1
Exhibit 4.2.3
TRUST B
TRUST AGREEMENT
between
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of November 1, 1998
2
TABLE OF CONTENTS
Page
ARTICLE I. Definitions.............................................................................. 1
SECTION 1.1 Capitalized Terms................................................................ 1
SECTION 1.2 Other Definitional Provisions.................................................... 3
SECTION 1.3 Action by or Consent of Class B Noteholders and Certificateholders............... 4
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..................................................... 6
SECTION 2.5 Initial Capital Contribution of Trust Estate..................................... 7
SECTION 2.6 Declaration of Trust............................................................. 7
SECTION 2.7 Liability........................................................................ 7
SECTION 2.8 Title to Trust Property.......................................................... 7
SECTION 2.9 Situs of Trust................................................................... 7
SECTION 2.10 Representations and Warranties of the Sponsor.................................... 7
SECTION 2.11 Federal Income Tax Allocations................................................... 8
SECTION 2.12 Covenants of the Sponsor......................................................... 9
SECTION 2.13 Covenants of the Certificateholders.............................................. 9
SECTION 2.14 Investment Companies............................................................. 10
ARTICLE III. Certificates and Transfer of Interests................................................. 10
SECTION 3.1 Initial Ownership................................................................ 10
SECTION 3.2 The Certificates................................................................. 10
SECTION 3.3 Authentication of Certificates................................................... 11
SECTION 3.4 Registration of Transfer and Exchange of Certificates............................ 11
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates................................ 11
SECTION 3.6 Persons Deemed Certificateholders................................................ 11
SECTION 3.7 Access to List of Certificateholders' Names and Addresses........................ 12
SECTION 3.8 Maintenance of Office or Agency.................................................. 12
SECTION 3.9 ERISA............................................................................ 12
SECTION 3.10 Restrictions on Transfer of Certificates......................................... 12
SECTION 3.11 Acceptance of Obligations........................................................ 13
SECTION 3.12 Payments on Certificates......................................................... 14
ARTICLE IV. Voting Rights and Other Actions......................................................... 14
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain Matters............... 14
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters..................... 14
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.......................... 15
SECTION 4.4 Restrictions on Certificateholders' Power........................................ 15
SECTION 4.5 Majority Control................................................................. 15
SECTION 4.6 Rights of Note Insurer........................................................... 16
i
3
ARTICLE V. Certain Duties........................................................................... 16
SECTION 5.1 Accounting and Records to the Class B Noteholders, Certificateholders, the
Internal Revenue Service and Others............................................ 16
SECTION 5.2 Signature on Returns; Tax Matters Partner........................................ 16
ARTICLE VI. Authority and Duties of Owner Trustee................................................... 17
SECTION 6.1 General Authority................................................................ 17
SECTION 6.2 General Duties................................................................... 17
SECTION 6.3 Action upon Instruction.......................................................... 17
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions............... 18
SECTION 6.5 No Action Except under Specified Documents or Instructions....................... 18
SECTION 6.6 Restrictions..................................................................... 18
ARTICLE VII. Concerning the Owner Trustee........................................................... 18
SECTION 7.1 Acceptance of Trust and Duties................................................... 18
SECTION 7.2 Furnishing of Documents.......................................................... 19
SECTION 7.3 Representations and Warranties................................................... 20
SECTION 7.4 Reliance; Advice of Counsel...................................................... 20
SECTION 7.5 Not Acting in Individual Capacity................................................ 20
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans...................... 20
SECTION 7.7 Owner Trustee May Own Certificates and Class B Notes............................. 21
SECTION 7.8 Payments from Owner Trust Estate................................................. 21
SECTION 7.9 Doing Business in Other Jurisdictions............................................ 21
ARTICLE VIII. Compensation of Owner Trustee......................................................... 21
SECTION 8.1 Owner Trustee's Fees and Expenses................................................ 21
SECTION 8.2 Indemnification.................................................................. 22
SECTION 8.3 Payments to the Owner Trustee.................................................... 22
SECTION 8.4 Non-recourse Obligations......................................................... 22
ARTICLE IX. Termination of Trust Agreement.......................................................... 22
SECTION 9.1 Termination of Trust Agreement................................................... 22
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees................................... 23
SECTION 10.1 Eligibility Requirements for Owner Trustee....................................... 23
SECTION 10.2 Resignation or Removal of Owner Trustee.......................................... 24
SECTION 10.3 Successor Owner Trustee.......................................................... 24
SECTION 10.4 Merger or Consolidation of Owner Trustee......................................... 25
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee........................ 25
ARTICLE XI. Miscellaneous........................................................................... 26
SECTION 11.1 Supplements and Amendments....................................................... 26
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders....................... 27
SECTION 11.3 Limitations on Rights of Others.................................................. 27
SECTION 11.4 Notices.......................................................................... 27
ii
4
SECTION 11.5 Severability..................................................................... 28
SECTION 11.6 Separate Counterparts............................................................ 28
SECTION 11.7 Assignments; Note Insurer........................................................ 28
SECTION 11.8 No Petition...................................................................... 28
SECTION 11.9 No Recourse...................................................................... 28
SECTION 11.10 Headings......................................................................... 28
SECTION 11.11 GOVERNING LAW.................................................................... 28
SECTION 11.12 Master Servicer.................................................................. 28
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
5
TRUST AGREEMENT relating to Trust B dated as of November 1, 1998 between
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation as 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.
