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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) May 17, 1999
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
(Exact name of registrant as specified in its charter)
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Delaware 23-2723382
333-77927
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
Attention: Genral Counsel 19477
Welsh & McKean Roads (Zip Code)
Spring House, Pennsylvania
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Registrant's telephone number, including area code (215) 657-4000
ADVANTA CONDUIT RECEIVABLES, INC.
(Exact name of registrant as specified in its charter)
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Nevada 333-77927 88-0360305
(State of Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
Attention: General Counsel 19477
Welsh & McKean Roads (Zip Code)
Spring House, Pennsylvania
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Registrant's telephone number, including area code (215) 657-4000
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Item 5. Other Events
Pursuant to Rule 411 of Regulation C under the Securities Act of 1933,
Advanta Mortgage Conduit Services, Inc. and Advanta Conduit Receivables, Inc.
(the "Registrants") will incorporate by reference, into the Registrants'
registration statement (File No. 333-77927) as Exhibit 4.4, thereto, the Form
of Indenture attached hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable.
(c) Exhibits
Exhibit No.
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4.4 Form of Indenture
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
By: /s/ Michael Coco
------------------------------------
Michael Coco
Vice President
ADVANTA CONDUIT RECEIVABLES, INC.
By: /s/ Michael Coco
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Michael Coco
Vice President
Dated: May 17, 1999
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EXHIBIT INDEX
Exhibit No. Description
4.4 Form of Indenture
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EXHIBIT 4.4
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EXHIBIT 4.4
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ADVANTA MORTGAGE LOAN TRUST ____-_
Mortgage Backed Notes, Series ____-_
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INDENTURE
Dated as of [DATE]
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[INDENTURE TRUSTEE]
Indenture Trustee
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TABLE OF CONTENTS
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ARTICLE I. Definitions and Incorporation by Reference
SECTION 1.1. Definitions.................................................................................2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act......................................22
SECTION 1.3. Rules of Construction......................................................................23
SECTION 1.4. Action by or Consent of Noteholders........................................................23
SECTION 1.5. Conflict with TIA..........................................................................23
ARTICLE II. The Notes
SECTION 2.1. Form.......................................................................................23
SECTION 2.2. Execution, Authentication and Delivery.....................................................24
SECTION 2.3. Registration; Registration of Transfer and Exchange........................................24
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes.................................................25
SECTION 2.5. Persons Deemed Owners......................................................................26
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest......................................27
SECTION 2.7. Cancellation...............................................................................27
SECTION 2.8. Release of Collateral......................................................................28
SECTION 2.9. Book-Entry Notes...........................................................................28
SECTION 2.10. Notices to Clearing Agency.................................................................29
SECTION 2.11. Definitive Notes...........................................................................29
ARTICLE III. Covenants
SECTION 3.1. Payment of Principal and Interest..........................................................29
SECTION 3.2. Maintenance of Office or Agency............................................................30
SECTION 3.3. Money for Payments to be Held in Trust.....................................................30
SECTION 3.4. Existence..................................................................................31
SECTION 3.5. Protection of Trust Estate.................................................................31
SECTION 3.6. Opinions as to Trust Estate................................................................32
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans....................................32
SECTION 3.8. Negative Covenants.........................................................................33
SECTION 3.9. Annual Statement as to Compliance..........................................................34
SECTION 3.10. Issuer Shall Not Consolidate or Transfer Assets............................................34
SECTION 3.11. No Other Business..........................................................................34
SECTION 3.12. No Borrowing...............................................................................34
SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities..........................................35
SECTION 3.14. Capital Expenditures.......................................................................35
SECTION 3.15. Compliance with Laws.......................................................................35
SECTION 3.16. Restricted Payments........................................................................35
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SECTION 3.17. Notice of Event of Defaults and Events of Servicing Termination............................35
SECTION 3.18. Further Instruments and Acts...............................................................35
SECTION 3.19. Amendments of Sale and Servicing Agreement and Trust Agreement.............................35
SECTION 3.20. Income Tax Characterization................................................................36
ARTICLE IV. Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture....................................................36
SECTION 4.2. Application of Trust Money.................................................................37
SECTION 4.3. Repayment of Monies Held by Note Paying Agent..............................................37
ARTICLE V. Remedies
SECTION 5.1. Rights Upon an Event of Default............................................................37
SECTION 5.2. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..................38
SECTION 5.3. Remedies...................................................................................38
SECTION 5.4. Indenture Trustee May File Proofs of Claim.................................................39
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession of Notes...........................40
SECTION 5.6. Application of Money Collected.............................................................40
SECTION 5.7. Limitation of Suits........................................................................41
SECTION 5.8. Unconditional Rights of Noteholders to Receive Principal and Interest......................41
SECTION 5.9. Restoration of Rights and Remedies.........................................................42
SECTION 5.10. Rights and Remedies Cumulative.............................................................42
SECTION 5.11. Delay or Omission Not a Waiver.............................................................42
SECTION 5.12. Control by Noteholders.....................................................................42
SECTION 5.13. Undertaking for Costs......................................................................42
SECTION 5.14. Waiver of Stay or Extension Laws...........................................................43
SECTION 5.15. Action on Notes............................................................................43
SECTION 5.16. Performance and Enforcement of Certain Obligations.........................................43
SECTION 5.17. Subrogation................................................................................44
SECTION 5.18. Preference Claims..........................................................................44
SECTION 5.19. Waiver of Past Defaults....................................................................45
ARTICLE VI. The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee................................................................45
SECTION 6.2. Rights of Indenture Trustee................................................................47
SECTION 6.3. Individual Rights of Indenture Trustee.....................................................48
SECTION 6.4. Indenture Trustee's Disclaimer.............................................................48
SECTION 6.5. Notice of Defaults.........................................................................48
SECTION 6.6. Reports by Indenture Trustee to Holders....................................................48
SECTION 6.7. Compensation and Indemnity.................................................................48
SECTION 6.8. Replacement of Indenture Trustee...........................................................49
SECTION 6.9. Successor Indenture Trustee by Merger......................................................50
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SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee..........................51
SECTION 6.11. Eligibility: Disqualification..............................................................52
SECTION 6.12. Preferential Collection of Claims Against Issuer...........................................52
SECTION 6.13. Appointment and Powers.....................................................................53
SECTION 6.14. Performance of Duties......................................................................53
SECTION 6.15. Limitation on Liability....................................................................53
SECTION 6.16. Reliance Upon Documents....................................................................53
SECTION 6.17. Representations and Warranties of the Indenture Trustee....................................53
SECTION 6.18. Waiver of Setoffs..........................................................................54
SECTION 6.19. Control by the Control Party...............................................................54
SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession of Notes...........................54
SECTION 6.21. Suits for Enforcement......................................................................54
SECTION 6.22. Mortgagor Claims...........................................................................55
ARTICLE VII. Noteholders' Lists and Reports
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and Addresses of Noteholders..................55
SECTION 7.2. Preservation of Information; Communications to Noteholders.................................56
SECTION 7.3. Reports by Issuer..........................................................................56
SECTION 7.4. Reports by Indenture Trustee...............................................................57
ARTICLE VIII. Payments and Statements to Noteholders and Certificateholders; Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money........................................................................57
SECTION 8.2. Release of Trust Estate....................................................................57
SECTION 8.3. Establishment of Accounts..................................................................58
SECTION 8.4. The Note Policy............................................................................58
SECTION 8.5. Reserved...................................................................................58
SECTION 8.6. Pre-Funding Account and Capitalized Interest Account.......................................58
SECTION 8.7. Flow of Funds..............................................................................59
SECTION 8.8. Investment of Accounts.....................................................................61
SECTION 8.9. Eligible Investments.......................................................................62
SECTION 8.10. Reports by Indenture Trustee...............................................................63
SECTION 8.11. Additional Reports by Indenture Trustee....................................................66
SECTION 8.12. Opinion of Counsel.........................................................................67
ARTICLE IX. Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.....................................67
SECTION 9.2. Supplemental Indentures with Consent of Noteholders........................................68
SECTION 9.3. Execution of Supplemental Indentures.......................................................70
SECTION 9.4. Effect of Supplemental Indenture...........................................................70
SECTION 9.5. Conformity With Trust Indenture Act........................................................70
SECTION 9.6. Reference in Notes to Supplemental Indentures..............................................70
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SECTION 9.7. Amendment..................................................................................70
ARTICLE X. Redemption of Notes
SECTION 10.1. Redemption.................................................................................71
SECTION 10.2. Surrender of Notes.........................................................................72
SECTION 10.3. Form of Redemption Notice..................................................................73
SECTION 10.4. Notes Payable on Redemption Date...........................................................74
ARTICLE XI. Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc..................................................74
SECTION 11.2. Form of Documents Delivered to Indenture Trustee...........................................74
SECTION 11.3. Acts of Noteholders........................................................................75
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating Agencies.............................76
SECTION 11.5. Notices to Noteholders; Waiver.............................................................77
SECTION 11.6. Alternate Payment and Notice Provisions....................................................77
SECTION 11.7. Conflict with Trust Indenture Act..........................................................78
SECTION 11.8. Effect of Headings and Table of Contents...................................................78
SECTION 11.9. Successors and Assigns.....................................................................78
SECTION 11.10. Separability...............................................................................78
SECTION 11.11. Benefits of Indenture......................................................................78
SECTION 11.12. Legal Holidays.............................................................................78
SECTION 11.13. Governing Law..............................................................................78
SECTION 11.14. Counterparts...............................................................................79
SECTION 11.15. Recording of Indenture.....................................................................79
SECTION 11.16. Trust Obligation...........................................................................79
SECTION 11.17. No Petition................................................................................79
SECTION 11.18. Inspection.................................................................................79
SECTION 11.19. Limitation of Liability....................................................................80
ARTICLE XII. Events of Default
SECTION 12.1. Events of Default..........................................................................80
EXHIBITS
Exhibit A -- Form of Note
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INDENTURE dated as of [DATE], between ADVANTA MORTGAGE LOAN
TRUST ____-_, a Delaware business trust (the "Trust" or the "Issuer"), and
[INDENTURE TRUSTEE], a ___________, as Indenture Trustee (the "Indenture
Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Trust's
Mortgage Backed Notes Series ____-_ (the "Notes"):
As security for the payment and performance by the Trust of
its obligations under this Indenture and the Notes, the Trust has agreed to
pledge the Collateral (as defined herein) to the Indenture Trustee on behalf of
the Noteholders.
___________________________ (the "Note Insurer") has issued
and delivered a financial guaranty insurance policy, dated as of the Closing
Date, pursuant to which the Note Insurer guarantees the Insured Payments (as
defined herein).
As an inducement to the Note Insurer to issue and deliver the
Note Policy, the Trust and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of [DATE] (as amended from time to
time, the "Insurance Agreement"), among the Note Insurer, the Trust, Advanta
Mortgage Conduit Services, Inc. and the Indenture Trustee.
As an additional inducement to the Note Insurer to issue the
Note Policy, and as security for the performance by the Trust of the Note
Insurer Issuer Secured Obligations and as security for the performance by the
Trust of the Indenture Trustee Issuer Secured Obligations, the Trust has agreed
to grant and assign the Collateral (as defined below) to the Indenture Trustee
for the benefit of the Trust Secured Parties, as their respective interests may
appear.
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GRANTING CLAUSE
The Trust hereby Grants to the Indenture Trustee at the
Closing Date, for the benefit of the Trust Secured Parties all of the Trust's
right, title and interest in and to (i) certain [fixed/adjustable] rate mortgage
loans (the "Mortgage Loans") made or to be made and conveyed to the Trust under
certain mortgage notes ("Notes"); (ii) interest accrued and principal collected
in respect of the Mortgage Loans on or after the Cut-Off Date and each
Subsequent Cut-Off Date, as applicable, including eligible investments as from
time to time may be held by the Indenture Trustee in the Note Account and by the
Master Servicer in the related Principal and Interest Account (except as
otherwise provided in the Sale and Servicing Agreement but excluding any premium
recapture, each to be created pursuant to the Sale and Servicing Agreement,
(iii) property, the ownership of which has been effected on behalf of the Trust,
as a result of foreclosure or acceptance by the Master Servicer of a deed in
lieu of foreclosure and that has not been withdrawn from the Trust; (iv) rights
of the Sponsor or any Affiliated Originators under Insurance Policies relating
to the Mortgage Loans (excluding any non-mortgage related or credit-life
insurance policies); (v) the Note Policy; (vi) Net Liquidation Proceeds with
respect to any Liquidated Mortgage Loan; (vii) amounts on deposit in the
Pre-Funding Account and the Capitalized Interest Account; (viii) all rights of
the Trust under the Sale and Servicing Agreement; and (ix) any and all proceeds
of the foregoing (the foregoing, collectively, the "Collateral").
The foregoing Grant is made in trust to the Indenture Trustee,
for the benefit first, of the Noteholders, and second, for the benefit of the
Note Insurer. The Indenture Trustee hereby acknowledges such Grant, accepts the
trust under this Indenture in accordance with the provisions of this Indenture
and agrees to perform the duties required of it by this Indenture to the best of
its ability to the end that the interests of such parties, recognizing the
priorities of their respective interests, may be adequately and effectively
protected.
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
Except as otherwise specified herein, the following terms have the
respective meanings set forth below for all purposes of this Indenture. In
addition, other capitalized terms used herein and not defined herein shall have
their respective meanings as set forth in the Sale and Servicing Agreement.
"Accelerated Principal Payments": With respect to any Payment
Date, a payment received as a payment of principal by the Noteholders for the
purpose of increasing the Overcollateralization Amount to the Specified
Overcollateralization Amount applicable to such Payment Date, and to be paid
from amounts remaining in the Note Account on such Payment Date, after deduction
of the amounts described in clauses (i) through (viii) of Section 8.7(b) hereof
(the "Remaining Cashflow") on such Payment Date and equal to the lesser of (x)
the amount of such Remaining Cashflow and (y) the Overcollateralization
Deficiency Amount.
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"Account": Any account established in accordance with Section
8.3 hereof or Section 4.8 of the Sale and Servicing Agreement.
"Act" has the meaning specified in Section 11.3(a) hereof.
"Affiliate" means, with respect to any specified Person, any
other Person controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AMHC": Advanta Mortgage Holding Company, a Delaware
corporation and the corporate parent of Advanta Mortgage Corp. USA, and the
indirect corporate parent of Advanta Mortgage Conduit Services, Inc.
"Appraised Value": The appraised value of any Property based
upon the appraisal or other valuation made at the time of the origination of the
related Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"Authorized Newspapers": Any of the following, The Wall Street
Journal, the New York Times, the Washington Post, the Los Angeles Times or such
other newspaper determined by the Indenture Trustee in its sole judgment.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Available Funds Cap Carry-Forward Amount:" With respect to
any Payment Date, the amount, if any, by which (x) the Available Funds Cap
Current Amount payable as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made to the Noteholders on such
immediately preceding Payment Date on account of the Available Funds Cap
Carry-Forward Amount.
"Available Funds Cap Current Amount": With respect to any
Payment Date, the sum of (i) the excess of (x) the Interest Distribution Amount
due on such Payment Date, calculated using the Note Formula Rate over (y) the
Interest Distribution Amount due on such Payment Date, calculated using the
Available Funds Cap Rate and (ii) the Available Funds Cap Carry-Forward Amount.
"Available Funds Cap Rate": As to any Payment Date, an amount,
expressed as a per annum rate, equal to (a)(i) the aggregate amount of interest
due and collected (or advanced) on all of the Mortgage Loans in the Trust for
the related Remittance Period, minus (ii) the aggregate of the Servicing Fee,
the Indenture Trustee's Fee, the Owner Trustee's Fee and the Premium Amount on
such Payment Date, minus (iii) commencing on the seventh Payment Date following
the Closing Date, an amount equal to ____% per annum times the aggregate Loan
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Balances of the Mortgage Loans in the Trust as of the beginning of such related
Remittance Period divided by (b) the aggregate Loan Balances of the Mortgage
Loans in the Trust as of the beginning of such related Remittance Period
calculated on the basis of a [360-day year and the actual number of days
elapsed/a year of 360 days and consisting of 12 thirty-day months].
"Available Reserve Amount": As defined in Section 8.5(a)
hereof.
"Benefit Plan": As defined in Section 2.3 hereof.
"Book Entry Notes": A beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.9 hereof.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York, the
State of California or in the city in which the principal Corporate Trust Office
of the Indenture Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Capitalized Interest Account Deposit": $____________.
