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EXHIBIT 4.2
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EXHIBIT 4.2
EXECUTION COPY
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Sponsor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of November 1, 1997
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TABLE OF CONTENTS
Page
ARTICLE I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions. (a) . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3 Action by or Consent of Noteholders and Certificateholders . . . . . . . . 3
ARTICLE II. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Appointment of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 Initial Capital Contribution of Trust Estate . . . . . . . . . . . . . . . 5
SECTION 2.6 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.8 Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9 Situs of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.10 Representations and Warranties of the Sponsor . . . . . . . . . . . . . . . 6
SECTION 2.11 Federal Income Tax Allocations . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.12 Covenants of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.13 Covenants of the Certificateholders . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III. Certificates and Transfer of Interests . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.1 Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2 The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.4 Registration of Transfer and Exchange of Certificates . . . . . . . . . . . 9
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . 10
SECTION 3.6 Persons Deemed Certificateholders . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.7 Access to List of Certificateholders' Names and Addresses . . . . . . . . . 10
SECTION 3.8 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.10 Restrictions on Transfer of Certificates . . . . . . . . . . . . . . . . . 11
SECTION 3.11 Acceptance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.12 Payments on Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV. Voting Rights and Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.1 Prior Notice to Holders with Respect to Certain Matters . . . . . . . . . . 12
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters . . . . . . . 13
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy . . . . . . . . . . 13
SECTION 4.4 Restrictions on Certificateholders' Power . . . . . . . . . . . . . . . . . 13
SECTION 4.5 Majority Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.6 Rights of Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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ARTICLE V. Certain Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.1 Accounting and Records to the Noteholders, Certificateholders, the
Internal Revenue Service and Others . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Signature on Returns; Tax Matters Partner . . . . . . . . . . . . . . . . . 15
ARTICLE VI. Authority and Duties of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.1 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.2 General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.3 Action upon Instruction . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions . . . . 16
SECTION 6.5 No Action Except under Specified Documents or Instructions . . . . . . . . 16
SECTION 6.6 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII. Concerning the Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.1 Acceptance of Trust and Duties . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.2 Furnishing of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.3 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.4 Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.5 Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . 19
SECTION 7.7 Owner Trustee May Own Certificates and Notes . . . . . . . . . . . . . . . 19
SECTION 7.8 Payments from Owner Trust Estate . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.9 Doing Business in Other Jurisdictions . . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII. Compensation of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.1 Owner Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.3 Payments to the Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.4 Non-recourse Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX. Termination of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.1 Termination of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees . . . . . . . . . . . . . . . . 22
SECTION 10.1 Eligibility Requirements for Owner Trustee . . . . . . . . . . . . . . . . 22
SECTION 10.2 Resignation or Removal of Owner Trustee . . . . . . . . . . . . . . . . . . 22
SECTION 10.3 Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.4 Merger or Consolidation of Owner Trustee . . . . . . . . . . . . . . . . . 23
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee . . . . . . . . . 24
ARTICLE XI. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 11.1 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders . . . . . . . . 26
SECTION 11.3 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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SECTION 11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.6 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.7 Assignments; Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.8 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.9 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.12 Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
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TRUST AGREEMENT dated as of November 1, 1997 between ADVANTA
MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation (the "Sponsor"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner Trustee.
ARTICLE I.
Definitions
SECTION 1.1 Capitalized Terms. For the purposes of this
Agreement, the following terms shall have the meanings set forth below. All
other capitalized terms used herein but not defined shall have the meanings set
forth in the Sale and Servicing Agreement.
"Affiliate" shall mean with respect to any specified Person, a
Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, or owns,
directly or indirectly, 50% or more of, the Person specified.
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the beneficial
ownership interest of a Certificateholder in the Trust, substantially in the
form of Exhibit A attached hereto.
"Certificate Account" shall mean the account designated as such as
established and maintained pursuant to the Indenture.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register maintained and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000,
Attention: Corporate Trust Administration, or at such other address as the
Owner Trustee may designate by notice to the Certificateholders and the
Sponsor, or the principal corporate trust office of any successor Owner Trustee
(the address of which the successor owner trustee will notify the
Certificateholders and the Sponsor).
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"ERISA" shall have the meaning assigned to such term in Section
3.9.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
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"Holder" or "Certificateholder" shall mean the Person in whose name
a Certificate is registered on the Certificate Register.
"Indemnification Agreement" shall mean the Indemnification
Agreement dated as of November 20, 1997 among the Insurer, the Sponsor and X.X.
Xxxxxx & Co..
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.2.
"Indenture" shall mean the Indenture dated as of November 1, 1997,
among the Issuer and Bankers Trust Company of California, N.A., as Indenture
Trustee, as the same may be amended and supplemented from time to time.
"Indenture Trustee" shall mean, initially Bankers Trust Company of
California, N.A., in its capacity as indenture trustee, including its
successors in interest, until and unless a successor Person shall have become
the Indenture Trustee pursuant to the Sale and Servicing Agreement and
thereafter "Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.3.
"Insurance Agreement" shall mean the Insurance Agreement dated as
of November 1, 1997 among the Insurer, the Sponsor, the Master Servicer and the
Indenture Trustee.
"Insurer" shall mean Ambac Assurance Corporation, or its successor
in interest.
"Issuer" shall mean Advanta Revolving Home Equity Loan Trust
1997-A.
"Master Servicer" shall mean Advanta Mortgage Corp. USA.
"Operative Documents" shall mean this Agreement, the Certificate of
Trust, the Sale and Servicing Agreement, the Indemnification Agreement, the
Insurance Agreement, the Indenture and the other documents and certificates
delivered in connection therewith.
"Originators" shall mean Advanta National Bank and Advanta Finance
Corp..
"Owner Trust Estate" shall mean all right, title and interest of
the Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and the Certificate Account and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Record Date" shall mean with respect to any Payment Date, the
close of business on the last Business Day immediately preceding such Payment
Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer and the Indenture Trustee, dated
as of November 1, 1997, as the same may be amended and supplemented from time
to time.
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"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Security Majority" means a majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Mortgage Conduit Services, Inc. in its
capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including proposed
or temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Accounts" shall have the meaning ascribed thereto in the
Sale and Servicing Agreement.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized
terms used herein and not otherwise defined have the meanings assigned to them
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on
the date of this Agreement or any such certificate or other document, as
applicable. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with
the meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such certificate or other
document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and
Exhibit references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
SECTION 1.3 Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Noteholder, as
the case may be, of record as of the Record Date immediately preceding the date
on which such action is to be taken, or consent given, by Noteholders or
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Noteholders or Certificateholders, any Note or Certificate
registered in the name of the Sponsor or any Affiliate thereof shall be deemed
not to be outstanding;
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provided, however, that, solely for the purpose of determining whether the
Indenture Trustee is entitled to rely upon any such action or consent, only
Notes or Certificates which the Owner Trustee, or the Indenture Trustee,
respectively, knows to be so owned shall be so disregarded.