"Accounts" shall have the meaning ascribed thereto in the Trust B
Indenture.
"Affiliate" shall mean with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, or owns, directly or indirectly,
50% or more of, the Person specified.
"Agreement" shall mean this Trust B 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 Trust B, substantially in the form
of Exhibit A attached hereto.
"Certificateholder" or "Holder" shall initially mean Holding Trust, until
and unless Holding Trust transfers any or all of its interest in the Certificate
to any other Person and thereafter "Certificateholder" shall also mean or
include such Person.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B to be filed for Trust B 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, the Sponsor and
Holding Trust, 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.
6
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holding Trust" shall mean Advanta Mortgage Holding Trust 1998-4.
"Indemnification Agreement" shall mean the Indemnification Agreement dated
as of November 24, 1998 between the Note Insurer and Xxxxxx Xxxxxxx & Co.
Incorporated.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture Trustee" shall initially mean 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 Trust B Sale and Servicing Agreement and thereafter
"Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement
dated as of November 24, 1998 among the Note Insurer, the Sponsor, the Master
Servicer Trust A, Trust B, Trust C and the Indenture Trustee.
"Issuer" shall mean Advanta Mortgage Loan Trust 1998-4B.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Note Insurer" shall mean Ambac Assurance Corporation, or its successor in
interest.
"Operative Documents" shall mean this Agreement, the Trust B Sale and
Servicing Agreement, the Master Transfer Agreement, the Subsequent Transfer
Agreements, the Trust B Note Policy, the Insurance Agreement, the
Indemnification Agreement, the Trust B Indenture, and the Class B Notes.
"Originators" shall mean any entity from which the Sponsor has purchased
(or, in the case of Subsequent Mortgage Loans, will purchase) Mortgage Loans, or
Advanta Mortgage Corp. USA, Advanta Mortgage Corp. Midatlantic, Advanta Mortgage
Corp. Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta Mortgage Corp. of
New Jersey, Advanta Mortgage Corp. Northeast, Advanta National Bank and Advanta
Finance Corp.
"Outstanding" shall have the meaning assigned to such term in the Trust B
Indenture.
"Owner Trust Estate" shall mean all right, title and interest of Trust B
in and to the property and rights assigned to Trust B pursuant to Article II of
the Trust B Sale and Servicing Agreement, all funds on deposit from time to time
in the Accounts and the Trust B Note Account and all other property of Trust B
from time to time, including any rights of the Owner Trustee and the Trust
pursuant to the Trust B 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,
provided, that if the Certificates or Class B Notes are in definitive form, the
Record Date with respect to each Payment Date shall be the
2
7
last Business Day of the calendar month immediately preceding the calendar month
in which such Payment Date occurs.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Security Majority" means a majority by principal amount of the Class B
Noteholders so long as the Class B 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 A" shall have the meaning assigned to it in the Trust B Indenture.
"Trust B" shall mean the trust established by this Agreement.
"Trust B Indenture" shall mean the Trust B Indenture dated as of November
1, 1998 between the Sponsor and the Issuer, as the same may be amended and
supplemented from time to time.
"Trust B Note Account" as defined in the Trust B Indenture.