"Capitalized Interest Account": The capitalized interest
account established in accordance with Section 8.3 hereof and maintained by the
Indenture Trustee.
"Capitalized Interest Amount": With respect to any
Determination Date, the amount on deposit in the Capitalized Interest Account.
"Capitalized Interest Requirement": As to any Payment Date
occurring during the Pre-Funding Period, the difference, if any, between (x) the
interest due on the portion of the Notes represented by the Pre-Funding Amount
plus the related portion of the Premium Amount on such Payment Date and (y) any
Pre-Funding Earnings to be transferred to the Note Account on such Payment Date
pursuant to Section 8.6(c) hereof.
"Certificate": As defined in the Trust Agreement.
"Certificateholders": The holders of the Certificates issued
pursuant to the Trust Agreement.
"Civil Relief Act": The Soldiers and Sailors' Civil Relief Act
of 1940, as amended from time to time.
"Clearing Agency Participant": A broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Clearing Agency" An organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Closing Date": [DATE].
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"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Collateral": As defined in the Recitals hereof.
"Combined Loan-to-Value Ratio": With respect to any First
Mortgage Loan, the percentage equal to the Original Principal Amount of the
related Note divided by the Appraised Value of the related Property and with
respect to any Junior Mortgage Loan, the percentage equal to (a) the sum of (i)
the remaining Loan Balance, as of origination of the Junior Mortgage Loan, as
appropriate, of the Senior Lien note(s) relating to such Junior Mortgage Loan,
as appropriate, and (ii) the Original Principal Amount of the Note relating to
such Junior Mortgage Loan, as appropriate, divided by (b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) of the
Sale and Servicing Agreement.
"Conduit Acquisition Trust": As defined in the Sale and
Servicing Agreement.
"Control Party": As defined in the Sale and Servicing
Agreement.
"Corporate Trust Office": As of the Closing Date, the
Indenture Trustee's office at [ADDRESS].
"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Initial Mortgage Loans
are transferred and assigned to the Trust, the opening of business, [DATE].
"Deficiency Amount": (a) For any Payment Date, any shortfalls
in the Total Available Funds to pay the sum of (i) the Interest Distribution
Amount (excluding any Available Funds Cap Current Amounts, Available Funds Cap
Carry Forward Amounts, and any Relief Act Shortfalls), and (ii) the
Overcollateralization Deficit and (b) on the Final Scheduled Payment Date, any
shortfall in the Total Available Funds to pay the outstanding Note Principal
Balance.
"Definitive Notes": Notes issued in definitive form without
coupons.
"Delinquency Advances": As defined in Section 4.9(a) of the
Sale and Servicing Agreement.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
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"Delivery Order": The delivery order in the form set forth as
Exhibit E of the Sale and Servicing Agreement and required to be delivered by
the Trust pursuant to Section 2.2 hereof.
"Depository": The Depository Trust Company, 7 Hanover Square,
New York, New York 10004 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each
Account, an institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the long-term deposits of
which shall be rated A2 or better by Moody's or A or better by Standard & Poor's
and in the highest short-term rating category for Moody's, and Standard & Poor's
unless otherwise approved in writing by the Note Insurer, Moody's and Standard &
Poor's, and which is any of the following: (i) a federal savings and loan
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal subsidiary of a bank
holding company, or (v) approved in writing by the Note Insurer, Moody's and
Standard & Poor's and, in each case acting or designated by the Master Servicer
as the depository institution for the Principal and Interest Account; provided,
however, that any such institution or association shall have combined capital,
surplus and undivided profits of at least $100,000,000. Notwithstanding the
foregoing, an Account may be held by an institution otherwise meeting the
preceding requirements except that the only applicable rating requirement shall
be that the unsecured and uncollateralized debt obligations thereof shall be
rated Baa3 or better by Moody's or BBB or better by Standard & Poor's if such
institution has trust powers and the Principal and Interest Account is held by
such institution in its corporate trust department.
"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date or such earlier day as shall be
agreed to by the Note Insurer and Indenture Trustee.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds the Notes
from time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization" shall
have the meaning set forth from time to time in the definition thereof at
Section 860E(e)(5) of the Code (or any successor statute thereto) and applicable
to the Trust.
"Eligible Investments": Those investments so designated
pursuant to Section 8.9 hereof.
"ERISA" means Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default": As defined in Section 12.1.
"Excess Overcollateralization Amount": With respect to any
Payment Date, the amount by which (x) the Overcollateralization Amount after
taking into account the payment of
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the Principal Distribution Amount on such Payment Date exceeds (y) the Specified
Overcollateralization Amount for such Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fannie Mae": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"Final Scheduled Payment Date": The Payment Date in _____
whereby the Noteholders will be entitled to receive a payment of principal in an
amount equal to the outstanding Note Principal Balance.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Mortgaged Property.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"Freddie Mac": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"Full Deficiency Amount": As defined in Section 8.5(b) herein.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Indebtedness" means, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, 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;
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(f) obligations of such Person under any guarantees, endorsements (other than
for collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment, to supply
funds to invest in any Person or otherwise to assure a creditor against loss;
(g) obligations of such Person secured by any lien on property or assets of such
Person, whether or not the obligations have been assumed by such Person; or (h)
obligations of such Person under any interest rate or currency exchange
agreement.
"Indemnification Agreement": The Indemnification Agreement
dated as of [DATE] between the Note Insurer and the Underwriter.
"Indenture" means this Indenture as amended and supplemented
from time to time.
"Indenture Trustee Issuer Secured Obligations" means all
amounts and obligations which the Trust may at any time owe to the Indenture
Trustee for the benefit of the Noteholders under this Indenture or the Notes.
"Indenture Trustee": [INDENTURE TRUSTEE], located on the date
of execution of this Agreement at [ADDRESS], not in its individual capacity but
solely as Indenture Trustee under this Agreement, and any successor hereunder.
"Indenture Trustee's Fees": With respect to any Payment Date,
the product of (x) one-twelfth of ____% and (y) the aggregate Loan Balance of
the Mortgage Loan as of the beginning of the related Remittance Period.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, prepared
by an Independent appraiser or other expert appointed pursuant to an Issuer
Order and approved by the Indenture Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Trust, any other
obligor upon the Notes, the Sponsor and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Trust, any such other obligor, the Sponsor or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Trust, any such other obligor, the Sponsor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, Indenture
Trustee, partner, director or Person performing similar functions.
"Indirect Participant" shall mean any financial institution
for whom any Direct Participant holds an interest in the Notes.
"Initial Cut-Off Date": With respect to the Initial Mortgage
Loans, the opening of business on [DATE].
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"Initial Mortgage Loans": Mortgage Loans delivered to the
Trust on the Closing Date.
"Initial Redemption Date": The first date on which the Master
Servicer, acting directly or through one or more affiliates, the
Certificateholder or the Note Insurer are eligible to exercise its right of
optional redemption of the Notes pursuant to Section 10.1(b) herein.
"Insurance Agreement": The Insurance and Indemnity Agreement
dated as of [DATE] among the Sponsor, the Master Servicer, the Trust, the
Indenture Trustee and the Note Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan.
"Insurance Proceeds": Proceeds paid by any insurer (other than
the Note Insurer) pursuant to any Insurance Policy covering a Mortgage Loan, or
amounts required to be paid by the Master Servicer pursuant to the last sentence
of the first paragraph of Section 4.11(b) of the 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 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.
"Insured Payment": As of any Payment Date, (i) any Deficiency
Amount and (ii) any Preference Amount.
"Interest Accrual Period": With respect to any Payment Date,
the period commencing on the immediately preceding Payment Date (or the Closing
Date in the case of the first Payment Date) to and including the day prior to
the current Payment Date. All calculations of interest on the Notes will be made
on the basis of [the actual number of days elapsed in the related Interest
Accrual Period in a year of 360 days/ a year of 360 days consisting of twelve
30-day months].
"Interest Carry-Forward Amount": With respect to any Payment
Date, the amount, if any, by which (x) the Interest Distribution Amount as of
the immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to the Noteholders on such immediately preceding Payment Date
on account of the Interest Distribution Amount.
"Interest Determination Date": With respect to any Interest
Accrual Period for the Notes, the second London Business Day preceding the first
day of such Interest Accrual Period.
"Interest Distribution Amount": With respect to any Payment
Date, the sum of (i) the product of (x) the Note Interest Rate applicable to
such Payment Date and (y) the Principal Balance immediately prior to such
Payment Date and (z) [the actual number of days elapsed during the related
Interest Accrual Period divided by 360/1/12], provided that such amount will be
reduced by any Relief Act Shortfalls relating to the Trust during the related
Remittance Period and (ii) the Interest Carry Forward Amount.
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"Interest Remittance Amount": As of any Remittance Date, the
sum, without duplication, of (i) all interest accrued and collected (or
advanced) by the Master Servicer during the related Remittance Period with
respect to the Mortgage Loans (net of the Servicing Fee), except that with
respect to Prepaid Installments, interest shall be remitted in the related
Remittance Period and (ii) all Net Liquidation Proceeds actually collected by
the Master Servicer with respect to the Mortgage Loans during the related
Remittance Period (to the extent such Net Liquidation Proceeds relate to
interest).
"Issuer" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on
the Notes.
"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.
"Issuer Secured Obligations" means the Note Insurer Issuer
Secured Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee
in respect of the Indenture Trustee Issuer Secured Obligations and the Note
Insurer in respect of the Note Insurer Issuer Secured Obligations.
"Junior Mortgage Loan": A Mortgage Loan which constitutes a
subordinate priority mortgage lien with respect to the related Mortgaged
Property.
"Late Payment Rate": For any Payment Date, means the lesser of
(a) the greater of (x) the per annum rate of interest publicly announced from
time to time by Citibank, N.A. as its prime or base lending rate (any change in
such rate of interest to be effective on the date such change is announced by
Citibank), plus 2% per annum and (y) the then applicable highest rate of
interest on the Notes and (b) the maximum rate permissible under applicable
usury or similar laws limiting interest rates. The Late Payment Rate shall be
computed on the basis of [the actual number of days elapsed over a year of 360
days/a year of 360 days consisting of twelve 30-day months].
"LIBOR": With respect to any Interest Accrual Period for the
Notes, the rate determined by the Indenture Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear on Telerate Screen Page
3750 (or any successor service thereto), as of 11:00 a.m. (London time) on such
Interest Determination Date. On each Interest Determination Date, LIBOR for the
related Interest Accrual Period will be established by the Indenture Trustee as
follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple
of 1/16%.
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be
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the higher of (i) LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
"Liquidated Mortgage Loan": As defined in the Sale and
Servicing Agreement.
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Master Servicer or any Sub-Servicer pursuant to Section 4.9 of the Sale and
Servicing Agreement with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan, any amounts (including the proceeds of any Insurance Policy but
excluding any amounts drawn on the Note Policy) recovered by the Master Servicer
in connection with such Liquidated Mortgage Loan, whether through Indenture
Trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof as of the Cut-Off Date or Subsequent
Cut-Off-Date, as the case may be, less any related Principal Remittance Amounts
relating to such Mortgage Loan included in previous related Monthly Remittance
Amounts that were transferred by the Master Servicer or any Sub-servicer to the
Indenture Trustee for deposit in the related Note Account; provided, however,
(x) that the Loan Balance for any Mortgage Loan which has become a Liquidated
Loan shall be zero as of the first day of the Remittance Period following the
Remittance Period in which such Mortgage Loan becomes a Liquidated Loan, and at
all times thereafter and (y) the Loan Balance "as of the Cut-Off Date" for any
Mortgage Loan originated during the period from the Cut-Off Date to the Closing
Date shall be the original Loan Balance thereof.
"London Business Day": A day on which banks are open for
dealing in foreign currency, and exchange in London and New York City.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer Affiliate": A Person (i) controlling,
controlled by or under common control with the Master Servicer and (ii) which is
qualified to service residential mortgage loans.
"Master Transfer Agreement": Any one of the Master Loan
Transfer Agreements among the Sponsor and/or the Conduit Acquisition Trust, the
Indenture Trustee and one or more Originators together with any related
Conveyance Agreements (as defined therein).
"Minimum Monthly Payment": With respect to any Mortgage Loan
and any month, the minimum amount required to be paid by the related Mortgagor
in that month.
"Monthly Remittance Amounts": With respect to any Remittance
Date, the sum of (i) the Interest Remittance Amount with respect to such
Remittance Date and (ii) the Principal Remittance Amount with respect to such
Remittance Date.
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"Moody's": Moody's Investors Service, Inc.
"Mortgage Files": As defined in the Sale and Servicing
Agreement.
"Mortgage Loans": As defined in the Sale and Servicing
Agreement.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or subordinate lien on an estate in fee simple interest in real
property securing a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Note": As defined in the recitals hereto.
"Note Account": The Note Account established in accordance
with Section 8.3 hereof and maintained by the Indenture Trustee.
"Note Formula Capped Rate": With respect to any Payment Date,
the lesser of (i) the Note Formula Rate for such Payment Date and (ii) ____%.
"Note Formula Rate": With respect to the first Interest
Accrual Period, LIBOR plus ____%. For any subsequent Interest Accrual Period,
(x) with respect to any Interest Accrual Period which occurs on or prior to the
Initial Redemption Date, LIBOR plus ____% per annum and (y) for any Interest
Accrual Period thereafter, LIBOR plus _____% per annum.
"Note Insurer Default": Any one of the following events shall
have occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment
required under the Note Policy;
(b) The Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
United States Bankruptcy Code or any other similar Federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under
the United States Bankruptcy Code or any other similar Federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) A court of competent jurisdiction, the New York Department
of Insurance, or other competent regulatory authority shall have
entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, Indenture Trustee, agent or receiver for the
Note Insurer or for all or any material portion of its property or (ii)
authorizing the taking of possession by a custodian, Indenture Trustee,
agent or receiver of the Note
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Insurer (or the taking of possession of all or any material portion of
the property of the Note Insurer).
"Note Insurer Issuer Secured Obligations": All amounts and
obligations which the Trust may at any time owe to or on behalf of the Note
Insurer under this Indenture, the Insurance Agreement or any other Operative
Document.
"Note Insurer": ______________________ or any successor
thereto, as issuer of the Note Policy.
"Note Interest Rate": As to any Payment Date, the lesser of
(i) the Note Formula Rate and (ii) the Available Funds Cap Rate.
"Noteholder": The Person in whose name a Note is registered on
the Note Register.
"Note Owner": With respect to a Book-Entry Note, the person
who is the owner of such Book-Entry Note or following the issuance of definitive
Notes, the registered owner of the Notes.
"Note Paying Agent": The Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the 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 Policy": The financial guaranty insurance policy dated
[DATE], issued by the Note Insurer to the Indenture Trustee for the benefit of
the Noteholders.
"Note Principal Balance": As defined in the Sale and Servicing
Agreement.
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.3.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate" means a certificate signed by any
Authorized Officer of the Trust, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
ss. 314, and delivered to the Indenture Trustee.
"Operative Documents": The Indenture, the Trust Agreement, the
Sale and Servicing Agreement, the Subsequent Transfer Agreements, the Note
Policy, the Notes, the Indemnification Agreement and the Insurance Agreement.
"Opinion of Counsel": One or more opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Trust and, if addressed to the Note Insurer, satisfactory to the
Note Insurer, and which shall comply with any
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applicable requirements of Section 11.1, and if addressed to the Note Insurer,
satisfactory to the Note Insurer.
"Original Note Principal Balance": $___________.
"Original Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Closing Date, from the proceeds of the sale of the
Notes, which amount is $____________.
"Original Principal Amount": With respect to each Note, the
principal amount of such Note relating to a Senior Lien on the date of
origination thereof.
"Originator": Any entity from which the Sponsor has purchased
(or, in the case of Subsequent Mortgage Loans, will purchase) Mortgage Loans, or
Advanta Mortgage Corp. USA, Advanta Mortgage Corp. Midatlantic, Advanta Mortgage
Corp. Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta Mortgage Corp. of
New Jersey, Advanta Mortgage Corp. Northeast, Advanta National Bank, Advanta
Bank Corp. and Advanta Finance Corp.
"Outstanding": With respect to all Notes, as of any date of
determination, all such Notes theretofore executed and delivered hereunder
except:
(i) Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Notes or portions thereof for which full and
final payment money in the necessary amount has been theretofore
deposited with the Indenture Trustee in trust for the Noteholders;
(iii) Notes in exchange for or in lieu of which other
Notes have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser; and
(iv) Notes alleged to have been destroyed, lost or
stolen for which replacement Notes have been issued as provided for in
Section 2.4 hereof.
"Overcollateralization Amount": With respect to any Payment
Date, the excess, if any, of (x) the Pool Principal Balance as of such Payment
Date over (y) the Note Principal Balance as of such Payment Date (after taking
into account reductions therein on such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any
Payment Date, the difference, if any, between (i) the Specified
Overcollateralization Amount applicable to such Payment Date and (ii) the
Overcollateralization Amount applicable to such Payment Date.
"Overcollateralization Deficit": With respect to any Payment
Date, the amount, if any, by which (i) the aggregate Note Principal Balance,
after taking into account the payment to the Noteholders of all principal from
sources other than the Note Policy on such Payment Date,
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exceeds (ii) the sum of (x) the Pool Principal Balance as of the end of the
applicable Remittance Period and (y) the amounts of deposit in the Pre-Funding
Account.
"Overcollateralization Increase Amount": With respect to any
Payment Date, the lesser of (i) the Overcollateralization Deficiency Amount as
of such Payment Date (after taking into account the payment of the Principal
Distribution Amount on such Payment Date (except for any Overcollateralization
Increase Amount) and (ii) the amount of Total Available Funds remaining to be
allocated for such purpose pursuant to Section 8.7(b)(ix) hereof on such Payment
Date.
"Overcollateralization Reduction Amount": With respect to any
Payment Date, the lesser of (x) the Excess Overcollateralization Amount for such
Payment Date and (y) the Principal Remittance Amount for the prior Remittance
Period.
"Owner Trustee": [OWNER TRUSTEE], not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee's Fee": A fee which is separately agreed to in
writing between the Sponsor and the Owner Trustee.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Noteholders, which shall be the 25th day
of each month, commencing in the month following the Closing Date or, if such
day is not a Business Day, then on the succeeding Business Day.
"Percentage Interest": As to any Note that percentage,
expressed as a fraction, the numerator of which is the Note Principal Balance of
such Note as of the related Cut-Off Date and the denominator of which is the
Original Note Principal Balance of all Notes; and as to any Certificate, that
Percentage Interest set forth on such Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period,
the sum of all Realized Losses with respect to the Mortgage Loans experienced
during such period.
"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate Loan
Balances of all Mortgage Loans 90 or more days Delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
"Pool Factor": A seven-digit decimal which the Indenture
Trustee shall compute monthly expressing the Note Principal Balance as of each
Payment Date (after giving effect to any distribution of principal on such
Payment Date) as a proportion of the Original Note Principal Balance. On the
Closing Date, the Pool Factor will be 1.0000000. Thereafter, the Pool
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Factor shall decline to reflect reductions in the related Principal Balance
resulting from distributions of principal to the Notes.
"Pool Principal Balance": The aggregate Loan Balances of all
Mortgage Loans.
"Predecessor Note": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Amount": Any amount previously distributed to
Noteholder that is recoverable and sought to be recovered as a voidable
preference by a Indenture Trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
"Preference Amount": As defined in the Note Policy.
"Pre-Funded Amount": As defined in the Sale and Servicing
Agreement.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.3 hereof and maintained by the Indenture Trustee.
"Pre-Funding Earnings": As defined in the Sale and Servicing
Agreement.
"Pre-Funding Period": As defined in the Sale and Servicing
Agreement.
"Premium Amount": As to any Payment Date, the product of (x)
one-twelfth of the Premium Percentage and (y) the Note Principal Balance on such
Payment Date (before taking into account any distributions of the Scheduled
Principal Distribution Amount to be made on such Payment Date).
"Premium Percentage": As defined in the Insurance Agreement.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan in
full which is received by the Master Servicer in advance of the scheduled due
date for the payment of such principal (other than the principal portion of any
Prepaid Installment), and the proceeds of any Insurance Policy which are to be
applied as a payment of principal on the related Mortgage Loan shall be deemed
to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-servicer in connection with a foreclosed Mortgage Loan prior
to the liquidation thereof,
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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 4.8(a) of the Sale and Servicing Agreement.
"Principal Distribution Amount": With respect to the Notes for
any Payment Date, the lesser of:
(i) the excess of (a) the sum, as of such Payment Date, of (x)
the Total Available Funds and (y) any Insured Payment over (b) the
Interest Distribution Amount; and
(ii) the sum, without duplication, of:
(a) the principal actually collected by the Master Servicer
with respect to the Mortgage Loans in the Trust during the related Remittance
Period,
(b) the Loan Balance of each Mortgage Loan in the Trust that
either was repurchased by an Originator or by the Sponsor or purchased by the
Master Servicer or any Sub-Servicer on the related Remittance Date, to the
extent such Loan Balance is actually received by the Indenture Trustee,
(c) any Substitution Amounts delivered by the Sponsor or an
Originator on the related Remittance Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Amounts are actually received by
the Indenture Trustee,
(d) all Net Liquidation Proceeds actually collected by the
Master Servicer with respect to the Mortgage Loans during the related Remittance
Period (to the extent such Net Liquidation Proceeds relate to principal),
(e) the proceeds received by the Indenture Trustee of any
termination of the Trust (to the extent such proceeds relate to principal),
minus
(f) the amount of any Overcollateralization Reduction Amount
for such Payment Date.
"Principal Remittance Amount": As of any Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the Master
Servicer with respect to Mortgage Loans in the Trust during the related
Remittance Period, (ii) the Loan Balance of each such Mortgage Loan that either
was repurchased by an Originator or by the Sponsor or purchased by the Master
Servicer or any Sub-Servicer on such Remittance Date, to the extent such Loan
Balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts delivered by the Sponsor or an Originator in connection
with a substitution of a Mortgage Loan, to the extent such Substitution Amounts
were actually deposited in the
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Principal and Interest Account on such Remittance Date, (iv) all Net Liquidation
Proceeds actually collected by the Master Servicer with respect to such Mortgage
Loans during the related Remittance Period (to the extent such Liquidation
Proceeds related to principal) net of amounts allowed to be retained pursuant to
Section 4.8(c) of the Sale and Servicing Agreement, (v) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
principal).
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated [DATE] naming
Advanta Conduit Receivables, Inc. and Advanta Mortgage Conduit Services, Inc. as
registrant and describing certain mortgage loan asset-backed securities to be
issued from time to time as described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement
dated [DATE], describing the Notes issued by the Trust.
"Rating Agency": Moody's and Standard & Poor's. If such agency
or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Sponsor and the Note Insurer, notice of which designation shall be given to the
Indenture Trustee. References herein to the highest short term unsecured rating
category of a Rating Agency shall means A-1 or better in the case of Standard &
Poor's and P-1 or better in the case of Moody's, and in the case of any other
Rating Agency shall mean the ratings such other Rating Agency deems equivalent
to the foregoing ratings. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of Standard & Poor's
and "Aaa" in the case of Moody's, and in the case of any other Rating Agency,
the rating such other Rating Agency deems equivalent to the foregoing ratings.
"Realized Loss": As to any Liquidated Mortgage Loan, the
amount, if any, by which the Loan Balance thereof as of the date of liquidation
is in excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, [the
business day immediately preceding the Payment Date occurs/ the last Business
Day of the calendar month immediately preceding the calendar month in which such
payment date occurs]; provided, that if the Notes revert to Definitive Notes,
the Record Date with respect to each Payment Date thereafter shall be the last
Business Day of the calendar month immediately preceding the calendar month in
which such payment date occurs.
"Redemption Date": In the case of a redemption of the Notes
pursuant to Section 10.1, the Payment Date specified by the Master Servicer or
the Trust pursuant to Section 10.2(a).
"Redemption Price": In the case of a redemption of the Notes
pursuant to Section 10.1, an amount equal to the unpaid principal amount of the
then outstanding principal amount of each class of Notes being redeemed plus
accrued and unpaid interest thereon to but excluding the Redemption Date.
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"Reference Banks": Chase Manhattan Bank, Deutsche Morgan
Grenfell, Fuji Bank, Merita Bank, Lloyds, Sumitomo Bank, Barclay's Bank PLC,
National Westminster Bank PLC, Abbey, Westpac, Hambros, Commerzbank AG,
Citibank, United Bank of Switzerland AG, BTM, and Royal Bank of Scotland;
provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Indenture Trustee which
are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Sponsor
or any affiliate thereof, (iii) whose quotations appear on the Telerate Screen
Page 3750 on the relevant Interest Determination Date and (iv) which have been
designated as such by the Indenture Trustee.
"Registration Statement": The Registration Statement filed by
the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus and the Prospectus Supplement
relating to the Notes constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all payments made pursuant to the Note Policy previously received by the
Indenture Trustee and all Preference Amounts previously paid to the Indenture
Trustee by the Note Insurer and in each case not previously repaid to the Note
Insurer pursuant to Section 8.7(b)(viii) hereof plus (ii) interest accrued on
each such payment made pursuant to the Note Policy not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related payment made pursuant to the Note Policy and (y)(i) any amounts then
due and owing to the Note Insurer under the Insurance Agreement plus (ii)
interest on such amounts at the Late Payment Rate. The Note Insurer shall notify
the Indenture Trustee and the Sponsor of the amount of any Reimbursement Amount.
"Relief Act Shortfall": With respect to any Remittance Period,
for any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Remittance Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (ii) the sum of (a) one month's interest on the Loan
Balance of such Mortgage Loan at the rate equal to the sum of the Note Interest
Rate, the rate at which the Indenture Trustee's Fee is calculated and the
Premium Percentage, plus (b) the aggregate Servicing Fee for such Mortgage Loan
payable to the Master Servicer in such calendar month.
"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the Principal and Interest Account to the
Indenture Trustee, which shall be the 18th day or, if such day is not a Business
Day, the next succeeding Business Day, of each month, commencing in the month
following the month in which the Closing Date occurs.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
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"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Notes
registered in the Register under the nominee name of the Depository.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Indenture Trustee determines to
be either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16%) of the one-month U.S. dollar lending rates which three
New York City banks selected by the Indenture Trustee are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Indenture
Trustee can determine no such arithmetic mean, the lowest one-month U.S. dollar
lending rate which three New York City banks selected by the Indenture Trustee
are quoting on such Interest Determination Date to leading European banks.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of [DATE], among the Trust, the Sponsor, the Master Servicer
and the Indenture Trustee, as the same may be amended or supplemented from time
to time.
"Scheduled Principal Distribution Amount": With respect to the
Notes for any Payment Date, an amount equal to the lesser of (x) the Principal
Distribution Amount as of such Payment Date and (y) the Note Principal Balance
as of such Payment Date.
"Schedules of Mortgage Loans": The Schedules of Mortgage
Loans, attached hereto as Schedule I as they may be further supplemented in
connection with Subsequent Transfers. Such Schedules shall also contain one of
the following codes for each Mortgage Loan or Subsequent Mortgage Loan: "C" if
such Mortgage Loan is an Unaffiliated Originator Loan or "A" for all other
Mortgage Loans. The information contained on each Mortgage Loan Schedule shall
be delivered to the Indenture Trustee on a computer readable magnetic tape or
disk.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Junior Mortgage Loan, the
mortgage loan relating to the corresponding Property having a senior priority
lien.
"Servicing Advance": As defined in the Sale and Servicing
Agreement.
"Servicing Fee": As defined in the Sale and Servicing
Agreement.
"Specified Overcollateralization Amount": As defined in the
Insurance Agreement.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
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"Standard & Poor's": Standard & Poor's Rating Group, a
division of The McGraw Hill Companies.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loan, the opening of business on the first day of the calendar month in
which the related Subsequent Transfer Date occurs.
"Subsequent Mortgage Loans" As defined in the Sale and
Servicing Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Indenture
Trustee and the Sponsor substantially in the form of Exhibit L of the Sale and
Servicing Agreement, by which Subsequent Mortgage Loans are assigned to the
Trust.
"Subsequent Transfer Date": The date specified in each
Subsequent Transfer Agreement, which must, with respect to any Payment Date, be
a date occurring during the calendar month in which such Payment Date occurs, at
least five Business Days prior to the Remittance Date occurring in such month.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies any requirements set
forth in Section 8.3 hereof in respect of the qualification of a Sub-Servicer.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such difference together with
accrued and unpaid interest on such amount calculated at the Coupon Rate net of
the Servicing Fee of the Mortgage Loan being replaced.
"Telerate Screen Page 3750": The display designated on page
3750 on the Telerate Service (or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks)
"Termination Date" means the latest of (i) the termination of
the Note Policy and the return of the Note Policy to the Note Insurer for
cancellation, (ii) the date on which the Note Insurer shall have received
payment and performance of all Note Insurer Issuer Secured Obligations and (iii)
the date on which the Indenture Trustee shall have received payment and
performance of all Indenture Trustee Issuer Secured Obligations.
"Total Available Funds": As defined in Section 8.7(a) hereof.
"Trust Agreement": The Trust Agreement dated as of [DATE]
between the Trust and the Sponsor.
"Trust Estate": Collectively, all money, instruments and other
property, to the extent such money, instruments and other property are subject
or intended to be held in trust, and in the subtrusts, for the benefit of the
Noteholders and the Note Insurer, including all proceeds
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thereof including, without limitation, (i) the Initial Mortgage Loans, Qualified
Replacement Mortgages and Subsequent Mortgage Loans, (ii) such amounts,
including Eligible Investments, as from time to time may be held in all Accounts
(except as otherwise provided herein and excluding any premium recapture), (iii)
any Mortgaged Property, the Noteholdership of which has been effected on behalf
of the Trust as a result of foreclosure or acceptance by the Master Servicer or
any Sub-Servicer of a deed in lieu of foreclosure and that has not been
withdrawn from the Trust, (iv) any Insurance Policies relating to the Mortgage
Loans and any rights of the Trust and the Originators under any Insurance
Policies (except for any non-mortgage or credit-life insurance policies), (v)
Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan, (vi) the
Insurance Policies, (vii) such amounts held in the Capitalized Interest Account,
and (viii) such amounts held in the Pre-Funding Account, the Principal and
Interest Account and the Note Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"Trust": Advanta Mortgage Loan Trust ____-_.
"UCC": Unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased by
the Sponsor from an Unaffiliated Originator and sold to the Trust by the
Sponsor.
"Unaffiliated Originators": Any Originator who is not
affiliated with the Sponsor.
"Underwriter": Morgan Stanley & Co. Incorporated.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Sale and Servicing Agreement or
the Trust Agreement.
SECTION 1.2. Incorporation by Reference of the Trust Indenture
Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional Indenture Trustee" means
the Indenture Trustee.
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"obligor" on the indenture securities means the Trust.
All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4. Action by or Consent of Noteholders.
Whenever any provision of this Agreement 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. Solely for
the purposes of any action to be taken, or consented to, by Noteholders, any
Note registered in the name of Advanta Mortgage Conduit Services, Inc. or any
Affiliate thereof shall be deemed not to be outstanding; provided, however,
that, solely for the purpose of determining whether the Indenture Trustee or the
Owner Trustee is entitled to rely upon any such action or consent, only Notes
which the Owner Trustee or the Indenture Trustee, respectively, knows to be so
owned shall be so disregarded.
SECTION 1.5. Conflict with TIA.
If any provision hereof limits, qualifies or conflicts with a provision of
the TIA that is required under the TIA to be part of and govern this Indenture,
the latter provision shall control and all provisions required by the TIA are
hereby incorporated by reference. If any provision of this Indenture modifies or
excludes any provision of the TIA that may be so modified or excluded, the
latter provisions shall be deemed to apply to this Indenture as so modified or
to be excluded, as the case may be.
ARTICLE II.
THE NOTES
SECTION 2.1. Form.
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The Notes, together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The
terms of the Note set forth in Exhibit A are part of the terms of this
Indenture.
SECTION 2.2. Execution, Authentication and Delivery.
The Notes shall be executed on behalf of the Trust by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
original or facsimile.
Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Trust shall bind the
Trust, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
The Indenture Trustee, upon receipt of a written Delivery
Order from the Trust, shall authenticate and deliver Notes for original issue in
an aggregate principal amount of $__________. The Notes outstanding at any time
may not exceed such amounts except as provided in Section 2.6.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of $1000
and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears attached to such
Note a certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Subject to Section 2.11, the Notes shall
be Book-Entry Notes.
SECTION 2.3. Registration; Registration of Transfer and
Exchange.
The Trust shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Trust shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of 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.
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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 Holders of the Notes 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(1) of the UCC are met, the Trust shall
execute or cause the Indenture Trustee to authenticate one or more new Notes, in
any authorized denominations, of the same class and a like aggregate principal
amount. A Noteholder may also obtain from the Indenture Trustee, in the name of
the designated transferee or transferees one or more new Notes, in any
authorized denominations, of the same class and a like aggregate principal
amount. Such requirements shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance by the Trust with Section 8-401 of the UCC.
At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, and if the
requirements of Section 8-401(1) of the UCC are met, the Trust shall execute and
upon its request the Indenture Trustee shall authenticate the Notes which the
Noteholder making the exchange is entitled to receive. Such requirements shall
not be 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 Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar all in accordance with the Exchange Act, and
(ii) accompanied by such other documents as the Note Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.4 or 9.6 not
involving any transfer.
The Note Registrar shall not register the transfer of any Note
(other than the transfer of a Note to the nominee of the Depository) unless the
transferee has executed and delivered to the Indenture Trustee a certification
to the effect that either (i) the transferee is not
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(A) an employee benefit plan (as defined in Section 3(3) of ERISA) that is
subject to the provisions of Title I of ERISA or (B) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code
(each of the foregoing, a "Benefit Plan"), and is not acting on behalf of or
investing the assets of a Benefit Plan, or (ii) that the transferee's
acquisition and continued holding of the Note will be covered by a U.S.
Department of Labor Prohibited Transaction Class Exemption. Each transferee of a
beneficial interest in a Book-Entry Note shall be deemed to make one of the
foregoing representations.
SECTION 2.4. 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 Indenture Trustee and the
Note Insurer such security or indemnity as may be required by it to hold the
Trust, the Indenture Trustee and the Note Insurer harmless, then, in the absence
of notice to the Trust, the Note Registrar or the Indenture Trustee that such
Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Indenture Trustee shall
execute and 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 Indenture Trustee may, instead of issuing a replacement Note pay
such destroyed, lost or stolen Note when so due or payable or upon the
Redemption Date without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Trust, the Indenture Trustee and the Note Insurer shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Trust or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section,
the Trust may require the payment by the Holder of such Note of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the 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.
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SECTION 2.5. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Note, the
Trust, the Indenture Trustee and the Note Insurer and any agent of the Trust,
the Indenture Trustee and the Note Insurer may treat the Person in whose name
any Note is registered (as of the related Record Date) as the owner of such Note
for the purpose of receiving payments of principal of and interest, if any on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Trust, the Note Insurer, the Indenture Trustee nor any
agent of the Trust, the Note Insurer or the Indenture Trustee shall be affected
by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted
Interest.
(a) The Notes shall accrue interest as provided herein, and
such amount shall be due and payable on each Payment Date as specified herein.
Any installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Trust on the applicable Payment Date
shall be paid to the Person in whose name such Note (or one or more Predecessor
Notes) is registered on the Record Date, by check mailed first-class, postage
prepaid, to such Person's address as it appears on the Note Register on such
Record Date, except that, unless 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 Final
Scheduled Payment Date (and except for the Redemption Price for any Note called
for redemption pursuant to Section 10.1(a)) which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.3.
(b) Upon written notice from the Trust, the Indenture Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Trust
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2.
(c) If the Trust defaults in a payment of interest on the
Notes, the Trust shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the Late Payment Rate to the extent lawful.
The Trust may pay such defaulted interest to the Persons who are Noteholders on
a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Trust shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Trust shall mail to each Noteholder and the Indenture
Trustee a notice that states the special record date, the payment date and the
amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the
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Indenture Trustee shall, upon written notice from the Master Servicer of the
amounts, if any, that the Note Insurer has paid in respect of the Notes under
the Note Policy or otherwise which has not been reimbursed to it, deliver such
surrendered Notes to the Note Insurer to the extent not previously cancelled or
destroyed.
SECTION 2.7. Cancellation.
Subject to Section 2.6(d), all Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly canceled by the Indenture Trustee. Subject to Section 2.6(d), the Trust
may at any time deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Trust may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Indenture Trustee. No Notes shall be authenticated in lieu of or
in exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.6(d), all canceled
Notes may be held or disposed of by the Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time unless the Trust
shall direct by an Issuer Order that they be destroyed or returned to it;
provided that such Issuer Order is timely and the Notes have not been previously
disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral.
The Indenture Trustee shall, on or after the Termination Date, release any
remaining portion of the Trust Estate from the lien created by this Indenture
and deposit in the Note Account any funds then on deposit in any other Account.
Except as otherwise set forth in the Sale and Servicing Agreement, the Indenture
Trustee shall release property from the lien created by this Indenture pursuant
to this Section 2.8 only upon receipt of an Issuer Request by it accompanied by
an Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA ss.ss. 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.1 or as provided in Section
4.14 of the Sale and Servicing Agreement.
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 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 Holder of the Notes, and shall have no obligation to the Note
Owners;
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(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 Notes are issued
pursuant to Section 2.11, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
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 Notes shall have been issued to Note
Owners pursuant to Section 2.11, the Indenture Trustee shall give all such
notices and communications specified herein to be given to Holders of the Notes
to the Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes.
If (i) the Sponsor advises the Indenture Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Notes, and the Sponsor is unable to locate
a qualified successor, (ii) the Sponsor at its option advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of a Event of Default, Note Owners
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Indenture Trustee through the
Clearing Agency in writing that the continuation of a book entry system through
the Clearing Agency is no longer in the best interests of the Note Owners, then
the Clearing Agency shall notify all Note Owners and the Indenture Trustee of
the occurrence of any such event and of the availability of Definitive Notes to
Note Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Trust shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of the Clearing Agency. None of the Trust, the Note Registrar
or the Indenture Trustee shall be liable for any delay in delivery of such
instructions
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and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall
recognize the holders of the Notes as Noteholders.
ARTICLE III.
COVENANTS
SECTION 3.1. Payment of Principal and Interest.
The Trust will duly and punctually pay the principal of and interest on the
Notes in accordance with the terms of the Notes and this Indenture. Without
limiting the foregoing, the Trust will cause to be distributed all amounts on
deposit in the Note Account on a Payment Date deposited therein pursuant to the
Sale and Servicing Agreement for the benefit of the Notes, to Noteholders.
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the 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 Indenture Trustee's offices maintained at 123 Washington Street, NY, NY
10006 and the Trust hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust.
The Trust will cause each Note Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee and the Note Insurer an
instrument in which such Note Paying Agent shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so
agrees), subject to the provisions of this Section, that such Note Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due
with respect to the 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;
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(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 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 on Issuer Request, and shall
be deposited by the Indenture Trustee in the Note Account; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Trust for payment thereof (but only to the extent of the amounts so paid to the
Trust), and all liability of the Indenture Trustee or such Note Paying Agent
with respect to such trust money shall thereupon cease.
SECTION 3.4. Existence.
Except as otherwise permitted by the provisions of Section 3.10, the Trust
will keep in full effect its existence, rights and franchises as a business
trust under the laws of the State of Delaware (unless it becomes, or any
successor Issuer 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 Trust Secured Parties 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 Trust
Secured Parties, a first lien on and a first priority, perfected security
interest in the
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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 Trust Secured Parties created by this Indenture or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee in such Trust Estate against the claims
of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Trust hereby designates the Indenture Trustee its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
required by the Indenture Trustee pursuant to this Section; provided that, such
designation shall not be deemed to create a duty in the Indenture Trustee or the
Indenture Trustee to monitor the compliance of the Trust with respect to its
duties under this Section 3.5 or the adequacy of any financing statement,
continuation statement or other instrument prepared by the Trust.
SECTION 3.6. Opinions as to Trust Estate.
(a) On the Closing Date, the Trust shall furnish to the
Indenture Trustee and the Note Insurer an Opinion of Counsel stating that, in
the opinion of such counsel, such actions have been taken with respect to the
recording and filing of this Indenture, any indentures supplemental hereto, and
any other requisite documents, and with respect to the execution and filing of
any financing statements and continuation statements, as are necessary to
perfect and make effective the first priority lien and security interest in
favor of the Indenture Trustee, for the benefit of the Trust Secured Parties,
created by this Indenture.
(b) Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Trust shall furnish to the Indenture Trustee and the Note
Insurer, an Opinion of Counsel either stating that, in the opinion of such
counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel, no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel
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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 Note Insurer to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Indenture Trustee
and the Note Insurer in an Officer's Certificate of the Trust shall be deemed to
be action taken by the Trust. Initially, the Trust has contracted with the
Master Servicer to assist the Trust in performing its duties under this
Indenture.
(c) The Trust will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the 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
in accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Trust shall not waive,
amend, modify, supplement or terminate any Operative Document or any provision
thereof without the consent of the Indenture Trustee, the Note Insurer or the
Holders of at least a majority of the Outstanding Amount of the Notes.
(d) If an Authorized Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicer Termination under the
Sale and Servicing Agreement, the Trust shall promptly notify the Indenture
Trustee, the Note Insurer and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, the Trust is
taking in respect of such default. If an Event of Servicer Termination shall
arise from the failure of the Master Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the Mortgage
Loans, the Trust shall take all reasonable steps available to it to remedy such
failure.
(e) The Trust agrees that it will not waive timely performance
or observance by the Master Servicer or the Sponsor of their respective duties
under the Operative Documents (x) without the prior consent of the Note Insurer
or (y) if the effect thereof would adversely affect the Holders of the Notes.
SECTION 3.8. Negative Covenants.
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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 consent of the Note Insurer (which
consent may not be unreasonably withheld; provided, that if an Note
Insurer Default has occurred and is continuing, the Noteholders
representing 51% of the Noteholders may direct the Indenture Trustee to
sell or dispose of the Trust Estate if the Indenture Trustee receives
the Redemption Price, as described in Section 10.1.
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created
on or extend to or otherwise arise upon or burden the Trust Estate or
any part thereof or any interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on a Mortgaged Property and arising
solely as a result of an action or omission of the related Mortgagor),
(C) permit the lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or other
lien) security interest in the Trust Estate or (D) amend, modify or
fail to comply with the provisions of the Operative Documents without
the prior written consent of the Note Insurer, which consent may not be
unreasonably withheld.
SECTION 3.9. Annual Statement as to Compliance.
The Trust will deliver to the Indenture Trustee and the Note Insurer,
within 90 days after the end of each fiscal year of the Trust (commencing with
the fiscal year ended December 31, ____), and otherwise in compliance with the
requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as to
the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Trust during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Trust has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
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SECTION 3.10. The Trust Shall Not Consolidate or Transfer
Assets.
(a) The Trust shall not consolidate or merge with or into any
other Person.
(b) Except as otherwise provided in the Sale and Servicing
Agreement, 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 Note Insurer under the Insurance
Agreement and (iii) any other Indebtedness permitted by or arising under the
Operative Documents. 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, to fund the Pre-Funding Account and the
Capitalized Interest Account and to pay the Trust's organizational,
transactional and start-up expenses.
SECTION 3.13. Guarantees, Loans, Advances and Other
Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Trust shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.14. Capital Expenditures.
The Trust shall not make any expenditure (by long-term or operating lease
or otherwise) for capital assets (either realty or personalty).
SECTION 3.15. Compliance with Laws.
The Trust shall comply with the requirements of all applicable laws, the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Trust to perform its obligations under
the Notes, this Indenture or any Operative Document.
SECTION 3.16. Restricted Payments.
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The Trust shall not, directly or indirectly, (i) pay any dividend or make
any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any owner
of a beneficial interest in the Trust or otherwise with respect to any ownership
or equity interest or security in or of the Trust or to the Master Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such ownership
or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Trust may make, or
cause to be made, distributions to the Master Servicer, the Owner Trustee, the
Indenture Trustee and the Certificateholders as permitted by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement,
this Indenture, or Trust Agreement. The Trust will not, directly or indirectly,
make payments to or distributions from the Note Account except in accordance
with this Indenture and the Operative Documents.
SECTION 3.17. Notice of Event of Defaults and Events of
Servicing Termination.
Upon a Responsible Officer of the Owner Trustee having actual knowledge
thereof, the Trust agrees to give the Indenture Trustee, the Note Insurer and
the Rating Agencies prompt written notice of each Event of Default hereunder or
Event of Servicer Termination under the Sale and Servicing Agreement.
SECTION 3.18. Further Instruments and Acts.
Upon request of the Indenture Trustee or the Note Insurer, the Trust will
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of this
Indenture.
SECTION 3.19. Amendments of Sale and Servicing Agreement and
Trust Agreement.
The Trust shall not agree to any amendment to Section 9.01 of the Sale and
Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate the
requirements thereunder that the Indenture Trustee, the Note Insurer or the
Holders of the Notes consent to amendments thereto as provided therein.
SECTION 3.20. Income Tax Characterization.
For purposes of federal income, state and local income and franchise and
any other income taxes, the Trust will treat the Notes as indebtedness of the
Sponsor and hereby instructs the Indenture Trustee to treat the Notes as
indebtedness of the Sponsor for federal and state tax reporting purposes.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
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Upon payment in full of 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, and
3.19, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.7 and
the obligations of the Indenture Trustee under Section 4.2) and (vi) the rights
of Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on written demand in the form of an Issuer Order and at the expense of
the Trust, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.4 and (ii) Notes for
which payment money has theretofore been deposited in trust or
segregated and held in trust by the Trust and thereafter repaid to the
Trust or discharged from such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation and the Note
Policy has terminated and been returned to the Note Insurer for
cancellation and all amounts owing to the Note Insurer have been paid
in full; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Final
Scheduled Payment Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Trust,
and in the case of (i), (ii) or (iii) above, the Trust, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such
amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture Trustee for cancellation
when due on the Final Scheduled Payment Date or Redemption Date (if the
Notes shall have been called for redemption pursuant to Section 10.1(a)
or (b)), as the case may be;
(B) the Trust has paid or caused to be paid all Note Insurer
Issuer Secured Obligations and all Indenture Trustee Issuer Secured Obligations;
and
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(C) the Trust has delivered to the Indenture Trustee and the
Note Insurer an Officer's Certificate, an Opinion of Counsel and if required by
the TIA, the Indenture Trustee or the Note Insurer an Independent Certificate
from a firm of certified public accountants, each meeting the applicable
requirements of Section 11.1(a) and each stating that all conditions precedent
herein provided relating to the satisfaction and discharge of this Indenture
have been complied with.
SECTION 4.2. Application of Trust Money.
All monies deposited with the Indenture Trustee pursuant to Section 4.1
hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Note Paying Agent, as the Indenture Trustee may determine, to the
Holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal and interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to the 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, upon demand of the Trust, be paid to the Indenture Trustee to
be held and applied according to Section 3.3 and thereupon such Note Paying
Agent shall be released from all further liability with respect to such monies.
ARTICLE V.
REMEDIES
SECTION 5.1. Rights Upon an Event of Default.
If an Event of Default as described in Article XII shall have occurred and
be continuing, but with the consent of the Note Insurer in the absence of a Note
Insurer Default, the Indenture Trustee may, and on request of the Note Insurer
or the Holders of Notes representing not less than 51% of the Outstanding Amount
of the Notes (with the consent of the Note Insurer), shall, declare all the
Notes to be immediately due and payable by a notice in writing to the Trust (and
to the Indenture Trustee if given by Noteholders), and upon any such declaration
such Notes, in an amount equal to the Outstanding Amount of the Notes, together
with accrued and unpaid interest thereon to the date of such acceleration, shall
become immediately due and payable, all subject to the prior written consent of
the Note Insurer in the absence of a Note Insurer Default.
At any time after such a declaration of acceleration of
maturity of the Notes has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter in
this Article; provided the Note Insurer or the Holders of Notes representing
more than 50% of the Outstanding Amount of the Notes, with the prior written
consent of the Note Insurer, by written notice to the Trust and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:
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(1) the Trust has paid or deposited with the Indenture Trustee
a sum sufficient to pay:
(A) all payments of principal of, and interest on,
all Notes and all other amounts that would then be due hereunder or
upon such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel; and
(2) 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 as provided in Section 5.19.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.2. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.
Subject to the following sentence, if an Event of Default with respect to
the Notes occurs and is continuing, the Indenture Trustee may, with the prior
written consent of the Note Insurer and shall, at the direction of the Note
Insurer, proceed to protect and enforce its rights and the rights of the
Noteholders and the Note Insurer by any Proceedings the Indenture Trustee deems
appropriate to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or enforce any other proper remedy. Any
proceedings brought by the Indenture Trustee on behalf of the Noteholders and
the Note Insurer or any Noteholder against the Trust shall be limited to the
preservation, enforcement and foreclosure of the liens, assignments, rights and
security interests under the Indenture and no attachment, execution or other
unit or process shall be sought, issued or levied upon any assets, properties or
funds of the Trust, other than the Trust Estate relative to the Notes in respect
of which such Event of Default has occurred. If there is a foreclosure of any
such liens, assignments, rights and security interests under this Indenture, by
private power of sale or otherwise, no judgment for any deficiency upon the
indebtedness represented by the 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 5.3. Remedies.
(a) If an Event of Default with respect to the Notes shall have occurred
and be continuing and the Notes have been declared due and payable and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee, at the direction of the Note Insurer may, for the benefit of
the Noteholders and the Note 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, subject in all cases to the
provisions of Sections 3.1 and 5.3;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iv) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee or
the Holders of the Notes and the Note Insurer hereunder; and
(v) refrain from selling the Trust Estate and apply all
related Monthly Remittance Amounts pursuant to Section 5.6.
SECTION 5.4. Indenture Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
Proceeding relative to the Trust or any other obligor upon any of the Notes or
the property of the Trust or of such other obligor or their creditors, 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
Note Insurer, be entitled and empowered, by intervention in such Proceeding or
otherwise to:
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes and file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel) and of the Noteholders and
the Note Insurer allowed in such Proceeding, and
(ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
receiver, assignee, Indenture Trustee, liquidator, or sequestrator (or
other similar official) in any such Proceeding is hereby authorized by
each Noteholder and the Note Insurer to make such payments to the
Indenture Trustee and, in the event that the Indenture Trustee shall
consent to the making of such payments directly to the Noteholders and
the Note Insurer, to pay to the Indenture Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder or the
Note Insurer any plan of reorganization, arrangement, adjustment or composition
affecting any of the Notes or the rights
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of any Holder thereof, or the Note Insurer, or to authorize the Indenture
Trustee to vote in respect of the claim of any Noteholder or the Note Insurer in
any such Proceeding. Any plan of reorganization, arrangement, adjustment or
composition relative to the Trust or any other obligor upon any of the Notes or
the property of the Trust or of such obligor or their creditors and affecting
the Notes or the rights of the Note Insurer under this Indenture or the
Insurance Agreement must be acceptable to the Note Insurer and, as long as no
Note Insurer Default exists and is continuing, the Note Insurer shall be
entitled to exercise the voting rights of the Holders of the Notes regarding
such plan, reorganization, arrangement, adjustment or composition.
SECTION 5.5. Indenture Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Indenture or any of the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Indenture Trustee, at the
direction of the Note Insurer, shall be brought in its own name as Indenture
Trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (i) Section 5.6.
SECTION 5.6. Application of Money Collected.
If the Notes have been declared due and payable following an Event of
Default with respect to the Notes and such declaration and its consequences have
not been rescinded and annulled, any money collected by the Indenture Trustee
with respect to the Notes pursuant to this Article or otherwise and any other
monies that may then be held or thereafter received by the Indenture Trustee as
security for the Notes shall be applied in the following order, at the date or
dates fixed by the Indenture Trustee and, in case of the payment of the entire
amount due on account of principal of, and interest on, the Notes, upon
presentation and surrender thereof:
(i) first, to the Indenture Trustee any unpaid Indenture
Trustee's Fees related to the Notes then due and any other amounts
payable and due to the Indenture Trustee under this Indenture,
including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article;
(ii) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees related to the Mortgage Loans
then due and, upon the final liquidation of the related Mortgage Loan
or the final liquidation of the Trust Estate related to the Mortgage
Loans, Servicing Advances and Delinquency Advances, including
Nonrecoverable Advances related to the Mortgage Loans previously made
by, and not previously reimbursed or retained by, the Servicer;
(iii) third, to the payment of the Interest Distribution
Amount then due and unpaid upon the Outstanding Amount of the Notes
through the day preceding the date on which such payment is made;
(iv) fourth, to the payment of the Note Principal Balance then
due and unpaid upon the Outstanding Amount of the Notes;
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(v) fifth, to the payment of the Note Insurer, all amounts due
pursuant to the Insurance Agreement; and
(vi) sixth, to the Certificateholders, any amount remaining on
deposit in the Note Account.
SECTION 5.7. Limitation of Suits.
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee in bankruptcy, or for any other remedy hereunder, unless:
(i) the Holders of not less than 25% of the Outstanding Amount
of the related Notes have made written request to the Indenture Trustee
to institute such proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(ii) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request;
(iii) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such proceedings;
(iv) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the related Notes;
and
(v) an Note Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Holders of Notes shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Notes or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of related Notes, each
representing less than a majority of the Outstanding Amount of the related
Notes, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Noteholders to Receive
Principal and Interest.
Notwithstanding any other provisions in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for
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the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Control Party or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, then and in every such case the Trust,
the Note Insurer, the Indenture Trustee and the Noteholders shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Note Insurer and the Noteholders shall continue as though
no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Control 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 5.11. Delay or Omission Not a Waiver.
No delay or omission of the Indenture Trustee, Control Party or any Holder
of any Note to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Indenture Trustee, the Note Insurer or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, the Note Insurer or by the Noteholders, as
the case may be.
SECTION 5.12. Control by Noteholders.
If the Indenture Trustee is the Control Party, the Holders of a majority of
the Outstanding Amount of the related Notes, with the consent of the Note
Insurer, shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee pursuant to
Section 12.1 with respect to the related 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.
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SECTION 5.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by such
Holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered or omitted by it as Indenture Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) any suit instituted by the Note
Insurer, any Noteholder, or group of Noteholders with the prior written consent
of the Note Insurer, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension Laws.
The Trust covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead or in any manner whatsoever, claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, that may affect the covenants or the performance
of this Indenture; and the Trust (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Indenture Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 5.15. Action on Notes.
The Indenture Trustee's right to seek and recover judgment on the Notes or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee,
the Note Insurer or the Noteholders shall be impaired by the recovery of any
judgment by the Indenture Trustee or the Note Insurer against the Trust or by
the levy of any execution under such judgment upon any portion of the Trust
Estate or upon any of the assets of the Trust.
SECTION 5.16. Performance and Enforcement of Certain
Obligations.
(a) Promptly following a request from the Indenture Trustee
(at the direction of the Note Insurer) to do so and at the Master Servicer's
expense, the Trust agrees to take all such lawful action as the Indenture
Trustee may request to compel or secure the performance and observance by the
Sponsor and the Master Servicer, as applicable, of each of their obligations to
the Trust under or in connection with the Sale and Servicing
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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 Control Party and if an
Event of Default has occurred and is continuing, the Indenture Trustee may, and,
at the written direction of the Holders of 66-2/3% of the Outstanding Amount of
the related Class of Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Trust against the Sponsor or the Master Servicer
under or in connection with the Sale and Servicing Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Sponsor or the Master Servicer of each of their obligations to the Trust
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Trust to take such action shall be suspended.
SECTION 5.17. Subrogation.
The Indenture Trustee shall receive as attorney-in-fact of each Noteholder
any Insured Payment from the Note Insurer pursuant to the Note Policy. Any and
all Insured Payments disbursed by the Indenture Trustee from claims made under
the Note Policy shall not be considered payment by the Trust, and shall not
discharge the obligations of the Trust with respect thereto. The Note Insurer
shall, to the extent it makes any payment with respect to any Notes, become
subrogated to the rights of the recipient of such payments to the extent of such
payments. Subject to and conditioned upon any payment with respect to any Notes
by or on behalf of the Note Insurer, the Indenture Trustee shall assign to the
Note Insurer all rights to the payment of interest or principal with respect to
such Class of Notes which are then due for payment to the extent of all payments
made by the Note Insurer. In addition to the rights of the Note Insurer set
forth in Section 11.20 hereof, the Note Insurer may exercise any option, vote,
right, power or the like with respect to such Class of Notes to the extent that
it has made payment pursuant to the related Note Policy.
SECTION 5.18. Preference Claims.
(a) In the event that the Indenture Trustee has received a
certified copy of an order of the appropriate court that any payment on a Note
has been avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Indenture Trustee shall so notify the Note Insurer, shall
comply with the provisions of the related Policy to obtain payment by the Note
Insurer of such avoided payment, and shall, at the time it provides notice to
the Note Insurer, notify Holders of the Notes 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 related Policy. The Indenture Trustee shall
furnish to the Note Insurer at its written request, the requested records it
holds in its possession evidencing the payments of principal of and interest on
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
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the related Policy, the Note Insurer will make such payment on behalf of the
Noteholder to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Final Order (as defined in the related Policy) and not
to the Indenture Trustee or any Noteholder directly.
(b) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action (of which the
Indenture Trustee has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Preference Claim") of any distribution made with respect to
the Notes. Each Holder, by its purchase of Notes, and the Indenture Trustee
hereby agree that so long as an Note Insurer Default shall not have occurred and
be continuing, the Note Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedes or performance bond pending any such appeal at the expense of
the Note Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.18, the Note Insurer shall be subrogated to, and each Noteholder and
the Indenture Trustee hereby delegate and assign, to the fullest extent
permitted by law, the rights of the Indenture Trustee and each Noteholder in the
conduct of any proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
SECTION 5.19. Waiver of Past Defaults.
The Note Insurer or the Holders of Notes representing more than 50% of the
aggregate Principal Balance of the Outstanding Notes on the applicable Record
Date may on behalf of the Holders of all the Notes, and with the consent of the
Note Insurer, waive any past default hereunder and its consequences, except a
default in the payment of principal or any installment of interest on any Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
ARTICLE VI.
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee.
(a) If a Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and the Operative Documents and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs; provided, however,
that if the Indenture Trustee is acting as Master Servicer, it shall use the
same degree of care and skill as is required of the Master Servicer under the
Sale and Servicing Agreement.
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(b) Except during the continuance of a Event of Default:
(i) The Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.11; and
(iv) the Indenture Trustee shall not be charged with knowledge
of any failure by the Master Servicer to comply with the obligations of
the Master Servicer referred to in clauses (i) and (ii) of Section 5.1
of the Sale and Servicing Agreement unless a Responsible Officer of the
Indenture Trustee at the Corporate Trust Office obtains actual
knowledge of such failure or occurrence or the Indenture Trustee
receives written notice of such failure or occurrence from the Master
Servicer, the Note Insurer or the Holders of Notes evidencing Voting
Rights aggregating not less than 51%.
(d) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Trust.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
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(g) The Indenture Trustee shall, upon two Business Days' prior
written notice to the Indenture Trustee, permit any representative of the Note
Insurer, during the Indenture Trustee's normal business hours, to examine all
books of account, records, reports and other papers of the Indenture Trustee
relating to the 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 Note Policy in trust, and will hold any proceeds of any claim on
the Note Policy in trust solely for the use and benefit of the Noteholders.
(j) In no event shall [INDENTURE TRUSTEE], in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement
except making payments to the Certificateholders.
SECTION 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture, at the request, order or
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direction of any of the Holders of Notes or the Control Party, pursuant to the
provisions of this Indenture, unless such Holders of Notes or the Control Party
shall have offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred therein or
thereby; provided, however, that the Indenture Trustee shall, upon the
occurrence of a Event of Default or Event of Servicer Termination as defined in
the 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 Note Insurer or by the Holders of Notes evidencing not less than 25% of
the Outstanding Amount thereof; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Indenture Trustee may require indemnity
reasonably satisfactory to it against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee shall be reimbursed by the Person making such request upon demand.
(h) The Indenture Trustee shall not be accountable, shall have
no liability and makes no representation as to any acts or omissions hereunder
of the Master Servicer until such time as, and only to the extent that, the
Indenture Trustee may be required to act as Master Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee.
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Trust or its
Affiliates with the same rights it would have if it were not Indenture Trustee.
Any Note Paying Agent, Note Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Indenture Trustee must comply with
Sections 6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Trust
Estate or the Notes, it shall not be accountable for the Trust's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Trust in the Indenture or in any document issued in connection with the sale
of the Notes or in the Notes other than the Indenture Trustee's certificate of
authentication.
SECTION 6.5. Notice of Defaults.
If an Event of Default or an Event of Servicer Termination occurs and is
continuing and if it is either known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder and to the Note Insurer of
such event within 10 days after such knowledge or notice occurs. Except in the
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case of an Event of 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 Holders.
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 Holder to prepare its Federal and state
income tax returns required by law.
SECTION 6.7. Compensation and Indemnity.
(a) The Indenture Trustee shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Indenture Trustee herein. Neither the Indenture Trustee nor
any of the directors, officers, employees or agents of the Indenture Trustee
shall be under any liability on any Note or otherwise to any Account, the
Sponsor, the Trust, the Master Servicer or any Securityholder for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Indenture, or for errors in judgment; provided, however, that this
provision shall not protect the Indenture Trustee or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or bad faith in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder. Subject to the
foregoing sentence, the Indenture Trustee shall not be liable for losses on
investments of amounts in any Account (except for any losses on obligations on
which the bank serving as Indenture Trustee is the obligor. The indemnification
provided in this Section 6.7 shall survive the termination of this Indenture or
the resignation or removal of the Indenture Trustee hereunder. The Indenture
Trustee and any director, officer, employee or agent of the Indenture Trustee
may rely and shall be protected in acting or refraining from acting in good
faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder.
(b) The Trust's obligations to the Indenture Trustee pursuant
to this Section shall survive the discharge of this Indenture. Notwithstanding
anything else set forth in this Indenture or the Operative Documents, the
Indenture Trustee agrees that the obligations of the Trust (but not the Master
Servicer) to the Indenture Trustee hereunder and under the Operative Documents
shall be recourse to the Trust Estate only and specifically shall not be
recourse to the assets of the Trust or any Securityholder. In addition, the
Indenture Trustee agrees that its recourse to the Trust, the Trust Estate, the
Sponsor and amounts held in the Accounts shall be limited to the right to
receive the distributions referred to herein.
SECTION 6.8. Replacement of Indenture Trustee.
The Indenture Trustee may resign at any time by so notifying the Trust and
the Note Insurer by written notice. Upon receiving such notice of resignation,
the Trust shall promptly appoint a successor Indenture Trustee (approved in
writing by the Note Insurer, so long as such approval is not unreasonably
withheld) by written instrument, in duplicate, one copy of such instrument shall
be delivered to the resigning Indenture Trustee (who shall deliver a copy to the
Master Servicer)
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and one copy to the successor Indenture Trustee; provided, however, that any
such successor Indenture Trustee shall be subject to the prior written approval
of the Master Servicer, which approval shall not be unreasonably withheld. The
Trust may and, at the request of the Note Insurer shall, remove the Indenture
Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, Indenture Trustee, conservator, sequestrator (or similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or ordering the winding-up or liquidation
of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
Indenture Trustee, conservator, sequestrator (or other similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or makes any assignment for the benefit
of creditors or fails generally to pay its debts as such debts become
due or takes any corporate action in furtherance of any of the
foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Trust shall promptly appoint a successor Indenture Trustee acceptable to the
Note Insurer. If the Trust fails to appoint such a successor Indenture Trustee,
the Note Insurer may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee, to the Note
Insurer and to the Trust. Thereupon the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the retiring Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor Indenture
Trustee.
If a successor Indenture Trustee does not take office within
30 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Trust or the
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Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Indenture Trustee
acceptable to the Note Insurer.
If the Indenture Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Note Insurer.
Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section shall not become effective until acceptance of appointment by
the successor Indenture Trustee pursuant to Section 6.8 and payment of all fees
and expenses owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Trust's and the Master Servicer's indemnity
obligations under Section 6.7 shall continue for the benefit of the retiring
Indenture Trustee and the Master Servicer shall pay any amounts owing to the
Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Indenture
Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor Indenture 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 consent of the Note Insurer shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-Indenture
Trustee or co-Indenture Trustees, or separate Indenture Trustee or separate
Indenture Trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-Indenture Trustee or separate
Indenture Trustee hereunder shall be required to meet the terms of eligibility
as a successor Indenture Trustee under Section 6.11 and no notice to Noteholders
of the appointment
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of any co-Indenture Trustee or separate Indenture Trustee shall be required
under Section 6.8 hereof.
(b) Every separate Indenture Trustee and co-Indenture Trustee
shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate Indenture Trustee or co-Indenture Trustee, but solely at the
direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally liable
by reason of any act or omission of any other Indenture Trustee
hereunder, including acts or omissions of predecessor or successor
Indenture Trustees; and
(iii) the Indenture Trustee and the Master Servicer acting
jointly may at any time accept the resignation of or remove any
separate Indenture Trustee or co-Indenture Trustee except that
following the occurrence of an Event of Servicer Termination, the
Indenture Trustee acting alone may accept the resignation of or remove
any separate Indenture Trustee or co-Indenture Trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate Indenture Trustees and co-Indenture Trustees, as effectively as if
given to each of them. Every instrument appointing any separate Indenture
Trustee or co-Indenture Trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate Indenture Trustee and co-Indenture Trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate Indenture Trustee or co-Indenture Trustee may
at any time constitute the Indenture Trustee, its agent or attorney-in-fact with
full power and authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, dissolve, become
insolvent, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor Indenture Trustee.
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(e) The Master Servicer shall be responsible for the fees of
any co-Indenture Trustee or separate Indenture Trustee appointed hereunder.
SECTION 6.11. Eligibility: Disqualification.
The Indenture Trustee shall at all times satisfy the requirements of TIA
Section 310(a). The Indenture Trustee shall have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual report
of condition. The Indenture Trustee shall provide copies of such reports to the
Note Insurer upon request. The Indenture Trustee shall comply with TIA Section
310(b), including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the 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 the
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 Trust Secured
Parties hereby appoints [INDENTURE TRUSTEE] as the Indenture Trustee with
respect to the Collateral, and [INDENTURE TRUSTEE] hereby accepts such
appointment and agrees to act as Indenture Trustee with respect to the Trust
Estate for the Trust Secured Parties, to maintain custody and possession of such
Trust Estate (except as otherwise provided hereunder) and to perform the other
duties of the Indenture Trustee in accordance with the provisions of this
Indenture and the other Operative Documents. Each Issuer Secured Party hereby
authorizes the Indenture Trustee to take such action on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder, as the Control
Party may direct and as are specifically authorized to be exercised by the
Indenture Trustee by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The
Indenture Trustee shall act upon and in compliance with the written instructions
of the Control Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Indenture Trustee shall
not act in accordance with any instructions (i) which are not authorized by, or
in violation of the provisions of, this Indenture or (ii) for which the
Indenture Trustee has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Indenture Trustee
of its express duties hereunder, except where this Indenture provides that the
Indenture Trustee is permitted to act only following and in accordance with such
instructions.
SECTION 6.14. Performance of Duties.
The Indenture Trustee shall have no duties or responsibilities except those
expressly set forth in this Indenture and the other Operative Documents to which
the Indenture Trustee is a party or as directed by the Control Party in
accordance with this Indenture. The Indenture Trustee shall not be required to
take any discretionary actions hereunder except at the written direction and
with the indemnification of the Control Party. The Indenture Trustee shall, and
hereby agrees
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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
Issuer Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a national
banking association, duly organized, validly existing and in good standing under
the laws of the United States and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite
right, power and authority to execute and deliver this Indenture and to perform
all of its duties as the Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the
Indenture Trustee of this Indenture and the other Operative Documents to which
it is a party, and the performance by the Indenture Trustee of its duties
hereunder and thereunder, have been duly authorized by all necessary corporate
proceedings, are required for the valid execution and delivery by the Indenture
Trustee, or the performance by the Indenture Trustee, of this Indenture and such
other Operative Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has
duly executed and delivered this Indenture and each other Operative Document to
which it is a party, and each of this Indenture and each such other Operative
Document constitutes the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its terms,
except as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors'
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rights generally and (ii) the availability of equitable remedies may be limited
by equitable principles of general applicability.
SECTION 6.18. Waiver of Setoffs.
The Indenture Trustee hereby expressly waives any and all rights of setoff
that the Indenture Trustee may otherwise at any time have under applicable law
with respect to any Account and agrees that amounts in the Accounts shall at all
times be held and applied solely in accordance with the provisions hereof.
SECTION 6.19. Control by the Control Party.
The Indenture Trustee shall comply with notices and instructions given by
the Trust only if accompanied by the written consent of the Control Party.
SECTION 6.20. Indenture Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Agreement 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 in respect of which such judgment has
been recovered.
SECTION 6.21. Suits for Enforcement.
In case an Event of Servicer Termination or other default by the Master
Servicer or the Sponsor hereunder shall occur and be continuing, the Indenture
Trustee, if the Control Party (and if not the Control Party, with the consent of
the Note Insurer), may proceed to protect and enforce its rights and the rights
of the Noteholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Indenture Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Indenture Trustee and the Noteholders.
SECTION 6.22. Mortgagor Claims.
In connection with any offset defenses, or affirmative claim for recovery,
asserted in legal actions brought by Mortgagors under one or more Mortgage Loans
based upon provisions therein or upon other rights or remedies arising from any
requirements of law applicable to the Mortgage Loans:
(a) The Indenture Trustee is the holder of the Mortgage Loans
only as Indenture Trustee on behalf of the holders of the Notes, and not as a
principal or in any individual or personal capacity.
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(b) The Indenture Trustee shall not be personally liable for,
or obligated to pay Mortgagors, any affirmative claims asserted thereby, or
responsible to holders of the Notes for any offset defense amounts applied
against Mortgage Loan payments, pursuant to such legal actions.
(c) The Indenture Trustee will pay, solely from available
Trust money, affirmative claims for recovery by Mortgagors only pursuant to
final judicial orders or judgments, or judicially-approved settlement
agreements, resulting from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and
judgments which require its actions or cooperation in connection with
Mortgagors' legal actions to recover affirmative claims against holders of the
Notes.
(e) The Indenture Trustee will cooperate with and assist the
Master Servicer, the Sponsor, or holders of the Notes in their defense of legal
actions by Mortgagors to recover affirmative claims if such cooperation and
assistance is not contrary to the interests of the Indenture Trustee as a party
to such legal actions and if the Indenture Trustee is satisfactorily indemnified
for all liability, costs and expenses arising therefrom.
(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.
ARTICLE VII.
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. The 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 Holders as of
such Record Date, (b) at such other times as the Indenture Trustee may request
in writing, within 30 days after receipt by the Trust of any such request, a
list of similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided, however, that so long as the Indenture
Trustee is the Note Registrar, no such list shall be required to be furnished.
The Indenture Trustee or, if the Indenture Trustee is not the Note Registrar,
the Trust shall furnish to the Note Insurer or the Trust in writing upon their
written request and at such other times as the Note Insurer or the Trust may
request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 and the names and addresses of Holders
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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 the Trust.
(a) The Trust shall:
(i) file with the Indenture Trustee, within 15 days after the
Trust is required to file the same with the Commission, copies of the
annual reports and copies of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Trust may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Trust with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Trust pursuant to clauses (i) and
(ii) of this Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Trust otherwise determines, the fiscal year of
the Trust shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee.
If required by TIA Section 313(a), within 60 days after each December 31,
beginning with December 31, ____, 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.
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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 including (a)
all payments due on the Mortgage Loans and required to be paid over to the
Indenture Trustee by the Master Servicer or by any Sub-Servicer and (b) Insured
Payments. 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 take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
SECTION 8.2. Release of Trust Estate.
(a) Subject to Section 8.12 and the payment of its fees and
expenses pursuant to Section 6.7, the Indenture Trustee may, and when required
by the Trust and the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture or
the Sale and Servicing Agreement. No party relying upon an instrument executed
by the Indenture Trustee as provided in this Article VIII shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no
Notes outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
and to the Note Insurer pursuant to the Insurance Agreement have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture and release to the Trust or any other Person entitled
thereto any funds then on deposit in the Accounts. The Indenture Trustee shall
release property from the lien of this Indenture pursuant to this Section 8.2(b)
only upon receipt of an Issuer Request accompanied by an Officer's Certificate,
an Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.1.
SECTION 8.3. Establishment of Accounts.
The Trust shall cause to be established, and the Indenture Trustee shall
maintain, at the corporate trust office of the Indenture Trustee, a Note
Account, a Pre-Funding Account and a
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Capitalized Interest Account, each to be held by the Indenture Trustee in the
name of the Trust for the benefit of the Noteholders and the Note Insurer, as
their interests may appear.
SECTION 8.4. The Note Policy.
(a) On or before each Determination Date the Indenture Trustee
shall determine with respect to the immediately following Payment Date, the
Deficiency Amount, if any.
(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 Note Policy and submit such
notice to the Note Insurer no later than 12:00 p.m., New York City time on the
third Business Day preceding such Payment Date as a claim for a payment in an
amount equal to the Deficiency Amount.
(c) Upon receipt of payments made pursuant to the Note Policy
from the Note Insurer on behalf of Noteholders, the Indenture Trustee shall
deposit such payments in the Note Account and shall distribute such payments, or
the proceeds thereof, in accordance with Section 8.7(b) hereof to the
Noteholders.
(d) The Indenture Trustee shall (i) receive payments made
pursuant to the Note Policy as attorney-in-fact of each Noteholder receiving any
Insured Payment from the Note Insurer and (ii) disburse such Insured Payment to
the Noteholders as set forth in Section 8.7(b) hereof. The Note Insurer shall be
entitled to receive the related Reimbursement Amount pursuant to Section
8.7(b)(viii) hereof with respect to each Insured Payment made by the Note
Insurer. The Indenture Trustee hereby agrees on behalf of each Noteholder and
the Trust for the benefit of the Note Insurer that it recognizes that to the
extent the Note Insurer makes payments pursuant to the Note Policy, either
directly or indirectly (as by paying through the Indenture Trustee), to the
Noteholders, the Note Insurer will be entitled to receive such related
Reimbursement Amount.
SECTION 8.5. Reserved.
SECTION 8.6. Pre-Funding Account and Capitalized Interest
Account.
(a) On the Closing Date, the Indenture Trustee will deposit
from the proceeds of the sale of the Notes, on behalf of the Noteholders and the
Note Insurer, in the Pre-Funding Account, the Original Pre-Funded Amount and in
the Capitalized Interest Account, the Capitalized Interest Account Deposit.
(b) On each Subsequent Transfer Date, the Sponsor shall
instruct the Indenture Trustee to withdraw from the Pre-Funding Account an
amount equal to 100% of the aggregate Loan Balances of the Subsequent Mortgage
Loans transferred to the Trust on such Subsequent Transfer Date and pay such
amount to or upon the order of the Sponsor upon satisfaction of the conditions
set forth in Section 2.4 of the Sale and Servicing Agreement with respect to
such transfer.
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(c) On the Payment Dates occurring in __________ and ________,
the Indenture Trustee shall transfer from the Pre-Funding Account to the Note
Account, the Pre-Funding Earnings needed to pay interest on the portion of the
Notes collateralized by amounts in the Pre-Funding Account, if any, applicable
to each such Payment Date. On the Payment Dates occurring in __________ and
________, the Indenture Trustee shall distribute directly to the holders of the
Certificates the Pre-Funding Earnings not used to pay interest on the portion of
the Notes collateralized by amounts in the Pre-Funding Account, if any,
applicable to such Payment Date.
(d) [Reserved].
(e) On each Payment Date occurring in __________ and ________,
the Indenture Trustee shall transfer from the Capitalized Interest Account to
the Note Account the Capitalized Interest Requirement, if any, for such Payment
Dates.
(f) On the Payment Date occurring in ________, any amounts
remaining in the Capitalized Interest Account after taking into account the
transfers on such Payment Date described in clause (d) above shall be paid to
the holders of the Certificates, and the Capitalized Interest Account shall be
closed.
(g) If (x) the Pre-Funded Amount has not been reduced to zero
by the Payment Date occurring in ________ or (y) the Pre-Funded Amount has been
reduced to $100,000 or less on any Remittance Date occurring during the
Pre-Funding Period, in either case after giving effect to any reductions in the
Pre-Funded Amount on or before the related such Remittance Date, the Sponsor
shall instruct the Indenture Trustee to withdraw from the Pre-Funding Account on
such Remittance Date and deposit to the Note Account the difference, if any,
between (A) the Original Pre-Funded Amount and (B) all amounts theretofore
withdrawn from the Pre-Funding Account with respect to Subsequent Mortgage
Loans.
SECTION 8.7. Flow of Funds.
(a) The Indenture Trustee shall deposit to the Note Account,
without duplication, upon receipt, (i) any payments made pursuant to the Note
Policy relating to the Trust, (ii) the proceeds of any liquidation of the assets
of the Trust, (iii) the Monthly Remittance Amount remitted by the Master
Servicer or any Sub-Servicer, together with any Substitution Amounts, and any
Loan Purchase Price amounts received by the Indenture Trustee, (iv) on the
Payment Dates occurring in ________ or ________, the Pre-Funding Earnings
transferred by the Indenture Trustee pursuant to Section 8.6(c) hereof, (v) the
Capitalized Interest Requirement to be transferred on such Payment Dates from
the Capitalized Interest Account, pursuant to Section 8.6(e) hereof and (vi) the
portion of the amount, if any, to be transferred on such Payment Date from the
Pre-Funding Account, pursuant to Section 8.6(g) hereof (collectively, the "Total
Available Funds").
(b) Subject to any superseding provisions of clause (d) below,
on each Payment Date, the Indenture Trustee shall make the following
allocations, disbursements and transfers from amounts then on deposit in the
Note Account in the following order of priority,
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and each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements have
occurred:
(i) first, to the Indenture Trustee, the Indenture Trustee's
Fee then due and to the Owner Trustee, the Owner Trustee's Fee then
due;
(ii) second, to the Note Insurer, the Premium Amount then due
to the Note Insurer for such Payment Date.
(iii) third, to the Master Servicer, an amount equal to any
previously unreimbursed Servicing Fees then due to it on account of the
Unaffiliated Originator Loans not theretofore received by the Master
Servicer pursuant to Section 4.8(c)(i) of the Sale and Servicing
Agreement, as reported by the Master Servicer to the Indenture Trustee.
(iv) fourth, to the Noteholders, the Interest Distribution
Amount for such Payment Date;
(v) fifth, to the Noteholders, as a distribution of principal,
the Scheduled Principal Distribution Amount for such Payment Date;
(vi) sixth, to the Noteholders, as a distribution of
principal, the related Overcollateralization Deficit for such Payment
Date;
(vii) seventh, if such Payment Date is the last Payment Date
in the Pre-Funding Period, to the Noteholders, as a distribution of
principal, any amount remaining in the Pre-Funding Account (after
taking into account all transfers of Subsequent Mortgage Loans on or
prior to such Payment Date);
(viii) eighth, to the Note Insurer, the Reimbursement Amount,
if any, then due to it;
(ix) ninth, to the Noteholders, as a distribution of
principal, up to an amount equal to the Accelerated Principal Payment;
(x) tenth, to the Noteholders, to fund the amount of any
Available Funds Cap Current Amount for such Payment Date;
(xi) eleventh, to the Noteholders, to fund the amount of any
Available Funds Cap Carry Forward Amount for such Payment Date;
(xii) twelfth, to the Master Servicer, to the extent of any
unreimbursed Delinquency Advances, unreimbursed Servicing Advances,
including Nonrecoverable Delinquency Advances and Nonrecoverable
Servicing Advances and accrued and unpaid Servicing Fees as of such
Payment Date;
(xiii) thirteenth, to the Indenture Trustee and the Owner
Trustee, to the extent of any unreimbursed expenses owed to each of
them with respect to the Trust;
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(xiv) fourteenth, to the Certificateholders, any
Overcollateralization Reduction Amount; and
(xv) fifteenth, to the Certificateholders, any amount
remaining on deposit in the Note Account.
(c) Reserved.
(d) On any Payment Date during the continuance of any Note
Insurer Default described in clause (b) or (c) of the definition thereof:
No Premium Amount shall be paid to the Note Insurer (unless
the Note Insurer or its custodian, Indenture Trustee, agent, receiver,
custodian, or similar official continues to make payments required under the
Note Policy) and any amounts otherwise payable to the Note Insurer as Premium
Amounts shall be retained in the Note Account as Total Available Funds. On any
Payment Date wherein such Note Insurer Default has been cured, the Premium
Amounts shall be paid to the Note Insurer.
SECTION 8.8. Investment of Accounts.
(a) So long as no event described in Section 5.1(a) or (b) of
the Sale and Servicing Agreement shall have occurred and be continuing, and
consistent with any requirements of the Code, all or a portion of the Accounts
held by the Indenture Trustee (other than each Principal and Interest Account
shall be invested and reinvested by the Indenture Trustee in the name of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer, as
directed in writing by the Master Servicer, in one or more Eligible Investments
bearing interest or sold at a discount. During the continuance of an event
described in Section 5.1(a) or (b) of the Sale and Servicing Agreement and
following any removal of the Master Servicer, the Note Insurer shall direct such
investments. All investment income shall be held in the Accounts for the benefit
of the Master Servicer. No investment in any Account shall mature later than the
Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any
Account held by the Indenture Trustee and sufficient uninvested funds are not
available to make such disbursement, the Indenture Trustee shall cause to be
sold or otherwise converted to cash a sufficient amount of the investments in
such Account. No investments will be liquidated prior to maturity unless the
proceeds thereof are needed for disbursement.
(c) The Indenture Trustee shall not in any way be held liable
by reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any loss on any Eligible Investment included therein.
(d) The Indenture Trustee shall hold funds in the Accounts
held by the Indenture Trustee uninvested upon the occurrence of either of the
following events:
(i) the Master Servicer or the Note Insurer, as the case may
be, shall have failed to give investment directions to the Indenture
Trustee; or
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(ii) the Master Servicer or the Note Insurer, as the case may
be, shall have failed to give investment directions to the Indenture
Trustee by 11:15 a.m. New York time (or such other time as may be
agreed by the Master Servicer or the Note Insurer, as the case may be,
and the Indenture Trustee) on any Business Day (any such investment by
the Indenture Trustee pursuant to this clause (ii) to mature on the
next Business Day after the date of such investment).
SECTION 8.9. Eligible Investments.
The following are Eligible Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States fully and
unconditionally guaranteed, the timely payment or the guarantee of which
constitutes a full faith and credit obligation of the United States.
(b) Federal Housing Administration debentures and rated Aa2 or
higher by Moody's and AA or better by Standard & Poor's if applicable.
(c) Freddie Mac senior debt obligations and rated Aa2 or
higher by Moody's and AA or better by Standard & Poor's, if applicable .
(d) Federal Home Loan Banks' consolidated senior debt
obligations and rated Aa2 or higher by Moody's and AA or better by Standard &
Poor's if applicable.
(e) FNMA senior debt obligations and rated Aa2 or higher by
Moody's and AA or better by Standard & Poor's, if applicable.
(f) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not more than
365 days) of any domestic bank, the short-term debt obligations of which have
been rated A-1 or better by Standard & Poor's and P-1 by Moody's.
(g) Investment agreements approved by the Note Insurer
provided:
1. The agreement is with a bank or insurance company
which has an unsecured, uninsured and unguaranteed obligation
(or claims-paying ability) rated Aa2 or better by Moody's and
AA or better by Standard & Poor's and
2. Monies invested thereunder may be withdrawn
without any penalty, premium or charge upon not more than one
day's notice (provided such notice may be amended or canceled
at any time prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on
any future deposits made pursuant to such agreement, and
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5. The Indenture Trustee and the Note Insurer receive
an opinion of counsel that such agreement is an enforceable
obligation of such insurance company or bank.
(h) Commercial paper (having original maturities of not more
than 365 days) rated A-1 or better by Standard & Poor's and P-1 or better by
Moody's.
(i) Investments in money market funds rated AAAm or AAAm-G by
Standard & Poor's and Aaa or P-1 by Moody's.
(j) Investments approved in writing by the Certificate Insurer
and acceptable to Moody's and Standard & Poor's;
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity.
SECTION 8.10. Reports by Indenture Trustee.
(a) On each Payment Date, to the extent that the related
report described in Section 4.8(d)(ii) of the Sale and Servicing Agreement has
been received by the Indenture Trustee, the Indenture Trustee shall provide to
each Noteholder, to the Master Servicer, to the Note Insurer, to the
Underwriter, to the Sponsor, to Standard & Poor's and to Moody's a written
report in substantially the form set forth as Exhibit B hereto, as such form may
be revised by the Indenture Trustee, the Master Servicer, Moody's and Standard &
Poor's from time to time, but in every case setting forth the information
requested on Exhibit B hereto and the following information:
(i) the Scheduled Principal Distribution Amount;
(ii) the amount of such distributions allocable to principal
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to interest;
(iv) the amount of any Interest Carry Forward Amount;
(v) the amount of any Insured Payment included in the amounts
distributed to the Notes on such Payment Date;
(vi) information furnished by the Sponsor pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Noteholders in computing their market discount;
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(vii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(viii) for Payment Dates during the Pre-Funding Period, the
remaining Pre-Funded Amount;
(ix) for the final Subsequent Transfer Date, the amount of any
remaining Pre-Funded Amount that has not been used to fund the purchase
of Subsequent Mortgage Loans and that will be distributed to the
Noteholders as principal, if any, on the immediately following Payment
Date;
(x) the amounts, if any, of any Realized Losses for the
related Remittance Period; and
(xi) the Pool Cumulative Realized Losses (x) as a percentage
of the average Pool Principal Balance as of the close of business on
the last day of each of the twelve preceding Remittance Periods and (y)
as a percentage of the Original Aggregate Loan Balance; and
(xii) the Note Principal Balance and the Pool Factor, each
after giving effect to such distribution of principal on such Payment
Date;
(xiii) the aggregate Loan Balances of all Mortgage Loans after
giving effect to any payment of principal on such Payment Date both in
the aggregate and in each Trust.
(xiv) the weighted average Coupon Rate of the Mortgage Loans
with respect to the Trust;
(xv) the amount of any Available Funds Cap Current Amount and
Available Funds Cap Carry Forward Amount;
(xvi) the Overcollateralization Deficit; and
(xvii) the amount of the Accelerated Principal Payment, if
any, for the related Payment Date.
(xviii) the amount by aggregate principal balance of Mortgage
Loans repurchased for the previous period and the cumulative number of
Mortgage Loans repurchased to date pursuant to Section 3.3(b) of the
Sale and Servicing Agreement.
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.
(b) In addition, on each Payment Date the Indenture Trustee
will distribute to each Noteholder, to the Note Insurer, to the Underwriter, to
the Master Servicer, to the Sponsor,
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to Standard & Poor's and to Moody's, together with the information described in
Subsection (a) preceding, the following information as of the close of business
on the last Business Day of the prior calendar month, which is hereby required
to be prepared by the Master Servicer and furnished to the Indenture Trustee for
such purpose on or prior to the related Remittance Date:
(i) the total number of Mortgage Loans and the Loan Balances
thereof in the Trust, together with the number, aggregate Loan Balances
of such Mortgage Loans and the percentage (based on the aggregate Loan
Balance of the Mortgage Loans) of the aggregate Loan Balance of such
Mortgage Loans to the aggregate Loan Balance of all Mortgage Loans (a)
30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more
days Delinquent;
(ii) the number, aggregate Loan Balances of all Mortgage Loans
and percentage (based on the aggregate Loan Balance of the Mortgage
Loans) of the aggregate Loan Balance of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans in foreclosure proceedings
(and whether any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (i));
(iii) the number, aggregate Loan Balances of all Mortgage
Loans and percentage (based on the aggregate Loan Balance of the
Mortgage Loans) of the aggregate Loan Balance of such Mortgage Loans to
the aggregate Loan Balance of all Mortgage Loans relating to Mortgagors
in bankruptcy proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause
(i));
(iv) the number, aggregate Loan Balances of all Mortgage Loans
and percentage (based on the aggregate Loan Balance of the Mortgage
Loans) of the aggregate Loan Balance of such Mortgage Loans to the
aggregate Loan Balance of all Mortgage Loans relating to REO Properties
(and whether any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (i)); and
(v) the loan number of the related Mortgage Loan and the book
value of any REO Property.
(c) The foregoing reports shall be sent be to a Noteholder
only insofar as such holder possesses a Note.
(d) The Sponsor and the Master Servicer, on behalf of
Noteholders and the Trust (the "Trust Parties") hereby authorize the Indenture
Trustee to include the loan level information with respect to the Mortgage
Loans, excluding any information relating to the fees or amounts due to the Note
Insurer, contained in reports provided to the Note Insurer or the Indenture
Trustee by the Master Servicer hereunder and, if so directed by an Authorized
Officer of the Sponsor in writing to the Indenture Trustee, the monthly report
in the Form of Exhibit F to the Noteholders prepared by the Indenture Trustee
(the "Information") on The Bloomberg, an on-line computer based information
network maintained by Bloomberg L.P. ("Bloomberg") or on any other on-line
computer based information network or service ("Information Network"), or in
other electronic or print information services deemed acceptable by the Sponsor
or the Master
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Servicer as designated in writing to the Indenture Trustee by an Authorized
Officer of the Master Servicer. The Trust Parties agree not to commence any
actions or proceedings, or otherwise assert any claims, against the Indenture
Trustee or its affiliates or any of the Indenture Trustee's or its affiliates'
respective agents, representatives, directors, officers or employees
(collectively, the "Designated Parties"), arising out of, or related to or in
connection with the dissemination and/or use of any Information by the Indenture
Trustee, including, but not limited to, claims based on allegations of
inaccurate or incomplete information by the Indenture Trustee to Bloomberg or to
any Information Network or otherwise (other than in connection with the
Indenture Trustee's negligence or willful misconduct). The Trust Parties waive
their rights to assert any such claims against the Designated Parties and fully
and finally release the Designated Parties from any and all such claims,
demands, obligations, actions and liabilities (other than in connection with
such Designated Parties' negligence or willful misconduct). The Indenture
Trustee makes no representations or warranties, expressed or implied, of any
kind whatsoever with respect to the accuracy, adequacy, timeliness,
completeness, merchantability or fitness for any particular purpose of any
Information in any form or manner. The authorizations, covenants and obligations
of the Trust Parties under this section shall be irrevocable and shall survive
the termination of this Agreement.
SECTION 8.11. Additional Reports by Indenture Trustee.
(a) The Indenture Trustee shall report to the Sponsor, the
Master Servicer and the Note Insurer with respect to the amount then held in
each Account (including investment earnings accrued or scheduled to accrue) held
by the Indenture Trustee and the identity of the investments included therein,
as the Sponsor, the Master Servicer or the Note Insurer may from time to time
request. Without limiting the generality of the foregoing, the Indenture Trustee
shall, at the request of the Sponsor, the Master Servicer or the Note Insurer,
transmit promptly to the Sponsor, the Master Servicer and the Note Insurer
copies of all accounting of aggregate receipts in respect of the Mortgage Loans
furnished to it by the Master Servicer pursuant to Section 4.8(d)(ii) of the
Sale and Servicing Agreement and shall notify the Sponsor, the Master Servicer
and the Note Insurer if any such receipts have not been received by the
Indenture Trustee.
(b) From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer with respect to its actual
knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
Section 3.3(a) of the Sale and Servicing Agreement. On the date that is eighteen
months after the Closing Date, the Indenture Trustee shall provide the Note
Insurer with a written report of all of such inaccuracies to such date of which
it has actual knowledge, without independent investigation, and of the action
taken by the Sponsor under Section 3.4(b) of the Sale and Servicing Agreement
with respect thereto.
SECTION 8.12. Opinion of Counsel.
The Indenture Trustee shall receive at least seven days' notice when
requested by the 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
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concluding that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders or the Note Insurer in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of the Holders of any Notes but with
the consent of the Note Insurer, as evidenced to the Indenture Trustee, the
Trust and the Indenture Trustee, when authorized by an Issuer Order, at any time
and from time to time, may enter into one or more indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as in force at
the date of the execution thereof), in form satisfactory to the Indenture
Trustee, 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 Holders of the Notes, 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 adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture 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 Indenture Trustee, pursuant to the
requirements of Article VI; or
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(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 Holders of the Notes
but with the prior written consent of the Note Insurer and with prior notice to
the Rating Agencies by the Trust, as evidenced to the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of
Noteholders.
The Trust and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies, with the consent of the Note
Insurer and with the consent of the Holders of not less than a majority of the
Outstanding Notes, by Act of such Holders 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 Holders of the Notes under this Indenture; provided,
however, that, subject to the express rights of the Note Insurer under the
Operative Documents, no such supplemental indenture shall, without the consent
of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption
Date);
(iii) reduce the percentage of the Outstanding Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
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(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Notes required to
direct the Indenture Trustee to direct the Trust to sell or liquidate
the Trust Estate pursuant to Section 12.1;
(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Operative Documents cannot be
modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation); or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein or in any of the Operative Documents, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may determine whether or not any Notes
would be adversely affected by any supplemental indenture upon receipt of an
Opinion of Counsel to that effect and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Trust and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures.
In executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Indenture Trustee shall be entitled
to receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel (and, if requested, an Officer's
Certificate) stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such
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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
Holders of the Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.5. Conformity With Trust Indenture Act.
Every amendment of this Indenture and every supplemental indenture executed
pursuant to this Article IX shall conform to the requirements of the Trust
Indenture Act as then in effect so long as this Indenture shall then be
qualified under the Trust Indenture Act.
SECTION 9.6. Reference in 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 Outstanding Notes.
SECTION 9.7. Amendment.
(a) The Indenture Trustee, the Sponsor, the Trust and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Noteholders, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of curing any
ambiguity, or correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof; or to add provisions hereto which
are not inconsistent with the provisions hereof; provided, however, that any
such action shall not, as evidenced by an opinion of counsel delivered to the
Indenture Trustee, materially and adversely affect the interests of any Owner
(without its written consent).
(b) The Indenture Trustee, the Sponsor, the Trust and the
Master Servicer may, at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Noteholders, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of changing the
definitions of "Specified Overcollateralization Amount"; provided, however, that
no such change shall affect the weighted average life of the Notes (assuming an
appropriate
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prepayment speed as determined by the Underwriter with respect to the Notes by
more than five percent, as determined by the Underwriter).
(c) This Agreement may also be amended by the Indenture
Trustee, the Sponsor, the Trust and the Master Servicer at any time and from
time to time, with the prior written approval of the Note Insurer and not less
than a majority of the Percentage Interest represented by the Notes then
Outstanding, for the purpose of adding any provisions or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders hereunder; provided, however, that no such
amendment shall (a) change in any manner the amount of, or change the timing of,
payments which are required to be distributed to any Noteholders without the
consent of the Noteholders, (b) reduce the aforesaid percentages of Percentage
Interests which are required to consent to any such amendments or (c) result in
a down-rating or withdrawal of any ratings then assigned to the Notes, without
the consent of all Noteholders then Outstanding.
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 Note
Insurer and (B) the earliest of (i) the transfer, under the conditions specified
in Section 10.1(b), to the Master Servicer of the Noteholders' interest in each
Mortgage Loan and all property acquired in respect of any Mortgage Loan
remaining in the Trust for an amount equal to the sum of (a) the Note Principal
Balance and (b) the sum of accrued and unpaid Interest Distribution Amount
through the day preceding the final Payment Date, (ii) the day following the
Payment Date on which the distribution made to Noteholders has reduced the Note
Principal Balance to zero and no other amounts are owed to the Noteholders,
(iii) the final payment or other liquidation of the last Mortgage Loan remaining
in the Trust (including, without limitation, the disposition of the Mortgage
Loan pursuant to Section 12.1 hereof) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and (iv) the Payment Date in _________; provided, however, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the date of death of the last surviving descendants of Joseph P. Kennedy, the
late ambassador of the United States to the Court of St. James, living on the
date hereof. Upon termination in accordance with clause (B)(i) of this Section
10.1(a), the Indenture Trustee shall execute such documents and instruments of
transfer presented by the Sponsor, in each case without recourse, representation
or warranty, and take such other actions as the Sponsor may reasonably request
to effect the transfer of the Mortgage Loan to the Sponsor.
(b) The Notes shall be subject to optional redemption by the
Master Servicer, acting directly or through one or more affiliates, or the
Certificateholder, or, in the event that the Master Servicer or the
Certificateholder do not exercise such option, the Note Insurer, on any Payment
Date after the Note Principal Balance has been reduced to an amount less than or
equal to $___________ (10% of the Original Note Principal Balance) and all
amounts due and owing to the Note Insurer pursuant to the Insurance Agreement
have been paid. Such transfer shall
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only be permitted if the Master Servicer, acting directly or through one or more
of affiliates, the Certificateholder or the Note Insurer delivers to the
Indenture Trustee an amount equal to the sum of the outstanding Note Principal
Balance and accrued and unpaid interest thereon at the Note Interest Rate
through the day preceding the final Payment Date plus all Reimbursement Amounts.