ARTICLE II.
Organization
SECTION 2.1 Name. There is hereby formed a trust to be known as
"Advanta Revolving Home Equity Loan Trust 1997-A", in which name the Owner
Trustee may conduct the business of the Trust, make and execute contracts and
other instruments on behalf of the Trust and xxx and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care
of the Owner Trustee at the Corporate Trust Office or at such other address as
the Owner Trustee may designate by written notice to the Certificateholders and
the Sponsor.
SECTION 2.3 Purposes and Powers. The purpose of the Trust is,
and the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and
the Certificates pursuant to this Agreement, and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to fund
the Pre-Funding Account and to pay the organizational, start-up and
transactional expenses of the Trust and to pay the balance to the
Sponsor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Owner Trust Estate to the Indenture Trustee on behalf of
the Noteholders and for the benefit of the Insurer and to hold,
manage and distribute to the Certificateholders pursuant to the
terms of the Sale and Servicing Agreement any portion of the Owner
Trust Estate released from the Lien of, and remitted to the Trust
pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Operative Documents to which it is a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Operative Documents,
to engage in such other activities as may be required in connection
with conservation of the Owner Trust Estate and the making of
distributions to the Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Operative Documents.
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SECTION 2.4 Appointment of Owner Trustee. The Sponsor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute.
SECTION 2.5 Initial Capital Contribution of Trust Estate. The
Sponsor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Sponsor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Account. On or prior to the Closing
Date, the Owner Trustee will also, upon receipt thereof, acknowledge on behalf
of the Trust receipt of the Mortgage Loans pursuant to the Sale and Servicing
Agreement. The Sponsor shall pay organizational expenses of the Trust as they
may arise.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Operative
Documents. It is the intention of the parties hereto that the Trust constitute
a business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income tax purposes, the Trust
shall be treated as a branch; provided, however, that in the event Certificates
are owned by more than one Certificateholder, it is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall then be treated as a partnership and that, unless otherwise required by
appropriate tax authorities, only after such time the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and to the extent not inconsistent
herewith, in the Business Trust Statute with respect to accomplishing the
purposes of the Trust. The Owner Trustee shall file the Certificate of Trust
with the Secretary of State.
SECTION 2.7 Liability. No Holder shall have any personal
liability for any liability or obligation of the Trust.
SECTION 2.8 Title to Trust Property. (a) Legal title to all
of the Owner Trust Estate shall be vested at all times in the Trust as a
separate legal entity except where applicable law in any jurisdiction requires
title to any part of the Owner Trust Estate to be vested in a trustee or
trustees, in which case title shall be deemed to be vested in the Owner
Trustee, a co-trustee and/or a separate trustee, as the case may be.
(b) The Holders shall not have legal title to any part of the
Trust Property. The Holders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Article IX. No transfer, by operation of law or otherwise, of any right, title
or interest by any Certificateholder of its ownership interest in the Owner
Trust Estate shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Property.
SECTION 2.9 Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of Delaware
or the State of New York. Payments will be received by the Trust only in
Delaware or New York and payments will be made by the Trust only from Delaware
or New York. The Trust shall not have any employees in any state other than
Delaware; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee, the Master Servicer or any agent of the Trust
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from having employees within or without the State of Delaware. The only office
of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Sponsor. The
Sponsor makes the following representations and warranties on which the Owner
Trustee relies in accepting the Owner Trust Estate in trust and issuing the
Certificates and upon which the Insurer relies in issuing the Policy.
(a) The Sponsor is duly organized and validly existing as a
Delaware corporation with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business
is presently conducted and is proposed to be conducted pursuant to this
Agreement and the Operative Documents;
(b) It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of its
property, the conduct of its business and the performance of its obligations
under this Agreement and the Operative Documents requires such qualification;
(c) The Sponsor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms; the Sponsor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and the Sponsor has duly authorized
such sale and assignment and deposit to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement has been
duly authorized by the Sponsor by all necessary corporate action. The Sponsor
has duly executed this Agreement and this Agreement constitutes a legal, valid
and binding obligation of the Sponsor enforceable against the Sponsor, in
accordance with its terms.
(d) To the best knowledge of the Sponsor, no consent, license,
approval or authorization or registration or declaration with, any Person or
with any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement and the Operative
Documents, except for such as have been obtained, effected or made;
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Sponsor, or any material indenture, agreement
or other instrument to which the Sponsor is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Operative Documents); nor violate any law or, to
the best of the Sponsor's knowledge, any order, rule or regulation applicable
to the Sponsor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Sponsor or its properties; and
(f) There are no proceedings or investigations pending or, to
its knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Operative Documents, (B) seeking to prevent the
issuance of the Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Documents,
(C) seeking any determination or ruling that might materially and adversely
affect its performance of its obligations under, or the validity or
enforceability
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of, this Agreement or any of the Operative Documents, or (D) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Notes or the Certificates.
SECTION 2.11 Federal Income Tax Allocations. In the event that
the Trust is treated as a partnership for Federal income tax purposes, net
income of the Trust for any month as determined for Federal income tax purposes
(and each item of income, gain, loss, credit and deduction entering into the
computation thereof) shall be allocated to the extent of available net income,
among the Certificateholders as of the first Record Date following the end of
such month, in proportion to their ownership percentage of principal amount of
Certificates on such date.
Net losses of the Trust, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated among the
Certificateholders as of the Record Date in proportion to their ownership
percentage of principal amount of Certificates on such Record Date until the
principal balance of the Certificates is reduced to zero. The Sponsor, as
agent on behalf of the Originators, is authorized to modify the allocations in
this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.