"Trust B Sale and Servicing Agreement" shall mean the Trust B Sale and
Servicing Agreement relating to Trust B among the Issuer, Advanta Mortgage
Conduit Services, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master
Servicer and the Indenture Trustee, dated as of November 1, 1998, as the same
may be amended and supplemented from time to time.
"Trust C" shall have the meaning assigned to it in the Trust B Indenture.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the Trust
B Sale and Servicing Agreement or, if not defined therein, in the Trust B
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
3
8
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 Class B Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Class B Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Class B
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
Class B Noteholders or Certificateholders. Solely for the purposes of any action
to be taken, or consented to, by Class B Noteholders or Certificateholders, any
Class B Note or Certificate registered in the name of the Sponsor, Holding Trust
or any Affiliate thereof shall be deemed not to be outstanding; provided,
however, that, solely for the purpose of determining whether the Indenture
Trustee is entitled to rely upon any such action or consent, only Class B 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
Mortgage Loan Trust 1998-4B", in which name the Owner Trustee may conduct the
business of Trust B, make and execute contracts and other instruments on behalf
of Trust B and xxx and be sued.
SECTION 2.2 Office. The office of Trust B 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
(a) The purpose of Trust B is, and Trust B shall have the power and
authority, to engage in the following activities:
(i) to issue the Class B Notes pursuant to the Trust B Indenture and
the Certificates pursuant to this Agreement, and to sell the Class B
Notes;
(ii) with the proceeds of the sale of the Class B Notes, to fund the
Pre-Funding Account relating to Trust B and to pay the organizational,
start-up and transactional expenses of Trust B and to pay the balance to
the Sponsor pursuant to the Trust B 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 Class B
Noteholders and for the benefit of the Note Insurer and to hold, manage
and distribute to the Certificateholders pursuant to the terms of the
Trust B Sale and Servicing Agreement any portion of the Owner Trust Estate
released from the lien of, and remitted to Trust B pursuant to, the Trust
B Indenture;
4
9
(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 Class B Noteholders.
(b) Trust B shall not engage in any activity other than in connection with
those described in Section 2.3(a) or other than as required or authorized by the
terms of this Agreement or the Operative Documents. In addition, Trust B shall
not:
(i) incur any indebtedness other than the Notes issued pursuant to
the Indenture
(ii) engage in any dissolution, liquidation, consolidation, merger
or sale of assets;
(iii) amend this Trust Agreement without a confirmation from each
applicable Rating Agency then rating the Notes, that such amendment would
not result in the qualification, downgrade or withdrawal of the rating on
the Notes;
(iv) effect a transfer of any direct or indirect ownership interest
in Trust B such that either (y) the transferee owns more than a 49%
interest in Trust B, or (z) the transferee is an affiliate or a family
member of a transferor which owned more than a 49% interest in the
Borrower before such transfer may be made unless such transfer is
conditioned upon the delivery of an acceptable non-consolidation opinion
to the Rating Agencies concerning, as applicable, the transferee and/or
their respective owners;
(v) engage in any business activity in which it is not currently
engaged;
(vi) take any action that might cause Trust B to become insolvent;
or
(vii) form, or caused to be formed, any subsidiaries;
(c) Trust B shall:
(i) maintain books and records separate from any other person or
entity;
(ii) maintain its bank accounts separate from any other person or
entity;
(iii) not commingle its assets with those of any other person or
entity and will hold all of its assets in its own name;
(iv) conduct its own business in its own name;
(v) maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other person or entity
and not have its assets listed on the financial statement of any other
entity;
5
10
(vi) file its tax returns separate from those of any other entity
and not file a consolidated federal income tax return with any other
entity;
(vii) except as set forth herein, pay its own liabilities and
expenses only out of its own funds;
(viii) observe all organizational formalities;
(ix) enter into transactions with affiliates only where each such
transaction is intrinsically fair, commercially reasonable, and on the
same terms as would be available in an arm's length transaction with a
person or entity that is not an affiliate;
(x) pay the salaries of its own employees from its own funds;
(xi) maintain a sufficient number of employees in light of its
contemplated business operations;
(xii) not guarantee or become obligated for the debts of any other
entity or person;
(xiii) not hold out its credit as being available to satisfy the
obligation of any other person or entity;
(xiv) not acquire the obligations or securities of its affiliates or
owners, including partners, members or shareholders, as appropriate;
(xv) not make loans to any other person or entity or buy or hold
evidence of indebtedness issued by any other person or entity (except for
cash and investment-grade securities);
(xvi) allocate fairly and reasonably any overhead expenses that are
shared with an affiliate, including paying for office space and services
performed by any employee of any affiliate;
(xvii) not pledge its assets for the benefit of any other person or
entity other than with respect to the Notes;
(xviii) hold itself out as a separate identity;
(xix) correct any known misunderstanding regarding its separate
identity;
(xx) not identify itself as a division of any other person or
entity; and
(xxi) maintain adequate capital in light of its contemplated
business operations.
