1
Exhibit 4.3
TRUST AGREEMENT
between
ADVANTA CONDUIT RECEIVABLES, INC.
Sponsor
ADVANTA HOLDING TRUST 1999-B,
Depositor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of September 1, 1999
2
Table of Contents
Page
ARTICLE I.
Definitions
Section 1.1 Capitalized Terms ..........................................1
Section 1.2 Other Definitional Provisions ..............................4
Section 1.3 Action by or Consent of Noteholders and Certificateholders .4
ARTICLE II.
Organization
Section 2.1 Names ......................................................4
Section 2.2 Office .....................................................5
Section 2.3 Purposes and Powers ........................................5
Section 2.4 Appointment of Owner Trustee ...............................5
Section 2.5 Initial Capital Contribution of Trust Estate ...............5
Section 2.6 Declaration of Trust .......................................6
Section 2.7 Liability ..................................................6
Section 2.8 Title to Trust Property ....................................6
Section 2.9 Situs of Trust .............................................6
Section 2.10 Representations and Warranties of the Sponsor and the
Depositor .................................................7
Section 2.11 Federal Income Tax Allocations .............................9
Section 2.12 Covenants of the Sponsor ...................................9
Section 2.13 Covenants of the Certificateholders .......................10
Section 2.14 Investment Company ........................................11
ARTICLE III.
Certificates and Transfer of Interests
Section 3.1 Initial Ownership .........................................11
Section 3.2 The Certificates ..........................................11
Section 3.3 Authentication of Certificates ............................12
Section 3.4 Registration of Transfer and Exchange of Certificates .....12
Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates .........12
Section 3.6 Persons Deemed Certificateholders .........................12
Section 3.7 Access to List of Certificateholders' Names and Addresses..13
Section 3.8 Maintenance of Office or Agency ...........................13
Section 3.9 ERISA .....................................................13
Section 3.10 Restrictions on Transfer of Certificates ..................13
Section 3.11 Acceptance of Obligations .................................15
Section 3.12 Payments on Certificates ..................................15
i
3
ARTICLE IV.
Voting Rights and Other Actions
Section 4.1 Prior Notice to Holders with Respect to Certain Matters ........15
Section 4.2 Action by Certificateholders with Respect to Certain Matters ...16
Section 4.3 Action by Certificateholders with Respect to Bankruptcy ........17
Section 4.4 Restrictions on Certificateholders' Power ......................17
Section 4.5 Majority Control ...............................................18
Section 4.6 Rights of Insurer ..............................................18
Section 4.7 Separateness ...................................................18
ARTICLE V.
Certain Duties
Section 5.1 Accounting and Records to the Noteholders, Certificateholders,
the Internal Revenue Service and Others ........................18
Section 5.2 Signature on Returns; Tax Matters Partner ......................19
ARTICLE VI.
Authority and Duties of Owner Trustee
Section 6.1 General Authority ..............................................19
Section 6.2 General Duties .................................................20
Section 6.3 Action upon Instruction ........................................20
Section 6.4 No Duties Except as Specified in this Agreement or in
Instructions ..................................................21
Section 6.5 No Action Except under Specified Documents or Instructions .....21
Section 6.6 Restrictions ...................................................21
ARTICLE VII.
Concerning the Owner Trustee
Section 7.1 Acceptance of Trust and Duties .................................21
Section 7.2 Furnishing of Documents ........................................23
Section 7.3 Representations and Warranties .................................23
Section 7.4 Reliance; Advice of Counsel ....................................23
Section 7.5 Not Acting in Individual Capacity ..............................24
Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans ....24
Section 7.7 Owner Trustee May Own Certificates and Notes ...................24
Section 7.8 Payments from Owner Trust Estate ...............................24
Section 7.9 Doing Business in Other Jurisdictions ..........................25
ii
4
ARTICLE VIII.
Compensation of Owner Trustee
Section 8.1 Owner Trustee's Fees and Expenses .........................25
Section 8.2 Indemnification ...........................................25
Section 8.3 Payments to the Owner Trustee .............................26
Section 8.4 Non-recourse Obligations ..................................26
ARTICLE IX.
Termination of Trust Agreement
Section 9.1 Termination of Trust Agreement ............................26
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
Section 10.1 Eligibility Requirements for Owner Trustee ................27
Section 10.2 Resignation or Removal of Owner Trustee ...................28
Section 10.3 Successor Owner Trustee ...................................28
Section 10.4 Merger or Consolidation of Owner Trustee ..................29
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee .29
ARTICLE XI.
Miscellaneous
Section 11.1 Supplements and Amendments ................................31
Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders 32
Section 11.3 Limitations on Rights of Others ...........................32
Section 11.4 Notices ...................................................32
Section 11.5 Severability ..............................................32
Section 11.6 Separate Counterparts .....................................33
Section 11.7 Assignments; Insurer ......................................33
Section 11.8 No Petition ...............................................33
Section 11.9 No Recourse ...............................................33
Section 11.10 Headings ..................................................33
Section 11.11 Governing Law .............................................33
Section 11.12 Master Servicer ...........................................33
Section 11.13 No Borrowing ..............................................34
Section 11.14 Nonpetition Covenant ......................................34
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
iii
5
TRUST AGREEMENT dated as of September 1, 1999 between ADVANTA
CONDUIT RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), ADVANTA HOLDING
TRUST 1999-B, a Delaware business trust, as depositor (the "Depositor") and
WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner Trustee (the
"Owner Trustee").
ARTICLE I.
Definitions
Section 1.1 Capitalized Terms. For the purposes of this
Agreement, the following terms shall have the meanings set forth below. All
other capitalized terms used herein but not defined shall have the meanings set
forth in the Indenture.
"Affiliate" shall mean with respect to any specified Person, a
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, or owns, directly or
indirectly, 50% or more of, the Person specified.
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time.
"Benefit Plan Investor" shall have the meaning assigned to
such term in Section 3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.
"Certificate" means a trust certificate evidencing the
beneficial ownership interest of a Certificateholder in the Trust, substantially
in the form of Exhibit A hereto.
"Certificate Account" shall mean the account designated as
such as established and maintained pursuant to the Indenture.
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of
the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean
the register maintained and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Insurer, the
Depositor and the Sponsor, or the principal corporate trust
6
office of any successor Owner Trustee (the address of which the successor owner
trustee will notify the Certificateholders, the Insurer, the Depositor and the
Sponsor).
"Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.
"Depositor" shall mean Advanta Holding Trust 1999-B in its
capacity as Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in
Section 3.9.
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose
name a Certificate is registered on the Certificate Register.
"Indemnification Agreement" shall mean the Indemnification
Agreement dated as of September 28, 1999 among the Insurer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated and Banc of America Securities LLC.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Indenture" shall mean the Indenture dated as of September 1,
1999, between the Trust and Bankers Trust Company of California, N.A., as
Indenture Trustee, as the same may be amended and supplemented from time to
time.
"Indenture Trustee" shall mean, initially Bankers Trust
Company of California, N.A., in its capacity as indenture trustee, including its
successors in interest, until and unless a successor Person shall have become
the Indenture Trustee pursuant to the Sale and Servicing Agreement and
thereafter "Indenture Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such
term in Section 6.3.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement dated as of September 28, 1999 among the Insurer, the Sponsor, the
Trust, Advanta Holding Trust 1999-B, the Master Servicer and the Indenture
Trustee.
"Insurer" shall mean Ambac Assurance Corporation, or its
successor in interest.
"Master Servicer" shall mean Advanta Mortgage Corp. USA, a
Delaware corporation.
"Notes" shall mean any of the Notes issued pursuant to the
Indenture.
"Noteholder" shall mean the holder of a Note.
"Operative Documents" shall mean this Agreement, the
Certificate of Trust, the Sale and Servicing Agreement, the Indemnification
Agreement, the Insurance Agreement, the
2
7
Indenture, the Purchase Agreement, the AMHC Guaranty to the Underwriter and the
Trust, the AMHC Guaranty to the Insurer and the Trust and the other documents
and certificates delivered in connection therewith.
"Originators" shall mean Advanta National Bank and Advanta
Finance Corp.
"Owner Trust Estate" shall mean all right, title and interest
of the Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and the Certificate Account and all other property
of the Trust from time to time, including any rights of the Owner Trustee and
the Trust pursuant to the Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
"Policy" shall mean the certificate guaranty insurance policy
with respect to the Notes, dated September 28, 1999, issued by the Insurer to
the Indenture Trustee for the benefit of the Noteholders.
"Record Date" shall mean with respect to any Payment Date, (i)
in the case of the certificates, the close of business on the last Business Day
immediately preceding such Payment Date and (ii) in the case of the Notes as
defined in the Indenture.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement among Advanta Holding Trust 1999-B, Advanta Revolving Home
Equity Loan Trust 1999-B, as Issuer, Advanta Conduit Receivables, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and the Indenture
Trustee, dated as of September 1, 1999, as the same may be amended and
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Security Majority" means a majority by principal amount of
the Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
"Sponsor" shall mean Advanta Conduit Receivables, Inc. in its
capacity as Sponsor hereunder.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" or "Issuer" shall mean the trust established by this
Agreement.
"Trust Accounts" shall have the meaning ascribed thereto in
the Sale and Servicing Agreement.
3
8
Section 1.2 Other Definitional Provisions. (a) Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
Section 1.3 Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or Noteholder, as the case may
be, of record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of the Sponsor or any Affiliate thereof shall be deemed not to be
outstanding; provided, however that, solely for the purpose of determining
whether the Indenture Trustee is entitled to rely upon any such action or
consent, only Notes or Certificates which the Owner Trustee, or the Indenture
Trustee, respectively, knows to be so owned shall be so disregarded.
ARTICLE II.
Organization
Section 2.1 Names. There is hereby formed a trust to be known
as "Advanta Revolving Home Equity Loan Trust 1999-B," in which name the Owner
Trustee may conduct
4
9
the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and ▇▇▇ and be sued.
Section 2.2 Office. The office of the Trust shall be in care
of the Owner Trustee at the Corporate Trust Office or at such other address as
the Owner Trustee may designate by written notice to the Certificateholders ,
the Insurer and the Sponsor.
Section 2.3 Purposes and Powers. The purpose of the Trust is,
and the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture
and the Certificates pursuant to this Agreement, and to sell
the Notes;
(ii) with the proceeds of the sale of the Notes, to
pay the organizational, startup and transactional expenses of
the Trust and to pay the balance to the Sponsor pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage
and convey the Owner Trust Estate to the Indenture Trustee on
behalf of the Noteholders and for the benefit of the Insurer
and to hold, manage and distribute to the Certificateholders
pursuant to the terms of this Agreement any portion of the
Owner Trust Estate released from the Lien of, and remitted to
the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations
under the Operative Documents to which it is a party;
(v) to engage in those activities, including
entering into agreements, that are necessary, suitable or
convenient to accomplish the foregoing or are incidental
thereto or connected therewith; and
(vi) subject to compliance with the Operative
Documents, to engage in such other activities as may be
required in connection with conservation of the Owner Trust
Estate and the making of distributions to the
Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Operative Documents.
Section 2.4 Appointment of Owner Trustee. The Sponsor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute.
Section 2.5 Initial Capital Contribution of Trust Estate. The
Depositor hereby assigns, transfers, conveys and sets over to the Owner Trustee,
as of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Account. On or prior to the Closing Date, the
5
10
Owner Trustee will also, upon receipt thereof, acknowledge on behalf of the
Trust, receipt of the Mortgage Loans pursuant to the Sale and Servicing
Agreement. The Sponsor shall pay organizational expenses of the Trust as they
may arise.
Section 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Operative
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income tax purposes, the Trust shall be
treated as a branch; provided, however, that in the event Certificates are owned
by more than one Certificateholder, it is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall then be
treated as a partnership and that, unless otherwise required by appropriate tax
authorities, only after such time the Trust will file or cause to be filed
annual or other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and to the extent not inconsistent herewith, in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
The Owner Trustee shall file the Certificate of Trust with the Secretary of
State.
Section 2.7 Liability. No Holder shall have any personal
liability for any liability or obligation of the Trust.
Section 2.8 Title to Trust Property. (a) Legal title to all of
the Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Holders shall not have legal title to any part of the
Trust Property. The Holders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Article IX. No transfer, by operation of law or otherwise, of any right, title
or interest by any Certificateholder of its ownership interest in the Owner
Trust Estate shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Property.
Section 2.9 Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. Payments will be received by the Trust only in Delaware or
New York and payments will be made by the Trust only from Delaware or New York.
The Trust shall not have any employees in any state other than Delaware;
provided, however, that nothing herein shall restrict or prohibit the Owner
Trustee, the Master Servicer or any agent of the Trust from having employees
within or without the State of Delaware. The only office of the Trust will be at
the Corporate Trust Office in Delaware.
6
11
Section 2.10 Representations and Warranties of the Sponsor and
the Depositor.
(a) The Sponsor makes the following representations and
warranties on which the Owner Trustee relies in accepting the Owner Trust Estate
in trust and issuing the Certificates and upon which the Insurer relies in
issuing the Policies.
(i) The Sponsor is duly organized and validly
existing as a Nevada corporation with power and authority to
own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted and is proposed to be conducted pursuant to this
Agreement and the Operative Documents;
(ii) It is duly qualified to do business as a
foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this
Agreement and the Operative Documents requires such
qualification;
(iii) The Sponsor has the corporate power and
authority to execute and deliver this Agreement and to carry
out its terms; and the execution, delivery and performance of
this Agreement has been duly authorized by the Sponsor by all
necessary corporate action. The Sponsor has duly executed this
Agreement and this Agreement constitutes a legal, valid and
binding obligation of the Sponsor enforceable against the
Sponsor, in accordance with its terms;
(iv) To the best knowledge of the Sponsor, no
consent, license, approval or authorization or registration or
declaration with, any Person or with any governmental
authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the
Operative Documents, except for such as have been obtained,
effected or made;
(v) The consummation of the transactions
contemplated by this Agreement and the fulfillment of the
terms hereof do not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of
incorporation or bylaws of the Sponsor, or any material
indenture, agreement or other instrument to which the Sponsor
is a party or by which it is bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Operative Documents);
nor violate any law or, to the best of the Sponsor's
knowledge, any order, rule or regulation applicable to the
Sponsor of any court or of any Federal or state regulatory
body, administrative agency or other governmental
instrumentality having jurisdiction over the Sponsor or its
properties; and
(vi) There are no proceedings or investigations
pending or, to its knowledge threatened against it before any
court, regulatory body,
7
12
administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties
(A) asserting the invalidity of this Agreement or any of the
Operative Documents, (B) seeking to prevent the issuance of
the Certificates or the Notes or the consummation of any of
the transactions contemplated by this Agreement or any of the
Operative Documents, (C) seeking any determination or ruling
that might materially and adversely affect its performance of
its obligations under, or the validity or enforceability of,
this Agreement or any of the Operative Documents, or (D)
seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Notes or the
Certificates.
(b) The Depositor makes the following representations and
warranties on which the Owner Trustee relies in accepting the Owner Trust Estate
in trust and issuing the Certificates and upon which the Insurer relies in
issuing the Policies.
(i) The Depositor is duly organized and validly
existing as a Delaware business trust with power and authority
to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted and is proposed to be conducted pursuant to this
Agreement and the Operative Documents;
(ii) It is duly qualified to do business as a
foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this
Agreement and the Operative Documents requires such
qualification;
(iii) The Depositor has the corporate power and
authority to execute and deliver this Agreement and to carry
out its terms; the Depositor has full power and authority to
convey and assign the property to be conveyed and assigned to
and deposited with the Trust and the Depositor has duly
authorized such conveyance and assignment and deposit to the
Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly
authorized by the Depositor by all necessary corporate action.
The Depositor has duly executed this Agreement and this
Agreement constitutes a legal, valid and binding obligation of
the Depositor enforceable against the Depositor, in accordance
with its terms;
(iv) To the best knowledge of the Depositor, no
consent, license, approval or authorization or registration or
declaration with, any Person or with any governmental
authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the
Operative Documents, except for such as have been obtained,
effected or made;
(v) The consummation of the transactions
contemplated by this Agreement and the fulfillment of the
terms hereof do not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of
trust of the Depositor,
8
13
or any material indenture, agreement or other instrument to
which the Depositor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the
Operative Documents); nor violate any law or, to the best of
the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any Federal or
state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Depositor or its properties; and
(vi) There are no proceedings or investigations
pending or, to its knowledge threatened against it before any
court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction
over it or its properties (A) asserting the invalidity of this
Agreement or any of the Operative Documents, (B) seeking to
prevent the issuance of the Certificates or the Notes or the
consummation of any of the transactions contemplated by this
Agreement or any of the Operative Documents, (C) seeking any
determination or ruling that might materially and adversely
affect its performance of its obligations under, or the
validity or enforceability of, this Agreement or any of the
Operative Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax
attributes of the Notes or the Certificates.
Section 2.11 Federal Income Tax Allocations. In the event that
the Trust is treated as a partnership for Federal income tax purposes, net
income of the Trust for any month as determined for Federal income tax purposes
(and each item of income, gain, loss, credit and deduction entering into the
computation thereof) shall be allocated to the extent of available net income,
among the Certificateholders as of the first Record Date following the end of
such month, in proportion to their ownership percentage of principal amount of
Certificates on such date.
Net losses of the Trust, if any, for any month as determined
for Federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated among the
Certificateholders as of the Record Date in proportion to their ownership
percentage of principal amount of Certificates on such Record Date until the
principal balance of the Certificates is reduced to zero. The Sponsor, as agent
on behalf of the Originators, is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.
Section 2.12 Covenants of the Sponsor. The Sponsor agrees and
covenants for the benefit of each Certificateholder, the Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as permitted by
its certificate of incorporation and the Operative Documents;
9
14
(b) it shall not, for any reason, institute proceedings for
the Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust, or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(c) it shall obtain from each counterparty to each Operative
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States; and
(d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against it, or file a petition seeking or consenting
to reorganization or relief under any applicable federal or state law relating
to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
Section 2.13 Covenants of the Certificateholders. Each
Certificateholder agrees:
(a) to be bound by the terms and conditions of the
Certificates and of this Agreement, including any supplements or amendments
hereto and to perform the obligations of a Certificateholder as set forth
therein or herein, in all respects as if it were a signatory hereto. This
undertaking is made for the benefit of the Trust, the Owner Trustee, the Insurer
and all other Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's
agent and attorney-in-fact to sign any federal income tax information return
filed on behalf of the Trust, if any, and agree that, if requested by the Trust,
it will sign such federal income tax information return in its capacity as
holder of an interest in the Trust. Each Certificateholder also hereby agrees
that in its tax returns it will not take any position inconsistent with those
taken in any tax returns that may be filed by the Trust;
(c) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099B, to notify the Owner Trustee of any transfer by it of a
Certificate in a taxable sale or exchange, within 30 days of the date of the
transfer; and
10
15
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust or the
Sponsor to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Sponsor or the Trust or a substantial part of its property, or
cause or permit the Sponsor or the Trust to make any assignment for the benefit
of its creditors, or admit in writing its inability to pay its debts generally
as they become due, or declare or effect a moratorium on its debt or take any
action in furtherance of any such action.
Except as provided in Section 2.13, and notwithstanding any
other provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.11, 2.12, 8.2 or elsewhere herein.
Section 2.14 Investment Company. Neither the Sponsor, the
Depositor nor any Holder shall take any action that would cause the Trust to
become an "investment company" required to register under the Investment Company
Act of 1940, as amended.
ARTICLE III.
Certificates and Transfer of Interests
Section 3.1 Initial Ownership. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of the Trust, to the Depositor, one or more Certificates
representing in the aggregate a 100% interest in the Trust, and has registered
such Certificates on the Certificate Register in the name of the Depositor. The
Depositor shall be the sole beneficiary of the Trust. Such Certificates are duly
authorized, validly issued, and entitled to the benefits of this Agreement. For
so long as the Depositor shall own such 100% interest in the Trust, the
Depositor shall be the sole beneficial owner of the Trust. For so long as any
Notes remaining outstanding, the Depositor shall not transfer its ownership
interest in the Trust, in whole or in part, without the Insurer's prior written
consent.
Section 3.2 The Certificates. The Certificates shall be issued
in denominations of $1,000 and integral multiples of $1000 in excess thereof.
The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. A transferee of a Certificate shall become a Certificateholder,
and shall be entitled to the rights and subject to the obligations of a
11
16
Certificateholder hereunder, upon due registration of such Certificate in such
transferee's name pursuant to Section 3.4.
Section 3.3 Authentication of Certificates. Concurrently with
the initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Sponsor, signed by its chairman of the board, its president
or any vice president, its treasurer or any assistant treasurer without further
corporate action by the Sponsor, in authorized denominations. No Certificate
shall entitle its holder to any benefit under this Agreement, or shall be valid
for any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication. The Trust shall not issue any other Certificate without the
prior written consent of the Insurer.
Section 3.4 Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
shall be delivered to the Certificate Registrar, the Owner Trustee and the
Insurer such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like class, tenor and denomination. In connection with the
issuance of any new Certificate under this Section, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 3.6 Persons Deemed Certificateholders. Every Person by
virtue of becoming a Certificateholder in accordance with this Agreement and the
rules and regulations of the Certificate Registrar shall be deemed to be bound
by the terms of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee, the Certificate Registrar and the
Insurer and any agent of the Owner Trustee, the Certificate Registrar and the
Insurer, may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to the Sale and Servicing Agreement and the
Indenture and for all other purposes whatsoever, and none of the Owner Trustee,
the Certificate Registrar or the
12
17
Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the
Insurer shall be bound by any notice to the contrary.