In connection with such purchase, the Master Servicer shall remit to the
Indenture Trustee all amounts then on deposit in the Principal and Interest
Account for deposit to the Note Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(c) Promptly following any such purchase, the Indenture
Trustee will release the Files to the Master Servicer, or otherwise upon their
order, in a manner similar to that described in Section 4.14 of the Sale and
Servicing Agreement.
(d) Advanta National Bank may not participate in any purchase
described in this Section 10.1(b), or fund any portion of the purchase price,
unless the then-outstanding Principal Balances of the Mortgage Loans in the
Trust Estate is less than or equal to five percent of the sum of the aggregate
Loan Balances of all Mortgage Loans in the Trust Estate as of the Initial
Cut-Off Date and the Original Pre-Funded Amount.
(e) If the Notes are to be redeemed pursuant to this Section
10.1(a), the Master Servicer or the Trust shall furnish notice of such election
to the Indenture Trustee not later than 45 days prior to the Redemption Date and
the Trust shall deposit with the Indenture Trustee in the Note Account the
Redemption Price of the Notes not less than five Business Days prior to the
Redemption Date whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.2.
SECTION 10.2. Surrender of Notes.
(a) Notice of any termination, specifying the Payment Date
(which shall be a date that would otherwise be a Payment Date) upon which the
Noteholders may surrender their Notes to the Indenture Trustee for payment of
the final distribution and cancellation, shall be given promptly by the
Indenture Trustee (upon receipt of written directions from the Sponsor, if the
Sponsor is exercising its right to transfer of the Mortgage Loans, given not
later than the first day of the month preceding the month of such final
distribution) to the Note Insurer and to the Master Servicer and by letter to
Noteholders mailed not earlier than the 15th day and not later than the 25th day
of the month next preceding the month of such final distribution specifying (i)
the Payment Date upon which final distribution of the 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 Note Insurer on account of
any Reimbursement Amounts, and second, to the Certificateholders; and such
Noteholder shall thereafter, as an unsecured general creditor, look only to the
Note Insurer or the
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Certificateholders for payment thereof (but only to the extent of the amounts so
paid to the Note Insurer or the Certificateholders), and all liability of the
Indenture Trustee with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee, before being required to make any
such payment, shall at the expense of the Trust cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Note Insurer or the Certificateholders.
The Indenture Trustee shall, at the direction of the Sponsor, also adopt and
employ, at the expense of the Trust, any other reasonable means of notification
of such payment (including, but not limited to, mailing notice of such payment
to Noteholders whose right to or interest in monies due and payable but not
claimed is determinable from the Note Register at the last address of record for
each such Noteholder).
SECTION 10.3. Form of Redemption Notice.
Notice of redemption supplied to the Indenture Trustee by the Master
Servicer under Section 10.1(a) shall be given by the Indenture Trustee by
facsimile or by first-class mail, postage prepaid, transmitted or mailed prior
to the applicable Redemption Date to each Holder of Notes of record, as of the
close of business on the date which is not less than 5 days prior to the
applicable Redemption Date, at such Holder's address appearing in the Note
Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such 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 Holder of any Note 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 Redemption
Price and (unless the Trust shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period after the
date to which accrued interest is calculated for purposes of calculating the
Redemption Price.
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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, the Trust shall furnish
to the Indenture Trustee and to the Note Insurer if the application or request
is made to the Indenture Trustee (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture
Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Trust may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the
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certificate or opinion or representations with respect to the matters upon which
his or her certificate or opinion is based are erroneous. Any such certificate
of an Authorized Officer or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Master Servicer, the Sponsor or the Trust,
stating that the information with respect to such factual matters is in the
possession of the Master Servicer, the Sponsor or the Trust, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Trust. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Trust, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of the
Indenture Trustee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done,
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omitted or suffered to be done by the Indenture Trustee or the Trust in reliance
thereon, whether or not notation of such action is made upon such Note.
SECTION 11.4. Notices, etc. to Indenture Trustee, the Trust
and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Trust
shall be sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed first-class and shall be deemed to have
been duly given upon receipt to the Indenture Trustee at its Corporate Trust
Office and any notice delivered by facsimile shall be addressed to the Corporate
Trust Office, telecopy number [TELECOPIER NUMBER], or
(b) The Trust by the Indenture Trustee or by any Noteholder
shall be in writing and shall be sufficient for every purpose hereunder if
personally delivered, delivered by facsimile or overnight courier or mailed
first class, and shall deemed to have been duly given upon receipt to the Trust
addressed to: Advanta Mortgage Loan Trust ____-_, in care of [OWNER TRUSTEE],
[ADDRESS], 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 Sponsor or the Master Servicer by the Indenture
Trustee shall be in writing and shall be sufficient for every purpose hereunder
if personally delivered, delivered by facsimile or overnight courier or mailed
first class and shall be deemed to have been duly given upon receipt to the
Sponsor or the Master Service addressed to:
Advanta Mortgage Conduit Services, Inc.
10790 Rancho Bernardo Road
San Diego, CA 92127
Advanta Mortgage Corp. USA
10790 Rancho Bernardo Road
San Diego, CA 92127
or such other address previously furnished in writing to the Indenture Trustee
by Sponsor or Master Services.
(d) The Note Insurer by the Trust or the Indenture Trustee
shall be sufficient for any purpose hereunder if in writing and mailed by
first-class mail, personally delivered, or telecopied to the recipient as
follows:
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To the Note Insurer:
[ADDRESS]
Notices required to be given to the Rating Agencies by the
Trust, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, delivered by overnight courier or first class or via
facsimile to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004, Fax No:
(212) 533-0355 and (ii) in the case of Standard & Poor's, at the following
address: Standard & Poor's Ratings Group, 26 Broadway (15th Floor), New York,
New York 10004, Attention: Asset Backed Surveillance Department, Fax No: (212)
412-0224; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 11.5. Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at his address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions.
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Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Trust may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Note Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Indenture Trustee (which consent shall
not be unreasonably withheld). The Trust will furnish to the Indenture Trustee a
copy of each such agreement and the Indenture Trustee will cause payments to be
made and notices to be given in accordance with such agreements.
SECTION 11.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns.
All covenants and agreements in this Indenture and the Notes by the Trust
shall bind its successors and assigns, whether so expressed or not. All
agreements of the Indenture Trustee in this Indenture shall bind its successors.
SECTION 11.10. Separability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture.
The Note Insurer and its successors and assigns shall be a third-party
beneficiary to the provisions of this Indenture, and shall be entitled to rely
upon and directly to enforce such provisions of this Indenture. Nothing in this
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, the Note Insurer and the
Noteholders, and any other party secured hereunder, and any other person with an
ownership interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture. The Note Insurer may
disclaim any of its rights and powers under this Indenture (in which case the
Indenture Trustee may exercise such right or
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power hereunder), but not its duties and obligations under the Note Policy, upon
delivery of a written notice to the Indenture Trustee.
SECTION 11.12. Legal Holidays.
In any case where the date on which any payment is due shall not be a
Business Day, then (except as otherwise provided by any other provision of the
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 Note
Insurer) to the effect that such recording is necessary either for the
protection of the Noteholders or any other person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
SECTION 11.16. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Trust, the Sponsor, any Originator, 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, any Originator, the Master Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Trust or (iii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Sponsor, any Originator, the
Master Servicer, the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Trust, the Sponsor, any
Originator, the Master Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Sponsor, any Originator, the Master Servicer,
the Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the
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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, 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, this Indenture or any of the Operative
Documents.
SECTION 11.18. Inspection.
The Trust agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee or of the Note Insurer, during the
Trust's normal business hours, to examine all the books of account, records,
reports, and other papers of the Trust, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Trust's affairs, finances and accounts with the Trust's
officers, employees, and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its Obligations hereunder.
SECTION 11.19. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by [OWNER TRUSTEE], 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 [OWNER TRUSTEE] 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 [OWNER TRUSTEE] 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
[OWNER TRUSTEE] 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.
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ARTICLE XII.
EVENTS OF DEFAULT
SECTION 12.1. Events of Default.
The following shall constitute Events of Default:
(a) failure on the part of the Trust (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 Trust 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 Holders or the Note Insurer are materially and adversely affected; provided,
however, that a Event of Default shall not be deemed to occur if the Sponsor has
purchased or made a substitution for the related Mortgage Loan or Mortgage Loans
if applicable during such period (or within an additional 60 days with the
consent of the Indenture Trustee and the Note Insurer) in accordance with the
provisions of the related Sale and Servicing Agreement;
(c) the occurrence of certain events of bankruptcy, insolvency
or receivership relating to the Sponsor or the Master Servicer;
(d) 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 Servicer Termination;
(f) default in the payment of any interest, principal or any
installment of principal on any Note when the same becomes due and payable, and
such default continues for a period of five days; and
(g) on any Payment Date, the failure to pay interest at the
Note Formula Capped Rate.
In the case of any event described in clause (a), (b), (e) or
(g), an Event of Default will be deemed to have occurred only if, after the
applicable grace period, if any, described herein or in the related Indenture or
Sale and Servicing Agreement either (i) the Indenture Trustee or Holders holding
Notes evidencing at least 50% of the aggregate principal amount of the Notes
with the consent of the Note Insurer (so long as there is no continuing default
by the Note Insurer in the performance of its obligations under the Note Policy)
or the Note Insurer (so long as there is no continuing default by the Note
Insurer in the performance of its obligations under the Note Policy), by written
notice to the Note Insurer, the Sponsor, the Rating Agencies, and the Master
Servicer
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(and to the Indenture Trustee, if given by the Holders or the Note Insurer)
declare that an Event of Default has occurred as of the date of such notice. In
the case of any event described in clause (c), (d) or (f), an Event of Default
will be deemed to have occurred without any notice or other action on the part
of the Indenture Trustee, the Noteholders or the Note Insurer immediately upon
the occurrence of such event.
In addition to the consequences of an Event of Default
discussed above, unless otherwise instructed within 60 days by the Noteholders
representing undivided interests aggregating more than 50% of the aggregate
principal amount of the Notes, the Indenture Trustee will sell, dispose of or
otherwise liquidate the Trust Estate in a commercially reasonable manner and on
commercially reasonable terms. Any such sale, disposal or liquidation and such
sale, disposal or liquidation will be "servicing retained" by the Master
Servicer. The net proceeds of such sale will first (if a Note Insurer Default
shall not have occurred and be continuing) be paid to the Note Insurer to the
extent of unreimbursed draws under the Note Policy and other amounts owing to
the Note Insurer. The amount required to reduce the Note Principal Balance,
together with all accrued and unpaid interest due thereon, to zero will be
distributed to the Holders of the Notes; the Note Policy will guarantee and pay
in full any amount by which such remaining net proceeds are insufficient to pay
the Note Principal Balance in full.
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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 MORTGAGE LOAN TRUST ____-_
By: [OWNER TRUSTEE], not in its individual capacity
but solely as Owner Trustee,
By:____________________________________________
Name:
Title:
[INDENTURE TRUSTEE], not in its individual capacity
but solely as Indenture Trustee,
By:____________________________________________
Name:
Title:
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EXHIBIT A
[Form of Note]
REGISTERED $________
No. A
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. _________
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Trust or
its agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA MORTGAGE LOAN TRUST ____-_
MORTGAGE BACKED NOTES
Advanta Mortgage Loan Trust ____-_, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ($___________), such amount payable on
each Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $___________ and the denominator of which is
$___________ by (ii) the aggregate amount, if any, payable from the Note Account
in respect of principal on the Notes pursuant to Section 8.7 of the Indenture;
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the __________, Payment Date (the "Final Scheduled Payment
Date"). The Trust will pay interest on this Note at the rate per annum provided
in the Indenture on each Payment Date until the principal of this Note is paid
or made available for payment, on the principal amount of this Note outstanding
on the preceding Payment Date (after giving effect to all payments of principal
made on the preceding Payment Date). Interest on this Note will accrue for each
Payment Date from the most recent Payment Date on which interest has been paid
to but excluding such Payment Date or, if no interest has yet been paid, from
[DATE]. Interest will be computed on
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the basis of the actual number of days elapsed in a 360-day year. 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 "Note Policy") issued by _________________ (the "Note
Insurer"), pursuant to which the Note Insurer has unconditionally guaranteed
payments of the Insured Payments 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 of the Trust and hereby instructs the Indenture Trustee to treat
the Notes as indebtedness of the Trust 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 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, any Originator, the Master
Servicer, the Indenture Trustee, or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Trust or (iii) any
owner, beneficiary, agent, officer, director or employee of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee, or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Trust, the
Sponsor, any Originator, the Master Servicer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Sponsor, any Originator, the Master
Servicer, the Indenture Trustee, or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
Each Note Owner, by acceptance of a beneficial interest in a
Note, shall be deemed to represent either (i) that it is not (A) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is
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subject to the provisions of Title I of ERISA or (B) a plan (as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code")) that is subject to Section 4975 of the Code (each of the foregoing, a
"Benefit Plan"), and is not acting on behalf of or investing the assets of a
Benefit Plan, or (ii) that its acquisition and continued holding of a beneficial
interest in the Note will be covered by a U.S. Department of Labor Prohibited
Transaction Class Exemption.
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IN WITNESS WHEREOF, the Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [DATE] ADVANTA MORTGAGE LOAN TRUST ____-_
By: [OWNER TRUSTEE], not in its individual capacity
but solely as Owner Trustee under the Trust
Agreement
By:____________________________________________
Name:
Title:
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INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: [DATE] [INDENTURE TRUSTEE], not in its individual capacity
but solely as Indenture Trustee
By:________________________________________________
Authorized Signatory
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REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Trust, designated as its Mortgage Backed Notes (herein called the "Notes"), all
issued under an Indenture dated as of [DATE] (such indenture, as supplemented or
amended, is herein called the "Indenture"), between the Trust and [INDENTURE
TRUSTEE], as Indenture Trustee (the "Indenture Trustee", which term includes any
successor Indenture Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Trust, the Indenture Trustee
and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Notes are and will be secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the twenty-fifth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing __________. 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, the entire unpaid principal amount of the Notes
shall be due and payable if the Sponsor or Master Servicer voluntarily files a
bankruptcy petition or goes into liquidation or any person is appointed a
receiver or bankruptcy trustee of the Sponsor or Master Servicer and the
Indenture Trustee or the Holders of the Notes representing at least 50% of the
Outstanding Amount of the Notes shall have the right to direct the Indenture
Trustee to sell or liquidate the Trust Estate as provided in Section 5.1 of the
Indenture. All principal payments on the Notes shall be made pro rata to the
Noteholders entitled thereto.
Payments of interest on this Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Note, shall be made by check mailed to the Person
whose name appears as the Holder of this Note (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 Holders 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 noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining
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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 Holder hereof as of the Record Date preceding such Payment Date by
notice mailed prior to such Payment Date and the amount then due and payable
shall be payable only upon presentation and surrender of this 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 Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture at the option of the
Certificateholders, on any Payment Date on or after the date on which the Note
Principal Balance is less than or equal to 10% of the Original Note Principal
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 Holder hereof or his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar
which requirements include membership or participation in Securities Transfer
Agents Medallion Program ("Stamp") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, Stamp, all in accordance with the Exchange Act, and (ii) accompanied by
such other documents as the Indenture Trustee may require, and thereupon one or
more new Notes of authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Trust, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Sponsor, any Originator, the Master
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Trust or (iii) any owner,
beneficiary, agent, officer, director or employee of the Sponsor, any
Originator, the Master Servicer, the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Trust, the
Sponsor, any Originator, the Master Servicer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Sponsor, any Originator, the Master
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the
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extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each 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 Note Insurer and any agent
of the Trust, the Indenture Trustee or the Note Insurer may treat the Person in
whose name this Note (as of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Trust, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trust and the rights of the Holders of the Notes under the
Indenture at any time by the Trust with the consent of the Note Insurer and of
the Holders of Notes representing a majority of the Outstanding Amount of all
Notes at the time Outstanding. Any such consent or waiver by the Holder of this
Note (or any one of more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders 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 Holders of the
Notes issued thereunder but with the consent of the Note Insurer.
The term "Issuer" as used in this Note includes any successor
to the Trust under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Trust,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Operative Documents, neither [OWNER
TRUSTEE] in its individual
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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 Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Indenture or the Operative Documents, in the case of an Event of
Default under the Indenture, the Holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Trust for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
(1)
Dated:______________________________ ______________________________
Signature Guaranteed:
____________________________________ ______________________________
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(1) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
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