(d)
SECTION 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints the
Owner Trustee as trustee of Trust B effective as of the date hereof, to have all
the rights, powers and duties set forth herein and in the Business Trust
Statute.
6
11
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 Trust B Note Account. On or prior to the Closing Date, the Owner Trustee
will also, upon receipt thereof, acknowledge on behalf of Trust B, receipt of
the Mortgage Loans pursuant to the Trust B Sale and Servicing Agreement. The
Sponsor shall pay the organizational expenses of Trust B 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 Trust B 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, Trust B 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, Trust B shall then be treated as a partnership and that, unless
otherwise required by appropriate tax authorities, only after such time Trust B
will file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of Trust B 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 Trust B. 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 Trust B.
SECTION 2.8 Title to Trust Property. (a) Legal title to all of the Owner
Trust Estate shall be vested at all times in Trust B 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 Certificateholders shall not have legal title to any part of the
Trust Property. The Certificateholders 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. Trust B will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of Trust B shall be located in the State of Delaware or the State of New
York. Payments will be received by Trust B only in Delaware or New York and
payments will be made by Trust B only from Delaware or New York. Trust B 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 Trust B from having employees within or without the State of
Delaware. The only office of Trust B 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
7
12
Owner Trust Estate in trust and issuing the Certificates and upon which the Note
Insurer relies in issuing the Trust B Note 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 Trust B and the Sponsor has duly authorized such sale and
assignment and deposit to Trust B 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 Class B Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Documents,
(C) seeking any determination or ruling that might materially and adversely
affect its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of the Operative Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Class B Notes or the Certificates.
SECTION 2.11 Federal Income Tax Allocations. In the event that Trust B is
treated as a partnership for Federal income tax purposes, net income of Trust B
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.
8
13
Net losses of Trust B, 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 Certificateholders, 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 Note 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 Trust B to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Trust B, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to the bankruptcy of Trust B, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Trust B or a substantial part of the property of Trust B or cause
or permit Trust B to make any assignment for the benefit of creditors, or admit
in writing the inability of Trust B to pay its debts generally as they become
due, or declare or effect a moratorium on the debt of Trust B 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 Trust B is a party and each other agreement entered into on or after
the date hereof to which it or Trust B 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 Trust B, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Covenants of the Certificateholders. Each Certificateholder
agrees:
(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of Trust B, the Owner Trustee, the Note 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 Trust B, if any, and
9
14
agree that, if requested by Trust B, it will sign such federal income tax
information return in its capacity as holder of an interest in Trust B. 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 Trust B;
(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 Trust B or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Trust B, 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
Trust B or a substantial part of its property, or cause or permit the Sponsor or
Trust B to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
Except as provided in this Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.12, 8.2 or elsewhere herein.
SECTION 2.14 Investment Company. Neither the Sponsor nor any
Certificateholders shall take any action that would cause the Trust to become an
"Investment Company" required to register under the Investment Company Act of
1940, as amended.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of Trust B 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 Trust B, to the Sponsor, one or more Certificates representing
in the aggregate a 100% interest in Trust B, and the Sponsor shall direct that
such Certificate(s) on the Certificate Register be registered in the name of
Holding Trust. Accordingly, Holding Trust shall initially be the sole
beneficiary of Trust B. Such Certificate(s) are duly authorized, validly issued,
and entitled to the benefits of this Agreement. For so long as Holding Trust
shall own such 100% interest in Trust B, Holding Trust shall be the sole
beneficial owner of Trust B.
SECTION 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of Trust B 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 Trust
B, 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. Subject to Section 2.13(d), 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.
10
15
SECTION 3.3 Authentication of Certificates. Concurrently with the initial
sale of the Mortgage Loans to Trust B pursuant to the Trust B Sale and Servicing
Agreement, the Owner Trustee shall cause each Certificate, to be executed on
behalf of Trust B, 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 Trust
B Pre-Funding Account prior to the release of such monies pursuant to Section
8.7(b)(vii) of the Trust B Indenture (other than Trust B Pre-Funding Earnings),
such monies being held in trust for the benefit of the Class B Noteholders and
the Note Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Trust B Pre-Funding Account constitute a
pledge of collateral, then the provisions of the Trust B 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 Note
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 Trust B Pre-Funding Account, and any amounts held therein from
time to time to the Indenture Trustee and the Note 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 Note Insurer
shall consider reasonably necessary in order to perfect the Indenture Trustee's
security interest in the Mortgage Loans.
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 Note 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 Trust B 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 Trust B, 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. Except as otherwise stated
herein, 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 Note Insurer and any agent of the Owner
Trustee, the Certificate Xxxxxxxxx
00
00
and the Note 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 Trust B Sale and
Servicing Agreement and the Trust B Indenture and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar or the Note
Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the
Note 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 Note 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 Certificateholders or one or more Certificateholders 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 Certificateholder, 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 Note 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 Note Insurer of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.9 ERISA. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any entity whose underlying assets include assets of a plan described in
(i) or (ii) 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 Holding
Trust and its initial transferee, 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 Note Insurer certifying to
the Owner Trustee and the Note Insurer the facts surrounding such transfer,
which investment letter shall not be an expense of the Owner Trustee or the Note
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 Note Insurer and the Sponsor that such transfer may be
12
17
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 Note Insurer or the
Sponsor. The Certificateholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Sponsor, the Owner Trustee and the Note 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 3.1, 3.3, 3.4 of the Trust A Sale and Servicing Agreement,
and Sections 2.10, 2.12 or 8.2 of this Agreement; (ii) the person that acquires
a Certificate shall deliver to the Owner Trustee and the Note 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 Note Insurer a
letter from each Rating Agency confirming that its rating of the Class B Notes,
after giving effect to such transfer, will not be reduced or withdrawn without
regard to the Trust B Note Policy; (iv) the person that acquires a Certificate
shall deliver to the Owner Trustee and the Note Insurer an Opinion of Counsel to
the effect that (a) such transfer will not adversely affect the treatment of the
Class B Notes after such transfer as debt for federal and applicable state
income tax purposes, (b) such transfer will not result in Trust B being subject
to tax at the entity level for federal or applicable state tax purposes, (c)
such transfer will not have any material adverse impact on the federal or
applicable state income taxation of a Class B 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 Trust B in the Mortgage Loans and the other
property conveyed hereunder shall have been taken or made. 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 Note Insurer shall have
received a letter from each Rating Agency confirming that its rating of the
Class B 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 Trust B Note Policy. Notwithstanding the
foregoing, the requirements set forth in this paragraph (b) shall not apply to
the initial issuance of the Certificates to the Holding Trust and its initial
transferee.
(d) Except for the initial issuance of the Certificates to Holding Trust
and its initial transferee, 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 and is not acting on behalf of or using the assets of 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.
13
18
SECTION 3.12 Payments on Certificates. The Certificateholders will be
entitled to distributions on each Payment Date, as provided in the Trust B
Indenture.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1 Prior Notice to Certificateholders 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 Trust B 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 Trust B Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Trust B 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 7.14 of the Trust B Sale and Servicing
Agreement, the amendment, change or modification of the Trust B 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.
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
Note Insurer or in the event that a Note 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 Trust B Sale and Servicing Agreement
or (ii) except as expressly provided in the Operative Documents, sell the
Mortgage Loans after the termination of the Trust B Indenture. The Owner Trustee
shall take the actions referred to in the preceding sentence only upon written
instructions signed by the Note Insurer or the Class B Noteholders, 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.
14
19
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy. Until
one year and one day following the day on which the Class B 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 Note Insurer (unless a Note
Insurer Default shall have occurred and is continuing) or upon a Note Insurer
Default, the Security Majority. Until one year and one day following the day on
which the Class B Notes have been paid in full, all amounts due to the Note
Insurer under the Insurance Agreement have been paid in full, the Trust B Note
Policy has terminated and the Indenture Trustee has surrendered the Trust B Note
Policy to the Note 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 Trust B 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 Trust B 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 Trust B 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 Holding Trust or its initial
transferee) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any
Operative Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% by Percentage Interest shall have made written
request upon the Owner Trustee to institute such action, suit or proceeding in
its own name as Owner Trustee under this Agreement and shall have offered to the
Owner Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Owner
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding, and during such 30-day period no request or waiver inconsistent
with such written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5 Majority Control. No Certificateholder shall have any right to
vote or in any manner otherwise control the operation and management of Trust B
except as expressly provided in this Agreement. Except as otherwise 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 Trust B. Except as otherwise 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 Trust B at the time of the delivery of such notice.