Section 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Master Servicer, the Sponsor or the Insurer, within 15 days after receipt by the
Owner Trustee of a request therefor from such Person in writing, a list, of the
names and addresses of the Certificateholders as of the most recent Record Date.
If three or more Holders of Certificates or one or more Holders of Certificates
evidencing not less than 25% by Percentage Interest apply in writing to the
Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and such application is accompanied by
a copy of the communication that such applicants propose to transmit, then the
Owner Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the
Master Servicer, the Owner Trustee or the Insurer or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
Section 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain in Wilmington, Delaware an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Insurer of any change in the location of the Certificate Register or any
such office or agency.
Section 3.9 ERISA. The Certificates may not be acquired by or
for the account of (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to the provisions of Title I of ERISA, (ii) a plan as (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any person acting on behalf of or using the assets of a plan described in
(i) or (ii) (each, a "Benefit Plan Investor") above. By accepting and holding
its beneficial ownership interest in its Certificate, the Holder thereof shall
be deemed to have represented and warranted that it is not a Benefit Plan
Investor.
Section 3.10 Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except for the initial issuance of the
Certificates to the Depositor, the Owner Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Owner Trustee and the Insurer certifying to the
Owner Trustee and the Insurer the facts
13
18
surrounding such transfer, which investment letter shall not be an expense of
the Owner Trustee or the Insurer, or (ii) if the investment letter is not
delivered, a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee, the Insurer and the Sponsor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor from said Act or is being made pursuant to said
Act, which Opinion of Counsel shall not be an expense of the Owner Trustee, the
Insurer or the Sponsor. The Holder of a Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Sponsor, the Owner
Trustee and the Insurer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such federal and state laws.
(c) The Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Certificate shall (A) be organized and existing under
the laws of the United States of America or any state thereof or the District of
Columbia; (B) expressly assume, by an agreement supplemental hereto, executed
and delivered to the Owner Trustee, the performance of every covenant and
obligation of the Sponsor hereunder except for the covenants and obligations
contained in Sections 2.1, 2.2, 2.3, 2.4, 3.3 and 3.4 of the Sale and Servicing
Agreement, Section 7.1 of the Indenture and under the Credit Line Agreements and
the Mortgage Notes; (ii) the person that acquires a Certificate shall deliver to
the Owner Trustee and the Insurer an Officer's Certificate stating that such
transfer and such supplemental agreement comply with this Section 3.10 and that
all conditions precedent provided by this subsection 3.10 have been complied
with and an Opinion of Counsel stating that such transfer and such supplemental
agreement comply with this Section 3.10 and that all conditions precedent
provided by this Section 3.10 have been complied with, and the Owner Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur no
liability in so relying; (iii) the person that acquires a Certificate shall
deliver to the Owner Trustee and the Insurer a letter from each Rating Agency
confirming that its rating of the Notes, after giving effect to such transfer,
will not be reduced or withdrawn without regard to the Policy; (iv) the person
that acquires a Certificate shall deliver to the Owner Trustee and the Insurer
an Opinion of Counsel to the effect that (a) such transfer will not adversely
affect the treatment of the Notes after such transfer as debt for federal and
applicable state income tax purposes, (b) such transfer will not result in the
Trust being subject to tax at the entity level for federal or applicable state
tax purposes, (c) such transfer will not have any material adverse impact on the
federal or applicable state income taxation of a Noteholder and (d) such
transfer will not result in the arrangement created by this Agreement or any
"portion" of the Trust, being treated as a taxable mortgage pool as defined in
Section 7701(i) of the Code; (v) all filings and other actions necessary to
continue the perfection of the interest of the Trust in the Mortgage Loans and
the other property conveyed hereunder shall have been taken or made and (vi) the
prior written consent of the Insurer has been obtained, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, the requirement set
forth in subclause (i)(A) of this Section 3.10 shall not apply in the event the
Owner Trustee and the Insurer shall have received a letter from each Rating
Agency confirming that its rating of the Notes, after giving effect to a
proposed transfer to a Person that does not meet the requirement set forth in
subclause (i)(A), shall not be reduced or withdrawn without regard to the
Policy. Notwithstanding the foregoing, the requirements set forth in this
paragraph (c) shall not apply to the initial issuance of the Certificates to the
Depositor.
14
19
(d) Except for the initial issuance of the Certificates to the
Depositor, no transfer of a Certificate shall be made unless the Owner Trustee
and the Insurer shall have received a representation letter from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Owner Trustee and the Insurer, to the effect that such transferee is not a
Benefit Plan Investor, which representation letter shall not be an expense of
the Owner Trustee.
(e) No transfer or pledge of the Certificates shall result in
more than 98 other holders of Certificates.
Section 3.11 Acceptance of Obligations. The Sponsor agrees to
be bound by and to perform all the duties of the Sponsor set forth in this
Agreement.
Section 3.12 Payments on Certificates. The Holders of the
Certificates will be entitled to distributions on each Payment Date, as provided
in the Indenture.
ARTICLE IV.
Voting Rights and Other Actions
Section 4.1 Prior Notice to Holders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Insurer in writing of
the proposed action and (i) the Insurer shall have consented in writing thereto
and (ii) the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or, with the written consent of the
Insurer, provided alternative direction:
(a) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Holders);
(b) the amendment of any Operative Document;
(c) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent or Indenture Trustee or, pursuant to this Trust
Agreement, of a successor Certificate Registrar or the consent to the assignment
by the Note Registrar, Paying Agent, Indenture Trustee or Certificate Registrar
of its obligations under the Indenture or this Trust Agreement, as applicable;
(d) the consent to the calling or waiver of any default under
any Operative Document;
(e) the consent to the assignment by the Indenture Trustee or
Master Servicer of their respective obligations under any Operative Document;
(f) perform any act that conflicts with any other Operative
Document;
15
20
(g) perform any act which would make it impossible to carry on
the ordinary business of the Trust as described in Section 2.3 hereof;
(h) confess a judgment against the Trust;
(i) possess Trust assets or assign the Trust's right to
property for other than a Trust purpose;
(j) cause the Trust to lend any funds to any entity; or
(k) change the Trust's purpose and powers from those
enumerated in this Trust Agreement.
The Owner Trustee shall notify the Certificateholders and the Insurer in writing
of any appointment of a successor Note Registrar, or Certificate Registrar
within five Business Days thereof.
In addition, the Owner Trustee shall not (i) cause the Trust
to merge or consolidate with or into any other entity, or convey or transfer all
or substantially all of the Trust's assets to any other entity; (ii) cause the
Trust to incur, assume or guaranty any indebtedness other than as set forth in
this Trust Agreement or (iii) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part.
Section 4.2 Action by Certificateholders with Respect to
Certain Matters. (a) The Owner Trustee shall not have the power, except upon the
written direction of the Insurer or in the event that an Insurer Default shall
have occurred and is continuing, the Security Majority in accordance with the
Operative Documents, to (i) remove the Master Servicer under the Sale and
Servicing Agreement, (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Indenture, (iii)
institute proceedings to have the Trust declared or adjudicated to be bankrupt
or insolvent, (iv) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (v) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (vi) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vii) make any assignment for the benefit of the Trust's creditors, (viii) cause
the Trust to admit in writing its inability to pay its debts generally as they
become due, (ix) take any action or cause the Trust to take any action, in
furtherance of any of the foregoing clauses (iii) through (ix) (any of such
clauses, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect, no Certificateholder shall have the power to take,
and shall not take, any Bankruptcy Action with respect to the Trust or direct
the Owner Trustee to take any Bankruptcy Action with respect to the Trust. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Insurer or the Securityholders, as the
case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee by the Certificateholders.
(b) Upon the written request of any Certificateholder (a
"Proposer"), the Owner Trustee shall distribute promptly to all
Certificateholders any request for action or consent of Certificateholders
submitted by such Proposer. The Owner Trustee shall provide a
16
21
reasonable method for collecting responses to such request and shall tabulate
and report the results thereof to the Certificateholders and the Sponsor. The
Owner Trustee shall have no responsibility or duty to determine if any such
proposed action or consent is permitted under the terms of this Agreement or
applicable law.
Section 4.3 Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the Notes have
been paid in full, the Owner Trustee shall not have the power to, and shall not
commence any proceeding or other actions contemplated by Section 2.12(b)
relating to the Trust without the prior written consent of the Insurer (unless
an Insurer Default shall have occurred and is continuing) or the Security
Majority upon an Insurer Default. Until one year and one day following the day
on which the Notes have been paid in full, all amounts due to the Insurer under
the Insurance Agreement have been paid in full, the Policies have terminated and
the Indenture Trustee has surrendered the Policies to the Insurer, the Owner
Trustee shall not have the power to, and shall not, commence any proceeding or
other actions contemplated by Section 2.12(b) relating to the Trust without the
prior written consent of all of the Certificateholders and the delivery to the
Owner Trustee by each such Certificateholder of a certificate certifying that
such Certificateholder reasonably believes that the Trust is insolvent.
Section 4.4 Restrictions on Certificateholders' Power. (a) The
Certificate-holders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Operative
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than the Originators) shall
have any right by virtue or by availing itself of any provisions of this
Agreement to institute any suit, action, or proceeding in equity or at law upon
or under or with respect to this Agreement or any Operative Document, unless the
Certificateholders are the Instructing Party pursuant to Section 6.3 and unless
a Certificateholder previously shall have given to the Owner Trustee a written
notice of default and of the continuance thereof, as provided in this Agreement,
and also unless Certificateholders evidencing not less than 25% by Percentage
Interest shall have made written request upon the Owner Trustee to institute
such action, suit or proceeding in its own name as Owner Trustee under this
Agreement and shall have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Owner Trustee, for 30 days after its receipt of such
notice, request, and offer of indemnity, shall have neglected or refused to
institute any such action, suit, or proceeding, and during such 30-day period no
request or waiver inconsistent with such written request has been given to the
Owner Trustee pursuant to and in compliance with this Section or Section 6.3; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4,
17
22
each and every Certificateholder and the Owner Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 4.5 Majority Control. No Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust except as expressly provided in this Agreement. Except
as expressly provided herein, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority interest in the Trust. Except
as expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by
Certificateholders evidencing not less than a majority interest in the Trust at
the time of the delivery of such notice.
Section 4.6 Rights of Insurer. Notwithstanding anything to the
contrary in the Operative Documents, without the prior written consent of the
Insurer (or if an Insurer Default shall have occurred and is continuing, the
Security Majority) the Owner Trustee shall not (i) remove the Master Servicer,
(ii) initiate any claim, suit or proceeding by the Trust or compromise any
claim, suit or proceeding brought by or against the Trust, other than with
respect to the enforcement of any Mortgage Loan or any rights of the Trust
thereunder, (iii) authorize the merger or consolidation of the Trust with or
into any other business trust or other entity (other than in accordance with
Section 3.10 of the Indenture), (iv) amend the Certificate of Trust or (v) amend
this Agreement in accordance with Section 11.1 of this Agreement.
Section 4.7 Separateness. The Trust shall (i) not commingle
its assets with those of any other entity; (ii) maintain its financial and
accounting books and records separate from those of any other entity; (iii)
maintain appropriate minutes or other records of all appropriate actions and
maintain books and records separate from any other entity; (iv) conduct its own
business in its own name; (v) except as expressly set forth herein, pay its
indebtedness, operating expenses and liabilities from its own funds; (vi) enter
into transactions with affiliates only on terms that are commercially reasonable
and on the same terms as would be available in an arm's length transaction;
(vii) not pay the indebtedness, operating expenses and liabilities of any other
entity; (viii) not hold out its credit as being available to satisfy the
obligation of any other entity; (ix) not make loans to any other entity or buy
or hold evidence of indebtedness issued by any other entity (except for cash and
investment-grade securities); (x) use separate stationery, invoices, and checks
bearing its own name; (xi) allocate fairly and reasonably any overhead expenses
that are shared with an affiliate, including paying for office space and
services performed by any employee of any affiliate; (xii) not identify itself
as a division of any other entity; (xiii) hold itself out as a separate
identity; and (xiv) maintain adequate capital in light of its contemplated
business operation.
ARTICLE V.
Certain Duties
Section 5.1 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
5.1(b)(iii) and 5.1(c) of the Sale and Servicing Agreement, the Sponsor shall
(a) maintain (or cause to be maintained) the books of the Trust on a calendar
year basis on the accrual method of accounting, including, without
18
23
limitation, the allocations of net income under Section 2.11 hereof, (b) deliver
(or cause to be delivered) to each Certificateholder, as may be required by the
Code and applicable Treasury Regulations, such information as may be required
(including Schedule K1, if applicable) to enable each Certificateholder to
prepare its Federal and state income tax returns, (c) file or cause to be filed,
if necessary, such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
branch, or if applicable, as a partnership, for Federal income tax purposes and
(d) collect or cause to be collected any withholding tax as described in and in
accordance with Section 5.1(b)(ii) of the Sale and Servicing Agreement with
respect to income or distributions to Certificateholders and the appropriate
forms relating thereto. The Owner Trustee or the Master Servicer, as the case
may be, shall make all elections pursuant to this Section as directed in writing
by the Sponsor. The Owner Trustee shall sign all tax information returns
presented to it in final execution form, if any, filed pursuant to this Section
5.1 and any other returns as may be required by law, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Sponsor or the Master Servicer. The Owner Trustee
shall elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Mortgage Loans. The Owner
Trustee shall not make the election provided under Section 754 of the Code.
Section 5.2 Signature on Returns; Tax Matters Partner.
(a) Notwithstanding the provisions of Section 5.1 and in the event that the
Trust is characterized as a partnership, the Owner Trustee shall sign on behalf
of the Trust the tax returns of the Trust presented to it in final execution
form, unless applicable law requires a Certificateholder to sign such documents,
in which case such documents shall be signed by the Sponsor, as agent, on behalf
of the Certificateholders.
(b) In the event that the Trust is characterized as a
partnership, the Depositor shall be the "tax matters partner" of the Trust
pursuant to the Code.
ARTICLE VI.
Authority and Duties of Owner Trustee
Section 6.1 General Authority. The Owner Trustee is authorized
and directed to execute and deliver the Operative Documents to which the Trust
is named as a party and each certificate or other document attached as an
exhibit to or contemplated by the Operative Documents to which the Trust is
named as a party and any amendment thereto, in each case, in such form as the
Sponsor shall approve as evidenced conclusively by the Owner Trustee's execution
thereof, and on behalf of the Trust, to direct the Indenture Trustee to
authenticate and deliver Notes in the aggregate principal amount of
$275,000,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Operative Documents. The Owner Trustee is further authorized from time to
time to take such action as the Instructing Party recommends with respect to the
Operative Documents so long as such activities are consistent with the terms of
the Operative Documents.
19
24
Section 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and to administer the Trust in the
interest of the Holders, subject to the Operative Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Operative Documents to the extent the Master Servicer
has agreed in the Sale and Servicing Agreement to perform any act or to
discharge any duty of the Trust or the Owner Trustee hereunder or under any
Operative Document, and the Owner Trustee shall not be liable for the default or
failure of the Master Servicer to carry out its obligations under the Sale and
Servicing Agreement.
Section 6.3 Action upon Instruction. (a) Subject to Article
IV, the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an Insurer Default shall have occurred
and be continuing) (the "Instructing Party") shall have the exclusive right to
direct the actions of the Owner Trustee in the management of the Trust, so long
as such instructions are not inconsistent with the express terms set forth
herein or in any Operative Document. The Instructing Party shall not instruct
the Owner Trustee in a manner inconsistent with this Agreement or the Operative
Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Operative Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Operative Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Operative Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Operative Documents, as it shall deem to
be in the best interests of the Certificateholders, and shall have no liability
to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Operative Document or any
such provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction
20
25
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Operative
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
Section 6.4 No Duties Except as Specified in this Agreement or
in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Operative Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any Operative Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any Liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
Section 6.5 No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Operative
Documents and (iii) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.3.
Section 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation or a publicly traded
partnership for Federal income tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.
ARTICLE VII.
Concerning the Owner Trustee
Section 7.1 Acceptance of Trust and Duties. The Owner Trustee
accepts the trust hereby created and agrees to perform its duties hereunder with
respect to such trust but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of the Operative Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Operative Document under any circumstances, except (i)
for its own willful misconduct, bad faith or gross negligence, (ii) in the case
of the inaccuracy
21
26
of any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment, not constituting gross negligence, made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it if such action or omission is in
accordance with the instructions of the Instructing Party, the Sponsor, the
Master Servicer or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Operative Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Sponsor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Operative Documents, other than
the certificate of authentication on the Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty or obligation to the
Sponsor, the Insurer, Indenture Trustee, any Certificateholder, other than as
expressly provided for herein and in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Sponsor, the Insurer, the Indenture Trustee, or the Master
Servicer under any of the Operative Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations under this
Agreement or the Operative Documents that are required to be performed by the
Sponsor under this Agreement, by the Indenture Trustee under the Indenture or
the Master Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Operative Document, at the request, order or
direction of the Instructing Party or any of the Certificateholders, unless such
Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any
22
27
discretionary act enumerated in this Agreement or in any Operative Document
shall not be construed as a duty, and the Owner Trustee shall not be answerable
for other than its negligence, bad faith or willful misconduct in the
performance of any such act.
Section 7.2 Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Operative Documents.
Section 7.3 Representations and Warranties. The Owner Trustee
hereby represents and warrants, in its individual capacity, to the Sponsor and
the Holders (which shall have relied on such representations and warranties in
issuing the Policy), that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
Section 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer,
secretary or other authorized officers of the relevant party, as to such fact or
matter, and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the
23
28
written opinion or advice of any such counsel, accountants or other such persons
and according to such opinion not contrary to this Agreement or any Operative
Document.
Section 7.5 Not Acting in Individual Capacity. Except as
provided in this Agreement, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Operative Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 7.6 Owner Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Sponsor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes (other
than the signature of the Owner Trustee on the Notes), or of any Mortgage Loan
or related documents. The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
any Mortgage Loan, or the perfection and priority of any security interest
created by any Mortgage Loan or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Mortgage Loan; the
existence and enforceability of any insurance thereon; the existence and
contents of any Mortgage Loan on any computer or other record thereof; the
validity of the assignment of any Mortgage Loan to the Trust or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan; the compliance by the Sponsor, the Master
Servicer or any other Person with any warranty or representation made under any
Operative Document or in any related document or the accuracy of any such
warranty or representation or any action of the Indenture Trustee or the Master
Servicer or any Sub-Servicer taken in the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own Certificates and Notes.
Subject to the provisions of Section 3.1 hereof, the Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
or Notes and may deal with the Sponsor, the Indenture Trustee and the Master
Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
Section 7.8 Payments from Owner Trust Estate. All payments to
be made by the Owner Trustee under this Agreement or any of the Operative
Documents to which the Trust or the Owner Trustee is a party shall be made only
from the income and proceeds of the Owner Trust Estate and only to the extent
that the Owner Trust shall have received income or proceeds from the Owner Trust
Estate to make such payments in accordance with the terms hereof. Wilmington
Trust Company, or any successor thereto, in its individual capacity, shall not
be liable for any amounts payable under this Agreement or any of the Operative
Documents to which the Trust or the Owner Trustee is a party.
24
29
Section 7.9 Doing Business in Other Jurisdictions.
Notwithstanding anything contained to the contrary, neither Wilmington Trust
Company or any successor thereto, nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5 hereof, (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by Wilmington Trust Company (or
any successor thereto); or (iii) subject Wilmington Trust Company (or any
successor thereto) to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company (or any successor
thereto) or the Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
Section 8.1 Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Sponsor and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Sponsor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder and under the Operative Documents.
Section 8.2 Indemnification. The Sponsor shall be liable as
primary obligor for, and the Master Servicer pursuant to the Sale and Servicing
Agreement shall be the secondary obligor for, and shall indemnify the Owner
Trustee (in its individual and trust capacities) and its officers, directors,
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may (in its trust or
individual capacities) at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the Operative Documents, the Owner Trust Estate,
the administration of the Owner Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that the Sponsor shall not be liable for or
required to indemnify the Owner Trustee from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section and the rights under Section 8.1
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Sponsor which
approval shall not be unreasonably withheld.
25
30
Section 8.3 Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part
of the Owner Trust Estate immediately after such payment.
Section 8.4 Non-recourse Obligations. Notwithstanding anything
in this Agreement or any Operative Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the Trust shall be recourse to the Owner Trust Estate only and specifically
shall not be recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
Section 9.1 Termination of Trust Agreement. (a) This Agreement
and the Trust shall terminate and be of no further force or effect upon the
later of (i) the maturity or other liquidation of the last Mortgage Loan
(including the redemption by the Sponsor at its option of the corpus of the
Trust as described in Section 10.1(b) and Section 10.1(c) of the Indenture) and
the subsequent distribution of amounts in respect of such Mortgage Loans as
provided in the Operative Documents, (ii) the payment to Certificateholders of
all amounts required to be paid to them pursuant to this Agreement and the
payment to the Insurer of all amounts payable or reimbursable to it pursuant to
the Sale and Servicing Agreement and the Insurance Agreement and (iii) the
termination of the Indenture and the Insurance Agreement; provided, however,
that the rights to indemnification under Section 8.2 and the rights under
Section 8.1 shall survive the termination of the Trust. The Master Servicer
shall promptly notify the Owner Trustee and the Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Sponsor, the
Depositor nor any other Certificateholder shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Payment Date upon which the Certificateholders shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
redemption from the Master Servicer given pursuant to Section 10.1 of the Sale
and Servicing Agreement, stating (i) the Payment Date upon or with respect to
which final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Indenture Trustee therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Payment Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Indenture Trustee therein specified. The Owner Trustee shall give such
notice to the Certificate Registrar (if other than
26
31
the Owner Trustee) and the Indenture Trustee at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Indenture Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Payment Date pursuant to Section 8.6(b)(xi) of the
Indenture.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the
Sponsor for payment.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Depositor.
(e) Notwithstanding any other provision to the contrary
herein, the Trust shall not dissolve or liquidate so long as any Notes are
outstanding.
(f) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
Section 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation (i) satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poor's or being otherwise acceptable to the
Rating Agencies; and (v) acceptable to the Insurer in its sole discretion. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
27
32
Section 10.2 Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Sponsor, the Insurer and the
Master Servicer. Upon receiving such notice of resignation, the Sponsor shall
promptly appoint a successor Owner Trustee, meeting the qualifications set forth
in Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Insurer by either of the Rating
Agencies. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
Insurer (so long as no Insurer Default shall have occurred and is continuing)
may remove the Owner Trustee. If a majority of the Certificateholders shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Sponsor shall promptly appoint a successor Owner Trustee
acceptable to the Insurer, meeting the qualifications set forth in Section 10.1
herein, by written instrument, in duplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed, one copy to the Insurer
and one copy to the successor Owner Trustee and the Sponsor shall pay all fees
owed to the outgoing Owner Trustee, if not previously paid by the Trust.
Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section shall not become effective until acceptance of appointment by the
successor Owner Trustee pursuant to Section 10.3 and payment of all reasonable
fees and expenses owed to the outgoing Owner Trustee. The Servicer shall provide
written notice of such resignation or removal of the Owner Trustee to each of
the Rating Agencies and the Insurer.
Notwithstanding any other provision of this Agreement, and in
addition to any other method of removal of the Owner Trustee contained herein,
upon a proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in the Trust,
the Owner Trustee may be removed as Owner Trustee, subject to the consent of the
Insurer (so long as no Insurer Default shall have occurred and is continuing),
which consent is not to be unreasonably withheld. In the event the Owner Trustee
is removed pursuant to this paragraph, the provisions of this Agreement,
including Article X herein, shall apply as if the Owner Trustee had resigned
hereunder.
Section 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor
Owner Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the
28
33
predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Sponsor and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Master Servicer shall mail notice of the successor
of such Owner Trustee to all Certificateholders, the Indenture Trustee, the
Insurer, and the Noteholders. If the Master Servicer shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Master Servicer.
The successor Owner Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State reflecting the name and
principal place of business of such successor Owner Trustee in the State of
Delaware.
Section 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies and the Insurer.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, the Master Servicer and the Owner Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee and the Insurer to act as co-trustee,
jointly with the Owner Trustee, or separate trustee or separate trustees, of all
or any part of the Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Trust, or any part thereof, and, subject to the
other provisions of this Section, such powers, duties, obligations, rights and
trusts as the Master Servicer and the Owner Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Owner Trustee
subject to the approval of the Insurer (which approval shall not be unreasonably
withheld) shall have the power to make
29
34
such appointment. No co-trustee or separate trustee under this Agreement shall
be required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3, except that notice to and
written consent of, the Insurer shall be required for the appointment of a
co-trustee.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred
upon and exercised or performed by the Owner Trustee and such
separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to
act separately without the Owner Trustee joining in such act),
except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(iii) the Master Servicer and the Owner Trustee
acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Master Servicer and the Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
30
35
ARTICLE XI.
Miscellaneous
Section 11.1 Supplements and Amendments. (a) This Agreement
and prior written notice to the Rating Agencies may be amended by the Sponsor
and the Owner Trustee, with the prior written consent of the Insurer (so long as
no Insurer Default shall have occurred and is continuing), without the consent
of any of the Noteholders (i) to cure any ambiguity or defect or (ii) to
correct, supplement or modify any provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel which
may be based upon a certificate of the Master Servicer, adversely affect in any
material respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time, with
the prior written consent of the Insurer (so long as no Insurer Default shall
have occurred and is continuing) by the Sponsor and the Owner Trustee, with
prior written notice to the Rating Agencies, and, to the extent such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in the Trust (which consent of any
Holder of a Certificate or Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Certificate or Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Insurer under the
Operative Documents, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Mortgage Loans or distributions that shall be required to be made
for the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the
Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to the Insurer, to each Certificateholder and the Indenture
Trustee.
It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Operative Document) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe. Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
31
36
Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise. The Owner Trustee shall furnish copies of any such
amendments to the Rating Agencies.
Section 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their ownership interest therein only in
accordance with Article IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
Section 11.3 Limitations on Rights of Others. Except for
Section 11.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to
the extent expressly provided herein, the Insurer, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 11.4 Notices. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor,
addressed to Advanta Conduit Receivables, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, addressed to Insurer, Ambac Assurance Corporation, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Structured Finance
Department - MBS, Telecopy No.:▇▇▇-▇▇▇-▇▇▇▇, Confirmation No.: 212-668-0340, if
to the Depositor, Advanta Holding Trust 1999-A, c/o Wilmington Trust Company, as
Owner Trustee, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 11.5 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdictional shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
32
37
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.7 Assignments; Insurer. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Insurer for so long as an Insurer Default shall not have occurred and be
continuing. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement which confer rights upon the Insurer shall be for
the benefit of and run directly to the Insurer, and the Insurer shall be
entitled to rely on and enforce such covenants, subject, however, to the
limitations on such rights provided in this Agreement and the Operative
Documents. The Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Policy) upon delivery of
a written notice to the Owner Trustee.
Section 11.8 No Petition. The Owner Trustee (in its individual
capacity and as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee, the
Originators and each Noteholder by accepting the benefits of this Agreement,
hereby covenants and agrees that they will not at any time institute against the
Sponsor, or the Trust or join in any institution against the Sponsor or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law.
Section 11.9 No Recourse. Each Certificateholder by accepting
a Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Insurer or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Certificates or the Operative Documents.
Section 11.10 Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
Section 11.11 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.12 Master Servicer. The Master Servicer is
authorized to prepare, or cause to be prepared, execute and deliver on behalf of
the Trust all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Trust or Owner Trustee to prepare, file
or deliver pursuant to the Operative Documents. Upon written request, the Owner
Trustee shall execute and deliver to the Master Servicer a limited power of
attorney
33
38
appointing the Master Servicer the Trust's agent and attorney-in-fact to
prepare, or cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.
Section 11.13 No Borrowing. The Trust shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness
permitted by or arising under the Operative Documents except that the Trust
shall not incur any Indebtedness that would cause it, or any portion thereof, to
be treated as a "taxable mortgage pool" under Section 7701(i) of the Code. The
proceeds of the Notes shall be used exclusively to fund the Trust's purchase of
the Mortgage Loans and the other assets specified in the Sale and Servicing
Agreement and to pay the Trust's organizational, transactional and start-up
expenses.
Section 11.14 Nonpetition Covenant. (a) Until one year plus
one day shall have elapsed since the full discharge of all obligations under the
Indenture with respect to Noteholders in accordance with its terms, neither the
Sponsor or Depositor nor any assignee of the Sponsor or Depositor shall petition
or otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust without the consent of the Owner
Trustee.
(b) So long as Notes remain outstanding, no voluntary petition for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law shall be filed without the
consent of the Owner Trustee.
34
39
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY, as
Owner Trustee
By:_______________________________________________
Name:
Title:
ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor
By:_______________________________________________
Name:
Title:
ADVANTA HOLDING TRUST 1999-B, as Depositor
By: WILMINGTON TRUST COMPANY, in its capacity as
Owner Trustee
By:_______________________________________________
Name:
Title:
40
Exhibit A
ASSET BACKED CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE
EXTENT DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION
AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.10 OF THE TRUST
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE
PROVIDES A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH
CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO
THE OWNER TRUSTEE AND THE INSURER, TO THE EFFECT THAT SUCH TRANSFEREE
IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, (ii) A PLAN SUBJECT
TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(iii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH
PLAN, WHICH REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER
TRUSTEE OR THE INSURER.
NO TRANSFER OF A CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS MADE
IN ACCORDANCE WITH SAID ACT AND LAWS. EXCEPT FOR THE INITIAL ISSUANCE
OF THE CERTIFICATE TO THE DEPOSITOR, THE OWNER TRUSTEE SHALL REQUIRE
(i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN
FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER
CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS SURROUNDING
SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF THE
OWNER TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT
DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE
A-1
41
SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION,
DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR, FROM SAID
ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH OPINION OF COUNSEL
SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE, THE INSURER, THE
DEPOSITOR OR THE SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO
EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE
SPONSOR, THE DEPOSITOR AND THE INSURER AGAINST ANY LIABILITY THAT MAY
RESULT IF THE TRANSFER IS NOT SO EXEMPT OR IS NOT MADE IN ACCORDANCE
WITH SUCH FEDERAL AND STATE LAWS.
THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED
EXCEPT UPON SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE
PERSON THAT ACQUIRES A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING
UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE OR THE
DISTRICT OF COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN AGREEMENT
SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO THE OWNER TRUSTEE, THE
PERFORMANCE OF EVERY COVENANT AND OBLIGATION OF THE SPONSOR UNDER THE
TRUST AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS CONTAINED IN
SECTIONS 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING
AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE
AGREEMENTS AND THE MORTGAGE NOTES; (II) THE PERSON THAT ACQUIRES A
CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN
OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL
AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST AGREEMENT AND THAT ALL
CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF THE TRUST AGREEMENT
HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT SUCH
TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 AND
THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 HAVE BEEN
COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY ON SUCH
OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD
TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO
RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO
THE OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING AGENCY
CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT TO SUCH
TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE
POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO
THE OWNER TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT
THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE
NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE
INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN THE TRUST
BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE
A-2
42
STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL
ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A
NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT
CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF THE TRUST, BEING
TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(i) OF THE
CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE
PERFECTION OF THE INTEREST OF THE TRUST IN THE MORTGAGE LOANS AND THE
OTHER PROPERTY CONVEYED UNDER THE TRUST AGREEMENT SHALL HAVE BEEN TAKEN
OR MADE.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-3
43
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
ASSET BACKED CERTIFICATE
Percentage Interest: 100%
Cut-Off Date:
Close of business on August 31, 1999
First Payment Date: Issue Date: September 28, 1999
October 25, 1999
No. 1
ADVANTA HOLDING TRUST 1999-B
Registered Holder
The Trust was created pursuant to a Trust Agreement dated as
of September 1, 1999 (the "Trust Agreement"), between Advanta Conduit
Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B (the
"Depositor") and Wilmington Trust Company, as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as Advanta Revolving Home Equity Loan Trust 1999-B "Asset Backed
Certificates." Also issued under the Indenture dated as of September 1, 1999
(the "Indenture") between the Trust and Bankers Trust Company of California,
N.A., as indenture trustee (the "Indenture Trustee") are the Advanta Revolving
Home Equity Loan Asset Backed Notes (the "Notes"). These Certificates are issued
under and are subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the holder of this Certificate by virtue of
the acceptance hereof assents and by which such holder is bound. The property of
the Trust includes a pool of adjustable-adjustable-rate home equity revolving
credit line loans secured by first or second deeds of trust or Mortgages on
primarily one-to-four family residential properties.
Under the Trust Agreement, there will be distributed on the
25th day of each month or, if such 25th day is not a Business Day, the next
Business Day (the "Payment Date"), commencing on October 25, 1999, to the Person
in whose name this Certificate is registered at the close of business on the
Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
A-4
44
It is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust or the Sponsor, or join in any institution against the Trust or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Operative
Documents.
Distributions on this Certificate will be made as provided in
the Sale and Servicing Agreement and the Indenture by the Indenture Trustee by
wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
A-5
45
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Certificate to be duly
executed.
Date: September 28, 1999 ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-B
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner Trustee
By:__________________________________________________
Name:
Title:
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within
mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee
By:_____________________________
Authenticating Agent
A-6
46
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, the Originators, the Sponsor, the Master Servicer, the Insurer, the
Depositor, the Owner Trustee or any Affiliates of any of them and no recourse
may be had against such parties or their assets, except as may be expressly set
forth or contemplated herein or in the Trust Agreement, the Indenture or the
Operative Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Mortgage Loans, as more specifically set
forth herein, in the Sale and Servicing Agreement and in the Indenture. A copy
of each of the Sale and Servicing Agreement and the Trust Agreement may be
examined during normal business hours at the principal office of the Sponsor,
and at such other places, if any, designated by the Sponsor, by any
Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Trust Agreement at any time by the Sponsor and the Owner Trustee with the prior
written consent of the Insurer and with the consent of the holders of the Notes
and the Certificates evidencing not less than a majority of the outstanding
Notes and the Certificates. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates (other than the Sponsor or the Insurer).
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Sponsor, the
Certificates are issuable only as registered Certificates without coupons in
denominations of $1,000 or integral multiples of $1,000 in excess thereof. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates in authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and
any agent of the Owner Trustee, the Certificate Registrar, the Insurer or the
Insurer may treat the person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the
A-7
47
Owner Trustee, the Certificate Registrar, the Insurer nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Trust.
The recitals contained herein shall be taken as the statements
of the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
A-8
48
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing __________________ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
___________________________
Signature Guaranteed:
*
___________________________
____________
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-9
49
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
This Certificate of Trust of Advanta Revolving Home Equity
Loan Trust 1999A (the "Trust") is being duly executed and filed by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. Code Section 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is
Advanta Revolving Home Equity Loan Trust 1999-B.
2. Delaware Trust. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is Wilmington Trust Company,
▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attn: Corporate Trust Administration.
3. This Certificate of Trust will be effective September 28,
1999.
IN WITNESS WHEREOF, the undersigned, in accordance with
Section 3811(a) of the Act, has duly executed this Certificate of Trust.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee of the Trust
By:______________________________________
Name:
Title:
B-1