SECTION 2.12 Covenants of the Sponsor. The Sponsor agrees and
covenants for the benefit of each Certificateholder, the Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as permitted by
its certificate of incorporation and the Operative Documents;
(b) it shall not, for any reason, institute proceedings for the
Trust to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Trust or a substantial part of the property of
the Trust or cause or permit the Trust to make any assignment for the benefit
of creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(c) it shall obtain from each counterparty to each Operative
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States; and
(d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state
law relating to bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of it
or a substantial part of its property, or make any assignment for the benefit
of creditors, or admit in writing
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its inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Covenants of the Certificateholders. Each
Certificateholder agrees:
(a) to be bound by the terms and conditions of the Certificates
and of this Agreement, including any supplements or amendments hereto and to
perform the obligations of a Certificateholder as set forth therein or herein,
in all respects as if it were a signatory hereto. This undertaking is made for
the benefit of the Trust, the Owner Trustee, the Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's
agent and attorney-in-fact to sign any federal income tax information return
filed on behalf of the Trust, if any, and agree that, if requested by the
Trust, it will sign such federal income tax information return in its capacity
as holder of an interest in the Trust. Each Certificateholder also hereby
agrees that in its tax returns it will not take any position inconsistent with
those taken in any tax returns that may be filed by the Trust;
(c) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099-B, to notify the Owner Trustee of any transfer by it of a
Certificate in a taxable sale or exchange, within 30 days of the date of the
transfer; and
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust or the
Sponsor to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust, or file
a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Sponsor or the Trust or a substantial part of
its property, or cause or permit the Sponsor or the Trust to make any
assignment for the benefit of its creditors, or admit in writing its inability
to pay its debts generally as they become due, or declare or effect a
moratorium on its debt or take any action in furtherance of any such action.
Except as provided in Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any
representation by, or duty of indemnification by or any other duty of, the
Sponsor, including those contained in Sections 2.10, 2.12, 3.6, 8.2 or
elsewhere herein.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of the Trust
by the contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of the Trust, to each Originator, two or more Certificates
representing in the aggregate a 100% interest in the Trust, and has registered
such Certificate(s) on the Certificate Register in the names of the
Originators. The Originators shall be the sole beneficiaries of the Trust.
Such Certificate(s) are duly authorized, validly issued, and entitled to the
benefits of this
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Agreement. For so long as the Originators shall together own such 100%
interest in the Trust, the Originators shall be the sole beneficial owners of
the Trust.
SECTION 3.2 The Certificates. The Certificates shall be issued
in denominations of $1,000 and integral multiples of $1000 in excess thereof.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be validly issued and entitled to the
benefit of this Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of authentication
and delivery of such Certificates. A transferee of a Certificate shall become
a Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
SECTION 3.3 Authentication of Certificates. Concurrently with
the initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate, which
Certificate Balance may increase or decrease in accordance with each
Originator's proportionate interest in the Originators' Interest, to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Sponsor, signed by its chairman of the board, its
president or any vice president, its treasurer or any assistant treasurer
without further corporate action by the Sponsor, in authorized denominations.
No Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Owner Trustee, by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
SECTION 3.4 Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held in the
Pre-Funding Account or the Funding Account or prior to the release of such
monies pursuant to Section 8.6(b)(xii) of the Indenture, such monies being held
in trust for the benefit of the Noteholders and the Insurer. Notwithstanding
the foregoing, in the event that it is ever determined that the monies held in
the Pre-Funding Account constitute a pledge of collateral, then the provisions
of the Sale and Servicing Agreement shall be considered to constitute a
security agreement and the Sponsor and the Certificateholders hereby grant to
the Indenture Trustee and the Insurer a first priority perfected security
interest in such amounts. In addition, each Certificateholder, by acceptance
of its Certificate, hereby appoints the Sponsor as its agent to pledge a first
priority perfected security interest in the Pre-Funding Account and the Funding
Account, and any amounts held therein from time to time to the Indenture
Trustee and the Insurer and agrees to execute and deliver such instruments of
conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case as the Insurer shall consider reasonably necessary in
order to perfect the Indenture Trustee's security interest in the Mortgage
Loans.
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SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
shall be delivered to the Certificate Registrar, the Owner Trustee and the
Insurer such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like class, tenor and denomination. In
connection with the issuance of any new Certificate under this Section, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Every Person by
virtue of becoming a Certificateholder in accordance with this Agreement and
the rules and regulations of the Certificate Registrar shall be deemed to be
bound by the terms of this Agreement. Prior to due presentation of a
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar and the Insurer and any agent of the Owner Trustee, the Certificate
Registrar and the Insurer, may treat the Person in whose name any Certificate
shall be registered in the Certificate Register as the owner of such
Certificate for the purpose of receiving distributions pursuant to the Sale and
Servicing Agreement and the Indenture and for all other purposes whatsoever,
and none of the Owner Trustee, the Certificate Registrar or the Insurer nor any
agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be
bound by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Master Servicer, the Sponsor or the Insurer, within 15 days after receipt by
the Owner Trustee of a request therefor from such Person in writing, a list, of
the names and addresses of the Certificateholders as of the most recent Record
Date. If three or more Holders of Certificates or one or more Holders of
Certificates evidencing not less than 25% by Percentage Interest apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their
rights under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Sponsor, the Master Servicer, the Owner Trustee or the Insurer or
any agent thereof accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain in Wilmington, Delaware an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Operative Documents may be served. The Owner
Trustee initially designates its Corporate Trust Office for such purposes. The
Owner Trustee shall give prompt written notice to the Sponsor, the
Certificateholders and the Insurer of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or
for the account of (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to the provisions of Title I of ERISA, (ii) a plan
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described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding its beneficial ownership interest in its Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
SECTION 3.10 Restrictions on Transfer of Certificates. (a)
The Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except for the initial issuance of the
Certificate to the Originators, the Owner Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Owner Trustee and the Insurer certifying to the
Owner Trustee and the Insurer the facts surrounding such transfer, which
investment letter shall not be an expense of the Owner Trustee or the Insurer
or (ii) if the investment letter is not delivered, a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Owner Trustee, the
Insurer and the Sponsor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor from said
Act or is being made pursuant to said Act, which Opinion of Counsel shall not
be an expense of the Owner Trustee, the Insurer or the Sponsor. The Holder of
a Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Sponsor, the Owner Trustee and the Insurer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
[(c) The Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent:
(i) the Person that acquires a Certificate shall (A) be organized and existing
under the laws of the United States of America or any state thereof or the
District of Columbia; (B) expressly assume, by an agreement supplemental
hereto, executed and delivered to the Owner Trustee, the performance of every
covenant and obligation of the Sponsor hereunder except for the covenants and
obligations contained in Sections 2.1, 2.2, 2.3, 2.4, 3.3, 3.4 of the Sale and
Servicing Agreement, 8.6(b)(vii), 8.6(b)(x) and 7.1 of the Indenture and under
the Credit Line Agreements; (ii) the person that acquires a Certificate shall
deliver to the Owner Trustee and the Insurer an Officer's Certificate stating
that such transfer and such supplemental agreement comply with this Section
3.10 and that all conditions precedent provided by this subsection 3.10 have
been complied with and an Opinion of Counsel stating that such transfer and
such supplemental agreement comply with this Section 3.10 and that all
conditions precedent provided by this Section 3.10 have been complied with, and
the Owner Trustee may conclusively rely on such Officer's Certificate, shall
have no duty to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying; (iii) the person that acquires a
Certificate shall deliver to the Owner Trustee and the Insurer a letter from
each Rating Agency confirming that its rating of the Class A Notes, after
giving effect to such transfer, will not be reduced or withdrawn without regard
to the Policy; (iv) the person that acquires a Certificate shall deliver to the
Owner Trustee and the Insurer an Opinion of Counsel to the effect that (a) such
transfer will not adversely affect the treatment of the Class A Notes after
such transfer as debt for federal and applicable state income tax purposes, (b)
such transfer will not result in the Trust being subject to tax at the entity
level for federal or applicable state tax purposes, (c) such transfer will not
have any material adverse impact on the federal or applicable state income
taxation of a Class A Noteholder and (d) such transfer will not result in the
arrangement created by this Agreement or any "portion" of the Trust, being
treated as a taxable mortgage pool as defined in Section 7701(i) of the Code;
(v) all filings and other actions necessary to continue the perfection of the
interest of the Trust in the Mortgage Loans and the other property conveyed
hereunder shall have been taken or made.