15
20
SECTION 4.6 Rights of Note Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Note Insurer (or if a Note 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 Trust B or
compromise any claim, suit or proceeding brought by or against Trust B, other
than with respect to the enforcement of any Mortgage Loan or any rights of Trust
B thereunder, (iii) authorize the merger or consolidation of Trust B with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Trust B 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 Class B Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Sponsor shall
(a) maintain (or cause to be maintained) the books of Trust B 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 Trust B (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 Trust B's characterization as a branch,
or if applicable, as a partnership, for Federal income tax purposes and (d)
collect or cause to be collected any withholding tax as described in and in
accordance with Section 6.1(a)(ii) of the Trust B Sale and Servicing Agreement
with respect to income or distributions to Certificateholders and the
appropriate forms relating thereto. The Owner Trustee or the Master Servicer, as
the case may be, shall make all elections pursuant to this Section as directed
in writing by the Sponsor. The Owner Trustee shall sign all tax information
returns presented to it in final execution form, if any, filed pursuant to this
Section 5.1 and any other returns as may be required by law, and in doing so
shall rely entirely upon, and shall have no liability for information provided
by, or calculations provided by, the Sponsor or the Master Servicer. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Mortgage Loans.
The Owner Trustee shall not make the election provided under Section 754 of the
Code.
SECTION 5.2 Signature on Returns; Tax Matters Partner. (a) Notwithstanding
the provisions of Section 5.1 and in the event that Trust B is characterized as
a partnership, the Owner Trustee shall sign on behalf of Trust B the tax returns
of Trust B 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 Trust B is characterized as a partnership, each
Certificateholder shall be the "tax matters partner" of Trust B pursuant to the
Code.
16
21
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 Trust B is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Operative Documents to which Trust B 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 Trust B, to direct the Indenture Trustee to authenticate and
deliver Class B Notes in the aggregate principal amount of $650,000,000. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of Trust B 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 Trust B 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 Trust B Sale and Servicing Agreement to perform any act or to discharge any
duty of Trust B 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 Trust B Sale and
Servicing Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the Note
Insurer (so long as a Note Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if a Note 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 Trust B,
so long as such instructions are not inconsistent with the express terms set
forth herein or in any Operative Document. The Instructing Party shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
Operative Documents.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any Operative Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Operative Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Operative Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Instructing Party received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Operative Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Operative Document or any such provision
is ambiguous as to its
17
22
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 Trust B or to
record this Agreement or any Operative Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Operative Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of Trust B set forth in Section 2.3 or
(b) that, to the actual knowledge of the Owner Trustee, would result in Trust B
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
18
23
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 Class B Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Sponsor or for the form, character, genuineness, sufficiency, value or validity
of any of the Owner Trust Estate or for or in respect of the validity or
sufficiency of the Operative Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to the Sponsor, the Note
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 Note Insurer, the Indenture Trustee, the Issuer, 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 Trust B
Indenture or the Master Servicer under the Trust B 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,
19
24
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 Trust B Note Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur
no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Operative
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and (ii) may
consult with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of 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
20
25
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 Class B 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 Class B Noteholders under the
Trust B 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 Trust B or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Sponsor, the Master Servicer or any other Person with any
warranty or representation made under any Operative Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the
name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Certificates and Class B Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Class B 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 Trust B 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 Trust B shall
have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Wilmington Trust Company, or any
successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the Operative Documents to which
Trust B 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
21
26
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.
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 Trust B that all obligations
of Trust B to the Owner Trustee individually or as Owner Trustee for Trust B
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 Trust B
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 Certificateholder at its option of the corpus of Trust B as
described in Section 10.1(b) of the Trust B 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
Note Insurer of all amounts payable or reimbursable to it pursuant to the Trust
B 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 Trust B. The Master Servicer shall
promptly notify the Owner Trustee and the Note 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 Trust B, 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
Trust B or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.
22
27
(b) Except as provided in clause (a), neither the Sponsor nor any other
Certificateholder shall be entitled to revoke or terminate Trust B.
(c) Notice of any termination of Trust B, 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 Trust B 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 8.7(b)(xx) of the Trust B Indenture.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Owner Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in Trust B after exhaustion of
such remedies shall be distributed, subject to applicable escheat laws, by the
Owner Trustee to the Sponsor and Certificateholders shall look solely to the
Sponsor for payment.
(d) Any funds remaining in Trust B 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 Trust B 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 Note 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.
23
28
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 Note 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 Note 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 Note 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 Note Insurer (so long
as no Note 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, 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 Note 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 Trust B.
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 Trust B, the
Owner Trustee may be removed as Owner Trustee , subject to the consent of the
Note Insurer (so long as no Note 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 Note 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.
24
29
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 Class B
Noteholders. If the Master Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Master Servicer.
The successor Owner Trustee shall file an amendment to the Certificate of
Trust with the Secretary of State reflecting the name and principal place of
business of such successor Owner Trustee in the State of Delaware.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
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 Note 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 Trust B, 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 Note 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 Trust B 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;
25
30
(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 Note Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be amended
by the Sponsor and the Owner Trustee, with the prior written consent of the Note
Insurer (so long as no Note Insurer Default shall have occurred and is
continuing), without the consent of any of the Class B Noteholders or
Certificateholders (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 Note Insurer which consent shall not be unreasonably
withheld (so long as no Note 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 Class B Noteholders, with the consent of the Class
B Noteholders evidencing not less than a majority of the Outstanding amount of
the Class B Notes and, the consent of the Certificateholders evidencing not less
than a majority interest in Trust B (which consent of any Holder of a
Certificate or Class B 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 Class B Note and of any
Certificate or Class B 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 Class B 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 Class B Noteholders or the
Certificateholders; provided, however, that, subject to the express rights of
the Note 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 Class B Noteholders or the
Certificateholders or (b) reduce
26
31
the aforesaid percentage of the Outstanding Amount of the Class B 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 Class B
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 Class
B Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Operative Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe. Promptly after
the execution of any amendment to the Certificate of Trust, the Owner Trustee
shall cause the filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
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 Note Insurer, the Indenture Trustee and the Class
B 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., Welsh & XxXxxx Xxxxx,
Xxxxxx Xxxxx, Xxxxxxxxxxxx 00000; if to the Note Insurer, addressed to, Ambac
Assurance Corporation, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxx and Xxx Xxxxx, 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
27
32
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; Note Insurer. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Note Insurer for so long as a Note 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 Note
Insurer shall be for the benefit of and run directly to the Note Insurer, and
the Note 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 Note Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Trust
B Note 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 Class B 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 Trust B only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Note 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 Trust B all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of Trust B or Owner Trustee to prepare, file or deliver
pursuant to the Operative Documents. Upon written request, the Owner Trustee
shall execute
28
33
and deliver to the Master Servicer a limited power of attorney appointing the
Master Servicer the Trust B'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.
29
34
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized as of the
day and year first above written.
WILMINGTON TRUST COMPANY, as Owner
Trustee
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
30
35
Exhibit A
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE TRUST B 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 B TRUST AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY 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 AND NOT ACTING ON BEHALF
OF OR USING THE ASSETS OF A BENEFIT PLAN, WHICH REPRESENTATION LETTER SHALL NOT
BE AN EXPENSE OF THE OWNER TRUSTEE.
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 HOLDING TRUST AND
ITS INITIAL TRANSFEREE, 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 NOTE INSURER CERTIFYING TO THE OWNER
TRUSTEE AND THE NOTE INSURER THE FACTS SURROUNDING SUCH TRANSFER, WHICH
INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE NOTE
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 NOTE 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 NOTE 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 NOTE 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.
36
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 B TRUST AGREEMENT, EXCEPT FOR THE COVENANTS AND
OBLIGATIONS CONTAINED IN SECTIONS 3.1, 3.3, AND 3.4 OF THE TRUST B SALE AND
SERVICING AGREEMENT, AND SECTIONS 2.10, 2.12 OR 8.2 OF THE TRUST B TRUST
AGREEMENT; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE
OWNER TRUSTEE AND THE NOTE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH
TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST B
TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF
THE TRUST B 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 NOTE INSURER A
LETTER FROM EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE CLASS B NOTES,
AFTER GIVING EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT
REGARD TO THE TRUST A NOTE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE
SHALL DELIVER TO THE OWNER TRUSTEE AND THE NOTE INSURER AN OPINION OF COUNSEL TO
THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE
CLASS B NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE
INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN TRUST A BEING SUBJECT
TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C)
SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR
APPLICABLE STATE INCOME TAXATION OF A CLASS B NOTEHOLDER AND (D) SUCH TRANSFER
WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST B TRUST AGREEMENT OR ANY
"PORTION" OF TRUST B, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN
SECTION 7701(I) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO
CONTINUE THE PERFECTION OF THE INTEREST OF TRUST B IN THE MORTGAGE LOANS AND THE
OTHER PROPERTY CONVEYED UNDER THE TRUST B 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.
37
ADVANTA MORTGAGE LOAN TRUST
1998-4B CERTIFICATE
Percentage Interest: 100%
Date of Cut-Off Date:
November 1, 1998
First Payment Date: Issue Date: November 24, 1998
December 28, 1998
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
Trust B was created pursuant to a Trust Agreement dated as of November 1,
1998 (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 Mortgage Loan Trust 1998-4B Certificates (herein called the
"Certificates"). Also issued under the Trust B Indenture dated as of November 1,
1998, among Trust B and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee") are Class B Notes (the "Class B 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 Trust B includes a pool of fixed-rate mortgage 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 28, 1998, to the Person in whose
name this Certificate is registered at the close of business on
38
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 Trust B Sale and Servicing
Agreement, the Trust B 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 Trust B Pre-Funding Account or prior to the
release of such monies pursuant to Section 8.7 of the Trust B Indenture, such
monies being held in trust for the benefit of the Class B Noteholders and the
Note Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Trust B Pre-Funding Account constitute a
pledge of collateral, then the provisions of the Trust B 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 Note 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 Trust
B 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 Note 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, Trust B 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, Trust B 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
Trust B. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
Trust B or the Sponsor, or join in any institution against Trust B 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 Trust B
Sale and Servicing Agreement and the Trust B 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
39
hereof to any benefit under the Trust Agreement or the Trust B Sale and
Servicing Agreement or be valid for any purpose.
40
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Trust B and not in its
individual capacity, has caused this Certificate to be duly executed.
ADVANTA MORTGAGE LOAN TRUST 1998-4B
By: WILMINGTON TRUST COMPANY not in its individual
capacity but solely as Owner Trustee
Dated: November 24, 1998
By: _________________________________________
Name:
Title:
41
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in, the
Originators, the Sponsor, the Master Servicer, the Note 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 Trust B 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 Trust B Sale and Servicing Agreement and in the Trust B
Indenture. A copy of each of the Trust B 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 Note 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 Note 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 Trust B
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 Advanta Mortgage Holding Trust 1998-4,
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 Note Insurer and any
agent of the Owner Trustee, the Certificate Registrar, the Note Insurer or the
Note 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 Note Insurer nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
Trust B created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement, the
Trust B Indenture and the Trust B Sale and Servicing Agreement and the
disposition of all property held as part of Trust B. The Certificateholder may
at its
42
option elect to redeem the corpus of Trust B at a price specified in the Trust B
Sale and Servicing Agreement, and after such redemption of the Mortgage Loans
and other property of Trust B, all proceeds will be distributed to the
Certificateholders; however, the Certificateholder's right to elect to redeem is
exercisable, subject to certain restrictions, only on any Payment Date on or
after the Payment Date immediately prior to which the Class B Note Principal
Balance is less than 10% of the Original Class B Note Principal Balance and all
amounts due and owing to the Note Insurer for unpaid premiums and unreimbursed
draws on the Trust B Note Policy and all other amounts due and owing to the Note
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 Trust B Sale and Servicing Agreement or
be valid for any purpose.
43
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.
44
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA MORTGAGE LOAN TRUST 1998-4B
This Certificate of Trust of Advanta Mortgage Loan Trust 1998-4B ("Trust
B"), dated as of November 20, 1998, 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 Mortgage
Loan Trust 1998-4B.
2. Delaware Trust. The name and business address of the Owner Trustee of
Trust B 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 20, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of Trust B,
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 Trust B.
By:_________________________________
Name:
Title:
