servicing Agreement"),
dated as of April 1, 2000, among the Sponsor, the Trust, Advanta Mortgage Corp.
USA, as master servicer (the "Master Servicer"), and the Indenture Trustee. The
Notes will be issued on or about April 27, 2000 (the "Closing Date") in the
aggregate original principal amount of $400,000,000. The Notes 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,
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excluding certain amounts as specified in the Documents (as defined below).
Concurrently therewith, the Sponsor will enter into an Insurance and Indemnity
Agreement (the "Insurance Agreement"), dated as of April 27, 2000 among the
Sponsor, the Insurer, the Master Servicer, 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 April 27, 2000 (the "Indemnification Agreement"), among the Sponsor, the
Underwriters and the Insurer.
As used herein, the "Documents" shall mean the Indenture, the Trust
Agreement, the Sale and Servicing Agreement, the Underwriting Agreement, the
Insurance Agreement and the Indemnification Agreement. Capitalized terms used
but not defined herein shall have the meanings given to them in the Sale and
Servicing Agreement.
SECTION 1. Representations and Warranties of the Sponsor The Sponsor
represents and warrants to, and agrees with each Underwriter that:
A. The Sponsor has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement (No. 333-92669) 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)(2), a prospectus supplement dated April 18, 2000 to the prospectus
dated December 28, 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 December 28, 1999, in the
form in which it will be filed with the Commission pursuant to Rule 424(b)
under the Act is hereinafter called the "Basic Prospectus"; such
prospectus supplement dated April 18, 2000 to the Basic Prospectus, in the
form in which it will be filed with the Commission pursuant to Rule
424(b)(2) of the Act, is hereinafter called the "Prospectus Supplement";
and the Basic Prospectus 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
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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.
D. Since the respective dates as of which information is given in
the Prospectus, there has not been any material adverse change in the
general affairs, management, financial condition, or results of operations
of the Sponsor, except as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Sponsor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which its ownership or lease
of property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its properties,
to conduct the business in which it is engaged and to enter into and
perform its obligations under the Documents to which it is a party, and to
cause the Notes to be issued.
F. There are no actions, proceedings or investigations pending
before or threatened by any court, administrative agency or other tribunal
to which the Sponsor is a party or of which any of its properties is the
subject (a) which if determined adversely to the Sponsor would have a
material adverse effect on the business or financial condition of the
Sponsor, (b) which asserts the invalidity of the Documents or the Notes,
(c) which
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seeks to prevent the issuance of the Notes or the consummation by the
Sponsor of any of the transactions contemplated by the Documents to which
it is a party or (d) which might materially and adversely affect the
performance by the Sponsor of its obligations under, or the validity or
enforceability of, the Documents to which it is a party or the Notes.
G. The Documents, when executed and delivered as contemplated hereby
and thereby, will have been duly authorized, executed and delivered by the
Sponsor and will constitute legal, valid and binding instruments
enforceable against the Sponsor, subject as to enforceability to (x)
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally, (y) general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and (z) with respect to rights of indemnity under this
Agreement, the Indemnification Agreement and the Insurance Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of the Documents by the
Sponsor and the consummation of the transactions contemplated hereby and
thereby, and the issuance and delivery of the Notes do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Sponsor is a party, by which the Sponsor is bound or to which any of
the property or assets of the Sponsor or any of their respective
subsidiaries are subject, nor will such actions result in any violation of
the provisions of the articles of incorporation or by-laws of the Sponsor
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Sponsor or any of
their respective properties or assets.
I. Arthur Andersen LLP are independent public accountants with
respect to the Sponsor as required by the Act and the Rules and
Regulations.
J. The direction by the Sponsor to the Indenture Trustee to execute,
authenticate, issue and deliver the Notes has been or will be duly
authorized by the Sponsor, and assuming the Indenture Trustee has been
duly authorized to do so, when executed, authenticated, issued and
delivered by the Indenture Trustee in accordance with the Indenture, the
Notes will be validly issued and outstanding and will be entitled to the
benefits provided by the Indenture.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the issuance of the Notes and the sale of
the Notes to the Underwriters, or the consummation by the Sponsor of the
other transactions contemplated by the Documents, except such consents,
approvals, authorizations, registrations or qualifications as may be
required under State securities or "blue sky" laws in connection with the
purchase and distribution of the Notes by the Underwriters or as have been
obtained.
L. At the time of execution and delivery of the Sale and Servicing
Agreement, the Sponsor will cause the Trust to: (i) have good title to the
interest in the Mortgage
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Loans and the other rights and properties to be conveyed by the Sponsor
thereunder, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively,
"Liens"); (ii) except as provided in the Documents, not have assigned to
any person any of its right, title or interest in the Mortgage Loans, in
the Sale and Servicing Agreement or in the Notes being issued pursuant
thereto; and (iii) have the power and authority to sell its interest in
the Mortgage Loans or cause the sale of the Mortgage Loans to the Trust
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 principal or interest collected prior to the
Cut-Off Date). Upon delivery to the Underwriters of the Notes, the
Underwriters will have good title to the Notes, free of any Liens.
M. As of the close of business on March 31, 2000 (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.
N. Neither the Sponsor nor the Trust is an "investment company"
within the meaning of such term under the Investment Company Act of 1940
(the "1940 Act") and the rules and regulations of the Commission
thereunder.
O. At the Closing Date, the Notes and the Indenture will conform in
all material respects to the descriptions thereof contained in the
Prospectus.
P. At the Closing Date, the Notes shall have been rated in the
highest rating category by at least two nationally recognized rating
agencies.
Q. Any applicable taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Documents and
the Notes have been paid or will be paid at or prior to the Closing Date.
R. At the Closing Date, each of the representations and warranties
of the Sponsor set forth in the Sale and Servicing Agreement, the
Insurance Agreement and the Indemnification Agreement will be true and
correct in all material respects.
Any certificate signed by an officer of the Sponsor and delivered to the
Underwriters or counsel for the Underwriters in connection with an offering of
the Notes shall be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 1 are made.
SECTION 2. Purchase and Sale The commitment of the Underwriters to
purchase the Notes pursuant to this Agreement shall be deemed to have been made
on the basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth. The Sponsor agrees to
instruct the Trust to issue and agrees to sell to the Underwriters and each
Underwriter agrees (except as provided in Sections 6 and 10 hereof)
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to purchase from the Sponsor, the Notes in the aggregate initial principal
amount or amounts set forth on Schedule A at the purchase price or prices set
forth in Schedule A.
The obligations of the Underwriters hereunder to purchase the Notes shall
be several and not joint. Each Underwriter's obligation shall be to purchase the
aggregate principal amount of Notes as is indicated with respect to each
Underwriter under the caption "Underwriting" in the Prospectus. The rights of
the Sponsor and a non-defaulting Underwriter shall be as set forth in Section 13
hereof.
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 Wolf,
Block, Schorr and Solis-Cohen LLP, 250 Park Avenue, New York, New York
10177-0030, at 10:00 A.M. New York City time on the Closing Date or at such
other time or date as shall be agreed upon in writing by the Underwriters and
the Sponsor. Payment shall be made to the Sponsor by wire transfer of same day
funds payable to such accounts as they shall designate in writing. Delivery of
the Notes shall be made to each Underwriter against payment of the purchase
price thereof. The Notes shall be in such denominations and registered in such
names as the Underwriters may request in writing at least two business days
prior to the Closing Date. The Notes will be made available for examination by
the Underwriters no later than 4:00 P.M. New York City time on the first
business day prior to the Closing Date.
SECTION 4. Offering by the Underwriters It is understood that,
subject to the terms and conditions hereof, the Underwriters proposes to offer
the Notes for sale to the public as set forth in the Prospectus.
SECTION 5. Covenants of the Sponsor With respect to the issuance of
the Notes, the Sponsor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriter
and to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second business day
following the first use of the Prospectus; to make no further amendment or
any supplement to the Registration Statement or to the Prospectus prior to
the Closing Date except as permitted herein; to advise the Underwriters,
promptly after they receive notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Underwriters with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Sponsor with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and, for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Notes, to promptly advise the
Underwriters of its receipt of notice of the issuance by the Commission of
any stop order or of: (i) any order preventing or suspending the use of
the Prospectus; (ii) the suspension of the qualification of the Notes for
offering or sale in any jurisdiction; (iii) the initiation of or threat of
any proceeding for any such purpose; (iv) any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information. In the event of the issuance of
any stop order or of any order
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preventing or suspending the use of the Prospectus or suspending any such
qualification, the Sponsor promptly shall use its best efforts to obtain
the withdrawal of such order or suspension.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with 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, which may be in
electronic form, 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.
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F. To use their best efforts, in cooperation with the Underwriters,
to qualify the Notes for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Underwriter may designate, and maintain or cause to be maintained such
qualifications in effect for as long as may be required for the
distribution of the Notes. The Sponsor will file or cause the filing of
such statements and reports as may be required by the laws of each
jurisdiction in which the Notes have been so qualified.
G. Not, without the Underwriters' prior written consent, to publicly
offer or sell or contract to sell any mortgage pass-through securities,
collateralized mortgage obligations or other similar securities
representing interests in or secured by other mortgage-related assets
originated or owned by the Sponsor for a period of 5 business days
following the commencement of the offering of the Notes to the public.
H. So long as the Notes shall be outstanding, to deliver to the
Underwriters as soon as such statements are furnished to the Indenture
Trustee the annual statement as to compliance delivered to the Indenture
Trustee pursuant to Section 3.9 of the Indenture.
I. To apply the net proceeds from the sale of the Notes in the
manner set forth in the Prospectus.
SECTION 6. Conditions to the Obligations of the Underwriters The
obligation of the Underwriters to purchase the Notes pursuant to this Agreement
is subject to: (i) the accuracy as of the Closing Date of the representations
and warranties on the part of the Sponsor herein contained; (ii) the performance
by the Sponsor of its obligations hereunder; and (iii) the following conditions
as of the Closing Date:
A. The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated
or threatened by the Commission. Any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus shall have been complied with.
B. The Underwriters shall not have discovered and disclosed to the
Sponsor on or prior to the Closing Date that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact or omits to state a fact which, in the opinion of
Brown & Wood LLP, counsel for the Underwriters, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of the Documents, the Notes, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be satisfactory in all respects to counsel for the Underwriters, and the
Sponsor shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
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D. The Underwriters shall have received the favorable opinion of
Wolf, Block, Schorr and Solis-Cohen LLP, special counsel to the Sponsor
with respect to the following items, dated the Closing Date, to the effect
that:
1. The Sponsor has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, and is qualified to do business in each state necessary to
enable it to perform its obligations as Sponsor under the Documents to
which it is a party. The Sponsor has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and
perform and observe the conditions of the Documents to which it is a
party.
2. The Documents to which the Sponsor is a party have been duly and
validly authorized, executed and delivered by the Sponsor and all
requisite corporate action by the Sponsor has been taken with respect
thereto, and the Notes constitute the valid, legal and binding agreement
of the Trust.
3. Neither the transfer of the Mortgage Loans to the Trust, the
issuance or sale of the Notes nor the execution, delivery or performance
by the Sponsor of the Documents to which it is a party (A) conflicts or
will conflict with or results or will result in a breach of, or
constitutes or will constitute a default under, (i) any term or provision
of the certificate of incorporation or by-laws of the Sponsor; (ii) any
term or provision of any material agreement, contract, instrument or
indenture, to which the Sponsor is a party or is bound and known to such
counsel; or (iii) any order, judgment, writ, injunction or decree of any
court or governmental agency or body or other tribunal having jurisdiction
over the Sponsor and known to such counsel; or (B) results in, or will
result in the creation or imposition of any lien, charge or encumbrance
upon any of the Trust's assets or upon the Notes, except as otherwise
contemplated by the Sale and Servicing Agreement.
4. With respect to the Mortgage Loans, the endorsement and delivery
of each Credit Line Agreement, and the preparation, delivery and recording
of an Assignment, in each case with respect to each Mortgage, is
sufficient to fully transfer to the Indenture Trustee for the benefit of
the Noteholders all right, title and interest of the Sponsor or its
affiliates in the Credit Line Agreement and Mortgage, as noteholder and
mortgagee or assignee thereof, subject to any exceptions set forth in such
opinion, and will be sufficient to permit the Indenture Trustee to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Sponsor and to prevent any other
sale, transfer, assignment, pledge or other encumbrance of the Mortgage
Loans by the Sponsor from being enforceable, subject to any exceptions set
forth in such opinion.
5. No consent, approval, authorization or order of, registration or
filing with, or notice to, courts, governmental agency or body or other
tribunal is required under the laws of the State of New York, for the
execution, delivery and performance of the Documents or the offer,
issuance, sale or delivery of the Notes or the consummation of any other
transaction contemplated thereby by the Sponsor, except such which have
been obtained.
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6. There are no actions, proceedings or investigations, to such
counsel's knowledge, pending or threatened against the Sponsor before any
court, governmental agency or body or other tribunal (i) asserting the
invalidity of the Documents to which the Sponsor is a party or the Notes,
(ii) seeking to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by the Documents or (iii) which would
materially and adversely affect the performance by the Sponsor of
obligations under, or the validity or enforceability of, the Notes or the
Documents to which the Sponsor is a party.
7. To the best knowledge of such counsel, the Commission has not
issued any stop order suspending the effectiveness of the Registration
Statement or any order directed to any prospectus relating to the Notes
(including the Prospectus), and has not initiated or threatened any
proceeding for that purpose.
8. The Registration Statement and the Prospectus (other than the
financial and statistical data included therein, as to which such counsel
need express no opinion), including the incorporated documents, as of the
date on which the Registration Statement was declared effective and as of
the date hereof, comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder, and such counsel
does not know of any amendment to the Registration Statement required to
be filed, or of any contracts, indentures or other documents of a
character required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement which has not
been filed or described as required.
9. The Indenture, when executed and delivered, will have been duly
qualified under the Trust Indenture Act.
10. The statements in the Prospectus and Prospectus Supplement set
forth under the captions "ERISA Considerations," "Material Federal Income
Tax Consequences," and the statements in the Prospectus set forth under
the caption "Legal Aspects of the Mortgage Loans," to the extent that they
constitute matters of federal, New York or California law, or federal, New
York or California legal conclusions provide a fair and accurate summary
of such law or conclusions.
11. No information has come to such counsel's attention which causes
them to believe that the Prospectus (other than the financial statement
and other financial and statistical data contained therein, as to which
such counsel need express no opinion), as of the date thereof, contained
any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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
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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 Anderson 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, a Division of the McGraw-Hill
Companies, Inc. and by Moody's Investors Service, Inc., and such ratings
shall not have been rescinded or downgraded. The Underwriters and counsel
for the Underwriters shall have received copies of any opinions of counsel
supplied to the rating organizations relating to any matters with respect
to the Notes. Any such opinions shall be dated the Closing Date and
addressed to the Underwriters or accompanied by reliance letters to the
Underwriters or shall state that the Underwriters may rely upon them.
G. The Underwriters shall have received from the Sponsor a
certificate, signed by the president, a senior vice president or a vice
president of the Sponsor, dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the Registration
Statement, the Sale and Servicing Agreement, and this Agreement and that,
to the best of his or her knowledge based upon reasonable investigation:
1. the representations and warranties of the Sponsor in this
Agreement, as of the Closing Date, and in the Sale and Servicing
Agreement, [the Insurance Agreement] and in all related agreements, as of
the date specified in such agreements, are true and correct, and the
Sponsor has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
2. except as set forth in the Prospectus, there are no actions,
suits or proceedings pending, or to the best of such officer's knowledge,
threatened against or affecting the Sponsor which if adversely determined,
individually or in the aggregate, would be reasonably likely to adversely
affect the Sponsor's obligations under the Documents to which it is a
party in any material way; and no merger, liquidation, dissolution or
bankruptcy of the Sponsor is pending or contemplated;
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 as 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;
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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 December 31,
1999, and no such amendment has been authorized. No event has occurred
since December 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 December 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
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
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laws affecting the enforcement of creditors' rights generally, as such
laws would apply in the event of a bankruptcy, insolvency or
reorganization or similar occurrence affecting the Indenture Trustee, and
(B) general principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of
the Indenture Trustee in connection with its execution and delivery of the
Documents to which it is a party or the performance of its obligations
thereunder;
4. the Notes have been duly executed, authenticated and delivered by
the Indenture Trustee; and
5. the execution and delivery of, and performance by the Indenture
Trustee of its obligations under, the Documents to which it is a party do
not conflict with or result in a violation of any statute or regulation
applicable to the Indenture Trustee, or the charter or by-laws of the
Indenture Trustee, or to the best knowledge of such counsel, any
governmental authority having jurisdiction over the Indenture Trustee or
the terms of any indenture or other agreement or instrument to which the
Indenture Trustee is a party or by which it is bound.
In rendering such opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the 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
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business in New York and is authorized to issue the Policy and perform its
obligations under the Policy in accordance with the terms thereof.
2. The execution and delivery by the Insurer of the Policy, the
Insurance Agreement and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all necessary
corporate action on the part of the Insurer; the Policy has been duly
executed and is the valid and binding obligation of the Insurer
enforceable in accordance with its terms except that the enforcement of
the Policy may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
3. The Insurer is authorized to deliver the Indemnification
Agreement and the Insurance Agreement and such agreements have been duly
executed and delivered and constitute the legal, valid and binding
obligations of the Insurer enforceable in accordance with its terms except
that the enforcement of the Insurance Agreement may be limited by laws
relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights generally
and by general principles of equity and, in the case of the
Indemnification Agreement, subject to principles of public policy limiting
the right to enforce the indemnification provisions contained therein
insofar as such provisions relate to indemnification for liabilities
arising under securities laws.
4. No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of
the Insurer, the lack of which would adversely affect the validity or
enforceability of the Policy; to the extent required by applicable legal
requirements that would adversely affect validity or enforceability of the
Policy, the form of the Policy has been filed with, 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.
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In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Sponsor, the
Indenture Trustee, the Insurer and public officials. Such opinion may
assume the due authorization, execution and delivery of the instruments
and documents referred to therein by the parties thereto other than the
Insurer.
L. Since December 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 in any
rating accorded any securities of the Sponsor, if any, by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of the Act.
M. On or prior to the Closing Date, there shall not have occurred
any downgrading, nor shall any notice have been given of (A) any intended
or potential downgrading or (B) any review or possible change in rating
the direction of which has not been indicated, in the rating accorded the
Insurer's claims paying ability by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the Act.
N. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1999, of (A) the
Sponsor and any subsidiaries or (B) the Insurer, that is in the
Underwriters' judgment material and adverse and that makes it in the
Underwriters' judgment impracticable to market the Notes on the terms and
in the manner contemplated in the Prospectus.
O. The Underwriters shall have received from the Insurer a
certificate, signed by the president, a senior vice president or a vice
president of the Insurer, dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the Policy, the
Insurance Agreement, the Indemnification Agreement and the related
documents and that, to the best of his or her knowledge based on
reasonable investigation:
1. There are no actions, suits, proceedings or investigations
pending or, to the best of Insurer's knowledge, threatened against it at
law or in equity before or by any court, governmental agency, board or
commission or any arbitrator which, if adversely determined, individually
or in the aggregate, would materially and adversely affect the Insurer's
condition (financial or otherwise) or operations or which would materially
and adversely effect its ability to perform its obligations under the
Policy, the Insurance Agreement or the Indemnification Agreement;
2. The information contained in the Prospectus Supplement under the
caption "The Insurer and the Policy" (the "Insurer Information") is
limited and does not purport to provide the scope of disclosure required
to be included in a prospectus for a registrant under the Act, in
connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, the Insurer
Information does not contain any untrue statement of a material fact or
omits to state a material fact necessary to make the
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statements therein, in light of the circumstances under which they were
made, not misleading;
3. The tables regarding the Insurer's capitalization set forth under
the heading "The Insurer and the Policy" in the Prospectus Supplement
presents accurately and fairly the capitalization of the Insurer as of
December 31, 1999;
4. The consolidated financial statements of the Insurer as of
December 31, 1999 and December 31, 1998, and for each of the years in the
three-year period ended December 31, 1999, 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;
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 December 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.
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 Wolf, Block, Schorr and
Solis-Cohen LLP, special counsel to the Sponsor, a survey in form and
substance satisfactory to
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the Underwriters, indicating the requirements of applicable local law
which must be complied with in order to transfer and service the Mortgage
Loans pursuant to the Sale and Servicing Agreement shall have complied
with all such requirements.
Q. The Underwriters shall have received from Brown & Wood LLP,
special counsel to the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes, the
Prospectus and such other related matters as the Underwriters shall
reasonably require.
R. The Underwriters shall have received from Wolf, Block, Schorr and
Solis-Cohen LLP, special counsel to the Sponsor, 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 or the Insurer
supplied to the Indenture Trustee relating to matters with respect to the
Notes or the Policy. Any such opinions shall be dated the Closing Date and
addressed to the Underwriters or accompanied by reliance letters to the
Underwriters or shall state the Underwriters may rely thereon.
T. The Underwriters shall have received such further information,
certificates and documents as the Underwriters may reasonably have
requested not later than the business day prior to the Closing Date.
U. There shall have been executed and delivered by Advanta Mortgage
Holding Company, the indirect corporate parent of the Sponsor and direct
corporate parent of the Master Servicer ("AMHC"), a letter agreement with
the Trust and the Insurer substantially in the form of Exhibit A hereto.
V. There shall have been executed and delivered by AMHC a letter
agreement with the Underwriters and the Insurer substantially in the form
of Exhibit B hereto.
W. Prior to the Closing Date, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as herein contemplated and related
proceedings or in order to evidence the accuracy and completeness of any
of the representations and warranties, or the fulfillment of any of the
conditions, herein contained, and all proceedings taken by the Originators
in connection with the issuance and sale of the Notes as herein
contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
X. Subsequent to the execution and delivery of this Agreement none
of the following shall have occurred: (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices shall
have been established on either of such exchanges or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium
shall have been declared by Federal or state authorities; (iii) the United
States shall have become engaged in hostilities, there shall have been an
escalation of hostilities involving the United States
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or there shall have been a declaration of a national emergency or war by
the United States; or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or
the effect of international conditions on the financial markets of the
United States shall be such); or (v) on or prior to the Closing Date,
there shall have occurred a material adverse change in the financial
condition of the Master Servicer or Advanta Corporation as reported in
Advanta Corporation's first quarter 2000 earnings announcement, 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 at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section 7.
All opinions, letters, evidence and Notes mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriters.
SECTION 7. Payment of Expenses The Sponsor agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the Notes
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
fees and expenses of qualifying the Notes under the securities laws of the
several jurisdictions as provided in Section 5(F) hereof and of preparing,
printing and distributing any Blue Sky Memorandum or Legal Investment Survey
(including related fees and expenses of counsel to the Underwriters); (e) any
fees charged by securities rating services for rating the Notes; (f) all other
costs and expenses incident to the performance of the obligations of the
Sponsor; provided, however, that, except as provided in this Section 7, the
Underwriters shall pay its own costs and expenses, including the costs and
expenses of its counsel, any transfer taxes on the Notes which they may sell and
the expenses of marketing any offering of the Notes made by the Underwriters
(including expenses incident to the preparation, printing and distribution of
Computational Materials and other Derived Information).
If this Agreement is terminated by the Underwriters, in accordance with
the provisions of Section 6 or Section 10, the Sponsor shall reimburse the
Underwriters for their respective reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of its counsel.
SECTION 8. Indemnification and Contribution
A. The Sponsor agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls the respective
Underwriter within the meaning of Section 15 of the Act from and against
any and all loss, claim, damage or liability,
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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
the Sponsor shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus or the Registration Statement in
reliance upon and in conformity with written information (including any
Derived Information) furnished to the Sponsor by the Underwriters
specifically for inclusion therein. For purposes of the last proviso to
the immediately preceding sentence, the term "Prospectus" shall not be
deemed to include the documents incorporated therein by reference, and the
Underwriters shall not be obligated to send or give any supplement or
amendment to any document incorporated therein by reference to any person
other than a person to whom the Underwriters have delivered such
incorporated document or documents in response to a written request
therefor. The foregoing indemnity agreement is in addition to any
liability which the Sponsor may otherwise have to any Underwriter or any
controlling person of any Underwriter.
B. Each Underwriter severally but not jointly will indemnify and
hold harmless the Sponsor, its directors, its officers who signed the
Registration Statement, and each person, if any, who controls the Sponsor
within the meaning of Section 15 of the Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Sponsor or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (iii) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or
(iv) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information (excluding any
Derived Information which is covered in paragraph (E) below) furnished to
the Sponsor by or on behalf of the Underwriters
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specifically for inclusion therein, and shall reimburse the Sponsor, and
any such director, officer or controlling person for any legal or other
expenses reasonably incurred by the Sponsor or any director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity agreement is
in addition to any liability which the Underwriters may otherwise have to
the Sponsor or any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this
Section 8 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify an indemnifying
party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure; and provided further, however, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless: (i) the employment thereof has been specifically
authorized by the indemnifying party in writing; (ii) such indemnified
party shall have been advised by such counsel that there may be one or
more legal defenses available to it which are different from or additional
to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to
employ separate counsel; or (iii) the indemnifying party has failed to
assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party, in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however,
the indemnifying party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the 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
20
<PAGE> 21
controlling persons, or by the Sponsor if the indemnified parties under
this Section 8 consist of the Sponsor or any of the Sponsor's directors,
officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(A) and (B), shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement
or judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered
into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement.
D. Each Underwriter agrees to deliver to the Sponsor a copy of its
Derived Information no later than one (1) business day prior to the date
such information is required to be filed, pursuant to the No-Action
Letters (as defined herein), with the Commission on Form 8-K.
E. Each Underwriter agrees, assuming all Sponsor-Provided
Information (defined below) is accurate and complete in all material
respects, to severally and not jointly indemnify and hold harmless the
Sponsor, each of the Sponsor's officers and directors and each person who
controls the Sponsor within the meaning of Section 15 of the Act against
any and all losses, claims, damages or liabilities, joint or several, to
which they may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of a material fact
contained in the Derived Information provided by such Underwriter, or
arise out of or are based upon the omission or alleged omission to state
therein, a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made and when read in conjunction with the Prospectus, not
misleading, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such
loss, claim, damage, liability or action as such expenses are 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).
21
<PAGE> 22
F. For purposes of this Section 8, the term "Derived Information"
means such portion, if any, of the information delivered to the Sponsor
pursuant to Section 8(D) for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
(ii) does not constitute Sponsor-Provided Information; and
(iii) is of the type of information defined as Collateral term
sheets, Structural term sheets or Computational
Materials (as such terms are interpreted in the
No-Action Letters).
"Sponsor-Provided Information" means any computer tape furnished to the
Underwriters by the Sponsor concerning the Mortgage Loans comprising the
Trust.
The terms "Collateral term sheet" and "Structural term sheet" shall
have the respective meanings assigned to them in the February 13, 1995
letter (the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf
of the Public Securities Association (which letter, and the SEC staff's
response thereto, were publicly available February 17, 1995). The term
"Collateral term sheet" as used herein includes any subsequent Collateral
term sheet that reflects a substantive change in the information
presented. The term "Computational Materials" has the meaning assigned to
it in the May 17, 1994 letter (the "Kidder letter" and together with the
PSA Letter, the "No-Action Letters") of Brown & Wood LLP on behalf of
Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response
thereto, were publicly available May 20, 1994).
G. If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(A) or (B) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to
therein, then (i) each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to
reflect the relative benefits received by the Sponsor on the one hand and
the Underwriters on the other from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law or if the indemnified party failed to give the notice required under
Section 8(C), in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Sponsor on the one hand and the Underwriters on the other
with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations.
The relative benefits of the Sponsor on the one hand and the
Underwriters on the other shall be deemed to be in such proportion as the
total net proceeds from the offering (before deducting expenses) received
by the Sponsor to the total underwriting discounts and commissions.
22
<PAGE> 23
The relative fault of the Underwriters and the Sponsor shall be
determined by reference to whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Sponsor or by the
Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement
or omission and other equitable considerations.
The Sponsor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(G) were to be
determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 8(G) shall be deemed to include, for
purposes of this Section 8(G), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim.
For purposes of this Section 8, in no case shall each Underwriter be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Notes over (y) the amount
paid by such Underwriter to the Sponsor for the Notes purchased by such
Underwriter hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
H. The Underwriters confirm that the information set forth in the
third, fourth, fifth, sixth, seventh and ninth paragraphs under the
caption "Underwriting" in the Prospectus Supplement, together with the
Derived Information, is correct and constitutes the only information
furnished in writing to the Sponsor by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the
Prospectus.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Sponsor submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of such Underwriter or controlling
persons thereof, or by or on behalf of the Sponsor and shall survive delivery of
any Notes to the Underwriters.
SECTION 10. Termination of Agreement The Underwriters may terminate
this Agreement immediately upon notice to the Sponsor at any time at or prior to
the Closing Date if any of the events or conditions described in Section 6(X) of
this Agreement shall occur and be continuing. In the event of any such
termination, the covenant set forth in the provisions of Section 7, the
indemnity agreement set forth in Section 8, and the provisions of Sections 9 and
13 shall remain in effect.
SECTION 11. Notices All statements, requests, notices and
agreements hereunder shall be in writing, and:
23
<PAGE> 24
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); and
B. if to the Sponsor, shall be delivered or sent by mail, telex or
facsimile transmission to Advanta Conduit Receivables, Inc. 10790 Rancho
Bernardo Road, San Diego, California 92127 Attention: General Counsel
(Fax: 858-676-3046).
SECTION 12. Persons Entitled to the Benefit of this Agreement This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Sponsor and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who controls such Underwriter within the meaning of Section 15 of the
Act, and for the benefit of directors of the Sponsor, officers of the Sponsor
who have signed the Registration Statement and any person controlling the
Sponsor within the meaning of Section 15 of the Act. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 12, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SECTION 13. Default by One of the Underwriters If one of the
Underwriters shall default in its obligation to purchase the Notes which it is
obligated to purchase hereunder (the "Defaulted Notes"), the remaining
Underwriter (the "Non-Defaulting Underwriter"), shall have the right, but not
the obligation, within one (1) Business Day after such default, to make
arrangements to purchase all, but not less than all, of the Defaulted Notes upon
the terms herein set forth; if, however, the Non-Defaulting Underwriter shall
not have completed such arrangements within such one (1) Business Day period,
then this Agreement shall terminate without liability on the part of the
Non-Defaulting Underwriter.
No action taken pursuant to this Section 13 shall relieve the defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Non-Defaulting Underwriter or the Sponsor shall have
the right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
SECTION 14. Survival The respective indemnities, representations,
warranties and agreements of the Sponsor and the Underwriters contained in this
Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Notes and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
SECTION 15. Definition of the Term "Business Day" For purposes of
this Agreement, "Business Day" means any day on which the New York Stock
Exchange, Inc. is open for trading.
24
<PAGE> 25
SECTION 16. GOVERNING LAW THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO THE CONFLICT OF LAW PROVISIONS THEREOF) AND SHALL BE CONSTRUED IN ACCORDANCE
WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 17. Counterparts This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 18. Headings The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
SECTION 19. Representations of Underwriters The Representative will
act for the several Underwriters in connection with the transactions
contemplated by this Agreement, and any action under this Agreement taken by the
Representative will be binding upon all of the Underwriters.
[Signature Page Follows]
25
<PAGE> 26
If the foregoing correctly sets forth the agreement between the Sponsor
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
ADVANTA CONDUIT RECEIVABLES,
INC.
By /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 Underwriters
set forth on Schedule I)
By: /s/Thomas S. Dunstan
------------------------------
Name: Thomas S. Dunstan
Title: Managing Director
26
<PAGE> 27
SCHEDULE I
<TABLE>
<CAPTION>
Principal Balance of Notes Purchase Price
Underwriter Purchased by the Underwriters to Underwriters Note Rate
----------- ----------------------------- --------------- ---------
<S> <C> <C> <C>
Bear, Stearns & Co. $100,000,000 $99,750,000 LIBOR + 0.25%
Inc.
Morgan Stanley & Co. $100,000,000 $99,750,000 LIBOR + 0.25%
Incorporated
Prudential Securities $100,000,000 $99,750,000 LIBOR + 0.25%
Incorporated
Salomon Smith Barney $100,000,000 $99,750,000 LIBOR + 0.25%
Inc.
Total.......... $400,000,000 $399,000,000
============ ============
</TABLE>
29
<PAGE> 28
EXHIBIT A
As of April 27, 2000
Advanta Revolving Home
Equity Loan Trust 2000-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: Advanta Revolving Home Equity Loan Trust 2000-A
Sale and Servicing Agreement
Ladies and Gentlemen:
Pursuant to the Sale and Servicing Agreement dated as of April 1,
2000 (the "Agreement") among Advanta Conduit Receivables, Inc. as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer ("AMCUSA"), Advanta Revolving
Home Equity Loan Trust 2000-A (the "Trust") and Bankers Trust Company of
California, N.A. as Indenture Trustee (the "Indenture Trustee"), AMCUSA in its
capacity as Master Servicer, has undertaken certain financial obligations with
respect to its servicing of the Mortgage Loans, including, but not limited to,
the making of Servicing Advances. In addition, the Sponsor has, in the Agreement
undertaken certain financial obligations, including, but not limited to, the
payment of the Loan Reacquisition Price relating to the repurchase of
non-qualifying Mortgage Loans, the payment of Substitution Amounts in connection
with the substitution of Qualified Replacement Mortgage Loans and the payment of
certain expenses of the Trust. Any financial obligations of AMCUSA or the
Sponsor under the Agreement, whether or not specifically enumerated in this
paragraph, are hereinafter referred to as the "Joint and Several Obligations";
provided, however, that "Joint and Several Obligations" shall mean only the
financial obligations of AMCUSA and the Sponsor under the Agreement (including
the payment of money damages for a breach of any of AMCUSA's or the Sponsor's
obligations under the Agreement, whether financial or otherwise) but shall not
include any obligations not relating to the payment of money (e.g., the
obligation to service the Mortgage Loans).
The Insurer has required the undersigned, Advanta Mortgage Holding
Company ("AMHC"), the parent corporation of AMCUSA and the indirect corporate
parent of the Sponsor, to acknowledge its joint-and-several liability with
AMCUSA and the Sponsor for the payment of the Joint and Several Obligations
under the Agreement.
A-1
<PAGE> 29
Now, therefore, the Trust, the Insurer and AMHC do hereby agree
that:
(i) AMHC hereby agrees to be absolutely and unconditionally
jointly and severally liable with AMCUSA and the Sponsor to
the Trust and the Insurer for the payment of the Joint and
Several Obligations under the Agreement.
(ii) AMHC may honor its obligations hereunder either by direct
payment of any Joint and Several Obligations or by causing any
Joint and Several Obligations to be paid to the Trust and the
Insurer by AMCUSA, the Sponsor, or another affiliate of AMHC.
This letter and the respective obligations and rights hereunder and
thereunder shall not be delegated or assigned by you without the prior written
consent of the Insurer. This letter may not be amended or otherwise modified
except pursuant to a writing signed by each of the parties hereto. This letter
may be executed by the signatories hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute one and the
same letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW
PROVISIONS THEREOF). 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.
A-2
<PAGE> 30
Capitalized terms used herein and not defined herein shall have
their respective meanings as set forth in the Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING COMPANY
By:_______________________________________
Authorized Signatory
ACKNOWLEDGED AND AGREED:
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-A
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By:_______________________________________
Authorized Signatory
ACKNOWLEDGED:
AMBAC ASSURANCE CORPORATION
By: ________________________________
Authorized Signatory
A-3
<PAGE> 31
EXHIBIT B
As of April 27, 2000
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(as Representative
of the Underwriters)
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Revolving Home Equity Loan Trust 2000-A
Underwriting Agreement and Insurance Agreement
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement dated April 18, 2000 (the
"Underwriting Agreement") between Advanta Conduit Receivables, Inc. (the
"Sponsor" or "ACRI") and Bear, Stearns & Co. Inc., as representative of the
underwriters named therein (the "Underwriters"), and the Insurance and Indemnity
Agreement dated April 27, 2000 (the "Insurance Agreement" and together with the
Underwriting Agreement, the "Designated Agreements") among the Sponsor, Advanta
Mortgage Corp. USA, Advanta Revolving Home Equity Loan Trust 2000-A and Ambac
Assurance Corporation (the "Insurer"), ACRI has undertaken certain financial
obligations with respect to the indemnification of the Underwriters and of the
Insurer with respect to the Registration Statement, the Prospectus and the
Prospectus Supplement described in the Designated Agreements. Any financial
obligations of ACRI under the Designated Agreements, whether or not specifically
enumerated in this paragraph, are hereinafter referred to as the "Joint and
Several Obligations"; provided, however, that "Joint and Several Obligations"
shall mean only the financial obligations of ACRI under the Designated
Agreements (including the payment of money damages for a breach of any of ACRI's
obligations under the Designated Agreements, whether financial or otherwise) but
shall not include any obligations not relating to the payment of money.
As a condition of their respective executions of the Underwriting
Agreement and of the Insurance Agreement, the Underwriters and the Insurer have
required the undersigned, Advanta Mortgage Holding Company ("AMHC"), the
indirect parent
B-1
<PAGE> 32
corporation of ACRI, to acknowledge its joint-and-several liability with ACRI
for the payment of the Joint and Several Obligations under the Designated
Agreements.
Now, therefore, the Underwriter, the Insurer and AMHC do hereby agree
that:
(i) AMHC hereby agrees to be absolutely and unconditionally
jointly and severally liable with ACRI to the Underwriters for the
payment of the Joint and Several Obligations under the Underwriting
Agreement.
(ii) AHMC hereby agrees to be absolutely and unconditionally
and jointly and severally liable with ACRI to the Insurer for
payment of the Joint and Several Obligations under the Insurance
Agreement.
(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 ACRI or another affiliate of AMHC.
Capitalized terms used herein and not defined herein shall have their
respective meanings set forth in the Designated Agreements.
This letter and the respective obligations and rights hereunder and
thereunder shall not be delegated or assigned by you without the prior written
consent of the Insurer. This letter may not be amended or otherwise modified
except pursuant to a writing signed by each of the parties hereto. This letter
may be executed by the signatories hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute one and the
same letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS
THEREOF). 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.
B-2
<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
B-3
<PAGE> 1
-------------------------------------------------------------------
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A
Advanta Revolving Home Equity Loan Asset Backed Notes, Series 2000-A,
--------------
INDENTURE
Dated as of April 1, 2000
--------------
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
-------------------------------------------------------------------
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions and Incorporation by Reference ......................................................... 2
SECTION 1.1 Definitions .................................................... 2
SECTION 1.2 Incorporation by Reference of the Trust Indenture Act .......... 2
SECTION 1.3 Rules of Construction .......................................... 2
SECTION 1.4 Action by or Consent of Noteholders ............................ 3
SECTION 1.5 Conflict with TIA .............................................. 3
ARTICLE II
The Notes .......................................................................................... 3
SECTION 2.1 Form ........................................................... 3
SECTION 2.2 Execution, Authentication and Delivery ......................... 3
SECTION 2.3 Registration; Registration of Transfer and Exchange ............ 4
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes ..................... 5
SECTION 2.5 Persons Deemed Owners .......................................... 6
SECTION 2.6 Payments on Notes; LIBOR Calculation ........................... 6
SECTION 2.7 Cancellation ................................................... 7
SECTION 2.8 Release of Trust Estate ........................................ 7
SECTION 2.9 Book-Entry Notes ............................................... 8
SECTION 2.10 Notices to Clearing Agency ..................................... 8
SECTION 2.11 Definitive Notes ............................................... 9
SECTION 2.12 Surrender of Notes Upon Final Payment .......................... 9
ARTICLE III
Covenants .......................................................................................... 9
SECTION 3.1 Payment of Principal and Interest .............................. 9
SECTION 3.2 Maintenance of Office or Agency ................................ 10
SECTION 3.3 Money for Payments to be Held in Trust ......................... 10
SECTION 3.4 Existence ...................................................... 11
SECTION 3.5 Protection of Trust Estate. .................................... 11
SECTION 3.6 Opinions as to Trust Estate .................................... 12
SECTION 3.7 Performance of Obligations; Servicing of Mortgage Loans ........ 12
. SECTION 3.8 Negative Covenants ............................................. 13
SECTION 3.9 Annual Statement as to Compliance .............................. 14
SECTION 3.10 Trust May Not Consolidate or Transfer Assets ................... 14
SECTION 3.11 No Other Business .............................................. 14
SECTION 3.12 No Borrowing ................................................... 15
SECTION 3.13 Guarantees, Loans, Advances and Other Liabilities .............. 15
SECTION 3.14 Capital Expenditures ........................................... 15
SECTION 3.15 Compliance with Laws ........................................... 15
SECTION 3.16 Restricted Payments ............................................ 15
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 3.17 Notice of Rapid Amortization Events, Events of
Default and Events of Servicing Termination .................. 16
SECTION 3.18 Further Instruments and Acts ................................... 16
SECTION 3.19 Amendments of Sale and Servicing Agreement and Trust Agreement . 16
SECTION 3.20 Income Tax Characterization .................................... 16
ARTICLE IV
Satisfaction and Discharge ......................................................................... 16
SECTION 4.1 Satisfaction and Discharge of Indenture ........................ 16
SECTION 4.2 Application of Trust Money ..................................... 18
SECTION 4.3 Repayment of Monies Held by Note Paying Agent .................. 18
ARTICLE V
Rapid Amortization Events and Events of Default .................................................... 18
SECTION 5.1 Rapid Amortization Events ...................................... 18
SECTION 5.2 Consequences of Rapid Amortization Event ....................... 19
SECTION 5.3 [Reserved] ..................................................... 20
SECTION 5.4 Events of Default .............................................. 20
SECTION 5.5 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee .............................. 21
SECTION 5.6 Remedies for Event of Default .................................. 21
SECTION 5.7 Indenture Trustee May File Proofs of Claim ..................... 22
SECTION 5.8 Indenture Trustee May Enforce Claims Without
Possession of Notes ........................................... 23
SECTION 5.9 Application of Money Collected ................................. 23
SECTION 5.10 Limitation of Suits ............................................ 24
SECTION 5.11 Unconditional Rights of Noteholders To Receive
Principal and Interest ........................................ 24
SECTION 5.12 Restoration of Rights and Remedies ............................. 25
SECTION 5.13 Rights and Remedies Cumulative ................................. 25
SECTION 5.14 Delay or Omission Not a Waiver ................................. 25
SECTION 5.15 Control by Noteholders ......................................... 25
SECTION 5.16 Undertaking for Costs .......................................... 26
SECTION 5.17 Waiver of Stay or Extension Laws ............................... 26
SECTION 5.18 Action on Notes ................................................ 26
SECTION 5.19 Performance and Enforcement of Certain Obligations ............. 26
SECTION 5.20 Subrogation .................................................... 27
SECTION 5.21 Preference Claims .............................................. 27
ARTICLE VI
The Indenture Trustee .............................................................................. 28
SECTION 6.1 Duties of Indenture Trustee .................................... 28
SECTION 6.2 Rights of Indenture Trustee .................................... 30
</TABLE>
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SECTION 6.3 Individual Rights of Indenture Trustee ......................... 31
SECTION 6.4 Indenture Trustee's Disclaimer ................................. 31
SECTION 6.5 Notice of Defaults ............................................. 31
SECTION 6.6 Reports by Indenture Trustee to Noteholders .................... 31
SECTION 6.7 Compensation and Indemnity ..................................... 31
SECTION 6.8 Replacement of Indenture Trustee ............................... 32
SECTION 6.9 Successor Indenture Trustee by Merger .......................... 33
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee ............................................. 34
SECTION 6.11 Eligibility: Disqualification .................................. 35
SECTION 6.12 Preferential Collection of Claims Against Trust ................ 35
SECTION 6.13 Appointment and Powers ......................................... 35
SECTION 6.14 Performance of Duties .......................................... 36
SECTION 6.15 Limitation on Liability ........................................ 36
SECTION 6.16 Reliance Upon Documents ........................................ 36
SECTION 6.17 Representations and Warranties of the Indenture Trustee ........ 36
SECTION 6.18 Waiver of Setoffs .............................................. 37
SECTION 6.20 Trustee May Enforce Claims Without Possession of Notes ......... 37
SECTION 6.21 Suits for Enforcement .......................................... 38
SECTION 6.22 Mortgagor Claims ............................................... 38
ARTICLE VII
Noteholders' Lists and Reports ..................................................................... 39
SECTION 7.1 Trust To Furnish To Indenture Trustee Names and
Addresses of Noteholders ..................................... 39
SECTION 7.2 Preservation of Information; Communications to Noteholders ..... 39
SECTION 7.3 Reports by Trust ............................................... 39
SECTION 7.4 Reports by Indenture Trustee ................................... 40
ARTICLE VIII
Payments and Statements to Noteholders and Certificateholders;
Accounts, Disbursements and Releases ............................................................... 40
SECTION 8.1 Collection of Money ............................................ 40
SECTION 8.2 Release of Trust Estate ........................................ 40
SECTION 8.3 Establishment of Accounts ...................................... 41
SECTION 8.4 The Payments Under the Policy .................................. 41
SECTION 8.5 Pre-Funding Account and Capitalized Interest Account ........... 42
SECTION 8.6 Flow of Funds; Allocation of Realized Loss Amounts ............. 42
SECTION 8.7 Investment of Accounts ......................................... 44
SECTION 8.8 Eligible Investments ........................................... 45
SECTION 8.9 Reports by Indenture Trustee ................................... 46
SECTION 8.10 Additional Reports by Indenture Trustee ........................ 48
SECTION 8.11 Opinion of Counsel ............................................. 48
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ARTICLE IX
Supplemental Indentures ............................................................................ 49
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders ......... 49
SECTION 9.2 Supplemental Indentures with Consent of Noteholders ............ 50
SECTION 9.3 Execution of Supplemental Indentures ........................... 51
SECTION 9.4 Effect of Supplemental Indenture ............................... 52
SECTION 9.5 Conformity With Trust Indenture Act ............................ 52
SECTION 9.6 Reference in Notes to Supplemental Indentures .................. 52
ARTICLE X
Redemption of Notes ................................................................................ 52
SECTION 10.1 Redemption ..................................................... 52
SECTION 10.2 Surrender of Notes ............................................. 53
SECTION 10.3 Form of Redemption Notice ...................................... 54
SECTION 10.4 Notes Payable on Redemption Date ............................... 54
ARTICLE XI
Miscellaneous ...................................................................................... 55
SECTION 11.1 Compliance Certificates and Opinions, etc. ..................... 55
SECTION 11.2 Form of Documents Delivered to Indenture Trustee ............... 55
SECTION 11.3 Acts of Noteholders ............................................ 56
SECTION 11.4 Notices, etc. to Indenture Trustee, Trust and Rating Agencies .. 56
SECTION 11.5 Notices to Noteholders; Waiver ................................. 57
SECTION 11.6 Alternate Payment and Notice Provisions ........................ 58
SECTION 11.7 Conflict with Trust Indenture Act .............................. 58
SECTION 11.8 Effect of Headings and Table of Contents ....................... 58
SECTION 11.9 Successors and Assigns ......................................... 58
SECTION 11.10 Separability ................................................ 59
SECTION 11.11 Benefits of Indenture .......................................... 59
SECTION 11.12 Legal Holidays ................................................. 59
SECTION 11.13 Governing Law .................................................. 59
SECTION 11.14 Counterparts ................................................... 59
SECTION 11.15 Recording of Indenture ......................................... 59
SECTION 11.16 Trust Obligation ............................................... 60
SECTION 11.17 No Petition .................................................... 60
SECTION 11.18 Inspection ..................................................... 60
SECTION 11.19 Limitation of Liability ........................................ 61
SECTION 11.20 Rights of the Insurer to Exercise Rights of Noteholders ........ 61
SECTION 11.21 Consent and Direction of Insurer ............................... 61
SECTION 11.22 Rules by Indenture Trustee ..................................... 61
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SCHEDULES AND EXHIBITS
Schedule I - Schedule of Mortgage Loans
Exhibit A - Form of Note
Exhibit B - Form of Indenture Trustee Monthly Report
Annex I - Defined Terms
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INDENTURE dated as of April 1, 2000, between ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 2000-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 2000-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 Trust Estate (as defined below) to the Indenture Trustee for the benefit of
the Noteholders and the Insurer.
Ambac Assurance Corporation (the "Insurer") has issued and delivered
the certificate guaranty insurance policy, dated as of the Closing Date (the
"Policy"), pursuant to which the Insurer guarantees the Insured Amount with
respect to the Notes.
The Trust and the Insurer have executed and delivered the Insurance and
Indemnity Agreement, dated as of April 27, 2000 (as amended from time to time,
the "Insurance Agreement"), among the Insurer, Advanta Mortgage Corp. USA, the
Trust, Advanta Conduit Receivables, Inc. and the Indenture Trustee.
GRANTING CLAUSE
The Trust hereby Grants to the Indenture Trustee at the Closing Date,
for the benefit of the Noteholders and the Insurer, all of the Trust's right,
title and interest in and to the following (collectively, the "Trust Estate"):
(i) certain adjustable rate revolving home equity credit line loans (the
"Mortgage Loans") (including any Additional Balances) made or to be made under
certain Credit Line Agreements and conveyed to the Trust; (ii) all principal and
interest collected in respect of the Mortgage Loans on and after the related
Cut-Off Date; (iii) property that secured a Mortgage Loan to the extent that it
has been acquired by foreclosure or deed in lieu of foreclosure; (iv) all rights
acquired by the Trust under any Mortgage Insurance Policies covering the
Mortgaged Properties; (v) the Policy; (vi) all amounts on deposit from time to
time in the Note Account (excluding investment earnings thereon); (vii) all
amounts on deposit from time to time in the Principal and Interest Account
(excluding any investment earnings thereon); (viii) all rights of the Sponsor
under the Purchase Agreement assigned to the Trust pursuant to the Sale and
Servicing Agreement (including all of the Sponsor's rights and remedies in the
event of certain breaches by the Originators of their respective representations
and warranties under the Purchase Agreement); (ix) all rights of the Trust under
the Sale and Servicing Agreement; (x) all Mortgage Files and other documents
relating to the foregoing; (xi) all amounts on deposit in the Pre-Funding
Account; (xii) all amounts on deposit in the Capitalized Interest Account
(excluding any investment earnings thereon); and (xiii) any and all proceeds of
the foregoing except as otherwise provided herein.
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The foregoing Grant is made in trust to the Indenture Trustee, for the
benefit of the Noteholders and the Insurer. The Indenture Trustee hereby
acknowledges and accepts such Grant under this Indenture in accordance with the
provisions of this Indenture and agrees to perform the duties required of it by
this Indenture to the best of its ability to the end that the interests of such
parties, recognizing the priorities of their respective interests, may be
adequately and effectively protected.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.1 Definitions.
Except as otherwise specified herein, capitalized terms are used in
this Indenture as defined in Annex 1. Defined terms that are used only in one
section or only in another definition may be omitted from the list of defined
terms in Annex 1. Defined terms include, as appropriate, all genders and the
plural as well as the singular.
SECTION 1.2 Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Trust.
All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means "including without limitation;" and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4 Action by or Consent of Noteholders.
Whenever any provision of this Indenture refers to action to be taken,
or consented to, by Noteholders, such provision shall be deemed to refer to the
Noteholder of record as of the Record Date immediately preceding the date on
which such action is to be taken, or consent given, by Noteholders.
SECTION 1.5 Conflict with TIA.
If any provision hereof limits, qualifies or conflicts with a provision
of the TIA that is required under the TIA to be part of and govern this
Indenture, the latter provision shall control and all provisions required by the
TIA are hereby incorporated by reference. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the latter provisions shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
ARTICLE II
The Notes
ARTICLE 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 Notes set forth in Exhibit A, are part of the terms of this Indenture.
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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 shall authenticate and deliver the Notes for
original issue in an aggregate principal amount of $400,000,000.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears attached to such Note
a certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Subject to Section 2.11, the Notes shall
be Book-Entry Notes.
SECTION 2.3 Registration; Registration of Transfer and Exchange.
The Trust shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Trust
shall provide for the registration of Notes and the transfers of Notes. The
Indenture Trustee is hereby initially appointed "Note Registrar" for the purpose
of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Trust shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Trust
as Note Registrar, the Trust will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Noteholders and the principal
amounts and number of such Notes.
Upon surrender for registration or transfer of any Note at the office
or agency of the Trust, to be maintained as provided in Section 3.2, and if the
requirements of Section 8-401(a) of the UCC are met, the Trust shall execute or
cause the Indenture Trustee to authenticate one or more new Notes, in any
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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.
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, the
Indenture Trustee and the Insurer such security or indemnity as may be required
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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.
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 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
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Trustee nor any agent of the Trust, the Insurer or the Indenture Trustee shall
be affected by notice to the contrary.
SECTION 2.6 Payments on Notes; LIBOR Calculation.
(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.
On each Interest Determination Date, the Indenture Trustee shall
determine the London interbank offered rate for one-month U.S. dollar deposits
("LIBOR") for the next Interest Accrual Period as follows:
first, on the basis of offered rates for one month United States dollar
deposits, as this rate appears on Telerate Screen Page 3750, as of 11:00 am
London time;
second, if the rate does not appear on Telerate Screen Page 3750 as of
11:00 am London time, LIBOR shall be the arithmetic mean of the offered
quotations of two or more Reference Banks, rounded to the nearest whole multiple
of 1/16%; and
third, if on the Interest Determination Date fewer than two Reference
Banks provide offered quotations, LIBOR for the Interest Accrual Period shall be
the higher of (x) LIBOR as determined on the previous Interest Determination
Date and (y) the Reserve Interest Rate.
(b) 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.
SECTION 2.7 Cancellation.
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. 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
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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. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Trust shall direct, by an Issuer Order, that they
be destroyed or returned to it; provided that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.8 Release of Trust Estate.
The Indenture Trustee shall, on or after the Termination Date, release
any remaining portion of the Trust Estate from the lien created by this
Indenture and deposit in the Note Account any funds then on deposit in any other
Account. The Indenture Trustee shall release property from the lien created by
this Indenture pursuant to this Section 2.8 only upon receipt by it of an Issuer
Order accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA
Sections 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.1.
SECTION 2.9 Book-Entry Notes.
The Notes, upon original issuance, will be issued in the form of
typewritten Notes representing the Book-Entry Notes, to be delivered to The
Depository Trust Company or its custodian, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Note Owner will receive a Definitive Note representing such Note Owner's
interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Note Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest
on the Notes and the giving of instructions or directions
hereunder) as the sole Noteholder, and shall have no
obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by
law and agreements between such Note Owners and the Clearing
Agency and/or the Clearing Agency Participants. 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;
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(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 in at least a
majority of the Note Balance advise the Indenture Trustee through the Clearing
Agency in writing that the continuation of a book entry system through the
Clearing Agency is no longer in the best interests of the Note Owners, then the
Clearing Agency shall notify all Note Owners and the Indenture Trustee of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Trust shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of the Clearing Agency. None of the Trust, the Note Registrar
or the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the holders of the Definitive Notes as Noteholders.
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SECTION 2.12 Surrender of Notes Upon Final Payment.
(a) 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.
(b) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, upon written notice from
the Master Servicer of the amounts, if any, that the Insurer has paid in respect
of any Notes under the Policy or otherwise which has not been reimbursed to it,
deliver such surrendered Notes to the Insurer to the extent not previously
cancelled or destroyed.
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.
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SECTION 3.3 Money for Payments to be Held in Trust.
The Trust will cause each Note Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee and the Insurer an
instrument in which such Note Paying Agent shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so
agrees), subject to the provisions of this Section, that such Note Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums
to such Persons as herein provided;
(ii) give the Indenture Trustee written notice of any default by
the Trust (or any other obligor upon the Notes) of which it
has actual knowledge in the making of any payment required to
be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Note
Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the
standards required to be met by a Note Paying Agent at the
time of its appointment; and
(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.
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SECTION 3.4 Existence.
Except as otherwise permitted by the provisions of Section 3.10, the
Trust will keep in full effect its existence, rights and franchises as a
business trust under the laws of the State of Delaware (unless it becomes, or
any successor Trust hereunder is or becomes, organized under the laws of any
other state or of the United States of America, in which case the Trust will
keep in full effect its existence, rights and franchises under the laws of such
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Trust Estate, the Notes, and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 Protection of Trust Estate.
The Trust intends the security interest granted pursuant to this
Indenture in favor of the Indenture Trustee to be prior to all other liens in
respect of the Trust Estate, and the Trust shall take all actions necessary to
obtain and maintain, in favor of the Indenture Trustee, for the benefit of the
Noteholders and the Insurer, a first lien on and a first priority, perfected
security interest in the Trust Estate. The Trust will from time to time prepare
(or shall cause to be prepared), execute and deliver all such supplements and
amendments hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments, and will take such other
action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Trustee for the
benefit of the Noteholders and the Insurer created by this
Indenture or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Trust Estate;
(v) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee in such Trust Estate against the
claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Trust hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section;
provided that, such designation shall not be deemed to create a duty in the
Indenture Trustee 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.
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SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, the Trust shall furnish to the
Indenture Trustee and the Insurer an Opinion of Counsel addressed to the Insurer
stating that, in the opinion of such counsel, such actions have been taken with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the first priority lien and security
interest in favor of the Indenture Trustee, for the benefit of the Noteholders
and the Insurer, created by this Indenture.
(b) Within 90 days after the beginning of each calendar year,
beginning with the year 2001, the Trust shall furnish to the Indenture Trustee
and the Insurer, an Opinion of Counsel addressed to each either stating that, in
the opinion of such counsel, such actions have been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements as
are necessary to maintain the lien and security interest created by this
Indenture and reciting the details of such action or stating that in the opinion
of such counsel, no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture.
SECTION 3.7 Performance of Obligations; Servicing of Mortgage
Loans.
(a) The Trust will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that 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
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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 holding at least a majority of
the Note Balance or the Indenture Trustee (with the prior written consent of the
Insurer)
(d) If an Authorized Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicing Termination under
the Sale and Servicing Agreement or of an Event of Servicing Termination under
the Insurance Agreement, the Trust shall promptly notify the Indenture Trustee,
the Insurer and the Rating Agencies thereof in accordance with Section 11.4, and
shall specify in such notice the action, if any, the Trust is taking in respect
of such default. If an Event of Servicing Termination or an Insurance Agreement
Event of Servicing Termination shall arise from the failure of the Master
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement or the Insurance Agreement with respect to the Mortgage
Loans, the Trust shall take all reasonable steps available to it to remedy (or
cause to be remedied) such failure.
(e) The Trust agrees that it will not waive timely performance
or observance by the Master Servicer or the Sponsor of their respective duties
under the Operative Documents without the prior written consent of the Insurer.
SECTION 3.8 Negative Covenants.
So long as any Notes are Outstanding, the Trust shall not:
(i) except as expressly permitted by this Indenture or the
Operative Documents, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Trust,
including those included in the Trust Estate, without the
prior written consent of the Insurer (provided, that if an
Insurer Default has occurred and is continuing, the
Noteholders holding 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
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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, 2000), and otherwise in compliance with the
requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as to
the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Trust during such year and
of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Trust has complied with all conditions and
covenants under this Indenture throughout such year, or, if
there has been a default in the compliance of any such
condition or covenant, specifying each such default known to
such Authorized Officer and the nature and status thereof.
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
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the Notes shall be used exclusively to fund the Trust's purchase of the Trust
Estate and to pay the Trust's organizational, transactional and start-up
expenses.
SECTION 3.13 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Trust shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become continently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.14 Capital Expenditures.
The Trust shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or personalty).
SECTION 3.15 Compliance with Laws.
The Trust shall comply with the requirements of all applicable laws,
the non-compliance with which would, individually or in the aggregate,
materially and adversely affect the ability of the Trust to perform its
obligations under the Notes, this Indenture or any Operative Document.
SECTION 3.16 Restricted Payments.
The Trust shall not, directly or indirectly, (i) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any owner
of a beneficial interest in the Trust or otherwise with respect to any ownership
or equity interest or security in or of the Trust or to the Master Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such ownership
or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Trust may make, or
cause to be made, distributions to the Master Servicer, the Owner Trustee, the
Indenture Trustee and the Certificateholders as permitted by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement,
this Indenture, or Trust Agreement. The Trust will not, directly or indirectly,
make payments to or distributions from the Note Account except in accordance
with this Indenture and the other Operative Documents.
SECTION 3.17 Notice of 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
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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 7.13 of the Sale
and Servicing Agreement or Section 11.1 of the Trust Agreement, if the effect of
such amendment is to eliminate the requirements under such agreement that the
Indenture Trustee, the Insurer or the Noteholders consent to amendments under
such agreement.
SECTION 3.20 Income Tax Characterization.
For purposes of federal income, state and local income and franchise
and any other income taxes, the Trust will treat the Notes as indebtedness and
hereby instructs the Indenture Trustee to treat the Notes as indebtedness for
federal and state tax reporting purposes.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture.
Upon receipt by the Indenture Trustee of all amounts to satisfy all
payment obligations with respect to the Notes, this Indenture shall cease to be
of further effect with respect to the Notes except as to (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13 and 3.20, (v) the rights, obligations and immunities of the
Indenture Trustee hereunder (including the rights of the Indenture Trustee under
Section 6.7 and the obligations of the Indenture Trustee under Section 4.2) and
(vi) the rights of Noteholders and the Insurer as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on written demand in the form of a
Issuer Order and at the expense of the Trust, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when 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
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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 (2)(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 and an Opinion of Counsel, and, if
required by the TIA or the Insurer, an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements of
Section 11.1(a) and each stating that all conditions precedent herein provided
relating to the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding anything herein to the contrary, in the event that the
principal and/or interest due on the Notes or any other amounts payable by the
Insurer pursuant to the terms of the Policy shall be paid by the Insurer
pursuant to the Policy, the Notes shall remain 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.
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SECTION 4.2 Application of Trust Money.
All monies deposited with the Indenture Trustee pursuant to Section 4.1
hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Note Paying Agent, as the Indenture Trustee may determine, to the
Noteholders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Indenture Trustee.
SECTION 4.3 Repayment of Monies Held by Note Paying Agent.
In connection with the satisfaction and discharge of this Indenture
with respect to the Notes, all monies then held by any Note Paying Agent other
than the Indenture Trustee under the provisions of this Indenture with respect
to such Notes shall immediately be paid to the Indenture Trustee to be held and
applied according to Section 3.3 and thereupon such Note Paying Agent shall be
released from all further liability with respect to such monies.
ARTICLE V
Rapid Amortization Events and Events of Default
SECTION 5.1 Rapid Amortization Events.
The following shall constitute "Rapid Amortization Events":
(a) failure on the part of the Master Servicer or Sponsor (i)
to make a payment or deposit required under the Sale and Servicing Agreement
within five Business Days after the date such payment or deposit is required to
be made or (ii) to observe or perform in any material respect any other
covenants or agreements of the Sponsor set forth in the Sale and Servicing
Agreement, which failure continues unremedied for a period of 60 days after
written notice;
(b) any representation or warranty made by the Sponsor in the
Sale and Servicing Agreement proves to have been incorrect in any material
respect when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result of which the interests of
the Noteholders or the Insurer are materially and adversely affected: provided,
however, that a Rapid Amortization Event shall not be deemed to occur if such
representation or warranty relates to a Mortgage Loan and the Sponsor has
reacquired or made a substitution for such Mortgage Loan during such period (or
within an additional 60 days with the prior written consent of the Insurer) in
accordance with the provisions of the Sale and Servicing Agreement;
(c) either (1) the entry of a decree or order for relief by a
court having jurisdiction in respect of one of the Originators or the Sponsor in
an involuntary case under the federal 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
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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 the property of any of
them or the making by any of the Originators or the Sponsor of an assignment for
the benefit of creditors or the failure by any of the Originators or the Sponsor
generally to pay its debts as such debts become due or the taking of corporate
action by the Originators or the Sponsor in furtherance of any of the foregoing;
(d) the Trust becomes subject to regulation by the Securities
and Exchange Commission as an investment company within the meaning of the
Investment Company Act of 1940, as amended;
(e) the occurrence of an Event of Servicing Termination;
(f) a draw is made under the Policy; and
(g) a default in the payment of any interest when the same
becomes due and payable and the continuance of such default for a period of five
days or a default in the payment in full of the Note Balance on the Final
Scheduled Payment Date.
In the case of any event described (i) in clause (a) through (f), a
Rapid Amortization Event will be deemed to have occurred only if, after any
applicable grace period described herein or in the Sale and Servicing Agreement
either (A) the Insurer or (B) the Indenture Trustee or Noteholders holding at
least 51% of the Note Balance, in each case, with the prior written consent of
the Insurer, by written notice to the Sponsor, the Originators, the Rating
Agencies, the Master Servicer, the Indenture Trustee (if given by a party other
than the Indenture Trustee) and the Insurer (if given by a party other than 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 clause (g), the Indenture Trustee or Noteholders holding at
least 51% of the Note Balance may by such written notice declare that a Rapid
Amortization Event has occurred as of the date of such notice. Within 15 days,
the Indenture Trustee will publish a notice of the occurrence of such event.
SECTION 5.2 Consequences of Rapid Amortization Event.
If a Rapid Amortization Event shall have occurred and be continuing,
(a) the Rapid Amortization Period shall immediately commence and the Noteholders
shall be entitled on each Payment Date thereafter to an amount equal to the
Maximum Principal Payment less the Overcollateralization Reduction Amount
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and (b) if the Rapid Amortization Event is one described in 5.1(c) above, on the
day of any such filing or appointment no further Additional Balances will be
transferred to the Trust, and such Originator will promptly give notice to the
Indenture Trustee and the Insurer of any such filing or appointment.
SECTION 5.3 [Reserved]
SECTION 5.4 Events of Default.
(a) The following occurrences shall constitute an "Event
of Default":
(i) a default in the payment of any interest when the
same becomes due and payable and the continuance of such default for a
period of five days or a default in the payment in full of the Note
Balance on the Final Scheduled Payment Date;
(ii) failure on the part of the Trust to perform in
any material respect any covenant or agreement under the Indenture
(other than a covenant in Section 5.4(a)(i) above) or the breach of a
representation or warranty of the Trust, which continues for a period
of thirty days after notice thereof is given; and
(iii) the entry of a decree or order for relief by a
court having jurisdiction in respect of the Trust, in an involuntary
case under the federal bankruptcy laws, as now or hereafter in effect,
or any other present or future federal or state bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust
or of any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days, or
(b) If an Event of Default shall have occurred and be
continuing, with the prior written consent of the Insurer, the Indenture Trustee
may, and at the direction of the Insurer or of Noteholders holding 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, the Notes, in an amount equal to the Note Balance, together
with accrued and unpaid interest thereon to the date of such acceleration, shall
become immediately due and payable.
(c) At any time after such a declaration of acceleration of
maturity of the Notes has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter
provided, the Insurer or the Noteholders holding 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:
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(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
may, at the written direction of the Insurer, 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 reorganization, arrangement,
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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 V or otherwise and any other monies that may then be
held or thereafter received by the Indenture Trustee as security for the Notes
shall be applied in the following order, at the date or dates fixed by the
Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, the Notes, upon presentation and
surrender thereof:
(i) to the Indenture Trustee and the Owner Trustee,
any unpaid Indenture Trustee Fee and unpaid Owner Trustee Fee,
respectively, then due and any other amounts payable and due to the
Indenture Trustee and the Owner Trustee under this Indenture and the
Trust Agreement, including any costs or expenses incurred by it in
connection with the enforcement of the remedies provided for in this
Article;
(ii) to the Insurer, any unpaid Premium Amount, then
due and payable pursuant to the Insurance Agreement;
(iii) to the Master Servicer, any amounts required to
pay the Master Servicer for any unpaid Servicing Fees then due and any
other amounts payable and due to the Master Servicer;
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(iv) to the payment of the Interest Distribution
Amount and Note Interest Shortfall then due and unpaid upon the Note
Balance through the day preceding the date upon which such payment is
made;
(v) to the Insurer, all amounts due pursuant to the
Insurance Agreement;
(vi) to the payment of the Note Balance then due and
unpaid;
(vii) to the Noteholders, the Net Funds Cap
Carry-Forward Amount;
(viii) to the Master Servicer, any unreimbursed
Servicing Advances, including Nonrecoverable Advances; and
(ix) to the Certificateholders, any amount remaining
on deposit in the Note Account.
SECTION 5.10 Limitation of Suits.
No Noteholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(i) the Noteholders holding 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 holding 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.
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In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
holding 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.
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. The obligation to pay the principal of and
interest on the Notes is solely that of the Trust, the payment of which shall be
made solely from the Trust Estate, and none of the Owner Trustee, the
Originators, the Sponsor or the Master Servicer shall have any liability with
respect thereto.
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.
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SECTION 5.15 Control by Noteholders.
If the Indenture Trustee is the Controlling Party, the Noteholders
holding 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;
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.
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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 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 holding 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
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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 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
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Master Servicer, it shall use the same degree of care and skill as is required
of the Master Servicer under the Sale and Servicing Agreement.
(b) Except during the continuance of an Event of Default:
(i) The Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform on their face to the requirements
of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph 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 holding not less than 51% of
the Note Balance.
(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.
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(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.
(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
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shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture, at the request, order or direction of any of the Noteholders
or the Controlling Party pursuant to the provisions of this Indenture, unless
such Noteholders or the Controlling Party shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; provided, however, that the
Indenture Trustee shall, upon the occurrence of an Event of Default, Insurance
Agreement Event of Servicing Termination or Event of Servicing Termination as
defined in the Sale and Servicing Agreement (that has not been cured or waived),
exercise the rights and powers vested in it by this Indenture or the Sale and
Servicing Agreement with reasonable care and skill.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Insurer or by the Noteholders holding 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.
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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 a notice of such event to each Noteholder and to the Insurer within 10 days
after the Indenture Trustee has knowledge or notice of the occurrence of such
event. 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(b)(i) and subject to Section 6.18 herein, the
Trust shall, or shall cause the Master Servicer to, pay to the Indenture
Trustee, on each Payment Date, reasonable compensation for its services rendered
hereunder. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. Pursuant to Section
8.6(b)(xii) herein, the Trust shall cause the Master Servicer to reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it in accordance with any provision of this Indenture (including the reasonable
compensation and expenses and disbursements of any of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or willful misconduct. The Indenture Trustee and any director,
officer, employee or agent of the Indenture Trustee shall be indemnified by the
Master Servicer pursuant to Section 4.4(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,
the Insurer and the Master Servicer by written notice.
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;
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(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, 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 Sponsor,
the Master Servicer and the Insurer by written instrument. One executed original
of such instrument of appointment and acceptance of appointment shall be
delivered to the resigning or removed Indenture Trustee, the Master Servicer,
the successor Indenture Trustee and the Insurer. 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 Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Trust or the Noteholders holding a majority of the Note Balance may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
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If the Indenture Trustee fails to comply with this Section 6.8 or
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.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Master Servicer's indemnity obligations under Section 6.7
shall continue for the benefit of the predecessor Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Indenture
Trustee, provided that the resulting, surviving or transferee corporation
satisfies the eligibility requirements of Section 6.11. Prior to any such
consolidation, merger or conversion, the Indenture Trustee shall provide written
notice to the Trust, the Insurer, the Master Servicer and the Sponsor of such
event and of its effective date.
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 (unless required by law),
and the Master Servicer acting jointly, except that following the occurrence of
an Event of Servicing Termination, the Indenture Trustee acting alone, 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.
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(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder, including
acts or omissions of predecessor or successor trustees; and
(iii) the Indenture Trustee and the Master Servicer acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee except that following the occurrence of an Event
of Servicing Termination, the Indenture Trustee acting alone may accept
the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
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.
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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 and the Sponsor upon request. The Indenture
Trustee shall comply with TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Trust are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Trust.
The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
SECTION 6.13 Appointment and Powers.
Subject to the terms and conditions hereof, each of the Noteholders and
the Insurer hereby appoints Bankers Trust Company of California, N.A. as the
Indenture Trustee with respect to the Trust Estate, and Bankers Trust Company of
California, N.A. hereby accepts such appointment and agrees to act as Indenture
Trustee with respect to the Trust Estate for the Noteholders and the Insurer, to
maintain custody and possession of such Trust Estate (except as otherwise
provided hereunder) and to perform the other duties of the Indenture Trustee in
accordance with the provisions of this Indenture and the other Operative
Documents. Each Noteholder and the Insurer hereby authorizes the Indenture
Trustee to take such action on its behalf, and to exercise such rights,
remedies, powers and privileges hereunder, as the Controlling Party may direct
and as are specifically authorized to be exercised by the Indenture Trustee by
the terms hereof, together with such actions, rights, remedies, powers and
privileges as are reasonably incidental thereto. The Indenture Trustee shall act
upon and in compliance with the written instructions of the Controlling Party
delivered pursuant to this Indenture promptly following receipt of such written
instructions; provided that the Indenture Trustee shall not act in accordance
with any instructions (i) which are not authorized by, or in violation of the
provisions of, this Indenture or (ii) for which the Indenture Trustee has not
received reasonable indemnity. Receipt of such instructions shall not be a
condition to the exercise by the Indenture Trustee of its express duties
hereunder, except where this Indenture provides that the Indenture Trustee is
permitted to act only following and in accordance with such instructions.
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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).
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.
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(d) Valid and Binding Indenture. The Indenture Trustee has duly
executed and delivered this Indenture and each other Operative Document to which
it is a party, and each of this Indenture and each such other Operative Document
constitutes the legal, valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms, except
as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 6.18 Waiver of Setoffs.
The Indenture Trustee hereby expressly waives any and all rights of
setoff that the Indenture Trustee may otherwise at any time have under
applicable law with respect to any Account and agrees that amounts in the
Accounts shall at all times be held and applied solely in accordance with the
provisions hereof.
SECTION 6.19 Control by the Controlling Party.
The Indenture Trustee shall comply with notices and instructions given
by the Trust or the Noteholders only if accompanied by the written consent of
the Controlling Party.
SECTION 6.20 Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the 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 its
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.
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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 Noteholders, 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 the Noteholders 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 the Noteholders.
(e) The Indenture Trustee will cooperate with and assist the
Master Servicer, the Insurer, the Sponsor, or the Noteholders in their defense
of legal actions by Mortgagors to recover affirmative claims if such cooperation
and assistance is not contrary to the interests of the Indenture Trustee as a
party to such legal actions and if the Indenture Trustee is satisfactorily
indemnified for all liability, costs and expenses arising therefrom.
(f) The Trust hereby agrees to cause the Master Servicer to
indemnify, hold harmless and defend the Indenture Trustee from and against any
and all liability, loss, costs and expenses of the Indenture Trustee resulting
from any affirmative claims for recovery asserted or collected by Mortgagors
under the Mortgage Loans and such amounts shall not be a responsibility of the
Trust.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 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
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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) send to the Indenture Trustee, within 15 days after
the Trust is required to file the same with the Commission, copies of
the annual reports and copies of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Trust may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) send to 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.
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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, 2000, the Indenture Trustee shall mail to each
Noteholder as required by TIA Section 313(c) a brief report dated as of such
date that complies with TIA Section 313(a). The Indenture Trustee also shall
comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Trust shall notify the Indenture Trustee
if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Payments and Statements to Noteholders and Certificateholders;
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money.
Except as otherwise expressly provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture and the Sale and Servicing Agreement. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture
and the Sale and Servicing Agreement. Except as otherwise expressly provided in
this Indenture or in the Sale and Servicing Agreement, if any default occurs in
the making of any payment or performance under any agreement or instrument that
is part of the Trust Estate, the Indenture Trustee may, with the prior written
consent of the Insurer, and shall, at the direction of the Insurer, take such
action (after the applicable cure period) as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
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
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Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.2(b) only upon receipt of an Issuer Order accompanied
by an Officer's Certificate, an Opinion of Counsel and, if required by the TIA,
Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1, and the prior
written consent of the Insurer.
(c) The foregoing notwithstanding, the Indenture Trustee shall
release Mortgage Loans from the lien of this Indenture pursuant to the Sale and
Servicing Agreement.
SECTION 8.3 Establishment of Accounts.
The Sponsor shall cause to be established at a Designated Depository
Institution, and the Indenture Trustee shall maintain, the Note Account, the
Pre-Funding Account and the Capitalized Interest Account, each to be held by the
Indenture Trustee in the name of the Trust for the benefit of the Noteholders
and the Insurer, as their interests may appear.
SECTION 8.4 The Payments Under the Policy.
(a) On each Determination Date the Indenture Trustee shall
calculate the Deficiency Amount, if any, with respect to the immediately
following Payment Date.
(b) If the Indenture Trustee determines pursuant to paragraph (a)
above that a Deficiency Amount would exist, the Indenture Trustee shall complete
a Notice in the form of Exhibit A to the Policy and submit such notice to the
Insurer no later than 12:00 noon New York City time on the second Business Day
preceding such Payment Date as a claim for a payment in an amount equal to the
Deficiency Amount.
(c) Upon receipt of payments made pursuant to the Policy, but in
no event later than the Payment Date, so long as the Insurer receives adequate
notice, from the Insurer on behalf of the Noteholders, the Indenture Trustee
shall deposit such payments in the Note Account and shall distribute such
payments, or the proceeds thereof, in accordance with Section 8.6(c) hereof to
the Noteholders.
(d) The Indenture Trustee shall (i) receive payments made
pursuant to the Policy as attorney-in-fact for each Noteholder and (ii) disburse
such Insured Payment to the Noteholders as set forth in Section 8.6(c) hereof.
The Insurer shall be entitled to receive the Reimbursement Amount pursuant to
Section 8.6(c)(viii) hereof with respect to each Insured Payment made by the
Insurer. The Indenture Trustee hereby agrees on behalf of each Noteholder and
the Trust for the benefit of the Insurer that it recognizes that to the extent
the Insurer makes payments pursuant to the Policy, either directly or indirectly
(as by paying through the Indenture Trustee), to the Noteholders, the Insurer
will be subrogated to the Noteholders and will be entitled to receive such
Reimbursement Amount.
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SECTION 8.5 Pre-Funding Account and Capitalized Interest Account.
(a) On the Closing Date, the Indenture Trustee will deposit, on
behalf of the Noteholders, the Pre-Funded Amount in the Pre-Funding Account and
the Capitalized Interest Amount in the Capitalized Interest Account from the
proceeds of the sale of the Notes.
(b) On any Subsequent Transfer Date, the Sponsor shall instruct
the Indenture Trustee in writing pursuant to the Subsequent Transfer Agreement
to withdraw from the Pre-Funding Account an amount equal to 94.8% of the
aggregate Principal Balances of the Subsequent Mortgage Loans transferred to the
Trust on such Subsequent Transfer Date and pay such amount to or upon the order
of the Sponsor upon satisfaction of the conditions set forth in Section 2.6 of
the Sale and Servicing Agreement.
(c) On each Payment Date during the Pre-Funding Period, the
Indenture Trustee shall transfer the Pre-Funding Earnings and the Capitalized
Interest Requirement, if any, for such Payment Date from the Pre-Funding Account
or Capitalized Interest Account, respectively, to the Note Account.
(d) On the Payment Date immediately following the end of the
Pre-Funding Period, the Indenture Trustee shall withdraw any amounts remaining
on deposit in the Pre-Funding Account and any Pre-Funding Earnings earned to
such Payment Date and shall deposit such amounts in the Note Account.
(e) On the Payment Date immediately following the end of the
Pre-Funding Period, any amounts remaining in the Capitalized Interest Account
(after taking into account the transfer on such Payment Date described in clause
(c) above) shall be paid to or upon the order of the Sponsor, and the
Capitalized Interest Account shall be closed.
SECTION 8.6 Flow of Funds; Allocation of Realized Loss Amounts.
(a) The Indenture Trustee shall deposit into the Note Account,
without duplication, immediately upon receipt, the Available Funds for the
related Payment Date.
(b) On each Payment Date, the Indenture Trustee shall, from
Available 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 only to payments specified under clauses (iii) (iv)
and (vii) below and, in the case of the Final Scheduled Payment Date, clause (v)
below:
(i) to the Indenture Trustee, the Indenture Trustee Fee
then due and to the Owner Trustee, the Owner Trustee Fee then
due;
(ii) to the Insurer, the Premium Amount then due;
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(iii) to the Noteholders, the Interest Distribution
Amount;
(iv) to the Noteholders, the Note Interest Shortfall, if
any;
(v) to the Noteholders, the Scheduled Principal
Distribution Amount for such Payment Date;
(vi) on the Payment Date immediately following the end
of the Pre- Funding Period, to the Noteholders, as a
distribution of principal, any Pre-Funded Amount remaining in
the Pre-Funding Account;
(vii) to the Noteholders, as a distribution of
principal, the Overcollateralization Deficit for such Payment
Date;
(viii) to the Insurer, the Reimbursement Amount, if any,
then due to it;
(ix) to the Noteholders, the Accelerated Principal
Payment for such Payment Date;
(x) to the Noteholders, the amount of any Net Funds Cap
Carry-Forward Amount then due;
(xi) to the Master Servicer, reimbursement for Servicing
Advances to the extent not previously reimbursed and
reimbursement for Servicing Advances which have been deemed
Nonrecoverable Advances;
(xii) to the Indenture Trustee and the Owner Trustee,
for the reimbursement of expenses of the Indenture Trustee and
the Owner Trustee not reimbursed pursuant to Section 8.6(b)(i)
above which expenses were incurred in connection with its duties
and obligations hereunder; and
(xiii) to the Certificateholders, any Available Funds
remaining on deposit in the Note Account.
(c) On each 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.
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SECTION 8.7 Investment of Accounts.
(a) So long as no event described in Section 5.1(a) of the Sale
and Servicing Agreement shall have occurred and be continuing, and consistent
with any requirements of the Code, all or a portion of the Accounts (excluding
investment earnings thereon) held by the Indenture Trustee shall be invested and
reinvested by the Indenture Trustee in the name of the Indenture Trustee for the
benefit of the Noteholders and the Insurer as directed in writing by the Master
Servicer, in one or more Eligible Investments bearing interest or sold at a
discount. During the continuance of an event described in Section 5.1(a) of the
Sale and Servicing Agreement and following any removal of the Master Servicer,
the Insurer may direct such investments. No investment in any Account shall
mature later than the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account
held by the Indenture Trustee and sufficient uninvested funds are not available
to make such disbursement, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account. No investments will be liquidated prior to maturity unless the proceeds
thereof are needed for disbursement.
(c) The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any loss on any Eligible Investment included therein (except in
its capacity as obligor on any such investment) but shall be liable for loss of
investment earnings if the funds held in the Accounts are not invested in
accordance with this Indenture.
(d) The Indenture Trustee shall hold funds in the Accounts held
by the Indenture Trustee in Eligible Investments specified in clause (i) of
Section 8.8 upon the occurrence of either of the following events:
(i) the Master Servicer or the Insurer shall have failed
to give investment directions to the Indenture Trustee; or
(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 and upon notification from the Indenture Trustee.
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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) Federal Home Loan Banks' consolidated debt obligations.
(d) Federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements (having original
maturities of not more than 365 days) of any bank, the short-term debt
obligations of which have been rated "A-1+" or better by S&P and "P-1" by
Moody's.
(e) Farmers Home Administration certificates of beneficial
interest.
(f) General Services Administration participation certificates.
(g) Maritime Administration guaranteed Title XI Financings.
(h) Small Business Administration guaranteed participation
certificates and guaranteed pool certificates.
(i) U.S. Department of Housing and Urban Development local
authority bonds.
(j) Washington Metro Area Transit Authority guaranteed transit
bonds.
(k) Farm Credit System consolidated system wide bonds and notes.
(l) FNMA debt obligations.
(m) Student Loan Marketing Association debt obligations.
(n) Financing Corp. debt obligations.
(o) Resolution Funding Corp. debt obligations.
(p) 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.
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(q) Investments in money market funds rated "AAAm" or "AAAm-G" by
S&P and "AAA" or "P-1" by Moody's.
(r) Other investments approved in writing by the Insurer and
acceptable to Moody's and S&P as evidenced by a letter from each Rating Agency.
Provided that no instrument described above is permitted: (1) 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; (2) to 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; or (3) to have an "r" highlighter affixed to its
rating.
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 in substantially the form set forth as Exhibit B
hereto, as such form may be revised by the Indenture Trustee and the Master
Servicer from time to time, but in every case setting forth, among other things,
the following information:
(i) the total amount of the distribution with respect to
the Notes and the Certificates;
(ii) the amount of such distributions allocable to
principal;
(iii) the amount of such distributions allocable to
interest;
(iv) the amount of any Note Interest Shortfall in such
distribution;
(v) the amount of any Insured Payment included in the
amounts distributed on such Payment Date;
(vi) information furnished by the Sponsor pursuant to
Section 6049(d)(7)(C) of the Code and the regulations
promulgated thereunder to assist the Noteholders in computing
their market discount;
(vii) the total of any Substitution Amounts and any Loan
Reacquisition Price amounts included in such distribution;
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(viii) the amounts, if any, of any Realized Losses for the related
Remittance Period;
(ix) the Servicing Fee for the related Remittance Period;
(x) the Note Balance and the Pool Factor, each after giving effect to
such distribution;
(xi) the Pool Principal Balance as of the end of the preceding
Remittance Period;
(xii) the Note Interest Rate applicable to the distribution on the
following Payment Date;
(xiii) the number and principal balances of any Mortgage Loans
reacquired by the Sponsor pursuant to Sections 2.2(b), 2.5, 3.3(c) and 3.4 of
the Sale and Servicing Agreement;
(xiv) the Overcollateralization Deficit;
(xv) the amount of any Net Funds Cap Carry-Forward Amount;
(xvi) the amount of any Overcollateralization Reduction Amount;
(xvii) the current level of the Overcollateralization Amount;
(xviii)the total number, aggregate Principal Balance and the percentage
(based on the Pool Principal Balance) of all Mortgage Loans, other than Mortgage
Loans relating to Mortgagors in bankruptcy proceedings, Mortgage Loans in
foreclosure proceedings and Mortgage Loans that have converted to REO Property,
that are (a) 30-59 days Delinquent, (b) 60-89 days Delinquent, (c) 90-119 days
Delinquent, (d) 120-149 days Delinquent, (e) 150-179 days Delinquent and (f) 180
or more days Delinquent;
(xix) the total number, aggregate Principal Balance and percentage
(based on the Pool Principal Balance) of all Mortgage Loans in foreclosure
proceedings and that are (a) less than 30 days Delinquent, (b) 30-59 days
Delinquent, (c) 60-89 days Delinquent, (d) 90-119 days Delinquent, (e) 120-149
days Delinquent, (f) 150-179 days Delinquent and (g) 180 or more days
Delinquent;
(xx) the total number, aggregate Principal Balance and percentage
(based on the Pool Principal Balance) of all Mortgage Loans relating to
Mortgagors in bankruptcy proceedings and that are (a) less than 30 days
Delinquent, (b) 30-59 days Delinquent, (c) 60-89 days Delinquent, (d) 90-119
days Delinquent, (e) 120-149 days Delinquent, (f) 150-179 days Delinquent and
(g) 180 or more days Delinquent;
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(xxi) the total number, aggregate Principal Balance and
percentage (based on the Pool Principal Balance) of all Mortgage Loans
relating to REO Properties (and whether any such Mortgage Loans are
also included in any of the statistics described in the foregoing
clauses (xix) and (xx);
(xxii) the book value of any REO Property; and
(xxiii)during the Pre-Funding Period, (1) the remaining
Pre-Funded Amount, (2) the Capitalized Interest Amount, (3) the
Pre-Funding Earnings Amount and (4) the aggregate Principal Balance of
Subsequent Mortgage Loans purchased by the Trust during the related
Remittance Period and cumulatively.
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 monthly 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.
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 Sponsor under Section 3.4(b) of the Sale and Servicing Agreement with
respect thereto.
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SECTION 8.11 Opinion of Counsel.
The Indenture Trustee shall receive at least seven days' notice when
requested by the Trust to take any action pursuant to Section 8.2(a),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall also require as a condition to such action, an Opinion of Counsel, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders or the
Insurer in contravention of the provisions of this Indenture; provided, however,
that such Opinion of Counsel shall not be required to express an opinion as to
the fair value of the Trust Estate. Counsel rendering any such opinion may rely,
without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Noteholders, but with the prior
written consent of the Insurer, as evidenced in a writing delivered to the
Indenture Trustee, the Trust and the Indenture Trustee 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, the Trust
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)
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adversely affect the interests of the Noteholders (2) or as evidenced in
writing by the Rating Agencies, result in a reduction of the
then-current rating on the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Trust and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Noteholders, but with
the prior written consent of the Insurer, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that such action shall not (1) as evidenced in writing by the
Rating Agencies, delivered to the Indenture Trustee and the Insurer, reduce the
then-current rating on the Notes or (2) as evidenced by an Opinion of Counsel
addressed to the Insurer and the Indenture Trustee, materially and adversely
affect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.
The Trust and the Indenture Trustee, when authorized by an Issuer Order,
may, with prior notice to the Rating Agencies, and with the prior written
consent of the Insurer and of the Noteholders holding 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;
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(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 Note Balance, the
consent of the Noteholders of which is required for any such
supplemental indenture, or the consent of the Noteholders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding;"
(v) reduce the percentage of the Note Balance, the consent
of the Noteholders of which is 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.
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Promptly after the execution by the Trust and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Noteholders to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures.
In executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Indenture Trustee shall be entitled
to receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel (and, if requested, an Officer's
Certificate) stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to the
provisions hereof, this Indenture shall be and be deemed to be modified and
amended in accordance therewith with respect to the Notes affected thereby, and
the respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Indenture Trustee, the Trust and the
Noteholders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity With Trust Indenture Act.
Every amendment of this Indenture and every supplemental indenture
executed pursuant to this Article IX shall conform to the requirements of the
Trust Indenture Act as then in effect so long as this Indenture shall then be
qualified under the Trust Indenture Act.
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.
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ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption.
(a) The Notes are subject to redemption following the later of
(A) the Payment Date following payment in full of all amounts owing to the
Insurer and (B) the earliest of (i) the transfer, under the conditions specified
in Section 10.1(b), to the Master Servicer or any Master Servicer Affiliate of
the Trust Estate, (ii) the final payment or other liquidation of the last
Mortgage Loan remaining in the Trust (including, without limitation, the
disposition of the Mortgage Loan pursuant to Section 5.6 hereof) or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (iii) the Payment Date in August 2024;
provided, however, that (x) no such redemption shall occur unless all amounts
due and owing to the Insurer as a Reimbursement Amount have been paid and (y) in
no event shall the trust created hereby continue beyond the expiration of 21
years from the date of death of the last surviving descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. Upon termination in accordance with clause (B)(i) of
this Section 10.1(a), the Indenture Trustee shall execute such documents and
instruments of transfer presented by the Sponsor, in each case without recourse,
representation or warranty, and take such other actions as the Sponsor may
reasonably request to effect the transfer of the Mortgage Loan to the Sponsor.
(b) The Notes shall be subject to optional redemption by the
Master Servicer or any Master Servicer Affiliate on any Payment Date after the
Payment Date on which the Pool Principal 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 redemption
shall only be permitted if the party exercising such option pays to the
Indenture Trustee an amount equal to the sum of (1) the Note Balance, (2)
accrued and unpaid interest thereon at the Note Interest Rate through the day
preceding such Payment Date and (3) all related Reimbursement Amounts (such
amount, the "Redemption Price"). In connection with such redemption, 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.
Notwithstanding the above, the party exercising such option to redeem the Notes
shall obtain the prior written consent of the Insurer, if such redemption would
result in a draw on the Policy.
(c) Promptly following any such redemption, the Indenture Trustee
shall release the Mortgage Files to the Master Servicer, or otherwise upon its
order, in a manner similar to that described in Section 4.14 of the Sale and
Servicing Agreement.
(d) If the Notes are to be redeemed pursuant to Section 10.1(b),
the Master Servicer or the Trust shall furnish notice of such election to the
Indenture Trustee not later than 15 days prior to the Redemption Date and the
Trust shall deposit with the Indenture Trustee in the Note Account the
Redemption Price of the Notes not less than five Business Days prior to the
Redemption Date whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.2.
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SECTION 10.2 Surrender of Notes.
(a) Notice of any termination, specifying the Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which the
Noteholders may surrender their Notes to the Indenture Trustee for payment of
the final distribution and cancellation, shall be given promptly by the
Indenture Trustee (upon receipt of written directions from the Sponsor, if the
Sponsor is exercising its right to transfer of the Mortgage Loans, given not
later than the first (1st) day of the month preceding the month of such final
distribution) to the Insurer and to the Master Servicer and by letter to
Noteholders mailed not earlier than the first (1st) day and not later than the
tenth (10th) day of the month of such final distribution specifying (i) the
Payment Date upon which final distribution of the Notes will be made upon
presentation and surrender of Notes at the office or agency of the Indenture
Trustee therein designated, (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, distributions being made only upon presentation and surrender of the
Notes at the office or agency of the Indenture Trustee therein specified.
(b) Any money held by the Indenture Trustee in trust for the
payment of any amount due with respect to any Note and remaining unclaimed by
the related Noteholder for the period then specified in the escheat laws of the
State of New York after such amount has become due and payable shall be
discharged from such trust and be paid first, to the Insurer on account of any
Reimbursement Amounts, and second, to the Certificateholders; and such
Noteholder shall thereafter, as an unsecured general creditor, look only to the
Certificateholders for payment thereof (but only to the extent of the amounts so
paid to the Insurer or the Certificateholders), and all liability of the
Indenture Trustee with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee, before being required to make any
such payment, shall at the expense of the Trust cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Insurer or the Certificateholders. The
Indenture Trustee shall, at the direction of the Sponsor, also adopt and employ,
at the expense of the Trust, any other reasonable means of notification of such
payment (including, but not limited to, mailing notice of such payment to
Noteholders whose right to or interest in monies due and payable but not claimed
is determinable from the Note Register at the last address of record for each
such Noteholder).
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.
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All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes at the place where such
Notes are to be surrendered for payment of the Redemption Price
(which shall be the office or agency of the Trust to be
maintained as provided in Section 3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Trust. Failure to give notice of
redemption, or any defect therein, to any Noteholder shall not impair or affect
the validity of the redemption of any other Note.
SECTION 10.4 Notes Payable on Redemption Date.
The Notes to be redeemed shall, following notice of redemption as
required by Section 10.2, on the Redemption Date become due and payable at the
related Redemption Price and (unless the Trust shall default in the payment of
the related Redemption Price) no interest shall accrue on such Redemption Price
for any period after the date to which accrued interest is calculated for
purposes of calculating such Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc.
Upon any application or request by the Trust to the Indenture Trustee to
take any action under any provision of this Indenture, and where specified in
this Indenture, the Trust shall furnish to the Indenture Trustee and to the
Insurer if the application or request is made to the Indenture Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel addressed to the Indenture Trustee and the Insurer
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the applicable
requirements of this Section, except that, in the case of any such application
or request as to which the furnishing of such documents is specifically required
by any provision of this Indenture, no additional certificate or opinion need be
furnished.
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Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(ii) a statement as to whether, in the opinion of each such signatory
such condition or covenant has been complied with.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trust may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Master Servicer, the Sponsor or the Trust, stating that the information with
respect to such factual matters is in the possession of the Master Servicer, the
Sponsor or the Trust, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The 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.
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SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Trust. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Trust, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Indenture
Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Noteholder shall bind the Noteholder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Trust in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4 Notices, etc. to Indenture Trustee, Trust and Rating
Agencies.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other communications provided or permitted by this
Indenture to be made upon, given or furnished to or filed shall be in writing
and shall be deemed to be given when delivered to:
(a) The Indenture Trustee at its Corporate Trust Office,
Attention: Advanta Series 2000-A and any notice delivered by facsimile shall be
addressed to the Corporate Trust Office, telecopy number (714) 247-6009, by any
Noteholder or by the Trust .
(b) The Trust by the Indenture Trustee or by any Noteholder
addressed to: Advanta Revolving Home Equity Loan Trust 2000-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
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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 a notice or other communication to the Insurer
refers to an Event of Servicing Termination, a claim on the Policy or with
respect to which failure on the part of the Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the general counsel (fax
No. 212-208-3558 and with the same confirmation number as stated above) and
should be marked "URGENT MATERIAL ENCLOSED".
Notices required to be given to the Rating Agencies by the Trust, the
Indenture Trustee or the Owner Trustee shall be sent by first class mail to (i)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10004, Fax No: (212) 533-0355, and
(ii) in the case of S&P, at the following address: Standard & Poor's Ratings
Group, 55 State Street, New York, New York 10041, Attention: Asset Backed
Surveillance Department, Fax No: (212) 412-0224; or as to each of the foregoing,
at such other address as shall be designated by written notice to the other
parties.
SECTION 11.5 Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by such event, at his address as it appears on the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
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Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to
the contrary, the Trust may enter into any agreement with any Noteholder
providing for a method of payment, or notice by the Indenture Trustee or any
Note Paying Agent to such Noteholder, that is different from the methods
provided for in this Indenture for such payments or notices, provided that such
methods are reasonable and consented to by the Indenture Trustee (which consent
shall not be unreasonably withheld). The Trust will furnish to the Indenture
Trustee a copy of each such agreement and the Indenture Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns.
All covenants and agreements in this Indenture and the Notes by the
Trust shall bind its successors and assigns, whether so expressed or not. All
agreements of the Indenture Trustee in this Indenture shall bind its successors.
SECTION 11.10 Separability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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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.
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SECTION 11.16 Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Trust, the Sponsor, the Originators, the Master Servicer, the
Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Sponsor, the Originators, the Master Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Trust or (iii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Sponsor, the Originators, the
Master Servicer, the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Trust, the Sponsor, the
Originators, the Master Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Sponsor, the Originators, the Master Servicer,
the Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Trust hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition.
The Indenture Trustee, by entering into this Indenture, and each
Noteholder, by accepting a Note, hereby covenant and agree that they will not at
any time institute against the Sponsor, the Trust, or any Certificateholder or
join in any institution against the Sponsor, 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.
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SECTION 11.19 Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Indenture is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of the Trust under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties to this Indenture and by any person claiming by, through or under
them and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaking by the Trust under this Indenture or any related
documents.
SECTION 11.20 Rights of the Insurer to Exercise Rights of Noteholders.
By accepting its Notes, each Noteholder agrees that unless an Insurer
Default exists, the Insurer shall have the right to exercise all rights of the
Noteholders under this Indenture without any further consent of the Noteholders,
including, without limitation:
(i) the right to direct the actions of the Indenture Trustee during
the continuance of 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.
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SECTION 11.22 Rules by Indenture Trustee.
The Indenture Trustee may make reasonable rules for any meeting of
Noteholders.
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IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-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 McNeill
---------------------------
Name: Mark McNeill
Title: Assistant Secretary
<PAGE> 73
EXHIBIT A
[Form of Note]
REGISTERED $__________
No. A-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00757CAF5
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trust or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A
ADVANTA REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES,
SERIES 2000-A
Advanta Revolving Home Equity Loan Trust 2000-A, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________________ ($__________),
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 $400,000,000.00 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 August 2024
Payment Date (the "Final Scheduled Payment Date"). Until the principal of this
Note is paid in full or made available for payment, the Trust will pay interest
on this Note at the rate per annum provided in the Indenture on each Payment
Date on the principal amount of this Note outstanding on the preceding Payment
Date (after giving effect to all payments of principal on this Note made on the
preceding Payment Date). Interest on this Note will accrue for each Payment Date
during the period from and including the preceding Payment Date (in the case of
the May 2000 Payment Date, from and including the Closing Date) to but excluding
the current Payment Date. Interest will be computed on the basis of the actual
number of days in the related Interest
Exhibit A-1
<PAGE> 74
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.
[Remainder of page intentionally left blank]
Exhibit A-2
<PAGE> 75
IN WITNESS WHEREOF, the Trust has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: April 27, 2000 ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-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: April 27, 2000 BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as
Indenture Trustee
By:____________________________________
Name:
Title:
Exhibit A-3
<PAGE> 76
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
2000-A (herein called the "Notes"), all issued under an Indenture dated as of
April 1, 2000 (such indenture, as supplemented or amended, is herein called the
"Indenture"), between the Trust and Bankers Trust Company of California, N.A.,
as trustee (the "Indenture Trustee," which term includes any successor Indenture
Trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Trust, the Indenture Trustee and the Noteholders.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Notes are and will be secured by the Trust Estate pledged as
security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in an amount
described on the face hereof. "Payment Date" means the twenty-fifth day of each
month, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing May 25, 2000. The term "Payment Date" shall be deemed to include
the Final Scheduled Payment Date.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Scheduled Payment Date and
the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Notwithstanding the foregoing, if an Event of Default has occurred and shall be
continuing, the Notes may be declared immediately due and payable. All principal
payments on the Notes shall be made pro rata to the Noteholders entitled
thereto.
Payments of interest on this Note are due and payable on each Payment
Date, together with the installment of principal, if any, to the extent such
payment is not the final payment of this Note, and 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 due and payable shall be
payable only upon
Exhibit A-4
<PAGE> 77
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.
The Policy does not cover any Net Funds Cap Carry-Forward Amount,
Prepayment Interest Shortfalls or Relief Act Shortfalls.
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 Pool Principal Balance has been reduced
to 10% or less of the Original Note Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Trust pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which requirements
include membership or participation in Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act, and (ii) accompanied by such other
documents as the Indenture Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Sponsor, or the Trust or join in any institution
against the Sponsor, or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Operative Documents.
Prior to the due presentment for registration of transfer of this Note,
the Trust, the Indenture Trustee and the Insurer and any agent of the Trust, the
Indenture Trustee or the Insurer may treat the Person in whose name this Note
(as of the day of determination or as of such other date as may be specified in
the Indenture) is registered as the owner hereof for all purposes, whether or
not this Note be overdue, and neither the Trust, the Indenture Trustee nor any
such agent shall be affected by notice to the contrary.
Exhibit A-5
<PAGE> 78
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 the Noteholders holding
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 other Operative Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Trust, nor any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Trust for the sole purposes of binding the interests of
the Trust in the assets of the Trust. The Noteholder by the acceptance hereof
agrees that except as expressly provided in the Indenture or the other 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.
Exhibit A-6
<PAGE> 79
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.
<TABLE>
<S> <C>
Dated: ________________ ___________________________________*
Signature Guaranteed:
Dated: ________________ ___________________________________
</TABLE>
*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.
Exhibit A-7
<PAGE> 80
EXHIBIT B
[Form of Indenture Trustee Monthly Report]
<PAGE> 81
ANNEX 1
TO THE INDENTURE
DEFINED TERMS
"Accelerated Principal Payments": With respect to any Payment Date, a
payment to be paid from Excess Cashflow received as a payment of principal by
the Noteholders, for the purpose of increasing the Overcollateralization Amount
to the Specified Overcollateralization Amount, and equal to the lesser of (x)
the amount of such Excess Cashflow and (y) the Overcollateralization Deficiency
Amount.
"Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
"Account": The Note Account, the Principal and Interest Account, the
Pre-Funding Account or the Capitalized Interest Account, each of which shall be
(i) an account maintained at a Designated Depository Institution or (ii) if the
applicable account is a segregated trust account, maintained with the corporate
trust department of a federal depository institution or a state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b),
which in the case of either clause (i) or (ii), has corporate trust powers,
acting in its fiduciary capacity, and in accordance with Section 8.3 of the
Indenture or, with respect to the Principal and Interest Account, Section 4.9 of
the Sale and Servicing Agreement.
"Act": has the meaning specified in Section 11.3(a) of the Indenture.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.6(b) of the Sale and Servicing
Agreement, the notice (which shall be given not later than two Business Days
prior to the related Transfer Date), of the Sponsor's designation of Subsequent
Mortgage Loans to be sold to the Trust, such notice shall include the aggregate
Principal Balance and the approximate weighted average Coupon Rate of such
Subsequent Mortgage Loans.
"Additional Balance": As to any Mortgage Loan and any day, the aggregate
amount of all Draws by the related Mortgagor conveyed to the Trust after the
Closing Date pursuant to Section 2.1 of the Sale and Servicing Agreement, it
being understood that the Trust shall not be required to fund any Additional
Balances.
"Advanta Bank Corp.": A Utah industrial loan corporation, including any
successors and assigns.
"Advanta Finance Corp.": A Nevada corporation, including any successors
and assigns.
"Advanta National Bank": A national banking association located in
Delaware.
Annex 1-1
<PAGE> 82
"Affiliate": Means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation and the
corporate parent of Advanta Mortgage Corp. USA, and the indirect corporate
parent of Advanta Conduit Receivables, Inc.
"Appraised Value": As to any Mortgaged Property, the value established
by a drive-by inspection, a full appraisal or a statistical property valuation
of such Mortgaged Property.
"Assignee": With respect to any Person, any direct or indirect assignee,
pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee.
"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 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 following
amounts, without duplication of any amount described more than once in the
following clauses (i) through (v):
(i) any Insured Payments;
(ii) the proceeds of any final liquidation of the assets of the Trust;
(iii) the Monthly Remittance Amount remitted by the Master Servicer or
any Sub-Servicer;
(iv) on each Payment Date occurring during the Pre-Funding Period, the
Pre-Funding Earnings and the Capitalized Interest Requirement for
such Payment Date; and
(v) at the end of the Pre-Funding Period, any amount remaining in the
Pre-Funding Account in accordance with Section 8.5(d).
Annex 1-2
<PAGE> 83
"Book Entry Notes": Means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.9 of the Indenture.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which any of the Insurer, the Master Servicer or the Sponsor is closed or
commercial banking institutions in the State of New York or Delaware or in the
city in which the principal Corporate Trust Office of the Indenture Trustee is
located, are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 8.3 of the Indenture and maintained by
the Indenture Trustee.
"Capitalized Interest Amount": The amount on deposit in the Capitalized
Interest Account, which shall initially be $2,253,543.85.
"Capitalized Interest Requirement": As to any Payment Date, an amount
equal to the product of (x) the sum of the Note Interest Rate and the rate at
which the Insurer premium is calculated, and (y) the amount on deposit in the
Pre-Funding Account as of the preceding Payment Date (or as of the Closing Date,
in the case of the first Payment Date), less investment earnings on the amounts
on deposit in the Pre-Funding Account as of the preceding Payment Date.
"Certificateholders": The holders of the Certificates issued pursuant to
the Trust Agreement.
"Certificates": The trust certificates evidencing the beneficial
ownership interests in the Trust.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
"Clean-Up Call Date": The first date on which the Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture.
"Clearing Agency Participant": Means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Clearing Agency": Means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Closing Date": April 27, 2000.
"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
Annex 1-3
<PAGE> 84
with an increase in the Credit Limit for such Mortgage Loan) the sum of the
outstanding principal balance of any mortgage loan or mortgage loans that are
senior in priority to the Mortgage Loan and which are secured by the same
Mortgaged Property and the denominator of which is the lesser of (C) the
Appraised Value of the related Mortgaged Property as set forth in the Mortgage
File on such date of execution or on such subsequent date, if any, or (D) in the
case of a Mortgaged Property purchased within one year of the date of execution
of the Credit Line Agreement, the purchase price thereof.
"Controlling Party": Means (i) the Insurer, so long as no Insurer
Default shall have occurred and be continuing, or (ii) the Indenture Trustee,
for so long as an Insurer Default shall have occurred and be continuing;
provided, however, that the Insurer's rights as Controlling Party shall be
immediately reinstated following the cure of any Insurer Default.
"Corporate Trust Office": The Indenture Trustee's office at 1761 East
St. Andrew Place, Santa Ana, California 92705.
"Coupon Rate": With respect to any Mortgage Loan and as of any day, the
per annum rate of interest, as specified in the Credit Line Agreement,
applicable to the calculation of interest on the outstanding 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, at any time
during the Draw Period, the percentage equivalent of a fraction, the numerator
of which is the outstanding Principal Balance and the denominator of which is
the related Credit Limit.
"Credit Line Agreement": With respect to any Mortgage Loan, the related
home equity line of credit agreement or promissory note executed by the related
Mortgagor and any amendment or modification thereof.
"Cut-Off Date": With respect to each (i) Initial Mortgage Loan, the
Initial Cut-Off Date, (ii) Qualified Replacement Mortgage Loan, the related
Replacement Cut-Off Date or (iii) Subsequent Mortgage Loan, the related
Subsequent Cut-Off Date.
"Cut-Off Date Pool Balance": The sum of (x) the aggregate Cut-Off Date
Principal Balance of the Initial Mortgage Loans ($302,265,974.63), and (y) the
initial Pre-Funded Amount ($113,451,856.05), which sum is $415,717,830.60.
"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.
Annex 1-4
<PAGE> 85
"Debt Service Reduction": With respect to any Mortgage Loan, as directed
by a court of competent jurisdiction, a reduction of the minimum amount required
to be paid by the related Mortgagor.
"Deficiency Amount": As defined in the Policy.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding Principal Balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the United States Bankruptcy
Code.
"Definitive Notes": Has the meaning specified in Section 2.9 of the
Indenture.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York 10004 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to any Account, a
federal or state chartered depository institution whose deposits are insured by
the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC,
the long-term deposits of which shall be rated "A2" or better by Moody's, the
long term debt obligations of which shall be rated at least "AA-" by S&P and the
commercial paper, short term debt obligations or short-term deposits of which
shall be rated "P-1" or better by Moody's and "A-1+" or better by S&P, unless
otherwise approved in writing by the 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 or the Indenture Trustee as the
depository institution for the any Account; provided, however, that any such
institution or association shall have combined capital, surplus and undivided
profits of at least $100,000,000.
"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, the Master Servicer and the Indenture Trustee.
Annex 1-5
<PAGE> 86
"Document Delivery Requirements": The Sponsor's obligations to deliver
certain legal documents, to prepare and record certain Assignments of Mortgage
or to deliver certain opinions relating to Assignments of Mortgage, in each case
with respect to the Mortgage Loans and upon certain conditions as set forth in
Section 2.1 of the Sale and Servicing Agreement.
"Draw": With respect to any Mortgage Loan, an additional borrowing by
the Mortgagor in accordance with the related Credit Line Agreement.
"Draw Period": With respect to any Mortgage Loan, the period of time
specified in the related Credit Line Agreement whereby a Mortgagor may make a
Draw. The Draw Period may be extended pursuant to the terms of the Credit Line
Agreement (provided that any such extension shall be in accordance with the
provisions set forth herein with respect to Mortgage Loan modifications) and the
Sale and Servicing Agreement, and will be limited by the provisions set forth in
Section 2.2 of the Sale and Servicing Agreement.
"Eligible Investments": Those investments so designated pursuant to
Section 8.8 of the Indenture.
"ERISA": Means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": As defined in Section 5.4 of the Indenture.
"Event of Servicing Termination": As defined in Section 5.1 of the Sale
and Servicing Agreement.
"Excess Cashflow": With respect to any Payment Date, the Available Funds
with respect to such Payment Date which remain on deposit in the Note Account
after taking into account the distributions listed in clauses (i) through (viii)
of Section 8.6(b) of the Indenture 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 August 2024.
"First Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
first priority mortgage lien with respect to any Mortgaged Property.
"Fixed Allocation Percentage": With respect to the Mortgage Loans,
94.8%.
Annex 1-6
<PAGE> 87
"FNMA": The Federal National Mortgage Association, a federally chartered
and privately owned corporation existing under the Federal National Mortgage
Association Charter Act as amended, and any successor thereto.
"Foreclosure Profit": With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (x) the aggregate of its Net Liquidation Proceeds
exceeds (y) the sum of (i) the related Principal Balance and (ii) accrued and
unpaid interest thereon at the applicable Coupon Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds.
"Formula Rate ": For any Interest Accrual Period, (x) with respect to
any Payment Date which occurs on or prior to the Clean-Up Call Date, LIBOR plus
0.25% 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 Trust Estate or of any agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Trust Estate and all other monies payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Guaranties": The Letter Agreement, dated as of April 27, 2000, among
the Underwriters, the Insurer and AMHC and the Letter Agreement, dated as of
April 27, 2000, among the Insurer, the Indenture Trustee and AMHC.
"HLTV HELOC Mortgage Loan": Any Mortgage Loan with a Combined
Loan-to-Value Ratio of greater than 100%.
"Highest Lawful Rate": As defined in Section 7.12 of the Sale and
Servicing Agreement.
"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
Annex 1-7
<PAGE> 88
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
April 18, 2000, among the Insurer and the Underwriters.
"Indenture": The Indenture dated as of April 1, 2000 between the Trust
and the Indenture Trustee, as the same may be amended and supplemented from time
to time in accordance with the terms thereof.
"Indenture Trustee": Bankers Trust Company of California, N.A., located
on the date of execution of the Indenture at 1761 East St. Andrew Place, Santa
Ana, California 92705, not in its individual capacity but solely as Indenture
Trustee under the Indenture, and any successor thereunder.
"Indenture Trustee Fee": With respect to any Payment Date, the product
of (x) one-twelfth of the Indenture Trustee Fee Rate and (y) the sum of (i) the
Pool Principal Balance as of the opening of business on the first day of the
related Remittance Period and (ii) the Pre-Funded Amount as of the opening of
business on the first day of the related Remittance Period.
"Indenture Trustee Fee Rate": 0.011% (1.1 basis points) per annum.
"Independent": When used with respect to any specified Person, that the
person (a) is in fact independent of the Trust, any other obligor upon the
Notes, the Sponsor and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Trust, any such other obligor, the Sponsor or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Trust, any such
other obligor, the Sponsor or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.
"Independent Certificate": A certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
prepared by an Independent appraiser or other expert, and such opinion or
certificate shall state that the signer has read this definition of
"Independent" and that the signer is Independent within the meaning thereof.
"Initial Cut-Off Date": The close of business on March 31, 2000.
"Initial Mortgage Loans": Shall mean the Mortgage Loans conveyed to the
Trust by the Sponsor on the Closing Date.
"Insurance Agreement": The agreement defined in the Preamble of the
Indenture.
"Insurance Agreement Event of Servicing Termination": An Event of
Servicing Termination as defined in the Insurance Agreement.
Annex 1-8
<PAGE> 89
"Insured Amounts": With respect to the Notes and any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments": With respect to the Notes and any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts
for any given Business Day.
"Insurer": Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation, or any successor thereto, as issuer of the Policy.
"Insurer Default": Means the failure and the continuance of such failure
by the Insurer to make a payment required under the Policy in accordance with
the terms thereof.
"Interest Accrual Period": With respect to any Payment Date, the period
from and including the prior Payment Date (or, in the case of the first Payment
Date, from and including the Closing Date) to, but excluding, the current
Payment Date.
"Interest Collections": With respect to the Mortgage Loans during the
related Remittance Period, the sum of (i) all interest payments paid by or on
behalf of Mortgagors and collected by the Master Servicer, except that with
respect to Prepaid Installments, interest payments shall be deemed to be paid by
or on behalf of Mortgagors and collected by the Master Servicer in the
Remittance Period to which such payments relate, (ii) any other amounts
constituting interest collected by the Master Servicer, (iii) with respect to
Mortgage Loans other than HTLV Mortgage Loans, the portion of Net Liquidation
Proceeds allocated to interest and (iv) with respect to HLTV Mortgage Loans, the
total amount of "Net Liquidation Proceeds." The terms of the related Credit Line
Agreement shall determine the portion of each payment that constitutes interest
(other than with respect to Net Liquidation Proceeds).
"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 (i) the Note Interest Rate multiplied by the actual number of days in
the Interest Accrual Period divided by 360 days and (ii) the Note Balance as of
the day immediately prior to such Payment Date.
"Interest Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Interest Collections for such Remittance
Period, less the Servicing Fee for the related Remittance Period, (ii) the
portion of the Loan Reacquisition Price and the Substitution Amount relating to
interest on the Mortgage Loans reacquired and (iii) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
interest).
"Interest Shortfall Amount": With respect to any payment date, the sum
of (i) the amount by which the Interest Distribution Amount exceeded the actual
amount distributed in respect of interest and (ii) any
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unreimbursed Interest Shortfall Amounts from prior payment dates together with
interest on such amounts at the Note Interest Rate.
"Issuer Order" and "Issuer Request": Means a written order or request
signed in the name of the Trust by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Junior Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
junior priority mortgage lien with respect to the related Mortgaged Property.
"LIBOR": As defined in Section 2.6(b) of the Indenture.
"LIBOR Business Day": Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
"Lifetime Rate Cap": With respect to each Mortgage Loan for which the
related Credit Line Agreement provides for a lifetime rate cap, the maximum
Coupon Rate permitted at any time under the terms of the related Credit Line
Agreement.
"Liquidated Mortgage Loan": Either (i) any HLTV HELOC Mortgage Loan that
has been Delinquent for a period of 180 consecutive days (irrespective of any
grace periods) or as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan, whichever
is the first to occur, or (ii) any Mortgage Loan other than an HLTV HELOC
Mortgage Loan as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan. The Trust
will be entitled to recoveries from any Liquidated Mortgage Loan and any such
recoveries (i) in the case of HLTV Mortgage Loans, shall be treated as Interest
Collections and (ii) in the case of non HLTV Mortgage Loans, shall be treated as
Principal Collections or Interest Collections. A Mortgage Loan which is
reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale
and Servicing Agreement shall not be a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the Master
Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, include, without limitation, legal fees
and expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.10 and 4.13 of the Sale and
Servicing Agreement with respect to the related Mortgage Loan.
"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, sale to a third party or
otherwise.
"Loan Reacquisition Price": With respect to any Mortgage Loan reacquired
from the Trust on a Remittance Date pursuant to Section 2.2(b), 3.3(c) or 3.4 of
the Sale and Servicing Agreement, an amount, without duplication, equal to (i)
the outstanding Principal Balance of such Mortgage Loan as of the date
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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 and
(iii) all Servicing Advances theretofore made with respect to such Mortgage Loan
and not subsequently recovered from the related Mortgage Loan, including
Nonrecoverable Advances.
"Managed Amortization Period": The period commencing on the Closing Date
and ending on the earlier to occur of (x) the end of the Remittance Period
related to the May 2003 Payment Date and (y) the end of the Remittance Period
related to the Payment Date which immediately precedes the occurrence of a Rapid
Amortization Event.
"Margin": With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Credit Line Agreement which amount is added to
the index specified in the related Credit Line Agreement to determine the Coupon
Rate for such Mortgage Loan, subject to any maximum or minimum.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation,
and its permitted successors and assigns.
"Master Servicer Affiliate": A Person that is (i) controlling,
controlled by or under common control with the Master Servicer, (ii) qualified
to service residential mortgage loans, and (iii) subservicing the Mortgage
Loans.
"Master Servicer's Trust Receipt": The Master Servicer's trust receipt
in the form set forth as Exhibit F to the Sale and Servicing Agreement.
"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
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or originated while doing business under another name, the signature must be in
the following form: "[the previous owner], formerly known as [previous name]",
or (iv) "Pay to the order of Bankers Trust Company of California, N.A., without
recourse" or (v)"Pay to the order of _________, without recourse". The original
Credit Line Agreement should be accompanied by any rider made in connection with
the origination of the related Mortgage Loan;
(b) The original of any guaranty executed in connection with the
Credit Line Agreement;
(c) The original Mortgage with evidence of recording thereon or
copies certified by the related recording office or if the original Mortgage has
not yet been returned from the recording office, a certified copy of the
Mortgage;
(d) The originals of any assumption, modification, consolidation
or extension agreements;
(e) The original Assignment of Mortgage of each Mortgage Loan to
(1) "Bankers Trust Company of California, N.A., as custodian or trustee," or (2)
"Bankers Trust Company of California, N.A., as trustee" or (3) 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)"; and
(f) The originals of all intervening Assignments of Mortgage, if
applicable, showing a complete chain of assignment from origination to the
related Seller, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof).
"Mortgage Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan, but excluding any non-mortgage
related or credit life insurance policy. The term "Mortgage Insurance Policy"
shall not include the Policy.
"Mortgage Insurance Proceeds": Proceeds paid by any insurer pursuant to
any Mortgage Insurance Policy covering a Mortgage Loan, or amounts required to
be paid by the Master Servicer pursuant to the last sentence of the first
paragraph of Section 4.11(b) of the Sale and Servicing Agreement, or the
penultimate sentence of Section 4.11(c) of the Sale and Servicing Agreement, net
of any component thereof (i) covering any Liquidation Expenses incurred by or on
behalf of the Master Servicer in connection with obtaining such proceeds, (ii)
that is applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures, or (iv) required to be paid to any holder of a mortgage
senior to such Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trust pursuant to Section 2.1 or Section 2.6 of the Sale and Servicing
Agreement, together with any Subsequent Mortgage Loans and any Qualified
Replacement Mortgage Loans substituted therefor in accordance with the Sale and
Servicing Agreement, which are held as a part of the Trust Estate. The term
"Mortgage Loan" includes any
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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 the Operative Documents.
"Mortgaged Property": The underlying property securing a Mortgage Loan.
"Mortgagor": The obligor under a Credit Line Agreement.
"Net Funds Cap Carry-Forward Amount": With respect to any Payment Date,
the sum of (i) the excess of the amount of interest accrued during the related
Interest Accrual Period based on the Formula Rate, over the interest accrued
during the related Interest Accrual Period based on the Net Funds Cap Rate, (ii)
any such amounts described in clause (i) for prior Payment Dates and not
previously paid 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 at the applicable
Coupon Rate during the related Remittance Period minus the amount of aggregate
Prepayment Interest Shortfalls for the related Remittance Period and minus the
amount of aggregate 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 related Remittance Period, less (y) 0.50%.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses other
than any such expenses reflected in the calculation of Mortgage Insurance
Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances
incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and
unpaid Servicing Fees with respect to such Mortgage Loan through the date of
liquidation. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Mortgage Loan be less than zero.
"Net Principal Collections": With respect to any Remittance Period, the
excess of (i) Principal Collections over (ii) 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.
"Nonrecoverable Advance": With respect to any Mortgage Loan, any
Servicing Advance previously made and not reimbursed pursuant to Section 4.10 of
the Sale and Servicing Agreement or any Servicing Advance proposed to be made in
respect of a Mortgage Loan, either of which, in the good faith business judgment
of the Master Servicer would not be ultimately recoverable.
"Note": Any note executed and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A to the Indenture.
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"Note Account": The Note Account established in accordance with Section
8.3 of the Indenture and maintained by the Indenture Trustee.
"Note Balance": As of any date of determination, the Original Note
Balance, less any amounts actually distributed as principal to the Noteholders
on all prior Payment Dates.
"Note Interest Rate": As to any Payment Date, the lesser of (i) the
Formula Rate and (ii) the Net Funds Cap Rate.
"Note Interest Shortfall": As of any Payment Date, the sum of (i) the
amount by which the Interest Distribution Amount for such Payment Date exceeds
the amount actually distributed to the Noteholders on such Payment Date and (ii)
any unreimbursed Note Interest Shortfalls from prior Payment Dates together with
interest accrued thereon at the Note Interest Rate for such Payment Date.
"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 of the Indenture and is authorized by the Trust to make payments to
and distributions from the Note Account, including payment of principal of or
interest on the Notes on behalf of the Trust.
"Note Register": The register maintained by the Indenture Trustee in
accordance with Section 2.3 of the Indenture, in which the names of the
Noteholders are set forth.
"Note Registrar": The Indenture Trustee, acting in its capacity as Note
Registrar appointed pursuant to Section 2.3 of the Indenture, or any duly
appointed and eligible successor thereto.
"Noteholder": A Person in whose name a Note is registered in the Note
Register.
"Officer's Certificate": A certificate signed by any Authorized Officer
of the Trust, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 of the Indenture and TIA
Section 314.
"Operative Documents": Collectively, the Indenture, the Guaranties, the
Trust Agreement, the Sale and Servicing Agreement, the Subsequent Transfer
Agreements, the Policy, the Notes, the Purchase Agreement, the Indemnification
Agreement and the Insurance Agreement.
"Opinion of Counsel": Means one or more opinions of counsel who may,
except as otherwise expressly provided in the Indenture, be employees of or
counsel to the Trust or Sponsor and which shall comply with any applicable
requirements of Section 11.1 of the Indenture.
"Original Note Balance": $400,000,000.00.
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"Originators": Advanta Bank Corp., Advanta National Bank and Advanta
Finance Corp.
"Outstanding": As of any date of determination, all Notes theretofore
executed and delivered hereunder except:
(i) Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Notes or portions thereof for which full and final payment
money in the necessary amount has been theretofore deposited with the Indenture
Trustee in trust for the Noteholders;
(iii) Notes in exchange for or in lieu of which other Notes have
been executed and delivered pursuant to this Indenture, unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are held
by a bona fide purchaser; and
(iv) Notes alleged to have been destroyed, lost or stolen for which
replacement Notes have been issued as provided for in Section 2.4 of the
Indenture;
provided, however, that to the extent of any payments made under the
Policy by the Insurer and not reimbursed, such Notes shall be deemed to be
"Outstanding" for all purposes, not defeased or otherwise satisfied and not be
considered paid by the Trust.
"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 plus the Pre-Funded Amount over (y) the Note Balance (after taking into
account the payment of principal to the Noteholders on such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any Payment
Date, the difference, if any, between (i) the Specified Overcollateralization
Amount and (ii) the Overcollateralization Amount.
"Overcollateralization Deficit": With respect to any Payment Date, the
amount, if any, by which (i) the Note Balance, after taking into account the
payment of principal to the Noteholders on such Payment Date, exceeds (ii) the
Pool Principal Balance plus the Pre-Funded Amount at the end of the related
Remittance Period.
"Overcollateralization Reduction Amount": With respect to any Payment
Date, the lesser of (i) the excess of (x) the Overcollateralization Amount,
after taking into account all payments of principal (without taking into account
any Overcollateralization Reduction Amount) that were applied as a reduction in
the Note Balance on such Payment Date, over (y) the Specified
Overcollateralization Amount for such Payment Date and (ii) the Scheduled
Principal Distribution Amount (without taking into account any
Overcollateralization Reduction Amount).
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"Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee Fee": With respect to any Payment Date, one-twelfth of
$3,000 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. AB0358BE) with
respect to the Notes, dated April 27, 2000, issued by the Insurer to the
Indenture Trustee for the benefit of the Noteholders.
"Pool Certification": The certification of the Indenture Trustee as to
receipt of required documents that is required pursuant to Section 2.2 of the
Sale and Servicing Agreement, a form of which is attached thereto as Exhibit E.
"Pool Factor": A seven-digit decimal which the Indenture Trustee shall
compute monthly expressing the Note Balance as of each Payment Date (after
giving effect to any distribution of principal on such Payment Date) as a
proportion of the Original Note Balance. On the Closing Date, the Pool Factor
will be 1.0000000.
"Pool Principal Balance": With respect to any date of determination, the
aggregate of the Principal Balances of the Mortgage Loans as of such date.
"Predecessor Note": means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Preference Amount": As defined in the Policy.
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"Pre-Funded Amount": The amount on deposit in the Pre-Funding Account,
which shall initially be $113,451,856.05.
"Pre-Funding Account": The Pre-Funding Account established in accordance
with Section 8.3 of the Indenture and maintained by the Indenture Trustee.
"Pre-Funding Earnings": With respect to each Payment Date during the
Pre-Funding Period, the investment earnings on the Pre-Funding Account during
the related Interest Accrual Period.
"Pre-Funding Period": The period commencing on the Closing Date and
ending on the earliest to occur of (i) the date on which the Pre-Funded Amount
(exclusive of any investment earnings) is less than $100,000, (ii) the date on
which any Event of Default or Rapid Amortization Event occurs, and (iii) August
31, 2000.
"Premium Amount": With respect to any Payment Date, the product of (x)
the actual number of days elapsed in the period from the prior Payment Date (or
with respect to the first Payment Date, the Closing Date) to and including the
day prior to the applicable Payment Date, divided by 360, (y) the Premium
Percentage (as defined in the Insurance Agreement) and (z) the Note Balance on
such Payment Date after taking into account any distributions of the Scheduled
Principal Distributions Amount to be made on such Payment Date.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment). The proceeds of any Mortgage Insurance Policy or credit life
insurance which are to be applied as a payment of principal on the related
Mortgage Loan in advance of the scheduled payment shall be deemed to be
Prepayments for all purposes of this Agreement.
"Prepayment Interest Shortfalls": With respect to any Payment Date, for
each Mortgage Loan that was the subject of a Prepayment, the amount, if any, by
which (i) one month's interest at the applicable Coupon Rate on the Principal
Balance of such Mortgage Loan immediately prior to such Prepayment exceeds (ii)
the amount of interest paid or collected in connection with such Prepayment.
"Preservation Expenses": Expenditures made by the Master Servicer or any
Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.
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"Principal and Interest Account": Collectively, each principal and
interest account created by the Master Servicer or any Sub-Servicer pursuant to
Section 4.9(a) of the Sale and Servicing Agreement, or pursuant to any
Sub-Servicing Agreement.
"Principal Balance": As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any date, the related Cut-Off Date Principal Balance,
plus (i) any Additional Balance, minus (ii) all collections credited as
principal against the Principal Balance of any Mortgage Loan prior to such day
in accordance with the Credit Line Agreement. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance of zero as
of the first day of the Remittance Period following the Remittance Period in
which such Mortgage Loan becomes a Liquidated Mortgage Loan and at all times
thereafter.
"Principal Collections": With respect to any Payment Date and any
Mortgage Loan, the sum of all payments by or on behalf of Mortgagors and any
other amounts constituting principal (including, but not limited to, any portion
of Mortgage Insurance Proceeds or Net Liquidation Proceeds allocable to
principal, but excluding Foreclosure Profits and any recoveries in respect of
Charged-Off Mortgage Loans) collected by the Master Servicer during the related
Remittance Period. The terms of the related Credit Line Agreement shall
determine the portion of each payment in respect of a Mortgage Loan that
constitutes principal and the priority of payment.
"Principal Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Principal Collections for such Remittance
Period, except that with respect to Prepaid Installments, principal shall be
remitted in the scheduled Remittance Period, (ii) the portion of the Loan
Reacquisition Price and the Substitution Amount relating to principal on the
Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate to principal) and (iv) any Pre-Funded
Amount deposited in the Note Account at the termination of the Pre-Funding
Period.
"Proceeding": Means any suit in equity, action at law or other judicial
or administrative proceeding.
"Prospectus": That certain Prospectus, dated December 28, 1999, naming
Advanta Conduit Receivables, Inc. as registrant and describing certain mortgage
loan asset-backed securities to be issued from time to time as described in
related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated April
18, 2000, describing the Notes issued by the Trust.
"Purchase Agreement": Means the Purchase Agreement dated as of April 1,
2000 between the Originators and the Sponsor with respect to the Mortgage Loans.
"Qualified Replacement Mortgage Loan": As defined in Section 2.3 of the
Sale and Servicing Agreement.
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"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 to any Liquidated Mortgage Loan, the amount, if any,
by which the Principal Balance of such Mortgage Loan as of the date of
liquidation is in excess of Net Liquidation Proceeds.
"Record Date": With respect to each Payment Date, so long as the Notes
are Book Entry Notes, the Business Day preceding such Payment Date, and if the
Notes are maintained as Definitive Notes, the last Business Day of the calendar
month immediately preceding the calendar month in which such Payment Date
occurs.
"Redemption Date": Means, in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, the Payment Date specified by the
Master Servicer or the Trust pursuant to Section 10.2(a) of the Indenture.
"Redemption Price": As defined in Section 10.1(b) of the Indenture.
"Reference Banks": Deutsche Bank AG, Barclay's Bank PLC, and National
Westminster Bank PLC; or such banks as are selected by the Indenture Trustee
after consultation with the Master Servicer which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Sponsors or any Affiliate thereof, (iii)
whose quotations appear on the Telerate Screen Page 3785 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Indenture Trustee.
"Registration Statement": The Registration Statement (No. 333-92669)
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.
"Reimbursement Amount": As defined in the Policy.
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"Relief Act Shortfall": With respect to any Remittance Period and any
Mortgage Loan for which there has been a reduction in the amount of interest
collectible thereon as a result of the application of the Civil Relief Act, the
amount by which (i) interest collectible on such Mortgage Loan is less than (ii)
one month's interest on the Principal Balance of such Mortgage Loan at the
Coupon Rate.
"Remittance Date": With respect to any Payment Date, the date on which
the Master Servicer is required to remit monies on deposit in the Principal and
Interest Account to the Indenture Trustee for deposit into the Note Account,
which shall be the 18th day of each month or, if such day is not a Business Day,
the next succeeding Business Day, commencing in the month following the Closing
Date.
"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master Servicer or
any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage Loan, the first day of the calendar month in which such Qualified
Replacement Mortgage Loan is conveyed to the Trust.
"Reserve Interest Rate": Means the rate per annum that the Indenture
Trustee determines to be either the arithmetic mean, rounded to the nearest
whole multiple of 1/16%, of the one-month U.S. dollar lending rates which New
York City banks selected by the Indenture Trustee are quoting on the Interest
Determination Date to the principal London offices of lending banks in the
London interbank market or, in the event that the Indenture Trustee cannot
determine the arithmetic mean, the lowest one-month U.S. dollar lending rate
which New York City banks selected by the Indenture Trustee are quoting on the
Interest Determination Date to leading European banks.
"S&P": Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc.
"Sale and Servicing Agreement": Means the Sale and Servicing Agreement,
including the Exhibits thereto, dated as of April 1, 2000, among the Trust, the
Sponsor, the Master Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"SAS 70": Means the Statement on Auditing Standards No. 70, Reports on
the Processing of Transactions by Service Organizations as in effect as of the
date hereof, which may be amended from time to time.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans attached to
the Indenture as Schedule I, as the same may be supplemented or amended from
time to time in connection with substitutions of Qualified Replacement Mortgage
Loans and the addition of Subsequent Mortgage Loans.
Annex 1-20
<PAGE> 101
The information contained on the Schedule of Mortgage Loans may be delivered to
the Indenture Trustee in an electronic medium.
"Scheduled Principal Distribution Amount": On any Payment Date (A)
during the Managed Amortization Period, the excess of (x) the lesser of (i) the
Fixed Allocation Percentage of Principal Collections and (ii) the Net Principal
Collections over (y) the Overcollateralization Reduction Amount, if any, with
respect to such Payment Date and (B) during the Rapid Amortization Period, the
excess of (x) the Fixed Allocation Percentage of Principal Collections 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 Section 4.10 and Section 4.13 of the
Sale and Servicing Agreement.
"Servicing Fee": With respect to any Remittance Period, the product of
(i) Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the opening of business on the first day of the related Remittance
Period.
"Servicing Fee Rate": 0.75% per annum.
"Servicing Officer": Any officer of the Master Servicer or a
Sub-Servicer.
"Specified Overcollateralization Amount": The amount specified in the
Insurance Agreement.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada corporation.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage Loan,
the opening of business on the first day of the calendar month in which such
Subsequent Mortgage Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans transferred and assigned
to the Trust pursuant to Section 2.6 of the Sale and Servicing Agreement, which
shall be listed on the Schedule of Mortgage Loans attached to the Subsequent
Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
executed by the Owner Trustee and the Sponsor substantially in the form of
Exhibit H to the Sale and Servicing Agreement, by which Subsequent Mortgage
Loans are transferred and assigned to the Trust.
"Subsequent Transfer Date": Means, with respect to any Subsequent
Mortgage Loans transferred to the Trust, the date set forth in the related
Subsequent Transfer Agreement.
Annex 1-21
<PAGE> 102
"Sub-Servicer": Any Person with whom the Master Servicer has entered
into a Sub-Servicing Agreement in accordance with Section 4.5 of the Sale and
Servicing Agreement.
"Sub-Servicing Agreement": The written contract reasonably acceptable to
the Insurer between the Master Servicer and any Sub-Servicer (other than an
Affiliated Sub-Servicer) relating to the servicing and/or administration of
certain Mortgage Loans as permitted by Section 4.5 of the Sale and Servicing
Agreement.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage Loan, if the outstanding principal amount of such Qualified
Replacement Mortgage Loan as of the applicable Replacement Cut-Off Date is less
than the related Principal Balance of the Mortgage Loan being replaced, an
amount equal to such difference together with accrued and unpaid interest on
such amount calculated at the Coupon Rate, net of the Servicing Fee, of the
Mortgage Loan being replaced.
"Telerate Screen Page 3750": The display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
"Termination Date": Means the latest of (i) the date on which the
termination of the Policy and the return of the Policy to the Insurer for
cancellation occurs, (ii) the date on which the Insurer shall have received
indefeasible payment of all amounts owed to it under the Insurance Agreement and
(iii) the date on which the Indenture Trustee and the Noteholders shall have
received payment of all amounts owed to them under the Indenture.
"Transfer Date": With respect to (i) a Qualified Replacement Mortgage
Loan, the date that such Mortgage Loan is delivered to the Indenture Trustee on
behalf of the Trust, (ii) a Mortgage Loan that is reassigned to the Sponsor
pursuant to Section 2.5 of the Sale and Servicing Agreement, the date that is
specified therein, and (iii) a Subsequent Mortgage Loan, the Subsequent Transfer
Date.
"Transfer Notice Date": As defined in Section 2.5 of the Sale and
Servicing Agreement.
"Trust": Advanta Revolving Home Equity Loan Trust 2000-A created by the
Trust Agreement.
"Trust Agreement": The Trust Agreement dated as of April 1, 2000 between
the Owner Trustee and the Sponsor relating to the formation of the Trust.
"Trust Estate": As defined in the Granting Clause of the Indenture.
"Trust Indenture Act" or "TIA": Means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
Annex 1-22
<PAGE> 103
"Underwriters": Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated, Prudential Securities Incorporated and Salomon Smith Barney 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) of the
Sale and Servicing Agreement.
Annex 1-23
<PAGE> 1
TRUST AGREEMENT
between
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of April 1, 2000
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I.
Definitions...................................................................................................... 1
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..................................................................................................... 5
Section 2.1 Names...................................................................................... 5
Section 2.2 Office..................................................................................... 5
Section 2.3 Purposes and Powers........................................................................ 5
Section 2.4 Appointment of Owner Trustee............................................................... 6
Section 2.5 Initial Capital Contribution of Trust Estate............................................... 6
Section 2.6 Declaration of Trust....................................................................... 6
Section 2.7 Liability.................................................................................. 6
Section 2.8 Title to Trust Property.................................................................... 6
Section 2.9 Situs of Trust............................................................................. 7
Section 2.10 Representations and Warranties of the Sponsor............................................. 7
Section 2.11 Federal Income Tax Allocations............................................................ 8
Section 2.12 Covenants of the Sponsor.................................................................. 8
Section 2.13 Covenants of the Certificateholders....................................................... 9
Section 2.14 Investment Company........................................................................ 10
ARTICLE III.
Certificates and Transfer of Interests........................................................................... 10
Section 3.1 Initial Ownership.......................................................................... 10
Section 3.2 The Certificates........................................................................... 10
Section 3.3 Authentication of Certificates............................................................. 11
Section 3.4 Registration of Transfer and Exchange of Certificates...................................... 11
Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.......................................... 11
Section 3.6 Persons Deemed Certificateholders.......................................................... 11
Section 3.7 Access to List of Certificateholders' Names and Addresses.................................. 12
Section 3.8 Maintenance of Office or Agency............................................................ 12
Section 3.9 ERISA...................................................................................... 12
Section 3.10 Restrictions on Transfer of Certificates.................................................. 12
Section 3.11 Acceptance of Obligations................................................................. 14
Section 3.12 Payments on Certificates.................................................................. 14
ARTICLE IV.
Voting Rights and Other Actions.................................................................................. 14
</TABLE>
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<TABLE>
<S> <C>
Section 4.1 Prior Notice to Holders with Respect to Certain Matters.................................... 14
Section 4.2 Action by Certificateholders with Respect to Certain Matters............................... 15
Section 4.3 Action by Certificateholders with Respect to Bankruptcy.................................... 16
Section 4.4 Restrictions on Certificateholders' Power.................................................. 16
Section 4.5 Majority Control........................................................................... 17
Section 4.6 Rights of Insurer.......................................................................... 17
Section 4.7 Separateness............................................................................... 17
ARTICLE V.
Certain Duties................................................................................................... 17
Section 5.1 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others............................................ 17
Section 5.2 Signature on Returns; Tax Matters Partner.................................................. 18
ARTICLE VI.
Authority and Duties of Owner Trustee............................................................................ 18
Section 6.1 General Authority.......................................................................... 18
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................................. 20
Section 6.6 Restrictions............................................................................... 20
ARTICLE VII.
Concerning the Owner Trustee..................................................................................... 20
Section 7.1 Acceptance of Trust and Duties............................................................. 20
Section 7.2 Furnishing of Documents.................................................................... 22
Section 7.3 Representations and Warranties............................................................. 22
Section 7.4 Reliance; Advice of Counsel................................................................ 22
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............................................... 23
Section 7.8 Payments from Trust Estate................................................................. 23
Section 7.9 Doing Business in Other Jurisdictions...................................................... 24
ARTICLE VIII.
Compensation of Owner Trustee.................................................................................... 24
Section 8.1 Owner Trustee's Fees and Expenses.......................................................... 24
Section 8.2 Indemnification............................................................................ 24
Section 8.3 Payments to the Owner Trustee.............................................................. 25
Section 8.4 Non-recourse Obligations................................................................... 25
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IX.
Termination of Trust Agreement................................................................................... 25
Section 9.1 Termination of Trust Agreement............................................................. 25
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees........................................................... 26
Section 10.1 Eligibility Requirements for Owner Trustee................................................ 26
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.................................................. 28
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee................................. 28
ARTICLE XI
Miscellaneous.................................................................................................... 30
Section 11.1 Supplements and Amendments................................................................ 30
Section 11.2 [Reserved.]............................................................................... 31
Section 11.3 Limitations on Rights of Others........................................................... 31
Section 11.4 Notices................................................................................... 31
Section 11.5 Severability.............................................................................. 31
Section 11.6 Separate Counterparts..................................................................... 32
Section 11.7 Assignments............................................................................... 32
Section 11.8 No Petition............................................................................... 32
Section 11.9 No Recourse............................................................................... 32
Section 11.10 Headings................................................................................. 32
Section 11.11 Governing Law............................................................................ 32
Section 11.12 Master Servicer.......................................................................... 32
Section 11.13 No Borrowing............................................................................. 33
Section 11.14 Nonpetition Covenant..................................................................... 33
</TABLE>
EXHIBITS
- --------
Exhibit A Form of Asset Backed Certificate
Exhibit B Form of Certificate of Trust
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<PAGE> 5
TRUST AGREEMENT dated as of April 1, 2000, between ADVANTA CONDUIT
RECEIVABLES, INC., a Nevada corporation, as sponsor (the "Sponsor"), 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 an undivided
beneficial ownership interest of a Certificateholder in the Trust, substantially
in the form of Exhibit A hereto.
"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
<PAGE> 6
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).
"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 April 27, 2000, among the Insurer and the Underwriters.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture, dated as of April 1, 2000,
between the Trust and the 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 Indenture 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 April 27, 2000, among the Insurer, the Sponsor, the Trust, the
Master Servicer and the Indenture Trustee.
"Insurer" shall mean Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation, or any successor thereto.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Notes" shall mean any of the Notes issued pursuant to the Indenture.
"Noteholder" shall mean a Person in whose name a Note is registered in
the Note Register.
"Operative Documents" shall mean, collectively, this Agreement, the
Certificate of Trust, the Sale and Servicing Agreement, the Indemnification
Agreement, the Insurance Agreement, the Subsequent Transfer Agreements, the
Indenture, the Purchase Agreement, the Guaranties, and the other documents and
certificates delivered in connection therewith.
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<PAGE> 7
"Originators" shall mean, collectively, Advanta Bank Corp., a Utah
industrial loan corporation, Advanta National Bank, a national banking
association, and Advanta Finance Corp., a Nevada corporation, and their
respective successors and assigns.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, its successors in interest and any successor Owner Trustee
hereunder.
"Policy" shall mean the certificate guaranty insurance policy (No.
AB0358BE) with respect to the Notes, dated April 27, 2000, 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 of the
month immediately preceding such Payment Date and (ii) in the case of the Notes,
so long as the Notes are Book Entry Notes, the Business Day immediately
preceding such Payment Date, and, so long as the Notes are Definitive Notes, the
last Business Day of the calendar month preceding the calendar month in which
such Payment Date occurs.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, the Sponsor, the Master Servicer and the Indenture
Trustee, dated as of April 1, 2000, 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, at any time, Noteholders holding Notes
evidencing a majority of the Note Balance so long as any Notes are outstanding
and Holders of a majority by principal amount of the Certificates if no Notes
are then Outstanding.
"Shadow Rating" shall mean, with respect to a Rating Agency, at any
time, the rating assigned to the Notes by such Rating Agency based on the
characteristics of the Mortgage Loans and the transaction structure, in the
absence of the Policy.
"Sponsor" shall mean Advanta Conduit Receivables, Inc., a Nevada
corporation, in its capacity as Sponsor hereunder.
"Subsequent Transfer Agreement" shall mean each Subsequent Transfer
Agreement executed by the Owner Trustee and the Sponsor substantially in the
form of Exhibit H to the Sale and Servicing Agreement, by which Subsequent
Mortgage Loans are transferred and assigned to the Trust.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary
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<PAGE> 8
regulations shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Estate" shall mean all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article II of
the Sale and Servicing Agreement, all funds on deposit from time to time in the
Accounts (excluding any investment earnings on the Principal and Interest
Account, Note Account and the Capitalized Interest 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.
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, 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
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<PAGE> 9
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 Indenture Trustee or the
Owner 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 2000-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 Indenture Trustee for the
Noteholders, 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 acquire, hold, dispose of and release the Trust Estate
in accordance with the Operative Documents, and to Grant the Trust Estate to the
Indenture Trustee for the benefit of the Noteholders and the Insurer and to
hold, manage and distribute to the Certificateholders pursuant to the terms of
this Agreement, any portion of the 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
-5-
<PAGE> 10
(vi) subject to compliance with the Operative Documents, to
engage in such other activities as may be required in connection with
conservation of the 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 Sponsor
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 Sponsor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Trust Estate and shall be deposited in a
segregated trust account established and maintained by the Owner Trustee for the
benefit of the Certificateholders. 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 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.
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<PAGE> 11
Section 2.8 Title to Trust Property. (a) Legal title to all of the
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 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 specific part of the
Trust Estate. The Holders shall be entitled to receive distributions with
respect to their undivided beneficial ownership interest in the Trust only in
accordance with Article IX. No transfer, by operation of law or otherwise, by
any Certificateholder of its ownership interest in the Trust 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 specific part of the
Trust Estate.
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. The Sponsor
makes the following representations and warranties on which the Owner Trustee
relies in accepting the Trust Estate in trust and issuing the Certificates and
upon which the Insurer relies in issuing the Policy:
(i) The Sponsor is duly organized and validly existing as a
Nevada corporation with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted and is proposed to be conducted pursuant to this Agreement
and the other Operative Documents;
(ii) The Sponsor 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 other 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. 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. 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, except as
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<PAGE> 12
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).
(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 by the Sponsor of this Agreement and the
other 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 (A) 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, (B)
result in the creation or imposition of any lien upon any of the Sponsor's
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Operative Documents), or (C) 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
the Sponsor's knowledge, threatened against the Sponsor before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Sponsor or its properties (A)
asserting the invalidity of this Agreement or any of the other 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 other Operative Documents, (C) seeking any determination or ruling
that might materially and adversely affect the Sponsor's performance of its
obligations under, or the validity or enforceability of, this Agreement or any
of the other 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 the outstanding principal amount
of the Certificates on such Record 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 first Record Date following the end of such month,
in proportion to their ownership percentage of the principal amount of the
Certificates outstanding on such Record Date until the principal balance of the
Certificates is reduced to zero. The Sponsor, as agent on
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behalf of the Originators, is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.
Section 2.12 Covenants of the Sponsor. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Insurer and the Owner Trustee,
during the term of this Agreement, and to the fullest extent permitted by
applicable law, that:
(a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Operative Documents;
(b) it shall not, for any reason, institute proceedings for the Trust
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(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, the Sponsor 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;
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(b) to appoint, and hereby appoints, the Sponsor as such
Certificateholder's agent and attorney-in-fact to sign all federal, state and
local income or franchise tax returns and any federal income tax information
return filed on behalf of the Trust, if any, and agrees that, if requested by
the Trust, it will sign such tax returns and information returns 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 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, (i) 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 (ii) file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, with respect to the Sponsor or the Trust, 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 the
Sponsor's or the Trust's property, or (iii) 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 this Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.11, 2.12, and 8.2 or elsewhere herein.
Section 2.14 Investment Company. Neither the Sponsor 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 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 the Originators.
Initially, the Originators shall be the sole beneficiaries of the Trust. Such
Certificates are duly authorized, validly
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issued, and entitled to the benefits of this Agreement. For so long as the
Originators shall own such 100% interest in the Trust, the Originators shall be
the sole beneficial owners of the Trust. For so long as any Notes remain
outstanding, each Originator shall not transfer its ownership interest in the
Trust, in whole or in part, to any Person that is not an Affiliate of the such
Originator, without the Insurer's prior written consent. Each Originator shall
give the Insurer notice of any transfer of its ownership interest in the Trust
to an Affiliate of such Originator.
Section 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures were 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. The Trust shall not issue any other Certificate, other
than (i) in connection with a transfer or exchange of a Certificate in
accordance with Sections 3.4 and 3.10 or (ii) in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Certificate, in accordance with Section
3.5.
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 in authorized denominations; provided, that, such
written order, if any, is signed by the chairman of the board, the president,
any vice president, the treasurer or any assistant treasurer of the Sponsor
without further corporate action by the Sponsor. No Certificate shall entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
Section 3.4 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
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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 agents 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 or 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 and/or the Insurer, within fifteen (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 an aggregate Percentage Interest of not less than 25% 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 (5) 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 of any of them accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
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Section 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the 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) of this Section 3.9 (each, a "Benefit Plan Investor"). By accepting
and holding its beneficial ownership interest in its Certificate, the Holder
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan Investor.
Section 3.10 Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a Certificate shall be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and any applicable state securities laws or is
made in accordance with the Securities Act and such state securities 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 and the Insurer that such transfer may be made
pursuant to an exemption from the Securities Act, describing the applicable
exemption and the basis therefor, or is being made in accordance with the
Securities 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) No Certificate or any interest therein shall be transferred except
upon satisfaction of the following conditions precedent: (i) the Person that
acquires such 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 and
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in the Credit Line Agreements and the Mortgage Notes; (ii) the Person that
acquires such 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 set forth in
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 set forth in 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 such Certificate shall deliver to the Owner Trustee and the Insurer a
letter from each Rating Agency confirming that its Shadow Rating will not be
reduced, after giving effect to the proposed transfer, solely as a result of the
transfer to such Person; (iv) the Person that acquires such 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 (c)(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
Shadow Rating will not be reduced, after giving effect to a proposed transfer to
a Person that does not meet the requirement set forth in subclause (c)(i)(A),
solely as a result of the transfer to such Person. 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
ninety-eight (98) other holders of Certificates.
Section 3.11 Acceptance of Obligations. The Sponsor agrees to be bound
by and to perform all the duties of the Sponsor set forth in this Agreement.
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Section 3.12 Payments on Certificates. The 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 thirty (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 the
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 Agreement, of a
successor Certificate Registrar or the consent by the Trust or the Owner Trustee
to the assignment by the Note Registrar, Paying Agent, Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this Agreement,
as applicable;
(d) the consent to the declaration 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) the performance of any act that conflicts with any other Operative
Document;
(g) the performance of any act which would make it impossible to carry
on the ordinary business of the Trust as described in Section 2.3 hereof;
(h) the confession of a judgment against the Trust;
(i) the possession of Trust assets or assignment of the Trust's
interest in any property, for any purpose other than a purpose enumerated in
Section 2.3;
(j) a loan by the Trust to any Person; or
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(k) any change in the Trust's purposes and powers enumerated in Section
2.3.
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 (5) 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, instruction of 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 (viii) (any such
action, 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 Security Majority, as the
case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee.
(b) Upon the written request of any Certificateholder (a "Proposer"),
the Owner Trustee shall distribute promptly to all Certificateholders any
request for action or consent of Certificateholders submitted by such Proposer.
The Owner Trustee shall provide a reasonable method for collecting responses to
such request and shall tabulate and report the results thereof to the
Certificateholders and the Sponsor. The Owner Trustee shall have no
responsibility or duty to determine if any such proposed action or consent is
permitted under the terms of this Agreement or applicable law.
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Section 4.3 Action by Certificateholders with Respect to Bankruptcy.
Until one year and one day following the day on which the Notes have been paid
in full, the Owner Trustee shall not have the power to, and shall not, commence
any proceeding or other actions contemplated by Section 2.12(b) relating to the
Trust without the prior written consent of the Insurer (unless an Insurer
Default shall have occurred and is continuing) or the Security Majority upon an
Insurer Default. Until one year and one day following the day on which the Notes
have been paid in full, all amounts due to the Insurer under the Insurance
Agreement have been paid in full, the Policy has been terminated and the
Indenture Trustee has surrendered the Policy to the Insurer, the Owner Trustee
shall not have the power to, and shall not, commence any proceeding or other
actions contemplated by Section 2.12(b) relating to the Trust without the prior
written consent of all of the Certificateholders and the delivery to the Owner
Trustee by each 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 other
Operative Documents or would be contrary to Section 2.3 or otherwise contrary to
law and the Owner Trustee shall not be obligated to follow any such direction,
if given.
(b) No Certificateholder (other than an Originator) 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 other Operative Document, unless (i) the
Certificateholders are the Instructing Party pursuant to Section 6.3 and (ii) 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 Holders of Certificates evidencing an aggregate Percentage Interest of not
less than 25% 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 by the Owner Trustee in connection therewith, and the Owner Trustee,
for 30 days after its receipt of such notice, request, and offer of indemnity,
shall have failed 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.
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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 an
aggregate Percentage Interest in excess of 50%. Except as expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Holders of Certificates evidencing an
aggregate Percentage Interest in excess of 50% 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, (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
6.1(a) and 6.1(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 using 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
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Code and applicable Treasury Regulations, such information as may be required
(including Schedule K1, if applicable) to enable each Certificateholder to
prepare its Federal and state income tax returns, (c) file or cause to be filed,
if necessary, such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
branch, or if applicable, as a partnership, for Federal income tax purposes and
(d) collect or cause to be collected any withholding tax as described in and in
accordance with Section 6.1(a) of the Sale and Servicing Agreement with respect
to income or distributions to Certificateholders and the appropriate forms
relating thereto. The Owner Trustee or the Master Servicer, as the case may be,
shall make all elections pursuant to this Section as directed in writing by the
Sponsor. The Owner Trustee shall sign all tax information returns presented to
it in final execution form, if any, filed pursuant to this Section 5.1 and any
other returns as may be required by law, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Sponsor or the Master Servicer. The Owner Trustee shall elect
under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Mortgage Loans. The Owner Trustee
shall not make the election provided under Section 754 of the Code.
Section 5.2 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that the Trust is
characterized as a partnership, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust presented to it in final execution form,
unless applicable law requires a Certificateholder to sign such documents, in
which case such documents shall be signed by the Sponsor, as agent, on behalf of
the Certificateholders.
(b) In the event that the Trust is characterized as a partnership, the
Sponsor 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 $400,000,000. 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 other 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 other Operative Document. The Instructing Party shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
other Operative Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any other 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 other 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
other 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 (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 other 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 other 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
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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 ten (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 other 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 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 other 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 make any filing with the Commission for
the Trust or to record this Agreement or any other 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 property
constituting part of the 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 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 property constituting part of the 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 any action that would violate the provisions of this Section.
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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
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 an Authorized 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 other 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 Trust Estate or for or in respect of the validity or sufficiency
of any of the other 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,
the Indenture Trustee, or any Certificateholder, other than as expressly
provided for herein and in the other Operative Documents;
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(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
other 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 on the Certificateholders have offered to the Owner Trustee security or
indemnity reasonably 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 other Operative Document shall not be construed as a duty,
and the Owner Trustee shall not be answerable for other than its gross
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, the Holders
and the Insurer (which shall have relied on such representations and warranties
in issuing the Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
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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 other
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 other Operative Document
shall look only to the 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
other 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 or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the 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 of, and information with
respect to, 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
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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 Trust Estate. All payments to be made by the
Owner Trustee under this Agreement or any of the other Operative Documents to
which the Trust or the Owner Trustee is a party shall be made only from the
income and proceeds of the Trust Estate and only to the extent that the Owner
Trustee shall have received income or proceeds from the 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 other Operative Documents to
which the Trust or the Owner Trustee is a party.
Section 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained herein 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 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
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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 other Operative Documents, the Trust Estate,
the administration of the Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that the Sponsor and the Master Servicer shall
not be liable for or required to indemnify the Owner Trustee from and against
any 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 the 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 Trust Estate immediately after such payment.
Section 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any other Operative Document, the Owner Trustee agrees, in its
individual capacity and in its capacity as Owner Trustee for the Trust, that
with respect to all obligations of the Trust to the Owner Trustee, individually
or as Owner Trustee for the Trust, the Owner Trustee shall have recourse to the
Trust Estate only and the Owner Trustee shall not have recourse to the assets of
any Originator or 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 Master Servicer at its option of the Notes as described in
Section 10.1(b) of the Indenture) and the subsequent distribution of amounts in
respect of such Mortgage Loans or redemption, as the case may be, 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
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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, or (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 Trust Estate or (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Sponsor nor any
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 the Certificateholders mailed within
five (5) Business Days of receipt of notice of such redemption from the Master
Servicer given pursuant to Section 10.1 of the Indenture, 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)(xiii) 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) Notwithstanding any other provision to the contrary herein, the
Trust shall not dissolve or liquidate so long as any Notes are outstanding.
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(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) organized, existing and
doing business under the laws of the United States of America or any State
thereof or the District of Columbia; (iii) authorized to exercise corporate
trust powers; (iv) having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or State authorities; (v)
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 (vi) 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.
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
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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 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 Holders
of Certificates evidencing an aggregate Percentage Interest of no less than
66-2/3%, 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 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
reasonable 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 to fully vest
and confirm 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 succession to the
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.
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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. 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 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 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 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;
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(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 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) and 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 Noteholders holding Notes evidencing more than 50% of the Note
Balance and the consent of the Holders of Certificates
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<PAGE> 36
evidencing an aggregate Percentage Interest greater than 50% (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 Note Balance or the aggregate Percentage Interest,
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 the
outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to 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 [Reserved.]
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
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other Person any legal or equitable right, remedy or claim in the 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: (i) in writing and
personally delivered, delivered by overnight courier or mailed first class mail
or certified mail, in each case return receipt requested; (ii) deemed to have
been duly given upon receipt; and (iii) if to the Owner Trustee, addressed to
the Corporate Trust Office; if to the Sponsor, addressed to Advanta Conduit
Receivables, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127; if
to the Insurer, addressed to Ambac Assurance Corporation, One State Street
Plaza, New York, New York 10004, Attention: Structured Finance Department - MBS,
Telecopy No.:212-363-1459, Confirmation No.:212-668-0340; or, if to any party,
addressed to 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 jurisdiction 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. 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
undivided 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 other 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 LAWS 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, execute 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.
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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 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.
[Signature Page Follows]
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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.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By: /s/ Michael Coco
------------------------------------
Name: Michael Coco
Title: Vice President
WILMINGTON TRUST COMPANY, as
Owner Trustee
By: /s/ Donald G. MacKelcan
------------------------------------
Name: Donald G. MacKelcan
Title: Vice President
<PAGE> 41
EXHIBIT A
FORM OF
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 (THE "SECURITIES ACT"), 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 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 (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")), (II) A PLAN (AS DEFINED IN
SECTION 4975(e) (1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE")) THAT IS SUBJECT TO SECTION 4975 OF THE CODE, OR (III) A PERSON ACTING
ON BEHALF OF OR USING THE ASSETS OF A PLAN DESCRIBED IN (I) OR (II) ABOVE, WHICH
REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE
INSURER.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH THE SECURITIES ACT AND SUCH
STATE SECURITIES LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF THIS CERTIFICATE TO
[________________________], 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
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<PAGE> 42
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 AND THE INSURER THAT SUCH
TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT,
DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR, OR IS BEING MADE
PURSUANT TO THE SECURITIES ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE
OF THE OWNER TRUSTEE OR THE INSURER. 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.
THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL NOT BE TRANSFERRED EXCEPT UPON
SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON THAT ACQUIRES
THIS 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 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 AND UNDER THE CREDIT LINE AGREEMENTS AND THE MORTGAGE NOTES; (II) THE
PERSON THAT ACQUIRES THIS 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 SET FORTH IN 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 SET FORTH IN 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 THIS 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, AS SET FORTH IN THE TRUST AGREEMENT;
(IV) THE PERSON THAT ACQUIRES THIS 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
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<PAGE> 43
PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE
FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH
TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR
ANY "PORTION" OF THE TRUST, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED
IN SECTION 7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO
CONTINUE THE PERFECTION OF THE INTEREST OF THE TRUST IN THE MORTGAGE LOANS AND
THE OTHER PROPERTY CONVEYED UNDER THE TRUST AGREEMENT SHALL HAVE BEEN TAKEN OR
MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
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<PAGE> 44
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A
ASSET BACKED CERTIFICATE
Percentage Interest: [____]%
Cut-Off Date:
Close of business on March 31, 2000
First Payment Date: Issue Date: April 27, 2000
May 25, 2000
No. ____
[__________________________________]
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as of April
1, 2000 (the "Trust Agreement"), between Advanta Conduit Receivables, Inc., as
sponsor (the "Sponsor"), and Wilmington Trust Company, as owner trustee (the
"Owner Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated
as Advanta Revolving Home Equity Loan Trust 2000-A "Asset Backed Certificates."
The 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. Under the Indenture dated as of April 1, 2000 (the "Indenture")
between the Trust and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee"), the Trust issued the Advanta Revolving Home
Equity Loan Asset Backed Notes, Series 2000-A (the "Notes"). The property of the
Trust includes a pool of adjustable rate revolving home equity 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 May 25, 2000, 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.
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<PAGE> 45
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.
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 other 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: April 27, 2000 ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-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> 47
(Reverse of Certificate)
This Certificate shall have the initial Percentage Interest set forth
on the face hereof, which Percentage Interest equals the percentage obtained by
dividing (x) the aggregate Principal Balance of the Initial Mortgage Loans
transferred to the Trust by the related Originator by (y) the aggregate
Principal Balance of all Initial Mortgage Loans. Thereafter, the Percentage
Interest of this Certificate, as of any date of determination, shall equal the
percentage obtained by dividing (x) the aggregate Principal Balance of the
Mortgage Loans transferred to the Trust by the related Originator by (y) the
aggregate Principal Balance of all of the Mortgage Loans transferred to the
Trust, in each case, as of such date of determination.
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 Trust Agreement, the Indenture or the other 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 by
any Certificateholder upon written request during normal business hours at the
principal office of the Sponsor, and at such other places, if any, designated by
the Sponsor.
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 Noteholders holding Notes evidencing more
than 50% of the Note Balance and holders of Certificates evidencing an aggregate
Percentage Interest greater than 50%. 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.
A-7
<PAGE> 48
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 or the Insurer, may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate Registrar or 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 the
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 2000-A
This Certificate of Trust of Advanta Revolving Home Equity Loan Trust
2000-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
Revolving Home Equity Loan Trust 2000-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 April ___, 2000.
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
SALE AND SERVICING AGREEMENT
among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A,
Trust,
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of April 1, 2000
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of this Agreement)
<TABLE>
<CAPTION>
Page
<S> <C>
Parties .......................................................................... 1
Recitals ......................................................................... 1
ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION ............................................... 1
Section 1.1. Definitions ................................................ 1
Section 1.2. Use of Words and Phrases ................................... 1
Section 1.3. Captions; Table of Contents ................................ 1
Section 1.4. Opinions ................................................... 2
ARTICLE 2
CONVEYANCE OF MORTGAGE LOANS ..................................................... 2
Section 2.1. Conveyance of the Mortgage Loans ........................... 2
Section 2.2. Acceptance of Mortgage Files by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Indenture Trustee ......................................... 6
Section 2.3. Qualified Replacement Mortgage Loans ....................... 8
Section 2.4. Cooperation Procedures ..................................... 9
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor
or the Related Originator ................................. 9
Section 2.6. Conveyance of the Subsequent Mortgage Loans ................ 10
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER ........................................... 13
Section 3.1. Representations and Warranties of the Sponsor .............. 13
Section 3.2. Representations and Warranties of the Master Servicer ...... 14
Section 3.3. Representations and Warranties of the Sponsor with Respect
to the Mortgage Loans; Retransfer of Certain Mortgage Loans 17
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations ............... 22
ARTICLE 4
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS ................................... 23
Section 4.1. Master Servicer and Sub-Servicers .......................... 23
Section 4.2. Modifications .............................................. 25
Section 4.3. Servicer Report ............................................ 27
Section 4.4. Liability of Master Servicer ............................... 27
Section 4.5. Sub-Servicing Agreements Between Master Servicer
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
and Sub-Servicers ......................................... 28
Section 4.6. Successor Sub-Servicers .................................... 29
Section 4.7. No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or the Noteholders ..................... 29
Section 4.8. Assumption or Termination of Sub-Servicing Agreement
by Indenture Trustee ..................................... 29
Section 4.9. Principal and Interest Account ............................ 29
Section 4.10. Servicing Advances ........................................ 31
Section 4.11. Maintenance of Insurance .................................. 31
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements 33
Section 4.13. Realization Upon Defaulted Mortgage Loans ................. 34
Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage Files . 35
Section 4.15. Servicing Compensation .................................... 36
Section 4.16. Annual Statement as to Compliance ......................... 36
Section 4.17. Annual Independent Certified Public Accountants' Reports .. 37
Section 4.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans ............................. 37
Section 4.19. Assignment of Agreement ................................... 38
Section 4.20. Resignation of the Master Servicer ........................ 38
ARTICLE 5
SERVICING TERMINATION ............................................................ 38
Section 5.1. Events of Servicing Termination ............................ 38
Section 5.2. Inspections by Insurer; Errors and Omissions Insurance ..... 42
Section 5.3. Merger, Conversion, Consolidation or Succession to
Business of Master Servicer ............................... 42
Section 5.4. Notification to Noteholders ................................ 42
Section 5.5. Notices of Material Events ................................. 42
ARTICLE 6
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER ..................................... 43
Section 6.1. Administrative Duties with Respect to the Indenture ........ 43
Section 6.2. Records .................................................... 45
Section 6.3. Additional Information to be Furnished to the Trust ........ 45
ARTICLE 7
MISCELLANEOUS .................................................................... 45
Section 7.1. Compliance Certificates and Opinions ...................... 45
Section 7.2. Form of Documents Delivered to the Indenture Trustee ...... 46
Section 7.3. Acts of Noteholders ....................................... 46
Section 7.4. Notices, etc. to Indenture Trustee ........................ 47
Section 7.5. Notices and Reports to Noteholders; Waiver of Notices ..... 47
Section 7.6. Successors and Assigns .................................... 48
Section 7.7. Severability .............................................. 48
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 7.8. Benefits of Agreement ..................................... 48
Section 7.9. Legal Holidays ............................................ 48
Section 7.10. Governing Law ............................................. 48
Section 7.11. Counterparts .............................................. 49
Section 7.12. Usury ..................................................... 49
Section 7.13. Amendment ................................................. 49
Section 7.14. The Insurer ............................................... 50
Section 7.16. Limitation of Liability ................................... 52
</TABLE>
<TABLE>
<S> <C> <C>
SCHEDULE I -- Schedule of Mortgage Loans
EXHIBIT A -- Defined Terms (Copy of Annex 1 to the Indenture)
EXHIBIT B -- [Reserved]
EXHIBIT C -- [Reserved]
EXHIBIT D -- Form of Trustee's Acknowledgment of Receipt
EXHIBIT E -- Form of Pool Certification
EXHIBIT F -- Form of Master Servicer's Trust Receipt
EXHIBIT G -- Form of Power of Attorney
EXHIBIT H -- Form of Subsequent Transfer Agreement
</TABLE>
iii
<PAGE> 5
SALE AND SERVICING AGREEMENT (the "Agreement"), dated as of April 1,
2000, by and among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A, a Delaware
business trust (the "Trust"), ADVANTA CONDUIT RECEIVABLES, INC., a Nevada
corporation, in its capacity as sponsor of the Trust (the "Sponsor"), ADVANTA
MORTGAGE CORP. USA, a Delaware corporation, in its capacity as master servicer
(the "Master Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a
national banking association, in its capacity as Indenture Trustee (the
"Indenture Trustee").
WHEREAS, the Trust desires to purchase a portfolio of Mortgage Loans
(as defined in Annex 1 to the Indenture) originated by the Originators (as
defined in Annex 1 to the Indenture);
WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Trust;
WHEREAS, the Master Servicer has agreed to service such Mortgage Loans,
which constitute the principal assets of the Trust Estate (as defined in Annex 1
to the Indenture);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Sponsor, the Master Servicer and the
Indenture Trustee hereby agree as follows:
ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions.
Except as otherwise specified herein, capitalized terms used in this
Agreement are defined in Annex 1 to the Indenture, dated as of April 1, 2000
(the "Indenture"), between the Trust and the Indenture Trustee. A copy of Annex
1 to the Indenture is attached to this Agreement as Exhibit A. Defined terms
that are used only in one section or only in another definition may be omitted
from the list of defined terms in Annex 1. Defined terms include, as
appropriate, all genders and the plural as well as the singular.
Section 1.2. Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders. As used herein, any form of
the word "include" shall be deemed to be followed by the words "without
limitation."
<PAGE> 6
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 2
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 the Trust, and the Trust hereby purchases and acquires, without
recourse (subject to the Sponsor's obligations herein), all right, title and
interest of the Sponsor in and to: (i) all Mortgage Loans listed on the Schedule
of Mortgage Loans, and their respective Principal Balances (including all
Additional Balances) and all principal and interest collected in respect thereof
on or after the respective Cut-Off Date; (ii) all Mortgaged Properties to the
extent that they are acquired by foreclosure or deed in lieu of foreclosure;
(iii) all of the Sponsor's rights under any Mortgage Insurance Policies covering
the Mortgaged Properties; (iv) all of the Sponsor's rights and benefits, but
none of its obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and
4.04 (other than the fourth paragraph thereof) of the Purchase Agreement,
including all of the Sponsor's rights and remedies in the event of certain
breaches by the Originators of their respective representations and warranties
under Sections 4.01 and 4.02 of the Purchase Agreement; (v) all Mortgage Files
and other documents relating to the foregoing; (vi) all amounts held in the
Accounts (excluding net investment earnings on the Principal and Interest
Account, the Note Account and the Capitalized Interest Account); (vii) all
proceeds with respect to the foregoing; and (viii) all other assets included or
to be included in the Trust Estate created under the Indenture for the benefit
of the 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.
-2-
<PAGE> 7
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.
As full consideration for the Sponsor's sale, assignment, 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 (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 the Trust 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
the Trust as contemplated by Section 2.1(a) be construed as a sale of the
Mortgage Loans by the Sponsor to the Trust for certain non-tax purposes. It is
not the intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Sponsor to the Trust or any of the Trust's Assignees
(including the Indenture Trustee) to secure a debt or other obligation of the
Sponsor or any Assignor of the Sponsor. However, in the event and to the extent
that, notwithstanding the intent of the parties hereto, any or all of the
Mortgage Loans (including the related Mortgage Files and the other rights and
properties described in Section 2.1(a) above) are held to be property of the
Sponsor or its Assignors, then:
(i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the Uniform Commercial Code
("UCC");
(ii) the conveyance provided for herein shall be deemed to be
a grant by the Sponsor to the Trust of a first priority security interest in all
of the Sponsor's right, title and interest in and to the Mortgage Loans
(including the related Mortgage Files and the other rights and properties
described in Section 2.1(a) above) and all amounts payable to the holder of the
Mortgage Loans and/or such rights or properties in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including all
amounts from time to time held or invested in the Accounts (excluding net
investment earnings on the Principal and Interest Account, the Note Account and
the Capitalized Interest Account), whether in the form of cash, instruments,
securities or other property;
(iii) the possession by the Trust 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 California UCC;
-3-
<PAGE> 8
(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 (ii) 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 the Sponsor 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. The Sponsor
also covenants not to pledge, assign or grant any security interest to any third
party in any Mortgage Loan conveyed to the Trust hereunder.
(c) Upon the Trust's request, the Sponsor shall perform (or
cause to be performed) such further acts and execute, acknowledge and deliver
(or cause to be executed, acknowledged and delivered) to the Trust such further
documents as the Trust shall deem necessary or advisable in order to evidence,
establish, maintain, protect, enforce or defend its rights in and to the
Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this Agreement
(including filing UCC-1 financing statements naming the Sponsor as debtor and
the Trust as secured party and any continuation statements relating thereto).
(d) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor agrees to:
(i) cause to be delivered without recourse to the Indenture
Trustee, on the Closing Date with respect to the Initial Mortgage Loans, on the
Transfer Date with respect to any Qualified Replacement Mortgage Loan, and on
the Subsequent Transfer Date with respect to any Subsequent Mortgage Loans, the
items listed in the definition of "Mortgage Files";
(ii) cause, within seventy-five (75) Business Days following
the Closing Date, the Subsequent Transfer Date or the Transfer Date (as
applicable), (x) Assignments of Mortgages to be prepared, (y) copies of
Assignments of Mortgages to be delivered to the Indenture Trustee and (z)
originals of Assignments of Mortgages to be submitted for recording in the
appropriate jurisdictions wherein such recordation is necessary to perfect the
lien of the Indenture Trustee against creditors of or purchasers from the
Sponsor; provided, however, that an Assignment of Mortgage shall not be required
to be submitted for recording with respect to any Mortgage Loan as to which the
recordholder is an
-4-
<PAGE> 9
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 thirty (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, (B) an Event of Servicing
Termination or a Rapid Amortization Event shall have occurred, (C) 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, (D) the circumstances discussed in
Section 2.1(j) below shall exist, or (E) the Insurer otherwise directs the
Sponsor in writing; and
(iii) cause, within one (1) year after the Closing Date, the
Subsequent Transfer Date or the Transfer Date (as applicable), to be delivered
to the Indenture Trustee and the Insurer evidence of the recording of such
Assignments of Mortgage (provided that such recording is 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 or assignment of a 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 or such assignment of a Mortgage, as the case may be, certified by the
public recording office to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments and any Assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
Within thirty (30) days after the Closing Day, the Master Servicer
shall deliver to the Indenture Trustee for execution powers of attorney,
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.
(e) 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.
(f) The Sponsor shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
(g) If (i) the amount of shareholders' equity of the Master
Servicer and the ultimate consolidating parent of the Master Servicer,
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 and (ii) the amount of
shareholders' equity of Advanta National Bank, calculated pursuant to applicable
regulatory accounting principles, as evidenced by the financial statements of
Advanta National Bank, falls below $25,000,000, then the Sponsor shall promptly
prepare and deliver
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to the Indenture Trustee an Assignment of Mortgage for each Mortgage Loan for
which an Assignment of Mortgage was not previously prepared. Upon the direction
of the Insurer, the Indenture Trustee shall submit such Assignments of Mortgages
with respect to all of the Mortgage Loans 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 Mortgages
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,
pursuant to Section 6.7 of the Indenture, from amounts otherwise distributable
to the Certificateholders.
(h) To the extent that the ratings, if any, then assigned to
the unsecured debt of 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 (and any documents theretofore delivered to the
Indenture Trustee shall be returned to Advanta National Bank or its designee) on
such terms and subject to such conditions as the Insurer, Moody's and S&P may
require.
Section 2.2. Acceptance of Mortgage Files by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Indenture Trustee.
(a) The Indenture Trustee hereby acknowledges its receipt of
the Policy and agrees to execute and deliver on the Closing Date and each
Subsequent Transfer Date and each Transfer Date an acknowledgment of receipt of
the Mortgage Files delivered to it by the Sponsor and declares that it will hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets of the Trust Estate delivered to the Indenture Trustee, as
Indenture Trustee in trust upon and subject to the conditions set forth herein,
for the benefit of the Noteholders and the Insurer.
(b) The Indenture Trustee further agrees to review any
documents delivered to it by the Sponsor within ninety (90) days after the
Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable,
and to deliver to the Sponsor, the Master Servicer, the Insurer and the Owner
Trustee a certification, in the form of Exhibit E hereto (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), (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 (except where such alteration has been acknowledged and accepted by the
Mortgagor) and on their face appear to relate to such Mortgage Loan. The Pool
Certification shall be delivered to the Sponsor, the Master Servicer, the
Insurer and the Owner Trustee within one-hundred twenty (120) days, but is not
required to be delivered prior to ninety (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.
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(c) If the Indenture Trustee during such 90-day period from
the Closing Date, the Subsequent Transfer Date or the Transfer Date, as
applicable, finds (i) any document constituting a part of a Mortgage File which
(A) is not properly executed, (B) has not been received within the specified
period, or (C) is unrelated to the Mortgage Loans identified in the Schedule of
Mortgage Loans, or (ii) 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 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 Mortgage File delivered by the Sponsor is limited solely to
confirming that the documents listed in the definition of Mortgage File have
been executed and received and, on their face, appear to relate to the Mortgage
Loans 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 thirty (30) days after
the Indenture Trustee's notice (which may be in the form of a Pool
Certification) 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, the
Noteholders or the Insurer, the Sponsor will then, within five (5) Business Days
(i) substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage
Loan pursuant to Section 2.3 and, deliver the Substitution Amount applicable
thereto to the Master Servicer for deposit in the Principal and Interest Account
or (ii) reacquire such Mortgage Loan at a purchase price equal to the Loan
Reacquisition Price thereof, which reacquisition price shall be delivered to the
Master Servicer for deposit in the Principal and Interest Account.
(d) As to any Qualified Replacement Mortgage Loan, the Sponsor
shall, if required to deliver any such 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, and deliver to the Indenture Trustee such documents
and agreements as are required to be held by the Indenture Trustee in accordance
with this Section 2.2. Upon receipt of the Mortgage File for a Qualified
Replacement Mortgage Loan and written notification signed by a Servicing Officer
to the effect that the related Substitution Amount, if any, has been deposited
into the Principal and Interest Account or of written notification signed by a
Servicing Officer to the effect that the Loan Reacquisition Price in respect of
an Unqualified Mortgage Loan has been deposited into the Principal and Interest
Account, then (i) on the date of conveyance of such Qualified Replacement
Mortgage Loan or deposit of the Loan Reacquisition Price, as the case may be,
the Indenture Trustee shall deliver to the Sponsor the Mortgage File for the
related Unqualified Mortgage Loan, properly endorsed without recourse to the
Sponsor and (ii) within ten (10) Business Days, the Indenture Trustee shall
execute such other 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 a transfer by the Trust of such Unqualified
Mortgage Loan to the Sponsor or its designee.
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It is understood and agreed that the obligation of the Sponsor to
accept a transfer of an Unqualified Mortgage Loan and to either convey a
Qualified Replacement Mortgage Loan (together with a deposit of the related
Substitution Amount, if any, into the Principal and Interest Account) or to make
a deposit of any related Loan Reacquisition Price into the Principal and
Interest Account shall constitute the sole remedy available to the 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 transfer, appropriately mark its records
to indicate that it is no longer servicing such Mortgage Loan on behalf of the
Trust.
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(c), 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 as, and a margin over such
index and a maximum interest rate at least equal to, the Mortgage Loan being
replaced, (ii) is secured by property of the same or better type and with 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
related Originator's credit underwriting guidelines), (iv) shall mature no later
than the Payment Date occurring in September, 2023, (v) has a Combined
Loan-to-Value Ratio no higher than that of the replaced Mortgage Loan, (vi) has
a Principal Balance equal to or less than that of the replaced Mortgage Loan,
(vii) is in the same lien position or better, (viii) is not more than 30 days
delinquent, and (ix) complies with the representations and warranties set forth
in Section 3.3(a). Except with respect to clause (ix) above, in the event that
one or more mortgage loans are proposed to be substituted for one or more
Mortgage Loans, the Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Insurer, as
evidenced by a written approval delivered to the Indenture Trustee and the
Sponsor by the Insurer.
(b) Each Unqualified Mortgage Loan that is required to be
repurchased or substituted pursuant to the provisions of this Agreement or the
Purchase Agreement shall, upon such reacquisition or substitution in accordance
with the provisions hereof, be released from the Trust and from the lien created
by the Indenture. As to each Mortgage Loan released from the Trust in connection
with its reacquisition or the conveyance of a Qualified Replacement Mortgage
Loan, 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.
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(c) For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgage Loans, the Master
Servicer shall determine the Substitution Amount, which the Sponsor shall
deposit in the Principal and Interest Account at the time of substitution. All
amounts received in respect of the Qualified Replacement Mortgage Loan during
the Remittance Period in which the circumstances giving rise to such
substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Principal and Interest Account. All
amounts received by the Master Servicer during the Remittance Period in which
the circumstances giving rise to such substitution occur in respect of any
Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by
the Master Servicer in the Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Sponsor shall be deemed (i) to
have made with respect to such Qualified Replacement Mortgage Loan or Loans, as
of the date of substitution, the covenants, representations and warranties set
forth in Section 3.3 and (ii) to have certified that such Mortgage Loan(s)
is/are Qualified Replacement Mortgage Loan(s). The procedures applied by the
Sponsor in selecting each Qualified Replacement Mortgage Loan shall not be
materially adverse to the interests of the Indenture Trustee, the Noteholders or
the Insurer.
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, to which the Insurer
must consent. 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 reassignment;
(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 and
the Insurer a revised Schedule of Mortgage Loans, reflecting
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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 to be removed from the Trust and no other selection
procedures which are adverse to the interests of the Noteholders or the
Insurer were utilized in selecting the Mortgage Loans to be removed
from the Trust; and
(v) The Sponsor or the related Originator shall have delivered
to the Indenture Trustee and the Insurer an Officer's Certificate
certifying that the items set forth in subparagraphs (i) through (v) of
this Section 2.5, inclusive, have been performed or are true and
correct, as the case may be. The Indenture Trustee may conclusively
rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur
no liability in so relying.
Upon receiving the requisite information from the Sponsor or the
related Originator, the Master Servicer shall perform in a timely manner those
acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Indenture Trustee shall deliver, or cause
to be delivered, to the Sponsor or the related Originator (or their designee)
the Mortgage File for each Mortgage Loan being so reassigned, and the Indenture
Trustee shall execute and deliver (at the Sponsor's or the related Originator's
direction) to the Sponsor or the related Originator such other documents as
shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor or
the related Originator. Any such transfer of the Trust's right, title and
interest in and to Mortgage Loans shall be without recourse, representation or
warranty by or of the Indenture Trustee or the Trust to the Sponsor or the
related Originator.
Section 2.6. Conveyance of the Subsequent Mortgage Loans.
(a) On any Subsequent Transfer Date, subject to the conditions
set forth in paragraph (b) below in consideration of the Indenture Trustee's
delivery of all or a portion of the balance of funds on deposit in the
Pre-Funding Account, the Sponsor shall sell, transfer, assign, set over and
otherwise convey, all right, title and interest in and to each Subsequent
Mortgage Loan listed on the Schedule of Mortgage Loans delivered by the Sponsor
to the Indenture Trustee on such Subsequent Transfer Date. In addition, the
Sponsor shall transfer, assign and set over all right, title and interest in and
to principal and interest collected on each such Subsequent Mortgage Loan on and
after the related Subsequent Cut-Off Date and all right, title and interest in
and to all Mortgage Insurance Policies; provided, however, that the Sponsor
reserves and retains all its right, title and interest in and to principal and
interest collected on each such Subsequent Mortgage Loan prior to the related
Subsequent Cut-Off Date. The transfer to the Trust of the Subsequent Mortgage
Loans set forth on the Schedule of Mortgage Loans shall be absolute and shall be
intended by the Sponsor and all parties hereto to be treated as a sale by the
Sponsor. The amount released from the Pre-Funding Account shall be equal to
94.8% of the aggregate Principal Balances of the Subsequent Mortgage Loans so
transferred.
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(b) The Sponsor shall transfer or cause to be transferred to
the Trust the Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:
(i) the Sponsor shall have provided the Indenture Trustee, the
Insurer and the Rating Agencies with an Addition Notice and shall have provided
information with respect to the Subsequent Mortgage Loans in an electronic data
file and in a form agreeable to the foregoing parties;
(ii) the Sponsor shall have delivered to the Indenture Trustee
a duly executed written assignment in substantially the form of Exhibit H (the
"Subsequent Transfer Agreement"), which shall include a Schedule of Mortgage
Loans listing the Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) as of each Subsequent Transfer Date, none of the related
Originator, the Master Servicer or the Sponsor was insolvent nor will any of
them have been made insolvent by such transfer nor is any of them aware of any
pending insolvency;
(iv) such addition will not result in a material adverse tax
consequence to the Trust or the Noteholders;
(v) the Pre-Funding Period shall not have terminated;
(vi) the Sponsor shall have delivered to the Indenture Trustee
an Officer's Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and paragraphs (c), (d) and (e) below, and in
the related Subsequent Transfer Agreement;
(vii) the Sponsor shall have delivered to the Rating Agencies,
the Insurer and the Indenture Trustee, Opinions of Counsel with respect to
bankruptcy, corporate and tax matters relating to the Subsequent Mortgage Loans
(which opinions may have already been delivered on the Closing Date); and
(viii) the Insurer shall have approved the transfer.
(c) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
requirements:
(i) with respect to any individual Subsequent Mortgage Loan:
a. such Subsequent Mortgage Loan may not be 30 or
more days contractually delinquent as of the related
Subsequent Cut-Off Date;
b. the maturity date of such Subsequent Mortgage
Loan may not be later than September 30, 2023;
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c. such Subsequent Mortgage Loan may not have a
Combined Loan-To-Value Ratio ("CLTV") in excess of 125%;
d. the Coupon Rate of such Subsequent Mortgage
Loan may not be below 8.00% per annum; and
e. such Subsequent Mortgage Loan may not have a
Principal Balance in excess of $300,000;
(ii) following the purchase of Subsequent Mortgage Loans, the
Mortgage Loans in the aggregate will satisfy the following criteria:
a. the Mortgage Loans will have a weighted
average Coupon Rate of at least 13.35%;
b. the Mortgage Loans will have a weighted
average CLTV of not more than 99.50%;
c. no more than 34.0% by aggregate Principal
Balance of the Mortgage Loans will have a CLTV of 100% or
greater;
d. no more than 0.5% by aggregate Principal
Balance of the Mortgage Loans will be secured by Mortgaged
Properties within a single zip code;
e. no more than 15.0% by aggregate Principal
Balance of the Mortgage Loans will be secured by Mortgaged
Properties in California;
f. no more than 96.0% by aggregate Principal
Balance of the Mortgage Loans will be in a second lien
position;
g. the Mortgage Loans will have a weighted
average FICO score of not less than 625;
h. the weighted average Margin will not be less
than 4.80% per annum;
i. the weighted average remaining term to
scheduled maturity of the Mortgage Loans will be not more than
275 months; and
j. no more than 45.0% by aggregate Principal
Balance of the Mortgage Loans will have FICO scores of less
than 620.
k. no more than 25% by Pool Principal Balance of
the Mortgage Loans will have been underwritten utilizing a
statistical property evaluation.
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The Insurer may waive or modify any of the above requirements or specify any
additional criteria provided that any such modification shall not materially and
adversely affect the Sponsor.
(d) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy the conditions set
forth in Sections 2.1(d)-(g).
(e) On each Subsequent Transfer Date, the Sponsor shall
deposit in the Principal and Interest Account all principal and interest
collections in respect of the related Subsequent Mortgage Loans received on or
after the related Subsequent Cut-Off Date.
(f) In connection with each Subsequent Transfer Date and on
the Payment Dates occurring in May 2000, June 2000, July 2000 and August 2000,
the Master Servicer and the Indenture Trustee shall co-operate in determining
(i) the amount and correct dispositions of the Capitalized Interest Requirement,
the Pre-Funding Earnings and the amount then on deposit in the Pre-Funding
Account, and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account.
ARTICLE 3
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 the Noteholders as of the Closing
Date that:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its respective business, or the properties owned or leased by it make such
qualification necessary. The Sponsor has all requisite corporate power and
authority to own and operate its respective properties, to carry out its
respective business as presently conducted and as proposed to be conducted and
to enter into and discharge its respective obligations under this Agreement and
the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and its
performance and compliance with the terms of this Agreement and of the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Sponsor and will not violate the
Sponsor's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Sponsor is a party or by which the Sponsor is bound, or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Sponsor or any of
its properties.
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(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 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 other) 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
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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 Initial Mortgage Loans,
any Qualified Replacement Mortgage Loans and the Subsequent 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 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 amount of shareholders' equity of the
Master Servicer or the ultimate consolidating parent of the Master Servicer,
calculated pursuant to generally accepted accounting principles, is at least
$5,000,000 or the amount of shareholders' equity of Advanta National Bank is at
least $25,000,000.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action on the part of the Master Servicer and will
not violate the Master Servicer's Articles of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Master Servicer is a party
or by which the Master Servicer is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Master Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a valid,
legal and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof 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).
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(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
other) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Master Servicer and the performance by the Master Servicer of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(g) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(h) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or which are
attributed to the Master Servicer therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Master Servicer or omit to state a
material fact required to be stated therein or necessary to make the statement
contained therein with respect to the Master Servicer not misleading.
(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.
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(j) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage loan servicing
business.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.
(l) The terms of each existing Sub-Servicing Agreement and
each designated Sub-Servicer are acceptable to the Master Servicer and any new
Sub-Servicing Agreements or Sub-Servicers will comply with the provisions of
Section 4.1.
It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Initial Mortgage Loans,
any Qualified Replacement Mortgage Loans and the Subsequent Mortgage Loans to
the Indenture Trustee.
Upon discovery by the Master Servicer, the Sponsor or the Indenture
Trustee of a breach of any of the representations and warranties set forth in
this Section 3.2 which materially and adversely affects the interests of the
Noteholders or the Insurer, the party discovering such breach shall give prompt
written notice to the other parties. Within thirty (30) days of its discovery or
its receipt of notice of such breach, the Master Servicer shall cure such breach
in all material respects; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Insurer.
Section 3.3. Representations and Warranties of the Sponsor with Respect
to the Mortgage Loans; Retransfer of Certain Mortgage
Loans.
(a) The Sponsor makes the following representations and
warranties as to each Mortgage Loan, on which the Trust relies in accepting the
Mortgage Loan and on which the Insurer relies in issuing the Policy. Such
representations and warranties speak as of the Closing Date, in the case of the
Initial Mortgage Loans, the Subsequent Transfer Date, in the case of the
Subsequent Mortgage Loans, and the Transfer Date, in the case of the Qualified
Replacement Mortgage Loans, but shall survive the transfer of the Mortgage Loans
to the Trust and the pledge thereof to the Indenture Trustee pursuant to the
Indenture:
(i) All of the original or certified documentation set forth
in the definition of Mortgage File with respect to each Mortgage Loan
has been or will be delivered to the Indenture Trustee on the Closing
Date, the Subsequent Transfer Date or the Transfer Date, as applicable,
except as otherwise provided in Section 2.1. 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, is
in due and proper form, and each such document or instrument is in a
form generally acceptable to prudent mortgage lenders that regularly
originate, purchase or sell mortgage loans comparable to the Mortgage
Loans.
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(ii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate.
(iii) The information set forth in the Schedule of Mortgage
Loans (as amended for Qualified Replacement Mortgage Loans and
Subsequent Mortgage Loans) for each Mortgage Loan listed is true and
correct in all material respects.
(iv) Immediately prior to the transfers and assignments herein
contemplated, the Sponsor held good and indefeasible title to, and was
the sole owner of, each Mortgage Loan conveyed by the Sponsor to the
Trust pursuant to Section 2.1 hereof, all monies due or to become due
with respect thereto, and all proceeds of such Cut-Off Date Principal
Balances with respect to such Mortgage Loans subject to no liens,
charges, mortgages, encumbrances or rights of others except liens which
will be released simultaneously with such transfers and assignments;
and immediately upon the transfers and assignments herein contemplated,
the Trust will hold good and indefeasible title to, and be the sole
owner of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfers and assignments.
(v) There is no valid offset, defense or counterclaim of any
Mortgagor 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, or 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.
(vi) As of the Initial Cut-Off Date and with respect to the
Initial Mortgage Loans, no Minimum Monthly Payment is more than 59 days
Delinquent (measured on a contractual basis) and no more than 0.51% (by
aggregate Cut-Off Date Principal Balance) of the Initial Mortgage Loans
were 30-59 days Delinquent (measured on a contractual basis).
(vii) Each Credit Line Agreement and each Mortgage relating to
the Mortgage Loans is the legal, valid, binding and enforceable
obligation of the related Mortgagor and is enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
any 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).
(viii) With respect to each Mortgage Loan, on each date that
the Coupon Rate has been adjusted, such adjustment was made in
compliance with the related Mortgage and Credit Line Agreement and
applicable law.
(ix) Each Mortgaged Property is improved by a single
(one-to-four) family residential dwelling, which may include
manufactured homes, condominiums and townhouses.
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(x) As of the Initial Cut-Off Date, no Initial Mortgage Loan
had a Combined Loan-to-Value Ratio in excess of 125.00%.
(xi) As of the Initial Cut-Off Date with respect to the
Initial Mortgage Loans, as of the Subsequent Cut-Off Date with respect
to the Subsequent Mortgage Loans and as of the applicable Transfer Date
with respect to any Qualified Replacement Mortgage Loan, each Mortgage
is a valid and subsisting first or junior lien of record on the
Mortgaged Property (subject in the case of any Junior Mortgage Loan
only to one or more Senior Liens on such Mortgaged Property) and
subject in all cases to the exceptions to title set forth in the title
insurance policy or title search, with respect to the related Mortgage
Loan, which exceptions are generally acceptable to banking institutions
in connection with their regular mortgage lending activities, and
except for liens for (i) real estate taxes and special assessments not
yet delinquent, (ii) income taxes not yet due, (iii) any covenants,
conditions and restrictions, rights of way, easements, and other
matters of public record and such other exceptions to which similar
properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage.
(xii) To the best of the Sponsor's knowledge, there is no
delinquent tax or assessment lien or mechanic's lien on any Mortgaged
Property relating to a Mortgage Loan, and each such Mortgaged Property
is free of substantial damage and is in good repair.
(xiii) Each Mortgage Loan at the time it was made complied in
all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act, the federal Home Ownership and Equity Protection
Act and other consumer protection laws, real estate settlement
procedure, usury, equal credit opportunity, disclosure and recording
laws.
(xiv) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of the Sponsor's knowledge, with
respect to each Mortgage Loan that is a Junior Mortgage Loan, (i) a
lender's title insurance policy, issued in standard California Land
Title Association form or American Land Title Association form, or
other form acceptable in a particular jurisdiction by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, was issued on the date of
origination of such Mortgage Loan, and as of the Closing Date, the
Subsequent Transfer Date or the Transfer Date, as applicable, each such
policy is valid and remains in full force and effect, or (ii) a title
search or guaranty of title customary in the relevant jurisdiction was
obtained with respect to any Mortgage Loan as to which no title
insurance policy or binder was issued.
(xv) The terms of each Credit Line Agreement and each related
Mortgage have not been impaired, cancelled, subordinated, rescinded,
altered or modified in any material respect (except as reflected in the
Mortgage File and in the Schedule of Mortgage Loans), and the related
Mortgaged Property has not been released from the lien of the related
Mortgage, in whole or in part, and no instrument has been executed that
would effect such release, cancellation,
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subordination or rescission, except by a written instrument which (if
such instrument is secured by real property) has been recorded, if
necessary, to protect the interest of the Noteholders and which has
been delivered to the Indenture Trustee. The substance of any other
alteration or modification of a Credit Line Agreement and related
Mortgaged Property is reflected on the related Schedule of Mortgage
Loans.
(xvi) Except as otherwise required by law or the terms of the
Credit Line Agreement, 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.
(xvii) Each Mortgaged Property is located in the state
identified in the Schedule of Mortgage Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon.
(xviii) To the best of the Sponsor's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently
occurring, and each such Mortgaged Property is undamaged by waste,
fire, earthquake or earth movement, flood, tornado or other casualty,
so as to affect adversely the value of such Mortgaged Property as
security for the related Mortgage Loan or the use for which the
premises were intended.
(xix) 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 or servicing file.
(xx) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. To the best of the Sponsor'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.
(xxi) There is no default, breach, violation or event of
acceleration existing under any Mortgage or Credit Line Agreement and
no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and the Sponsor has not
waived any default, breach, violation or event of acceleration;
provided, however, that the foregoing shall not apply to the extent
that the relevant default, breach, violation or other event relates to
one or more of the Delinquent Mortgage Loans.
(xxii) To the best of the Sponsor's knowledge, all parties to
each Credit Line Agreement and the related Mortgage had legal capacity
to execute such Credit Line Agreement and the related
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Mortgage and each such Credit Line Agreement and the related Mortgage
have been duly and properly executed by such parties.
(xxiii) 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.
(xxiv) 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.
(xxv) 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.
(xxvi) To the best of the Sponsor's knowledge, all required
inspections, licenses and certificates with respect to the use and
occupancy of all occupied portions of all property securing the
Mortgages have been made, obtained or issued, as applicable.
(xxvii) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related senior lien does not provide for negative
amortization.
(xxviii) 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.
(xxix) With respect to each Mortgage Loan, (A) 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 the least of (1) prior to
the end of the draw period, the Credit Limit of such Mortgage Loan, (2)
after the draw period, the unpaid principal balance of the related
Mortgage Loan, or (3) the maximum insurable value of the related
Mortgaged Property, or (B) the Master Servicer has obtained and will
maintain a blanket policy insuring against fire and hazards of extended
coverage with respect to all of the Mortgage Loans.
(xxx) With respect to each Mortgaged Property located in an
area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, (A) such Mortgaged
Property is covered by a valid and existing flood insurance policy in a
form which meets the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable carrier
which provides for coverage not less than the least of (1) prior to the
end of the draw period, the Credit Limit of the related Mortgage Loan,
(2) after the draw period, the unpaid principal balance of the related
Mortgage Loan or (3) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973, or (B) the Master
Servicer has
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obtained a master flood insurance policy insuring against losses due to
flooding on the Mortgaged Properties located in federally designated
flood zones.
(xxxi) With respect to any Mortgage Loan which is a First
Mortgage Loan, the Sponsor has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Master Servicer and the Indenture Trustee in any
Mortgage Insurance Policies applicable to such Mortgage Loan,
including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Trust
and its assignees in care of the Indenture Trustee.
(xxxii) To the best of the Sponsor's knowledge, each Mortgage
Loan was underwritten in all material respects in accordance with the
credit underwriting guidelines of the related Originator, as in effect
on the date of origination.
(xxxiii) 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 or the Master Servicer.
(xxxiv) As of the respective Cut-Off Date, no Mortgagor had
been identified on the records of the Sponsor as being the subject of a
current bankruptcy proceeding.
(xxxv) To the best of the Sponsor's knowledge, each of the
related Originator, the Master Servicer, and the Sponsor is (or, if
applicable, during the period in which such party held any interest in
a Mortgage Loan, was) in substantial compliance with any and all
applicable licensing requirements of the law of the state wherein the
property securing the Mortgage Loan is located.
(xxxvi) To the best of the Sponsor's knowledge, with respect
to the Mortgage Loans, the documents, instruments and agreements
submitted by each Mortgagor for loan underwriting were not falsified
and contain no untrue statement of a material fact and do not omit to
state a material fact required to be stated therein or necessary to
make the information and the statements contained therein not
misleading.
(xxxvii) Except as previously disclosed in writing to the
Indenture Trustee and the Insurer, there is only one originally
executed Mortgage and Credit Line Agreement not stamped as a duplicate.
(xxxviii) With respect to the Initial Mortgage Loans, as of
the Initial Cut-Off Date, and with respect to the Subsequent Mortgage
Loans on the Subsequent Cut-Off Date, each such Mortgage Loan conforms,
and all the Mortgage Loans, in the aggregate, conform, in all material
respects to the description thereof set forth in the Registration
Statement.
(xxxix) During the period from origination to Closing Date,
each Mortgage Loan has been serviced in accordance with applicable
laws.
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(xl) As of the Cut-Off Date, no more than 0.5% of the
aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans
is secured by Mortgaged Properties located within any single zip code
area.
(xli) Except as disclosed in the Prospectus Supplement, no
Mortgage Loan had a Combined Loan-to-Value Ratio in excess of 125.00%
at the time of origination.
(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 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.
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations.
(a) With respect to the representations and warranties set
forth in Section 3.3 that are made to the best of the Sponsor's knowledge or as
to which the Sponsor has no knowledge, if it is discovered by the Sponsor, the
Master Servicer, the Indenture Trustee or any Sub-Servicer that the substance of
such representation or warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan then, notwithstanding
the Sponsor's lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty and the Sponsor shall cure such breach, repurchase
the related Mortgage Loan at the Loan Reacquisition Price or substitute a
Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b), 3.3(c)
or 3.4 hereof.
(b) With the provisos and limitations as to remedies set forth
in this Section 3.4, upon the discovery by the 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 the Insurer, the party discovering such breach shall give prompt written
notice to the other parties.
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The Sponsor acknowledges that a breach of any representation or
warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan or (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Mortgaged Property constitutes a
breach of a representation or warranty which materially and adversely affects
the interests of the Noteholders or of the Insurer in such Mortgage Loan.
(c) Upon the earliest to occur of the Sponsor's discovery of a
breach of any representation and warranty which materially and adversely affects
the interests of the Noteholders or the Insurer, its receipt of notice of such
breach from any one of the other parties hereto or from the Insurer 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 thirty (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, at the end of such 30-day
period (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, if any, 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 and the Indenture Trustee or the Insurer against the Sponsor, except
as otherwise provided in the Insurance Agreement.
(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 4
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 or cause to be performed 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
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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, the related Mortgaged Properties and the
Mortgage Insurance Policies related thereto 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 related thereto or
distributions to be made to Noteholders. Such costs shall be recoverable by the
Master Servicer pursuant to Section 4.10 and 4.13.
(c) [reserved]
(d) The relationship of the Master Servicer (and of any
successor to the Master Servicer as servicer under this Agreement) to the
Indenture Trustee under this Agreement is intended by the parties to be that of
an independent contractor and not that of a joint venturer, partner or agent.
In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer may
(with the written consent of the Insurer), to the extent permitted by applicable
law, terminate or assume the existing Sub-Servicer arrangements, which
termination or assumption will not violate the terms of such arrangements;
provided, that, in no event shall any successor to the Master Servicer be
permitted to assume any Sub-Servicer arrangements with any Affiliate of the
Master Servicer without such Affiliate's prior written consent.
(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 ownership 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
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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.
(a) The Master Servicer may consent to any modification of the
terms of any Mortgage Loan that is not Delinquent (a) which modification is 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 the Noteholders or the Insurer, unless the Insurer consents in
writing; provided, however, that, if the Insurer has not given its written
response 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, further, 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 the lapse of such five
day period, in which case the Master Servicer shall give the Insurer immediate
notice of such action.
(b) In accordance with Accepted Servicing Practices, the
Master Servicer may in its discretion (or shall, to the extent required by
applicable law):
(i) waive any assumption fees, late payment charges, charges
for checks returned for insufficient funds, termination fees, if any,
or the fees which may be collected in the ordinary course of servicing
the Mortgage Loans,
(ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the
Mortgagor to modify the payment terms, modify the coupon rate or
otherwise modify or amend the related Mortgage Loan if the Master
Servicer believes that such modification will maximize the amount of
proceeds of such Mortgage Loan to the Trust and will not materially and
adversely affect the interests of the Noteholder or the Insurer;
provided, however, that 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 with respect to Mortgage Loans with
aggregate Principal Balances in excess of 10% of the Cut-Off Date Pool
Balance without the prior written consent of the Insurer; provided,
further, that if the Insurer has not given its written response within
five (5) Business Days after notice from the Master Servicer, the
Insurer shall be deemed to have given its
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consent to such modification or rescheduling; provided, further, that
such notice and consent shall not be required in the event that the
Master Servicer reasonably determines, in its sole discretion, that
such modification or rescheduling is legally required to be made prior
to the lapse of such five day period, in which case the Master Servicer
shall give the Insurer immediate notice of such action;
(iii) 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;
(iv) 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 August 2024), without the Insurer's
written approval.
(v) without prior approval from the Insurer (but subject to
the 10% limitation described above), 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 increases are less than or equal to the Combined Loan-to-Value
Ratios of the Mortgage Loans as of the related dates of origination,
(ii) such increases are consistent with the applicable Originator's
underwriting policies, (iii) the related Mortgagors have made Draws on
the Credit Line Agreements in the past twelve months and have made
timely payments and (iv) the Master Servicer receives verbal
verification of employment of the related Mortgagors. In addition, the
Master Servicer may increase the Credit Limits on Mortgage Loans having
aggregate balances of up to 5% of the Cut-Off Date Pool Balance without
obtaining new appraisals provided that (i) the increases in the Credit
Limits do not cause the Combined Loan-to-Value Ratios of such Mortgage
Loans to exceed 100%, (ii) the increases are consistent with the
applicable Originator's underwriting policies, (iii) the related
Mortgagors have used the related Credit Line Agreements in the past
twelve months and have made timely payments and (iv) the Master
Servicer receives verbal verification of employment of the related
Mortgagors.
(vi) for Mortgage Loans that are not Delinquent, 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 may only
reduce such Coupon Rates in accordance with the 10% limitation
described above. Alternatively, the related Originators, acting on
behalf of the Master Servicer, may take any action that the Master
Servicer is permitted to take pursuant to this Section 4.2(b)(vi).
(vii) subject to the 10% limitation on modifications described
above, 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 response within five (5) Business Days after notice from the
Master Services, the Insurer shall be deemed to have given its consent
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to such modification; provided, however, that such notice and consent
shall not be required in the event that the Master Services determines,
in its reasonable discretion, that such modification is legally
required to be made prior to the lapse of such five day period, in
which case the Master Servicer shall give the Insurer immediate notice
of such action.
No application for consent to a partial release of Mortgage 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.
(c) The Master Servicer shall have the right to sell, in
whole-loan, third-party sales, any Delinquent Mortgage Loan if the Master
Servicer believes that such means of disposition will provide the largest
recovery.
Except as otherwise permitted under this Agreement, the Master
Servicer may not, without the prior written consent of the Insurer (which
consent shall not be unreasonably withheld or delayed), forgive any Mortgage
Loan payments, impair any lien position on the Mortgage Loans or extend the
maturity of any Mortgage Loan. In addition, unless the Insurer consents in
writing, the Master Servicer may not modify Mortgage Loans having an aggregate
Principal Balance in excess of 10% of the Cut-Off Date Pool Balance.
Section 4.3. Servicer Report.
On the tenth day of each month, the Master Servicer shall send to the
Indenture Trustee a report (the "Servicer Report"), in the form of a computer
tape, detailing the aggregate payments on the Mortgage Loans during the prior
Remittance Period. Such tape shall be in the form and have the specifications as
may be agreed to between the Master Servicer and the Indenture Trustee from time
to time.
Section 4.4. Liability of Master Servicer.
(a) The Master Servicer shall not be relieved of its
obligations under this Agreement notwithstanding any Sub-Servicing Agreement or
any of the provisions of this Agreement relating to agreements or arrangements
between the Master Servicer and a Sub-Servicer or otherwise, and the Master
Servicer shall be obligated to the same extent 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.
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.
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(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 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 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 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 or the Trust pursuant to this Section 4.4(b) and such party
thereafter collects any of such amounts from others, such party will promptly
repay such amounts collected to the Master Servicer, without interest.
(c) The Master Servicer shall be the secondary obligor in
respect of any Expenses (as defined in the Trust Agreement) owing to any
Indemnified Party (as defined in the Trust Agreement) under Section 8.2 of the
Trust Agreement.
Section 4.5. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
The Master Servicer may enter into one or more Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with one or more
institutions (including affiliates) which are acceptable to the Insurer and are
in compliance with the laws of each state necessary to enable them to perform
their obligations under such Sub-Servicing Agreements. 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.
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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
either directly service the related Mortgage Loans itself or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under
Section 4.5.
Section 4.7. No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or the Noteholders.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Master Servicer alone and the Insurer, the
Indenture Trustee and the Noteholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
any Sub-Servicer except as set forth in Section 4.8.
Section 4.8. Assumption or Termination of Sub-Servicing Agreement by
Indenture Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee, it is understood and agreed that the Master
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Master Servicer and a Sub-Servicer may be assumed or
terminated by the Indenture Trustee at its option.
The Master Servicer shall, upon request of the Indenture Trustee, but
at the expense of the Master Servicer, deliver to the assuming party documents
and records relating to each Sub-Servicing Agreement and an accounting of
amounts collected and held by it and otherwise use its best reasonable efforts
to effect the orderly and efficient transfer of the Sub-Servicing Agreements to
the assuming party.
Section 4.9. Principal and Interest Account.
(a) The Master Servicer and/or each Sub-Servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Noteholders and the Insurer and maintain at 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.
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On the Closing Date, the Sponsor shall cause the Master
Servicer to deposit within five Business Days after the Closing Date to the
Principal and Interest Account all principal and interest collected on the
Mortgage Loans on and after the related Cut-Off Dates.
The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Credit Line Agreement.
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC, or (ii) invested
in Eligible Investments (as defined in the Indenture). The Principal and
Interest Account shall be held in trust in the name of the Trust and for the
benefit of the Noteholders and the Insurer. Any investment earnings on funds
held in the Principal and Interest Account shall be for the account of the
Master Servicer. Any references herein to amounts on deposit in the Principal
and Interest Account shall refer to amounts net of such investment earnings. The
Master Servicer shall deposit the amount of any investment losses immediately
into the Principal and Interest Account as realized.
(c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal and interest
collected on the Mortgage Loans received on or after the related Cut-Off Dates,
including any Prepayments and Net Liquidation Proceeds, all Loan Reacquisition
Prices and Substitution Amounts received or paid by the Master Servicer with
respect to the Mortgage Loans and other recoveries or amounts related to the
Mortgage Loans received by the Master Servicer, together with any amounts which
are reimbursable from the Principal and Interest Account, but net of (i) the
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the Mortgage Loans prior to the
related Cut-Off Dates, (iii) interest collected on the Mortgage Loans prior to
the related Cut-Off Dates and (iv) Foreclosure Profits.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
a. to effect the timely remittance to the
Indenture Trustee of the Monthly Remittance Amount due on the
Remittance Date;
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;
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d. to withdraw amounts that have been deposited
to the Principal and Interest Account in error;
e. to clear and terminate the Principal and
Interest Account following the termination of the Trust Estate
pursuant to Article X or XII of the Indenture; and
f. to invest in Eligible Investments.
(ii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds, the Interest Remittance Amount and the Principal
Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are satisfactory to the Insurer, Moody's and S&P, then the
requirement to maintain the Principal and Interest Account at a Designated
Depository Institution may be waived by an instrument signed by the Insurer, S&P
and Moody's, and the Master Servicer may be allowed to co-mingle with its
general funds the amounts otherwise required to be deposited to the Principal
and Interest Account and make monthly deposits to the Note Account on such terms
and subject to such conditions as the Insurer, Moody's and S&P may permit.
Section 4.10. Servicing Advances.
The Master Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) the cost of any
enforcement or judicial proceedings, including (a) foreclosures, and (b) other
legal actions and costs associated herewith that potentially affect the
existence, validity, priority, enforceability or collectibility of the Mortgage
Loans, including collection agency fees and costs of pursuing or obtaining
personal judgments, garnishments, levies, attachment and similar actions, (iii)
the cost of the conservation, management, liquidation, sale or other disposition
of 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)(xxiii) 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) during the draw period, the Credit Limit of such
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Mortgage Loan, (ii) after the draw period, the unpaid principal balance of such
Mortgage Loan or (iii) the maximum insurable value of the related Mortgaged
Property. The Master Servicer may satisfy it obligation to cause a hazard
insurance policy to be maintained with respect to a Mortgaged Property by
causing the related Mortgagor to obtain, or obtaining on behalf of such
Mortgagor and at the expense of such Mortgagor, a hazard insurance policy
insuring against losses on the related Mortgage 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 master policy as described in clause (d) 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) during the draw period, the Credit Limit
of such Mortgage Loan, (ii) after the draw period, the unpaid principal balance
of such Mortgage Loan or (iii) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973. The Master Servicer shall
indemnify the Trust and the 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. The Master Servicer may satisfy its obligation to cause a
flood insurance policy to be maintained with respect to a Mortgaged Property by
causing the related Mortgagor to obtain, or obtaining on behalf of such
Mortgagor and at the expense of such Mortgagor, a flood insurance policy
insuring against losses on the related Mortgage Property.
It is understood and agreed that such insurance shall be with
insurers approved by the Master Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Any cost incurred by the Master Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Credit Line Agreement so permit; provided,
however, that the addition of any such cost shall not be taken into account for
purposes of calculating the principal amount of the Credit Line Agreements or
the distributions to be made to the Noteholders. Such costs shall be considered
a Servicing Advance and shall be recoverable by the Master Servicer pursuant to
Section 4.10.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire 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 and hazard insurance coverage under this Section 4.11, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged
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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.
(d) In the event that the Master Servicer shall obtain and
maintain a master policy insuring against flood on all of the Mortgage Loans
referred to in (b) above, then, to the extent such policy names the Master
Servicer as loss payee 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 flood insurance coverage under this Section
4.11, it being understood that such master 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 paragraph (b) of this Section 4.11, and there shall have been a loss which
would have been covered by such policy, deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between the
amount that would have been payable under a policy complying with paragraph (b)
of this Section 4.11 and the amount paid under such master 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 not materially and adversely affect the interest of the Noteholders or the
Insurer, In such event, the Master Servicer shall enter into an assumption and
modification agreement (the terms of which will be consistent with the 10%
limitation on modifications described in Section 4.2(h) above) with the person
to whom such property has been or is about to be conveyed, pursuant to which
such person becomes liable under the Credit Line Agreements and, unless
prohibited by applicable law or this Agreement or any of the agreements,
guaranties or assignments relating to the Mortgage Loans contained in the
Mortgage Files, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Master Servicer is authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Credit Line Agreement; provided, however,
that to the extent any such substitution of liability agreement would be
delivered by the Master Servicer outside of its usual procedures for mortgage
loans held in its own portfolio, the Master Servicer shall, prior to executing
and delivering such agreement, obtain the prior written consent of the Insurer.
The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Master
Servicer shall notify the
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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, unless the
Master Servicer determines that the costs associated with the foreclosure will
be greater than the recovery received. If the Master Servicer determines not to
bring or to terminate foreclosure proceedings, it will determine in accordance
with the Accepted Servicing Practices whether or not to seek a judgment against
the Mortgagor. In connection with such foreclosure or other conversion, the
Master Servicer shall follow Accepted Servicing Practices. Any amounts advanced
pursuant to this Section 4.13 shall constitute "Servicing Advances" within the
meaning of Section 4.10 hereof.
Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Noteholders solely for the purpose of its prompt disposition
and sale. Pursuant to its efforts to sell such REO Property, the Master Servicer
shall either itself or through an agent selected by the Master Servicer protect
and conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may, incident
to its conservation and protection of the interests of the Noteholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Noteholders for the period prior to the sale of such REO
Property. The Master Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
Mortgaged Property.
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(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
sales to third parties, 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 a Master Servicer's customary liquidation report (each, a
"Liquidation Report") with respect to such Mortgage Loan. The Master Servicer
will charge-off an HLTV HELOC Mortgage Loan on the earlier to occur of (i) the
date upon which such Mortgage Loan becomes 180 days Delinquent or (ii) the date
upon which the Master Servicer has determined that it has recovered all amounts
it expects to recover from such Mortgage Loan, whereupon such Mortgage Loan
shall become a Liquidated Mortgage Loan. Any net recoveries from a Liquidated
Mortgage Loan shall constitute property of the Trust and shall be deposited by
the Master Servicer in the Principal and Interest Account, all in accordance
with the provisions of this Agreement.
Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage
Files.
(a) Upon the payment in full of the Principal Balance of any
Mortgage Loan (including the repurchase of any Mortgage Loan or any liquidation
of such Mortgage Loan through foreclosure or otherwise), or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer shall deliver to the
Indenture Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, in trust to (i) the Master Servicer, or (ii) an escrow
agent for the Master Servicer. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Master
Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee
and the mortgagee under the Mortgage which secured the Credit Line Agreement, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Master Servicer may prepare
and submit to the Indenture Trustee, a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Indenture Trustee with all requisite information completed by
the Master Servicer; in such event, the Indenture Trustee shall execute and
acknowledge such satisfaction or assignment, as the case may be, and deliver the
same with the related Mortgage File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Mortgage Insurance Policy, the Indenture Trustee shall, upon request of the
Master Servicer and delivery to the Indenture Trustee of a Master Servicer's
Trust Receipt in the form of Exhibit F hereto, release the related Mortgage File
to the Master Servicer and shall execute such documents as shall be 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 twenty-five (25) Mortgage Files. The Indenture Trustee shall complete in
the name of the Indenture Trustee any endorsement in blank on any Credit Line
Agreement
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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
as provided 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 (7) Business Days
after receipt of a Master Servicer's Trust Receipt. If the Master Servicer is
required to pay penalties or damages due solely to the Indenture Trustee's
negligent failure to release the related Mortgage File or the Indenture
Trustee's negligent failure to execute and release documents in a timely manner,
the Indenture Trustee shall be liable for such penalties or damages.
Section 4.15. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall
be entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Loan pursuant to the provisions of this Agreement. Additional servicing
compensation in the form of prepayment charges, termination fees, release fees,
bad check charges, assumption fees, 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.
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Section 4.16. Annual Statement as to Compliance.
The Master Servicer, at its own expense, will deliver to the Indenture
Trustee, the Insurer, S&P and Moody's, on or before the fifteenth of April of
each year, commencing in 2001, 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 2001,
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 either (i) performed applicable
tests substantially in compliance with the testing procedures as set forth in
Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees, (ii) examined such operations substantially in compliance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
in either case stating such firm's conclusions relating thereto or (iii)
examined such operations in accordance with the requirements of SAS 70.
Section 4.18. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Master Servicer shall provide to the Indenture Trustee, the
Insurer, and the agents and examiners of each of the foregoing (when accompanied
by each of the foregoing) access to the documentation regarding the Mortgage
Loans required by applicable state and federal regulations, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Master Servicer. The Indenture Trustee and
the Insurer shall not use or disclose any information provided pursuant to this
Section 4.18, unless such information is available from public sources or third
parties not, to the knowledge of the Indenture Trustee or the Insurer, as the
case may be, under any obligation of confidentiality with respect thereto, or
except as may be otherwise required by regulation, law or court order or other
legal process or requested by appropriate governmental authorities or as
necessary to preserve its rights or security under or to enforce the Operative
Documents; provided, however, that the foregoing shall not limit the right of
the Insurer to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel and
accountants. If the Insurer is requested or required (by oral questions,
interrogatories, requests for information or documents subpoena, civil
investigative demand or similar process) to disclose any information provided to
the Insurer pursuant to or in connection with this Section 4.18, the Insurer
will, unless otherwise prohibited by law, regulation or legal process, promptly
notify the Master Servicer of such request(s) so that the Master Servicer may
seek an appropriate protective order and/or waive the Insurer's compliance with
the provisions of this Section 4.18. If, in the absence of a protective order or
the receipt
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of a waiver hereunder, the Insurer is, nonetheless, in the opinion of its
counsel (which shall be delivered the Master Servicer), compelled to disclose
such information to any tribunal or else stand liable for contempt or suffer
other censure of significant penalty, the Insurer may disclose such information
to such tribunal that the Insurer is compelled to disclose, provided that unless
otherwise prohibited by law, regulation or legal process, a copy of all
information disclosed is provided to the Master Servicer promptly upon such
disclosure.
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 the 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 5
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 (3) Business Days following
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written notice to an Authorized Officer of the Master Servicer from the
Indenture Trustee or from the Insurer or Noteholders holding Percentage
Interests aggregating not less than 25%.
(ii) The Master Servicer shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing
its inability to pay its debts generally as they become due, (III) make
a general assignment for the benefit of creditors, (IV) be adjudicated
a bankrupt or insolvent, (V) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of
any insolvency law or file an answer admitting the material allegations
of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing.
(iii) If without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or similar
entity with respect to the Master Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Master Servicer in 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 fail
to perform any covenants hereunder, which failure materially and
adversely affects the interests of the Noteholders or the 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
holding Notes 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 the
Event of Servicing Termination shall not have been remedied by the
Master Servicer, either the Indenture Trustee or Noteholders holding
Notes 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 or the Noteholders) may terminate all of the
rights and obligations of the Master Servicer as servicer under this
Agreement. Any such notice to the
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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 administration, all cash amounts
that shall at the time be held by the Master Servicer. The Indenture
Trustee will promptly deposit such cash in the Note Account.
Thereafter, any cash received by the Master Servicer with respect to
the Mortgage Loans shall be immediately transferred to the Note
Account. 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 any failure or delay by it to perform its obligations,
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, 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 (but excluding prepayment fees
and termination fees); provided, however, that if the Indenture Trustee acts as
successor Master Servicer then the Sponsor agrees to pay to the Indenture
Trustee at such time that the Indenture Trustee becomes such successor Master
Servicer a fee of twenty-five dollars ($25.00) for each Mortgage Loan then
included in the Trust Estate. The Indenture Trustee shall be obligated to serve
as successor Master Servicer whether or not the $25.00 fee described in the
preceding sentence is paid by the Sponsor, but shall in any event be entitled to
receive, and to enforce payment of, such fee from the Sponsor.
(g) In the event the Indenture Trustee solicits bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Master Servicer shall be entitled
to the full amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Sections 4.9 and 4.15 (but
excluding prepayment fees and termination fees). Within thirty (30) days after
any such public announcement, the Indenture Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory bid. The
Indenture Trustee shall deduct from any sum received by the Indenture Trustee
from the successor to the Master Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum shall be paid by the Indenture
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the Master Servicer's successor.
(h) The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Master Servicer agrees to cooperate with the Indenture
Trustee and any successor Master Servicer in effecting the termination of the
Master Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Indenture Trustee or such successor Master Servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Master Servicer's functions hereunder and shall promptly also
transfer to
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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, or any agents or representatives thereof may
inspect the Master Servicer's servicing operations and discuss the servicing
operations of the Master Servicer with any of its officers or directors.
(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.
Section 5.3. Merger, Conversion, Consolidation or Succession to
Business of Master Servicer.
Any corporation into which the Master Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Master Servicer shall
be a party, or any corporation succeeding to all or substantially all of the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto provided that such corporation meets the
qualifications set forth in Section 5.1(f).
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Section 5.4. Notification to Noteholders.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article V, the Indenture Trustee shall give prompt
written notice thereof to the Noteholders at their respective addresses
appearing in the Note Register, the Insurer and each Rating Agency.
Section 5.5. Notices of Material Events.
The Master Servicer shall give prompt notice to the Insurer, the
Indenture Trustee, Moody's and S&P of the occurrence of any of the following
events:
(a) Any default or any fact or event which results in the
occurrence of a default by the Sponsor, any Originator or the Master Servicer
under any Operative Document or would constitute a material breach of a
representation, warranty or covenant under any Operative Document.
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against any
Originator, the Sponsor, the Master Servicer or AMHC in any federal, state or
local court or before any governmental body or agency, or before any arbitration
board, or the threatening of any such proceedings 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 6
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 Operative Documents, the Master
Servicer shall perform such calculations and shall prepare for
execution by the Trust or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be
the duty of the Trust or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Operative Documents or under
state and federal tax and securities laws, and at the request of the
Owner Trustee shall take all appropriate action that it is the duty of
the Trust to take pursuant to this Agreement or any of 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 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.
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(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 or any
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.
(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.
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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 7
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.
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
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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 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.
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(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.
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.
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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 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 LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 7.11. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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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 and, 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) or other
terms related to the Insurer or the Insurance Agreement; provided, however, that
no such change shall affect the weighted average life of the Notes (assuming an
appropriate prepayment speed as determined by the Underwriters as evidenced in
writing) by more than five percent, as determined by the Underwriters.
(c) In addition to (a) and (b) above, 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
Noteholders holding Notes evidencing more than 50% of the Note Balance, for the
purpose of adding any provisions or changing in any manner or eliminating any of
the
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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 holding Notes 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 Noteholders holding Notes
evidencing more than 50% of the Note Balance. 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.
1761 East St. Andrew Place
Santa Ana, CA 92705
Attention: ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 2000-A
Tel: (714) 247-6000
Fax: (714) 247-6009
The Sponsor: Advanta Conduit Receivables, Inc.
10790 Rancho Bernardo Drive
San Diego, CA 92127
Attention:
Tel: (858) 676-3099
Fax: (858) 676-3024
with a copy addressed to the attention of the General Counsel at the same
address.
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The Master Servicer: Advanta Mortgage Corp. USA
10790 Rancho Bernardo Drive
San Diego, CA 92127
Attention: Senior Vice President,
Loan Service
Tel: (858) 676-3099
Fax: (858) 676-3024
The Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance
Department-MBS
Fax: (212) 363-1459
Confirmation: (212) 668-0340
In each case in which notice or other communication to the Insurer
refers to an Event of Servicing Termination, a claim on the Policy or with
respect to which failure on 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, Inc.
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring
Department
S&P: Standard & Poor's Ratings Services, A division
of the McGraw-Hill Companies, Inc.
55 Water Street
New York, New York 10041
Attention: Mortgage Surveillance Group
The Trust: Advanta Revolving Home Equity Loan Trust
2000-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
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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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<PAGE> 59
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 REVOLVING HOME EQUITY LOAN
TRUST 2000-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 CONDUIT RECEIVABLES, 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
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
not in its individual capacity but solely as
Indenture Trustee
By: /s/ Mark McNeill
-----------------------------------
Name: Mark McNeill
Title: Assistant Secretary
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EXHIBIT A
ANNEX 1
TO THE INDENTURE
DEFINED TERMS
"Accelerated Principal Payments": With respect to any Payment Date, a
payment to be paid from Excess Cashflow received as a payment of principal by
the Noteholders, for the purpose of increasing the Overcollateralization Amount
to the Specified Overcollateralization Amount, and equal to the lesser of (x)
the amount of such Excess Cashflow and (y) the Overcollateralization Deficiency
Amount.
"Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
"Account": The Note Account, the Principal and Interest Account, the
Pre-Funding Account or the Capitalized Interest Account, each of which shall be
(i) an account maintained at a Designated Depository Institution or (ii) if the
applicable account is a segregated trust account, maintained with the corporate
trust department of a federal depository institution or a state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b),
which in the case of either clause (i) or (ii), has corporate trust powers,
acting in its fiduciary capacity, and in accordance with Section 8.3 of the
Indenture or, with respect to the Principal and Interest Account, Section 4.9 of
the Sale and Servicing Agreement.
"Act": has the meaning specified in Section 11.3(a) of the Indenture.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.6(b) of the Sale and Servicing
Agreement, the notice (which shall be given not later than two Business Days
prior to the related Transfer Date), of the Sponsor's designation of Subsequent
Mortgage Loans to be sold to the Trust, such notice shall include the aggregate
Principal Balance and the approximate weighted average Coupon Rate of such
Subsequent Mortgage Loans.
"Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws by the related Mortgagor conveyed to the Trust
after the Closing Date pursuant to Section 2.1 of the Sale and Servicing
Agreement, it being understood that the Trust shall not be required to fund any
Additional Balances.
"Advanta Bank Corp.": A Utah industrial loan corporation, including any
successors and assigns.
"Advanta Finance Corp.": A Nevada corporation, including any successors
and assigns.
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"Advanta National Bank": A national banking association located in
Delaware.
"Affiliate": Means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation and
the corporate parent of Advanta Mortgage Corp. USA, and the indirect corporate
parent of Advanta Conduit Receivables, Inc.
"Appraised Value": As to any Mortgaged Property, the value established
by a drive-by inspection, a full appraisal or a statistical property valuation
of such Mortgaged Property.
"Assignee": With respect to any Person, any direct or indirect
assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee.
"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 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 following
amounts, without duplication of any amount described more than once in the
following clauses (i) through (v):
(i) any Insured Payments;
(ii) the proceeds of any final liquidation of the assets of the
Trust;
(iii) the Monthly Remittance Amount remitted by the Master Servicer
or any Sub- Servicer;
(iv) on each Payment Date occurring during the Pre-Funding Period,
the Pre-Funding Earnings and the Capitalized Interest
Requirement for such Payment Date; and
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(v) at the end of the Pre-Funding Period, any amount remaining in
the Pre-Funding Account in accordance with Section 8.5(d).
"Book Entry Notes": Means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.9 of the Indenture.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which any of the Insurer, the Master Servicer or the Sponsor is closed or
commercial banking institutions in the State of New York or Delaware or in the
city in which the principal Corporate Trust Office of the Indenture Trustee is
located, are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 8.3 of the Indenture and maintained by
the Indenture Trustee.
"Capitalized Interest Amount": The amount on deposit in the Capitalized
Interest Account, which shall initially be $2,253,543.85.
"Capitalized Interest Requirement": As to any Payment Date, an amount
equal to the product of (x) the sum of the Note Interest Rate and the rate at
which the Insurer premium is calculated, and (y) the amount on deposit in the
Pre-Funding Account as of the preceding Payment Date (or as of the Closing Date,
in the case of the first Payment Date), less investment earnings on the amounts
on deposit in the Pre-Funding Account as of the preceding Payment Date.
"Certificateholders": The holders of the Certificates issued pursuant
to the Trust Agreement.
"Certificates": The trust certificates evidencing the beneficial
ownership interests in the Trust.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Clean-Up Call Date": The first date on which the Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture.
"Clearing Agency Participant": Means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Clearing Agency": Means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Closing Date": April 27, 2000.
"Code": The Internal Revenue Code of 1986, as amended, and any
successor statute.
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"Combined Loan-to-Value Ratio": With respect to any Mortgage Loan as of
any date, the percentage equivalent of a fraction, the numerator of which is the
sum of (A) the Credit Limit and (B) as of the date of execution of the related
Credit Line Agreement (or as of any subsequent date, in connection with an
increase in the Credit Limit for such Mortgage Loan) the sum of the outstanding
principal balance of any mortgage loan or mortgage loans that are senior in
priority to the Mortgage Loan and which are secured by the same Mortgaged
Property and the denominator of which is the lesser of (C) the Appraised Value
of the related Mortgaged Property as set forth in the Mortgage File on such date
of execution or on such subsequent date, if any, or (D) in the case of a
Mortgaged Property purchased within one year of the date of execution of the
Credit Line Agreement, the purchase price thereof.
"Controlling Party": Means (i) the Insurer, so long as no Insurer
Default shall have occurred and be continuing, or (ii) the Indenture Trustee,
for so long as an Insurer Default shall have occurred and be continuing;
provided, however, that the Insurer's rights as Controlling Party shall be
immediately reinstated following the cure of any Insurer Default.
"Corporate Trust Office": The Indenture Trustee's office at 1761 East
St. Andrew Place, Santa Ana, California 92705.
"Coupon Rate": With respect to any Mortgage Loan and as of any day, the
per annum rate of interest, as specified in the Credit Line Agreement,
applicable to the calculation of interest on the outstanding 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, at any time
during the Draw Period, the percentage equivalent of a fraction, the numerator
of which is the outstanding Principal Balance and the denominator of which is
the related Credit Limit.
"Credit Line Agreement": With respect to any Mortgage Loan, the related
home equity line of credit agreement or promissory note executed by the related
Mortgagor and any amendment or modification thereof.
"Cut-Off Date": With respect to each (i) Initial Mortgage Loan, the
Initial Cut-Off Date, (ii) Qualified Replacement Mortgage Loan, the related
Replacement Cut-Off Date or (iii) Subsequent Mortgage Loan, the related
Subsequent Cut-Off Date.
"Cut-Off Date Pool Balance": The sum of (x) the aggregate Cut-Off Date
Principal Balance of the Initial Mortgage Loans ($302,265,974.63), and (y) the
initial Pre-Funded Amount ($113,451,856.05), which sum is $415,717,830.60.
"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
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Date but prior to the Closing Date, the unpaid principal balance of such
Mortgage Loans as of its origination date.
"Debt Service Reduction": With respect to any Mortgage Loan, as
directed by a court of competent jurisdiction, a reduction of the minimum amount
required to be paid by the related Mortgagor.
"Deficiency Amount": As defined in the Policy.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
"Definitive Notes": Has the meaning specified in Section 2.9 of the
Indenture.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York 10004 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to any Account, a
federal or state chartered depository institution whose deposits are insured by
the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC,
the long-term deposits of which shall be rated "A2" or better by Moody's, the
long term debt obligations of which shall be rated at least "AA-" by S&P and the
commercial paper, short term debt obligations or short-term deposits of which
shall be rated "P-1" or better by Moody's and "A-1+" or better by S&P, unless
otherwise approved in writing by the 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 or the Indenture Trustee as the
depository institution for the any Account; provided, however, that any such
institution or association shall have combined capital, surplus and undivided
profits of at least $100,000,000.
"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, the Master Servicer and the Indenture Trustee.
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"Document Delivery Requirements": The Sponsor's obligations to deliver
certain legal documents, to prepare and record certain Assignments of Mortgage
or to deliver certain opinions relating to Assignments of Mortgage, in each case
with respect to the Mortgage Loans and upon certain conditions as set forth in
Section 2.1 of the Sale and Servicing Agreement.
"Draw": With respect to any Mortgage Loan, an additional borrowing by
the Mortgagor in accordance with the related Credit Line Agreement.
"Draw Period": With respect to any Mortgage Loan, the period of time
specified in the related Credit Line Agreement whereby a Mortgagor may make a
Draw. The Draw Period may be extended pursuant to the terms of the Credit Line
Agreement (provided that any such extension shall be in accordance with the
provisions set forth herein with respect to Mortgage Loan modifications) and the
Sale and Servicing Agreement, and will be limited by the provisions set forth in
Section 2.2 of the Sale and Servicing Agreement.
"Eligible Investments": Those investments so designated pursuant to
Section 8.8 of the Indenture.
"ERISA": Means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": As defined in Section 5.4 of the Indenture.
"Event of Servicing Termination": As defined in Section 5.1 of the Sale
and Servicing Agreement.
"Excess Cashflow": With respect to any Payment Date, the Available
Funds with respect to such Payment Date which remain on deposit in the Note
Account after taking into account the distributions listed in clauses (i)
through (viii) of Section 8.6(b) of the Indenture 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 August 2024.
"First Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
first priority mortgage lien with respect to any Mortgaged Property.
"Fixed Allocation Percentage": With respect to the Mortgage Loans,
94.8%.
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"FNMA": The Federal National Mortgage Association, a federally
chartered and privately owned corporation existing under the Federal National
Mortgage Association Charter Act as amended, and any successor thereto.
"Foreclosure Profit": With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (x) the aggregate of its Net Liquidation Proceeds
exceeds (y) the sum of (i) the related Principal Balance and (ii) accrued and
unpaid interest thereon at the applicable Coupon Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds.
"Formula Rate ": For any Interest Accrual Period, (x) with respect to
any Payment Date which occurs on or prior to the Clean-Up Call Date, LIBOR plus
0.25% 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 Trust Estate or of any agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Trust Estate and all other monies payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Guaranties": The Letter Agreement, dated as of April 27, 2000, among
the Underwriters, the Insurer and AMHC and the Letter Agreement, dated as of
April 27, 2000, among the Insurer, the Indenture Trustee and AMHC.
"HLTV HELOC Mortgage Loan": Any Mortgage Loan with a Combined
Loan-to-Value Ratio of greater than 100%.
"Highest Lawful Rate": As defined in Section 7.12 of the Sale and
Servicing Agreement.
"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
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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
April 18, 2000, among the Insurer and the Underwriters.
"Indenture": The Indenture dated as of April 1, 2000 between the Trust
and the Indenture Trustee, as the same may be amended and supplemented from time
to time in accordance with the terms thereof.
"Indenture Trustee": Bankers Trust Company of California, N.A., located
on the date of execution of the Indenture at 1761 East St. Andrew Place, Santa
Ana, California 92705, not in its individual capacity but solely as Indenture
Trustee under the Indenture, and any successor thereunder.
"Indenture Trustee Fee": With respect to any Payment Date, the product
of (x) one-twelfth of the Indenture Trustee Fee Rate and (y) the sum of (i) the
Pool Principal Balance as of the opening of business on the first day of the
related Remittance Period and (ii) the Pre-Funded Amount as of the opening of
business on the first day of the related Remittance Period.
"Indenture Trustee Fee Rate": 0.011% (1.1 basis points) per annum.
"Independent": When used with respect to any specified Person, that the
person (a) is in fact independent of the Trust, any other obligor upon the
Notes, the Sponsor and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Trust, any such other obligor, the Sponsor or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Trust, any such
other obligor, the Sponsor or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.
"Independent Certificate": A certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
prepared by an Independent appraiser or other expert, and such opinion or
certificate shall state that the signer has read this definition of
"Independent" and that the signer is Independent within the meaning thereof.
"Initial Cut-Off Date": The close of business on March 31, 2000.
"Initial Mortgage Loans": Shall mean the Mortgage Loans conveyed to the
Trust by the Sponsor on the Closing Date.
"Insurance Agreement": The agreement defined in the Preamble of the
Indenture.
"Insurance Agreement Event of Servicing Termination": An Event of
Servicing Termination as defined in the Insurance Agreement.
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"Insured Amounts": With respect to the Notes and any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments": With respect to the Notes and any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts
for any given Business Day.
"Insurer": Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation, or any successor thereto, as issuer of the Policy.
"Insurer Default": Means the failure and the continuance of such
failure by the Insurer to make a payment required under the Policy in accordance
with the terms thereof.
"Interest Accrual Period": With respect to any Payment Date, the period
from and including the prior Payment Date (or, in the case of the first Payment
Date, from and including the Closing Date) to, but excluding, the current
Payment Date.
"Interest Collections": With respect to the Mortgage Loans during the
related Remittance Period, the sum of (i) all interest payments paid by or on
behalf of Mortgagors and collected by the Master Servicer, except that with
respect to Prepaid Installments, interest payments shall be deemed to be paid by
or on behalf of Mortgagors and collected by the Master Servicer in the
Remittance Period to which such payments relate, (ii) any other amounts
constituting interest collected by the Master Servicer, (iii) with respect to
Mortgage Loans other than HTLV Mortgage Loans, the portion of Net Liquidation
Proceeds allocated to interest and (iv) with respect to HLTV Mortgage Loans, the
total amount of "Net Liquidation Proceeds." The terms of the related Credit Line
Agreement shall determine the portion of each payment that constitutes interest
(other than with respect to Net Liquidation Proceeds).
"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 (i) the Note Interest Rate multiplied by the actual number of days in
the Interest Accrual Period divided by 360 days and (ii) the Note Balance as of
the day immediately prior to such Payment Date.
"Interest Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Interest Collections for such Remittance
Period, less the Servicing Fee for the related Remittance Period, (ii) the
portion of the Loan Reacquisition Price and the Substitution Amount relating to
interest on the Mortgage Loans reacquired and (iii) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
interest).
"Interest Shortfall Amount": With respect to any payment date, the sum
of (i) the amount by which the Interest Distribution Amount exceeded the actual
amount distributed in respect of interest and (ii) any unreimbursed Interest
Shortfall Amounts from prior payment dates together with interest on such
amounts at the Note Interest Rate.
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"Issuer Order" and "Issuer Request": Means a written order or request
signed in the name of the Trust by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Junior Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
junior priority mortgage lien with respect to the related Mortgaged Property.
"LIBOR": As defined in Section 2.6(b) of the Indenture.
"LIBOR Business Day": Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
"Lifetime Rate Cap": With respect to each Mortgage Loan for which the
related Credit Line Agreement provides for a lifetime rate cap, the maximum
Coupon Rate permitted at any time under the terms of the related Credit Line
Agreement.
"Liquidated Mortgage Loan": Either (i) any HLTV HELOC Mortgage Loan
that has been Delinquent for a period of 180 consecutive days (irrespective of
any grace periods) or as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan, whichever
is the first to occur, or (ii) any Mortgage Loan other than an HLTV HELOC
Mortgage Loan as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan. The Trust
will be entitled to recoveries from any Liquidated Mortgage Loan and any such
recoveries (i) in the case of HLTV Mortgage Loans, shall be treated as Interest
Collections and (ii) in the case of non HLTV Mortgage Loans, shall be treated as
Principal Collections or Interest Collections. A Mortgage Loan which is
reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale
and Servicing Agreement shall not be a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the Master
Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, include, without limitation, legal fees
and expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.10 and 4.13 of the Sale and
Servicing Agreement with respect to the related Mortgage Loan.
"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, sale to a third party or
otherwise.
"Loan Reacquisition Price": With respect to any Mortgage Loan
reacquired from the Trust on a Remittance Date pursuant to Section 2.2(b),
3.3(c) or 3.4 of the Sale and Servicing Agreement, an amount, without
duplication, equal to (i) the outstanding Principal Balance of such Mortgage
Loan as of the date of reacquisition, (ii) one month's interest on (if not
already deposited in the Principal and Interest Account) the outstanding
Principal Balance thereof as of the beginning of the preceding Remittance Period
computed at the Coupon Rate and (iii) all Servicing Advances theretofore made
with respect to such Mortgage Loan and not subsequently recovered from the
related Mortgage Loan, including Nonrecoverable Advances.
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"Managed Amortization Period": The period commencing on the Closing
Date and ending on the earlier to occur of (x) the end of the Remittance Period
related to the May 2003 Payment Date and (y) the end of the Remittance Period
related to the Payment Date which immediately precedes the occurrence of a Rapid
Amortization Event.
"Margin": With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Credit Line Agreement which amount is added to
the index specified in the related Credit Line Agreement to determine the Coupon
Rate for such Mortgage Loan, subject to any maximum or minimum.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation,
and its permitted successors and assigns.
"Master Servicer Affiliate": A Person that is (i) controlling,
controlled by or under common control with the Master Servicer, (ii) qualified
to service residential mortgage loans, and (iii) subservicing the Mortgage
Loans.
"Master Servicer's Trust Receipt": The Master Servicer's trust receipt
in the form set forth as Exhibit F to the Sale and Servicing Agreement.
"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]", or (iv) "Pay to the order of Bankers Trust Company of
California, N.A., without recourse" or (v)"Pay to the order of _________,
without recourse". The original Credit Line Agreement should be accompanied by
any rider made in connection with the origination of the related Mortgage Loan;
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(b) The original of any guaranty executed in connection with the Credit
Line Agreement;
(c) The original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;
(d) The originals of any assumption, modification, consolidation or
extension agreements;
(e) The original Assignment of Mortgage of each Mortgage Loan to (1)
"Bankers Trust Company of California, N.A., as custodian or trustee," or (2)
"Bankers Trust Company of California, N.A., as trustee" or (3) 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)"; and
(f) The originals of all intervening Assignments of Mortgage, if
applicable, showing a complete chain of assignment from origination to the
related Seller, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof).
"Mortgage Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan, but excluding any non-mortgage
related or credit life insurance policy. The term "Mortgage Insurance Policy"
shall not include the Policy.
"Mortgage Insurance Proceeds": Proceeds paid by any insurer pursuant to
any Mortgage Insurance Policy covering a Mortgage Loan, or amounts required to
be paid by the Master Servicer pursuant to the last sentence of the first
paragraph of Section 4.11(b) of the Sale and Servicing Agreement, or the
penultimate sentence of Section 4.11(c) of the Sale and Servicing Agreement, net
of any component thereof (i) covering any Liquidation Expenses incurred by or on
behalf of the Master Servicer in connection with obtaining such proceeds, (ii)
that is applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures, or (iv) required to be paid to any holder of a mortgage
senior to such Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trust pursuant to Section 2.1 or Section 2.6 of the Sale and Servicing
Agreement, together with any Subsequent Mortgage Loans and any Qualified
Replacement Mortgage Loans substituted therefor in accordance with the Sale and
Servicing Agreement, which are held as a part of the Trust Estate. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Mortgaged Property that is REO Property
prior to such Mortgaged Property's disposition by the Trust and any Mortgage
Loan the related Mortgagor of which is in bankruptcy. Any mortgage loan which,
although intended by the parties hereto to have been, and which purportedly was,
transferred and assigned to the Trust by the Sponsor, in fact was not
transferred and assigned to the Trust for any reason whatsoever shall
nevertheless be considered a "Mortgage Loan" for all purposes of the Operative
Documents.
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"Mortgaged Property": The underlying property securing a Mortgage Loan.
"Mortgagor": The obligor under a Credit Line Agreement.
"Net Funds Cap Carry-Forward Amount": With respect to any Payment Date,
the sum of (i) the excess of the amount of interest accrued during the related
Interest Accrual Period based on the Formula Rate, over the interest accrued
during the related Interest Accrual Period based on the Net Funds Cap Rate, (ii)
any such amounts described in clause (i) for prior Payment Dates and not
previously paid 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 at the applicable
Coupon Rate during the related Remittance Period minus the amount of aggregate
Prepayment Interest Shortfalls for the related Remittance Period and minus the
amount of aggregate 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 related Remittance Period, less (y) 0.50%.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses other
than any such expenses reflected in the calculation of Mortgage Insurance
Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances
incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and
unpaid Servicing Fees with respect to such Mortgage Loan through the date of
liquidation. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Mortgage Loan be less than zero.
"Net Principal Collections": With respect to any Remittance Period, the
excess of (i) Principal Collections over (ii) 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.
"Nonrecoverable Advance": With respect to any Mortgage Loan, any
Servicing Advance previously made and not reimbursed pursuant to Section 4.10 of
the Sale and Servicing Agreement or any Servicing Advance proposed to be made in
respect of a Mortgage Loan, either of which, in the good faith business judgment
of the Master Servicer would not be ultimately recoverable.
"Note": Any note executed and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A to the Indenture.
"Note Account": The Note Account established in accordance with Section
8.3 of the Indenture and maintained by the Indenture Trustee.
"Note Balance": As of any date of determination, the Original Note
Balance, less any amounts actually distributed as principal to the Noteholders
on all prior Payment Dates.
"Note Interest Rate": As to any Payment Date, the lesser of (i) the
Formula Rate and (ii) the Net Funds Cap Rate.
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"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 for such Payment Date.
"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 of the Indenture and is authorized by the Trust to make payments to
and distributions from the Note Account, including payment of principal of or
interest on the Notes on behalf of the Trust.
"Note Register": The register maintained by the Indenture Trustee in
accordance with Section 2.3 of the Indenture, in which the names of the
Noteholders are set forth.
"Note Registrar": The Indenture Trustee, acting in its capacity as Note
Registrar appointed pursuant to Section 2.3 of the Indenture, or any duly
appointed and eligible successor thereto.
"Noteholder": A Person in whose name a Note is registered in the Note
Register.
"Officer's Certificate": A certificate signed by any Authorized Officer
of the Trust, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 of the Indenture and TIA
Section 314.
"Operative Documents": Collectively, the Indenture, the Guaranties, the
Trust Agreement, the Sale and Servicing Agreement, the Subsequent Transfer
Agreements, the Policy, the Notes, the Purchase Agreement, the Indemnification
Agreement and the Insurance Agreement.
"Opinion of Counsel": Means one or more opinions of counsel who may,
except as otherwise expressly provided in the Indenture, be employees of or
counsel to the Trust or Sponsor and which shall comply with any applicable
requirements of Section 11.1 of the Indenture.
"Original Note Balance": $400,000,000.00.
"Originators": Advanta Bank Corp., Advanta National Bank and Advanta
Finance Corp.
"Outstanding": As of any date of determination, all Notes theretofore
executed and delivered hereunder except:
(i) Notes theretofore cancelled by the Indenture Trustee or delivered
to the Indenture Trustee for cancellation;
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(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 of the
Indenture;
provided, however, that to the extent of any payments made under the Policy by
the Insurer and not reimbursed, such Notes shall be deemed to be "Outstanding"
for all purposes, not defeased or otherwise satisfied and not be considered paid
by the Trust.
"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 plus the Pre-Funded Amount over (y) the Note Balance (after taking into
account the payment of principal to the Noteholders on such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any Payment
Date, the difference, if any, between (i) the Specified Overcollateralization
Amount and (ii) the Overcollateralization Amount.
"Overcollateralization Deficit": With respect to any Payment Date, the
amount, if any, by which (i) the Note Balance, after taking into account the
payment of principal to the Noteholders on such Payment Date, exceeds (ii) the
Pool Principal Balance plus the Pre-Funded Amount at the end of the related
Remittance Period.
"Overcollateralization Reduction Amount": With respect to any Payment
Date, the lesser of (i) the excess of (x) the Overcollateralization Amount,
after taking into account all payments of principal (without taking into account
any Overcollateralization Reduction Amount) that were applied as a reduction in
the Note Balance on such Payment Date, over (y) the Specified
Overcollateralization Amount for such Payment Date and (ii) the Scheduled
Principal Distribution Amount (without taking into account any
Overcollateralization Reduction Amount).
"Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee Fee": With respect to any Payment Date, one-twelfth of
$3,000 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.
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"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. AB0358BE) with
respect to the Notes, dated April 27, 2000, issued by the Insurer to the
Indenture Trustee for the benefit of the Noteholders.
"Pool Certification": The certification of the Indenture Trustee as to
receipt of required documents that is required pursuant to Section 2.2 of the
Sale and Servicing Agreement, a form of which is attached thereto as Exhibit E.
"Pool Factor": A seven-digit decimal which the Indenture Trustee shall
compute monthly expressing the Note Balance as of each Payment Date (after
giving effect to any distribution of principal on such Payment Date) as a
proportion of the Original Note Balance. On the Closing Date, the Pool Factor
will be 1.0000000.
"Pool Principal Balance": With respect to any date of determination,
the aggregate of the Principal Balances of the Mortgage Loans as of such date.
"Predecessor Note": means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Preference Amount": As defined in the Policy.
"Pre-Funded Amount": The amount on deposit in the Pre-Funding Account,
which shall initially be $113,451,856.05.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.
"Pre-Funding Earnings": With respect to each Payment Date during the
Pre-Funding Period, the investment earnings on the Pre-Funding Account during
the related Interest Accrual Period.
"Pre-Funding Period": The period commencing on the Closing Date and
ending on the earliest to occur of (i) the date on which the Pre-Funded Amount
(exclusive of any investment earnings) is less than
A-16
<PAGE> 76
$100,000, (ii) the date on which any Event of Default or Rapid Amortization
Event occurs, and (iii) August 31, 2000.
"Premium Amount": With respect to any Payment Date, the product of (x)
the actual number of days elapsed in the period from the prior Payment Date (or
with respect to the first Payment Date, the Closing Date) to and including the
day prior to the applicable Payment Date, divided by 360, (y) the Premium
Percentage (as defined in the Insurance Agreement) and (z) the Note Balance on
such Payment Date after taking into account any distributions of the Scheduled
Principal Distributions Amount to be made on such Payment Date.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment). The proceeds of any Mortgage Insurance Policy or credit life
insurance which are to be applied as a payment of principal on the related
Mortgage Loan in advance of the scheduled payment shall be deemed to be
Prepayments for all purposes of this Agreement.
"Prepayment Interest Shortfalls": With respect to any Payment Date, for
each Mortgage Loan that was the subject of a Prepayment, the amount, if any, by
which (i) one month's interest at the applicable Coupon Rate on the Principal
Balance of such Mortgage Loan immediately prior to such Prepayment exceeds (ii)
the amount of interest paid or collected in connection with such Prepayment.
"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, or pursuant to any
Sub-Servicing Agreement.
"Principal Balance": As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any date, the related Cut-Off Date Principal Balance,
plus (i) any Additional Balance, minus (ii) all collections credited as
principal against the Principal Balance of any Mortgage Loan prior to such day
in accordance with the Credit Line Agreement. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance of zero as
of the first day of the Remittance Period following the Remittance Period in
which such Mortgage Loan becomes a Liquidated Mortgage Loan and at all times
thereafter.
"Principal Collections": With respect to any Payment Date and any
Mortgage Loan, the sum of all payments by or on behalf of Mortgagors and any
other amounts constituting principal (including, but not
A-17
<PAGE> 77
limited to, any portion of Mortgage Insurance Proceeds or Net Liquidation
Proceeds allocable to principal, but excluding Foreclosure Profits and any
recoveries in respect of Charged-Off Mortgage Loans) collected by the Master
Servicer during the related Remittance Period. The terms of the related Credit
Line Agreement shall determine the portion of each payment in respect of a
Mortgage Loan that constitutes principal and the priority of payment.
"Principal Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Principal Collections for such Remittance
Period, except that with respect to Prepaid Installments, principal shall be
remitted in the scheduled Remittance Period, (ii) the portion of the Loan
Reacquisition Price and the Substitution Amount relating to principal on the
Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate to principal) and (iv) any Pre-Funded
Amount deposited in the Note Account at the termination of the Pre-Funding
Period.
"Proceeding": Means any suit in equity, action at law or other judicial
or administrative proceeding.
"Prospectus": That certain Prospectus, dated December 28, 1999, naming
Advanta Conduit Receivables, Inc. as registrant and describing certain mortgage
loan asset-backed securities to be issued from time to time as described in
related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated April
18, 2000, describing the Notes issued by the Trust.
"Purchase Agreement": Means the Purchase Agreement dated as of April 1,
2000 between the Originators and the Sponsor with respect to the Mortgage Loans.
"Qualified Replacement Mortgage Loan": As defined in Section 2.3 of the
Sale and Servicing Agreement.
"Rapid Amortization Period": The period which follows the earlier to
occur of (x) the end of the Managed Amortization Period and (y) the occurrence
of a Rapid Amortization Event.
"Rating Agency": Means Moody's and S&P. If such agency or a successor
is no longer in existence, "Rating Agency" shall be such statistical credit
rating agency, or other comparable Person, designated by the Insurer, notice of
which designation shall be given by the Insurer to the Indenture Trustee, and
the Indenture Trustee shall give such notice to each of the Master Servicer and
the Sponsor. References herein to the highest short term unsecured rating
category of a Rating Agency shall mean A-1+ or better in the case of S&P and P-1
or better in the case of Moody's, and in the case of any other Rating Agency
shall mean the ratings such other Rating Agency deems equivalent to the
foregoing ratings. References herein to the highest long-term rating category of
a Rating Agency shall mean "AAA" in the case of S&P and "Aaa" in the case of
Moody's, and in the case of any other Rating Agency, the rating such other
Rating Agency deems equivalent to the foregoing ratings.
"Realized Loss": As to any Liquidated Mortgage Loan, the amount, if
any, by which the Principal Balance of such Mortgage Loan as of the date of
liquidation is in excess of Net Liquidation Proceeds.
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<PAGE> 78
"Record Date": With respect to each Payment Date, so long as the Notes
are Book Entry Notes, the Business Day preceding such Payment Date, and if the
Notes are maintained as Definitive Notes, the last Business Day of the calendar
month immediately preceding the calendar month in which such Payment Date
occurs.
"Redemption Date": Means, in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, the Payment Date specified by the
Master Servicer or the Trust pursuant to Section 10.2(a) of the Indenture.
"Redemption Price": As defined in Section 10.1(b) of the Indenture.
"Reference Banks": Deutsche Bank AG, Barclay's Bank PLC, and National
Westminster Bank PLC; or such banks as are selected by the Indenture Trustee
after consultation with the Master Servicer which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Sponsors or any Affiliate thereof, (iii)
whose quotations appear on the Telerate Screen Page 3785 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Indenture Trustee.
"Registration Statement": The Registration Statement (No. 333-92669)
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.
"Reimbursement Amount": As defined in the Policy.
"Relief Act Shortfall": With respect to any Remittance Period and any
Mortgage Loan for which there has been a reduction in the amount of interest
collectible thereon as a result of the application of the Civil Relief Act, the
amount by which (i) interest collectible on such Mortgage Loan is less than (ii)
one month's interest on the Principal Balance of such Mortgage Loan at the
Coupon Rate.
"Remittance Date": With respect to any Payment Date, the date on which
the Master Servicer is required to remit monies on deposit in the Principal and
Interest Account to the Indenture Trustee for deposit into the Note Account,
which shall be the 18th day of each month or, if such day is not a Business Day,
the next succeeding Business Day, commencing in the month following the Closing
Date.
"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master Servicer or
any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage Loan, the first day of the calendar month in which such Qualified
Replacement Mortgage Loan is conveyed to the Trust.
A-19
<PAGE> 79
"Reserve Interest Rate": Means the rate per annum that the Indenture
Trustee determines to be either the arithmetic mean, rounded to the nearest
whole multiple of 1/16%, of the one-month U.S. dollar lending rates which New
York City banks selected by the Indenture Trustee are quoting on the Interest
Determination Date to the principal London offices of lending banks in the
London interbank market or, in the event that the Indenture Trustee cannot
determine the arithmetic mean, the lowest one-month U.S. dollar lending rate
which New York City banks selected by the Indenture Trustee are quoting on the
Interest Determination Date to leading European banks.
"S&P": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Sale and Servicing Agreement": Means the Sale and Servicing Agreement,
including the Exhibits thereto, dated as of April 1, 2000, among the Trust, the
Sponsor, the Master Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"SAS 70": Means the Statement on Auditing Standards No. 70, Reports on
the Processing of Transactions by Service Organizations as in effect as of the
date hereof, which may be amended from time to time.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans attached
to the Indenture as Schedule I, as the same may be supplemented or amended from
time to time in connection with substitutions of Qualified Replacement Mortgage
Loans and the addition of Subsequent Mortgage Loans. The information contained
on the Schedule of Mortgage Loans may be delivered to the Indenture Trustee in
an electronic medium.
"Scheduled Principal Distribution Amount": On any Payment Date (A)
during the Managed Amortization Period, the excess of (x) the lesser of (i) the
Fixed Allocation Percentage of Principal Collections and (ii) the Net Principal
Collections over (y) the Overcollateralization Reduction Amount, if any, with
respect to such Payment Date and (B) during the Rapid Amortization Period, the
excess of (x) the Fixed Allocation Percentage of Principal Collections 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 Section 4.10 and Section 4.13 of the
Sale and Servicing Agreement.
"Servicing Fee": With respect to any Remittance Period, the product of
(i) Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the opening of business on the first day of the related Remittance
Period.
"Servicing Fee Rate": 0.75% per annum.
A-20
<PAGE> 80
"Servicing Officer": Any officer of the Master Servicer or a
Sub-Servicer.
"Specified Overcollateralization Amount": The amount specified in the
Insurance Agreement.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada corporation.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage
Loan, the opening of business on the first day of the calendar month in which
such Subsequent Mortgage Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans transferred and
assigned to the Trust pursuant to Section 2.6 of the Sale and Servicing
Agreement, which shall be listed on the Schedule of Mortgage Loans attached to
the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
executed by the Owner Trustee and the Sponsor substantially in the form of
Exhibit H to the Sale and Servicing Agreement, by which Subsequent Mortgage
Loans are transferred and assigned to the Trust.
"Subsequent Transfer Date": Means, with respect to any Subsequent
Mortgage Loans transferred to the Trust, the date set forth in the related
Subsequent Transfer Agreement.
"Sub-Servicer": Any Person with whom the Master Servicer has entered
into a Sub-Servicing Agreement in accordance with Section 4.5 of the Sale and
Servicing Agreement.
"Sub-Servicing Agreement": The written contract reasonably acceptable
to the Insurer between the Master Servicer and any Sub-Servicer (other than an
Affiliated Sub-Servicer) relating to the servicing and/or administration of
certain Mortgage Loans as permitted by Section 4.5 of the Sale and Servicing
Agreement.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage Loan, if the outstanding principal amount of such Qualified
Replacement Mortgage Loan as of the applicable Replacement Cut-Off Date is less
than the related Principal Balance of the Mortgage Loan being replaced, an
amount equal to such difference together with accrued and unpaid interest on
such amount calculated at the Coupon Rate, net of the Servicing Fee, of the
Mortgage Loan being replaced.
"Telerate Screen Page 3750": The display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
"Termination Date": Means the latest of (i) the date on which the
termination of the Policy and the return of the Policy to the Insurer for
cancellation occurs, (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.
A-21
<PAGE> 81
"Transfer Date": With respect to (i) a Qualified Replacement Mortgage
Loan, the date that such Mortgage Loan is delivered to the Indenture Trustee on
behalf of the Trust, (ii) a Mortgage Loan that is reassigned to the Sponsor
pursuant to Section 2.5 of the Sale and Servicing Agreement, the date that is
specified therein, and (iii) a Subsequent Mortgage Loan, the Subsequent Transfer
Date.
"Transfer Notice Date": As defined in Section 2.5 of the Sale and
Servicing Agreement.
"Trust": Advanta Revolving Home Equity Loan Trust 2000-A created by the
Trust Agreement.
"Trust Agreement": The Trust Agreement dated as of April 1, 2000
between the Owner Trustee and the Sponsor relating to the formation of the
Trust.
"Trust Estate": As defined in the Granting Clause of the Indenture.
"Trust Indenture Act" or "TIA": Means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"Underwriters": Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated, Prudential Securities Incorporated and Salomon Smith Barney 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) of the
Sale and Servicing Agreement.
A-22
<PAGE> 82
EXHIBIT B
[Reserved]
B-1
<PAGE> 83
EXHIBIT C
[Reserved]
C-1
<PAGE> 84
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 April 1, 2000 (the
"Sale and Servicing Agreement"), by and among Advanta Conduit Receivables, Inc.,
a Nevada corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a
Delaware corporation, as Master Servicer, Advanta Revolving Home Equity Loan
Trust 2000-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.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned thereto in Annex A to the Indenture, dated as of April 1,
2000, between the Trust and the Indenture Trustee.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Dated:
------------------
D-1
<PAGE> 85
EXHIBIT E
FORM OF POOL 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
April 1, 2000 (the "Sale and Servicing Agreement"), by and among Advanta Conduit
Receivables, Inc., a Nevada corporation, as sponsor (the "Sponsor"), Advanta
Mortgage Corp. USA, a Delaware corporation, as Master Servicer, Advanta
Revolving Home Equity Loan Trust 2000-A, as Trust, and the Indenture Trustee
(Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in Annex A to the Indenture, dated as of April 1, 2000, between
the 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 Mortgage Files relating to
the Pool within a specified period following the Closing Date, Subsequent
Transfer 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) (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> 86
EXHIBIT F
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, CA 92705
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
April 1, 2000 by and among Advanta Conduit Receivables, Inc., a Nevada
corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as
Master Servicer, Advanta Revolving Home Equity Loan Trust 2000-A, as Trust, and
you (the "Agreement"), the Master Servicer hereby requests a release of the
Mortgage 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 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)
F-1
<PAGE> 87
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
be returned to you, except if the Mortgage Loan has been paid in full, or
purchased or substituted for by a Qualified Replacement Mortgage Loan (in which
case the Mortgage File will be retained by us permanently) and except if the
Mortgage Loan is being foreclosed (in which case the Mortgage File will be
returned when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
ADVANTA MORTGAGE CORP. USA
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
F-2
<PAGE> 88
EXHIBIT G
FORM OF POWER OF ATTORNEY
G-1
<PAGE> 89
EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement (this "Agreement"),
dated as of __________, _____, among Advanta Conduit Receivables, Inc., a Nevada
corporation (the "Sponsor), and Advanta Revolving Home Equity Loan Trust 2000-A
(the "Trust"), the Sponsor and the Trust agree to the sale by the Sponsor to the
Trust, of the Mortgage Loans listed on the attached schedule of Mortgage Loans
(the "Subsequent Mortgage Loans").
Capitalized terms are used in this Agreement as defined in Annex 1 of
the Indenture, dated as of April 1, 2000 (the "Indenture"), between the Trust
and Bankers Trust Company of California, N.A., as Indenture Trustee, which
meanings are incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1. Sale of Subsequent Mortgage Loans.
(a) The Sponsor does hereby sell, transfer, assign, set over and convey
to the Trust, without recourse, all of its right, title and interest in and to
the Subsequent Mortgage Loans, and including all principal and interest
collected on the Subsequent Mortgage Loans on and after the Subsequent Cut-Off
Date, and the Mortgage File for each Subsequent Mortgage Loan. The Sponsor,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trust the Mortgage File for each Subsequent Mortgage
Loan.
The transfer to the Trust of the Subsequent Mortgage Loans identified
on the Schedule of Subsequent Mortgage Loans shall be absolute and is intended
by the parties hereto to constitute a sale by the Sponsor to the Trust on the
Subsequent Transfer Date of all the Sponsor's right, title and interest in and
to the Subsequent Mortgage Loans, and other property as and to the extent
described above. In the event the transactions set forth herein shall be deemed
not to be a sale, the Sponsor hereby grants to the Trust as of the Subsequent
Transfer Date a security interest in all of the Sponsor's right, title and
interest in, to and under the Subsequent Mortgage Loans, and such other
property, to secure all of the Sponsor's obligations hereunder, and this
Agreement shall constitute a security agreement under applicable law. The
Sponsor agrees to take or cause to be taken such actions and to execute such
documents, including without limitation the filing of all necessary UCC- 1
financing statements and any continuation statements with respect thereto as are
necessary to perfect and protect the Trust's interests in each Subsequent
Mortgage Loan and the proceeds thereof.
(b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans and this Agreement shall be borne by the Sponsor.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Sponsor hereby affirms the representations and warranties set
forth in Sections 3.1 and 3.3 of the Sale and Servicing Agreement that relate to
the Sponsor or the Subsequent Mortgage Loans as
H-1
<PAGE> 90
of the date hereof. The Sponsor hereby confirms that each of the conditions set
forth in Section 2.6 of the Sale and Servicing Agreement are satisfied as of the
date hereof and further represents and warrants that each Subsequent Mortgage
Loan complies with the requirements of this Agreement and Section 2.6 of the
Sale and Servicing Agreement.
(b) The Sponsor is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder nor is it
aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Sponsor prior to the
date hereof.
(c) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.
Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in
which any or all of the properties subject to the related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction of the Insurer or Noteholders holding Notes evidencing at
least 51% of the Aggregate Note Balance, but only when accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of the Noteholders or the Insurer or is necessary for the
administration or servicing of the Subsequent Mortgage Loans.
Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 5. Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an original
and together shall constitute one and the same instrument.
Section 6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Sponsor the Trust and their respective
successors and assigns.
[Signature Page Follows]
H-2
<PAGE> 91
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-A,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Acknowledged and Accepted:
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 1
Exhibit 4.4
Ambac Assurance Corporation
c/o CT Corporation
44 East Mifflin Street, Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, New York 10004
Telephone: (212) 668-0340
AMBAC
CERTIFICATE GUARANTY INSURANCE POLICY
Policy Number: AB0358BE
Advanta Revolving Home Equity Loan
Asset-Backed Notes, Series 2000-A
Premium: As specified in the
endorsement attached hereto
AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/ P. Lassiter /s/ Stephen D. Cooke
- ----------------------------- --------------------------------
President Secretary
/s/ [Authorized Representative]
--------------------------------
Effective Date: April 27, 2000 Authorized Representative
<PAGE> 1
PURCHASE AGREEMENT
among
ADVANTA BANK CORP.,
ADVANTA NATIONAL BANK
and
ADVANTA FINANCE CORP.
as the Originators
and
ADVANTA CONDUIT RECEIVABLES, INC.
as Purchaser
Dated as of April 1, 2000
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions.....................................................................................1
ARTICLE II
Procedures for Purchases of Mortgage Loans;
Conditions Precedent; Settlements...............................................................1
Section 2.01. Purchase and Sale....................................................2
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans....................3
Section 2.03. Survival of Representations..........................................4
Section 2.04. Proceeds of Mortgage Loans...........................................4
Section 2.05. Repurchased Mortgage Loans...........................................4
ARTICLE III
Protective Security Interest....................................................................4
ARTICLE IV
Representations and Warranties..................................................................6
Section 4.01. Representations and Warranties of Originators........................6
Section 4.02. Representations and Warranties Regarding Mortgage Loans..............7
Section 4.03. Representations and Warranties of Purchaser..........................7
Section 4.04. Remedies for Breach of Representations and Warranties;
Repurchase Obligation................................................8
ARTICLE V
Covenants of Originators.......................................................................10
Section 5.01. Affirmative Covenants...............................................10
Section 5.02. Negative Covenants..................................................10
ARTICLE VI
Sale of Mortgage Loans by Purchaser............................................................11
ARTICLE VII
Additional Remedies............................................................................12
ARTICLE VIII
Term...........................................................................................12
ARTICLE IX
Exclusive Benefit of Parties; Assignment.......................................................12
ARTICLE X
Amendment; Waivers.............................................................................13
ARTICLE XI
Execution in Counterparts......................................................................13
ARTICLE XII
Effect of Invalidity of Provisions.............................................................13
ARTICLE XIII
Governing Law..................................................................................13
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE XIV
Notices........................................................................................13
ARTICLE XV
Entire Agreement...............................................................................14
ARTICLE XVI
Indemnities....................................................................................14
ARTICLE XVII
RESPA Obligations..............................................................................15
ARTICLE XVIII
Survival.......................................................................................16
ARTICLE XIX
Consent to Service.............................................................................16
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury............................................16
ARTICLE XXI
Construction...................................................................................16
ARTICLE XXII
Further Assurances.............................................................................17
ARTICLE XXIII
Third Party Beneficiary........................................................................17
ARTICLE XXIV
No Petition....................................................................................17
</TABLE>
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<PAGE> 4
PURCHASE AGREEMENT (the "Agreement") dated as of April 1, 2000, among
Advanta Bank Corp., a Utah industrial loan corporation ("ABC"), Advanta National
Bank, a national banking association ("ANB"), and Advanta Finance Corp., a
Nevada corporation ("AFC"), on one hand, and Advanta Conduit Receivables, Inc.,
a Nevada corporation ("Purchaser"), on the other hand. ABC, ANB and AFC are
sometimes individually referred to herein as an "Originator" and sometimes
collectively referred to herein as the "Originators."
WHEREAS, all of the Mortgage Loans were originated by the Originators;
WHEREAS, certain of the Mortgage Loans are owned by the Originators.
The remaining Mortgage Loans, which are indicated on the Schedule of Mortgage
Loans with Investor Codes 24, 25 and 27, were conveyed by the Originators to a
warehouse trust and are owned by the warehouse trust;
WHEREAS, the Originators desire to sell to Purchaser, and Purchaser
desires to purchase from the Originators, the Mortgage Loans owned by the
Originators, all in accordance with the terms and conditions set forth in this
Agreement; and
WHEREAS, Purchaser is purchasing the Mortgage Loans owned by the
warehouse trust from the warehouse trust pursuant to a certain Assignment, dated
as of April 27, 2000 (the "Assignment");
NOW, THEREFORE, in consideration of the premises, the mutual promises
herein made and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Except as otherwise specified herein, capitalized terms used in this
Agreement are defined in Annex 1 to the Indenture, dated as of April 1, 2000
(the "Indenture"), between Advanta Revolving Home Equity Loan Trust 2000-A and
Bankers Trust Company of California, N.A., as Indenture Trustee. A copy of Annex
1 to the Indenture is attached to this Agreement as Exhibit A. Defined terms
that are used only in one section or only in another definition may be omitted
from the list of defined terms in Annex 1. Defined terms include, as
appropriate, all genders and the plural as well as the singular.
ARTICLE II
Procedures for Purchases of Mortgage Loans;
Conditions Precedent; Settlements
<PAGE> 5
Section 2.01. Purchase and Sale. (a) The Originators hereby agree to,
and do hereby, sell, assign, transfer, convey and set over to Purchaser, and
Purchaser hereby agrees to, and does hereby, purchase and acquire from the
Originators, without recourse (subject to the Originators' obligations herein,
including any obligation to fund Additional Balances with respect to the Initial
Mortgage Loans), on the Closing Date, all of the Originators' respective right,
title and interest in and to (a) each Initial Mortgage Loan owned by an
Originator, including its Principal Balance as of the Initial Cut-Off Date and
all principal and interest collected in respect of such Initial Mortgage Loan on
or after the Initial Cut-Off Date (excluding any payments of principal and
interest collected in respect to such Initial Mortgage Loan prior to the Initial
Cut-Off Date); (b) each related Mortgaged Property that is acquired by
foreclosure or deed in lieu of foreclosure; (c) all rights under any Mortgage
Insurance Policies covering each related Mortgaged Property; (d) all proceeds
with respect to the foregoing; and (e) the Mortgage File and other documents
relating to the foregoing; provided, however, that neither Purchaser nor any of
its Assignees (including the Trust and the Indenture Trustee) shall be deemed to
assume 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' and the warehouse trust's sale, transfer, assignment and
conveyance to Purchaser of all of their respective right, title and interest in
and to the Initial Mortgage Loans and other properties specified above and in
the Assignment from the warehouse trust to Purchaser, on the Closing Date,
Purchaser shall (x) pay to or upon the order of the Originators and the
warehouse trust that amount in immediately available funds equal to the
Originators' and the warehouse trust's pro rata share of the proceeds of the
sale of the Notes, net of the initial deposits to the Pre-Funding Account and
the Capitalized Interest Account, any underwriting discounts and other
transaction costs, and (y) direct the issuance of the Certificates to or upon
the order of the Originators, all in such relative proportions as the
Originators shall jointly determine on or before the Closing Date.
(b) The Originators hereby agree to sell, assign, transfer,
convey and set over to Purchaser, and the Purchaser, subject to the satisfaction
of the conditions set forth in Section 2.6 of the Sale and Servicing Agreement,
hereby agrees to purchase and acquire from the Originators, without recourse
(subject to the Originators' obligations herein, including any obligation to
fund Additional Balances with respect to the Subsequent Mortgage Loans), on each
Subsequent Transfer Date, all of the Originators' respective right, title and
interest in and to (a) each Subsequent Mortgage Loan, including its Principal
Balance as of the Subsequent Cut-Off Date and all principal and interest
collected in respect of such Subsequent Mortgage Loan on or after the Subsequent
Cut-Off Date (excluding any payments of principal and interest collected in
respect to such Subsequent Mortgage Loans prior to the Subsequent Cut-Off Date);
(b) each related Mortgaged Property that is acquired by foreclosure or deed in
lieu of foreclosure; (c) all rights under any Mortgage Insurance Policies
covering each related Mortgaged Property; (d) all proceeds with respect to the
foregoing; and (e) the Mortgage File and other documents relating to the
foregoing; provided, however, that neither Purchaser nor any of its Assignees
(including the Trust and the Indenture Trustee) shall be deemed to assume any
obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, it being understood that any such
obligation shall remain with the Originators and that neither Purchaser nor any
of
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<PAGE> 6
its Assignees (including the Trust and the Indenture Trustee) shall be required
or permitted to fund any such future advances. As full consideration for the
Originators' sale, transfer, assignment and conveyance to Purchaser of all of
their respective right, title and interest in and to the Subsequent Mortgage
Loans and other properties specified above, on each Subsequent Transfer Date,
Purchaser shall direct the Indenture Trustee to pay from funds on deposit in the
Pre-Funding Account to or upon the order of the Originators that amount in
immediately available funds equal to 94.8% of the aggregate Principal Balance of
the Subsequent Mortgage Loans as of the Subsequent Cut-Off Date, all in such
relative proportions as the Purchaser and the Originators shall jointly
determine on or before each Subsequent Transfer Date.
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans. Prior
to the purchase of the Initial Mortgage Loans or any Subsequent Mortgage Loans,
as the case may be:
(a) Each Originator shall have delivered to Purchaser or any
agent appointed by Purchaser the Mortgage File for each of the Mortgage Loans
sold to Purchaser by such Originator.
(b) Purchaser shall have received a copy of the Schedule of
Mortgage Loans.
(c) On the Closing Date, Purchaser shall have received copies
of the resolutions of the Board of Directors of each Originator, certified by
its Secretary or Assistant Secretary, approving this Agreement.
(d) On the Closing Date, Purchaser shall have received copies
of the articles of incorporation, articles of association or charter of each
Originator.
(e) On the Closing Date, Purchaser shall have received from
each Originator (i) a certificate of the Secretary or Assistant Secretary of
such Originator certifying the names and signatures of the officers authorized
on its behalf to execute this Agreement and any other documents to be delivered
by it hereunder and (ii) a copy of such Originator's by-laws.
(f) On the Closing Date, Purchaser shall have received an
opinion of counsel to each Originator as to the due authorization, execution and
delivery by such Originator of this Agreement and as to the validity and
enforceability of the transfers contemplated hereunder and addressing such other
matters as Purchaser may reasonably request.
(g) Purchaser shall be permitted to perform its standard loan
review of each Mortgage Loan to be purchased.
(h) On the Closing Date, UCC-1 financing statements duly
executed by each Originator as debtor shall have been filed naming Purchaser as
secured party and, if Purchaser so requests, the Indenture Trustee on behalf of
the Trust as assignee.
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<PAGE> 7
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 and in the Assignment. Each Originator will be deemed on the Closing
Date and each Subsequent Transfer Date to have made to Purchaser the
representations and warranties set forth in Article IV hereof, including,
without limitation, the representations and warranties in regard to the Mortgage
Loans, whether conveyed by such Originator to Purchaser hereunder or conveyed by
the warehouse trust to Purchaser under the Assignment, and such representations
and warranties of such Originator shall be true and correct on and as of the
Closing Date and each Subsequent Transfer Date . In addition, such Originator
will be deemed to have reaffirmed the representations and warranties contained
in Article IV hereof including, without limitation, the representations and
warranties in regard to all of the Initial Mortgage Loans, whether conveyed by
such Origination to Purchaser hereunder or conveyed by the warehouse trust to
Purchaser under the Assignment, on the date of sale of such Mortgage Loans by
Purchaser pursuant to Section 2.1(a) of 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 owned by an Originator shall
include all proceeds, products and profits derived therefrom, including all
payments of principal of and interest on such Mortgage Loan and other amounts
due or payable or to become due or payable in respect thereof and proceeds
thereof, including all monies, goods and other tangible or intangible property
received upon the liquidation or sale thereof, except any payments in respect of
principal or interest collected prior to the Cut-Off Date.
Section 2.05. Repurchased Mortgage Loans. If any Mortgage Loan sold by
an Originator hereunder or by the warehouse trust under the Assignment 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 Reacquisition 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 all conveyances of
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 such Mortgage Loans by
the Originators to Purchaser. It is, further, not the intent of the parties that
such conveyance be deemed a pledge of such 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 any or all of the Originators, then:
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<PAGE> 8
(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
conveyed hereunder (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 such Mortgage Loans and/or such rights or properties in accordance
with the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including all amounts from time to time held or invested in the
Accounts (excluding any investment earnings on the Note Account, the Principal
and Interest Account and the Capitalized Interest Account), whether in the form
of cash, instruments, securities or other property;
(iii) the possession by Purchaser or any of its Assignees or their
respective bailees or agents of items of property that constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the California 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 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 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,
-5-
<PAGE> 9
establish, maintain, protect, enforce or defend its rights in and to the
Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this Agreement
(including UCC-1 financing statements naming such Originator as debtor and
Purchaser as secured party and any continuation statements relating thereto).
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of Originators. Each of
the Originators represents, warrants and covenants to Purchaser as of the
Closing Date and each Subsequent Transfer Date that:
(a) Such Originator is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by such Originator in any state in which a Mortgaged
Property is located to the extent necessary to ensure the enforceability of each
Mortgage Loan in accordance with the terms of this Agreement.
(b) Such Originator has the full corporate power and authority
to originate the Mortgage Loans conveyed by it hereunder and to execute, deliver
and perform, and to enter into and consummate the transactions contemplated by,
this Agreement; the execution, delivery and performance of this Agreement by
such Originator has been duly authorized by all necessary corporate action on
the part of such Originator; and this Agreement, assuming the due authorization,
execution and delivery thereof by Purchaser, constitutes a legal, valid and
binding obligation of such Originator, enforceable against such Originator in
accordance with its respective terms, except to the extent that (i) the
enforceability thereof may be limited by federal or state bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to 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
-6-
<PAGE> 10
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.
(g) Such Originator has caused to be performed any and all
acts required to preserve the rights and remedies of Purchaser in any Mortgage
Insurance Policies of such Originator applicable to the Mortgage Loans conveyed
by such Originator hereunder.
Section 4.02. Representations and Warranties Regarding Mortgage Loans.
Each Originator represents and warrants to Purchaser as of the Closing Date, the
Transfer Date and the Subsequent Transfer Date, as the case may be, that, with
respect to each Mortgage Loan originated by such Originator and conveyed by such
Originator or the warehouse trust, as the case may be, on such date, each
representation and warranty set forth in Exhibit A hereto is true and correct.
Section 4.03. Representations and Warranties of Purchaser. Purchaser
hereby makes the following representations and warranties, each of which
representations and warranties (i) is material and being relied upon by the
Originators and (ii) is true in all respects as of the Closing Date, the
Transfer Date and the Subsequent Transfer Date:
(a) Purchaser has been duly organized and is validly existing
as a corporation under the laws of the State of Nevada.
(b) Purchaser has the requisite power and authority and legal
right to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement to be performed
by it.
-7-
<PAGE> 11
(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 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.
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
Mortgage Loans by the Originators or the warehouse trust 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 or any Assignee's interest therein, the party discovering such
breach shall give prompt written notice to the others.
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<PAGE> 12
Within 30 days of the earlier of either discovery by or notice to an
Originator of any breach of a representation or warranty set forth in Sections
4.01 and 4.02 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 or cause to be cured
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
30-day period, Originator shall, at Purchaser's option, either (a) repurchase
such Mortgage Loan at the Loan Reacquisition Price therefor or (b) substitute in
lieu of such Mortgage Loan 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, if any, 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 the applicable
Originator shall arrange for the assignment to the applicable Originator of the
Mortgage Loan to be repurchased or replaced and the delivery to the applicable
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 any breach of the representations
and warranties contained in this Article IV which materially and adversely
affects the value of any Mortgage Loan or Purchaser's or any Assignee's
(including the Trust's and the Indenture Trustee's) interest therein, or to
repurchase the affected Mortgage Loan or substitute a Qualified Replacement
Mortgage Loan in lieu thereof and to indemnify and hold harmless Purchaser as
provided in this Section 4.04 constitute the sole remedies of Purchaser or any
Assignee of Purchaser (including the Trust and the Indenture Trustee) 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 the Originator or notice thereof by Purchaser to the
Originator, (ii) failure by the Originator to cure such breach or to repurchase
such Mortgage Loan or substitute a Qualified Replacement Mortgage Loan in lieu
thereof as specified above, and (iii) demand upon the Originator by Purchaser
for compliance with the relevant provisions of this Agreement.
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ARTICLE V
Covenants of Originators
So long as this Agreement remains in effect or any Originator has
obligations hereunder, each Originator hereby covenants and agrees with
Purchaser as follows:
Section 5.01. Affirmative Covenants.
(a) Such Originator shall do all things necessary to remain
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and to maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted except
where failure to maintain such authority would not have a material adverse
effect on the ability of such Originator to conduct its business or to perform
its obligations under this Agreement.
(b) At all times during this Agreement, such Originator shall
possess sufficient net capital and liquid assets (or ability to access the same)
to satisfy its obligations as they become due in the normal course of business.
(c) Such Originator shall permit Purchaser, its Assignees and
their respective accountants, attorneys and other agents access to all of the
books and records relating to the Mortgage Loans purchased and retained by
Purchaser for inspection during normal business hours at all places where such
Originator conducts business.
(d) Such Originator shall be obligated to convey all
Additional Balances to the Trust (to the extent such Additional Balances are
related to the Mortgage Loans originated by such Originator).
(e) Such Originator will deliver or cause to be delivered to
the Indenture Trustee the items listed in the definition of "Mortgage Files"
with respect to each Mortgage Loan originated by such Originator and conveyed to
Purchaser by such Originator or by the warehouse trust.
Section 5.02. Negative Covenants.
(a) Such Originator shall not assign or attempt to assign this
Agreement or any rights hereunder, without first obtaining the specific written
consent of Purchaser.
(b) Such Originator shall not amend its articles of
incorporation, articles of association or charter or its by-laws if such
amendment shall have or is likely to have an adverse effect upon Purchaser or
its interests under this Agreement, without the prior written consent of
Purchaser.
(c) Such Originator shall not (i) dissolve or terminate its
existence or (ii) transfer any assets to any affiliate except in the ordinary
course of its business or as otherwise expressly permitted or contemplated
hereby.
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(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 Mortgage Loans by the Originators to Purchaser as provided herein or the
conveyance of Mortgage Loans to Purchaser by the warehouse trust, pursuant to
the Sale and Servicing Agreement, Purchaser will sell, assign, transfer, convey
and set over to the Trust all of Purchaser's right, title and interest in and to
all of the Mortgage Loans (including the other rights and properties conveyed to
it hereunder) and (ii) immediately after the sale of all of the Mortgage Loans
by Purchaser to the Trust 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,
the Trust and the Indenture Trustee with respect to all reasonable requests and
due diligence procedures, including participating in meetings with rating
agencies, insurers and such other parties as Purchaser shall designate and
participating in meetings with Purchaser's Assignees and the Trust and providing
information reasonably requested by Purchaser's Assignees and the Trust;
(b) to execute all other necessary documents to effect the
transactions contemplated hereby;
(c) to affirm the representations and warranties set forth
herein regarding such Originator and any Mortgage Loans originated by such
Originator as of the date of the transfer thereof to the Trust;
(d) to deliver to Purchaser for inclusion in any prospectus or
other offering material such publicly available information regarding (i) such
Originator, (ii) its financial condition, (iii) the mortgage loan delinquency,
foreclosure and loss experience of its portfolio as is customarily set forth in
a prospectus supplement with respect to a comparable mortgage pool, (iv) the
underwriting guidelines for mortgage loans, (v) the servicer, (vi) the servicing
and collection practices regarding mortgage loans, and (vii) any additional
information reasonably requested by Purchaser, or as is otherwise reasonably
requested by Purchaser and which such Originator is capable of providing without
unreasonable effort or expense, and to indemnify Purchaser and its Assignees for
material misstatements or omissions contained in such information;
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(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, 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.
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 the Trust, the Indenture
Trustee, the Noteholders and the Insurer. Neither this Agreement nor any rights
hereunder may be assigned by any party hereto without the prior written consent
of the others and the Insurer except if assigned by the Purchaser to the Trust
or the Indenture Trustee.
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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 signatures of the other parties.
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.
ARTICLE XIII
Governing Law
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
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ARTICLE XIV
Notices
Any notices, consents, directions, demands and other communications
given under this Agreement (unless otherwise specified herein) shall be: (a) in
writing and personally delivered or telecopied to the respective addresses or
facsimile numbers of the parties hereto, as follows: if to the Purchaser,
addressed to Advanta Conduit Receivables, Inc., 10790 Rancho Bernardo Road, San
Diego, California 92127; if to ABC, addressed to Advanta Bank Corp., 11850 South
Election Road, Draper, Utah 84020; if to 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, if to any party, addressed to such other address or facsimile number
as such party shall give notice to the other parties 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. Any notice,
consent, direction, demand or other communication given under this Agreement
shall 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;
(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
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<PAGE> 18
(c) The failure by such Originator (if so requested by
Purchaser) to execute and properly file, or any delay in executing and properly
filing, financing statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with respect to the
Mortgage Loans.
Promptly after receipt by an Indemnified Party under this Article XVI
of notice of the commencement of any action or other proceeding, such
Indemnified Party will, if a claim in respect thereof is to be made against the
indemnifying party under this Article XVI, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may have to
any Indemnified Party otherwise than under this Article XVI. In case any such
action is brought against any Indemnified Party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the Indemnified Party promptly after receiving the aforesaid notice
from such Indemnified Party, to assume the defense thereof, with counsel
satisfactory to such Indemnified Party; provided, however, that if the
defendants in any such action include both the Indemnified Party and the
indemnifying party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it and/or other Indemnified
Parties that are different from or additional to those available to the
indemnifying party, the Indemnified Party shall have the right to elect separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such Indemnified Party. Upon receipt of
notice from the indemnifying party to such Indemnified Party of its election so
to assume the defense of such action and approval by the Indemnified Party of
counsel, the indemnifying party will not be liable for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel representing the Indemnified Parties under this Article XVI who
are parties to such action), (ii) the indemnifying party shall have employed
counsel which is not satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the Indemnified Party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall only be in
respect of the counsel referred to in such clause (i) or (iii).
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 of all 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
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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.
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
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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 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 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.
[Signature Page Follows]
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all as of
the date first written above.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Purchaser
By: /s/ Michael Coco
------------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA BANK CORP.,
as an Originator
By: /s/ Mark B. Hales
------------------------------------------
Name: Mark B. Hales
Title: 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> 22
SCHEDULE I
SCHEDULE OF MORTGAGE LOANS
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<PAGE> 23
EXHIBIT A
MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES
Each Originator makes the following representations and warranties to
Purchaser solely with respect to the Mortgage Loans originated by such
Originator and sold by such Originator or the warehouse trust to Purchaser. Such
representations and warranties to speak (unless otherwise indicated) as of the
Closing Date, in the case of the Initial Mortgage Loans, the Subsequent Transfer
Date, in the case of the Subsequent Mortgage Loans, and the applicable Transfer
Date, in the case of any Qualified Replacement Mortgage Loans, but shall survive
the sale, transfer, and assignment of such Mortgage Loans 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, in the case of the Initial Mortgage Loans, the
Subsequent Transfer Date, in the case of the Subsequent Mortgage Loans, and the
applicable Transfer Date, in the case of any Qualified Replacement Mortgage
Loans. All such documentation is true and accurate in all material respects.
Each of the documents and instruments specified to be included therein has been
duly executed and is in due and proper form, and each such document or
instrument is in a form generally acceptable to prudent mortgage lenders that
regularly originate, purchase or sell mortgage loans comparable to the Mortgage
Loans.
(ii) Each Mortgage Loan is being serviced by the Master Servicer
or a Master Servicer Affiliate.
(iii) During the period from origination to the Cut-Off Date or
Subsequent Cut-Off Date, as applicable, each Mortgage Loan has been serviced in
accordance with applicable law.
(iv) All action has been taken to validly transfer and assign to
the Purchaser all right, title and interest of such Originator in and to such
Mortgage Loans and all other related property described in Section 2.01
(including the related Additional Balances); and, in accordance with Article
III, all action has been taken to grant a security interest (as defined in the
UCC as in effect in New York) in such property to Purchaser, which, if the
Indenture Trustee maintains possession of the Mortgage File for each such
Mortgage Loan, shall constitute a first priority perfected security interest in
such property (to the extent that perfection can be achieved by possession by or
on behalf of a secured party), subject to the effect of Section 9-306 of the UCC
with respect to collections on such Mortgage Loans that are deposited in the
Accounts.
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<PAGE> 24
(v) The information set forth in the Schedule of Mortgage Loans
(as amended for Qualified Replacement Mortgage Loans and Subsequent Mortgage
Loans) for each such Mortgage Loan is true and correct in all material respects.
(vi) The Mortgages and the Credit Line Agreements conveyed to
Purchaser by the Originators pursuant to Section 2.01 hereof are not at the time
of conveyance assigned or pledged by such Originator, and, at the time of
conveyance thereof to Purchaser, such Originator is the owner and holder of such
Mortgages and such Credit Line Agreements free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the holder of the
related Mortgage Loans, to sell, assign or transfer the same.
(vii) There is no valid offset, defense or counterclaim of any
obligor under any Credit Line Agreement or Mortgage relating to each such
Mortgage Loan. Neither the operation of any of the terms of any such Credit Line
Agreement or any such Mortgage nor the exercise of any right thereunder will
render either such Credit Line Agreement or such Mortgage unenforceable, in
whole or in part, nor subject to any right of rescission, set-off, claim,
counterclaim or defense, including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto.
(viii) With respect to each Mortgage Loan, on each date that the
Coupon Rates have been adjusted, such adjustment was 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.
(ix) 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.
(x) As of the Initial Cut-Off Date with respect to the Initial
Mortgage Loans, as of the Subsequent Cut-Off Date with respect to Subsequent
Mortgage Loans and as of the applicable Transfer Date with respect to any
Qualified Replacement Mortgage Loan, each Mortgage is a valid and subsisting
first or 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.
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<PAGE> 25
(xi) To the best of such Originator's knowledge, each Mortgage
Loan at the time it was made had no delinquent tax or assessment lien or
mechanic's lien on the related Mortgaged Property, and each such Mortgaged
Property is free of substantial damage and is in good repair.
(xii) Each Mortgage Loan at the time it was made complied in all
material respects with all applicable state and federal laws and regulations,
including the federal Truth-in-Lending Act and other consumer protection laws,
real estate settlement procedure, usury, equal credit opportunity, disclosure
and recording laws.
(xiii) With respect to each Mortgage Loan 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) a lender's title insurance
policy, issued in standard California Land Title Association form or American
Land Title Association form, or other form acceptable in a particular
jurisdiction by a title insurance company authorized to transact business in the
state in which the related Mortgaged Property is situated, was issued on the
date of origination of such Mortgage Loan, and as of the Closing Date with
respect to the Initial Mortgage Loans, as of the Subsequent Transfer Date with
respect to the Subsequent Mortgage Loans and as of each applicable Transfer Date
with respect to any Qualified Replacement Mortgage Loan, each such policy is
valid and remains in full force and effect, or (b) 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.
(xiv) Each Credit Line Agreement and each Mortgage relating to a
Mortgage Loan is an enforceable obligation of the related Mortgagor and is
enforceable in accordance with its terms, except as the enforceability thereof
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).
(xv) To the best of such Originator's knowledge, all parties to
each Credit Line Agreement and the related Mortgage had legal capacity to
execute such Credit Line Agreement and related Mortgage and each such Credit
Line Agreement and related Mortgage have been duly and properly executed by such
parties.
(xvi) The terms of each Credit Line Agreement and each related
Mortgage have not been impaired, cancelled, subordinated, rescinded, altered or
modified in any material respect (except as set forth in the Mortgage File or on
the Schedule of Mortgage Loans), and the related Mortgaged Property has not been
released from the lien of the related Mortgage, in whole or in part and no
instrument has been executed that would effect such release, cancellation,
subordination or rescission, except by a written instrument which (if such
instrument is secured by real property) has been recorded, if necessary, to
protect the interest of the Noteholders and which has been delivered to the
Indenture Trustee.
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(xvii) Except as otherwise required by law or the terms of the
Credit Line Agreement, 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.
(xviii) Each Mortgaged Property is located in the state identified in
the Schedule of Mortgage Loans and consists of one or more parcels of real
property with a residential dwelling erected thereon.
(xix) To the best of such Originator's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of any
Mortgaged Property, nor is such a proceeding currently occurring, and each such
Mortgaged Property is undamaged by waste, fire, earthquake or earth movement,
flood, tornado or other casualty, so as to affect adversely the value of such
Mortgaged Property as security for the related Mortgage Loan or the use for
which the premises were intended.
(xx) 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.
(xxi) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. 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.
(xxii) To the best of such Originator's knowledge, there is no
default, breach, violation or event of acceleration existing under any Mortgage
or Credit Line Agreement and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration, and 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.
(xxiii) 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.
(xxiv) 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.
(xxv) At the time of origination of each Mortgage Loan that is not
a First Mortgage Loan, the indebtedness secured by the related senior lien was
not more than 30 days delinquent.
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<PAGE> 27
(xxvi) 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 have been made,
obtained or issued, as applicable.
(xxvii) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the indebtedness secured by the related senior lien does not
provide for negative amortization.
(xxviii) 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 indebtedness secured by the related senior lien if such senior lien
provides for a balloon payment.
(xxix) 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.
(xxx) With respect to any Mortgage Loan which is a First Mortgage
Loan, such Originator has caused and will cause to be performed any and all acts
required to be performed to preserve the rights and remedies of the Master
Servicer and the Indenture Trustee in any Mortgage Insurance Policies applicable
to any such Mortgage Loan delivered by such Originator hereunder, including any
necessary notifications of insurers, assignments of policies or interests
therein and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Trust and its assignees in care of the Master Servicer or the
Indenture Trustee.
(xxxi) To the best of such Originator's knowledge, each Mortgage
Loan was underwritten in all material respects in accordance with the credit
underwriting guidelines of such Originator as in effect on the date of
origination.
(xxxii) 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.
(xxxiii) As of the respective Cut-Off Date, no Mortgagor had been
identified on the records of such Originator as being the subject of a current
bankruptcy proceeding.
(xxxiv) 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.
A-5
<PAGE> 28
(xxxv) Except as previously disclosed in writing to the Indenture
Trustee, with respect to each Mortgage Loan, there is only one originally
executed Mortgage and Credit Line Agreement not stamped as a duplicate.
(xxxvi) With respect to the Initial Mortgage Loans as of the Initial
Cut-Off Date, and with respect to the Subsequent Mortgage Loans on the
Subsequent Cut-Off Date, each such Mortgage Loan conforms, and all such Mortgage
Loans in the aggregate conform, in all material respects to the description
thereof set forth in the Registration Statement.
A-6
<PAGE> 29
EXHIBIT B
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement (this "Agreement"),
dated as of __________, _____, between Advanta Bank Corp., a Utah industrial
loan corporation ("ABC"), Advanta National Bank, a national banking association
("ANB"), and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand,
and Advanta Conduit Receivables, Inc., a Nevada corporation ("Purchaser"), on
the other hand (ABC, ANB and AFC are sometimes individually referred to herein
as an "Originator" and sometimes collectively referred to herein as the
"Originators"), and pursuant to the Purchase Agreement dated as of April 1, 2000
(the "Purchase Agreement"), among the Originators and the Purchaser, the
Originators and the Purchaser agree to the sale by the Originators and the
purchase by the Purchaser of the Mortgage Loans listed on the attached Schedule
of Mortgage Loans (the "Subsequent Mortgage Loans").
Capitalized terms are used in this Agreement as defined in Annex 1 of
the Indenture, dated as of April 1, 2000 (the "Indenture"), between Advanta
Revolving Home Equity Loan Trust 2000-A and Bankers Trust Company of California,
N.A., as Indenture Trustee, which meanings are incorporated by reference herein.
All other capitalized terms used herein shall have the meanings specified
herein.
Section 1. Sale of Subsequent Mortgage Loans.
(a) The Originators do hereby sell, transfer, assign, set over and
convey to the Purchaser, without recourse, all of their right, title and
interest in and to the Subsequent Mortgage Loans, and including all principal
and interest collected in respect of the Subsequent Mortgage Loans on and after
the Subsequent Cut-Off Date, and all items with respect to the Subsequent
Mortgage Loans to be delivered pursuant to Section 2.02 of the Purchase
Agreement; provided, however, that the Originators reserve and retain all right,
title and interest in and to principal and interest collected in respect of the
Subsequent Mortgage Loans prior to the Subsequent Cut-Off Date. The Originators,
contemporaneously with the delivery of this Agreement, have delivered or caused
to be delivered to the Purchaser each item set forth in Section 2.02 of the
Purchase Agreement.
(b) The transfer to the Purchaser by the Originators of the Subsequent
Mortgage Loans identified on the Schedule of Mortgage Loans shall be absolute
and is intended by the parties hereto to constitute a sale by the Originators to
the Purchaser on the Subsequent Transfer Date of all the Originators' right,
title and interest in and to the Subsequent Mortgage Loans, and other property
as and to the extent described above. In the event the transactions set forth
herein shall be deemed not to be a sale, the Originators hereby grant to the
Purchaser as of the Subsequent Transfer Date a security interest in all of the
Originators' right, title and interest in, to and under the Subsequent Mortgage
Loans, and such other property, to secure all of the Originators' obligations
hereunder, and this Agreement shall constitute a security agreement under
applicable law. The Originators agree to take or cause to be taken such actions
and to execute such documents, including without limitation the filing of all
necessary UCC-1 financing
B-1
<PAGE> 30
statements and any continuation statements with respect thereto as are necessary
to perfect and protect the Purchaser's interests in each Subsequent Mortgage
Loan and the proceeds thereof.
(c) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans and this Agreement shall be borne by the Originators.
Section 2. Representations and Warranties; Conditions Precedent.
(a) Each of the Originators hereby affirms the representations and
warranties set forth in Sections 4.01 and 4.02 of the Purchase Agreement that
relate to such Originator or the Subsequent Mortgage Loans conveyed by such
Originator as of the date hereof. Each of the Originators hereby confirms that
each of the conditions set forth in Section 2.02 of the Purchase Agreement are
satisfied as of the date hereof and further represents and warrants that each
Subsequent Mortgage Loan conveyed by such Originator complies with the
requirements of this Agreement and Section 2.01(b) of the Purchase Agreement.
(b) Each of the Originators hereby affirms that it is solvent, is able
to pay its debts as they become due and has capital sufficient to carry on its
business and its obligations hereunder; it will not be rendered insolvent by the
execution and delivery of this Agreement or by the performance of its
obligations hereunder nor is it aware of any pending insolvency; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against such
Originator prior to the date hereof.
(c) All terms and conditions of the Purchase Agreement are hereby
ratified and confirmed; provided, however, that in the event of any conflict the
provisions of this Agreement shall control over the conflicting provisions of
the Purchase Agreement.
Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in
which any or all of the properties subject to the related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction of Noteholders holding Notes evidencing at least 51% of the
Aggregate Note Balance, but only when accompanied by an Opinion of Counsel to
the effect that such recordation materially and beneficially affects the
interests of the Noteholders or is necessary for the administration or servicing
of the Subsequent Mortgage Loans.
SECTION 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-2
<PAGE> 31
Section 5. Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an original
and together shall constitute one and the same instrument.
Section 6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Originators and the Purchaser and their
respective successors and assigns.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Purchaser
By:
------------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA BANK CORP.,
as an Originator
By:
------------------------------------------
Name:
Title:
ADVANTA NATIONAL BANK,
as an Originator
By:
------------------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA FINANCE CORP.,
as an Originator
By:
------------------------------------------
Name: Michael Coco
<PAGE> 32
Title: Vice President
<PAGE> 1
Exhibit 10.2
AMBAC ASSURANCE CORPORATION,
and
BEAR, STEARNS & CO. INC.
as Representative of the Underwriters
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A
Dated as of April 18, 2000
<PAGE> 2
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be part of this Indemnification Agreement. All capitalized
terms used in this Indemnification Agreement and not otherwise defined shall
have the meanings set forth in Article I of this Indemnification Agreement.)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Defined Terms........................................................ 1
Section 2. Other Definitional Provisions........................................ 2
Section 3. Representations, Warranties and Covenants of the Underwriters........ 2
Section 4. Representations and Warranties of the Insurer........................ 2
Section 5. Indemnification...................................................... 4
Section 6. Amendments, Etc...................................................... 6
Section 7. Notices.............................................................. 6
Section 8. Severability......................................................... 7
Section 9. Governing Law........................................................ 7
Section 10. Counterparts........................................................ 7
Section 11. Headings............................................................ 7
</TABLE>
(i)
<PAGE> 3
INDEMNIFICATION AGREEMENT dated as of April 18, 2000 (the
"Indemnification Agreement"), by and between AMBAC ASSURANCE CORPORATION, as
Insurer and BEAR, STEARNS & CO. INC., as Representative of the Underwriters.
Section 1. Defined Terms. Unless the context clearly requires
otherwise, all capitalized terms used but not defined herein shall have the
respective meanings assigned to them in 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 April 1, 2000 by and among the
Advanta Revolving Home Equity Loan Trust 2000-A and Bankers Trust Company of
California, N.A., as Indenture Trustee.
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of April
25, 2000 by and among the Advanta Conduit Receivables, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, the Insurer, Advanta Revolving Home
Equity Loan Trust 2000-A, 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 April 18,
2000, 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.
"Representative" means Bear, Stearns & Co. Inc., as representative of
the Underwriters.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of April 1, 2000, relating to the Advanta Revolving Home Equity Loan
Asset Backed Notes, Series 2000-A, by and among Advanta Revolving Home Equity
Loan Trust 2000-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.
<PAGE> 4
"Underwriters" means Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated, Prudential Securities Incorporated and Salomon Smith Barney Inc.
"Underwriters Information" has the meaning given such term in Section
3.
Section 2. Other Definitional Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. Representations, Warranties and Covenants of the
Underwriters. The Representative represents, warrants and covenants 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 set forth in the
third, fourth, fifth, sixth, seventh and ninth paragraphs under the
caption "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
corporation duly qualified to conduct an insurance business in the
State of California.
(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.
2
<PAGE> 5
(c) Authorization; Approvals. Proceedings legally required for
the issuance of the Policy and the execution, delivery and performance
of this Indemnification Agreement have been taken and all material
licenses, orders, consents or other authorizations or approvals of any
governmental boards or bodies legally required for the enforceability
of the Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to
the enforceability of the Policy.
(d) Enforceability. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and
binding obligation of the Insurer, enforceable in accordance with its
terms, subject to insolvency, reorganization, moratorium, receivership
and other similar laws affecting creditors' rights generally and by
general principles of equity and subject to principles of public policy
limiting the right to enforce the indemnification provisions contained
therein and herein, insofar as such provisions relate to
indemnification for liabilities arising under federal securities laws.
(e) Financial Information. The consolidated financial
statements of the Insurer and subsidiaries as of December 31, 1999 and
December 31, 1998, and for each of the years in the three-year period
ended December 31, 1999, 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, 2000; Commission File Number 1-10777), 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 December 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 S&P would be reasonably expected to result in a
downgrade of the rating of the financial strength of the Insurer by
either of such Rating Agencies.
(h) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policy or this Indemnification Agreement.
3
<PAGE> 6
(i) Securities Act Registration. The Policy is exempt from
registration under the Securities Act.
Section 5. Indemnification.
(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
4
<PAGE> 7
shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the Indemnifying Party (in which case, if the
Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense of such action or proceeding on behalf of such Indemnified
Party, it being understood, however, that the Indemnifying Party shall
not, in connection with any one such action or proceeding or separate
but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the Indemnified
Parties, which firm shall be designated in writing by the Indemnified
Party). The Indemnifying Party shall not be liable for any settlement
of any such action or proceeding effected without its written consent
to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding with respect to which the Indemnifying Party shall have
received notice in accordance with this subsection (c), the
Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such
settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party
(other than due to application of this Section), each Indemnifying
Party shall contribute to the losses incurred by the Indemnified Party
on the basis of the relative fault of the Indemnifying Party, on the
one hand, and the Indemnified Party, on the other hand provided, that
neither of the Underwriters shall be liable for any amount in excess of
(i) the excess of the sales prices of the Notes to the public over the
prices paid therefor by the Underwriters over (ii) the aggregate amount
of any damages which the Underwriters have otherwise been required to
pay in respect of the same or any substantially similar claim.
The relative fault of each Indemnifying Party, on the
one hand, and each Indemnified Party, on the other, shall be determined
by reference to, among other things, whether the breach of, or alleged
breach of, any of its representations, warranties or covenants set
forth herein was within the control of, the Indemnifying Party or the
Indemnified Party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such breach.
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.
5
<PAGE> 8
Section 6. Amendments, Etc. This Indemnification Agreement may be
amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department - MBS
Telecopy No.: 212-363-1459
Confirmation: 212-668-0340
(b) To the Representative:
Bear, Stearns & Co. Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Asset-Backed Securities
Telecopy No.: 212-272-7294
Confirmation: 212-272-2000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
Indemnification Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnification Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
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> 9
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> 10
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 Tong
Name: Warren Tong
Title: First Vice President
BEAR, STEARNS & CO. INC.
as Representative of the Underwriters
By: /s/Thomas S. Dunstan
Name: Thomas S. Dunstan
Title: Managing Director
<PAGE> 1
As of April 27, 2000
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(as Representative of the Underwriters)
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Revolving Home Equity Loan Trust 2000-A
Underwriting Agreement and Insurance Agreement
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement dated April 18, 2000 (the
"Underwriting Agreement") between Advanta Conduit Receivables, Inc. (the
"Sponsor" or "ACRI") and Bear, Stearns & Co. Inc., as representative of the
underwriters named therein (the "Underwriters"), and the Insurance and Indemnity
Agreement dated April 27, 2000 (the "Insurance Agreement" and together with the
Underwriting Agreement, the "Designated Agreements") among the Sponsor, Advanta
Mortgage Corp. USA, as master servicer, Advanta Revolving Home Equity Loan Trust
2000-A, Ambac Assurance Corporation (the "Insurer") and Bankers Trust Company of
California, N.A., as indenture trustee, ACRI has undertaken certain financial
obligations with respect to the indemnification of the Underwriters and of the
Insurer with respect to the Registration Statement, the Basic Prospectus and the
Prospectus Supplement described in the Designated Agreements. Any financial
obligations of ACRI under the Designated Agreements, whether or not specifically
enumerated in this paragraph, are hereinafter referred to as the "Joint and
Several Obligations"; provide , however, that "Joint and Several Obligations"
shall mean only the financial obligations of ACRI under the Designated
Agreements (including the payment of money damages for a breach of any of ACRI's
obligations under the Designated Agreements, whether financial or otherwise) but
shall not include any obligations not relating to the payment of money.
As a condition of their respective executions of the Underwriting
Agreement and of the Insurance Agreement, the Underwriters and the Insurer have
required the undersigned, Advanta Mortgage Holding Company ("AMHC"), the
indirect parent corporation of ACRI, to acknowledge its joint-and-several
liability with ACRI for the payment of the Joint and Several Obligations under
the Designated Agreements.
Now, therefore, the Underwriter, the Insurer and AMHC do hereby agree
that:
<PAGE> 2
(i) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with ACRI to the
Underwriters for the payment of the Joint and Several
Obligations under the Underwriting Agreement.
(ii) AHMC hereby agrees to be absolutely and
unconditionally and jointly and severally liable with ACRI to
the Insurer for payment of the Joint and Several Obligations
under the Insurance Agreement.
(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 ACRI or another affiliate
of AMHC.
Capitalized terms used herein and not defined herein shall have their
respective meanings set forth in the Designated Agreements.
This letter and the respective obligations and rights hereunder and
thereunder shall not be delegated or assigned by you without the prior written
consent of the Insurer. This letter may not be amended or otherwise modified
except pursuant to a writing signed by each of the parties hereto. This letter
may be executed by the signatories hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute one and the
same letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISION
THEREOF). 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.
Very truly yours,
ADVANTA MORTGAGE HOLDING COMPANY
By: /S/ Michael Coco
-----------------------------
Authorized Signatory
[SIGNATURES CONTINUE ON NEXT PAGE]
<PAGE> 3
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CONFIRMED AND ACCEPTED,
as of the date first above written:
AMBAC ASSURANCE CORPORATION
By: /S/ Warren Tong
---------------------------
Authorized Signatory
BEAR, STEARNS & CO. INC.
By: /S/ Thomas S. Dunstan
---------------------------
Authorized Signatory
<PAGE> 1
As of April 27, 2000
Advanta Revolving Home
Equity Loan Trust 2000-A
c/o Wilmington Trust Company,
as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Advanta Revolving Home Equity Loan Trust 2000-A
Sale and Servicing Agreement
Ladies and Gentlemen:
Pursuant to the Sale and Servicing Agreement dated as of April
1, 2000 (the "Agreement") among Advanta Conduit Receivables, Inc. as Sponsor,
Advanta Mortgage Corp. USA, as master servicer ("AMCUSA"), Advanta Revolving
Home Equity Loan Trust 2000-A (the "Trust") and Bankers Trust Company of
California, N.A. as indenture trustee (the "Indenture Trustee"), AMCUSA, in its
capacity as master servicer, has undertaken certain financial obligations with
respect to its servicing of the Mortgage Loans, including, but not limited to,
the making of Servicing Advances. In addition, the Sponsor has, in the
Agreement, undertaken certain financial obligations, including, but not limited
to, the payment of the Loan Reacquisition Price relating to the repurchase of
non-qualifying Mortgage Loans, the payment of Substitution Amounts in connection
with the substitution of Qualified Replacement Mortgage Loans and the payment of
certain expenses of the Trust. Any financial obligations of AMCUSA or the
Sponsor under the Agreement, whether or not specifically enumerated in this
paragraph, are hereinafter referred to as the "Joint and Several Obligations";
provided, however, that "Joint and Several Obligations" shall mean only the
financial obligations of AMCUSA and the Sponsor under the Agreement (including
the payment of money damages for a breach of any of AMCUSA's or the Sponsor's
obligations under the Agreement, whether financial or otherwise) but shall not
include any obligations not relating to the payment of money (e.g., the
obligation to service the Mortgage Loans).
<PAGE> 2
The Insurer has required the undersigned, Advanta Mortgage
Holding Company ("AMHC"), the parent corporation of AMCUSA and the indirect
corporate parent of the Sponsor, to acknowledge its joint-and-several liability
with AMCUSA and the Sponsor for the payment of the Joint and Several Obligations
under the Agreement.
Now, therefore, the Trust, the Insurer and AMHC do hereby
agree that:
(i) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with
AMCUSA and the Sponsor to the Trust and the Insurer
for the payment of the Joint and Several Obligations
under the Agreement.
(ii) AMHC may honor its obligations hereunder either by
direct payment of any Joint and Several Obligations
or by causing any Joint and Several Obligations to be
paid to the Trust and the Insurer by AMCUSA, the
Sponsor, or another affiliate of AMHC.
This letter and the respective obligations and rights
hereunder and thereunder shall not be delegated or assigned by you without the
prior written consent of the Insurer. This letter may not be amended or
otherwise modified except pursuant to a writing signed by each of the parties
hereto. This letter may be executed by the signatories hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISION
THEREOF). 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.
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
<PAGE> 3
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CONFIRMED AND ACCEPTED,
as of the date first above written:
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-A
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By: /S/ Donald G. MacKelcan
---------------------------
Authorized Signatory
AMBAC ASSURANCE CORPORATION
By: /S/ Warren Tong
---------------------------
Authorized Signatory