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Notwithstanding the foregoing, the requirement set forth in subclause (i)(A) of
this Section 3.10 shall not apply in the event the Owner Trustee and the
Insurer shall have received a letter from each Rating Agency confirming that
its rating of the Class A Notes, after giving effect to a proposed transfer to
a Person that does not meet the requirement set forth in subclause (i)(A),
shall not be reduced or withdrawn without regard to the Policy.
Notwithstanding the foregoing, the requirements set forth in this paragraph (b)
shall not apply to the initial issuance of the Certificates to the Originators.
(d) Except for the initial issuance of the Certificates to the
Originators, no transfer of a Certificate shall be made unless the Owner
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the Owner
Trustee, to the effect that such transferee is not a Benefit Plan, which
representation letter shall not be an expense of the Owner Trustee.
(e) No transfer or pledge of the Certificates shall result in
more than 98 other holders of Certificates.
SECTION 3.11 Acceptance of Obligations. The Sponsor agrees to
be bound by and to perform all the duties of the Sponsor set forth in this
Agreement.
SECTION 3.12 Payments on Certificates. The Holders of the
Certificates will be entitled to distributions on each Payment Date, as
provided in the Indenture.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Holders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not
take action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Holders);
(b) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(d) except pursuant to Section [___] of the Sale and Servicing
Agreement, the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.
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SECTION 4.2 Action by Certificateholders with Respect to
Certain Matters. (a) The Owner Trustee shall not have the power, except
upon the direction of the Insurer or in the event that an Insurer Default shall
have occurred and is continuing, the Security Majority in accordance with the
Operative Documents, to (i) remove the Master Servicer under the Sale and
Servicing Agreement or (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Indenture. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Insurer or the Securityholders, as the
case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee by the Certificateholders.
(b) Upon the written request of any Certificateholder (a
"Proposer"), the Owner Trustee shall distribute promptly to all
Certificateholders any request for action or consent of Certificateholders
submitted by such Proposer. The Owner Trustee shall provide a reasonable
method for collecting responses to such request and shall tabulate and report
the results thereof to the Certificateholders and the Sponsor. The Owner
Trustee shall have no responsibility or duty to determine if any such proposed
action or consent is permitted under the terms of this Agreement or applicable
law.
SECTION 4.3 Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the Notes
have been paid in full, the Owner Trustee shall not have the power to, and
shall not, commence any proceeding or other actions contemplated by Section
2.12(b) relating to the Trust without the prior written consent of the Insurer
(unless an Insurer Default shall have occurred and is continuing) or the
Security Majority upon an Insurer Default. Until one year and one day
following the day on which the Notes have been paid in full, all amounts due
to the Insurer under the Insurance Agreement have been paid in full, the Policy
has terminated and the Indenture Trustee has surrendered the Policy to the
Insurer, the Owner Trustee shall not have the power to, and shall not, commence
any proceeding or other actions contemplated by Section 2.12(b) relating to the
Trust without the prior written consent of all of the Certificateholders and
the delivery to the Owner Trustee by each such Certificateholder of a
certificate certifying that such Certificateholder reasonably believes that the
Trust is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. (a)
The Certificateholders shall not direct the Owner Trustee to take or refrain
from taking any action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this Agreement or any of the
Operative Documents or would be contrary to Section 2.3 or otherwise contrary
to law nor shall the Owner Trustee be obligated to follow any such direction,
if given.
(b) No Certificateholder (other than the Originators) shall
have any right by virtue or by availing itself of any provisions of this
Agreement to institute any suit, action, or proceeding in equity or at law upon
or under or with respect to this Agreement or any Operative Document, unless
the Certificateholders are the Instructing Party pursuant to Section 6.3 and
unless a Certificateholder previously shall have given to the Owner Trustee a
written notice of default and of the continuance thereof, as provided in this
Agreement, and also unless Certificateholders evidencing not less than 25% by
Percentage Interest shall have made written request upon the Owner Trustee to
institute such action, suit or proceeding in its own name as Owner Trustee
under this Agreement and shall have offered to the Owner Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
days after its receipt of such notice, request, and offer of indemnity, shall
have neglected or refused to institute any such action, suit, or proceeding,
and during such 30-day period no request or waiver inconsistent with such
written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3; it being understood and intended,
and being expressly covenanted by each Certificateholder with every
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other Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 4.4, each and every Certificateholder and the Owner
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 4.5 Majority Control. No Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust except as expressly provided in this Agreement. Except
as expressly provided herein, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority interest in the Trust. Except
as expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by
Certificateholders evidencing not less than a majority interest in the Trust at
the time of the delivery of such notice.
SECTION 4.6 Rights of Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Insurer (or if an Insurer Default shall have occurred and is continuing, the
Security Majority) the Owner Trustee shall not (i) remove the Master Servicer,
(ii) initiate any claim, suit or proceeding by the Trust or compromise any
claim, suit or proceeding brought by or against the Trust, other than with
respect to the enforcement of any Mortgage Loan or any rights of the Trust
thereunder, (iii) authorize the merger or consolidation of the Trust with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Indenture), (iv) amend the Certificate of Trust or (v)
amend this Agreement in accordance with Section 11.1 of this Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to
Sections 5.1(b)(iii) and 5.1(c) of the Sale and Servicing Agreement, the
Sponsor shall (a) maintain (or cause to be maintained) the books of the Trust
on a calendar year basis on the accrual method of accounting, including,
without limitation, the allocations of net income under Section 2.11 hereof,
(b) deliver (or cause to be delivered) to each Certificateholder, as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1, if applicable) to enable each
Certificateholder to prepare its Federal and state income tax returns, (c) file
or cause to be filed, if necessary, such tax returns relating to the Trust
(including a partnership information return, Form 1065), and direct the Owner
Trustee or the Master Servicer, as the case may be, to make such elections as
may from time to time be required or appropriate under any applicable state or
Federal statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a branch, or if applicable, as a partnership, for Federal
income tax purposes and (d) collect or cause to be collected any withholding
tax as described in and in accordance with Section 5.1(b)(ii) of the Sale and
Servicing Agreement with respect to income or distributions to
Certificateholders and the appropriate forms relating thereto. The Owner
Trustee or the Master Servicer, as the case may be, shall make all elections
pursuant to this Section as directed in writing by the Sponsor. The Owner
Trustee shall sign all tax information returns presented to it in final
execution form, if any, filed pursuant to this Section 5.1 and any other
returns as may be required by law, and in doing so shall rely entirely upon,
and shall have no liability for information
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provided by, or calculations provided by, the Sponsor or the Master Servicer.
The Owner Trustee shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the Mortgage
Loans. The Owner Trustee shall not make the election provided under Section
754 of the Code.
SECTION 5.2 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that the Trust
is characterized as a partnership, the Owner Trustee shall sign on behalf of
the Trust the tax returns of the Trust presented to it in final execution form,
unless applicable law requires a Certificateholder to sign such documents, in
which case such documents shall be signed by the Sponsor, as agent, on behalf
of the Certificateholders.
(b) In the event that the Trust is characterized as a
partnership, each Originator shall be the "tax matters partner" of the Trust
pursuant to the Code.
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized
and directed to execute and deliver the Operative Documents to which the Trust
is named as a party and each certificate or other document attached as an
exhibit to or contemplated by the Operative Documents to which the Trust is
named as a party and any amendment thereto, in each case, in such form as the
Sponsor shall approve as evidenced conclusively by the Owner Trustee's
execution thereof, and on behalf of the Trust, to direct the Indenture Trustee
to authenticate and deliver Class A Notes in the aggregate principal amount of
$100,000,000. In addition to the foregoing, the Owner Trustee is authorized,
but shall not be obligated, to take all actions required of the Trust pursuant
to the Operative Documents. The Owner Trustee is further authorized from time
to time to take such action as the Instructing Party recommends with respect to
the Operative Documents so long as such activities are consistent with the
terms of the Operative Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and to administer the Trust in the
interest of the Holders, subject to the Operative Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Operative Documents to the extent the Master Servicer
has agreed in the Sale and Servicing Agreement to perform any act or to
discharge any duty of the Trust or the Owner Trustee hereunder or under any
Operative Document, and the Owner Trustee shall not be liable for the default
or failure of the Master Servicer to carry out its obligations under the Sale
and Servicing Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article
IV, the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an Insurer Default shall have
occurred and be continuing) (the "Instructing Party") shall have the exclusive
right to direct the actions of the Owner Trustee in the management of the
Trust, so long as such instructions are not inconsistent with the express terms
set forth herein or in any Operative Document. The Instructing Party shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
Operative Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Operative Document if the Owner Trustee shall have
reasonably determined, or shall have been
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advised by counsel, that such action is likely to result in liability on the
part of the Owner Trustee or is contrary to the terms hereof or of any
Operative Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Operative Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days
of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Operative Documents, as it shall deem
to be in the best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Operative Document or any
such provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Operative Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action
or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or
in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Owner Trust Estate, or to otherwise take or refrain
from taking any action under, or in connection with, any document contemplated
hereby to which the Owner Trustee is a party, except as expressly provided by
the terms of this Agreement or in any document or written instruction received
by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Operative Document against
the Owner Trustee. The Owner Trustee shall have no responsibility for filing
any financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Commission filing for the
Trust or to record this Agreement or any Operative Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take
all action as may be necessary to discharge any Liens on any part of the Owner
Trust Estate that result from actions by, or claims against, the Owner Trustee
(solely in its individual capacity) and that are not related to the ownership
or the administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Operative
Documents and
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(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation or a publicly traded
partnership for Federal income tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee
accepts the trust hereby created and agrees to perform its duties hereunder
with respect to such trust but only upon the terms of this Agreement. The
Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Owner Trust Estate upon the terms of the Operative
Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Operative Document under any circumstances,
except (i) for its own willful misconduct, bad faith or gross negligence, (ii)
in the case of the inaccuracy of any representation or warranty contained in
Section 7.3 expressly made by the Owner Trustee in its individual capacity,
(iii) for liabilities arising from the failure of the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section 6.4
hereof, (iv) for any investments issued by the Owner Trustee or any branch or
affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment, not constituting gross negligence, made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it if such action or omission is in
accordance with the instructions of the Instructing Party, the Sponsor, the
Master Servicer or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Sponsor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Operative Documents, other than
the certificate of authentication on the Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty or obligation to
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the Sponsor, the Insurer, Indenture Trustee, any Certificateholder, other than
as expressly provided for herein and in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Sponsor, the Insurer, the Indenture Trustee, or the Master
Servicer under any of the Operative Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations under
this Agreement or the Operative Documents that are required to be performed by
the Sponsor under this Agreement, by the Indenture Trustee under the Indenture
or the Master Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Operative Document, at the request, order or
direction of the Instructing Party or any of the Certificateholders, unless
such Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Operative Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its negligence, bad
faith or willful misconduct in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Operative Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee
hereby represents and warrants, in its individual capacity, to the Sponsor and
the Holders (which shall have relied on such representations and warranties in
issuing the Policy), that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing
the banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or by-laws
or any indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full
force and effect. As to any fact or matter the method of the determination of
which is not specifically
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prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer,
secretary or other authorized officers of the relevant party, as to such fact
or matter, and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or
the Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and according to such opinion not contrary to this
Agreement or any Operative Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Operative Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Sponsor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or sufficiency of this
Agreement, of any Operative Document or of the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) or the
Notes, or of any Mortgage Loan or related documents. The Owner Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage Loan, or the perfection
and priority of any security interest created by any Mortgage Loan or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments
to be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition
and ownership of any Mortgage Loan; the existence and enforceability of any
insurance thereon; the existence and contents of any Mortgage Loan on any
computer or other record thereof; the validity of the assignment of any
Mortgage Loan to the Trust or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Sponsor, the Master Servicer or any other Person with any
warranty or representation made under any Operative Document or in any related
document or the accuracy of any such warranty or representation or any action
of the Indenture Trustee or the Master Servicer or any SubMaster Servicer taken
in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Notes and may deal with the Sponsor, the Indenture
Trustee and the Master Servicer in banking transactions with the same rights as
it would have if it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to
be made by the Owner Trustee under this Agreement or any of the Operative
Documents to which the Trust or the Owner Trustee is a party shall be made only
from the income and proceeds of the Owner Trust Estate and only to the extent
that the Owner Trust shall have received income or proceeds from the Owner
Trust Estate to make such payments in accordance with the terms hereof.
Wilmington Trust Company,
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or any successor thereto, in its individual capacity, shall not be liable for
any amounts payable under this Agreement or any of the Operative Documents to
which the Trust or the Owner Trustee is a party.
SECTION 7.9 Doing Business in Other Jurisdictions.
Notwithstanding anything contained to the contrary, neither Wilmington Trust
Company or any successor thereto, nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5 hereof, (i) require the
consent or approval or authorization or order of or the giving of notice to, or
the registration with or the taking of any other action in respect of, any
state or other governmental authority or agency of any jurisdiction other than
the State of Delaware; (ii) result in any fee, tax or other governmental
charge under the laws of the State of Delaware becoming payable by Wilmington
Trust Company (or any successor thereto); or (iii) subject Wilmington Trust
Company (or any successor thereto) to personal jurisdiction in any jurisdiction
other than the State of Delaware for causes of action arising from acts
unrelated to the consummation of the transactions by Wilmington Trust Company
(or any successor thereto) or the Owner Trustee, as the case may be,
contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Sponsor and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Sponsor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder and under the Operative Documents.
SECTION 8.2 Indemnification. The Sponsor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee (in its individual
and trust capacities) and its officers, directors, successors, assigns, agents
and servants (collectively, the "Indemnified Parties") from and against, any
and all liabilities, obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may (in its trust or individual capacities) at
any time be imposed on, incurred by, or asserted against the Owner Trustee or
any Indemnified Party in any way relating to or arising out of this Agreement,
the Operative Documents, the Owner Trust Estate, the administration of the
Owner Trust Estate or the action or inaction of the Owner Trustee hereunder,
except only that the Sponsor shall not be liable for or required to indemnify
the Owner Trustee from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.1. The indemnities
contained in this Section and the rights under Section 8.1 shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section, the Owner Trustee's choice of legal
counsel shall be subject to the approval of the Sponsor which approval shall
not be unreasonably withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
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SECTION 8.4 Non-recourse Obligations. Notwithstanding anything
in this Agreement or any Operative Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the Trust shall be recourse to the Owner Trust Estate only and specifically
shall not be recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1 Termination of Trust Agreement. (a) This
Agreement and the Trust shall terminate and be of no further force or effect
upon the later of (i) the maturity or other liquidation of the last Mortgage
Loan (including the redemption by the Sponsor at its option of the corpus of
the Trust as described in Section 10.1(b) of the Indenture) and the subsequent
distribution of amounts in respect of such Mortgage Loans as provided in the
Operative Documents or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Insurer of all amounts payable or reimbursable to it pursuant to the Sale and
Servicing Agreement and the Insurance Agreement; provided, however, that the
rights to indemnification under Section 8.2 and the rights under Section 8.1
shall survive the termination of the Trust. The Master Servicer shall promptly
notify the Owner Trustee and the Insurer of any prospective termination
pursuant to this Section 9.1. The bankruptcy, liquidation, dissolution, death
or incapacity of any Certificateholder shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Sponsor nor
any other Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Payment Date upon which the Certificateholders shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of
such redemption from the Master Servicer given pursuant to Section 10.1 of the
Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect
to which final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Indenture Trustee therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Payment Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Indenture Trustee therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar (if other than the Owner Trustee) and
the Indenture Trustee at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates, the Indenture Trustee
shall cause to be distributed to Certificateholders amounts distributable on
such Payment Date pursuant to Section 8.6(b)(xii) of the Indenture.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the
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remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the
Sponsor for payment.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Sponsor.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation (i) satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poors or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the Insurer in its sole discretion. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Owner Trustee shall resign immediately
in the manner and with the effect specified in Section 10.2.
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Sponsor, the Insurer and the Master
Servicer. Upon receiving such notice of resignation, the Sponsor shall
promptly appoint a successor Owner Trustee, meeting the qualifications set
forth in Section 10.1 herein, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Owner Trustee and one copy
to the successor Owner Trustee, provided that the Sponsor shall have received
written confirmation from each of the Rating Agencies that the proposed
appointment will not result in an increased capital charge to the Insurer by
either of the Rating Agencies. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee or the Insurer may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
Insurer (so long as no Insurer Default shall have occurred and is continuing)
may remove the Owner Trustee. If a majority of the Certificateholders shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Sponsor shall promptly appoint a successor Owner Trustee,
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meeting the qualifications set forth in Section 10.1 herein, by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the outgoing Owner Trustee so removed, one copy to the Insurer and one copy to
the successor Owner Trustee and the Sponsor shall pay all fees owed to the
outgoing Owner Trustee, if not previously paid by the Trust.
Any resignation or removal of the Owner Trustee and appointment of
a successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3 and payment of all reasonable fees and
expenses owed to the outgoing Owner Trustee.
Notwithstanding any other provision of this Agreement, and in
addition to any other method of removal of the Owner Trustee contained herein,
upon a proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in the Trust,
the Owner Trustee may be removed as Owner Trustee, subject to the consent of
the Insurer (so long as no Insurer Default shall have occurred and is
continuing), which consent is not to be unreasonably withheld. In the event
the Owner Trustee is removed pursuant to this paragraph, the provisions of this
Agreement, including Article X herein, shall apply as if the Owner Trustee had
resigned hereunder.
SECTION 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor
Owner Trustee an instrument accepting such appointment under this Agreement,
and thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner Trustee
shall upon payment of its fees and expenses deliver to the successor Owner
Trustee all documents and statements and monies held by it under this
Agreement; and the Sponsor and the predecessor Owner Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Owner Trustee
all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Master Servicer shall mail notice of the
successor of such Owner Trustee to all Certificateholders, the Indenture
Trustee and the Noteholders. If the Master Servicer shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at
the expense of the Master Servicer.
The successor Owner Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State reflecting the name and
principal place of business of such successor Owner Trustee in the State of
Delaware.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
10.1, without the execution or filing of any instrument or any further act
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on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, the Master Servicer and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee and the Insurer to act as co-trustee,
jointly with the Owner Trustee, or separate trustee or separate trustees, of
all or any part of the Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Trust, or any part thereof, and, subject to the
other provisions of this Section, such powers, duties, obligations, rights and
trusts as the Master Servicer and the Owner Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Owner Trustee
subject to the approval of the Insurer (which approval shall not be
unreasonably withheld) shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.1 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Master Servicer and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Master Servicer and the Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful
24
30
act under or in respect of this Agreement on its behalf and in its name. If
any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Owner Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement
may be amended by the Sponsor and the Owner Trustee, with the prior written
consent of the Insurer (so long as no Insurer Default shall have occurred and
is continuing), without the consent of any of the Noteholders (i) to cure any
ambiguity or defect or (ii) to correct, supplement or modify any provisions in
this Agreement; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel which may be based upon a certificate of the Master
Servicer, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time, with
the prior written consent of the Insurer (so long as no Insurer Default shall
have occurred and is continuing) by the Sponsor and the Owner Trustee, with
prior written notice to the Rating Agencies, and, to the extent such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in the Trust (which consent of
any Holder of a Certificate or Note given pursuant to this Section or pursuant
to any other provision of this Agreement shall be conclusive and binding on
such Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Certificate or Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that, subject to the express rights of
the Insurer under the Operative Documents, no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Mortgage Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificates, the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all the
outstanding Notes and Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of Certificateholders,
the Noteholders or the Indenture Trustee pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Certificateholders provided
for in this Agreement or in any other Operative Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable requirements as the Owner Trustee may prescribe. Promptly
after the execution of any amendment to the Certificate of Trust, the Owner
Trustee shall cause the filing of such amendment with the Secretary of State.
25
31
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their
ownership interest in the Owner Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for
Section 11.7, the provisions of this Agreement are solely for the benefit of
the Owner Trustee, the Sponsor, the Certificateholders, the Master Servicer
and, to the extent expressly provided herein, the Insurer, the Indenture
Trustee and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt, if
to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Sponsor, addressed to Advanta Mortgage Conduit Services, Inc., 000 Xxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, XX 00000; if to the Insurer,
addressed to Insurer, AMBAC Assurance Corporation, Xxx Xxxxx Xxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxxx, Structured Finance Department,
Telecopy No.: (000) 000-0000; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7 Assignments; Insurer. (a) This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
26
32
This Agreement shall also inure to the benefit of the Insurer for so long as an
Insurer Default shall not have occurred and be continuing. Without limiting
the generality of the foregoing, all covenants and agreements in this Agreement
which confer rights upon the Insurer shall be for the benefit of and run
directly to the Insurer, and the Insurer shall be entitled to rely on and
enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Operative Documents. The Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Policy) upon delivery of a written notice to the
Owner Trustee.
SECTION 11.8 No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the
Indenture Trustee and each Noteholder by accepting the benefits of this
Agreement, hereby covenants and agrees that they will not at any time institute
against the Sponsor, or join in any institution against the Sponsor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates,
the Notes, this Agreement or any of the Operative Documents.
SECTION 11.9 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Insurer or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Certificates or the Operative Documents.
SECTION 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12 Master Servicer. The Master Servicer is authorized
to prepare, or cause to be prepared, execute and deliver on behalf of the Trust
all such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Trust or Owner Trustee to prepare, file or deliver
pursuant to the Operative Documents. Upon written request, the Owner Trustee
shall execute and deliver to the Master Servicer a limited power of attorney
appointing the Master Servicer the Trust's agent and attorney-in-fact to
prepare, or cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.
27
33
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY, as Owner
Trustee
By
--------------------------------
Name:
Title:
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Sponsor
By:
--------------------------------
Name:
Title:
34
Exhibit A-1
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE
EXTENT DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION
WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.10 OF THE TRUST AGREEMENT
REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE
PROVIDES A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE,
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE
AND THE INSURER, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT (i) AN
EMPLOYEE BENEFIT PLAN SUBJECT TO SECTION 406 OF ERISA, (ii) A PLAN
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE, NOR (iii) A
PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN, WHICH
REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE INDENTURE TRUSTEE OR
THE INSURER.
NO TRANSFER OF A CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS MADE IN
ACCORDANCE WITH SAID ACT AND LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF
THE CERTIFICATES TO THE ORIGINATORS, THE INDENTURE TRUSTEE SHALL REQUIRE
(i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN
FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER
CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS SURROUNDING
SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF THE
OWNER TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT
DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE SPONSOR
THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION, DESCRIBING THE
APPLICABLE EXEMPTION AND THE BASIS THEREFOR, FROM SAID ACT OR IS BEING
MADE PURSUANT TO SAID ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE OWNER TRUSTEE, THE INSURER OR THE SPONSOR. THE HOLDER OF
A CERTIFICATE DESIRING TO EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY
AGREE TO, INDEMNIFY THE SPONSOR AND THE INSURER AGAINST ANY LIABILITY
THAT MAY RESULT IF THE TRANSFER IS NOT SO EXEMPT OR IS NOT MADE IN
ACCORDANCE WITH SUCH FEDERAL AND STATE LAWS.
35
THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED EXCEPT
UPON SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON
THAT ACQUIRES A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING UNDER THE
LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE OR THE DISTRICT OF
COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL
HERETO, EXECUTED AND DELIVERED TO THE OWNER TRUSTEE, THE PERFORMANCE OF
EVERY COVENANT AND OBLIGATION OF THE SPONSOR UNDER THE TRUST AGREEMENT,
EXCEPT FOR THE COVENANTS AND OBLIGATIONS CONTAINED IN SECTIONS 2.1, 2.2,
2.3, 2.4, 3.3, 3.4 OF THE SALE AND SERVICING AGREEMENT, 8.6(b)(vii),
8.6(b)(x) AND 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE AGREEMENTS;
(II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER
TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH
TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE
TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION
3.10 OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF
COUNSEL STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY
WITH SECTION 3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION
3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY
ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH
REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN
SO RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO
THE OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING AGENCY
CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT TO SUCH
TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE POLICY;
(IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER
TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH
TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH
TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES,
(B) SUCH TRANSFER WILL NOT RESULT IN THE TRUST BEING SUBJECT TO TAX AT
THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH
TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR
APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH TRANSFER
WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR ANY
"PORTION" OF THE TRUST, BEING TREATED AS A TAXABLE MORTGAGE POOL AS
DEFINED IN SECTION 7701(I) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS
NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF THE TRUST IN THE
MORTGAGE LOANS AND THE OTHER PROPERTY CONVEYED UNDER THE TRUST AGREEMENT
SHALL HAVE BEEN TAKEN OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
36
ADVANTA REVOLVING HOME EQUITY LOAN TRUST
1997-A CERTIFICATE
Percentage Interest: ___%
Date of Cut-Off Date:
November 1, 1997
First Payment Date: Issue Date: November 20, 1997
December 25, 1997
No. 1
---------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by:
----------------------------
Authenticating Agent
The Trust was created pursuant to a Trust Agreement dated as of
November 1, 1997 (the "Trust Agreement"), between the Sponsor and Wilmington
Trust Company, as owner trustee (the "Owner Trustee"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as Advanta Home Equity Loan "Asset Backed Certificates" (herein
called the "Certificates"). Also issued under the Indenture dated as of
November 1, 1997, among the Trust and Bankers Trust Company of California,
N.A., as indenture trustee (the "Indenture Trustee") are Class A Notes (the
"Class A Notes"). These Certificates are issued under and are subject to the
terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust includes
a pool of adjustable-rate home equity revolving credit line loans secured by
first or second deeds of trust or Mortgages on primarily one-to-four family
residential properties.
Under the Trust Agreement, there will be distributed on the 25th
day of each month or, if such 25th day is not a Business Day, the next Business
Day (the "Payment Date"), commencing on December 26, 1997, to the Person in
whose name this Certificate is registered at the close of business on
37
the Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Certificate are subordinated
to the rights of the Noteholders as described in the Sale and Servicing
Agreement, the Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this Certificate,
specifically acknowledges that it has no right to or interest in any monies at
any time held pursuant to the Pre-Funding Account or prior to the release of
such monies pursuant to Section 8.6____ of the Indenture, such monies being
held in trust for the benefit of the Noteholders and the Insurer.
Notwithstanding the foregoing, in the event that it is ever determined that the
monies held in the Pre-Funding Account constitute a pledge of collateral, then
the provisions of the Sale and Servicing Agreement shall be considered to
constitute a security agreement and the holder of this Certificate hereby
grants to the Indenture Trustee and the Insurer a first priority perfected
security interest in such amounts. In addition, each Certificateholder, by
acceptance of its Certificate, hereby appoints the Sponsor as its agent to
pledge a first priority perfected security interest in the Pre-Funding Account
and agrees to execute and deliver such instruments of conveyance, assignment,
grant, confirmation, etc., as well as any financing statements, in each case as
the Insurer shall consider reasonably necessary in order to perfect the
Indenture Trustee's security interest in the Trust Property.
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will
be treated as a branch. In the event that the Certificates are held by more
than one Holder, it is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will
be treated as a partnership and the Certificateholders will be treated as
partners in that partnership. The Sponsor and any other Certificateholders, by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as partnership
interests in the Trust. Each Certificateholder, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Sponsor, or join in any institution
against the Trust or the Sponsor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Trust Agreement or
any of the Operative Documents.
Distributions on this Certificate will be made as provided in the
Sale and Servicing Agreement and the Indenture by the Indenture Trustee by wire
transfer or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the
making of any notation hereon. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
38
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly
executed.
ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1997-A
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner
Trustee
Dated: November 20, 1997
By:
------------------------------------
Name:
Title:
39
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest
in, the Originators, the Sponsor, the Master Servicer, the Insurer, the Owner
Trustee or any Affiliates of any of them and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Trust Agreement, the Indenture or the Operative
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Mortgage Loans, as more specifically set forth
herein, in the Sale and Servicing Agreement and in the Indenture. A copy of
each of the Sale and Servicing Agreement and the Trust Agreement may be
examined during normal business hours at the principal office of the Sponsor,
and at such other places, if any, designated by the Sponsor, by any
Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Trust Agreement at any time by the Sponsor and the Owner Trustee with the prior
written consent of the Insurer and with the consent of the holders of the Notes
and the Certificates evidencing not less than a majority of the outstanding
Notes and the Certificates. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and on all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders
of any of the Certificates (other than the Sponsor or the Insurer).
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Sponsor, the Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000 or integral multiples of $1,000 in excess thereof. As provided in the
Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates in authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and any
agent of the Owner Trustee, the Certificate Registrar, the Insurer or the
Insurer may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Owner Trustee, the
Certificate Registrar, the Insurer nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement, the Indenture and the Sale and Servicing Agreement and the
disposition of all property held as part of the Trust. The Sponsor may at its
option redeem the corpus of the Trust at a price specified in the Sale and
Servicing Agreement, and such purchase of the
40
Mortgage Loans and other property of the Trust will effect a transfer of the
Certificates; however, such right of purchase is exercisable, subject to
certain restrictions, only on any Payment Date on or after the Payment Date
immediately prior to which the Class A Note Principal Balance is less than 10%
of the Original Class A Note Principal Balance and all amounts due and owing to
the Insurer for unpaid premiums and unreimbursed draws on the Policy and all
other amounts due and owing to the Insurer pursuant to the Insurance Agreement,
together with interest thereon as provided under the Insurance Agreement, have
been paid.
The recitals contained herein shall be taken as the statements of
the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
41
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ____________________________________________________
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
----------------------------
Signature Guaranteed:
*
----------------------------
--------------------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
42
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1997-A
This Certificate of Trust of Advanta Revolving Home Equity Loan
Trust 1997-A (the "Trust"), dated as of November __, 1997, is being duly
executed and filed by Wilmington Trust Company, a Delaware banking corporation,
as trustee, to form a business trust under the Delaware Business Trust Act (12
Del. Code, Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is
Advanta Revolving Home Equity Loan Trust 1997-A.
2. Delaware Trust. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is Wilmington Trust Company,
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000.
Attn: Corporate Trust Administration.
3. This Certificate of Trust will be effective November __,
1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as
Owner Trustee of the Trust.
By:
---------------------------------
Name:
Title:
