-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ay5Z49b99UgyzxLaGhFa2a55att+duuCMnqo65qkQqvl4LHI4oUE5544rQEOBDqL gj+6j31X6tccjz04CRH1ag== 0000893220-99-001329.txt : 19991202 0000893220-99-001329.hdr.sgml : 19991202 ACCESSION NUMBER: 0000893220-99-001329 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19991117 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CONDUIT RECEIVABLES MORT LOAN TRUST 1999-4 CENTRAL INDEX KEY: 0001098755 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 880360305 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-75295-03 FILM NUMBER: 99767422 BUSINESS ADDRESS: STREET 1: ATTN: GENERAL COUNSEL STREET 2: 10790 RANCHO BERNARDO ROAD CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 6196741800 MAIL ADDRESS: STREET 1: ATTN: GENERAL COUNSEL STREET 2: 10790 RANCHO BERNARDO ROD CITY: SAN DIEGO STATE: CA ZIP: 92127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CONDUIT RECEIVABLES INC CENTRAL INDEX KEY: 0001082751 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 880360305 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-75295 FILM NUMBER: 99767423 BUSINESS ADDRESS: STREET 1: ATTN: GENERAL COUNSEL STREET 2: 10790 RANCHO BERNARDO ROAD CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 6196741800 MAIL ADDRESS: STREET 1: ATTN: GENERAL COUNSEL STREET 2: 10790 RANCHO BERNARDO ROD CITY: SAN DIEGO STATE: CA ZIP: 92127 8-K 1 ADVANTA CONDUIT RECEIVABLES, INC. (1999-4) 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 17, 1999 Advanta Conduit Receivables, Inc., as Sponsor on behalf of Advanta Mortgage Loan Trust 1999-4 (Exact name of registrant as specified in its charter)
Nevada 333-75295-03 88-0360305 ------ ------------ ---------- (State or Other Jurisdiction (Commission File (I.R.S. Employer of Incorporation) Number) Identification No.)
Advanta Conduit Receivables, Inc. (Exact name of registrant as specified in its charter)
Nevada 333-75295 88-0360305 ------ --------- ---------- (State or Other Jurisdiction (Commission File (I.R.S. Employer of Incorporation) Number) Identification No.)
Attention: General Counsel 10790 Rancho Bernardo Drive San Diego, California 92127 - --------------------- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (858) 676-3099 (Former name or former address, if changed since last report) 2 Item 2. Acquisition or Disposition of Assets Description of the Certificates and the Mortgage Loans Advanta Conduit Receivables, Inc. (the "Registrant" or the "Sponsor") registered an issuance of $1,699,051,007.20 in principal amount of Mortgage Loan Asset-Backed Certificates on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"), by the Registration Statement on Form S-3 (File No. 333-75295) (the "Registration Statement"). Pursuant to the Registration Statement, the Sponsor formed Advanta Mortgage Loan Trust 1999-4 (the "Trust") which issued $200,000,000 in aggregate principal amount of its Mortgage Loan Asset-Backed Notes (the "Notes"), on November 17, 1999 (the "Closing Date"). This Current Report on Form 8-K is being filed to satisfy an undertaking to file copies of certain agreements executed in connection with the issuance of the Notes, the forms of which were filed as Exhibits to the Registration Statement. The Notes were issued pursuant to an Indenture (the "Indenture") attached hereto as Exhibit 4.1, dated as of November 1, 1999, between the Trust and Bankers Trust Company of California, N.A., in its capacity as Indenture Trustee (the "Indenture Trustee"). The Notes evidence indebtedness of the Trust. Also issued, but not offered, by the Trust are Certificates ("Certificates") evidencing the ownership interest in the Trust. The Certificates will initially be retained by Advanta Holding Trust 1999-4. The primary assets of the Trust is a pool of closed-end mortgage loans ("Mortgage Loans"), used predominantly to refinance an existing mortgage loan on more favorable terms, to consolidate debt or to obtain cash proceeds by borrowing against the related borrower's equity in the real property and improvements pledged to secure the related Mortgage Loan. The Mortgage Loans are secured primarily by mortgages on single-family residences (which may be detached, a condominium unit or a unit in a planned unit development) which were conveyed to the Trust on the Closing Date. As of the Closing Date, the Mortgage Loans had the characteristics described in the Prospectus Supplement dated November 5, 1999 filed pursuant to Rule 424(b)(5) of the Act with the Commission. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Not applicable (b) Not applicable 3 (c) Exhibits: 1.1 Underwriting Agreement, dated November 5, 1999, between the Sponsor and Bear, Stearns & Co. Inc., as Representative of the Underwriters. 4.1 Indenture, dated as of November 1, 1999 between the Trust and the Indenture Trustee. 4.2 Trust Agreement, dated as of November 1, 1999, between the Sponsor, and Wilmington Trust Company, as Owner Trustee (the "Owner Trustee"), relating to the formation of Advanta Holding Trust 1999-4. 4.3 Trust Agreement, dated as of November 1, 1999, among the Sponsor, Advanta Holding Trust 1999-4 and Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta Mortgage Loan Trust 1999-4. 4.4 Sale and Servicing Agreement, dated November 1, 1999, among the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and Bankers Trust Company of California, N.A., as Trustee. 4.5 Certificate Insurance Policy, dated November 17, 1999, and issued and delivered by Ambac Assurance Corporation. 5.1 Opinion of Dewey Ballantine LLP regarding legality of the registered securities, dated as of November 17, 1999.* 8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as of November 17, 1999.* 10.1 Indemnification Agreement, dated November 5, 1999, among Bear, Stearns & Co. Inc., and SG Cowen Securities Corporation as Underwriters (the "Underwriters") and Ambac Assurance Corporation, as Note Insurer. 10.2 Guaranty, dated November 17, 1999, to Ambac Assurance Corporation and Bear, Stearns & Co. Inc., as Representative of the Underwriters, issued by Advanta Mortgage Holding Company. 10.3 Guaranty, dated November 17, 1999, to Ambac Assurance Corporation and Advanta Mortgage Loan Trust 1999-4 issued by Advanta Mortgage Holding Company. 23.1 Consent of KPMG Inc. regarding financial statements of Ambac Assurance Corporation, and their report.* 23.2 Consent of Arthur Andersen LLP.* * Previously filed on Form 8-K filed with the Securities and Exchange Commission. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned thereunto duly authorized. ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor on behalf of Advanta Mortgage Loan Trust 1999-4 By: /s/ Michael Coco --------------------------------- Name: Michael Coco Title: Vice President ADVANTA CONDUIT RECEIVABLES, INC. By: /s/ Michael Coco --------------------------------- Name: Michael Coco Title: Vice President Dated: November 17, 1999 5 EXHIBIT INDEX
Exhibit No. Description ----------- ----------- 1.1 Underwriting Agreement, dated November 5, 1999, between the Sponsor and Bear, Stearns & Co. Inc., as Representative of the Underwriters. 4.1 Indenture, dated as of November 1, 1999 between the Trust and the Indenture Trustee 4.2 Trust Agreement, dated as of November 1, 1999, between the Sponsor, and Wilmington Trust Company, as Owner Trustee (the "Owner Trustee"), relating to the formation of Advanta Holding Trust 1999-4 4.3 Trust Agreement, dated as of November 1, 1999, among the Sponsor, Advanta Holding Trust 1999-4 and Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta Mortgage Loan Trust 1999-4. 4.4 Sale and Servicing Agreement, dated November 1, 1999, among the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and Bankers Trust Company of California, N.A., as Trustee. 4.5 Certificate Insurance Policy, dated November 17, 1999, and issued and delivered by Ambac Assurance Corporation. 10.1 Indemnification Agreement, dated November 5, 1999, among Bear, Stearns & Co. Inc., and SG Cowen Securities Corporation as Underwriters (the "Underwriters") and Ambac Assurance Corporation, as Note Insurer. 10.2 Guaranty, dated November 17, 1999, to Ambac Assurance Corporation and Bear, Stearns & Co. Inc., as Representative of the Underwriters, issued by Advanta Mortgage Holding Company. 10.3 Guaranty, dated November 17, 1999, to Ambac Assurance Corporation and Advanta Mortgage Loan Trust 1999-4 issued by Advanta Mortgage Holding Company.
EX-1.1 2 UNDERWRITING AGREEMENT 1 EXHIBIT 1.1 ADVANTA CONDUIT RECEIVABLES, INC. Mortgage Loan Asset-Backed Notes, Series 1999-4 UNDERWRITING AGREEMENT November 5, 1999 BEAR, STEARNS & CO. INC. As Representative of the Underwriters (the "Representative") named in Schedule I 245 Park Avenue, New York, NY 10167 Ladies and Gentlemen: Advanta Conduit Receivables, Inc. (the "Company") has authorized the issuance and sale by Advanta Mortgage Loan Trust 1999-4, a Delaware business trust (the "Trust"), of Mortgage Loan Asset-Backed Notes, Series 1999-4 (the "Notes") and Trust Certificates (the "Trust Certificates", and together with the Notes, the "Securities"). Only the Notes are offered by the Underwriters. The Notes will be issued by the Trust, and will be secured by the trust estate (the "Trust Estate") which will consist primarily of a pool of closed-end adjustable-rate, first lien sub-prime residential mortgage loans (the "Mortgage Loans"), amounts on deposit with Bankers Trust Company of California, N.A., as Indenture Trustee of the Trust (the "Indenture Trustee") in an account to be used to acquire additional mortgage loans following the Closing Date (as hereinafter defined) for the Trust (the "Pre-Funding Account") and certain related property. The Mortgage Loans shall have, on or about November 17, 1999 (the "Closing Date"), an aggregate principal balance of approximately $133,943,952 and the Pre-Funding Account shall have approximately $71,100,000, which amount may be applied to the purchase of additional loans during the period from the Closing Date to on or before February 29, 1999. The Notes are to be issued pursuant to an Indenture, to be dated as of November 1, 1999 (the "Indenture"), between the Trust and the Indenture Trustee. The Trust, the Indenture Trustee, Advanta Holding Trust 1999-4 (the "Holding Trust"), the Company and Advanta Mortgage Corp. USA, as Master Servicer will also enter into a Sale and Servicing Agreement, dated as of November 1, 1999 (the "Sale and Servicing Agreement"). On or prior to the date of issuance of the Notes, the Company will obtain a financial guaranty insurance policy (the "Policy") issued by Ambac Assurance Corporation (the "Insurer") which will unconditionally and irrevocably guarantee to the Indenture Trustee for the benefit of the holders of the Notes an amount equal to the Insured Amount (as defined in the Annex A to the Sale and Servicing Agreement). 2 The Notes are more fully described in a Registration Statement which the Company has furnished to the Underwriters. Capitalized terms used but not defined herein shall have the meanings given to them in the Annex A to the Sale and Servicing Agreement. Simultaneously with the execution of the Indenture and the Sale and Servicing Agreement, the Company will enter into a conveyance agreement pursuant to the Mortgage Loan Transfer Agreement dated on or about November 1, 1999 among the Company and the Originators named therein (together, the "Purchase Agreement"), pursuant to which the Originators will transfer to the Company all of their right, title and interest in and to the Mortgage Loans as of the Closing Date. The Company will also enter into a Trust Agreement (the "Trust Agreement"), dated as of November 1, 1999, among the Wilmington Trust Company, as Owner Trustee (the "Owner Trustee"), the Holding Trust and the Company, pursuant to which the Trust will be formed. The Company will also enter into an Indemnification Agreement (the "Indemnification Agreement") dated as of November 5, 1999 among the Underwriters and the Insurer. Section 1. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with the Underwriters that: a. A Registration Statement on Form S-3 (registration statement number 333-75295), as amended by Post-Effective Amendments thereto, has (i) been prepared by the Company in conformity with the requirements of the Securities Act of 1933 (the "Securities Act") and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the respective rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such Registration Statement has been delivered by the Company to the Underwriters. As used in this Agreement, "Effective Time" means the date and the time as of which such Registration Statements, or the most recent post-effective amendment thereto, if any, was declared effective by the Commission; "Effective Date" means the date of the Effective Time; "Registration Statement" means such registration statement, as amended by all Post-Effective Amendments thereto heretofore filed with the Commission, at the Effective Time, including any documents incorporated by reference therein at such time; and "Prospectus" means each Prospectus included in such Registration Statement or amendments thereof and any prospectus filed with the Commission by the Company with the consent of the Underwriters pursuant to Rule 424(a) of the Rules and Regulations and as supplemented by a final prospectus supplement (the "Prospectus Supplement") relating to the Notes, as first filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations. Reference made herein to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of such Prospectus, as the case may be, and any 2 3 reference to any amendment or supplement to the Prospectus shall be deemed to refer to and include any document filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") after the date of such Prospectus, as the case may be, and incorporated by reference in such Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to include any report of the Company filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the Effective Time that is incorporated by reference in the Registration Statement. There are no contracts or documents of the Company which are required to be filed as exhibits to the Registration Statement pursuant to the Securities Act or the Rules and Regulations which have not been so filed or incorporated by reference therein on or prior to the Effective Date of the Registration Statement. The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. To the extent that any Underwriter (i) has provided to the Company Collateral Term Sheets (as hereinafter defined) that such Underwriter has provided to a prospective investor, the Company has filed such Collateral Term Sheets as an exhibit to a report on Form 8-K within two business days of its receipt thereof, or (ii) has provided to the Company Structural Term Sheets or Computational Materials (each as defined below) that such Underwriter has provided to a prospective investor, the Company will file or cause to be filed with the Commission a report on Form 8-K containing such Structural Term Sheet and Computational Materials, as soon as reasonably practicable after the date of this Agreement, but in any event, not later than the date on which the Prospectus is filed with the Commission pursuant to Rule 424 of the Rules and Regulations. b. The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will, when they become effective or are filed with the Commission, as the case may be, conform in all respects to the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations. The Registration Statement, as of the Effective Date thereof and of any amendment thereto, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus as of its date, and as amended or supplemented as of the Closing Date does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company in writing by the Underwriters expressly for use therein. c. The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material 3 4 fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. d. Since the respective dates as of which information is given in the Prospectus, there has not been any material adverse change in the general affairs, management, financial condition, or results of operations of the Company, otherwise than as set forth or contemplated in the Prospectus as supplemented or amended as of the Closing Date. e. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, and has all power and authority necessary to own or hold its properties, to conduct the business in which it is engaged and to enter into and perform its obligations under this Agreement, the Sale and Servicing Agreement, an Insurance and Indemnity Agreement, dated as of November 17, 1999, between the Insurer, Advanta Mortgage Corp. USA, as Master Servicer , the Company, the Trust, the Holding Trust and the Indenture Trustee (the "Insurance Agreement"), the Trust Agreement, and the Purchase Agreement, and to cause the Notes to be issued. f. There are no actions, proceedings or investigations pending before or threatened by any court, administrative agency or other tribunal to which the Company is a party or of which any of its properties is the subject (a) which if determined adversely to the Company would have a material adverse effect on the business or financial condition of the Company, (b) which asserts the invalidity of this Agreement, the Sale and Servicing Agreement, the Insurance Agreement, the Purchase Agreement, the Trust Agreement or the Notes, (c) which seeks to prevent the issuance of the Notes or the consummation by the Company of any of the transactions contemplated by the Indenture, the Sale and Servicing Agreement, the Insurance Agreement, the Purchase Agreement, the Trust Agreement or this Agreement, as the case may be, or (d) which might materially and adversely affect the performance by the Company of its obligations under, or the validity or enforceability of, the Sale and Servicing Agreement, the Insurance Agreement, the Purchase Agreement, the Trust Agreement, this Agreement or the Notes. g. This Agreement has been, and the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement and the Purchase Agreement when executed and delivered as contemplated hereby and thereby will have been, duly authorized, executed and delivered by the Company, and this Agreement constitutes, the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement and the 4 5 Purchase Agreement when executed and delivered as contemplated herein, will constitute, legal, valid and binding instruments enforceable against the Company in accordance with their respective terms, subject as to enforceability to (x) applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors' rights generally, (y) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law), and (z) with respect to rights of indemnity under this Agreement and limitations of public policy under applicable securities laws. h. The execution, delivery and performance of this Agreement, the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement and the Purchase Agreement by the Company and the consummation of the transactions contemplated hereby, thereby and in the Indenture, and the issuance and delivery of the Notes do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party, by which the Company is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the articles of incorporation or by-laws of the Company or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties or assets. i. Arthur Andersen LLP are independent public accountants with respect to the Company as required by the Securities Act and the Rules and Regulations. j. The direction by the Company to the Indenture Trustee to execute, authenticate, issue and deliver the Notes has been duly authorized by the Company, and assuming the Indenture Trustee has been duly authorized to do so, when executed, authenticated, issued and delivered by the Indenture Trustee in accordance with the Indenture, the Notes will be validly issued and outstanding and will be entitled to the benefits provided by the Indenture. k. No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body of the United States is required for the issuance of the Notes and the sale of the Notes to the Underwriters, or the consummation by the Company of the other transactions contemplated by this Agreement, the Indenture, the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement and the Purchase Agreement, except such consents, approvals, authorizations, registrations or qualifications as may be required under State securities or Blue Sky laws in connection with the purchase and distribution of the Notes by the Underwriters or as have been obtained. l. The Company possesses all material licenses, certificates, authorities or permits issued by the appropriate State, Federal or foreign regulatory agencies or bodies necessary to conduct the business now conducted by it and as described in the Prospectus, and the Company has not received notice of any proceedings 5 6 relating to the revocation or modification of any such license, certificate, authority or permit which if decided adversely to the Company would, singly or in the aggregate, materially and adversely affect the conduct of its business, operations or financial condition. m. At the time of execution and delivery of the Indenture and the Sale and Servicing Agreement, the Company will or will cause the Trust to: (i) have good title to the interest in the Mortgage Loans, free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or other security interest (collectively, "Liens"); (ii) not have assigned to any person any of its right, title or interest in the Mortgage Loans, in the Purchase Agreement, in the Indenture, in the Sale and Servicing Agreement, in the Trust Agreement or in the Notes being issued pursuant thereto; and (iii) have the power and authority to sell its interest in or cause the sale of the Mortgage Loans to the Indenture Trustee, on behalf of the Trust, and to sell the Notes to the Underwriters. Upon execution and delivery of the Sale and Servicing Agreement by the Trust, the Trust will have acquired beneficial ownership of all of the Company's right, title and interest in and to the Mortgage Loans. Upon delivery to the Underwriters of the Notes, the Underwriters will have good title to the Notes, free of any Liens. n. The Trust's pledge of the Mortgage Loans to the Indenture Trustee pursuant to the Indenture will vest in the Indenture Trustee, for the benefit of the Noteholders, a first priority perfected security interest therein, subject to no prior lien, mortgage, security interest, pledge, adverse claim, charge or other encumbrance. o. As of the opening of business on November 1, 1999 (the "Cut-Off Date"), and on each Subsequent Cut-Off Date (as defined in the Annex A to the Sale and Servicing Agreement) each of the Mortgage Loans will meet the eligibility criteria described in the Prospectus and will conform to the descriptions thereof contained in the Prospectus. p. None of the Company, the Holding Trust or the Trust is an "investment company" within the meaning of such term under the Investment Company Act of 1940, as amended (the "1940 Act") and the rules and regulations of the Commission thereunder. q. At the Closing Date, the Notes, the Indenture and the Sale and Servicing Agreement will conform in all material respects to the descriptions thereof contained in the Prospectus. r. At the Closing Date, the Notes shall have been rated in the highest rating category by at least two nationally recognized rating agencies. s. Any taxes, fees and other governmental charges in connection with the execution, delivery and issuance of this Agreement, the Indenture, the Sale and Servicing Agreement, the Insurance Agreement, the Indemnification Agreement, the 6 7 Purchase Agreement, the Trust Agreement and the Securities have been paid or will be paid at or prior to the Closing Date. t. At the Closing Date, each of the representations and warranties of the Company set forth in the Sale and Servicing Agreement will be true and correct in all material respects. Any certificate signed by an officer of the Company and delivered to the Representative or counsel for the Underwriters in connection with an offering of the Notes shall be deemed, and shall state that it is, a representation and warranty as to the matters covered thereby to each person to whom the representations and warranties in this Section 1 are made. Section 2. Purchase and Sale. The commitment of the Underwriters to purchase the Notes pursuant to this Agreement shall be deemed to have been made on the basis of the representations and warranties herein contained and shall be subject to the terms and conditions herein set forth. The Company agrees to instruct the Indenture Trustee to issue and agrees to sell to the Underwriters, and the Underwriters agree (except as provided in Sections 10 and 11 hereof) to purchase from the Company the aggregate initial principal amounts of Notes set forth on Schedule A, at the purchase price or prices set forth in Schedule A. The obligations of the Underwriters hereunder to purchase the Notes shall be several and not joint. Each Underwriter's obligation shall be to purchase the aggregate principal amount of Notes as is indicated with respect to each Underwriter under the caption "Underwriting" in the Prospectus. The rights of the Company and a non-defaulting Underwriter shall be as set forth in Section 13 hereof. Section 3. Delivery and Payment. Delivery of and payment for the Notes to be purchased by the Underwriters shall be made at the offices of Dewey Ballantine LLP, 1301 Sixth Avenue, New York, New York 10019, or at such other place as shall be agreed upon by the Representative and the Company at 10:00 A.M. New York City time on November 17, 1999 or at such other time or date as shall be agreed upon by the Representative and the Company. Payment shall be made to the Company by wire transfer of same day funds payable to the account of the Company. Delivery of the Notes shall be made to the Representative for the accounts of the Underwriters against payment of the purchase price thereof. The Notes shall be in such denominations and registered in such names as the Company and the Representative have agreed upon at least two business days prior to the Closing Date. The Notes will be made available for examination by the Representative no later than 2:00 p.m. New York City time on the first business day prior to the Closing Date. Section 4. Offering by the Underwriters. It is understood that, subject to the terms and conditions hereof, the Underwriters propose to offer the Notes for sale to the public as set forth in the Prospectus. 7 8 Section 5. Covenants of the Company. The Company agrees as follows: a. (i) To prepare the Prospectus Supplement in a form approved by the Representative and to file such Prospectus Supplement pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement; (ii) to make no further amendment or any supplement to the Registration Statement or to the Prospectus prior to the Closing Date except as permitted herein; (iii) to advise the Representative, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Representative with copies thereof; (iv) to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and, for so long as the delivery of a prospectus is required in connection with the offering or sale of the Notes; and (v) to promptly advise the Representative of its receipt of notice of the issuance by the Commission of any stop order or of: (w) any order preventing or suspending the use of the Prospectus; (x) the suspension of the qualification of the Notes for offering or sale in any jurisdiction; (y) the initiation of or threat of any proceeding for any such purpose; (z) any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information. In the event of the issuance of any stop order or of any order preventing or suspending the use of the Prospectus or suspending any such qualification, the Company promptly shall use its best efforts to obtain the withdrawal of such order or suspension. b. To furnish promptly to the Representative and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, and of each amendment thereto filed with the Commission, including all consents and exhibits filed therewith. c. To deliver promptly to the Representative such number of the following documents as the Representative shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case including exhibits); (ii) the Prospectus and any amended or supplemented Prospectus; and (iii) any document incorporated by reference in the Prospectus (including exhibits thereto). If the delivery of a prospectus is required at any time prior to the expiration of nine months after the Effective Time in connection with the offering or sale of the Notes, and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, the Company shall notify 8 9 the Representative and, upon the Representative's request, shall file such document and prepare and furnish without charge to the Underwriters and to any dealer in securities as many copies as the Representative may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which corrects such statement or omission or effects such compliance, and in case any of the Underwriters are required to deliver a Prospectus in connection with sales of any of the Notes at any time nine months or more after the Effective Time, upon the request of the Representative but at the expense of such Underwriter, the Company shall prepare and deliver to such Underwriter as many copies as such Underwriter may reasonably request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Securities Act. d. To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Representative, be required by the Securities Act or requested by the Commission. e. Prior to filing with the Commission any (i) amendment to the Registration Statement or supplement to the Prospectus, or document incorporated by reference in the Prospectus, or (ii) Prospectus pursuant to Rule 424 of the Rules and Regulations, to give at least three business days prior notification to the Representative and to furnish a copy thereof to the Representative and counsel for the Underwriters, provided, however, that if any of the foregoing filings referred to in (i) or (ii), relate to the Notes, the Company shall obtain the consent of the Representative to such filing, which consent shall not be unreasonably withheld. f. [Reserved]. g. To use its best efforts, in cooperation with the Representative, to qualify the Notes for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Representative may designate, and maintain or cause to be maintained such qualifications in effect for as long as may be required for the distribution of the Notes. The Company will file or cause the filing of such statements and reports as may be required by the laws of each jurisdiction in which the Notes have been so qualified. h. The Company shall not, without the Representative's prior written consent, which consent shall not be unreasonably withheld, publicly offer or sell or contract to sell any mortgage pass-through securities, collateralized mortgage obligations or other similar securities representing interests in or secured by other mortgage-related assets originated or owned by the Company for a period of 5 business days following the commencement of the offering of the Notes to the public. i. So long as the Notes shall be outstanding, to deliver to the Representative as soon as such statements are furnished to the Indenture Trustee: (i) the annual statement as to compliance delivered to the Indenture Trustee pursuant to Article IV of the Sale and Servicing Agreement; (ii) the annual statement of a firm of 9 10 independent public accountants furnished to the Indenture Trustee pursuant to Article IV of the Sale and Servicing Agreement; and (iii) the Monthly Statement furnished to the Noteholders pursuant to Article VIII of the Indenture. j. To apply the net proceeds from the sale of the Notes in the manner set forth in the Prospectus. Section 6. Conditions to the Underwriters' Obligations. The obligations of the Underwriters to purchase the Notes pursuant to this Agreement are subject to: (i) the accuracy on and as of the Closing Date of the representations and warranties on the part of the Company herein contained; (ii) the performance in all material respects by the Company of all of their respective obligations hereunder; and (iii) the following conditions as of the Closing Date: a. The Representative shall have received confirmation of the effectiveness of the Registration Statement. No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission. Any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus shall have been complied with. b. None of the Underwriters shall have discovered and disclosed to the Company on or prior to the Closing Date that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact or omits to state a fact which, in the opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Underwriters, is material and is required to be stated therein or is necessary to make the statements therein not misleading. c. All corporate proceedings and other legal matters relating to the authorization, form and validity of this Agreement, the Indenture, the Sale and Servicing Agreement, the Purchase Agreement, the Insurance Agreement, the Indemnification Agreement, the Trust Agreement, the Notes, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be satisfactory in all respects to counsel for the Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. d. The Representative shall have received the favorable opinion of Dewey Ballantine LLP, special counsel to the Company with respect to the following items, dated the Closing Date, to the effect that: 1. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Nevada, and is qualified to do business in each state necessary to enable it to perform its obligations as Sponsor under the Sale and Servicing Agreement. The Company has the requisite power and authority to execute and deliver, engage in the transactions contemplated by, and perform and observe the conditions of, this 10 11 Agreement, the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement and the Purchase Agreement. 2. This Agreement, the Notes, the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement and the Purchase Agreement have been duly and validly authorized, executed and delivered by the Company, all requisite corporate action having been taken with respect thereto, and each (other than the Securities) constitutes the valid, legal and binding agreement of the Company. 3. Neither the transfer of the Mortgage Loans to the Trust Estate, the issuance or sale of the Notes nor the execution, delivery or performance by the Company of the Sale and Servicing Agreement, this Agreement, the Insurance Agreement, the Trust Agreement or the Purchase Agreement (A) conflicts or will conflict with or results or will result in a breach of, or constitutes or will constitute a default under, (i) any term or provision of the certificate of incorporation or bylaws of the Company; (ii) any term or provision of any material agreement, contract, instrument or indenture, to which the Company is a party or is bound and known to such counsel; or (iii) any order, judgment, writ, injunction or decree of any court or governmental agency or body or other tribunal having jurisdiction over the Company and known to such counsel; or (B) results in, or will result in the creation or imposition of any lien, charge or encumbrance upon the Trust Estate or upon the Notes, except as otherwise contemplated by the Indenture or the Sale and Servicing Agreement. 4. With respect to the Mortgage Loans, the endorsement and delivery of each Mortgage Note, and the preparation, delivery and recording of an Assignment in each case with respect to each Mortgage is sufficient to fully transfer to the Trust for the benefit of the owners of the Notes all right, title and interest of the Company in the Mortgage Note and Mortgage, as noteholder and mortgagee or assignee thereof, subject to any exceptions set forth in such opinion, and will be sufficient to permit the Trust to avail itself of all protection available under applicable law against the claims of any present or future creditors of the Company and to prevent any other sale, transfer, assignment, pledge or other encumbrance of the Mortgage Loans by the Company from being enforceable. 5. No consent, approval, authorization or order of, registration or filing with, or notice to, courts, governmental agency or body or other tribunal is required under the laws of the State of New York, for the execution, delivery and performance of the Sale and Servicing Agreement, this Agreement, the Insurance Agreement, the Purchase Agreement, the Trust Agreement or the offer, issuance, sale or delivery of the Notes or the consummation of any other transaction contemplated thereby by the Company, except such which have been obtained. 11 12 6. There are no actions, proceedings or investigations, to such counsel's knowledge, pending or threatened against the Company before any court, governmental agency or body or other tribunal (i) asserting the invalidity of the Sale and Servicing Agreement, the Insurance Agreement, this Agreement, the Purchase Agreement, the Trust Agreement or the Notes, (ii) seeking to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by the Indenture, the Sale and Servicing Agreement, the Indemnification Agreement, the Insurance Agreement, the Trust Agreement or this Agreement, or (iii) which would materially and adversely affect the performance by the Company of obligations under, or the validity or enforceability of, the Sale and Servicing Agreement, the Insurance Agreement, the Notes, the Purchase Agreement, the Trust Agreement or this Agreement. 7. To the best of the knowledge of such counsel, the Commission has not issued any stop order suspending the effectiveness of the Registration Statement or any order directed to any prospectus relating to the Notes (including the Prospectus), and has not initiated or threatened any proceeding for that purpose. 8. The Registration Statement and the Prospectus (other than the financial and statistical data included therein, as to which such counsel need express no opinion), including the Incorporated Documents, as of the date on which the Registration Statement was declared effective and as of the date hereof, comply as to form in all material respects with the requirements of the Securities Act and the rules and regulations thereunder and the Exchange Act and the rules and regulations thereunder, and such counsel does not know of any amendment to the Registration Statement required to be filed, or of any contracts, indentures or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be described in the Registration Statement which has not been filed or described as required. 9. The Indenture, when executed and delivered, will have been duly qualified under the Trust Indenture Act. The registration of the Trust under the Investment Company Act of 1940, as amended is not presently required. 10. The Indenture, upon execution and delivery, is effective to create a valid and enforceable security interest in favor of the Indenture Trustee, for the benefit of the Noteholders and the Insurer, in all of the Trust's right, title and interest in the Mortgage Loans. The security interest in favor of the Indenture Trustee, for the benefit of the Noteholders and the Insurer, will constitute a first priority perfected security interest upon the delivery of the Mortgage Files to the Indenture Trustee, on behalf of the Noteholders, and the recording of instruments in accordance with the provisions of the Sale and Servicing Agreement. 11. The statements in the Prospectus set forth under the captions "DESCRIPTION OF THE SECURITIES," "THE AGREEMENTS" and 12 13 the statements in the Prospectus Supplement set forth under the caption "DESCRIPTION OF THE NOTES," to the extent such statements purport to summarize certain provisions of the Notes or of the Indenture or the Sale and Servicing Agreement, are fair and accurate in all material respects. 12. The statements in the Prospectus and Prospectus Supplement set forth under the captions "ERISA CONSIDERATIONS," "MATERIAL FEDERAL INCOME TAX CONSEQUENCES," and the statements in the Prospectus set forth under the caption "LEGAL ASPECTS OF MORTGAGE LOANS," to the extent that they constitute matters of federal, New York, California or Nevada law, or federal, New York, California or Nevada legal conclusions provide a fair and accurate summary of such law or conclusions. 13. The opinions of Dewey Ballantine LLP, special counsel to the Company, expressed or referred to under the captions "MATERIAL FEDERAL INCOME TAX CONSEQUENCES" of the Prospectus and Prospectus Supplement are hereby confirmed. 14. Such opinion shall also relate to comparable matters with respect to the Originators and Advanta Mortgage Holding Company. 15. No information has come to such counsel's attention which causes them to believe that the Prospectus (other than the financial statement and other financial and statistical data contained therein, as to which such counsel need express no opinion), as of the date thereof, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 16. Such other matters as the Representative may reasonably request. In rendering its opinions, the counsel described above may rely, as to matters of fact, on certificates of responsible officers of the Company, the Indenture Trustee and public officials. Such opinions may also assume the due authorization, execution and delivery of the instruments and documents referred to therein by the parties thereto other than the Company. e. The Representative shall have received letters, including bring-down letters, from Arthur Andersen LLP, dated on or before the Closing Date, in form and substance satisfactory to the Representative and counsel for the Underwriters, to the effect that they have performed certain specified procedures requested by the Representative with respect to the information set forth in the Prospectus and certain matters relating to the Company. f. The Notes shall have received the ratings listed on Schedule A hereto, and such ratings shall not have been rescinded or downgraded as of the Closing Date. The Representative and counsel for the Underwriters shall have received copies of 13 14 any opinions of counsel supplied to the rating organizations relating to any matters with respect to the Notes. Any such opinions shall be dated the Closing Date and addressed to the Underwriters or accompanied by reliance letters to the Underwriters or shall state that the Underwriters may rely upon them. g. The Representative shall have received from the Company a certificate, signed by the president, a senior vice president or a vice president of the Company, dated the Closing Date, to the effect that the signer of such certificate has carefully examined the Registration Statement, the Indenture, the Sale and Servicing Agreement and this Agreement and that, to the best of his or her knowledge based upon reasonable investigation: 1. the representations and warranties of the Company in this Agreement, as of the Closing Date, and in the Sale and Servicing Agreement, the Insurance Agreement, the Purchase Agreement, the Trust Agreement and in all related agreements, as of the date specified in such agreements, are true and correct, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; 2. except as set forth in the Prospectus, there are no actions, suits or proceedings pending, or to the best of such officer's knowledge, threatened against or affecting the Company which if adversely determined, individually or in the aggregate, would be reasonably likely to adversely affect the Company's obligations under the Sale and Servicing Agreement, the Insurance Agreement, this Agreement, the Trust Agreement or the Purchase Agreement in any material way; and no merger, liquidation, dissolution or bankruptcy of the Company is pending or contemplated; 3. the information contained in the Registration Statement and the Prospectus relating to the Company, the Mortgage Loans or the servicing procedures of it or its affiliates or subservicer is true and accurate in all material respects and nothing has come to his or her attention that would lead such officer to believe that the Registration Statement or Prospectus includes any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading; 4. the information set forth in the Schedule of Mortgage Loans required to be furnished pursuant to the Sale and Servicing Agreement is true and correct in all material respects; 5. there has been no amendment or other document filed affecting the articles of incorporation or bylaws of the Company since December 31, 1998, and no such amendment has been authorized. No event has occurred since September 30, 1999, which has affected the good standing of the Company under the laws of the State of Nevada; 14 15 6. there has not occurred any material adverse change or, except as set forth in the Prospectus, any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from September 30, 1999; 7. on or prior to the Closing Date, there has been no downgrading, nor has any notice been given of (A) any intended or potential downgrading or (B) any review or possible changes in rating the direction of which has not been indicated, if any, accorded the Company or in any rating accorded any securities of the Company, if any, by any "nationally recognized statistical rating organization," as such term is defined for purposes of the Securities Act; and 8. each person who, as an officer or representative of the Company, signed or signs the Registration Statement, the Sale and Servicing Agreement, the Insurance Agreement, the Trust Agreement, this Agreement, or any other document delivered pursuant hereto, on the date of such execution, or on the Closing Date, as the case may be, in connection with the transactions described in the Indenture, the Sale and Servicing Agreement, the Insurance Agreement, the Purchase Agreement, the Trust Agreement and this Agreement was, at the respective times of such signing and delivery, and is now, duly elected or appointed, qualified and acting as such officer or representative, and the signatures of such persons appearing on such documents are their genuine signatures. The Company shall attach to such certificate a true and correct copy of its certificate or articles of incorporation, as appropriate, and bylaws which are in full force and effect on the date of such certificate and a certified true copy of the resolutions of its Board of Directors with respect to the transactions contemplated herein. h. The Representative shall have received a favorable opinion of counsel to the Indenture Trustee, dated the Closing Date and in form and substance satisfactory to the Representative, to the effect that: 1. the Indenture Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the power and authority to enter into and to take all actions required of it under the Indenture and the Sale and Servicing Agreement; 2. the Indenture and the Sale and Servicing Agreement have been duly authorized, executed and delivered by the Indenture Trustee and the Indenture and the Sale and Servicing Agreement constitute the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms, except as enforceability thereof may be limited by (A) bankruptcy, insolvency, reorganization or other similar laws 15 16 affecting the enforcement of creditors' rights generally, as such laws would apply in the event of a bankruptcy, insolvency or reorganization or similar occurrence affecting the Indenture Trustee, and (B) general principles of equity regardless of whether such enforcement is sought in a proceeding at law or in equity; 3. no consent, approval, authorization or other action by any governmental agency or body or other tribunal is required on the part of the Indenture Trustee in connection with its execution and delivery of the Indenture and the Sale and Servicing Agreement or the performance of its obligations thereunder; 4. the Notes have been duly executed, authenticated and delivered by the Indenture Trustee; and 5. the execution and delivery of, and performance by the Indenture Trustee of its obligations under, the Indenture and the Sale and Servicing Agreement do not conflict with or result in a violation of any statute or regulation applicable to the Indenture Trustee, or the charter or bylaws of the Indenture Trustee, or to the best knowledge of such counsel, any governmental authority having jurisdiction over the Indenture Trustee or the terms of any indenture or other agreement or instrument to which the Indenture Trustee is a party or by which it is bound. In rendering such opinion, such counsel may rely, as to matters of fact, on certificates of responsible officers of the Company, the Indenture Trustee and public officials. Such opinion may also assume the due authorization, execution and delivery of the instruments and documents referred to therein by the parties thereto other than the Indenture Trustee. i. The Representative shall have received from the Indenture Trustee a certificate, signed by the President, a senior vice president or a vice president of the Indenture Trustee, dated the Closing Date, to the effect that each person who, as an officer or representative of the Indenture Trustee, signed or signs the Notes, the Indenture, the Sale and Servicing Agreement or any other document delivered pursuant hereto, on the date hereof or on the Closing Date, in connection with the transactions described in the Indenture and the Sale and Servicing Agreement was, at the respective times of such signing and delivery, and is now, duly elected or appointed, qualified and acting as such officer or representative, and the signatures of such persons appearing on such documents are their genuine signatures. j. The Representative shall have received a favorable opinion of Richards, Layton & Finger, counsel to the Trust, dated the Closing Date and in form and substance satisfactory to the Representative, to the effect that: 1. The Trust has been duly formed and is validly existing as a business trust under the laws of the State of Delaware, 12 Del. C. Section 3801, et seq., and has the power and 16 17 authority to own its properties, to conduct its business as described in the Trust Agreement, to execute, deliver and perform the Indenture, the Insurance Agreement and the Sale and Servicing Agreement and to issue, execute and deliver the Notes and the Certificate (as defined in the Trust Agreement). 2. The Indenture, the Insurance Agreement and the Sale and Servicing Agreement have been duly authorized, executed and delivered by the Trust. 3. The Trust Agreement constitutes a legal, valid and binding obligation of the Depositor (as defined in the Trust Agreement), enforceable against the Depositor, in accordance with its terms. 4. The Trust has the power and authority to pledge the Mortgage Loans as security for the Notes and has duly authorized such pledge by all necessary trust action. The Notes have been duly authorized, executed and delivered by the Trust. 5. No consent, approval or other authorization of, or registration, declaration or filing with, any court or governmental agency or commission of the State of Delaware is required by or with respect to the Trust for the issuance and sale of the Notes or the valid execution and delivery of the Indenture, the Insurance Agreement and the Sale and Servicing Agreement, or for the validity or enforceability thereof, or for the payment of any amounts by the Trust thereunder. 6. Neither the execution and delivery by the Trust of the Indenture, the Insurance Agreement and the Sale and Servicing Agreement, nor the issuance, execution and delivery by the Trust of the Notes, nor the consummation of the transactions contemplated thereby, nor compliance with the terms thereof, will (i) conflict with or result in a breach of, or constitute a default under the provisions of any law, rule or regulation of the State of Delaware applicable to the Trust or, to our knowledge, without independent investigation, any judgment or order applicable to the Trust or its properties or, to our knowledge, without independent investigation, any indenture, mortgage, contract or other agreement or instrument to which the Trust is a party or by which it is bound or (ii) to our knowledge, result in the 17 18 creation or imposition of any lien, charge or encumbrance upon the Trusts properties (other than the lien of the Indenture). 7. To our knowledge, without independent investigation, there are no pending or threatened actions, suits or proceedings affecting the Trust before any court or other government authority which, if adversely decided, would materially and adversely affect the ability of the Trust to carry out the transactions contemplated by the Indenture, the Insurance Agreement and the Sale and Servicing Agreement. 8. To our knowledge, the Trust is not required to obtain any material permits, licenses, authorizations and approvals necessary under the laws of the State of Delaware to conduct its activities as now conducted and as described in the Trust Agreement and the Indenture. k. The Representative shall have received a favorable opinion of Richards, Layton & Finger, counsel to the Owner Trustee, dated the Closing Date and in form and substance satisfactory to the Representative, to the effect that: 1. Owner Trustee is duly incorporated and validly existing as a banking corporation under the laws of the State of Delaware and has the power and authority to execute and deliver the Trust Agreement. 2. The Trust Agreement has been duly authorized, executed and delivered by the Owner Trustee, and the Trust Agreement constitutes a legal, valid and binding agreement of the Owner Trustee, enforceable against the Owner Trustee, in accordance with its terms. 3. No consent, approval or other authorization of, or registration, declaration or filing with, any court or governmental agency or commission of the State of Delaware or the United States or America, involving the banking and trust powers of the Owner Trustee is required by or with respect to the Owner Trustee for the valid execution and delivery of the Trust Agreement or for the validity or enforceability thereof. 4. Neither the execution and delivery by the Owner Trustee of the Trust Agreement, nor the consummation of the transactions contemplated thereby, nor compliance with the terms thereof, will (i) conflict with or result in a breach of, 18 19 or constitute a default under the provisions of the Trust Agreement or the certificate of incorporation of the Owner Trustee or, any law, rule or regulation of the State of Delaware applicable to the Owner Trustee or, to our knowledge, without independent investigation, any judgment or order applicable to the Owner Trustee or its properties or any indenture, mortgage, contract or other agreement or instrument to which the Owner Trustee is a party or by which it is bound or (ii) to our knowledge, without independent investigation, result in the creation or imposition of any lien, charge or encumbrance upon the Owner Trustee's properties. 5. To our knowledge, without independent investigation, there are no pending or threatened actions, suits or proceedings affecting the Owner Trustee before any court or other government authority which, if adversely decided, would materially and adversely affect the ability of the Owner Trustee to carry out the transactions contemplated by the Trust Agreement. l. The Policy relating to the Notes shall have been duly executed and issued at or prior to the Closing Date and shall conform in all material respects to the description thereof in the Prospectus. m. The Representative shall have received a favorable opinion of in-house counsel to the Insurer, dated the Closing Date and in form and substance satisfactory to counsel for the Underwriters, to the effect that: 1. The Insurer is a stock insurance company duly organized and validly existing under the laws of the State of Wisconsin and duly qualified to conduct an insurance business in the State of California and the State of New York. The Insurer is validly licensed and authorized to issue the Policy and perform its obligations under the Policy in accordance with the terms thereof under the laws of the State of California, State of New York and the State of Wisconsin. 2. The Insurer has full corporate power and authority to execute and deliver the Policy and the Policy has been duly authorized, executed and delivered by the Insurer and constitutes a legal, valid and binding obligation of the Insurer enforceable in accordance with its terms except to the extent that the enforceability (but not the validity) of such obligation may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law 19 20 or enactment now or hereafter enacted affecting the enforcement of creditors' rights and by general principles of equity. 3. The execution and delivery by the Insurer of the Policy, the Insurance Agreement and the Indemnification Agreement will not, and the consummation of the transactions contemplated thereby and the satisfaction of the terms thereof will not, conflict with or result in a breach of any of the terms, conditions or provisions of the Certificate of Incorporation or By-Laws of the Insurer, or any restriction contained in any contract, agreement or instrument to which the Insurer is a party or by which it is bound or constitute a default under any of the foregoing. 4. Proceedings legally required for the issuance of the Policy, and the execution, delivery and performance of the Insurance Agreement and the Indemnification Agreement have been taken by the Insurer and licenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally required for the enforceability of the Policy have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceability of the Policy, the Insurance Agreement and the Indemnification Agreement. 5. The Policy is exempt from registration under the Securities Act. 6. There is no action, suit or proceeding pending against or affecting the Insurer in any court, or before or by any governmental body, which is likely to affect or impair the validity or enforceability of the Policy, the Insurance Agreement or the Indemnification Agreement. 7. The statements contained in the Prospectus Supplement under the heading "THE NOTE INSURER" and "THE POLICY", insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements describe the Insurer, fairly and accurately describe the Insurer, other than any financial or statistical information contained or incorporated by reference therein, as to which no opinion is expressed. 8. The Insurer is authorized to deliver the Insurance Agreement and the Indemnification Agreement, and each of the Insurance Agreement and the Indemnification Agreement has been duly executed and is the valid and binding obligation of the Insurer enforceable in accordance with its terms except to the extent that the enforceability (but not the validity) of such obligation may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law or enactment now or hereafter enacted affecting the enforcement of creditors' rights and by general principles of equity and subject to principles of public policy limiting the right to enforce the indemnification 20 21 provisions contained therein insofar as such provisions relate to indemnification for liabilities arising under the securities laws. In rendering this opinion, such counsel may rely, as to matters of fact, on certificates of responsible officers of the Company, the Indenture Trustee, the Insurer and public officials. Such opinion may assume the due authorization, execution and delivery of the instruments and documents referred to therein by the parties thereto other than the Insurer. The Insurer shall attach to such opinion a true and correct copy of its certificate or articles of incorporation, as appropriate, and its bylaws, all of which are in full force and effect on the date of such certificate. n. On or prior to the Closing Date, there has been no downgrading, nor has any notice been given of (A) any intended or potential downgrading or (B) any review or possible changes in rating the direction of which has not been indicated, in the rating, if any, accorded the Insurer's claims paying ability by any "nationally recognized statistical rating organization," as such term is defined for purposes of the Securities Act. o. On or prior to the Closing Date, there has been no downgrading, nor has any notice been given of (A) any intended or potential downgrading or (B) any review or possible changes in rating the direction of which has not been indicated, in the rating, if any, accorded the Company or in any rating accorded any securities of the Company, if any, by any "nationally recognized statistical rating organization," as such term is defined for purposes of the Securities Act. p. There has not occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations, since September 30, 1999, of (A) the Company and its subsidiaries or (B) the Insurer, that is in the Representative's judgment material and adverse and that makes it in the Representative's judgment impracticable to market the Notes on the terms and in the manner contemplated in the Prospectus. r. The Representative shall have received from Dewey Ballantine LLP, special counsel to the Company, a survey in form and substance satisfactory to the Representative, indicating the requirements of applicable local law which must be complied with in order to transfer and service the Mortgage Loans pursuant to the Sale and Servicing Agreement and the Indenture and the Company shall have complied with all such requirements. s. The Representative shall have received from Fried, Frank, Harris, Shriver & Jacobson, special counsel to the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the issuance and sale of the Notes, the Prospectus and such other related matters as the Representative shall reasonably require. t. The Representative and counsel for the Underwriters shall have received copies of any opinions of counsel to the Company supplied to the Indenture 21 22 Trustee relating to matters with respect to the Notes. Any such opinions shall be dated the Closing Date and addressed to the Underwriters or accompanied by reliance letters to the Underwriters or shall state the Underwriters may rely thereon. u. The Representative shall have received such further information, certificates and documents as the Representative may reasonably have requested not fewer than three (3) full business days prior to the Closing Date. v. There shall have been executed and delivered by Advanta Mortgage Holding Company, the indirect corporate parent of the Company ("AMHC"), a letter agreement with the Indenture Trustee and the Insurer, pursuant to which AMHC agrees to become jointly and severally liable with the Company and Advanta Mortgage Corp. USA for the payment of the Joint and Several Obligations (as defined in such letter agreement). w. There shall have been executed and delivered by AMHC, the indirect corporate parent of the Company, a letter agreement with the Underwriters and the Insurer, pursuant to which AMHC agrees to become jointly and severally liable with the Company and Advanta Mortgage Corp. USA for the payment of the Joint and Several Obligations (as defined in such letter agreement). x. Prior to the Closing Date, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Notes as herein contemplated and related proceedings or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained, and all proceedings taken by the Company in connection with the issuance and sale of the Notes as herein contemplated shall be satisfactory in form and substance to the Representative and counsel for the Underwriters. y. Subsequent to the execution and delivery of this Agreement none of the following shall have occurred: (i) trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the over-the-counter market shall have been suspended or minimum prices shall have been established on either of such exchanges or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction; (ii) a banking moratorium shall have been declared by Federal or state authorities; (iii) the United States shall have become engaged in hostilities, there shall have been an escalation of hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States; or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets of the United States shall be such) as to make it, in the judgment of the Representative, impractical or inadvisable to proceed with the public offering or delivery of the Notes on the terms and in the manner contemplated in the Prospectus. 22 23 z. The Notes shall have received the ratings set forth on Schedule A hereto. If any condition specified in this Section 6 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representative by notice to the Company at any time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 7. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters. Section 7. Payment of Expenses. The Company agrees to pay: (a) the costs incident to the authorization, issuance, sale and delivery of the Notes and any taxes payable in connection therewith; (b) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (c) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), the Prospectus and any amendment or supplement to the Prospectus or any document incorporated by reference therein, all as provided in this Agreement; (d) the fees and expenses of qualifying the Notes under the securities laws of the several jurisdictions as provided in Section 5(g) hereof and of preparing, printing and distributing a Blue Sky Memorandum and a Legal Investment Survey (including related fees and expenses of counsel to the Underwriters); (e) any fees charged by securities rating services for rating the Notes; (f) the costs and expenses of Dewey Ballantine LLP, counsel to the Company; and (g) all other costs and expenses incident to the performance of the obligations of the Company; provided that, except as provided in this Section 7, the Underwriters shall pay their own costs and expenses, including the costs and expenses of Fried, Frank, Harris, Shriver & Jacobson, any transfer taxes on the Notes which they may sell and the expenses of advertising any offering of the Notes made by the Underwriters. If this Agreement is terminated by the Representative, in accordance with the provisions of Section 6 or Section 10, the Company shall reimburse the Underwriters for their respective reasonable out-of-pocket expenses, including fees and disbursements of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Underwriters. Section 8. Indemnification and Contribution. a. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act from and against any and all loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Notes), to which such Underwriter or any such controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or 23 24 necessary to make the statements therein not misleading, (iii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus or (iv) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse such Underwriter and each such controlling person promptly upon demand for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in , the Prospectus or the Registration Statement in reliance upon and in conformity with written information (including any Derived Information) furnished to the Company through the Representative specifically for inclusion therein; and provided, further, that as to any Collateral Term Sheets or Computational Materials this indemnity shall not inure to the benefit of any Underwriter or any controlling person on account of any loss, claim, damage, liability or action arising from the sale of the Notes to any person by such Underwriter if such Underwriter failed to send or give a copy of the Prospectus, as amended or supplemented, to that person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact in the Collateral Term Sheets, Structural Term Sheets or Computational Materials was corrected in the Prospectus, unless such failure resulted from non-compliance by the Company with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to any Underwriters or any controlling person of such Underwriter. b. Each Underwriter agrees severally, and not jointly to indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, claim, damage or liability, or any action in respect thereof, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus, or (iv) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Underwriter specifically for inclusion therein, and shall reimburse the Company and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company or any director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any 24 25 liability which any Underwriter may otherwise have to the Company or any such director, officer or controlling person. c. Promptly after receipt by any indemnified party under this Section 8 of notice of any claim or the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure, and provided, further, that the failure to notify any indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless: (i) the employment thereof has been specifically authorized by the indemnifying party in writing; (ii) such indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party and in the reasonable judgment of such counsel it is advisable for such indemnified party to employ separate counsel; or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to local counsel) at any time for all such indemnified parties, which firm shall be designated in writing by the Underwriters, if the indemnified parties under this Section 8 consist of the Underwriters or any of their controlling persons, or by the Company, if the indemnified parties under this Section 8 consist of the Company or any of the Company's directors, officers or controlling persons. Each indemnified party, as a condition of the indemnity agreements contained in Section 8(a) and (b), shall use its best efforts to cooperate with the indemnifying party in the 25 26 defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. d. Each Underwriter agrees to deliver to the Company no later than the date on which the Prospectus Supplement is required to be filed pursuant to Rule 424 with a copy of its Derived Information (as defined below) for filing with the Commission on Form 8-K. e. Each Underwriter agrees, assuming all Company-Provided Information (defined below) is accurate and complete in all material respects, to severally and not jointly indemnify and hold harmless the Company, each of the Company's officers and directors and each person who controls the Company within the meaning of Section 15 of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Derived Information provided by such Underwriter, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him, her or it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. The obligations of each of the Underwriters under this Section 8(e) shall be in addition to any liability which such Underwriter may otherwise have. The procedures set forth in Section 8(c) shall be equally applicable to this Section 8(e). f. For purposes of this Section 8, the term "Derived Information" means such portion, if any, of the information delivered to the Company pursuant to Section 8(d) for filing with the Commission on Form 8-K as: (i) is not contained in the Prospectus without taking into account information incorporated therein by reference; (ii) does not constitute Company-Provided Information; and 26 27 (iii) is of the type of information defined as Collateral Term Sheets, Structural Term Sheets or Computational Materials (as such terms are interpreted in the No-Action Letters). "Company-Provided Information" means any computer tape furnished to the Underwriters by the Company concerning the Mortgage Loans comprising all or a portion of the Trust Estate. The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have the respective meanings assigned to them in the February 13, 1995 letter (the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public Securities Association (which letter, and the SEC staff's response thereto, were publicly available February 17, 1995). The term "Collateral Term Sheet" as used herein includes any subsequent Collateral Term Sheet that reflects a substantive change in the information presented. The term "Computational Materials" has the meaning assigned to it in the May 17, 1994 letter (the "Kidder letter" and together with the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf of Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response thereto, were publicly available May 20, 1994). g. If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or (b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or if the indemnified party failed to give the notice required under Section 8(c), in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits of the Underwriters and the Company shall be deemed to be in such proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions. The relative fault of the Underwriters and the Company shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by one of the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission and other equitable considerations. 27 28 The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(g) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8(g) shall be deemed to include, for purposes of this Section 8(g), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. h. For purposes of this Section 8, in no case shall any Underwriter be responsible for any amount in excess of (x) the amount received by such Underwriter in connection with its resale of the Notes over (y) the amount paid by such Underwriter to the Company for the Notes purchased by such Underwriter hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. g. The Underwriters severally confirm that the information set forth (i) in the Prospectus Supplement relating to market making and (ii) in the third paragraph under the caption "Underwriting" in the Prospectus Supplement, together with the Derived Information, is correct and constitutes the only information furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in the Registration Statement and the Prospectus. Section 9. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or contained in certificates of officers of the Company submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriters or controlling persons thereof, or by or on behalf of the Company and shall survive delivery of any Notes to the Underwriters. Section 10. Termination of Agreement. The Representative may terminate this Agreement immediately upon notice to the Company, at any time at or prior to the Closing Date if any of the events or conditions described in Section 6(y) of this Agreement shall occur and be continuing. In the event of any such termination, the covenant set forth in Section 5(g), the provisions of Section 7, the indemnity agreement set forth in Section 8, and the provisions of Sections 8 and 9 shall remain in effect. Section 11. Notices. All statements, requests, notices and agreements hereunder shall be in writing, and: a. if to the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Bear, Stearns & Co., Inc., as Representative of the Underwriters, Asset-Backed Securities Group, 245 Park Avenue, 4th Floor, New York, NY, 10167, Attention: General Counsel (fax:(212) 272-7294); 28 29 b. if to the Company, shall be delivered or sent by mail, telex or facsimile transmission to Advanta Conduit Receivables, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127, Attention: General Counsel (Fax: (858) 674-3592). Section 12. Persons Entitled to the Benefit of this Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters and the Company, and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that the representations, warranties, indemnities and agreements contained in this Agreement shall also be deemed to be for the benefit of the person or persons, if any, who control the Underwriters within the meaning of Section 15 of the Securities Act, and for the benefit of directors of the Company, officers of the Company who have signed the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 12, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. Section 13. Default by One of the Underwriters. If one of the Underwriters shall fail on the Closing Date to purchase the Notes which it is obligated to purchase hereunder (the "Defaulted Securities"), the remaining Underwriter(s) (the "Non-Defaulting Underwriter"), shall have the right, but not the obligation within one (1) Business Day thereafter, to make arrangements to purchase all, but not less than all, of the Defaulted Securities upon the terms herein set forth; if, however, the Non-Defaulting Underwriter shall not have completed such arrangements within such one (1) Business Day period, then this Agreement shall terminate without liability on the part of the Non-Defaulting Underwriter. No action taken pursuant to this Section 13 shall relieve the defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, either the Non-Defaulting Underwriter or the Company shall have the right to postpone the Closing Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. Section 14. Survival. The respective indemnities, representations, warranties and agreements of the Company and the Underwriters contained in this Agreement, or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Notes and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. Section 15. Definition of the Term "Business Day". For purposes of this Agreement, "Business Day" means any day that is not a Saturday or Sunday or other day on which any of the Insurer, Advanta Mortgage Corp. USA or the Company is closed or commercial banking institutions in the States of New York, California or Delaware or in the city in which the principal corporate trust office of the Indenture Trustee is located, are authorized or obligated by law or executive order to be closed. 29 30 Section 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. Section 17. Counterparts. This Agreement may be executed in counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. Section 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. Section 19. Representations of Underwriters. The Representative will act for the several Underwriters in connection with the transactions contemplated by this Agreement, and any action under this Agreement taken by the Representative will be binding upon all of the Underwriters. 30 31 If the foregoing correctly sets forth the agreement between the Company and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, ADVANTA CONDUIT RECEIVABLES, INC. By: /s/ Susan A. McVeigh ------------------------------ Name: Susan A. McVeigh Title: Vice-President CONFIRMED AND ACCEPTED, as of the date first above written: BEAR, STEARNS & CO., INC. as Representative of the Underwriters By: /s/ Thomas S. Dunstan ----------------------------- Name: Thomas S. Dunstan Title: Managing Director 31 32
SCHEDULE A - -------------------------------------------------------------------------------- INITIAL PURCHASE PRICE PRINCIPAL TO UNDERWRITERS REQUIRED AMOUNT OF NOTES DISREGARDING NOTES RATINGS PURCHASED BY COUPON ACCRUED INTEREST S&P/MOODY'S UNDERWRITERS - -------------------------------------------------------------------------------- Notes AAA /Aaa $200,000,000 LIBOR $199,500,000 +.375% (1),(2)
(1) Notes are subject to the Available Funds Cap Rate as defined in the Prospectus Supplement. (2) Notes are subject to an increase in the note interest rate on the payment date immediately following the month in which the clean-up call may first be exercised, as defined in the Prospectus Supplement. 33 SCHEDULE I
UNDERWRITER PRINCIPAL AMOUNT OF NOTES: ----------- -------------------------- Bear, Stearns & Co. Inc. $120,000,000 SG Cowen Securities Corporation $ 80,000,000 ------------ TOTAL FOR NOTES $200,000,000
EX-4.1 3 INDENTURE BETWEEN THE TRUST & INDENTURE TRUSTEE 1 Exhibit 4.1 INDENTURE between ADVANTA MORTGAGE LOAN TRUST 1999-4, as Trust, and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee Dated as of November 1, 1999 Mortgage Loan Asset-Backed Notes, Series 1999-4 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..................................... 2 Section 1.01 Definitions............................................................ 2 Section 1.02 Incorporation by Reference of the Trust Indenture Act.................. 2 Section 1.03 Rules of Construction.................................................. 2 Section 1.04 Action by or Consent of Noteholders.................................... 3 Section 1.05 Conflict with TIA...................................................... 3 ARTICLE II THE NOTES..................................................................... 3 Section 2.01 Form................................................................... 3 Section 2.02 Execution, Authentication and Delivery................................. 3 Section 2.03 Registration; Registration of Transfer and Exchange.................... 4 Section 2.04 Mutilated, Destroyed, Lost or Stolen Notes............................. 5 Section 2.05 Persons Deemed Owners.................................................. 6 Section 2.06 Payment of Principal and Interest; Defaulted Interest.................. 6 Section 2.07 Cancellation........................................................... 7 Section 2.08 Release of Trust Estate................................................ 7 Section 2.09 Book-Entry Notes....................................................... 8 Section 2.10 Notices to Clearing Agency............................................. 8 Section 2.11 Definitive Notes....................................................... 8 Section 2.12 Calculation of LIBOR................................................... 9 ARTICLE III COVENANTS.................................................................... 9 Section 3.01 Payment of Principal and Interest...................................... 9 Section 3.02 Maintenance of Office or Agency........................................ 10 Section 3.03 Money for Payments to be Held in Trust................................. 10 Section 3.04 Existence.............................................................. 11 Section 3.05 Protection of Trust Estate............................................. 11 Section 3.06 Opinions as to Trust Estate............................................ 12 Section 3.07 Performance of Obligations; Servicing of Mortgage Loans................ 12 Section 3.08 Negative Covenants..................................................... 13 Section 3.09 Annual Statement as to Compliance...................................... 14 Section 3.10 Trust Shall Not Consolidate or Transfer Assets......................... 14 Section 3.11 No Other Business...................................................... 14 Section 3.12 No Borrowing........................................................... 14 Section 3.13 Guarantees, Loans, Advances and Other Liabilities...................... 15 Section 3.14 Capital Expenditures................................................... 15 Section 3.15 Compliance with Laws................................................... 15 Section 3.16 Restricted Payments.................................................... 15 Section 3.17 Notice of Event of Defaults and Events of Servicing Termination........ 15 Section 3.18 Further Instruments and Acts........................................... 15
v 3 Section 3.19 Amendments of Sale and Servicing Agreement and Trust Agreement......... 16 Section 3.20 Income Tax Characterization............................................ 16 ARTICLE IV SATISFACTION AND DISCHARGE.................................................... 16 Section 4.01 Satisfaction and Discharge of Indenture................................ 16 Section 4.02 Application of Trust Money............................................. 17 Section 4.03 Repayment of Monies Held by Note Paying Agent.......................... 17 ARTICLE V EVENTS OF DEFAULT; REMEDIES.................................................... 18 Section 5.01 Events of Default...................................................... 18 Section 5.02 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee............................................................ 19 Section 5.03 Remedies for Events of Default......................................... 19 Section 5.04 Indenture Trustee May File Proofs of Claim............................. 20 Section 5.05 Indenture Trustee May Enforce Claims Without Possession of Notes....... 21 Section 5.06 Application of Money Collected......................................... 21 Section 5.07 Limitation of Suits.................................................... 22 Section 5.08 Unconditional Rights of Noteholders to Receive Principal and Interest.. 22 Section 5.09 Restoration of Rights and Remedies..................................... 23 Section 5.10 Rights and Remedies Cumulative......................................... 23 Section 5.11 Delay or Omission Not a Waiver......................................... 23 Section 5.12 Control by Noteholders................................................. 23 Section 5.13 Undertaking for Costs.................................................. 23 Section 5.14 Waiver of Stay or Extension Laws....................................... 24 Section 5.15 Action on Notes........................................................ 24 Section 5.16 Performance and Enforcement of Certain Obligations..................... 24 Section 5.17 Subrogation............................................................ 25 Section 5.18 Preference Claims...................................................... 25 Section 5.19 Waiver of Past Defaults................................................ 26 ARTICLE VI THE INDENTURE TRUSTEE......................................................... 26 Section 6.01 Duties of Indenture Trustee............................................ 26 Section 6.02 Rights of Indenture Trustee............................................ 28 Section 6.03 Individual Rights of Indenture Trustee................................. 29 Section 6.04 Indenture Trustee's Disclaimer......................................... 29 Section 6.05 Notice of Defaults..................................................... 29 Section 6.06 Reports by Indenture Trustee to Noteholders............................ 29 Section 6.07 Compensation and Indemnity............................................. 29 Section 6.08 Replacement of Indenture Trustee....................................... 30 Section 6.09 Successor Indenture Trustee by Merger.................................. 31 Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee...... 32 Section 6.11 Eligibility: Disqualification.......................................... 33
ii 4 Section 6.12 Preferential Collection of Claims Against Trust........................ 33 Section 6.13 Appointment and Powers................................................. 33 Section 6.14 Performance of Duties.................................................. 34 Section 6.15 Limitation on Liability................................................ 34 Section 6.16 Reliance Upon Documents................................................ 34 Section 6.17 Representations and Warranties of the Indenture Trustee................ 34 Section 6.18 Waiver of Setoffs...................................................... 35 Section 6.19 Control by the Controlling Party....................................... 35 Section 6.20 Indenture Trustee May Enforce Claims Without Possession of Notes....... 35 Section 6.21 Suits for Enforcement.................................................. 35 Section 6.22 Mortgagor Claims....................................................... 35 ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS............................................... 36 Section 7.01 Trust to Furnish to Indenture Trustee Names and Addresses of Noteholders........................................................ 36 Section 7.02 Preservation of Information; Communications to Noteholders............. 37 Section 7.03 Reports by Trust....................................................... 37 Section 7.04 Reports by Indenture Trustee........................................... 37 ARTICLE VIII PAYMENTS AND STATEMENTS; ACCOUNTS, DISBURSEMENTS AND RELEASES............... 38 Section 8.01 Collection of Money.................................................... 38 Section 8.02 Release of Trust Estate................................................ 38 Section 8.03 Establishment of Accounts.............................................. 38 Section 8.04 The Policy............................................................. 39 Section 8.05 Pre-Funding Account and Capitalized Interest Account................... 39 Section 8.06 Flow of Funds.......................................................... 40 Section 8.07 Investment of Accounts................................................. 41 Section 8.08 Eligible Investments................................................... 42 Section 8.09 Reports by Indenture Trustee........................................... 44 Section 8.10 Additional Reports by Trustee.......................................... 46 Section 8.11 Opinion of Counsel..................................................... 47 ARTICLE IX SUPPLEMENTAL INDENTURES....................................................... 47 Section 9.01 Supplemental Indentures Without Consent of Noteholders................. 47 Section 9.02 Supplemental Indentures with Consent of Noteholders.................... 48 Section 9.03 Execution of Supplemental Indentures................................... 50 Section 9.04 Effect of Supplemental Indenture....................................... 50 Section 9.05 Conformity With Trust Indenture Act.................................... 50 Section 9.06 Reference in Notes to Supplemental Indentures.......................... 50 ARTICLE X REDEMPTION OF NOTES............................................................ 50 Section 10.01 Redemption............................................................. 50 Section 10.02 Surrender of Notes..................................................... 51
iii 5 Section 10.03 Form of Redemption Notice.............................................. 52 Section 10.04 Notes Payable on Redemption Date....................................... 52 ARTICLE XI MISCELLANEOUS................................................................. 53 Section 11.01 Compliance Certificates and Opinions, etc.............................. 53 Section 11.02 Form of Documents Delivered to Indenture Trustee....................... 53 Section 11.03 Acts of Noteholders.................................................... 54 Section 11.04 Notices, etc. to Indenture Trustee, Trust and Rating Agencies.......... 54 Section 11.05 Notices to Noteholders; Waiver......................................... 56 Section 11.06 Alternate Payment and Notice Provisions................................ 56 Section 11.07 Conflict with Trust Indenture Act...................................... 57 Section 11.08 Effect of Headings and Table of Contents............................... 57 Section 11.09 Successors and Assigns................................................. 57 Section 11.10 Separability........................................................... 57 Section 11.11 Benefits of Indenture.................................................. 57 Section 11.12 Legal Holidays......................................................... 57 Section 11.13 GOVERNING LAW.......................................................... 57 Section 11.14 Counterparts........................................................... 57 Section 11.15 Recording of Indenture................................................. 58 Section 11.16 Trust Obligation....................................................... 58 Section 11.17 No Petition............................................................ 58 Section 11.18 Inspection............................................................. 58 Section 11.19 Usury.................................................................. 59 Section 11.20 Limitation of Liability................................................ 59 Section 11.21 Rights of the Note Insurer to Exercise Rights of Noteholders........... 59 Section 11.22 Consent and Direction of Note Insurer.................................. 60 Section 11.23 Rules by Indenture Trustee............................................. 60
EXHIBITS Exhibit A -- Form of Note Exhibit B -- Form of Authentication Order
iv 6 ADVANTA MORTGAGE LOAN TRUST 1999-4 Reconciliation and Tie between the Indenture, dated as of November 1, 1999, and the Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section --------------------------- ----------------- 310(a)(1) 6.11 (a)(2) 6.11 (a)(3) 6.10 (a)(4) Not Applicable (b) 6.08; 6.11 (c) Not Applicable 311(a) 6.12 (b) 6.12 312(a) 7.02 (b) 7.02 (c) 7.02 313(a) 7.04 (b)(1) 7.02; 7.04; (b)(2) 7.04 (c) 7.04 (d) 7.04 314(a) 7.03; 8.09; 3.09 (b) Not Applicable (c)(1) 11.01 (c)(2) 11.01 (c)(3) Not Applicable (d) Not Applicable (e) 11.01 (f) Not Applicable 315(a) 6.01 (b) 6.05 (c) 6.01 (d) 6.01 (e) 6.01 316(a) (last sentence) 1.04 (a)(1)(A) 7.17 (a)(1)(B) 5.04 317(a)(1) 5.03 (a)(2) 6.05 (b) Not Applicable 318(a) 11.07 (c) 11.07
v 7 INDENTURE, dated as of November 1, 1999 (this "Indenture"), between ADVANTA MORTGAGE LOAN TRUST 1999-4, a Delaware business trust, as issuer (the "Trust"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, as indenture trustee (the "Indenture Trustee"). PREAMBLE Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Noteholders of the Advanta Mortgage Loan Asset-Backed Notes, Series 1999-4 (the "Notes"). As security for the payment and performance by the Trust of its obligations under this Indenture and the Notes, the Trust has agreed to pledge the Trust Estate (as defined below) to the Indenture Trustee for the benefit of the Noteholders and the Note Insurer. Ambac Assurance Corporation (the "Note Insurer") has issued and delivered the financial guaranty insurance policy (the "Policy") pursuant to which the Note Insurer guarantees the Insured Amount with respect to the Notes. The Note Insurer has executed and delivered the Insurance and Indemnity Agreement, dated as of November 17, 1999 (as amended from time to time, the "Insurance Agreement"), among the Note Insurer, Advanta Holding Trust 1999-4, Advanta Mortgage Corp. USA, as master servicer (the "Master Servicer"), the Trust, Advanta Conduit Receivables, Inc., as sponsor (the "Sponsor"), and the Indenture Trustee. GRANTING CLAUSE The Trust hereby Grants to the Indenture Trustee on the Closing Date, for the benefit of the Noteholders and the Note Insurer, all of the Trust's right, title and interest in and to all money, instruments and other property, to the extent such money, instruments and other property are subject or intended to be held in trust, for the benefit of the Noteholders, including all proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii) such amounts in all Accounts including principal collected and interest accrued in respect of the Mortgage Loans on or after the Initial Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off Date, as applicable, including Eligible Investments, as may from time to time may be held in such Accounts (except (x) any premium recapture, (y) interest accrued prior to the Initial Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off Date, as applicable, and (z) net investment earnings on the Principal and Interest Account, the Capitalized Interest Account and the Note Account), (iii) any Property, the ownership of which has been effected on behalf of the Trust as a result of foreclosure or acceptance by the Master Servicer of a deed in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) any Mortgage Insurance Policies relating to the Mortgage Loans and any rights of the Sponsor or any Originator under any Mortgage Insurance Policies, (v) Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan, (vi) the rights of the Indenture Trustee under the Policy, and (vii) the rights of the Sponsor against any Originator pursuant to the Mortgage Loan Transfer Agreement (the foregoing, collectively, the "Trust Estate"). 8 The foregoing Grant is made in trust to the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. The Indenture Trustee hereby acknowledges and accepts such Grant under this Indenture in accordance with the provisions of this Indenture and agrees to perform the duties required of it by this Indenture to the best of its ability to the end that the interests of such parties, recognizing the priorities of their respective interests, may be adequately and effectively protected. ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. Capitalized terms used herein shall have the meanings assigned to them in Annex A to the Sale and Servicing Agreement, dated as of November 1, 1999, among the Trust, the Sponsor, Advanta Mortgage Corp. USA, as master servicer (the "Master Servicer"), and the Indenture Trustee. Section 1.02 Incorporation by Reference of the Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Securities and Exchange Commission. "indenture securities" means the Notes. "indenture security holder" means a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Indenture Trustee. "obligor" on the indenture securities means the Trust. All other TIA terms used in this Indenture that are defined by the TIA, or defined by Commission rule have the meaning assigned to them by such definitions. Section 1.03 Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; (c) "or" is not exclusive; (d) "including" means including without limitation; and 2 9 (e) words in the singular include the plural and words in the plural include the singular. Section 1.04 Action by or Consent of Noteholders. Whenever any provision of this Indenture refers to action to be taken, or consented to, by Noteholders, such provision shall be deemed to refer to the Noteholders of record as of the Record Date immediately preceding the date on which such action is to be taken, or consent given, by Noteholders. Solely for the purposes of any action to be taken, or consented to, by Noteholders, any Note registered in the name of 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 or the Owner Trustee is entitled to rely upon any such action or consent, only Notes which the Owner Trustee or the Indenture Trustee, respectively, knows to be so owned shall be so disregarded. Section 1.05 Conflict with TIA. If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is required under the TIA to be part of and govern this Indenture, the latter provision shall control and all provisions required by the TIA are hereby incorporated by reference. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provisions shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. ARTICLE II THE NOTES Section 2.01 Form. The Notes, together with the Indenture Trustee's certificate of authentication, shall be in substantially the form set forth in Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. Each Note shall be dated the date of its authentication. The terms of the Note set forth in Exhibit A are part of the terms of this Indenture. Section 2.02 Execution, Authentication and Delivery. The Notes shall be executed on behalf of the Trust by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be original or facsimile. Notes bearing the original or facsimile signature of individuals who were at any time Authorized Officers of the Trust shall bind the Trust, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. The Indenture Trustee, upon receipt from the Trust of a written Authentication Order in the form of Exhibit B hereto, shall authenticate and deliver Notes for original issue in an 3 10 aggregate principal amount equal to the Original Note Principal Balance. The Notes outstanding at any time may not exceed such amounts except as provided in Section 2.06. Each Note shall be dated the date of its authentication. The Notes shall be issuable as registered Notes in the minimum denomination of $1,000 and in integral multiples of $1,000 in excess thereof. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears attached to such Note a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate attached to any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Subject to Section 2.11, the Notes shall be Book-Entry Notes. Section 2.03 Registration; Registration of Transfer and Exchange. The Trust shall cause to be kept a register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Trust shall provide for the registration of Notes and the registration of transfers of Notes. The Indenture Trustee, as an agent for the Trust, shall be "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon any resignation of any Note Registrar, the Trust shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar. If a Person other than the Indenture Trustee is appointed by the Trust as Note Registrar, the Trust will give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof. The Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Authorized Officer thereof as to the names and addresses of the Noteholders and the principal amounts and number of such Notes. Upon surrender for registration or transfer of any Note at the office or agency of the Trust to be maintained as provided in Section 3.02, and if the requirements of Section 8-401(1) of the UCC are met, the Trust shall execute or cause the Indenture Trustee to authenticate one or more new Notes, in any authorized denominations, of the same class and a like aggregate principal amount. A Noteholder may also obtain from the Indenture Trustee, in the name of the designated transferee or transferees one or more new Notes, in any authorized denominations, of the same class and a like aggregate principal amount. Such requirements shall not be deemed to create a duty in the Indenture Trustee to monitor the compliance by the Trust with Section 8-401 of the UCC. At the option of the Noteholder, Notes may be exchanged for other Notes in any authorized denominations, of the same class and a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, and if the requirements of Section 8-401(1) of the UCC are met, the Trust shall execute and upon its request the Indenture Trustee shall authenticate the Notes which the Noteholder making the exchange is entitled to receive. Such requirements shall not be 4 11 deemed to create a duty in the Indenture Trustee to monitor the compliance by the Trust with Section 8-401 of the UCC. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Trust, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange shall be (i) duly endorsed by, or be accompanied by a written instrument of transfer in the form attached to Exhibit A, duly executed by the Noteholder or such Noteholder's attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar all in accordance with the Exchange Act, and (ii) accompanied by such other documents as the Note Registrar may require. No service charge shall be made to a Noteholder for any registration of transfer or exchange of Notes, but the Note Registrar may require payment from a Noteholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 2.04 or 9.06 not involving any transfer. The Note Registrar shall not register the transfer of any Note (other than the transfer of a Note to the nominee of the Depository) unless the transferee has executed and delivered to the Indenture Trustee a certification to the effect that either (i) the transferee is not (A) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the assets of a Benefit Plan, or (ii) that the transferee's acquisition and continued holding of the Note will be covered by a U.S. Department of Labor Prohibited Transaction Class Exemption. Each transferee of a beneficial interest in a Book-Entry Note shall be deemed to make one of the foregoing representations. Section 2.04 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is surrendered to the Note Registrar, or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Trust, the Sponsor, the Indenture Trustee and the Note Insurer such security or indemnity as may be required by it to hold the Trust, the Sponsor, the Indenture Trustee and the Note Insurer harmless, then, in the absence of notice to the Trust, the Note Registrar or the Indenture Trustee that such Note has been acquired by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are met, the Trust shall execute and upon its request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note (such requirement shall not be deemed to create a duty in the Indenture Trustee to monitor the compliance by the Trust with Section 8-405); provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven days shall be due and payable, or shall have been called for redemption, the Trust may, instead of issuing a replacement Note, direct the Indenture Trustee, in writing, to pay such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof. 5 12 If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Trust, the Indenture Trustee and the Note Insurer shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Trust or the Indenture Trustee in connection therewith. Upon the issuance of any replacement Note under this Section 2.04, the Trust may require the payment by the Noteholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee) connected therewith. Every replacement Note issued pursuant to this Section 2.04 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Trust, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section 2.04 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. Section 2.05 Persons Deemed Owners. Prior to due presentment for registration of transfer of any Note, the Trust, the Indenture Trustee and the Note Insurer and any agent of the Trust, the Indenture Trustee and the Note Insurer shall treat the Person in whose name any Note is registered (as of the related Record Date) as the owner of such Note for the purpose of receiving payments of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Trust, the Note Insurer, the Indenture Trustee nor any agent of the Trust, the Note Insurer or the Indenture Trustee shall be affected by notice to the contrary. Section 2.06 Payment of Principal and Interest; Defaulted Interest. (a) The Notes shall accrue interest as provided herein, and such amount shall be due and payable on each Payment Date as specified herein. Any installment of interest or principal payable on any Note which is punctually paid or duly provided for by the Trust on the applicable Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date, by check mailed first-class, postage prepaid, to such Person's address as it appears on the Note Register on such Record Date; provided, that, unless Definitive Notes have been issued pursuant to Section 2.11, with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire transfer in immediately available funds to the account designated by such nominee; and provided, further, that the final installment of principal payable with respect to such Note on a Payment Date or on the Final Scheduled Payment Date (and except for the Redemption Price for any Note called for redemption pursuant to Section 10.01(a)) which 6 13 shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.03. (b) Upon written notice from the Trust, the Indenture Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Payment Date on which the Trust expects that the final installment of principal of and interest on such Note will be paid. Such notice shall be mailed or transmitted by facsimile at least five (5) Business Days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment. Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 10.02. (c) If the Trust defaults in a payment of interest on the Notes, the Trust shall pay interest on such defaulted interest at the Note Formula Rate to the extent lawful. (d) Promptly following the date on which all principal of and interest on the Notes has been paid in full and the Notes have been surrendered to the Indenture Trustee, the Indenture Trustee shall, upon written notice from the Master Servicer of the amounts, if any, that the Note Insurer has paid in respect of any Notes under the Policy or otherwise which has not been reimbursed to it, deliver such surrendered Notes to the Note Insurer to the extent not previously cancelled or destroyed. Section 2.07 Cancellation. Subject to Section 2.06(d), all Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled by the Indenture Trustee. Subject to Section 2.06(d), the Trust may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Trust may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.07, except as expressly permitted by this Indenture. Subject to Section 2.06(d), all cancelled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Trust shall direct by an Issuer Order that they be destroyed or returned to it; provided, that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. Section 2.08 Release of Trust Estate. The Indenture Trustee shall, on or after the Termination Date, release any remaining portion of the Trust Estate from the lien created by this Indenture and deposit in the Note Account any funds then on deposit in any other Account. The Indenture Trustee shall release property from the lien created by this Indenture pursuant to this Section 2.08 only upon receipt by it of an Issuer Order accompanied by an Officer's Certificate, an Opinion of Counsel and (if required by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01 or as provided in Section 4.14 of the Sale and Servicing Agreement. 7 14 Section 2.09 Book-Entry Notes. The Notes, upon original issuance, will be issued in the form of typewritten Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company or its custodian, the initial Clearing Agency, by, or on behalf of, the Trust. Such Notes shall initially be registered on the Note Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner will receive a Definitive Note representing such Note Owner's interest in such Note, except as provided in Section 2.11. Unless and until definitive, fully registered Notes have been issued to Note Owners pursuant to Section 2.11: (a) the provisions of this Section 2.09 shall be in full force and effect; (b) the Note Registrar and the Indenture Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of instructions or directions hereunder) as the sole Noteholder, and shall have no obligation to the Note Owners; (c) to the extent that the provisions of this Section 2.09 conflict with any other provisions of this Indenture, the provisions of this Section 2.09 shall control; (d) the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency and/or the Clearing Agency Participants. Unless and until Definitive Notes are issued pursuant to Section 2.11, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest on the Notes to such Clearing Agency Participants; (e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Noteholders evidencing a specified percentage of the Outstanding Note Principal Balance of the Notes, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee; and (f) Note Owners may receive copies of any reports sent to the Noteholders pursuant to this Indenture, upon written request, together with a certification that they are Note Owners and payment of reproduction and postage expenses associated with the distribution of such reports, from the Indenture Trustee at the Corporate Trust Office. Section 2.10 Notices to Clearing Agency. Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until Definitive Notes shall have been issued to Note Owners pursuant to Section 2.11, the Indenture Trustee shall give all such notices and communications specified herein to be given to Noteholders to the Clearing Agency, and shall have no obligation to the Note Owners. Section 2.11 Definitive Notes. If (i) the Master Servicer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its 8 15 responsibilities with respect to the Notes, and the Master Servicer is unable to locate a qualified successor, (ii) the Master Servicer at its option advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of Default, if Note Owners representing beneficial interests aggregating at least a majority of the Outstanding Note Principal Balance of the Notes advise the Indenture Trustee through the Clearing Agency in writing that the continuation of a book entry system through the Clearing Agency is no longer in the best interests of the Note Owners, then the Clearing Agency shall notify all Note Owners and the Indenture Trustee of the occurrence of any such event and of the availability of Definitive Notes to Note Owners requesting the same. Upon surrender to the Indenture Trustee of the typewritten Note or Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Trust shall execute and the Indenture Trustee shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Trust, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the holders of the Definitive Notes as Noteholders. Section 2.12 Calculation of LIBOR. (a) On each Interest Determination Date, the Indenture Trustee shall determine LIBOR for the next Interest Accrual Period as follows: first: on the basis of offered rates for one-month United States dollar deposits, as this rate appears on Telerate Screen Page 3750, as of 11:00 a.m. London time; second: if the rate does not appear on Telerate Screen Page 3750 as of 11:00 a.m. London time, LIBOR shall be the arithmetic mean of the offered quotations of two or more Reference Banks, rounded to the nearest whole multiple of 1/16%; and third: if on the Interest Determination Date fewer than two Reference Banks provide offered quotations, LIBOR for the Interest Accrual Period shall be the higher of (x) LIBOR as determined on the previous Interest Determination Date and (y) the Reserve Interest Rate. (b) The establishment of LIBOR on each Interest Determination Date by the Indenture Trustee and the Indenture Trustee's calculation of the rate of interest applicable to the Notes for the related Interest Accrual Period will, in the absence of manifest error, be final and binding. ARTICLE III COVENANTS Section 3.01 Payment of Principal and Interest. The Trust will duly and punctually pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. Amounts properly withheld under the Code or any applicable state tax law by any Person from a payment to any Noteholder of interest and/or principal shall be 9 16 considered as having been paid by the Trust to such Noteholder for all purposes of this Indenture. Section 3.02 Maintenance of Office or Agency. The Trust will maintain an office or agency where Notes may be surrendered for registration, transfer or exchange of the Notes, and where notices and demands to or upon the Trust in respect of the Notes and this Indenture may be served. The Trust hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Trust will give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Trust shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office and the Trust hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands. Section 3.03 Money for Payments to be Held in Trust. The Trust will cause each Note Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee and the Note Insurer an instrument in which such Note Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Note Paying Agent will: (a) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; (b) give the Indenture Trustee written notice of any default by the Trust (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes; (c) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Note Paying Agent; (d) immediately resign as a Note Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Note Paying Agent at the time of its appointment; and (e) comply with all requirements of the Code and any applicable state tax laws with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. The Trust may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held in trust by such Note Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Note Paying Agent; and upon such a payment by any Note Paying Agent to 10 17 the Indenture Trustee, such Note Paying Agent shall be released from all further liability with respect to such money. Subject to applicable laws with respect to the escheat of funds, any money held by the Indenture Trustee or any Note Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two (2) years after such amount has become due and payable shall be discharged from such trust and be paid to the Trust; and the related Noteholder shall thereafter, as an unsecured general creditor, look only to the Trust for payment thereof (but only to the extent of the amounts so paid to the Trust), and all liability of the Indenture Trustee or such Note Paying Agent with respect to such trust money shall thereupon cease. Section 3.04 Existence. Except as otherwise permitted by the provisions of Section 3.10, the Trust will keep in full effect its existence, rights and franchises as a business trust under the laws of the State of Delaware (unless it becomes, or any successor Trust hereunder is or becomes, organized under the laws of any other state or of the United States of America, in which case the Trust will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Trust Estate, the Notes, and each other instrument or agreement included in the Trust Estate. Section 3.05 Protection of Trust Estate. The Trust intends the security interest granted pursuant to this Indenture in favor of the Indenture Trustee to be prior to all other liens in respect of the Trust Estate, and the Trust shall take all actions necessary to obtain and maintain, in favor of the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, a first lien on and a first priority, perfected security interest in the Trust Estate. The Trust will from time to time prepare (or shall cause to be prepared), execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and will take such other action necessary or advisable to: (a) Grant more effectively all or any portion of the Trust Estate; (b) maintain or preserve the lien and security interest (and the priority thereof) in favor of the Indenture Trustee for the benefit of the Noteholders and the Note Insurer created by this Indenture or carry out more effectively the purposes hereof; (c) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; (d) enforce any of the Trust Estate; (e) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee in such Trust Estate against the claims of all persons and parties; and (f) pay all taxes or assessments levied or assessed upon the Trust Estate when due. 11 18 The Trust hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required by the Indenture Trustee pursuant to this Section 3.05; provided, that, such designation shall not be deemed to create a duty in the Indenture Trustee or the Indenture Trustee to monitor the compliance of the Trust with respect to its duties under this Section 3.05 or the adequacy of any financing statement, continuation statement or other instrument prepared by the Trust. Section 3.06 Opinions as to Trust Estate. (a) On the Closing Date, the Trust shall furnish to the Indenture Trustee and the Note Insurer an Opinion of Counsel addressed to each stating that, in the opinion of such counsel, such actions have been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto, and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements, as are necessary to perfect and make effective the first priority lien and security interest in favor of the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, created by this Indenture. (b) Within 90 days after the beginning of each calendar year, beginning with the calendar year 2001, the Trust shall furnish to the Indenture Trustee and the Note Insurer, an Opinion of Counsel addressed to each either stating that, in the opinion of such counsel, such actions have been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any financing statements and continuation statements as are necessary to maintain the lien and security interest created by this Indenture and reciting the details of such action or stating that in the opinion of such counsel, no such action is necessary to maintain such lien and security interest. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any financing statements and continuation statements that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture. Section 3.07 Performance of Obligations; Servicing of Mortgage Loans. (a) The Trust will not take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations under any instrument or agreement included in the Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as ordered by any bankruptcy or other court or as expressly provided in this Indenture, the other Operative Documents or such other instrument or agreement. (b) The Trust may contract with other Persons acceptable to the Note Insurer to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee and the Note Insurer in an Officer's Certificate of the Trust shall be deemed to be action taken by the Trust. Initially, the Trust has contracted with the Master Servicer to assist the Trust in performing its duties under this Indenture. (c) The Trust will punctually perform and observe all of its obligations and agreements contained in this Indenture, the other Operative Documents and in the instruments 12 19 and agreements included in the Trust Estate, including, but not limited, to preparing (or causing to be prepared) and filing (or causing to be filed) all UCC financing statements and continuation statements required to be filed by the terms of this Indenture and the Sale and Servicing Agreement or any other Operative Document in accordance with and within the time periods provided for herein and therein. Except as otherwise expressly provided therein, the Trust shall not waive, amend, modify, supplement or terminate any Operative Document or any provision thereof without the prior written consent of the Note Insurer, the Noteholders representing at least a majority of the Outstanding Note Principal Balance of the Notes or the Indenture Trustee (with the prior written consent of the Note Insurer). (d) If an Authorized Officer of the Owner Trustee shall have actual knowledge of the occurrence of an Event of Servicing Termination under the Sale and Servicing Agreement or of an Insurance Agreement Event of Servicing Termination, the Trust shall promptly notify the Indenture Trustee, the Note Insurer and the Rating Agencies thereof in accordance with Section 11.04, and shall specify in such notice the action, if any, the Trust is taking in respect of such default. If an Event of Servicing Termination or an Insurance Agreement Event of Servicing Termination shall arise from the failure of the Master Servicer to perform any of its duties or obligations under the Sale and Servicing Agreement or the Insurance Agreement with respect to the Mortgage Loans, the Trust shall take all reasonable steps available to it to remedy (or cause to be remedied) such failure. (e) The Trust agrees that it will not waive timely performance or observance by the Master Servicer or the Sponsor of their respective duties under the Operative Documents (x) without the prior written consent of the Note Insurer or (y) the Note Insurer has consented in writing to such waiver but the effect thereof would adversely affect the Noteholders of the Notes. Section 3.08 Negative Covenants. So long as any Notes are Outstanding, the Trust shall not: (a) except as expressly permitted by this Indenture or the other Operative Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Trust, including those included in the Trust Estate, without the prior written consent of the Note Insurer (which consent may not be unreasonably withheld); provided, that if a Note Insurer Default has occurred and is continuing, the Noteholders representing at least 51% of the Outstanding Note Principal Balance of the Notes may direct the Indenture Trustee to sell or dispose of the Trust Estate in accordance with Section 5.03; (b) claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Noteholder or the Note Insurer by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate; or (c) (i) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien in favor of the Indenture Trustee created by this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be 13 20 released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (ii) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics' liens and other liens that arise by operation of law, in each case on a Mortgaged Property and arising solely as a result of an action or omission of the related Mortgagor), (iii) permit the lien of this Indenture not to constitute a valid first priority (other than with respect to any such tax, mechanics' or other lien) security interest in the Trust Estate or (iv) amend, modify or fail to comply with the provisions of the Operative Documents without the prior written consent of the Note Insurer, which consent may not be unreasonably withheld. Section 3.09 Annual Statement as to Compliance. The Trust will deliver to the Indenture Trustee and the Note Insurer, within 90 days after the end of each fiscal year of the Trust (commencing with the fiscal year ended December 31, 2000), and otherwise in compliance with the requirements of TIA Section 314(a)(4), an Officer's Certificate stating, as to the Authorized Officer signing such Officer's Certificate, that (a) a review of the activities of the Trust during such year and of performance under this Indenture has been made under such Authorized Officer's supervision; and (b) to the best of such Authorized Officer's knowledge, based on such review, the Trust has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof. Section 3.10 Trust Shall Not Consolidate or Transfer Assets. (a) The Trust shall not consolidate or merge with or into any other Person. (b) Except as otherwise provided in the Sale and Servicing Agreement, and unless the Note Insurer has otherwise consented in writing, the Trust shall not convey or transfer all or substantially all of its properties or assets, including those included in the Trust Estate, to any Person. Section 3.11 No Other Business. The Trust shall not engage in any business other than purchasing, owning, selling and managing the Mortgage Loans and other assets in the manner contemplated by this Indenture and the other Operative Documents and activities incidental thereto. Section 3.12 No Borrowing. The Trust shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any Indebtedness except for (i) the Notes, (ii) obligations owing from time to time to the Note Insurer under the Insurance Agreement and (iii) any other Indebtedness permitted by or arising under the Operative Documents 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 14 21 Notes shall be used exclusively to fund the Trust's purchase of the Mortgage Loans and the other assets specified in the Sale and Servicing Agreement, to fund the Pre-Funding Account and the Capitalized Interest Account and to pay the Trust's organizational, transactional and start-up expenses. Section 3.13 Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by the Sale and Servicing Agreement or this Indenture, the Trust shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. Section 3.14 Capital Expenditures. The Trust shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty). Section 3.15 Compliance with Laws. The Trust shall comply with the requirements of all applicable laws, the non-compliance with which would, individually or in the aggregate, materially and adversely affect the ability of the Trust to perform its obligations under the Notes, this Indenture or any other Operative Document. Section 3.16 Restricted Payments. The Trust shall not, directly or indirectly, (i) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Owner Trustee or any owner of a beneficial interest in the Trust or otherwise with respect to any ownership or equity interest or security in or of the Trust or to the Master Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Trust may make, or cause to be made, distributions to the Master Servicer, the Owner Trustee, the Indenture Trustee and the Certificateholders as permitted by, and to the extent funds are available for such purpose under the Sale and Servicing Agreement, this Indenture, or Trust Agreement. The Trust will not, directly or indirectly, make payments to or distributions from the Note Account except in accordance with this Indenture and the other Operative Documents. Section 3.17 Notice of Event of Defaults and Events of Servicing Termination. Upon a Responsible Officer of the Owner Trustee having actual knowledge thereof, the Trust agrees to give the Indenture Trustee, the Note Insurer and the Rating Agencies prompt written notice of each Event of Default hereunder or Event of Servicing Termination under the Sale and Servicing Agreement. Section 3.18 Further Instruments and Acts. Upon request of the Indenture Trustee or the Note Insurer, the Trust will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. 15 22 Section 3.19 Amendments of Sale and Servicing Agreement and Trust Agreement. The Trust shall not agree to any amendment to Section 9.01 of the Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to eliminate the requirements thereunder that the Indenture Trustee, the Note Insurer or the Noteholders consent to amendments thereto as provided therein. Section 3.20 Income Tax Characterization. For purposes of federal income, state and local income and franchise and any other income taxes, the Trust will treat the Notes as indebtedness and hereby instructs the Indenture Trustee to treat the Notes as indebtedness for federal and state tax reporting purposes. ARTICLE IV SATISFACTION AND DISCHARGE Section 4.01 Satisfaction and Discharge of Indenture. Upon receipt by the Indenture Trustee of all amounts to satisfy all payment obligations with respect to the Notes, this Indenture shall cease to be of further effect with respect to the Notes except as to (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12, 3.13 and 3.20, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi) the rights of Noteholders and the Note Insurer as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on written demand in the form of an Issuer Order and at the expense of the Trust, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when: (a) either (i) all Notes theretofore authenticated and delivered (other than (x) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.04 and (y) Notes for which payment money has theretofore been deposited in trust or segregated and held in trust by the Trust and thereafter repaid to the Trust or discharged from such trust, as provided in Section 3.03) have been delivered to the Indenture Trustee for cancellation and the Policy has terminated and been returned to the Note Insurer for cancellation and all amounts owing to the Note Insurer have been paid in full; or (ii) all Notes not theretofore delivered to the Indenture Trustee for cancellation: (A) have become due and payable, (B) will become due and payable at their Final Scheduled Payment Date within one (1) year, or 16 23 (C) are to be called for redemption within one (1) year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Trust, and in the case of clauses (A), (B) or (C) above, the Trust, has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Indenture Trustee for cancellation when due at their Final Scheduled Payment Date or Redemption Date (if the Notes shall have been called for redemption pursuant to Section 10.01(a) or (b)), as the case may be; (b) the Trust has paid or caused to be paid all amounts due the Note Insurer and the Indenture Trustee; and (c) the Trust has delivered to the Indenture Trustee and the Note Insurer an Officer's Certificate, an Opinion of Counsel and if required by the TIA, the Indenture Trustee or the Note Insurer an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.01(a) and each stating that all conditions precedent herein provided relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Notes or any other amounts payable by the Note Insurer pursuant to the terms of the Policy shall be paid by the Note Insurer pursuant to the Policy, the Notes shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Trust, and the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations of the Trust to the Noteholders shall continue to exist and shall run to the benefit of the Note Insurer, and the Note Insurer shall be subrogated to the rights of such Noteholders. Section 4.02 Application of Trust Money. All monies deposited with the Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Note Paying Agent, as the Indenture Trustee may determine, to the Noteholders of the particular Notes for the payment or redemption of which such monies have been deposited in the Note Account by the Indenture Trustee. Section 4.03 Repayment of Monies Held by Note Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all monies then held by any Note Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall immediately be paid to the Indenture Trustee to be held and applied according to Section 3.03 and thereupon such Note Paying Agent shall be released from all further liability with respect to such monies. 17 24 ARTICLE V EVENTS OF DEFAULT; REMEDIES Section 5.01 Events of Default. (a) The following occurrences shall constitute "Events of Default": (i) a default in the payment of the Interest Distribution Amount on any Payment Date and the continuance of such default for a period of five (5) days; (ii) a default in the payment in full of the Outstanding Note Principal Balance of the Notes on the Final Scheduled Payment Date; (iii) failure on the part of the Trust to pay interest at the Note Formula Capped Rate on any Payment Date; (iv) failure on the part of the Trust to perform in any material respect any covenant or agreement under the Indenture (other than a covenant covered by clause (i) and (ii) above) or the breach of a representation or warranty of the Trust, which continues for a period of thirty (30) days after notice thereof is given; (v) the Trust becomes subject to regulation by the Securities and Exchange Commission as an investment company within the meaning of the Investment Company Act of 1940, as amended; or (vi) the entry of a decree or order for relief by a court having jurisdiction in respect of the Trust, in an involuntary case under the federal bankruptcy laws, as now or hereafter in effect, or any other present or future federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Trust, or of any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Trust and the continuance of any such decree or order unstayed and in effect for period of 60 consecutive days. (b) If an Event of Default as described in subsection (a) above shall have occurred and be continuing, with the prior written consent of the Note Insurer, the Indenture Trustee may, and at the direction of the Note Insurer or of Noteholders representing not less than 51% of the Outstanding Note Principal Balance of the Notes (with the prior written consent of the Note Insurer), shall, declare the Notes to be immediately due and payable by a notice in writing to the Trust (and to the Indenture Trustee if given by Noteholders), and upon any such declaration such Notes, in an amount equal to the Outstanding Note Principal Balance of the Notes, together with accrued and unpaid interest thereon to the date of such acceleration, shall become immediately due and payable. (c) At any time after such a declaration of acceleration of maturity of the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee, the Note Insurer or the Noteholders representing at least 51% of the Outstanding Note Principal Balance of the Notes, with the prior written consent of the 18 25 Note Insurer, by written notice to the Trust and the Indenture Trustee, may direct the Indenture Trustee to rescind and annul such declaration and its consequences if: (i) the Trust has paid or deposited with the Indenture Trustee a sum sufficient to pay: (A) all payments of principal of, and interest on, all Notes and all other amounts that would then be due hereunder or upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and (B) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel; and (ii) all Events of Default with respect to the Notes, other than the nonpayment of the principal of the Notes that have become due solely by such acceleration, have been cured or waived as provided in Section 5.19. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon. Section 5.02 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. Subject to the following sentence, if an Event of Default with respect the Notes occurs and is continuing, the Indenture Trustee may, with the prior written consent of the Note Insurer and shall, at the written direction of the Note Insurer, proceed to protect and enforce its rights and the rights of the Noteholders and the Note Insurer by any proceedings the Indenture Trustee deems appropriate to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or enforce any other proper remedy. Any proceedings brought by the Indenture Trustee on behalf of the Noteholders and the Note Insurer or any Noteholder against the Trust shall be limited to the preservation, enforcement and foreclosure of the liens, assignments, rights and security interests under the Indenture and no attachment, execution or other unit or process shall be sought, issued or levied upon any assets, properties or funds of the Trust, other than the Trust Estate. If there is a foreclosure of any such liens, assignments, rights and security interests under this Indenture, by private power of sale or otherwise, no judgment for any deficiency upon the indebtedness represented by the Notes may be sought or obtained by the Indenture Trustee or any Noteholder against the Trust. The Indenture Trustee shall be entitled to recover the costs and expenses expended by it pursuant to this Article V including reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel. Section 5.03 Remedies for Events of Default. If an Event of Default shall have occurred and be continuing and the Notes have been declared due and payable and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee, at the written direction of the Note Insurer shall, for the benefit of the Noteholders and the Note Insurer, do one or more of the following: 19 26 (a) institute proceedings for the collection of all amounts then payable on the Notes, or under this Indenture, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Trust moneys adjudged due; (b) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; (c) institute proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate; (d) exercise any remedies of a secured party under the Uniform Commercial Code and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee or the Noteholders and the Note Insurer hereunder; and (e) refrain from selling the Trust Estate and apply all Monthly Remittance Amounts pursuant to Section 5.06. Section 5.04 Indenture Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, composition or other judicial Proceeding relative to the Trust upon any of the Notes or the property of the Trust, the Indenture Trustee (irrespective of (i) whether the Notes shall then be due and payable as therein expressed or by declaration or otherwise and (ii) whether the Indenture Trustee shall have made any demand on the Trust for the payment of any overdue principal or interest) shall, at the direction of the Note Insurer, be entitled and empowered, by intervention in such proceeding or otherwise to: (a) file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Notes and file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel) and of the Noteholders and the Note Insurer allowed in such proceeding, and (b) (i) collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, Indenture Trustee, liquidator, or sequestrator (or other similar official) in any such Proceeding is hereby authorized by each Noteholder and the Note Insurer to make such payments to the Indenture Trustee and (ii) in the event that the Indenture Trustee shall consent to the making of such payments directly to the Noteholders and the Note Insurer, to pay to the Indenture Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder or the Note Insurer any plan of reorganization, arrangement, adjustment or composition affecting any of the Notes or the rights of any Noteholder, or the Note Insurer, or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder or the Note Insurer in any such Proceeding. Any plan of reorganization, arrangement, adjustment or composition relative to the Trust or any other obligor 20 27 upon any of the Notes or the property of the Trust or of such obligor or their creditors and affecting the Notes or the rights of the Note Insurer under this Indenture or the Insurance Agreement must be acceptable to the Note Insurer and, as long as no Note Insurer Default exists and is continuing, the Note Insurer shall be entitled to exercise the voting rights of the Noteholders of the Notes regarding such plan, reorganization, arrangement, adjustment or composition. Section 5.05 Indenture Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or any of the Notes may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any Proceeding relating thereto, and any such Proceeding instituted by the Indenture Trustee, at the direction of the Note Insurer, shall be brought in its own name as Indenture Trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the Noteholders and the Note Insurer in respect of which such judgment has been recovered after payment of amounts required to be paid pursuant to Section 5.06(a). Section 5.06 Application of Money Collected. If any Notes have been declared due and payable following an Event of Default and such declaration and its consequences have not been rescinded or annulled, any money collected by the Indenture Trustee with respect to the Notes pursuant to this Article V or otherwise and any other monies that may then be held or thereafter received by the Indenture Trustee as security for the Notes shall be applied in the following order, at the date or dates fixed by the Indenture Trustee and, in case of the payment of the entire amount due on account of principal of, and interest on, the Notes, upon presentation and surrender thereof: (a) to the Indenture Trustee and the Owner Trustee, any unpaid Indenture Trustee's Fees and unpaid Owner Trustee Fee, respectively, then due and any other amounts payable and due to the Indenture Trustee and the Owner Trustee under this Indenture and the Trust Agreement, including any costs or expenses incurred by it in connection with the enforcement of the remedies provided for in this Article V; (b) to the Note Insurer, any unpaid Premium Amount, then due and payable pursuant to the Insurance Agreement; (c) to the Master Servicer, any amounts required to pay the Master Servicer for any unpaid Servicing Fees then due and any other amounts payable and due to the Master Servicer; (d) to the payment of the Interest Distribution Amount then due and unpaid on the Notes through the day preceding the date upon which such payment is made; (e) to the payment of the Outstanding Note Principal Balance of the Notes; (f) to the payment of the Note Insurer, all amounts due pursuant to the Insurance Agreement; (g) to the Noteholders, the Available Funds Cap Carry-Forward Amount; 21 28 (h) to the Master Servicer, any unreimbursed Servicing Advances, including Nonrecoverable Advances; and (i) to the Certificateholders, any amount remaining on deposit in the Note Account. Section 5.07 Limitation of Suits. No Noteholder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (a) the Noteholders of not less than 25% of the Outstanding Note Principal Balance of the Notes have made written request to the Indenture Trustee to institute such proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder; (b) such Noteholders have offered to the Indenture Trustee indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request; (c) the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such proceedings; (d) no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Noteholders of a majority of the Outstanding Note Principal Balance of the Notes; and (e) a Note Insurer Default shall have occurred and be continuing; it being understood and intended that no Noteholders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Noteholders or to obtain or to seek to obtain priority or preference over any other Noteholders or to enforce any right under this Indenture, except in the manner herein provided. In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Noteholders, each representing less than a majority of the Outstanding Note Principal Balance of the Notes, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture. Section 5.08 Unconditional Rights of Noteholders to Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, a Noteholder shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Noteholder. 22 29 Section 5.09 Restoration of Rights and Remedies. If the Controlling Party or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, then and in every such case the Trust, the Note Insurer, the Indenture Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee, the Note Insurer and the Noteholders shall continue as though no such proceeding had been instituted. Section 5.10 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Controlling Party or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11 Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee, the Controlling Party or any Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee, the Note Insurer or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee, the Note Insurer or by the Noteholders, as the case may be. Section 5.12 Control by Noteholders. If the Indenture Trustee is the Controlling Party, the Noteholders of a majority of the Outstanding Note Principal Balance of the Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee pursuant to Section 5.01 with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided, that (a) such direction shall not be in conflict with any rule of law or with this Indenture; (b) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction; provided, however, that, subject to Section 6.01, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not consenting to such action. Section 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Noteholder by such Noteholder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to 23 30 the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by the Note Insurer, any Noteholder, or group of Noteholders, with the prior written consent of the Note Insurer, in each case holding in the aggregate more than 10% of the Outstanding Note Principal Balance of the Notes or (c) any suit instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after the Redemption Date). Section 5.14 Waiver of Stay or Extension Laws. The Trust covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Trust (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.15 Action on Notes. The Indenture Trustee's right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee, the Note Insurer or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee or the Note Insurer against the Trust or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of the assets of the Trust. Section 5.16 Performance and Enforcement of Certain Obligations. (a) Promptly following a request from the Indenture Trustee (at the direction of the Note Insurer) to do so and at the Master Servicer's expense, the Trust agrees to take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Sponsor and the Master Servicer, as applicable, of each of their obligations to the Trust under or in connection with the Sale and Servicing Agreement in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Trust under or in connection with the Sale and Servicing Agreement to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of the Sponsor or the Master Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Sponsor or the Master Servicer of each of their obligations under the Sale and Servicing Agreement. (b) If the Indenture Trustee is a Controlling Party and if an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the written direction of the Noteholders of at least 51% of the Outstanding Note Principal Balance of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Trust against the Sponsor or the Master Servicer under or in connection with the Sale and Servicing Agreement, including the right or power to take any action to compel or secure performance or observance by the Sponsor or the Master Servicer of each of their obligations to the Trust thereunder and to give any 24 31 consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement, and any right of the Trust to take such action shall be suspended. Section 5.17 Subrogation. The Indenture Trustee shall receive as attorney-in-fact of each Noteholder any Insured Payment from the Note Insurer pursuant to the Policy. Any and all Insured Payments disbursed by the Indenture Trustee from claims made under the Policy shall not be considered payment by the Trust, and shall not discharge the obligations of the Trust with respect thereto. The Note Insurer shall, to the extent it makes any payment with respect to any Notes, become subrogated to the rights of the recipient of such payments to the extent of such payments. Subject to and conditioned upon any payment with respect to the Notes by or on behalf of the Note Insurer, the Indenture Trustee shall assign to the Note Insurer all rights to the payment of interest or principal with respect to the Notes which are then due for payment to the extent of all payments made by the Note Insurer. In addition to the rights of the Note Insurer set forth in Section 11.21, the Note Insurer may exercise any option, vote, right, power or the like with respect to the Notes to the extent that it has made payment pursuant to the Policy. Section 5.18 Preference Claims. (a) In the event that the Indenture Trustee has received a certified copy of an order of the appropriate court that any payment on a Note covered by the Policy has been avoided in whole or in part as a preference payment under applicable bankruptcy law, the Indenture Trustee shall so notify the Note Insurer, shall comply with the provisions of the Policy to obtain payment by the Note Insurer of such avoided payment, and shall, at the time it provides notice to the Note Insurer, notify Noteholders by mail that, in the event that any Noteholder's payment is so recoverable, such Noteholder will be entitled to payment pursuant to the terms of the Policy. The Indenture Trustee shall furnish to the Note Insurer at its written request, the requested records it holds in its possession evidencing the payments of principal of and interest on Notes, if any, which have been made by the Indenture Trustee and subsequently recovered from Noteholders, and the dates on which such payments were made. Pursuant to the terms of the Policy, the Note Insurer will make such payment on behalf of the Noteholder to the receiver, conservator, debtor-in-possession or trustee in bankruptcy named in the Final Order (as defined in the Policy) and not to the Indenture Trustee or any Noteholder directly. (b) The Indenture Trustee shall promptly notify the Note Insurer of any proceeding or the institution of any action (of which the Indenture Trustee has actual knowledge) seeking the avoidance as a preferential transfer under applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (a "Preference Claim") of any distribution made with respect to the Notes. Each Noteholder, by its purchase of Notes, and the Indenture Trustee hereby agree that so long as an Note Insurer Default shall not have occurred and be continuing, the Note Insurer may at any time during the continuation of any proceeding relating to a Preference Claim direct all matters relating to such Preference Claim including, without limitation, (i) the direction of any appeal of any order relating to any Preference Claim and (ii) the posting of any surety, supersedes or performance bond pending any such appeal at the expense of the Note Insurer, but subject to reimbursement as provided in the Insurance Agreement. In addition, and without limitation of the foregoing, as set forth in Section 5.17, the Note Insurer shall be subrogated to, and each Noteholder and the Indenture Trustee hereby delegate and assign, to the fullest extent permitted by law, the rights of the Indenture Trustee and each Noteholder in the conduct of any proceeding with respect to a Preference Claim, including, 25 32 without limitation, all rights of any party to an adversary proceeding action with respect to any court order issued in connection with any such Preference Claim. Section 5.19 Waiver of Past Defaults. The Note Insurer or the Noteholders representing at least 51% of the Outstanding Note Principal Balance of the Notes on the Record Date may on behalf of the Noteholders of all of the Notes, and with the consent of the Note Insurer, waive any past default hereunder with respect to the Notes and its consequences, except a default in the payment of principal or any installment of interest on any Note. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. ARTICLE VI THE INDENTURE TRUSTEE Section 6.01 Duties of Indenture Trustee. (a) If a Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and the Operative Documents and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs; provided, however, that if the Indenture Trustee is acting as Master Servicer, it shall use the same degree of care and skill as is required of the Master Servicer under the Sale and Servicing Agreement. (b) Except during the continuance of an Event of Default: (i) The Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and (ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; however, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform on their face to the requirements of this Indenture. (c) The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this paragraph (c) does not limit the effect of paragraph (b) of this Section 6.01; 26 33 (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; (iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.12; and (iv) the Indenture Trustee shall not be charged with knowledge of any failure by the Master Servicer to comply with the obligations of the Master Servicer referred to in clauses (i) and (ii) of Section 5.01(a) of the Sale and Servicing Agreement unless a Responsible Officer of the Indenture Trustee at the Corporate Trust Office obtains actual knowledge of such failure or occurrence or the Indenture Trustee receives written notice of such failure or occurrence from the Master Servicer, the Note Insurer or the Noteholders aggregating not less than 51% of the Outstanding Note Principal Balance of the Notes. (d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Trust. (e) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or indemnity reasonably satisfactory to it against such risk or liability is not reasonably assured to it. (f) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the TIA. (g) The Indenture Trustee shall, upon two (2) Business Days' prior written notice to the Indenture Trustee, permit any representative of the Note Insurer, during the Indenture Trustee's normal business hours, to examine all books of account, records, reports and other papers of the Indenture Trustee relating to the Notes, to make copies and extracts therefrom and to discuss the Indenture Trustee's affairs and actions, as such affairs and actions relate to the Indenture Trustee's duties with respect to the Notes, with the Indenture Trustee's officers and employees responsible for carrying out the Indenture Trustee's duties with respect to the Notes. (h) The Indenture Trustee shall, and hereby agrees that it will, perform all of the obligations and duties required of it under the Sale and Servicing Agreement. (i) The Indenture Trustee shall, and hereby agrees that it will, hold the Policy in trust, and will hold any proceeds of any claim on the Policy in trust solely for the use and benefit of the Noteholders. (j) In no event shall Bankers Trust Company of California, N.A., in any of its capacities hereunder, be deemed to have assumed any duties of the Owner Trustee under the Delaware Business Trust Statute, common law, or the Trust Agreement. 27 34 Section 6.02 Rights of Indenture Trustee. (a) The Indenture Trustee may rely on any document reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in the document. (b) Before the Indenture Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officer's Certificate or Opinion of Counsel. (c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee. (d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful misconduct, negligence or bad faith. (e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel selected by it with due care with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Indenture Trustee shall be under no obligation to institute, conduct or defend any litigation under this Indenture or in relation to this Indenture, at the request, order or direction of any of the Noteholders or the Controlling Party, pursuant to the provisions of this Indenture, unless such Noteholders or the Controlling Party shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; provided, however, that the Indenture Trustee shall, upon the occurrence of an Event of Default, Insurance Agreement Event of Servicing Termination or Event of Servicing Termination (that has not been cured or waived), exercise the rights and powers vested in it by this Indenture or the Sale and Servicing Agreement with reasonable care and skill. (g) The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by the Note Insurer or by the Noteholders evidencing not less than 25% of the Outstanding Note Principal Balance of the Notes; provided, however, that if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture or the Sale and Servicing Agreement, the Indenture Trustee may require indemnity reasonably satisfactory to it against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Person 28 35 making such request, or, if paid by the Indenture Trustee shall be reimbursed by the Person making such request upon demand. (h) The Indenture Trustee shall not be accountable, shall have no liability and makes no representation as to any acts or omissions hereunder of the Master Servicer until such time as, and only to the extent that, the Indenture Trustee may be required to act as Master Servicer. Section 6.03 Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Trust or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Note Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12. Section 6.04 Indenture Trustee's Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Trust Estate or the Notes, it shall not be accountable for the Trust's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Trust in the Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee's certificate of authentication. Section 6.05 Notice of Defaults. If an Event of Default, an Event of Servicing Termination or any other default occurs and is continuing and if it is either known by, or written notice of the existence thereof has been delivered to, a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder and to the Note Insurer of such event within ten (10) days after such knowledge or notice occurs. Except in the case of a default in payment of principal of or interest on any Note, the Indenture Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Noteholders. Section 6.06 Reports by Indenture Trustee to Noteholders. Upon written request, the Note Paying Agent or the Master Servicer shall on behalf of the Trust deliver to each Noteholder such information as may be reasonably required to enable such Noteholder to prepare its Federal and state income tax returns required by law. Section 6.07 Compensation and Indemnity. Pursuant to Section 8.06(b)(i) and subject to Section 6.18 herein, the Trust shall, or shall cause the Master Servicer to, pay to the Indenture Trustee, on each Payment Date, reasonable compensation for its services rendered hereunder. The Indenture Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. Pursuant to Section 8.06(b)(xiii) herein, the Trust shall cause the Master Servicer to reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it in accordance with any provision of this Indenture (including the reasonable compensation and expenses and disbursements of any of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct. The Indenture Trustee and any director, officer, employee or agent of the Indenture Trustee shall be indemnified by the Master Servicer pursuant to Section 29 36 4.05(b) of the Sale and Servicing Agreement and held harmless against any loss, liability, or expense incurred or paid to third parties in connection with the acceptance or administration of its trusts hereunder or the Notes, other than any loss, liability or expense incurred by reason of willful misfeasance, bad faith or negligence in the performance of the Indenture Trustee's duties hereunder or by reason of reckless disregard of the Indenture Trustee's obligations and duties hereunder. Section 6.08 Replacement of Indenture Trustee. The Indenture Trustee may resign at any time by so notifying the Trust and the Note Insurer by written notice. Upon receiving such notice of resignation, the Sponsor, on behalf of the Trust, shall promptly appoint a successor Indenture Trustee (approved in writing by the Note Insurer, so long as such approval is not unreasonably withheld) by written instrument, in duplicate, one copy of such instrument shall be delivered to the resigning Indenture Trustee (who shall deliver a copy to the Master Servicer) and one copy to the successor Indenture Trustee. The Trust may (with the prior written consent of the Note Insurer) and, at the request of the Note Insurer, shall, remove the Indenture Trustee, if: (a) the Indenture Trustee fails to comply with Section 6.11; (b) a court having jurisdiction in the premises in respect of the Indenture Trustee in an involuntary case or proceeding under federal or state banking or bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, shall have entered a decree or order granting relief or appointing a receiver, liquidator, assignee, custodian, trustee, conservator, sequestrator (or similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee's property, or ordering the winding-up or liquidation of the Indenture Trustee's affairs; (c) an involuntary case under the federal bankruptcy laws, as now or hereafter in effect, or another present or future federal or state bankruptcy, insolvency or similar law is commenced with respect to the Indenture Trustee and such case is not dismissed within 60 days; (d) the Indenture Trustee commences a voluntary case under any federal or state banking or bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, conservator, sequestrator (or other similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee's property, or makes any assignment for the benefit of creditors or fails generally to pay its debts as such debts become due or takes any corporate action in furtherance of any of the foregoing; or (e) the Indenture Trustee otherwise becomes incapable or is prohibited by law from acting. If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein 30 37 as the retiring Indenture Trustee), the Trust shall promptly appoint a successor Indenture Trustee acceptable to the Note Insurer. If the Trust fails to appoint such a successor Indenture Trustee, the Note Insurer may appoint a successor Indenture Trustee. A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee, to the Note Insurer and to the Trust. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the retiring Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee. If a successor Indenture Trustee does not take office within 30 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Trust or the Noteholders of a majority in Outstanding Note Principal Balance of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee acceptable to the Note Insurer. If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee acceptable to the Note Insurer. Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of the provisions of this Section 6.08 shall not become effective until acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.08. Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Trust's and the Master Servicer's indemnity obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee and the Master Servicer shall pay any amounts owing to the Indenture Trustee. Section 6.09 Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Indenture Trustee shall have. 31 38 Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust may at the time be located, the Indenture Trustee with the consent of the Note Insurer shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Trust (including, for purposes of this Section 6.10, all or any part of the Trust Estate), and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders and the Note Insurer, such title to the Trust, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08. The Indenture Trustee shall remain primarily liable for the actions of any co-trustee. (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, including acts or omissions of predecessor or successor trustees; and (iii) the Indenture Trustee and the Master Servicer acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee except that following the occurrence of an Event of Servicing Termination, the Indenture Trustee acting alone may accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording 32 39 protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee. (d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, dissolve, become insolvent, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Section 6.11 Eligibility: Disqualification. There shall at all times be a trustee hereunder which shall be a corporation or association organized and doing business under the laws of the United States of America or of any State authorized under such laws to exercise corporate trust powers, subject to supervision or examination by the United States of America or any such State having a rating or ratings acceptable to the Note Insurer or, in the event of an Note Insurer Default, the Sponsor and having (x) short-term, unsecured debt rated at least P-1 by Moody's (or such lower rating as may be acceptable to Moody's and the Note Insurer) and (y) a short-term deposit rating of at least A-1 from S&P (or such lower rating as may be acceptable to S&P and the Note Insurer). The Indenture Trustee shall at all times satisfy the requirements of TIA Section 310(a). The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Indenture Trustee shall provide copies of such reports to the Note Insurer upon request. The Indenture Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities of the Trust are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. Section 6.12 Preferential Collection of Claims Against Trust. The Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. Section 6.13 Appointment and Powers. Subject to the terms and conditions hereof, each of the Noteholders and the Note Insurer hereby appoints Bankers Trust Company of California, N.A. as the Indenture Trustee with respect to the Trust Estate, and Bankers Trust Company of California, N.A. hereby accepts such appointment and agrees to act as Indenture Trustee with respect to the Trust Estate for the Noteholders and the Note Insurer, to maintain custody and possession of such Trust Estate (except as otherwise provided hereunder) and to perform the other duties of the Indenture Trustee in accordance with the provisions of this Indenture and the other Operative Documents. Each Noteholder and the Note Insurer hereby authorizes the Indenture Trustee to take such action on its behalf, and to exercise such rights, remedies, powers and privileges hereunder, as the Controlling Party may direct and as are specifically authorized to be exercised by the Indenture Trustee by the terms hereof, together with such actions, rights, remedies, powers and privileges as are reasonably incidental thereto. The Indenture Trustee shall act upon and in compliance with the written instructions of the Controlling Party delivered pursuant to this Indenture promptly following receipt of such written 33 40 instructions; provided, that the Indenture Trustee shall not act in accordance with any instructions (i) which are not authorized by, or in violation of the provisions of, this Indenture or (ii) for which the Indenture Trustee has not received reasonable indemnity. Receipt of such instructions shall not be a condition to the exercise by the Indenture Trustee of its express duties hereunder, except where this Indenture provides that the Indenture Trustee is permitted to act only following and in accordance with such instructions. Section 6.14 Performance of Duties. The Indenture Trustee shall have no duties or responsibilities except those expressly set forth in this Indenture and the other Operative Documents to which the Indenture Trustee is a party or as directed by the Controlling Party in accordance with this Indenture. The Indenture Trustee shall not be required to take any discretionary actions hereunder except at the written direction of the Controlling Party and with the indemnification described in Section 6.07. The Indenture Trustee shall, and hereby agrees that it will, perform all of the duties and obligations required of it under the Sale and Servicing Agreement. Section 6.15 Limitation on Liability. Neither the Indenture Trustee nor any of its directors, officers, employees and agents shall be liable for any action taken or omitted to be taken by it or them hereunder, or in connection herewith, except that the Indenture Trustee shall be liable for its negligence, bad faith or willful misconduct; nor shall the Indenture Trustee be responsible for the validity, effectiveness, value, sufficiency or enforceability against the Trust of this Indenture or any of the Trust Estate (or any part thereof). Section 6.16 Reliance Upon Documents. In the absence of negligence, bad faith or willful misconduct on its part, the Indenture Trustee shall be entitled to rely on any communication, instrument, paper or other document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons and shall have no liability in acting, or omitting to act, where such action or omission to act is in reasonable reliance upon any statement or opinion contained in any such document or instrument. Section 6.17 Representations and Warranties of the Indenture Trustee. The Indenture Trustee represents and warrants to the Trust and to each Noteholder and the Note Insurer as follows: (a) Due Organization. The Indenture Trustee is a national banking association, duly organized, validly existing and in good standing under the laws of the United States and is duly authorized and licensed under applicable law to conduct its business as presently conducted. (b) Corporate Power. The Indenture Trustee has all requisite right, power and authority to execute and deliver this Indenture and to perform all of its duties as the Indenture Trustee hereunder. (c) Due Authorization. The execution and delivery by the Indenture Trustee of this Indenture and the other Operative Documents to which it is a party, and the performance by the Indenture Trustee of its duties hereunder and thereunder, have been duly authorized by all necessary corporate proceedings, are required for the valid 34 41 execution and delivery by the Indenture Trustee, or the performance by the Indenture Trustee, of this Indenture and such other Operative Documents. (d) Valid and Binding Indenture. The Indenture Trustee has duly executed and delivered this Indenture and each other Operative Document to which it is a party, and each of this Indenture and each such other Operative Document constitutes the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms, except as (i) such enforceability may be limited by bankruptcy, insolvency, reorganization and similar laws relating to or affecting the enforcement of creditors' rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability. Section 6.18 Waiver of Setoffs. The Indenture Trustee hereby expressly waives any and all rights of setoff that the Indenture Trustee may otherwise at any time have under applicable law with respect to any Account and agrees that amounts in the Accounts shall at all times be held and applied solely in accordance with the provisions hereof. Section 6.19 Control by the Controlling Party. The Indenture Trustee shall comply with notices and instructions given by the Trust or the Noteholders only if accompanied by the written consent of the Controlling Party. Section 6.20 Indenture Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and such proceeding instituted by the Indenture Trustee shall be brought in its own name or in its capacity as Indenture Trustee. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursement and advances of the Indenture Trustee, its agents and counsel, be for the ratable benefit of the Noteholders and the Note Insurer in respect of which such judgment has been recovered. Section 6.21 Suits for Enforcement. In case an Event of Servicing Termination or other default by the Master Servicer or the Sponsor hereunder or under the other Operative Documents shall occur and be continuing, the Indenture Trustee, if the Controlling Party has given its prior written consent, may proceed to protect and enforce its rights and the rights of the Noteholders and the Note Insurer under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, as the Indenture Trustee, being advised by counsel selected by it with due care, shall deem most effectual to protect and enforce any of the rights of the Indenture Trustee, the Note Insurer and the Noteholders. Section 6.22 Mortgagor Claims. In connection with any offset defenses, or affirmative claim for recovery, asserted in legal actions brought by Mortgagors under one or more Mortgage Loans based upon provisions therein or upon other rights or remedies arising from any requirements of law applicable to the Mortgage Loans: 35 42 (a) The Indenture Trustee is the holder of the Mortgage Loans only as trustee on behalf of the holders of the Notes, and not as a principal or in any individual or personal capacity. (b) The Indenture Trustee shall not be personally liable for, or obligated to pay Mortgagors, any affirmative claims asserted thereby, or responsible to holders of the Notes for any offset defense amounts applied against Mortgage Loan payments, pursuant to such legal actions. (c) The Indenture Trustee will pay, solely from available Trust money, affirmative claims for recovery by Mortgagors only pursuant to final judicial orders or judgments, or judicially-approved settlement agreements, resulting from such legal actions against the Trust. (d) The Indenture Trustee will comply with judicial orders and judgments which require its actions or cooperation in connection with Mortgagors' legal actions to recover affirmative claims against holders of the Notes. (e) The Indenture Trustee will cooperate with and assist the Master Servicer, the Sponsor, the Note Insurer or the Noteholders in their defense of legal actions by Mortgagors to recover affirmative claims if such cooperation and assistance is not contrary to the interests of the Indenture Trustee as a party to such legal actions and if the Indenture Trustee is satisfactorily indemnified for all liability, costs and expenses arising therefrom. (f) The Trust hereby agrees to cause the Master Servicer to indemnify, hold harmless and defend the Indenture Trustee from and against any and all liability, loss, costs and expenses of the Indenture Trustee resulting from any affirmative claims for recovery asserted or collected by Mortgagors under the Mortgage Loans and such amounts shall not be a responsibility of the Trust. ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS Section 7.01 Trust to Furnish to Indenture Trustee Names and Addresses of Noteholders. The Trust will furnish or cause to be furnished to the Indenture Trustee (a) not more than five (5) days after the earlier of (i) each Record Date and (ii) three months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders as of such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within 30 days after receipt by the Trust of any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished. The Indenture Trustee or, if the Indenture Trustee is not the Note Registrar, the Trust shall furnish to the Note Insurer or the Trust in writing upon their written request and at such other times as the Note Insurer or the Trust may request a copy of the list. 36 43 Section 7.02 Preservation of Information; Communications to Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Noteholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Noteholders received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished. (b) Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. (c) The Trust, the Indenture Trustee and the Note Registrar shall have the protection of TIA Section 312(c). Section 7.03 Reports by Trust. (a) The Trust shall: (i) file with the Indenture Trustee, within fifteen (15) days after the Trust is required to file the same with the Commission, copies of the annual reports and copies of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Trust may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (ii) file with the Indenture Trustee and the Commission in accordance with rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Trust with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA Section 313(c)) such summaries of any information, documents and reports required to be filed by the Trust pursuant to clauses (i) and (ii) of this Section 7.03(a) as may be required by rules and regulations prescribed from time to time by the Commission. (b) Unless the Trust otherwise determines, the fiscal year of the Trust shall end on December 31 of each year. Section 7.04 Reports by Indenture Trustee. If required by TIA Section 313(a), within 60 days after each December 31, beginning with December 31, 2000, the Indenture Trustee shall mail to each Noteholder as required by TIA Section 313(c) a brief report dated as of such date that complies with TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b). A copy of each report at the time of its mailing to Noteholders shall be filed by the Indenture Trustee with the Commission and each stock exchange, if any, on which the Notes are listed. The Trust shall notify the Indenture Trustee if and when the Notes are listed on any stock exchange. 37 44 ARTICLE VIII PAYMENTS AND STATEMENTS; ACCOUNTS, DISBURSEMENTS AND RELEASES Section 8.01 Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the Sale and Servicing Agreement. The Indenture Trustee shall apply all such money received by it as provided in this Indenture and the Sale and Servicing Agreement. Except as otherwise expressly provided in this Indenture or in the Sale and Servicing Agreement, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may, with the prior written consent of the Note Insurer, and shall, at the direction of the Note Insurer, take such action (after the applicable cure period) as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings. Section 8.02 Release of Trust Estate. (a) Subject to Section 8.11 and the payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and when required by the Trust and the provisions of this Indenture shall, execute instruments to release property from the lien of this Indenture, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture or the Sale and Servicing Agreement. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies. (b) The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 and all Reimbursement Amounts due to the Note Insurer pursuant to the Insurance Agreement have been paid and confirmed in writing by the Note Insurer, release any remaining portion of the Trust Estate that secured the Notes from the lien of this Indenture and release to the Trust or any other Person entitled thereto any funds then on deposit in the Accounts. The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section 8.02(b) only upon receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if required by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01. (c) Notwithstanding the foregoing, the Indenture Trustee shall release Mortgage Loans from the lien of this Indenture pursuant to the Sale and Servicing Agreement. Section 8.03 Establishment of Accounts. The Sponsor shall cause to be established at a Designated Depository Institution, and the Indenture Trustee shall maintain, the Note Account, the Pre-Funding Account and the Capitalized Interest Account, each to be held by the Indenture Trustee in the name of the Trust, for the benefit of the Noteholders and the Note Insurer, as their interests may appear. 38 45 Section 8.04 The Policy. (a) On or before each Determination Date the Indenture Trustee shall calculate the Deficiency Amount, if any, with respect to the immediately following Payment Date. (b) If the Indenture Trustee determines pursuant to paragraph (a) above that a Deficiency Amount would exist, the Indenture Trustee shall complete a Notice in the form of Exhibit A to the Policy and submit such notice to the Note Insurer no later than 12:00 p.m., New York City time on the second Business Day preceding such Payment Date as a claim for a payment in an amount equal to the Deficiency Amount. (c) Upon receipt of payments made pursuant to the Policy from the Note Insurer on behalf of Noteholders, the Indenture Trustee shall deposit such payments in the Note Account and shall distribute such payments, or the proceeds thereof, in accordance with Section 8.06(b) to the Noteholders. (d) The Indenture Trustee shall (i) receive payments made pursuant to a Policy as attorney-in-fact of each Noteholder receiving any Insured Payment from the Note Insurer and (ii) disburse such Insured Payment to the Noteholders as set forth in Section 8.06(b) hereof. The Note Insurer shall be entitled to receive the Reimbursement Amount pursuant to Section 8.06(b)(viii) with respect to each Insured Payment made by the Note Insurer. The Indenture Trustee hereby agrees on behalf of each Noteholder and the Trust for the benefit of the Note Insurer that it recognizes that to the extent the Note Insurer makes payments pursuant to a Policy, either directly or indirectly (as by paying through the Indenture Trustee), to the Noteholders, the Note Insurer will be subrogated to the Noteholders and entitled to receive such Reimbursement Amount. Section 8.05 Pre-Funding Account and Capitalized Interest Account. (a) On the Closing Date, the Indenture Trustee will deposit from the proceeds of the sale of the Notes, on behalf of the Noteholders and the Note Insurer, (x) to the Pre-Funding Account, the Original Pre-Funded Amount and (y) to the Capitalized Interest Account, the Capitalized Interest Account Deposit. (b) On each Subsequent Transfer Date, the Sponsor shall instruct the Indenture Trustee to withdraw from the Pre-Funding Account an amount equal to 96.25% of the aggregate Loan Balances of the Subsequent Mortgage Loans transferred to the Trust on such Subsequent Transfer Date and pay such amount to or upon the order of the Sponsor upon satisfaction of the conditions set forth in Section 2.04 of the Sale and Servicing Agreement with respect to such transfer. (c) On each Payment Date occurring during the Pre-Funding Period, the Indenture Trustee shall transfer from the Pre-Funding Account to the Note Account, the Pre-Funding Earnings, if any, for each such Payment Date. (d) On each Payment Date during the Pre-Funding Period, the Indenture Trustee shall transfer from the Capitalized Interest Account to (x) the Note Account, the Capitalized Interest Requirement, if any, for each such Payment Date and (y) the Master Servicer 39 46 or its designee, any investment earnings with respect to amounts on deposit in the Capitalized Interest Account. (e) On the Payment Date immediately following the end of the Pre-Funding Period, any amounts remaining in the Capitalized Interest Account after taking into account the transfers on such Payment Date described in clause (d) above shall be paid to the holders of the Certificates, and the Capitalized Interest Account shall be closed. (f) On the Payment Date immediately following the end of the Pre-Funding Period, the Sponsor shall instruct the Indenture Trustee to withdraw from the Pre-Funding Account and deposit to the Note Account any amounts remaining on deposit in the Pre-Funding Account on such Payment Date for distribution in accordance with Section 8.06(vii). Section 8.06 Flow of Funds. (a) The Indenture Trustee shall deposit to the Note Account, without duplication, upon receipt, (x) on each Remittance Date, (A) the proceeds of any liquidation of the assets of the Trust Estate and (B) the Monthly Remittance Amount remitted by the Master Servicer or any Sub-Servicer, together with any Substitution Amounts and any Loan Purchase Prices received by the Indenture Trustee, (y) on the Payment Dates occurring during the Pre-Funding Period, (A) the Pre-Funding Earnings transferred by the Indenture Trustee on such Payment Dates pursuant to Section 8.05(c) and (B) the Capitalized Interest Requirement to be transferred on such Payment Dates from the Capitalized Interest Account pursuant to Section 8.05(d) (collectively, the "Total Available Funds"), and (z) on the Payment Date immediately following the end of the Pre-Funding Period, the amount, if any, to be transferred on such Payment Date from the Pre-Funding Account pursuant to Section 8.05(f). The Indenture Trustee shall also deposit to the Note Account, upon receipt, any Insured Payments made pursuant to the Policy. (b) Subject to any superseding provisions of clause (c) below, on each Payment Date, the Indenture Trustee shall make the following allocations, disbursements and transfers from amounts then on deposit in the Note Account (other than funds on deposit in the Note Account relating to Insured Payments, which amounts shall be applied only to the payments specified in clauses (iv) and (vi) and, in the case of the Final Scheduled Payment Date, clause (v) below) in the following order of priority, and each such allocation, transfer and disbursement shall be treated as having occurred only after all preceding allocations, transfers and disbursements have occurred: (i) first, to the Indenture Trustee, the Indenture Trustee's Fee then due and to the Owner Trustee, the Owner Trustee's Fee then due; (ii) second, to the Note Insurer, the Premium Amount then due to the Note Insurer; (iii) third, to the Master Servicer, an amount equal to any previously unreimbursed Servicing Fees then due to it not theretofore received by the Master Servicer pursuant to Section 4.08(c)(i) of the Sale and Servicing Agreement, as reported by the Master Servicer to the Indenture Trustee; 40 47 (iv) fourth, to the Noteholders, the Interest Distribution Amount for such Payment Date; (v) fifth, to the Noteholders, as a distribution of principal, the Scheduled Principal Distribution Amount for such Payment Date; (vi) sixth, to the Noteholders, as a distribution of principal, the Overcollateralization Deficit for such Payment Date; (vii) seventh, if such Payment Date is the Payment Date following the end of the Pre-Funding Period, to the Noteholders, as a distribution of principal, any amount remaining on deposit in the Pre-Funding Account; (viii) eighth, to the Note Insurer, the Reimbursement Amount, if any, then due to it; (ix) ninth, to the Noteholders, as a distribution of principal, an amount up to the Accelerated Principal Payment; (x) tenth, to the Noteholders, the amount of any Available Funds Cap Carry-Forward Amount for such Payment Date; (xi) eleventh, to the Master Servicer, to the extent of any unreimbursed Delinquency Advances, unreimbursed Servicing Advances, including Nonrecoverable Delinquency Advances and Nonrecoverable Servicing Advances, and accrued and unpaid Servicing Fees as of such Payment Date; (xii) twelfth, to the Indenture Trustee and the Owner Trustee, to the extent of any unreimbursed expenses owed to each of them; (xiii) thirteenth, to the Certificateholders, any Overcollateralization Reduction Amount; and (xiv) fourteenth, to the Certificateholders, any amount remaining on deposit in the Note Account. (c) On any Payment Date during the continuance of any Note Insurer Default, no Premium Amount shall be paid to the Note Insurer (unless the Note Insurer or its custodian, trustee, agent, receiver, custodian, or similar official continues to make payments required under the Policy) and any amounts otherwise payable to the Note Insurer as Premium Amounts shall be retained in the Note Account but segregated from Total Available Funds on deposit in the Note Account. On any Payment Date wherein such Note Insurer Default has been cured, the Premium Amount shall be paid to the Note Insurer. Section 8.07 Investment of Accounts. (a) So long as no event described in Section 5.01(a) or (b) of the Sale and Servicing Agreement shall have occurred and be continuing, and consistent with any requirements of the Code, all or a portion of the Accounts (excluding investment earning thereon) held by the Indenture Trustee shall be invested and 41 48 reinvested by the Indenture Trustee in the name of the Indenture Trustee for the benefit of the Noteholders and the Note Insurer, as directed in writing by the Master Servicer, in one or more Eligible Investments bearing interest or sold at a discount. During the continuance of an event described in Section 5.01(a) or (b) of the Sale and Servicing Agreement and following any removal of the Master Servicer, the Note Insurer may direct such investments. No investment in any Account shall mature later than the Business Day immediately preceding the next Payment Date. (b) If any amounts are needed for disbursement from any Account held by the Indenture Trustee and sufficient uninvested funds are not available to make such disbursement, the Indenture Trustee shall cause to be sold or otherwise converted to cash a sufficient amount of the investments in such Account. No investments will be liquidated prior to maturity unless the proceeds thereof are needed for disbursement. (c) The Indenture Trustee shall not in any way be held liable by reason of any insufficiency in any Account held by the Indenture Trustee resulting from any loss on any Eligible Investment included therein (except in its capacity as obligor on any such investment) but shall be liable for loss of investment earnings if the funds held in the Accounts are not invested in accordance with this Indenture. (d) The Indenture Trustee shall hold funds in the Accounts held by the Indenture Trustee in Eligible Investments specified in Section 8.08(i) upon the occurrence of either of the following events: (i) the Master Servicer or the Note Insurer shall have failed to give investment directions to the Indenture Trustee; or (ii) the Master Servicer or the Note Insurer shall have failed to give investment directions to the Indenture Trustee by 5:00 p.m. California time (or such other time as may be agreed by the Master Servicer and the Indenture Trustee) on the Business Day prior to receipt of such funds. Any investment earnings on funds held in the Note Account and the Capitalized Interest Account shall be for the account of the Master Servicer and may only be withdrawn from the Note Account by the Indenture Trustee to be remitted to the Master Servicer on each respective Payment Date. Any references herein to amounts on deposit in the Note Account and the Capitalized Interest Account shall refer to amounts net of such investment earnings. The Master Servicer shall deposit the amount of any investment losses immediately into the Note Account and the Capitalized Interest Account as realized. Section 8.08 Eligible Investments. The following are "Eligible Investments": (a) Direct general obligations of the United States or the obligations of any agency or instrumentality of the United States fully and unconditionally guaranteed, the timely payment or the guarantee of which constitutes a full faith and credit obligation of the United States. (b) Federal Housing Administration debentures. 42 49 (c) Freddie Mac participation certificates and senior debt obligations. (d) Federal Home Loan Banks' consolidated senior debt obligations. (e) Fannie Mae mortgage backed securities (other than stripped mortgage securities which are valued greater than par on the portion of unpaid principal) and senior debt obligations. (f) Federal funds, certificates of deposit, time and demand deposits, and bankers' acceptances (having original maturities of not more than 365 days) of any domestic bank, the short-term debt obligations of which have been rated "A-1" or better by S&P and "P-1" by Moody's. (g) Investment agreements approved by the Note Insurer; provided, that: (i) the agreement is with a bank or insurance company which has an unsecured, uninsured and unguaranteed obligation (or claims-paying ability) rated "Aa2" or better by Moody's and "AA" or better by S&P, or is the lead bank of a parent bank holding company with an uninsured, unsecured and unguaranteed obligation meeting such rating requirements, and (ii) monies invested thereunder may be withdrawn without any penalty, premium or charge upon not more than one day's notice (provided such notice may be amended or canceled at any time prior to the withdrawal date), and (iii) the agreement is not subordinated to any other obligations of such insurance company or bank, and (iv) the same guaranteed interest rate will be paid on any future deposits made pursuant to such agreement, and (v) the Indenture Trustee and the Note Insurer receive an opinion of counsel that such agreement is an enforceable obligation of such insurance company or bank. (h) Commercial paper (having original maturities of not more than 365 days) rated "A-1" or better by S&P and "P-1" or better by Moody's. (i) Investments in money market funds rated "AAAm" or "AAAm-G" by S&P and "Aaa" or "P-1" by Moody's. (j) Investments approved in writing by the Note Insurer and acceptable to Moody's and S&P; provided, that no instrument described above is permitted to evidence either the right to receive (a) only interest with respect to obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument and the interest and principal payments with respect to such instrument 43 50 provided a yield to maturity at par greater than 120% of the yield to maturity at par of the underlying obligations; and, provided, further, that no instrument described above may be purchased at a price greater than par if such instrument may be prepaid or called at a price less than its purchase price prior to stated maturity. Section 8.09 Reports by Indenture Trustee. (a) On each Payment Date, the Indenture Trustee shall provide to each Noteholder, to the Master Servicer, to the Note Insurer, to the Representative, to the Sponsor and to each Rating Agency a written report in substantially the form set forth as Exhibit C hereto, as such form may be revised by the Indenture Trustee and the Master Servicer from time to time, but in every case setting forth the following information: (i) the amount of the distribution with respect to the Notes; (ii) the amount of such distributions allocable to principal, separately identifying the aggregate amount of any Prepayments or other unscheduled recoveries of principal included therein; (iii) the amount of such distributions allocable to interest; (iv) the Available Funds Cap Carry-Forward Amount; (v) the Outstanding Note Principal Balance of the Notes as of such Payment Date, together with the principal amount of the Notes (based on a Note in an original principal amount of $1,000) then outstanding, in each case after giving effect to any payment of principal on such Payment Date; (vi) any Insured Amount included in the amounts distributed in respect of the Notes; (vii) the aggregate Loan Balance of all Mortgage Loans after giving effect to any payment of principal on such Payment Date; (viii) information furnished by the Sponsor pursuant to Section 6049(d)(7)(C) of the Code and the regulations promulgated thereunder to assist the Owners in computing their market discount; (ix) the total of any Substitution Amounts and any Loan Purchase Prices amounts included in such distribution; (x) the weighted average Coupon Rate of the Mortgage Loans; (xi) the Overcollateralization Amount after giving effect to any payment of principal on such Payment Date; (xii) the aggregate Loan Balances of all Mortgage Loans that were repurchased during the related Remittance Period and any repurchases pursuant to Section 4.10 of the Sale and Servicing Agreement; 44 51 (xiii) the amounts, if any, of any Realized Losses for the related Remittance Period and the preceding six (6) Remittance Periods; (xiv) the amount on deposit in the Pre-Funding Account and the Capitalized Interest Account; (xv) the amount of Pre-Funding Earnings; (xvi) a number with respect the Notes (the "Pool Factor") computed by dividing the Note Principal Balance of the Notes (after giving effect to any distribution of principal to be made on such Payment Date) by the Note Principal Balance of the Notes on the Closing Date; (xvii) whether a Servicer Termination Loss Trigger has occurred, as such terms are defined in the Insurance Agreement. Items (i) through (iii) above shall be presented on the basis of a Note having a $1,000 denomination. In addition, by January 31 of each calendar year following any year during which the Notes are outstanding, the Indenture Trustee shall furnish a report to each Note Owner of record at any time during each calendar year as to the aggregate of amounts reported pursuant to (i), (ii) and (iii) with respect to the Notes for such calendar year. If the Notes are in book-entry form, DTC will supply such reports to the Note Owners as are in accordance with its procedures. (b) In addition, on each Payment Date the Indenture Trustee will distribute to each Note Owner, to the Note Insurer, to the Representative, to the Master Servicer, to the Sponsor and to each Rating Agency, together with the information described in subsection (a) preceding, the following information with respect to the Mortgage Loans as of the close of business on the last Business Day of the related Remittance Period, which is hereby required to be prepared by the Master Servicer and furnished to the Indenture Trustee for such purpose on or prior to the related Remittance Date: (i) the total number and aggregate Loan Balances of Mortgage Loans and the percentage (based on the aggregate Loan Balances) of the aggregate Loan Balances of such Mortgage Loans which are (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days Delinquent; (ii) the number, aggregate Loan Balances and percentage (based on the aggregate Loan Balances of the Mortgage Loans) of all Mortgage Loans in foreclosure proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (i)); (iii) the number, aggregate Loan Balances and percentage (based on the aggregate Loan Balances of the Mortgage Loans) of all Mortgage Loans relating to Mortgagors in bankruptcy proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (i)); 45 52 (iv) the number, aggregate Loan Balances and percentage (based on the aggregate Loan Balances of the Mortgage Loans) of all Mortgage Loans relating to REO Properties (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (i)); and (v) the book value of any REO Property. (c) The Sponsor and the Master Servicer, on behalf of Noteholders and the Trust (the "Trust Parties") hereby authorize the Indenture Trustee to include the information, excluding any information relating to the fees or amounts due to the Note Insurer, contained in reports provided to the Note Insurer or the Indenture Trustee by the Master Servicer hereunder and, if so directed by an Authorized Officer of the Sponsor in writing to the Indenture Trustee, the monthly report to the Note Owners prepared by the Indenture Trustee (the "Information") on The Bloomberg, an on-line computer based on-line information network maintained by Bloomberg L.P. ("Bloomberg") or on any other on-line computer based on-line information network or service ("Information Network"), or in other electronic or print information services deemed acceptable by the Sponsor or the Master Servicer as designated in writing to the Indenture Trustee by an Authorized Officer of the Master Servicer. The Trust Parties agree not to commence any actions or proceedings, or otherwise assert any claims, against the Indenture Trustee or its affiliates or any of the Indenture Trustee's or its affiliates' respective agents, representatives, directors, officers or employees (collectively, the "Designated Parties"), arising out of, or related to or in connection with the dissemination and/or use of any Information by the Indenture Trustee, including, but not limited to, claims based on allegations of inaccurate or incomplete information by the Indenture Trustee to Bloomberg or to any Information Network or otherwise (other than in connection with the Indenture Trustee's negligence or willful misconduct). The Trust Parties waive their rights to assert any such claims against the Designated Parties and fully and finally release the Designated Parties from any and all such claims, demands, obligations, actions and liabilities (other than in connection with such Designated Parties' negligence or willful misconduct). The Indenture Trustee makes no representations or warranties, expressed or implied, of any kind whatsoever with respect to the accuracy, adequacy, timeliness, completeness, merchantability or fitness for any particular purpose of any Information in any form or manner. The covenants and obligations of the Trust Parties under this Section 8.09(c) shall be irrevocable and shall survive the termination of this Indenture. Section 8.10 Additional Reports by Trustee. (a) The Indenture Trustee shall report to the Sponsor, the Note Insurer and the Master Servicer with respect to the amount then held in each Account (including investment earnings accrued or scheduled to accrue) held by the Indenture Trustee and the identity of the investments included therein, as the Sponsor, the Master Servicer or the Note Insurer may from time to time request. Without limiting the generality of the foregoing, the Indenture Trustee shall, at the request of the Sponsor, the Master Servicer or the Note Insurer, transmit promptly to the Sponsor, the Note Insurer and the Master Servicer copies of all accounting of receipts in respect of the Mortgage Loans furnished to it by the Master Servicer and shall notify the Sponsor, the Note Insurer and the Master Servicer if any such receipts have not been received by the Indenture Trustee. 46 53 (b) The Indenture Trustee shall immediately report to the Note Insurer, Sponsor and Master Servicer with respect to its actual knowledge, without independent investigation, of any breach of any of the representations or warranties relating to individual Mortgage Loans set forth in the Mortgage Loan Transfer Agreement or in Section 3.03(a) the Sale and Servicing Agreement. Section 8.11 Opinion of Counsel. The Indenture Trustee shall receive at least seven (7) days' notice when requested by the Trust to take any action pursuant to Section 8.02(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require as a condition to such action, an Opinion of Counsel, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders or the Note Insurer in contravention of the provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action. ARTICLE IX SUPPLEMENTAL INDENTURES Section 9.01 Supplemental Indentures Without Consent of Noteholders. (a) Without the consent of the Noteholders but with the prior written consent of the Note Insurer (as evidenced to the Indenture Trustee), the Trust and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee and the Note Insurer, for any of the following purposes: (i) to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property; (ii) to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Trust, and the assumption by any such successor of the covenants of the Trust herein and in the Notes contained; (iii) to add to the covenants of the Trust, for the benefit of the Noteholders and the Note Insurer, or to surrender any right or power herein conferred upon the Trust; (iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee; 47 54 (v) to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture which may be inconsistent with any other provision herein or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided, that such action shall not (1) adversely affect the interests of the Noteholders or (2) result in a reduction of the then current rating on the Notes; (vi) to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI; or (vii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained. (b) The Trust and the Indenture Trustee, when authorized by an Issuer Order, may, without the consent of any of the Noteholders but with the prior written consent of the Note Insurer, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that such action shall not (1) reduce the then current rating on the Notes or (2) as evidenced by an Opinion of Counsel addressed to the Note Insurer and the Indenture Trustee, materially and adversely affect the interests of any Noteholder. Section 9.02 Supplemental Indentures with Consent of Noteholders. The Trust and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies, with the prior written consent of the Note Insurer and with the consent of the Noteholders of at least 51% of the Outstanding Note Principal Balance of the Notes, by Act of such Noteholders delivered to the Trust and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that, subject to the express rights of the Note Insurer under the Operative Documents, no such supplemental indenture shall, without the consent of the Noteholder of each Outstanding Note affected thereby: (a) change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the interest rate thereon or the Redemption Price with respect thereto, change the provision of this Indenture relating to the application of collections on, or the proceeds of the sale of, the Trust Estate to payment of principal of or interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable; 48 55 (b) impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date); (c) reduce the percentage of the Outstanding Note Principal Balance of the Notes, the consent of the Noteholders of which is required for any such supplemental indenture, or the consent of the Noteholders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; (d) modify or alter the provisions of the proviso to the definition of the term "Outstanding"; (e) reduce the percentage of the Outstanding Note Principal Balance of the Notes required to direct the Indenture Trustee to direct the Trust to sell or liquidate the Trust Estate pursuant to Section 5.03; (f) modify any provision of this Section 9.02 except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the other Operative Documents cannot be modified or waived without the consent of the Noteholder of each Note affected thereby; (g) modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual components of such calculation); or (h) permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein or in any of the other Operative Documents, terminate the lien of this Indenture on any property at any time subject hereto or deprive the Noteholder of any Note of the security provided by the lien of this Indenture. The Indenture Trustee may determine whether or not any Notes would be adversely affected by any supplemental indenture upon receipt of an Opinion of Counsel to that effect and any such determination shall be conclusive upon all Noteholders, whether theretofore or thereafter authenticated and delivered hereunder. The Indenture Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Promptly after the execution by the Trust and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee shall mail to the Noteholders to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture 49 56 Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 9.03 Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel (and, if requested, an Officer's Certificate) stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. Section 9.04 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Trust and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 9.05 Conformity With Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act. Section 9.06 Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Trust or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Trust, to any such supplemental indenture may be prepared and executed by the Trust and authenticated and delivered by the Indenture Trustee in exchange for the Notes. ARTICLE X REDEMPTION OF NOTES Section 10.01 Redemption. (a) The Notes are subject to redemption following the later of (A) the Payment Date following payment in full of all amounts owing to the Note Insurer and (B) the earliest of (i) the transfer, under the conditions specified in Section 10.01(b), to the Master Servicer or any Master Servicer Affiliate of the Trust Estate, (ii) the final payment or other liquidation of the last Mortgage Loan remaining in the Trust (including, without limitation, the disposition of the Mortgage Loan pursuant to Section 5.03) or the disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (iv) the Final Scheduled Payment Date; provided, however, that (x) no such redemption shall 50 57 occur unless all amounts due and owing to the Note Insurer as a Reimbursement Amount have been paid and (y) in no event shall the trust created hereby continue beyond the expiration of 21 years from the date of death of the last surviving descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date hereof. Upon termination in accordance with clause (B)(i) of this Section 10.01(a), the Indenture Trustee shall execute such documents and instruments of transfer presented by the Sponsor, in each case without recourse, representation or warranty, and take such other actions as the Sponsor may reasonably request to effect the transfer of the Mortgage Loan to the Sponsor. (b) The Notes shall be subject to optional redemption by the Master Servicer or any Master Servicer Affiliate on any Payment Date after the Payment Date on which the Note Principal Balance has been reduced to an amount less than or equal to 10% of the Original Note Principal Balance and all amounts due and owing to the Note Insurer as a Reimbursement Amount have been paid. Such transfer shall only be permitted if the party exercising such option delivers to the Indenture Trustee an amount equal to the sum of the Outstanding Note Principal Balance of the Notes and accrued and unpaid interest thereon (including any Available Funds Cap Carry Forward Amounts) at the Note Formula Rate through the day preceding the final Payment Date plus all Reimbursement Amounts (the "Redemption Price"). In connection with such purchase, the Master Servicer shall remit to the Indenture Trustee all amounts then on deposit in the Principal and Interest Account for deposit to the Note Account, which deposit shall be deemed to have occurred immediately preceding such purchase. (c) Promptly following any such purchase, the Indenture Trustee will release the Mortgage Files to the Master Servicer, or otherwise upon its order, in a manner similar to that described in Section 4.14 of the Sale and Servicing Agreement. (d) If the Notes are to be redeemed pursuant to this Section 10.01, the Master Servicer or the Trust shall furnish notice of such election to the Indenture Trustee not later than 15 days prior to the Redemption Date and the Trust shall deposit with the Indenture Trustee in the Note Account the Redemption Price of the Notes not less than three (3) Business Days prior to the Redemption Date whereupon all such Notes shall be due and payable on the Redemption Date upon the furnishing of a notice complying with Section 10.02. Section 10.02 Surrender of Notes. (a) Notice of any termination, specifying the Payment Date (which shall be a date that would otherwise be a Payment Date) upon which the Noteholders may surrender their Notes to the Indenture Trustee for payment of the final distribution and cancellation, shall be given promptly by the Indenture Trustee (upon receipt of written directions from the Sponsor, if the Sponsor is exercising its right to transfer of the Mortgage Loans, given not later than the first day of the month preceding the month of such final distribution) to the Note Insurer and to the Master Servicer and by letter to Noteholders mailed not earlier than the 1st day and not later than the 10th day of the month of such final distribution specifying (i) the Payment Date upon which final distribution of the Notes will be made upon presentation and surrender of the Notes at the office or agency of the Indenture Trustee therein designated, (ii) the amount of any such final distribution and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable, distributions being made only upon presentation and surrender of the Notes at the office or agency of the Indenture Trustee therein specified. 51 58 (b) Any money held by the Indenture Trustee in trust for the payment of any amount due with respect to any Note and remaining unclaimed by the related Noteholder for the period then specified in the escheat laws of the State of New York after such amount has become due and payable shall be discharged from such trust and be paid first, to the Note Insurer on account of any Reimbursement Amounts, and second, to the Certificateholders; and such Noteholder shall thereafter, as an unsecured general creditor, look only to the Certificateholders for payment thereof (but only to the extent of the amounts so paid to the Note Insurer or the Certificateholders), and all liability of the Indenture Trustee with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee, before being required to make any such payment, shall at the expense of the Trust cause to be published once, in the eastern edition of The Wall Street Journal, notice that such money remains unclaimed and that, after a date specified therein, which shall be not fewer than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be paid to the Note Insurer or the Certificateholders. The Indenture Trustee shall, at the direction of the Sponsor, also adopt and employ, at the expense of the Trust, any other reasonable means of notification of such payment (including, but not limited to, mailing notice of such payment to Noteholders whose right to or interest in monies due and payable but not claimed is determinable from the Note Register at the last address of record for each such Noteholder). Section 10.03 Form of Redemption Notice. (a) Notice of redemption supplied to the Indenture Trustee by the Master Servicer under Section 10.01 shall be given by the Indenture Trustee by facsimile or by first-class mail, postage prepaid, transmitted or mailed prior to the applicable Redemption Date to each Noteholder of record, as of the close of business on the date which is not less than five (5) days prior to the applicable Redemption Date, at such Noteholder's address appearing in the Note Register. (b) All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) that the Record Date otherwise applicable to such Redemption Date is not applicable and that payments shall be made only upon presentation and surrender of such Notes at the place where such Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Trust to be maintained as provided in Section 3.02); and (iv) that interest on the Notes shall cease to accrue on the Redemption Date. (c) Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Trust. Failure to give notice of redemption, or any defect therein, to any Noteholder shall not impair or affect the validity of the redemption of any other Note. Section 10.04 Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as required by Section 10.02, on the Redemption Date become due and payable at the Redemption Price and (unless the Trust shall default in the 52 59 payment of the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating the Redemption Price. ARTICLE XI MISCELLANEOUS Section 11.01 Compliance Certificates and Opinions, etc. Upon any application or request by the Trust to the Indenture Trustee to take any action under any provision of this Indenture, and where specified in this Indenture, the Trust shall furnish to the Indenture Trustee and to the Note Insurer if the application or request is made to the Indenture Trustee (i) an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel addressed to the Indenture Trustee and the Note Insurer stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section 11.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and (b) a statement as to whether, in the opinion of each such signatory such condition or covenant has been complied with. Section 11.02 Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Authorized Officer of the Trust may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Master Servicer, the Sponsor or the Trust, stating that the information with respect to such factual matters is in the possession of the Master Servicer, the Sponsor or the 53 60 Trust, stating that the information with respect to such factual matters is in the possession of the Master Servicer, the Sponsor or the Trust, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Trust shall deliver any document as a condition of the granting of such application, or as evidence of the Trust's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Trust to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to conclusively rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. Section 11.03 Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Trust. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Trust, if made in the manner provided in this Section 11.03. (b) The fact and date of the execution by any person of any such instrument or writing may be proved in any customary manner of the Indenture Trustee. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Noteholder shall bind the Noteholder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Trust in reliance thereon, whether or not notation of such action is made upon such Note. Section 11.04 Notices, etc. to Indenture Trustee, Trust and Rating Agencies. Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other 54 61 communications provided or permitted by this Indenture to be made upon, given or furnished to or filed shall be in writing and shall be deemed to be given when delivered to: (a) The Indenture Trustee by any Noteholder or by the Trust at its Corporate Trust Office, Attention: Advanta Series 1999-4 and any notice delivered by facsimile shall be addressed to the Corporate Trust Office, telecopy number (714) 247-6475, or (b) The Trust by the Indenture Trustee or by any Noteholder addressed to: Advanta Mortgage Loan Trust 1999-4, in care of Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 Attention: Corporate Trust Administration, or at any other address previously furnished in writing to the Indenture Trustee by Trust. The Trust shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee. (c) The Sponsor or the Master Servicer by the Indenture Trustee addressed to: In the case of the Sponsor: Advanta Conduit Receivables, Inc. Welsh & McKean Roads Springhouse, PA 19477 Attn: Treasury, Structured Finace In the case of the Master Servicer: Advanta Mortgage Corp. USA 10790 Rancho Bernardo Road San Diego, CA 92127 Attn: Investor Reporting or such other address previously furnished in writing to the Indenture Trustee by Sponsor or Master Servicer. (d) The Note Insurer by the Trust or the Indenture Trustee as follows: Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: Structure Finance Department - MBS Fax: (212) 363-1459 Confirmation: (212) 668-0340 In each case in which notice or other communication to the Note Insurer refers to an Event of Servicing Termination, a claim on the Policy or with respect to which failure on the part of the Note Insurer to respond shall be deemed to constitute consent or acceptance, then a copy of such notice or other communication should also be sent to the 55 62 attention of the general counsel (fax no. (212) 208-3558 and with the same confirmation number as stated above) and should be marked "URGENT MATERIAL ENCLOSED". (e) Notices required to be given to the Rating Agencies by the Trust, the Indenture Trustee or the Owner Trustee shall be sent by first class mail to (i) in the case of Moody's, at the following address: Moody's Investors Service, Inc., 99 Church Street, New York, New York 10004, Fax No: (212) 533-0355 and (ii) in the case of S&P, at the following address: Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041, Attention: Asset Backed Surveillance Department, Fax No: (212) 438-2661; or as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. Section 11.05 Notices to Noteholders; Waiver. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at his address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder. Section 11.06 Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Trust may enter into any agreement with any Noteholder providing for a method of payment, or notice by the Indenture Trustee or any Note Paying Agent to such Noteholder, that is different from the methods provided for in this Indenture for such payments or notices, provided that such methods are reasonable and consented to by the Indenture Trustee (which consent shall not be unreasonably withheld). The Trust will furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee will cause payments to be made and notices to be given in accordance with such agreements. 56 63 Section 11.07 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. The provisions of TIA Sections 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. Section 11.08 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 11.09 Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Trust shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors. Section 11.10 Separability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.11 Benefits of Indenture. The Note Insurer and its successors and assigns shall be a third-party beneficiary to the provisions of this Indenture, and shall be entitled to rely upon and directly to enforce such provisions of this Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Note Insurer and the Noteholders, and any other party secured hereunder, and any other person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture. The Note Insurer may disclaim any of its rights and powers under this Indenture (in which case the Indenture Trustee may exercise such right or power hereunder), but not its duties and obligations under the Policy, upon delivery of a written notice to the Indenture Trustee. Section 11.12 Legal Holidays. In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date. Section 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 11.14 Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 57 64 Section 11.15 Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Trust and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Trust or any other counsel reasonably acceptable to the Indenture Trustee and the Note Insurer) to the effect that such recording is necessary either for the protection of the Noteholders or any other person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. Section 11.16 Trust Obligation. No recourse may be taken, directly or indirectly, with respect to the obligations of the Trust, the Sponsor, the Originators, the Master Servicer, the Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Sponsor, the Originators, the Master Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Trust or (iii) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Sponsor, the Originators, the Master Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Trust, the Sponsor, the Originators, the Master Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Sponsor, the Originators, the Master Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacity) and except that any such owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Trust hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement. Section 11.17 No Petition. The Indenture Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they will not at any time institute against the Sponsor, Advanta Holding Trust 1999-4, the Trust or any Certificateholder, or join in any institution against the Sponsor, Advanta Holding Trust 1999-4, the Trust or any Certificateholder of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, this Indenture or any of the Operative Documents. Section 11.18 Inspection. The Trust agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee or of the Note Insurer, during the Trust's normal business hours, to examine all the books of account, records, reports, and other papers of the Trust, to make copies and extracts therefrom, to cause such books to be audited by independent certified public accountants, and to discuss the Trust's affairs, finances and accounts with the Trust's officers, employees, and independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are 58 65 unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Section 11.19 Usury. The amount of interest payable or paid on any Note under the terms of this Indenture shall be limited to an amount which shall not exceed the maximum nonusurious rate of interest allowed by the applicable laws of the State of New York or any applicable law of the United States permitting a higher maximum nonusurious rate that preempts such applicable New York laws, which could lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In the event any payment of interest on any Note exceeds the Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed to have been paid to the Note Owner as a result of an error on the part of the Indenture Trustee acting on behalf of the Trust and the Note Owner receiving such excess payment shall promptly, upon discovery of such error or upon notice thereof from the Indenture Trustee on behalf of the Trust, refund the amount of such excess or, at the option of such Note Owner, apply the excess to the payment of principal of such Note, if any, remaining unpaid. In addition, all sums paid or agreed to be paid to the Indenture Trustee for the benefit of Note Owners for the use, forbearance or detention of money shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such Notes. Section 11.20 Limitation of Liability. It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by Wilmington Trust Company, not individually or personally but solely as Owner Trustee of the Trust under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose for binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust Company individually or personally to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties to this Indenture and by any person claiming by, through or under them and (d) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaking by the Trust under this Indenture or any related documents. Section 11.21 Rights of the Note Insurer to Exercise Rights of Noteholders. By accepting its Notes, each Noteholder agrees that unless a Note Insurer Default exists, or as otherwise provided in this Indenture, the Note Insurer shall have the right to exercise all rights of the Noteholders under this Indenture without any further consent of the Noteholders, including, without limitation: (a) the right to direct the actions of the Indenture Trustee during the continuance of a an Event of Default; and (b) the right to vote on proposed amendments to this Indenture. 59 66 In addition, each Noteholder agrees that, unless an Note Insurer Default exists, any rights may be exercised by the Noteholders only with the prior written consent of the Note Insurer. Notwithstanding any provision in this Indenture to the contrary, so long as an Note Insurer Default has occurred and is continuing, the Note Insurer shall have no rights to exercise any voting rights of the Noteholders hereunder, nor shall the Indenture Trustee be required to obtain the prior written consent of, or act at the direction of, the Note Insurer. Section 11.22 Consent and Direction of Note Insurer. Unless otherwise specified, with respect to (i) each action which requires the consent of the Note Insurer, such consent shall only be required if no Note Insurer Default shall have occurred and be continuing and (ii) each action which the Note Insurer may take or direct another party to take, such action or direction may only be taken or given if no Note Insurer Default shall have occurred and be continuing. Section 11.23 Rules by Indenture Trustee. The Indenture Trustee may make reasonable rules for any meeting of Noteholders. [Remainder of Page Intentionally Left Blank] 60 67 IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, hereunto duly authorized, all as of the day and year first above written. ADVANTA MORTGAGE LOAN TRUST 1999-4 By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee, By: /s/ Donald G. MacKelcan _____________________________________ Name: Donald G. MacKelcan Title: Vice President BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity but solely as Indenture Trustee, By: /s/ Whitney Iger _____________________________________ Name: Whitney Iger Title: Assistant Vice President 68 EXHIBIT A [Form of Note] REGISTERED $________ No. 1 SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP NO. _________ Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Trust or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. ADVANTA MORTGAGE LOAN TRUST 1999-4 MORTGAGE LOAN ASSET-BACKED NOTES Advanta Mortgage Loan Trust 1999-4, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Trust"), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of ($___________), such amount payable on each Payment Date in an amount equal to the result obtained by multiplying (i) a fraction the numerator of which is $___________ and the denominator of which is $___________ by (ii) the aggregate amount, if any, payable from the Note Account in respect of principal on the Notes pursuant to Section 8.06 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the November 2029 Payment Date (the "Final Scheduled Payment Date"). Until the principal of this Note is paid or made available for payment, the Trust will pay interest on this Note at the rate per annum provided in the Indenture on each Payment Date on the principal amount of this Note outstanding on the day immediately preceding the related Payment Date (after giving effect to all payments of principal on this Note made on the preceding Payment Date). Interest on this Note will accrue for each Payment Date during the period from and including the preceding Payment Date (or in the case of the December 1999 Payment Date, from and including the Closing Date) to but excluding the current Payment Date. Interest will be computed on the actual number of days in the related Interest Accrual Period divided by 360 days. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. A-1-1 69 The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Trust with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note. The Notes are entitled to the benefits of a financial guaranty insurance policy (the "Policy") issued by Ambac Assurance Corporation (the "Note Insurer"), pursuant to which the Note Insurer has unconditionally guaranteed payments of the Insured Amounts on each Payment Date, all as more fully set forth in the Indenture. For purposes of federal income, state and local income and franchise and any other income taxes, the Trust will treat the Notes as indebtedness and hereby instructs the Indenture Trustee to treat the Notes as indebtedness for federal and state tax reporting purposes. Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees (1) to treat the Notes as indebtedness for purposes of federal income, state and local income and franchise and any other income taxes and (2) that no recourse may be taken, directly or indirectly, with respect to the obligations of the Trust, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Sponsor, the Originators, the Master Servicer, the Indenture Trustee, or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Trust or (iii) any owner, beneficiary, agent, officer, director or employee of the Sponsor, the Originators, the Master Servicer, the Indenture Trustee, or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Trust, the Sponsor, the Originators, the Master Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Sponsor, the Originators, the Master Servicer, the Indenture Trustee, or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacity) and except that any such owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. Each Note Owner, by acceptance of a beneficial interest in a Note, shall be deemed to represent either (i) that it is not (A) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the assets of a Benefit A-1-2 70 Plan, or (ii) that its acquisition and continued holding of the Note will be covered by a U.S. Department of Labor Prohibited Transaction Class Exemption. A-1-3 71 IN WITNESS WHEREOF, the Trust has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: November __, 1999 ADVANTA MORTGAGE LOAN TRUST 1999-4 By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee under the Trust Agreement By: __________________________________ Name: Title: A-1-4 72 INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture. Date: November __, 1999 BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity but solely as Indenture Trustee By: _____________________________________ Authorized Signatory A-1-5 73 REVERSE OF NOTE This Note is one of a duly authorized issue of Notes of the Trust, designated as its Mortgage Loan Asset-Backed Notes, Series 1999-4 (herein called the " Notes"), issued under an Indenture dated as of November 1, 1999 (such indenture, as supplemented or amended, is herein called the "Indenture"), between the Trust, as issuer, and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee", which term includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Trust, the Indenture Trustee and the Noteholders. The Notes are subject to all terms of the Indenture. All terms used in this Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Notes are and will be secured by the Trust Estate pledged as security therefor as provided in the Indenture. Principal of the Notes will be payable on each Payment Date in an amount described on the face hereof. "Payment Date" means the twenty-fifth day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing December 27, 1999. The term "Payment Date," shall be deemed to include the Final Scheduled Payment Date. As described above, the entire unpaid principal amount of this Note shall be due and payable on the earlier of the Final Scheduled Payment Date and the Redemption Date, if any, pursuant to Section 10.01(a) of the Indenture. Notwithstanding the foregoing, if an Event of Default has occurred and shall be continuing the Notes may be declared immediately due and payable. All principal payments on the Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Note are due and payable on each Payment Date, together with the installment of principal, if any, to the extent such payment is not the final payment of this Note, shall be made by check mailed to the Person whose name appears as the Noteholder (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment. Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all future Noteholders and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Trust, will notify the Person who was the Noteholder hereof as of the Record Date preceding such Payment Date by notice mailed prior to such A-1-6 74 Payment Date and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture Trustee's principal Corporate Trust Office or at the office of the Indenture Trustee's agent appointed for such purposes. The Trust shall pay interest on overdue installments of interest at the Note Formula Rate to the extent lawful. As provided in the Indenture, the Notes may be redeemed pursuant to Section 10.01(b) of the Indenture, in whole, but no in party, at the option of the Master Servicer or any Master Servicer Affiliate, on any Payment Date following the Payment Date on which the Outstanding Note Principal Balance of the Notes has been reduced to an amount equal to 10% or less of the Original Note Principal Balance of the Notes. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Trust pursuant to the Indenture, (i) duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or his attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar which requirements include membership or participation in Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act, and (ii) accompanied by such other documents as the Indenture Trustee may require, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Sponsor, or the Trust or join in any institution against the Sponsor, or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the other Operative Documents. Prior to the due presentment for registration of transfer of this Note, the Trust, the Indenture Trustee and the Note Insurer and any agent of the Trust, the Indenture Trustee or the Note Insurer shall treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Trust, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Trust and the rights A-1-7 75 of the Noteholders under the Indenture at any time by the Trust with the prior written consent of the Note Insurer and of the Noteholders representing a majority of the Outstanding Note Principal Balance of the Notes. Any such consent or waiver by the Noteholder of this Note (or any one of more Predecessor Notes) shall be conclusive and binding upon such Noteholder and upon all future Noteholders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Noteholders issued thereunder but with the prior written consent of the Note Insurer. The term "Trust" as used in this Note includes any successor to the Trust under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note and the Indenture shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Trust, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place, and rate, and in the coin or currency herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Indenture or the other Operative Documents, neither Wilmington Trust Company in its individual capacity, any owner of a beneficial interest in the Trust, nor any of their respective beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Trust for the sole purposes of binding the interests of the Trust in the assets of the Trust. The Noteholder by the acceptance hereof agrees that except as expressly provided in the Indenture or the Operative Documents, in the case of an Event of Default under the Indenture, the Noteholder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Trust for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. A-1-8 76 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto: ______________________________________________________________ (name and address of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated:_______________________ __________________________________1 Signature Guaranteed: _____________________________ __________________________________ - ---------- 1 NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever. A-1-9 77 EXHIBIT B FORM OF AUTHENTICATION ORDER ORDER TO AUTHENTICATE THE NOTES November 17, 1999 Bankers Trust Company of California, N.A., as Indenture Trustee 1761 E. St. Andrew Place Santa Ana, California 92705 Ladies and Gentlemen: Pursuant to Section 2.02 of the Indenture, dated as of November 1, 1999 (the "Indenture"), between Advanta Mortgage Loan Trust 1999-4 (the "Trust") and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee"), the Trust hereby certifies that all conditions precedent to the issuance of its Advanta Mortgage Loan Asset-Backed Notes in the amount of $200,000,000 (CUSIP No. 00755W HC3) (the "Notes") have been satisfied and hereby requests you to authenticate and deliver the Notes and to release the Notes to CEDE & CO., or otherwise upon its order. Very truly yours, ADVANTA MORTGAGE LOAN TRUST 1999-4 By: WILMINGTON TRUST COMPANY, not in its individual capacity, but solely in its capacity as Owner Trustee under the Trust Agreement By: ________________________________________ Name: Title: B-1 78 ANNEX A - DEFINED TERMS "Accelerated Principal Payment": With respect to any Payment Date, any payment of excess spread in the form of principal to the Noteholders for the purpose of increasing the Overcollateralization Amount to the Specified Overcollateralization Amount for such Payment Date. "Accepted Servicing Practices": The Master Servicer's normal servicing practices in servicing and administering mortgage loans for its own account, which in general will conform to the mortgage servicing practices of prudent mortgage lending institutions which service for their own account mortgage loans of the same type as the Mortgage Loans in the jurisdictions in which the related Properties are located. "Account": Any account established in accordance with Section 8.03 of the Indenture or Section 4.08 of the Sale and Servicing Agreement, each of which shall be established at a Designated Depository Institution. "Act" has the meaning specified in Section 11.03(a) of the Indenture. "Addition Notice": With respect to the transfer of Subsequent Mortgage Loans to the Trust pursuant to Section 2.04(a) of the Sale and Servicing Agreement, written notice which shall be given not later than two (2) Business Days prior to the related Subsequent Transfer Date, of the Sponsor's designation of Subsequent Mortgage Loans to be sold to the Trust. Such notice shall include the approximate aggregate Loan Balance and the weighted average Coupon Rate of such Subsequent Mortgage Loans. "Affiliate" means, with respect to any specified Person, any other Person controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" means the power to direct the management and policies of a Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AMHC": Advanta Mortgage Holding Company, a Delaware corporation and the corporate parent of Advanta Mortgage Corp. USA, and the indirect corporate parent of Advanta Conduit Receivables, Inc. "Appraised Value": The appraised value of any Property based upon the appraisal or other valuation made at the time of the origination of the related Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money mortgage, the sales price of the Property at the time of origination, if the sales price is less than the appraised value. "Authentication Order": The order in the form set forth as Exhibit B to the Indenture and required to be delivered by the Trust on the Closing Date pursuant to Section 2.02 of the Indenture. Ann. A-1 79 "Authorized Newspapers": Any of the following, The Wall Street Journal, the New York Times, the Washington Post, the Los Angeles Times or such other newspaper determined by the Indenture Trustee in its sole judgment. "Authorized Officer": (A) With respect to the Indenture Trustee, the Sponsor, the Owner Trustee and the Master Servicer, those individuals whose names appear on the lists of Authorized Officers delivered on the Closing Date, as such lists may be amended or supplemented from time to time, and (B) with respect to any other Person, any person who is authorized to act for such Person in matters relating to the Operative Documents, and whose action is binding upon such Person. "Available Funds Cap Carry-Forward Amount": With respect to any Payment Date, the sum of (i) the excess of (x) the Interest Distribution Amount due on such Payment Date, calculated using the Note Formula Rate, over (y) the Interest Distribution Amount due on such Payment Date, calculated using the Available Funds Cap Rate and (ii) the Available Funds Cap Carry-Forward Amount, if any, from the immediately preceding Payment Date, with interest thereon at the Note Formula Rate. "Available Funds Cap Rate": With respect to any Payment Date, an amount, expressed as a per annum rate and calculated on the basis of a 360-day year and the actual number of days elapsed in the related Interest Accrual Period, equal to (a)(i) the aggregate amount of interest accrued and collected (or advanced) at the Coupon Rates on all of the Mortgage Loans for the related Remittance Period, minus (ii) the aggregate of the Servicing Fee, the Indenture Trustee's Fee, the Owner's Trustee's Fee and the Premium Amount due on such Payment Date, minus (iii) commencing on the seventh Payment Date following the Closing Date, an amount equal to 0.75% per annum times the aggregate Loan Balances of the Mortgage Loans as of the beginning of the related Remittance Period, divided by (b) the aggregate Loan Balances of the Mortgage Loans as of the beginning of the related Remittance Period. "Balloon Loan": Any Mortgage Loan which has an amortization schedule which extends beyond its maturity date, resulting in a relatively large unamortized principal balance due in a single payment at maturity. "Bankruptcy Code": Means the United States Bankruptcy Code (11 U.S.C.), as amended from time to time. "Benefit Plan": As defined in Section 2.03 of the Indenture. "Borrower" or "Borrowers": The obligor or obligors on a Promissory Note "Book-Entry Notes": A beneficial interest in the Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.09 of the Indenture. "Business Day": Any day that is not a Saturday, Sunday or other day on which any of the Note Insurer, the Master Servicer or the Sponsor is closed or commercial banking institutions in the States of New York, California or Delaware or in the city in which the Ann. A-2 80 principal Corporate Trust Office of the Indenture Trustee is located, are authorized or obligated by law or executive order to be closed. "Capitalized Interest Account": The capitalized interest account for the Notes established in accordance with Section 8.03 of the Indenture and maintained by the Indenture Trustee. "Capitalized Interest Account Deposit": $845,803.72. "Capitalized Interest Amount": With respect to any date of determination, the amount on deposit in the Capitalized Interest Account. "Capitalized Interest Requirement": With respect to any Payment Date occurring during the Pre-Funding Period, an amount equal to (i) the product of (x) the sum of the Note Interest Rate and the Premium Percentage for such Payment Date and (y) the amount on deposit in the Pre-Funding Account as of the immediately preceding Payment Date minus (ii) any Pre-Funding Earnings to be transferred to the Note Account on such Payment Date pursuant to Section 8.06(c) of the Indenture. "Certificate": As defined in the Trust Agreement. "Certificateholders": The holders of the Certificates issued pursuant to the Trust Agreement. "Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as amended from time to time. "Clean-Up Call Date": The first date on which the Master Servicer or any Master Servicer Affiliate is eligible to exercise its right of optional redemption of the Notes pursuant to Section 10.01(b) of the Indenture. "Clearing Agency": An organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. "Clearing Agency Participant": A broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date": November 17, 1999. "Code": The Internal Revenue Code of 1986, as amended and any successor statute. "Compensating Interest": As defined in Section 4.09(b) of the Sale and Servicing Agreement. "Controlling Party": Means, (i) the Note Insurer, so long as no Note Insurer Default has occurred and is continuing, and (ii) the Indenture Trustee, for so long as a Note Ann. A-3 81 Insurer Default shall have occurred and be continuing; provided, that the Note Insurer's rights as Controlling Party shall be immediately reinstated following the cure of any Note Insurer Default. "Corporate Trust Office": As of the Closing Date, the Indenture Trustee's office at 1761 E. St. Andrew Place, Santa Ana, California 92705. "Coupon Rate": The rate of interest borne by each Mortgage Note. "Cut-Off Date": With respect to (x) any Initial Mortgage Loans, the Initial Cut-Off Date, (y) any Subsequent Mortgage Loans, the Subsequent Cut-Off Date, and (z) any Qualified Replacement Mortgage Loans, the Replacement Cut-Off Date. "Deficiency Amount": As defined in the Policy. "Definitive Notes": Any Notes issued in definitive form without coupons pursuant to Section 2.11 of the Indenture. "Delinquency Advance": As defined in Section 4.09(a) of the Sale and Servicing Agreement. "Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon is not made by the close of business on the day such payment is scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has not been received by the close of business on the corresponding day of the month immediately succeeding the month in which such payment was due, or, if there is no such corresponding day (e.g., as when a 30-day month follows a 31-day month in which a payment was due on the 31st day of such month) then on the last day of such immediately succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and so on. "Depository": The Depository Trust Company, 55 Water Street, New York, New York 10041 and any successor Depository hereafter named. "Designated Depository Institution": With respect to each Account, an institution whose deposits are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, the long-term deposits of which shall be rated "A2" or better by Moody's or "A" or better by S&P and the short-term deposits of which shall be rated "P-1" or better by Moody's and "A-1" or better by S&P unless otherwise approved in writing by the Indenture Trustee, the Note Insurer, Moody's and S&P, and which is any of the following: (i) a federal savings and loan association duly organized, validly existing and in good standing under the federal banking laws, (ii) an institution duly organized, validly existing and in good standing under the applicable banking laws of any state, (iii) a national banking association duly organized, validly existing and in good standing under the federal banking laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in writing by the Indenture Trustee, the Note Insurer and each Rating Agency and, in each case acting or designated by the Master Servicer as the depository institution for such Account; provided, however, that any such institution or association shall have combined capital, surplus and undivided profits of at least $50,000,000. Notwithstanding the foregoing, an Account may be held by an institution otherwise meeting the preceding requirements except that the only applicable rating requirement Ann. A-4 82 shall be that the unsecured and uncollateralized debt obligations thereof shall be rated "Baa3" or better by Moody's or "BBB" or better by S&P if such institution has trust powers and such Account is held by such institution in its corporate trust department. "Determination Date": With respect to any Payment Date, the third Business Day next preceding such Payment Date, or such earlier day as shall be agreed to by the Note Insurer and Indenture Trustee. "Direct Participant" or "DTC Participant": Any broker-dealer, bank or other financial institution for which the Depository holds the Notes from time to time as a securities depository. "Document Delivery Requirements": The Sponsor's obligations to deliver certain legal documents, to prepare and record certain Mortgage assignments or to deliver certain opinions relating to Mortgage assignments, in each case with respect to the Mortgage Loans and as set forth in Section 2.01(c) of the Sale and Servicing Agreement. "Eligible Investments": As defined in Section 8.08 of the Indenture. "ERISA": The Employee Retirement Income Security Act of 1974, as amended. "Event of Default": As defined in Section 5.01(a) of the Indenture. "Event of Servicing Termination": Any event described in Sections 5.01(a) and (b) of the Sale and Servicing Agreement. "Excess Overcollateralization Amount": With respect to any Payment Date, the amount by which (x) the Overcollateralization Amount after taking into account the payment of the Scheduled Principal Distribution Amount on such Payment Date, exceeds (y) the Specified Overcollateralization Amount for such Payment Date. "Exchange Act": The Securities Exchange Act of 1934, as amended. "Fannie Mae": The Federal National Mortgage Association, a federally-chartered and privately-owned corporation existing under the Federal National Mortgage Association Charter Act, as amended, or any successor thereof. "FDIC": The Federal Deposit Insurance Corporation, or any successor thereto. "Final Scheduled Payment Date": The Payment Date occurring in November 2029, on which the Noteholders will be entitled to receive a payment of principal in an amount equal to the then Outstanding Note Principal Balance. "First Mortgage Loan": Any Mortgage Loan which constitutes a first priority mortgage lien with respect to any Property. Ann. A-5 83 "Foreclosed Loan": As of any Determination Date, any Loan that as of the end of the preceding Remittance Period has been discharged as a result of (i) the completion of foreclosure or comparable proceedings by the Servicer, on behalf of the Issuer; (ii) the acceptance of the deed or other evidence of title to the related Mortgaged Property in lieu of foreclosure or other comparable proceeding; or (iii) the acquisition of title to the related Mortgaged Property by operation of law. "Foreclosure Property": Any real property securing a Foreclosed Loan that has been acquired by the Master Servicer on behalf of the Issuer through a foreclosure, deed in lieu of foreclosure or similar proceedings in respect of the related Loan. "Freddie Mac": The Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created pursuant to the Emergency Home Finance Act of 1970, as amended, or any successor thereof. "Grant": To mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of the Trust Estate and all other monies payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto. "Gross Margin": With respect to each Mortgage Loan with an adjustable Coupon Rate, the fixed percentage amount set forth in the related Mortgage Note which amount is added to the Index in accordance with the terms of the related Mortgage Note to determine, on each Interest Rate Adjustment Date, the Coupon Rate for such Mortgage Loan, subject to any maximum. "Guaranties": The Letter Agreement, dated as of November 17, 1999, among the Representative, the Note Insurer and AMHC and the Letter Agreement, dated as of November 17, 1999, among the Note Insurer, the Indenture Trustee and AMHC. "Highest Lawful Rate": Has the meaning specified in Section 11.19 of the Indenture. "Holder" or "Noteholder": Means the Person in whose name a Note is registered in the Register held by the Note Registrar. "Holding Trust": The Advanta Holding Trust 1999-4, the trust created under the Holding Trust Agreement. Ann. A-6 84 "Holding Trust Agreement": The Trust Agreement, dated as of November 1, 1999, between the Owner Trustee and the Sponsor, as it may be amended from time to time, pursuant to which the Holding Trust was created. "Indebtedness": With respect to any Person at any time (a) indebtedness or liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or other instruments, or for the deferred purchase price of property or services (including trade obligations); (b) obligations of such Person as lessee under leases which should have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases; (c) current liabilities of such Person in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (d) obligations issued for or liabilities incurred on the account of such Person; (e) obligations or liabilities of such Person arising under acceptance facilities; (f) obligations of such Person under any guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss; (g) obligations of such Person secured by any lien on property or assets of such Person, whether or not the obligations have been assumed by such Person; or (h) obligations of such Person under any interest rate or currency exchange agreement. "Indemnification Agreement": The Indemnification Agreement, dated as of November 5, 1999, between the Note Insurer and the Underwriters. "Indenture": The Indenture, dated as of November 1, 1999, between the Trust and the Indenture Trustee, as the same may be amended and supplemented from time to time in accordance with the terms thereof. "Indenture Trustee": Bankers Trust Company of California, N.A., located on the date of execution of the Indenture at 1761 E. St. Andrew Place, Santa Ana, California 92705, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture, and any successor thereunder. "Indenture Trustee's Fees": With respect to any Payment Date, the product of (x) one-twelfth of the Indenture Trustee Fee Rate and (y) the Pool Principal Balance as of the opening of business on the first day of the related Remittance Period, less any Pre-Funded Amount. "Indenture Trustee Fee Rate": 1.5 basis points per annum. "Independent": Means, when used with respect to any specified Person, that the person (a) is in fact independent of the Trust, any other obligor upon the Notes, the Sponsor and any Affiliate of any of the foregoing persons, (b) does not have any direct financial interest or any material indirect financial interest in the Trust, any such other obligor, the Sponsor or any Affiliate of any of the foregoing Persons and (c) is not connected with the Trust, any such other obligor, the Sponsor or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, Indenture Trustee, partner, director or Person performing similar functions. Ann. A-7 85 "Independent Certificate": Means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, prepared by an Independent appraiser or other expert appointed pursuant to an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in the Indenture and that the signer is Independent within the meaning thereof. "Indirect Participant": Any financial institution for whom any Direct Participant holds an interest in the Notes. "Initial Cut-Off Date": The date as of which Initial Mortgage Loans are transferred and assigned to the Trust, which date shall be the opening of business, November 1, 1999. "Initial Mortgage Loans": The Mortgage Loans delivered to the Trust on the Closing Date. "Insurance Agreement": The Insurance Agreement, dated as of November 17, 1999, among the Sponsor, the Master Servicer, the Trust, the Indenture Trustee and the Note Insurer, as it may be amended from time to time. "Insurance Agreement Event of Servicing Termination": An "event of servicing termination" under the Insurance Agreement. "Insured Amount": As defined in the Policy. "Insured Payment": As defined in the Policy. "Interest Accrual Period": With respect to any Payment Date, the period commencing on the immediately preceding Payment Date (or, in the case of the December 1999 Payment Date, the Closing Date) to and including the day immediately preceding such Payment Date. "Interest Carry-Forward Amount": With respect to any Payment Date, the sum of (A) the amount, if any, by which (x) the Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution of interest made to the Noteholders on such immediately preceding Payment Date and (B) interest on such amount at the Note Formula Rate, calculated on the basis of the actual number of days elapsed in the related Interest Accrual Period and a year of 360 days. "Interest Determination Date": With respect to each Interest Accrual Period, the second London Business Day preceding the first day of such Interest Accrual Period or, with respect to the December 1999 Payment Date, the second London Business Day preceding the Closing Date. "Interest Distribution Amount": With respect to any Payment Date, the sum of (i) the product of (x) the Note Interest Rate for such Payment Date, (y) the Note Principal Ann. A-8 86 Balance immediately prior to such Payment Date and (z) the actual number of days in the related Interest Accrual Period, divided by 360, plus (ii) the Interest Carry-Forward Amount, minus (iii) any Relief Act Shortfalls for the related Remittance Period. "Interest Rate Adjustment Date": The date on which an adjustment to the Coupon Rate on a Mortgage Note becomes effective. "Interest Remittance Amount": With respect to any Remittance Date or Payment Date, the sum, without duplication, of (i) all interest accrued during the related Remittance Period (less the Servicing Fee with respect to such Mortgage Loans) and actually collected prior to such Remittance Date, (ii) all Delinquency Advances and all Special Advances made by the Master Servicer on such Remittance Date, (iii) all Compensating Interest paid by the Master Servicer on such Remittance Date, net of amounts allowed to be retained pursuant to Section 4.08(c) of the Sale and Servicing Agreement, (iv) without duplication, the portion of the Loan Purchase Prices and the Substitution Amounts paid prior to such Remittance Date which relate to accrued and unpaid interest on the Mortgage Loans, to the extent such Loan Purchase Prices or Substitution Amounts are actually received by the Indenture Trustee, (v) all Net Liquidation Proceeds actually collected by the Master Servicer with respect to the Mortgage Loans during the related Remittance Period (to the extent such Net Liquidation Proceeds relate to accrued and unpaid interest) and (vi) the proceeds of any termination of the Trust received by the Indenture Trustee (to the extent such proceeds relate to interest). "Issuer Order" and "Issuer Request" means a written order or request signed in the name of the Trust by any one of its Authorized Officers and delivered to the Indenture Trustee. "Late Payment Rate": The rate defined in the Insurance Agreement. "LIBOR": The London interbank offered rate, which shall be determined by the Indenture Trustee on each Interest Determination Date pursuant to Section 2.12 of the Indenture. "Liquidation Expenses": Expenses which are incurred by the Master Servicer or any Sub-Servicer in connection with the liquidation of any defaulted Mortgage Loan, such expenses include, without limitation, legal fees and expenses, and any unreimbursed Servicing Advances expended by the Master Servicer or any Sub-Servicer pursuant to Section 4.09 of the Sale and Servicing Agreement. "Liquidated Mortgage Loan": A Mortgage Loan with respect to which the related Property has been acquired, liquidated, sold to a third party, or foreclosed and with respect to which the Master Servicer determines, in accordance with Section 4.13(b) of the Sale and Servicing Agreement, that all Liquidation Proceeds which it expects to recover from or on account of such Mortgage Loan have been recovered. A Mortgage Loan which is purchased from the Trust pursuant to Sections 3.03(b), 3.04(b), 2.02(b) or 4.10 of the Sale and Servicing Agreement is not a "Liquidated Mortgage Loan". "Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any amounts (including the proceeds of any Mortgage Insurance Policy) recovered by the Master Servicer in connection with such Liquidated Mortgage Loan, whether through trustee's sale, foreclosure sale, third party sale or otherwise, including payments in connection with such Ann. A-9 87 Liquidated Mortgage Loan received from the related Mortgagor, other than the amounts required to be paid to the Mortgagor pursuant to the terms of the applicable Mortgage or to be applied otherwise pursuant to law. "Loan": Any mortgage loan sold to the Trust hereunder and pledged to the Indenture Trustee, which mortgage loan includes, without limitation, (i) the Promissory Note and the related Mortgage and (ii) all right, title and interest of the related Originator in and to the Mortgaged Property or foreclosure property covered by such Mortgage. "Loan Balance": With respect to each Mortgage Loan, the outstanding principal balance thereof as of the related Cut-Off Date, less any principal thereof previously deposited to the Principal and Interest Account; provided, however, that the Loan Balance for any Mortgage Loan which has become a Liquidated Mortgage Loan shall be zero as of the first day of the Remittance Period following the Remittance Period in which such Mortgage Loan becomes a Liquidated Mortgage Loan, and at all times thereafter. "Loan Purchase Price": With respect to any Mortgage Loan purchased from the Trust on a Remittance Date pursuant to Sections 3.03(b), 3.04(b), 2.02(b) or 4.10 of the Sale and Servicing Agreement, an amount, without duplication, equal to the Loan Balance of such Mortgage Loan as of the date of reacquisition, plus one month's accrued interest on (if not already deposited in the Principal and Interest Account) the outstanding Loan Balance as of the beginning of the preceding Remittance Period, computed at the related Coupon Rate less the Servicing Fee (expressed as an annual percentage rate), together with, without duplication, the aggregate amount of (i) all Servicing Advances, including Nonrecoverable Advances theretofore made and not subsequently recovered from the related Mortgage Loan, (ii) all Delinquency Advances which the Master Servicer or any Sub-servicer has theretofore failed to remit with respect to such Mortgage Loan and (iii) any Reimbursement Amount relating to such Mortgage Loan. "Loan-to-Value Ratio": With respect to any Mortgage Loan, the percentage equal to the original Loan Balance of such Mortgage Loan, divided by the Appraised Value of the related Property. "London Business Day": A day on which banks are open for dealing in foreign currency, and exchange in London and New York City. "Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation, and its permitted successors and assigns. "Master Servicer Affiliate": A person (i) controlling, controlled by or under common control with the Master Servicer and (ii) which is qualified to service residential mortgage loans and is acting as a Sub-Servicer pursuant to Section 4.03 of the Sale and Servicing Agreement. "Master Servicer's Trust Receipt": The Master Servicer's trust receipt in the form set forth as Exhibit D to the Sale and Servicing Agreement. Ann. A-10 88 "Monthly Remittance Amount": With respect to any Remittance Date, the sum of (i) the Interest Remittance Amount for such Remittance Date and (ii) the Principal Remittance Amount for such Remittance Date. "Moody's": Moody's Investors Service, Inc. "Mortgage": The mortgage, deed of trust or other instrument creating a first or junior lien on an interest in real property securing a Mortgage Note. "Mortgage Files": For any Mortgage Loan, the items listed below: (a) the original Mortgage Note, or , if such Mortgage Note is lost, a certified copy thereof along with a Lost Note Affidavit in the form of Exhibit E to the Sale and Servicing Agreement, bearing all intervening endorsements, endorsed either (i) "Pay to the order of Bankers Trust Company of California, N.A., as custodian or trustee under the applicable custody or trust agreement, without recourse" or (ii) "Pay to the order of Bankers Trust Company of California, N.A., as custodian or trustee under the applicable custody or trust agreement, without recourse, Advanta Mortgage Corp. USA as Master Servicer," or (iii) "Pay to the order of Bankers Trust Company of California, N.A., as custodian or trustee" by [Seller, signature, name, title] and signed in the name of the previous owner by an authorized officer (in the event that the Mortgage Loan was acquired by the previous owner in a merger the signature must be in the following form: "[the previous owner], successor by merger to [name of predecessor]", in the event that the Mortgage Loan was acquired or originated while doing business under another name, the signature must be in the following form: "[the previous owner], formerly known as [previous name]" or (iv) "Pay to the order of Bankers Trust Company of California, N.A., without recourse" or (v) "Pay to the order of______________, without recourse". The original Mortgage Note should be accompanied by any rider made in connection with the origination of the related Mortgage Loan; (b) the original of any guarantee executed in connection with the Mortgage Note (if any); (c) the original Mortgage with evidence of recording thereon or copies certified by the related recording office or, if the original Mortgage has not yet been returned from the recording office, a certified copy of the Mortgage or a copy of the Mortgage certified by the related recording office in those instances where the original recorded Mortgage has been lost; (d) the originals of all assumption, modification, consolidation or extension agreements; (e) the originals of all intervening assignments of Mortgage, showing a complete chain of assignment from origination to the related Originator, including warehousing assignments, with evidence of recording thereon (or, if an original intervening assignment has not been returned from the recording office, a certified copy thereof); Ann. A-11 89 (f) the original assignment of Mortgage of each Mortgage Loan to "Bankers Trust Company of California, N.A., as custodian or trustee", "Bankers Trust Company of California, N.A. as trustee or "Pay to the order of _______________." In the event that the Mortgage Loan was acquired by the previous owner in a merger, the assignment of Mortgage must be by the "(previous owner), successor by merger to (names of predecessor)"; and in the event that the Mortgage Loan was acquired or originated by the previous owner while doing business under another name, the assignment of Mortgage must be by the "(previous owner), formerly known as (previous name)"; and (g) any assignment of Mortgages required to be delivered under Section 2.01(c) of the Sale and Servicing Agreement. "Mortgage Insurance Policy": Any hazard, title or primary mortgage insurance policy relating to a Mortgage Loan, but excluding any non-mortgage related or credit life insurance policy. The term Mortgage Insurance Policy shall not include the Policy. "Mortgage Loan": Each of the mortgage loans transferred to the Trust pursuant to Section 2.01(a) of the Sale and Servicing Agreement (including Subsequent Mortgage Loans), together with any Qualified Replacement Mortgage Loans substituted therefor in accordance with the Sale and Servicing Agreement, and identified in the Schedule of Mortgage Loans. The term Mortgage Loan includes any Mortgage Loan which is Delinquent, which relates to a foreclosure or which relates to a Property which is REO Property prior to such Property's disposition by the Trust. Any mortgage loan which, although intended by the parties hereto to have been, and which purportedly was, transferred and assigned to the Trust, in fact was not transferred and assigned to the Trust for any reason whatsoever shall nevertheless be considered a Mortgage Loan for all purposes of the Operative Documents. The term Mortgage Loan includes the terms Initial Mortgage Loan, Subsequent Mortgage Loan and Qualified Replacement Mortgage Loan. "Mortgage Loan Transfer Agreement": The Mortgage Loan Transfer Agreement, dated as of November 1, 1999, among the Sponsor, the Indenture Trustee and the Originators named therein, together with any related Conveyance Agreements (as defined therein). "Mortgage Note": The note or other evidence of indebtedness of a Mortgagor under a Mortgage Loan. "Mortgaged Property": With respect to a Loan, the related Borrower's fee and/or leasehold interest in the real property (and/or all improvements, buildings, fixtures, building equipment and personal property thereon (to the extent applicable) and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of the debt evidenced by the related Promissory Note. "Mortgagor": The obligor on a Mortgage Note. "Net Liquidation Proceeds": As to any Liquidated Mortgage Loan, Liquidation Proceeds net of, without duplication, Liquidation Expenses and unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued and unpaid Servicing Fees through Ann. A-12 90 the date of liquidation. In no event shall Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan be less than zero. "Nonrecoverable Advances": With respect to any Mortgage Loan (a) any Delinquency Advance or Servicing Advance previously made and not reimbursed pursuant to Section 8.06(b)(xii) of the Indenture or Section 4.09 of the Sale and Servicing Agreement, (b) a Delinquency Advance or Servicing Advance proposed to be made in respect of a Mortgage Loan or REO Property either of which, in the good faith business judgment of the Master Servicer, as evidenced by an Officer's Certificate delivered promptly to the Note Insurer and the Indenture Trustee following such determination would not be ultimately recoverable pursuant to Section 8.06(b)(xii) of the Indenture or Section 4.09 of the Sale and Servicing Agreement, or (c) any other advance identified as a Nonrecoverable Advance in Section 4.09(d) of the Sale and Servicing Agreement. "Note": Any of the Advanta Mortgage Loan Asset-Backed Notes Series 1999-4. "Note Account": The Note Account established in accordance with Section 8.03 of the Indenture and maintained by the Indenture Trustee. "Note Formula Capped Rate": Means, for any Payment Date, the lesser of (x) the Note Formula Rate for such Payment Date, and (y) 6.375%. "Note Formula Rate": With respect to any Payment Date which occurs (x) on or prior to the Clean-Up Call Date, LIBOR plus 0.375% per annum and (y) after the Clean-Up Call Date, LIBOR plus 0.750% per annum. "Note Insurer": Ambac Assurance Corporation, or any successor thereto, as issuer of the Policy. "Note Insurer Default": Any one of the following events shall have occurred and be continuing: (a) the Note Insurer shall have failed to make a payment required under the Policy; (b) the Note Insurer shall have (i) filed a petition or commenced any case or proceeding under any provision or chapter of the Bankruptcy Code or any other similar Federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made a general assignment for the benefit of its creditors, or (iii) had an order for relief entered against it under the Bankruptcy Code or any other similar Federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is final and nonappealable; or (c) a court of competent jurisdiction, the New York Department of Insurance, the Wisconsin Department of Insurance, or other competent regulatory authority shall have entered a final and nonappealable order, judgment or decree (i) appointing a custodian, trustee, agent or receiver for the Note Insurer or for all or any material portion of its property or (ii) authorizing the taking of possession by a custodian, Indenture Ann. A-13 91 Trustee, agent or receiver of the Note Insurer (or the taking of possession of all or any material portion of the property of the Note Insurer). "Note Interest Rate": With respect to any Payment Date, the lesser of (i) the Note Formula Rate for such Payment Date and (ii) the Available Funds Cap Rate for such Payment Date. "Note Owner": With respect to a Book-Entry Note, the person who is the owner of such Book-Entry Note or following the issuance of Definitive Notes, the registered owner of the Definitive Notes. "Note Paying Agent": The Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section 6.11 of the Indenture and is authorized by the Trust to make payments to and distributions from the Note Account, including payment of principal of or interest on the Notes on behalf of the Trust. "Note Principal Balance": As of any date of determination, the Original Note Principal Balance less any principal amounts actually distributed in respect of the Notes on all prior Payment Dates pursuant to Section 8.06 of the Indenture. "Note Register" and "Note Registrar": Shall have the respective meanings specified in Section 2.03 of the Indenture. "Noteholder": The Person in whose name a Note is registered on the Note Register. "Officer's Certificate": A certificate signed by any Authorized Officer of the Owner Trustee, on behalf of the Trust, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture and TIA Section 314, and delivered to the Indenture Trustee. "Operative Documents": Collectively, the Mortgage Loan Transfer Agreement, the Insurance Agreement, the Indemnification Agreement, the Sale and Servicing Agreement, any Subsequent Transfer Agreements, the Trust Agreement, the Policy, the Indenture, the Guaranties and the Notes. "Opinion of Counsel": One or more opinions of counsel who may, except as otherwise expressly provided in the Indenture, be employees of or counsel to the Trust and, if addressed to the Note Insurer, satisfactory to the Note Insurer, and which shall comply with any applicable requirements of Section 11.01 of the Indenture, and if addressed to the Note Insurer, satisfactory to the Note Insurer. "Original Note Principal Balance": $200,000,000. "Original Pool Principal Balance": The aggregate Loan Balance of the Initial Mortgage Loans as of the Closing Date, which equals $132,550,785.07, plus the Original Pre-Funded Amount, which equals $72,419,869.37. The sum of which equals $204,970,654.44. Ann. A-14 92 "Original Pre-Funded Amount": The amount deposited in the Pre-Funding Account on the Closing Date from the proceeds of the sale of the Notes, which amount is $72,419,869.37. "Originator": Advanta Mortgage Corp. USA, a Delaware corporation, Advanta National Bank, a national banking association, and Advanta Finance Corp., a Nevada corporation. "Outstanding": With respect to the Notes, as of any date of determination, all Notes theretofore executed and delivered hereunder except: (i) Notes theretofore cancelled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation; (ii) Notes or portions thereof for which full and final payment money in the necessary amount has been theretofore deposited with the Indenture Trustee in trust for the Noteholders; (iii) Notes in exchange for or in lieu of which other Notes have been executed and delivered pursuant to the Indenture, unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a bona fide purchaser; and (iv) Notes alleged to have been destroyed, lost or stolen for which replacement Notes have been issued as provided for in Section 2.04 of the Indenture. "Overcollateralization Amount": With respect to any Payment Date, the excess, if any, of (i) the sum of (x) the Pool Principal Balance on such Payment Date and (y) the Pre-Funded Amount as of such Payment Date over (ii) the aggregate Note Principal Balance on such Payment Date, after taking into account the distribution of principal to the Noteholders on such Payment Date from all sources other than the Policy. "Overcollateralization Deficiency Amount": With respect to any Payment Date, the difference, if any, between (i) the Specified Overcollateralization Amount and (ii) the Overcollateralization Amount. "Overcollateralization Deficit": With respect to any Payment Date, the amount, if any, by which (i) the aggregate Note Principal Balance, after taking into account the distribution of principal to the Noteholders on such Payment Date from all sources other than the Policy, exceeds (ii) the sum of (x) the Pool Principal Balance and (y) the Pre-Funded Amount as of such Payment Date. "Overcollateralization Increase Amount": With respect to any Payment Date, the lesser of (i) the Overcollateralization Deficiency Amount for such Payment Date after taking into account the payment of the Scheduled Principal Distribution Amount on such Payment Date and (ii) the amount of Total Available Funds remaining to be allocated to the payment of a Accelerated Principal Payment pursuant to Section 8.06(b) of the Indenture on such Payment Date. Ann. A-15 93 "Overcollateralization Reduction Amount": With respect to any Payment Date, the lesser of (x) the Excess Overcollateralization Amount for such Payment Date and (y) the Principal Remittance Amount for such Payment Date. "Owner Trustee": Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, its successors in interest or any successor Owner Trustee under the Trust Agreement. "Owner Trustee's Fee": With respect to any Payment Date, one-twelfth of $5,000 per annum. "Payment Date": Any date on which the Indenture Trustee is required to make distributions to the Noteholders, which shall be the 25th day of each month, commencing in the month following the Closing Date or, if such day is not a Business Day, then on the next succeeding Business Day. "Percentage Interest": With respect to any Note and any date of determination, that percentage, expressed as a fraction, the numerator of which is the Note Principal Balance of such Note and the denominator of which is the Original Note Principal Balance of all Notes; and as to any Certificate, the Percentage Interest for such Certificate, as determined pursuant to the Trust Agreement. "Person": Any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Policy": The financial guaranty insurance policy number AB0317BE, dated November 17, 1999, issued by the Note Insurer to the Indenture Trustee, for the benefit of the Noteholders. "Pool Factor": A seven-digit decimal which the Indenture Trustee shall compute monthly expressing the Note Principal Balance as of each Payment Date (after giving effect to any distribution of principal on such Payment Date) as a proportion of the Original Note Principal Balance. On the Closing Date, the Pool Factor will be 1.0000000. Thereafter, the Pool Factor shall decline to reflect reductions in the related Note Principal Balance resulting from distributions of principal to the Notes. "Pool Principal Balance": Means, as of any date of determination, the sum of the Loan Balances of the Mortgage Loans and the amount on deposit in the Pre-Funding Account, if any. "Predecessor Note": With respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.04 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note. "Preference Amount": As defined in the Policy. Ann. A-16 94 "Preference Claim": As defined in Section 5.08(b) of the Indenture. "Pre-Funded Amount": With respect to any date of determination, the amount on deposit in the Pre-Funding Account on such date. "Pre-Funding Account": The Pre-Funding Account established in accordance with Section 8.03 of the Indenture and maintained by the Indenture Trustee. "Pre-Funding Earnings": With respect to any Payment Date occurring during the Pre-Funding Period, the net investment earnings on the Pre-Funded Amount during the period from and including the immediately prior Payment Date (or, in the case of the December 1999 Payment Date, the Closing Date) through but excluding such Payment Date, as calculated by the Indenture Trustee pursuant to Section 8.08 of the Indenture. "Pre-Funding Period": The period commencing on the Closing Date and ending on the earlier to occur of (i) the date on which the Pre-Funded Amount (exclusive of any Pre-Funding Earnings) is less than $100,000, (ii) February 29, 2000 or (iii) the occurrence of an Event of Default, an Event of Servicing Termination or any Insurance Agreement Event of Servicing Termination. "Premium": Any amount paid by an Originator to a third party seller of a Loan in excess of the par value of the Loan. "Premium Amount": With respect to any Payment Date, the product of (x) the actual number of days elapsed in the period from the prior Payment Date (or with respect to the first Payment Date, the Closing Date) to and including the day prior to the applicable Payment Date, divided by 360, (y) the Premium Percentage and (z) the Note Principal Balance on such Payment Date before taking into account any distributions of the Scheduled Principal Distribution Amount to be made on such Payment Date. "Premium Percentage": As defined in the Insurance Agreement. "Premium Recapture": Any portion of a Premium that an Originator receives back from a third party seller of a Loan. "Prepaid Installment": With respect to any Mortgage Loan, any installment of principal thereof and interest thereon received prior to the scheduled due date for such installment, intended by the Mortgagor as an early payment thereof and not as a Prepayment with respect to such Mortgage Loan. "Prepayment": Any payment of principal on a Mortgage Loan which is received by the Master Servicer in advance of the scheduled due date for such payment (other than the principal portion of any Prepaid Installment), and the proceeds of any Mortgage Insurance Policy which are to be applied as a payment of principal on the related Mortgage Loan shall be deemed to be Prepayments for all purposes of the Operative Documents. "Prepayment Interest Shortfall": As defined in Section 4.09(b) of the Sale and Servicing Agreement. Ann. A-17 95 "Preservation Expenses": Expenditures made by the Master Servicer or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the liquidation thereof, including, without limitation, expenditures for real estate property taxes, hazard insurance premiums, property restoration or preservation. "Principal and Interest Account": Collectively, each principal and interest account created by the Master Servicer or any Sub-Servicer pursuant to Section 4.08(a) of the Sale and Servicing Agreement, or pursuant to any Sub-Servicing Agreement. "Principal Distribution Amount": With respect to any Payment Date, the lesser of: (i) the excess of (a) the sum of (x) the Total Available Funds for such Payment Date and (y) any Insured Payment for such Payment Date, over (b) the Interest Distribution Amount for such Payment Date; and (ii) the sum, without duplication, of: (a) the Principal Remittance Amount for such Payment Date, minus (b) any Overcollateralization Reduction Amount for such Payment Date. "Principal Remittance Amount": With respect to any Remittance Date or Payment Date, the sum, without duplication, of (a) the principal actually collected by the Master Servicer with respect to the Mortgage Loans during the related Remittance Period, (b) the portion of the Loan Purchase Price and the Substitution Amount paid prior to such Remittance Date which relate to principal on the Mortgage Loans, to the extent such Loan Purchase Price or Substitution Amount are actually received by the Indenture Trustee, (d) all Net Liquidation Proceeds actually collected by the Master Servicer with respect to the Mortgage Loans during the related Remittance Period (to the extent such Net Liquidation Proceeds relate to principal), and (e) the proceeds of any termination of the Trust received by the Indenture Trustee (to the extent such proceeds relate to principal). "Promissory Note": With respect to a Loan, the original executed promissory note or other evidence of indebtedness of the related Borrower or Borrowers. "Property": The underlying property securing a Mortgage Loan. "Prospectus": That certain prospectus, dated August 10, 1999, naming Advanta Conduit Receivables, Inc. as registrant and describing certain mortgage loan asset-backed securities to be issued from time to time as described in related prospectus supplements. "Prospectus Supplement": That certain prospectus supplement, dated November 5, 1999, describing the Notes issued by the Trust. Ann. A-18 96 "Qualified Replacement Mortgage Loan": Any Mortgage Loan substituted for another Mortgage Loan pursuant to Sections 3.03(b), 3.04(b) or 2.02(b) of the Sale and Servicing Agreement. "Rating Agency": Moody's and S&P. If such agency or a successor is no longer in existence, Rating Agency shall be such statistical credit rating agency, or other comparable Person, designated by the Sponsor and the Note Insurer, notice of which designation shall be given to the Indenture Trustee. References herein to the highest short-term unsecured rating category of a rating agency shall means "A-1" or better in the case of S&P and "P-1" or better in the case of Moody's, and in the case of any other Rating Agency shall mean the ratings such other Rating Agency deems equivalent to the foregoing ratings. References herein to the highest long-term rating category of a Rating Agency shall mean "AAA" in the case of S&P and "Aaa" in the case of Moody's, and in the case of any other Rating Agency, the rating such other Rating Agency deems equivalent to the foregoing ratings. "Realized Loss": As to any Liquidated Mortgage Loan, the amount, if any, by which the Loan Balance thereof as of the date of liquidation or disposition is in excess of realized Net Liquidation Proceeds. "Record Date": With respect to the Notes and each Payment Date, the business day immediately preceding that Payment Date; provided, that, if the Notes revert to Definitive Notes, the Record Date with respect to each Payment Date thereafter shall be the last Business Day of the calendar month immediately preceding the calendar month in which such Payment Date occurs. "Redemption Date": In the case of a redemption of the Notes pursuant to Section 10.01 of the Indenture, the Payment Date specified by the Master Servicer or a Master Servicer Affiliate pursuant to Section 10.02(a) of the Indenture. "Redemption Price": As defined in Section 10.01(b) of the Indenture. "Reference Banks": Leading banks which are engaged in transactions in Eurodollar deposits in the international Eurocurrency market (1) with an established place of business in London, (2) which have been designated by the Indenture Trustee after consultation with the Master Servicer and (3) which are not controlling, controlled by, or under common control with, the Sponsor. "Registration Statement": The Registration Statement (No. 333-75295) filed by the Sponsor with the Securities and Exchange Commission, including all amendments thereto and including the Prospectus and the Prospectus Supplement relating to the Notes constituting a part thereof. "Reimbursement Amount": With respect to any Payment Date, the sum of (x)(i) all payments made pursuant to the Policy previously received by the Indenture Trustee and all Preference Amounts previously paid to the Indenture Trustee by the Note Insurer and in each case not previously repaid to the Note Insurer pursuant to Sections 8.06(b)(vii) of the Indenture, plus (ii) interest accrued on each such payment not previously repaid, calculated at the Late Payment Rate from the date the Indenture Trustee received the related payment and (y)(i) any Ann. A-19 97 amounts then due and owing to the Note Insurer with respect to the Notes under the Insurance Agreement, plus (ii) interest on such amounts at the Late Payment Rate. The Note Insurer shall notify the Indenture Trustee and the Sponsor of the amount of any Reimbursement Amount if such amount is greater than zero. "Relief Act Shortfall": With respect to any Remittance Period, for any Mortgage Loan as to which, as a result of the application of the Civil Relief Act, the amount by which (i) interest collectible on such Mortgage Loan during the most recently ended calendar month is less than (ii) the sum of (a) one month's interest on the Loan Balance of such Mortgage Loan at the Note Interest Rate, and (b) the Indenture Trustee's Fee, the Owner Trustee's Fee, the Servicing Fee and the Premium Amount applicable to such Mortgage Loan. "Remittance Date": Any date on which the Master Servicer is required to remit monies on deposit in the Principal and Interest Account to the Indenture Trustee, which shall be no later than the 18th day of each month, or, if such day is not a Business Day, the immediately succeeding Business Day, commencing in the month following the month in which the Closing Date occurs. "Remittance Period": The calendar month immediately preceding the month in which a Remittance Date occurs. "REO Property": A Property acquired by the Master Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan. "Replacement Cut-Off Date": With respect to any Qualified Replacement Mortgage Loan, the first day of the calendar month in which such Qualified Replacement Mortgage Loan is conveyed to the Trust. "Representation Letter": Letters to, or agreements with, the Depository to effectuate a book-entry system with respect to the Notes registered in the Register under the nominee name of the Depository. "Representative": Means Bear, Stearns & Co., Inc., as representative of the Underwriters. "Reserve Interest Rate": With respect to any Interest Determination Date, the rate per annum that the Indenture Trustee determines to be either the arithmetic mean, rounded to the nearest whole multiple of 1/16%, of the one-month U.S. dollar lending rates which New York City banks selected by the Indenture Trustee are quoting on the Interest Determination Date to the principal London offices of leading banks in the London interbank market or, in the event that the trustee cannot determine the arithmetic mean, the lowest one-month U.S. dollar lending rate which New York City banks selected by the Indenture Trustee are quoting on the Interest Determination Date to leading European banks. "Sale and Servicing Agreement": The Sale and Servicing Agreement, dated as of November 1, 1999, among the Trust, the Sponsor, the Master Servicer, the Holding Trust and the Indenture Trustee, as the same may be amended or supplemented from time to time. Ann. A-20 98 "SAS 70": Means the "Statement on Auditing Standards No. 70 Reports on the Processing of Transactions by Service Organizations" as in effect as of the date of the Sale and Servicing Agreement, which may be amended from time to time. "Schedule of Mortgage Loans": The Schedule of Mortgage Loans, attached to the Sale and Servicing Agreement as Schedule I, as it may be further supplemented to include Subsequent Mortgage Loans or Qualified Replacement Mortgage Loans. The information contained on the Schedule of Mortgage Loans shall be delivered to the Indenture Trustee in an electronic media acceptable to the Indenture Trustee. "Scheduled Principal Distribution Amount": With respect to any Payment Date, an amount equal to the lesser of (x) the Principal Distribution Amount for such Payment Date and (y) the Outstanding Note Principal Balance on such Payment Date. "Securities Act": The Securities Act of 1933, as amended. "Servicer Termination Loss Trigger". As defined in the Insurance Agreement. "Servicing Advance": The amounts described in Sections 4.09(c) and 4.13(a) of the Sale and Servicing Agreement. "Servicing Fee": For any Remittance Period, the product of (x) one-twelfth of 0.75% and (y) the aggregate Loan Balances of the Mortgage Loans as of the opening of business on the first day of the Remittance Period preceding such Payment Date. "Special Advance" Any advance made by the Master Servicer pursuant to Section 4.09(d) of the Sale and Servicing Agreement. "Specified Overcollateralization Amount": As defined in the Insurance Agreement. "Sponsor": Advanta Conduit Receivables, Inc., a Nevada corporation. "Standard & Poor's" or "S&P": Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. "Subsequent Cut-Off Date": With respect to any Subsequent Mortgage Loan, the first day of the month in which such Subsequent Mortgage Loan is sold and assigned to the Trust. "Subsequent Mortgage Loan": Any Mortgage Loan sold to the Trust pursuant to Section 2.04 of the Sale and Servicing Agreement. "Subsequent Transfer Agreement": Each Subsequent Transfer Agreement, dated as of a Subsequent Transfer Date, executed by the Trust, the Holding Trust, the Indenture Trustee and the Sponsor, substantially in the form of Exhibit I to the Sale and Servicing Agreement, pursuant to which Subsequent Mortgage Loans are sold and assigned to the Trust. Ann. A-21 99 "Subsequent Transfer Date": The date Subsequent Mortgage Loans are sold and assigned to the Trust, as specified in each Subsequent Transfer Agreement. "Substitution Amount": In connection with the delivery of any Qualified Replacement Mortgage Loan, if the outstanding principal amount of such Qualified Replacement Mortgage Loan as of the related Replacement Cut-Off Date is less than the Loan Balance of the Mortgage Loan being replaced as of such Replacement Cut-Off Date, an amount equal to such difference together with accrued and unpaid interest on such amount calculated at the Coupon Rate net of the Servicing Fee of the Mortgage Loan being replaced. "Sub-Servicer": Any Person with whom the Master Servicer has entered into a Sub-Servicing Agreement and is either a Master Servicer Affiliate or who satisfies any requirements set forth in Section 4.03 of the Sale and Servicing Agreement in respect of the qualification of a Sub-Servicer . "Sub-Servicing Agreement": The written contract between the Master Servicer and any Sub-Servicer (other than a Master Servicer Affiliate) relating to servicing and/or administration of certain Mortgage Loans as permitted by Section 4.03 of the Sale and Servicing Agreement. "Telerate Screen Page 3750": The display designated on page 3750 on the Telerate Service or such other page as may replace page 3750 on that service for the purpose of displaying London interbank offered rates of major banks. "Termination Date": The latest of (i) the termination of the Policy and the return of the Policy to the Note Insurer for cancellation, (ii) the date on which the Note Insurer shall have received payment and performance of all obligations owed to it by the Trust and (iii) the date on which the Indenture Trustee shall have received payment and performance of all obligations owed to it and to the Noteholders. "Total Available Funds": As defined in Section 8.06(a) of the Indenture. "Trust": Advanta Mortgage Loan Trust 1999-4, the trust created under the Trust Agreement. "Trust Agreement": The Trust Agreement, dated as of November 1, 1999, between the Owner Trustee, the Holding Trust and the Sponsor, as it may be amended from time to time, pursuant to which the Trust was created. "Trust Estate": As defined in the Granting Clause of the Indenture. "Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as amended and as in force on the date of the Indenture, unless otherwise specifically provided. "UCC": Unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time. "Underwriters": Bear, Stearns & Co. Inc. and SG Cowen Securities Corporation. Ann. A-22 EX-4.2 4 TRUST AGREEMENT, ADVANTA HOLDING TRUST 1994-4 1 EXHIBIT 4.2 TRUST AGREEMENT between ADVANTA CONDUIT RECEIVABLES, INC. Sponsor and WILMINGTON TRUST COMPANY Owner Trustee Dated as of November 1, 1999 2 Table of Contents
Page ---- ARTICLE I Definitions Section 1.01. Capitalized Terms....................................... 1 Section 1.02. Other Definitional Provisions........................... 4 Section 1.03. Action by or Consent of Noteholders and Certificateholders...................................... 4 Article II Organization Section 2.01. Names................................................... 5 Section 2.02. Office.................................................. 5 Section 2.03. Purposes and Powers..................................... 5 Section 2.04. Appointment of Owner Trustee............................ 5 Section 2.05. Initial Capital Contribution of Trust Estate............ 5 Section 2.06. Declaration of Trust.................................... 6 Section 2.07. Liability............................................... 6 Section 2.08. Title to Trust Property................................. 6 Section 2.09. Situs of Trust.......................................... 6 Section 2.10. Representations and Warranties of the Sponsor........... 7 Section 2.11. Covenants of the Sponsor................................ 8 Section 2.12. Covenants of the Certificateholders..................... 8 Section 2.13. Investment Company...................................... 9 Article III Certificates and Transfer of Interests Section 3.01. Initial Ownership....................................... 9 Section 3.02. The Certificates....................................... 10 Section 3.03. Authentication of Certificates......................... 10 Section 3.04. Registration of Transfer and Exchange of Certificates........................................... 10 Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates...... 11 Section 3.06. Persons Deemed Certificateholders...................... 11 Section 3.07. Access to List of Certificateholders' Names and Addresses.............................................. 11 Section 3.08. Maintenance of Office or Agency........................ 11 Section 3.09. ERISA.................................................. 12 Section 3.10. Restrictions on Transfer of Certificates............... 12 Section 3.11. Acceptance of Obligations.............................. 13 Section 3.12. Payments on Certificates............................... 13
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Page ---- Article IV Voting Rights and Other Actions Section 4.01. Prior Notice to Holders with Respect to Certain Matters................................................ 13 Section 4.02. Action by Certificateholders with Respect to Certain Matters........................................ 15 Section 4.03. Action by Certificateholders with Respect to Bankruptcy............................................. 15 Section 4.04. Restrictions on Certificateholders' Power.............. 15 Section 4.05. Majority Control....................................... 16 Section 4.06. Rights of Insurer...................................... 16 Section 4.07. Separateness........................................... 17 Article V Certain Duties Section 5.01. Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others............................................. 17 Article VI Authority and Duties of Owner Trustee Section 6.01. General Authority...................................... 18 Section 6.02. General Duties......................................... 18 Section 6.03. Action upon Instruction................................ 18 Section 6.04. No Duties Except as Specified in this Agreement or in Instructions..................................... 19 Section 6.05. No Action Except under Specified Documents or Instructions........................................... 19 Section 6.06. Restrictions........................................... 20 Article VII Concerning the Owner Trustee Section 7.01. Acceptance of Trust and Duties......................... 20 Section 7.02. Furnishing of Documents................................ 21 Section 7.03. Representations and Warranties......................... 21 Section 7.04. Reliance; Advice of Counsel............................ 21 Section 7.05. Not Acting in Individual Capacity...................... 22 Section 7.06. Owner Trustee Not Liable for Certificates or Mortgage Loans......................................... 22 Section 7.07. Owner Trustee May Own Certificates and Notes........... 23 Section 7.08. Payments from Owner Trust Estate....................... 23 Section 7.09. Doing Business in Other Jurisdictions.................. 23 Article VIII Compensation of Owner Trustee Section 8.01. Owner Trustee's Fees and Expenses...................... 23
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Page ---- Section 8.02. Indemnification........................................ 24 Section 8.03. Payments to the Owner Trustee.......................... 24 Section 8.04. Non-recourse Obligations............................... 24 Article IX Termination of Trust Agreement Section 9.01. Termination of Trust Agreement......................... 24 Article X Successor Owner Trustees and Additional Owner Trustees Section 10.01. Eligibility Requirements for Owner Trustee............. 26 Section 10.02. Resignation or Removal of Owner Trustee................ 26 Section 10.03. Successor Owner Trustee................................ 27 Section 10.04. Merger or Consolidation of Owner Trustee............... 28 Section 10.05. Appointment of Co-Owner Trustee or Separate Owner Trustee.......................................... 28 Article XI Miscellaneous Section 11.01. Supplements and Amendments............................. 29 Section 11.02. No Legal Title to Owner Trust Estate in Certificateholders..................................... 30 Section 11.03. Limitations on Rights of Others........................ 30 Section 11.04. Notices................................................ 30 Section 11.05. Severability........................................... 31 Section 11.06. Separate Counterparts.................................. 31 Section 11.07. Assignments; Insurer................................... 31 Section 11.08. No Petition............................................ 31 Section 11.09. No Recourse............................................ 31 Section 11.10. Headings............................................... 32 Section 11.11. Governing Law.......................................... 32 Section 11.12. Master Servicer........................................ 32 Section 11.13. No Borrowing........................................... 32 Section 11.14. Nonpetition Covenant................................... 32 EXHIBITS Exhibit A Form of Certificate..................................... A-1 Exhibit B Form of Certificate of Trust ........................... B-1
iii 5 TRUST AGREEMENT dated as of November 1, 1999 between ADVANTA CONDUIT RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner Trustee. Article I Definitions Section 1.01. Capitalized Terms. For the purposes of this Agreement, the following terms shall have the meanings set forth below. All other capitalized terms used herein but not defined shall have the meanings set forth in the Sale and Servicing Agreement. "Accounts" shall have the meaning ascribed thereto in Annex A to the Sale and Servicing Agreement. "Affiliate" shall mean with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, or owns, directly or indirectly, 50% or more of, the Person specified. "Agreement" shall mean this Trust Agreement, as the same may be amended and supplemented from time to time. "Benefit Plan Investor" shall have the meaning assigned to such term in Section 3.09. "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 3.04. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. "Corporate Trust Office" shall mean, with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, or at such other address as the Owner Trustee may designate by notice to the Certificateholders, the Insurer and the Sponsor, or the principal corporate trust office of any 6 successor Owner Trustee (the address of which the successor owner trustee will notify the Certificateholders, the Insurer and the Sponsor). "Definitive Certificates" shall mean Certificates issued in certificated, fully registered form. "ERISA" shall have the meaning assigned to such term in Section 3.09. "Expenses" shall have the meaning assigned to such term in Section 8.02. "Holder" or "Certificateholder" shall mean the Person in whose name a Certificate is registered on the Certificate Register. "Indemnification Agreement" shall mean the Indemnification Agreement dated as of November 17, 1999 among the Insurer, Bear, Stearns & Co. Inc. and SG Cowan Securities Corporation. "Indemnified Parties" shall have the meaning assigned to such term in Section 8.02. "Indenture" shall mean the Indenture dated as of November 1, 1999, between the Issuer and Bankers Trust Company of California, N.A., as Indenture Trustee, as the same may be amended and supplemented from time to time. "Indenture Trustee" shall mean, initially Bankers Trust Company of California, N.A., in its capacity as indenture trustee, including its successors in interest, until and unless a successor Person shall have become the Indenture Trustee pursuant to the Sale and Servicing Agreement and thereafter "Indenture Trustee" shall mean such successor Person. "Instructing Party" shall have the meaning assigned to such term in Section 6.03. "Insurance Agreement" shall mean the Insurance and Indemnity Agreement dated as of November 17, 1999 among the Insurer, the Sponsor, the Issuer, Advanta Holding Trust 1999-4, the Master Servicer and the Indenture Trustee. "Insurer" shall mean Ambac Assurance Corporation, or its successor in interest. "Issuer" shall mean Advanta Mortgage Loan Trust 1999-4. "Majority Certificateholder" shall mean more than 50% by principal amount of the Certificateholders. "Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware corporation. "Notes" shall mean any one of the Notes issued pursuant to the Indenture. "Noteholders" shall mean the Holder of a Note. 2 7 "Operative Documents" shall mean this Agreement, the Certificate of Trust, the Sale and Servicing Agreement, the Indemnification Agreement, the Insurance Agreement, the Indenture, the AMHC Guaranty to the Representative and the Issuer, the AMHC Guaranty to the Insurer and the Issuer, the Mortgage Loan Transfer Agreement and the other documents and certificates delivered in connection therewith. "Originators" shall mean Advanta National Bank, Advanta Finance Corp and Avanta Mortgage Corp. USA. "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 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 November 17, 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 1999-4, Advanta Mortgage Loan Trust 1999-4, as Issuer, the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and the Indenture Trustee, dated as of November 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" shall mean the trust established by this Agreement. 3 8 Section 1.02. Other Definitional Provisions. (a) Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in Annex A to 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 1.03. 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. 4 9 Article II Organization Section 2.01. Names. There is hereby formed a trust to be known as "Advanta Holding Trust 1999-4," in which name the Owner Trustee may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. Section 2.02. 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 2.03. 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 Certificates pursuant to this Agreement; (ii) with the proceeds of the sale of the Notes by Advanta Mortgage Loan Trust 1999-4, to pay the organizational, start-up and transactional expenses of the Trust; (iii) to assign, grant, transfer and convey the Owner Trust Estate to the Advanta Mortgage Loan Trust 1999-4 and to hold, manage and distribute to the Certificateholders pursuant to the terms of this Agreement such distributions as the Trust may receive pursuant to its beneficial interest in Advanta Mortgage Loan Trust 1999-4; (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. 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 2.04. 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 2.05. Initial Capital Contribution of Trust Estate. The Sponsor hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt in trust from the Sponsor, as of the date hereof, of the foregoing contribution, which shall constitute the initial Owner Trust Estate 5 10 and shall be deposited in the Certificate Account. On or prior to the Closing Date, the Owner Trustee will also acknowledge on behalf of the Trust, receipt of the Mortgage Loans by execution of the Sale and Servicing Agreement. The Sponsor shall pay organizational expenses of the Trust as they may arise. Section 2.06. 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 tax purposes, the Trust shall elect on Internal Revenue Service Form 8832 within 75 days of its formation to be classified as an association (and thus as a corporation pursuant to Section 301.7701-2(b)(2) of the regulations promulgated under the Code). The Trust shall file or cause to be filed any additional forms or documents as may be required to make such election under applicable federal, state and local law. 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 2.07. Liability. No Holder shall have any personal liability for any liability or obligation of the Trust. Section 2.08. Title to Trust Property. (a) Legal title to all of the Owner Trust Estate shall be vested at all times in the Trust during the time that such Owner Trust Estate is owned by 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 2.09. 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. The Sponsor makes the following representations and warranties on which the Owner Trustee relies in accepting the Owner Trust Estate in trust and issuing the Certificates and upon which the Insurer relies in issuing the Policy. (a) The Sponsor is duly organized and validly existing as a Delaware corporation with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted and is proposed to be conducted pursuant to this Agreement and the Operative Documents; (b) It is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property, the conduct of its business and the performance of its obligations under this Agreement and the Operative Documents requires such qualification; (c) The Sponsor has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; the Sponsor has full power and authority to sell and assign the property to be sold and assigned to and deposited with the Trust and the Sponsor has duly authorized such sale and assignment and deposit to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Sponsor by all necessary corporate action. The Sponsor has duly executed this Agreement and this Agreement constitutes a legal, valid and binding obligation of the Sponsor enforceable against the Sponsor, in accordance with its terms. (d) To the best knowledge of the Sponsor, no consent, license, approval or authorization or registration or declaration with, any Person or with any governmental authority, bureau or agency is required in connection with the execution, delivery or performance of this Agreement and the Operative Documents, except for such as have been obtained, effected or made; (e) The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or by-laws of the Sponsor, or any material indenture, agreement or other instrument to which the Sponsor is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Operative Documents); nor violate any law or, to the best of the Sponsor's knowledge, any order, rule or regulation applicable to the Sponsor of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Sponsor or its properties; and (f) There are no proceedings or investigations pending or, to its knowledge threatened against it before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over it or its properties (A) asserting the invalidity of this Agreement or any of the Operative Documents, (B) seeking to prevent the issuance of the Certificates or the Notes or the consummation of any of the transactions 7 12 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. Covenants of the Sponsor. The Sponsor agrees and covenants for the benefit of each Certificateholder, the Insurer and the Owner Trustee, during the term of this Agreement, and to the fullest extent permitted by applicable law, that: (a) it shall not create, incur or suffer to exist any indebtedness or engage in any business, except, in each case, as permitted by its certificate of incorporation and the Operative Documents; (b) it shall not, for any reason, institute proceedings for the Trust to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Trust, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to the bankruptcy of the Trust, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Trust or a substantial part of the property of the Trust or cause or permit the Trust to make any assignment for the benefit of creditors, or admit in writing the inability of the Trust to pay its debts generally as they become due, or declare or effect a moratorium on the debt of the Trust or take any action in furtherance of any such action; (c) it shall obtain from each counterparty to each Operative Document to which it or the Trust is a party and each other agreement entered into on or after the date hereof to which it or the Trust is a party, an agreement by each such counterparty that prior to the occurrence of the event specified in Section 9.01(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 2.12. 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 8 13 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 all corporate, federal, state and local income or franchise tax returns filed on behalf of the Trust, and agree that, if requested by the Trust, it will sign such tax returns on behalf of the Trust. Each Certificateholder also hereby agrees that in its tax returns it will not take any position inconsistent with those taken in any tax returns that may be filed by the Trust; (c) if such Certificateholder is other than an individual or other entity holding its Certificate through a broker who reports securities sales on Form 1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a taxable sale or exchange, within 30 days of the date of the transfer; and (d) until the completion of the events specified in Section 9.01(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, 8.02 or elsewhere herein. Section 2.13. Investment Company. Neither the Sponsor nor any Holders 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 3.01. Initial Ownership. Upon the formation of the Trust by the contribution by the Sponsor pursuant to Section 2.05, the Owner Trustee, contemporaneously therewith, having full power, authority, and authorization to do so, has executed, authenticated, dated, issued, and delivered, in the name and on behalf of the Trust, to the Originators, one or more Certificates, representing in the aggregate a 100% interest in the Trust, and has registered one such Certificate in the name of Advanta National Bank and two such Certificates, representing the interests of Advanta Finance Corp. and Advanta Mortgage Corp. USA, in the name of Advanta Finance Receivables Corporation on the Certificate Register. Each such 9 14 Certificate shall have the initial percentage interest set forth on the face thereof, which percentage interest equals the percentage obtained by dividing (x) the aggregate Loan Balance of the Initial Mortgage Loans transferred to the Trust by the related Originator by (y) the aggregate Loan Balance of all Initial Mortgage Loans. Thereafter, the percentage interest of each such Certificate, as of any date of determination, shall equal the percentage obtained by dividing (x) the aggregate Loan Balance of the Mortgage Loans transferred to the Trust by the related Originator by (y) the aggregate Loan Balance of all of the Mortgage Loans transferred to the Trust, in each case, as of such date of determination. The Originators shall be the sole beneficiaries of the Trust. Such Certificates are duly authorized, validly issued, and entitled to the benefits of this Agreement. For so long as the Originators shall own such 100% interest in the Trust, the Originators shall be the sole beneficial owners of the Trust. For so long as any Notes remain outstanding, the Originators shall not transfer their ownership interest in the Trust, in whole or in part, without the Insurer's prior written consent. Section 3.02. The Certificates. The Certificates shall be issued in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of an authorized officer of the Owner Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefit of this Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates. A transferee of a Certificate shall become a Certificateholder, and shall be entitled to the rights and subject to the obligations of a Certificateholder hereunder, upon due registration of such Certificate in such transferee's name pursuant to Section 3.04. Section 3.03. 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 Certificates without the prior written consent of the Insurer. Section 3.04. 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 3.08, 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. 10 15 Section 3.05. 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 3.05, 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 3.06. Persons Deemed Certificateholders. Every Person by virtue of becoming a Certificateholder in accordance with this Agreement and the rules and regulations of the Certificate Registrar shall be deemed to be bound by the terms of this Agreement. Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee, the Certificate Registrar and the Insurer and any agent of the Owner Trustee, the Certificate Registrar and the Insurer, may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to the Sale and Servicing Agreement and the Indenture and for all other purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar or the Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be bound by any notice to the contrary. Section 3.07. 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 3.08. 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 11 16 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 3.09. ERISA. The Certificates may not be acquired by or for the account of (i) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan (as defined in Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or (iii) any person acting on behalf of or using the assets of a plan described in (i) or (ii) above (each, a "Benefit Plan Investor"). By accepting and holding its beneficial ownership interest in its Certificate, the Holder thereof shall be deemed to have represented and warranted that it is not a Benefit Plan Investor. Section 3.10. Restrictions on Transfer of Certificates. (a) The Certificates shall be assigned, transferred, exchanged, pledged, financed, hypothecated or otherwise conveyed (collectively, for purposes of this Section 3.10 and any other Section referring to the Certificates, "transferred" or a "transfer") only in accordance with this Section 3.10. (b) No transfer of a Certificate shall be made unless such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws or is made in accordance with said Act and laws. Except for the initial issuance of the Certificates to the Originators, the Owner Trustee shall require (i) the transferee to execute an investment letter acceptable to and in form and substance satisfactory to the Owner Trustee and the Insurer certifying to the Owner Trustee and the Insurer the facts surrounding such transfer, which investment letter shall not be an expense of the Owner Trustee or the Insurer, or (ii) if the investment letter is not delivered, a written Opinion of Counsel acceptable to and in form and substance satisfactory to the Owner Trustee, the Insurer and the Sponsor that such transfer may be made pursuant to an exemption, describing the applicable exemption and the basis therefor from said Act or is being made pursuant to said Act, which Opinion of Counsel shall not be an expense of the Owner Trustee, the Insurer or the Sponsor. The Holder of a Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the Sponsor, the Owner Trustee and the Insurer against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. (c) The Certificates and any interest therein shall not be transferred except upon satisfaction of the following conditions precedent: (i) the Person that acquires a Certificate shall (A) be organized and existing under the laws of the United States of America or any state thereof or the District of Columbia; (B) expressly assume, by an agreement supplemental hereto, executed and delivered to the Owner Trustee, the performance of every covenant and obligation of the Sponsor hereunder except for the covenants and obligations contained in Sections 2.01, 2.02, 2.03, 2.04, 3.03 and 3.04 of the Sale and Servicing Agreement, Section 7.01 of the Indenture and under the Mortgage Loans 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 Section 3.10 have been complied with and an Opinion of Counsel stating that such transfer and such supplemental agreement comply with this Section 3.10 and that all conditions precedent provided by this Section 3.10 have been complied with, 12 17 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 Policies; (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 Advanta Mortgage Loan Trust 1999-4 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 Advanta Mortgage Loan Trust 1999-4, 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 Insurer has been obtained. 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 Originators. (d) Except for the initial issuance of the Certificates to the Originators, no transfer of a Certificate shall be made unless the Owner Trustee and the Insurer shall have received a representation letter from the transferee of such Certificate, acceptable to and in form and substance satisfactory to the Owner Trustee and the Insurer, to the effect that such transferee is not a Benefit Plan Investor, which representation letter shall not be an expense of the Owner Trustee. (e) No transfer or pledge of the Certificates shall result in more than 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 4.01. 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 13 18 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 of 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 Servicer of their respective obligations under any Operative Document; (f) perform any act that conflicts with any other Operative Document; (g) perform any act which would make it impossible to carry on the ordinary business of the Trust described in Section 2.03 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. 14 19 Section 4.02. 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 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 4.03. Action by Certificateholders with Respect to Bankruptcy. Until one year and one day following the day on which the Notes have been paid in full, the Owner Trustee shall not have the power to, and shall not commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of the Insurer (unless an Insurer Default shall have occurred and is continuing) or the Security Majority upon an Insurer Default. Until one year and one day following the day on which the Notes have been paid in full, all amounts due to the Insurer under the Insurance Agreement have been paid in full, the Policy has terminated and the Indenture Trustee has surrendered the Policy to the Insurer, the Owner Trustee shall not have the power to, and shall not, commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of all of the Certificateholders and the delivery to the Owner Trustee by each such Certificateholder of a certificate certifying that such Certificateholder reasonably believes that the Trust is insolvent. Section 4.04. Restrictions on Certificateholders' Power. (a) The Certificateholders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligation of the Trust or the Owner Trustee 15 20 under this Agreement or any of the Operative Documents or would be contrary to Section 2.03 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 6.03 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 6.03; 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 4.04, 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 4.05. 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 4.06. 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 11.01 of this Agreement. 16 21 Section 4.07. 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 5.01. Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others. Subject to Sections 6.01(b)(iii) and 6.01(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, (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 to enable each Certificateholder to prepare its Federal and state income tax returns, (c) file or cause to be filed such tax returns relating to the Trust (including a corporate return, Form 1120), and direct the Owner Trustee or the Master Servicer, as the case may be, to make such elections and file such forms as may from time to time be required or appropriate under any applicable state or Federal statute or rule or regulation thereunder given the Trust's characterization as a corporation, or if applicable, as a partnership, for Federal income tax purposes and (d) collect or cause to be collected any withholding tax as described in and in accordance with Section 6.01(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 5.01 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 on behalf of the Trust to include in income currently any market discount that accrues with respect to the Mortgage Loans. 17 22 Article VI Authority and Duties of Owner Trustee Section 6.01. 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 $200,000,000. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust pursuant to the Operative Documents. The Owner Trustee is further authorized from time to time to take such action as the Instructing Party recommends with respect to the Operative Documents so long as such activities are consistent with the terms of the Operative Documents. Section 6.02. 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 6.03. 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 18 23 such action to any Person. If the Owner Trustee shall not have received appropriate instruction within ten days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Operative Documents, as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction. (d) In the event that the Owner Trustee is unsure as to the application of any provision of this Agreement or any Operative Document or any such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement permits any determination by the Owner Trustee or is silent or is incomplete as to the course of action that the Owner Trustee is required to take with respect to a particular set of facts, the Owner Trustee may give notice (in such form as shall be appropriate under the circumstances) to the Instructing Party requesting instruction and, to the extent that the Owner Trustee acts or refrains from acting in good faith in accordance with any such instruction received, the Owner Trustee shall not be liable, on account of such action or inaction, to any Person. If the Owner Trustee shall not have received appropriate instruction within 10 days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Operative Documents, as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction. Section 6.04. 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 6.03; 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 6.05. 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 6.03. 19 24 Section 6.06. Restrictions. The Owner Trustee shall not take any action that is inconsistent with the purposes of the Trust set forth in Section 2.03. The Certificateholders shall not direct the Owner Trustee to take action that would violate the provisions of this Section 6.06. Article VII Concerning the Owner Trustee Section 7.01. Acceptance of Trust and Duties. The Owner Trustee accepts the trust hereby created and agrees to perform its duties hereunder with respect to such trust but only upon the terms of this Agreement. The Owner Trustee also agrees to disburse all monies actually received by it constituting part of the Owner Trust Estate upon the terms of the Operative Documents and this Agreement. The Owner Trustee shall not be answerable or accountable hereunder or under any Operative Document under any circumstances, except (i) for its own willful misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of any representation or warranty contained in Section 7.03 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 6.04 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 20 25 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 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 7.02. 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 7.03. Representations and Warranties. The Owner Trustee hereby represents and warrants, in its individual capacity, to the Sponsor and the Holders (which shall have relied on such representations and warranties in issuing the Policy), that: (a) It is a Delaware banking corporation, duly organized and validly existing in good standing under the laws of the State of Delaware. It has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. (b) It has taken all corporate action necessary to authorize the execution and delivery by it of this Agreement, and this Agreement will be executed and delivered by one of its officers who is duly authorized to execute and deliver this Agreement on its behalf. (c) Neither the execution nor the delivery by it of this Agreement, nor the consummation by it of the transactions contemplated hereby nor compliance by it with any of the terms or provisions hereof will contravene any federal or Delaware state law, governmental rule or regulation governing the banking or trust powers of the Owner Trustee or any judgment or order binding on it, or constitute any default under its charter documents or by-laws or any indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of its properties may be bound. Section 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, 21 26 consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of the determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof rely on a certificate, signed by the president or any vice president or by the treasurer, secretary or other authorized officers of the relevant party, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. (b) In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under this Agreement or the Operative Documents, the Owner Trustee (i) may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, and (ii) may consult with counsel, accountants and other skilled persons to be selected with reasonable care and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the written opinion or advice of any such counsel, accountants or other such persons and according to such opinion not contrary to this Agreement or any Operative Document. Section 7.05. 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 7.06. 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 22 27 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 7.07. Owner Trustee May Own Certificates and Notes. Subject to the provisions of Section 3.01 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 7.08. 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. Section 7.09. 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 10.05 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 8.01. 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. 23 28 Section 8.02. 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 7.01. The indemnities contained in this Section and the rights under Section 8.01 shall survive the resignation or termination of the Owner Trustee or the termination of this Agreement. In any event of any claim, action or proceeding for which indemnity will be sought pursuant to this Section, the Owner Trustee's choice of legal counsel shall be subject to the approval of the Sponsor which approval shall not be unreasonably withheld. Section 8.03. 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 8.04. 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 9.01. 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 10.01(b) and Section 10.01(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 8.02 and the rights under Section 8.01 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 9.01. 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 24 29 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, any Originator 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 10.01 of the Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Indenture Trustee at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Indenture Trustee shall cause to be distributed to Certificateholders amounts distributable on such Payment Date pursuant to Section 8.06(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 Sponsor. (e) Upon the winding up of the Trust and its termination, the Owner Trustee shall cause the Certificate of Trust to be canceled by filing a certificate of cancellation with the Secretary of State in accordance with the provisions of Section 3810 of the Business Trust Statute. (f) Notwithstanding any other provisions to the contrary herein, the Trust shall not dissolve so long as any Notes are outstanding. 25 30 (g) The Sponsor shall take all necessary steps to qualify the termination of the Trust as a liquidation under Section 332 of the Code, if applicable, including the adoption of a plan of liquidation. Article X Successor Owner Trustees and Additional Owner Trustees Section 10.01. 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 10.01, 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 10.02. Section 10.02. 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 10.01 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 10.01 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 10.01 herein, by written instrument, in duplicate, one copy of which instrument shall be delivered to the outgoing Owner Trustee so 26 31 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 10.03 and payment of all reasonable fees and expenses owed to the outgoing Owner Trustee. The Master Servicer shall provide 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 4.02(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 10.03. Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor Owner Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Owner Trustee shall become effective and such successor Owner Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement; and the Sponsor and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties and obligations. No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall be eligible pursuant to Section 10.01. 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. 27 32 Section 10.04. 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 10.01, 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 10.05. 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 Property may at the time be located, the Master Servicer and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with the Owner Trustee, or separate trustee or separate trustees, of all or any part of the Owner Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Master Servicer and the Owner Trustee may consider necessary or desirable. If the Master Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee subject to the approval of the Insurer (which approval shall not be unreasonably withheld) shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 10.01 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.03, 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. 28 33 Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Master Servicer and the Insurer. Any separate trustee or co-trustee may at any time appoint the Owner Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Article XI Miscellaneous Section 11.01. Supplements and Amendments. (a) This Agreement may be amended by the Sponsor and the Owner Trustee, with the prior written consent of the Insurer and prior written notice to the Rating Agencies (so long as no Insurer Default shall have occurred and is continuing), 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 11.01 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, such amendment shall not (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Mortgage Loans or 29 34 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. 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 11.02. 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 VIII of the Indenture and Article IX of this Agreement. 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 11.03. Limitations on Rights of Others. Except for Section 11.07, 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 11.04. 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 30 35 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., 10790 Rancho Bernardo Road, San Diego, California 92127; if to the Insurer, addressed to Insurer, Ambac Assurance Corporation, One State Street Plaza, New York, New York 10004, Attention: Structured Finance Department - - MBS, Telecopy No.: 212-363-1459, Confirmation No.: 212-668-0340, or, 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 11.05. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdictional shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 11.06. 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 11.07. 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 11.08. 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 11.09. 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 31 36 Owner Trustee, the Indenture Trustee, the Insurer or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Agreement, the Certificates or the Operative Documents. Section 11.10. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. Section 11.11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 11.12. Master Servicer. The Master Servicer is authorized to prepare, or cause to be prepared, execute and deliver on behalf of the Trust all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant to the Operative Documents. Upon written request, the Owner Trustee shall execute and deliver to the Master Servicer a limited power of attorney appointing the Master Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be prepared, execute and deliver all such documents, reports, filings, instruments, certificates and opinions. 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 nor any assignee of the Sponsor shall petition or otherwise invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Trust under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Trust or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Trust without the consent of the Owner Trustee. (b) So long as any 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. [Remainder of Page Intentionally Left Blank] 32 37 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers hereunto duly authorized as of the day and year first above written. WILMINGTON TRUST COMPANY, as Owner Trustee By: /s/ Donald G. MacKelcan ----------------------------------------- Name: Donald G. MacKelcan Title: Vice President ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By: /s/ Michael Coco ----------------------------------------- Name: Michael Coco Title: Vice President 38 Exhibit A CERTIFICATE SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT DESCRIBED HEREIN AND IN THE TRUST 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 ORIGINATORS, THE OWNER TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF A-1 39 COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR, FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE, THE INSURER OR THE SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR AND THE INSURER AGAINST ANY LIABILITY THAT MAY RESULT IF THE TRANSFER IS NOT SO EXEMPT OR IS NOT MADE IN ACCORDANCE WITH SUCH FEDERAL AND STATE LAWS. 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 2.01, 2.02, 2.03, 2.04, 3.03 AND 3.04 OF THE SALE AND SERVICING AGREEMENT, SECTION 7.01 OF THE INDENTURE AND UNDER THE MORTGAGE LOANS 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 ADVANTA MORTGAGE LOAN TRUST A-2 40 1999-4 BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF THE ADVANTA MORTGAGE LOAN TRUST 1999-4, 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 41 ADVANTA HOLDING TRUST 1999-4 CERTIFICATE Initial Percentage Interest: [ ]% Cut-Off Date: Opening of business November 1, 1999 First Payment Date: Issue Date: November 17, 1999 December 27, 1999 No. 1 ------------------- Registered Holder The Trust was created pursuant to a Trust Agreement dated as of November 1, 1999 (the "Holding Trust Agreement"), between the Sponsor and Wilmington Trust Company, as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Holding Trust Agreement. Also the Advanta Mortgage Loan Trust 1999-4 (the "Issuer") was created pursuant to a Trust Agreement dated as of November 1, 1999 (the "Trust Agreement") between Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-4 and Wilmington Trust Company, as Owner Trustee (the "Owner Trustee"). This Certificate is one of the duly authorized Certificates designated as Advanta Holding Trust 1999-4 "Certificates." Pursuant to the Trust Agreement, there is also issued duly authorized Certificates designated as Advanta Mortgage Loan Trust 1999-4 "Asset Backed Certificates". Pursuant to the Indenture dated as of November 1, 1999 (the "Indenture") between the Issuer and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee") there is also issued the Advanta Mortgage Loan Asset Backed Notes (the "Notes"). These Certificates are issued under and are subject to the terms, provisions and conditions of the Holding Trust Agreement, to which Holding 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 consists of the Asset Backed Certificates of the Issuer. The property of the Issuer includes a pool of adjustable-rate mortgage loans secured by first deeds of trust or Mortgages on primarily one-to-four family residential properties. Under the Holding Trust Agreement, there will be distributed on the 25th day of each month or, if such 25th day is not a Business Day, the next Business Day (the "Payment Date"), commencing on December 27, 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. A-4 42 This Certificate shall have the initial Percentage Interest set forth on the face hereof, which Percentage Interest equals the percentage obtained by dividing (x) the aggregate Loan Balance of the Initial Mortgage Loans transferred to the Trust by the related Originator by (y) the aggregate Loan Balance of all Initial Mortgage Loans. Thereafter, the Percentage Interest of this Certificate, as of any date of determination, shall equal the percentage obtained by dividing (x) the aggregate Loan Balance of the Mortgage Loans transferred to the Trust by the related Originator by (y) the aggregate Loan Balance of all of the Mortgage Loans transferred to the Trust, in each case, as of such date of determination. 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 Holding Trust Agreement, as applicable. It is the intent of the Sponsor, the Master Servicer, and the Certificateholders that, for purposes of Federal income taxes, the Trust will be treated as a corporation. 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 equity interests in a corporation. 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 Holding 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 Holding 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 Holding Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose. A-5 43 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: November 17, 1999 ADVANTA HOLDING TRUST 1999-4 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 44 (Reverse of Certificate) The Certificates do not represent an obligation of, or an interest in, the Originators, the Sponsor, the Master Servicer, the Insurer, the Owner Trustee or any Affiliates of any of them and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated herein or in the Holding 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 Holding 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 Holding 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 Holding 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 Holding 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 Holding 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 Holding 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 Holding Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates in authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Owner Trustee, the Certificate Registrar, the Insurer and any agent of the Owner Trustee, the Certificate Registrar or the Insurer may treat the person in whose name this A-7 45 Certificate is registered as the owner hereof for all purposes, and none of the Owner Trustee, the Certificate Registrar, the Insurer nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Holding 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 Holding 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 Holding Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose. A-8 46 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 47 EXHIBIT B CERTIFICATE OF TRUST OF ADVANTA HOLDING TRUST 1999-4 This Certificate of Trust of Advanta Holding Trust 1999-4 (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 Holding Trust 1999-4. 2. Delaware Trust. The name and business address of the Owner Trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration. 3. This Certificate of Trust will be effective November 17, 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 EX-4.3 5 TRUST AGREEMENT, ADVANTA MORTGAGE LOAN TRUST 1 EXHIBIT 4.3 TRUST AGREEMENT between ADVANTA CONDUIT RECEIVABLES, INC. Sponsor ADVANTA HOLDING TRUST 1999-4, Depositor and WILMINGTON TRUST COMPANY Owner Trustee Dated as of November 1, 1999 2 Table of Contents
Page ---- ARTICLE I Definitions Section 1.01. Capitalized Terms......................................................................... 1 Section 1.02. Other Definitional Provisions............................................................. 3 Section 1.03. Action by or Consent of Noteholders and Certificateholders................................ 4 ARTICLE II Organization Section 2.01. Names..................................................................................... 4 Section 2.02. Office.................................................................................... 4 Section 2.03. Purposes and Powers....................................................................... 5 Section 2.04. Appointment of Owner Trustee.............................................................. 5 Section 2.05. Initial Capital Contribution of Trust Estate.............................................. 5 Section 2.06. Declaration of Trust...................................................................... 5 Section 2.07. Liability................................................................................. 6 Section 2.08. Title to Trust Property................................................................... 6 Section 2.09. Situs of Trust............................................................................ 6 Section 2.10. Representations and Warranties of the Sponsor and the Depositor........................... 6 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 3.01. Initial Ownership........................................................................ 11 Section 3.02. The Certificates......................................................................... 11 Section 3.03. Authentication of Certificates........................................................... 11 Section 3.04. Registration of Transfer and Exchange of Certificates.................................... 12 Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates........................................ 12 Section 3.06. Persons Deemed Certificateholders........................................................ 12 Section 3.07. Access to List of Certificateholders' Names and Addresses................................ 12 Section 3.08. Maintenance of Office or Agency.......................................................... 13 Section 3.09. ERISA.................................................................................... 13 Section 3.10. Restrictions on Transfer of Certificates................................................. 13 Section 3.11. Acceptance of Obligations................................................................ 14 Section 3.12. Payments on Certificates................................................................. 14
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ARTICLE IV Voting Rights and Other Actions Section 4.01. Prior Notice to Holders with Respect to Certain Matters.................................. 15 Section 4.02. Action by Certificateholders with Respect to Certain Matters............................. 16 Section 4.03. Action by Certificateholders with Respect to Bankruptcy.................................. 16 Section 4.04. Restrictions on Certificateholders' Power................................................ 17 Section 4.05. Majority Control......................................................................... 17 Section 4.06. Rights of Insurer........................................................................ 17 Section 4.07. Separateness............................................................................. 18 ARTICLE V Certain Duties Section 5.01. Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others........................................... 18 Section 5.02. Signature on Returns; Tax Matters Partner................................................ 19 ARTICLE VI Authority and Duties of Owner Trustee Section 6.01. General Authority........................................................................ 19 Section 6.02. General Duties........................................................................... 19 Section 6.03. Action upon Instruction.................................................................. 19 Section 6.04. No Duties Except as Specified in this Agreement or in Instructions....................... 20 Section 6.05. No Action Except under Specified Documents or Instructions............................... 21 Section 6.06. Restrictions............................................................................. 21 ARTICLE VII Concerning the Owner Trustee Section 7.01. Acceptance of Trust and Duties........................................................... 21 Section 7.02. Furnishing of Documents.................................................................. 22 Section 7.03. Representations and Warranties........................................................... 22 Section 7.04. Reliance; Advice of Counsel.............................................................. 23 Section 7.05. Not Acting in Individual Capacity........................................................ 23 Section 7.06. Owner Trustee Not Liable for Certificates or Mortgage Loans.............................. 23 Section 7.07. Owner Trustee May Own Certificates and Notes............................................. 24 Section 7.08. Payments from Owner Trust Estate......................................................... 24 Section 7.09. Doing Business in Other Jurisdictions.................................................... 24 ARTICLE VIII Compensation of Owner Trustee Section 8.01. Owner Trustee's Fees and Expenses........................................................ 24 Section 8.02. Indemnification.......................................................................... 25
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Section 8.03. Payments to the Owner Trustee............................................................ 25 Section 8.04. Non-recourse Obligations................................................................. 25 ARTICLE IX Termination of Trust Agreement Section 9.01. Termination of Trust Agreement........................................................... 25 ARTICLE X Successor Owner Trustees and Additional Owner Trustees Section 10.01. Eligibility Requirements for Owner Trustee............................................... 27 Section 10.02. Resignation or Removal of Owner Trustee.................................................. 27 Section 10.03. Successor Owner Trustee.................................................................. 28 Section 10.04. Merger or Consolidation of Owner Trustee................................................. 29 Section 10.05. Appointment of Co-Owner Trustee or Separate Owner Trustee................................ 29 ARTICLE XI Miscellaneous Section 11.01. Supplements and Amendments............................................................... 30 Section 11.02. No Legal Title to Owner Trust Estate in Certificateholders............................... 31 Section 11.03. Limitations on Rights of Others.......................................................... 31 Section 11.04. Notices.................................................................................. 31 Section 11.05. Severability............................................................................. 32 Section 11.06. Separate Counterparts.................................................................... 32 Section 11.07. Assignments; Insurer..................................................................... 32 Section 11.08. No Petition.............................................................................. 32 Section 11.09. No Recourse.............................................................................. 32 Section 11.10. Headings................................................................................. 33 Section 11.11. Governing Law............................................................................ 33 Section 11.12. Master Servicer.......................................................................... 33 Section 11.13. No Borrowing............................................................................. 33 Section 11.14. Nonpetition Covenant..................................................................... 33
EXHIBITS Exhibit A Form of Certificate Exhibit B Form of Certificate of Trust
iii 5 TRUST AGREEMENT dated as of November 1, 1999 between ADVANTA CONDUIT RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), ADVANTA HOLDING TRUST 1999-4, 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 1.01 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. "Accounts" shall have the meaning ascribed thereto in Annex A to the Sale and Servicing Agreement. "Affiliate" shall mean with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, or owns, directly or indirectly, 50% or more of, the Person specified. "Agreement" shall mean this Trust Agreement, as the same may be amended and supplemented from time to time. "Benefit Plan Investor" shall have the meaning assigned to such term in Section 3.09. "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 3.04. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. "Corporate Trust Office" shall mean, with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, or at such other address as the Owner Trustee may designate by notice to the 6 Certificateholders, the Insurer, the Depositor and the Sponsor, or the principal corporate trust office of any successor Owner Trustee (the address of which the successor owner trustee will notify the Certificateholders, the Insurer, the Depositor and the Sponsor). "Definitive Certificates" shall mean Certificates issued in certificated, fully registered form. "Depositor" shall mean Advanta Holding Trust 1999-4 in its capacity as Depositor hereunder. "ERISA" shall have the meaning assigned to such term in Section 3.09. "Expenses" shall have the meaning assigned to such term in Section 8.02. "Holder" or "Certificateholder" shall mean the Person in whose name a Certificate is registered on the Certificate Register. "Indemnification Agreement" shall mean the Indemnification Agreement dated as of November 5, 1999 among the Insurer, Bear, Stearns & Co. Inc. and SG Cowen Securities Corporation. "Indemnified Parties" shall have the meaning assigned to such term in Section 8.02. "Indenture" shall mean the Indenture dated as of November 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 6.03. "Insurance Agreement" shall mean the Insurance and Indemnity Agreement dated as of November 17, 1999 among the Insurer, the Sponsor, the Trust, Advanta Holding Trust 1999-4, 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 Mortgage Loan Transfer Agreement, the AMHC Guaranty to the Representative 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, Advanta Finance Corp. and Advanta Mortgage Corp. USA "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 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 November 17, 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 1999-4, Advanta Mortgage Loan Trust 1999-4, as Issuer, Advanta Conduit Receivables, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and the Indenture Trustee, dated as of November 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. Section 1.02 Other Definitional Provisions. (a) Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in Annex A to the Sale and Servicing Agreement or, if not defined therein, in the Indenture. 3 8 (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 1.03 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 2.01 Names. There is hereby formed a trust to be known as "Advanta Mortgage Loan Trust 1999-4," in which name the Owner Trustee may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. Section 2.02 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. 4 9 Section 2.03 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 2.04 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 2.05 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 Owner Trustee will also acknowledge on behalf of the Trust, receipt of the Mortgage Loans by execution of the Sale and Servicing Agreement. The Sponsor shall pay organizational expenses of the Trust as they may arise. Section 2.06 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 5 10 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 (and not as an association or publicly traded partnership taxable as a corporation); 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 not as an association or publicly traded partnership taxable as a corporation) 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 2.07 Liability. No Holder shall have any personal liability for any liability or obligation of the Trust. Section 2.08 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 2.09 Situs of Trust. The Trust will be located and administered in the State of Delaware. All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or the State of New York. Payments will be received by the Trust only in Delaware or New York and payments will be made by the Trust only from Delaware or New York. The Trust shall not have any employees in any state other than Delaware; provided, however, that nothing herein shall restrict or prohibit the Owner Trustee, the Master Servicer or any agent of the Trust from having employees within or without the State of Delaware. The only office of the Trust will be at the Corporate Trust Office in Delaware. Section 2.10 Representations and Warranties of the Sponsor 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 Policy. 6 11 (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, 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 7 12 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 Policy. (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, 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 8 13 (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; (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; 9 14 (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 9.01(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 (d) until the completion of the events specified in Section 9.01(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. 10 15 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, 8.02 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 3.01 Initial Ownership. Upon the formation of the Trust by the contribution by the Depositor pursuant to Section 2.05, 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 3.02 The Certificates. The Certificates shall be issued in denominations of $1,000 and integral multiples of $1000 in excess thereof. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of an authorized officer of the Owner Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefit of this Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates. A transferee of a Certificate shall become a Certificateholder, and shall be entitled to the rights and subject to the obligations of a Certificateholder hereunder, upon due registration of such Certificate in such transferee's name pursuant to Section 3.04. Section 3.03 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 11 16 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 3.04 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 3.08, 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 3.05 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 3.05, 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 3.06 Persons Deemed Certificateholders. Every Person by virtue of becoming a Certificateholder in accordance with this Agreement and the rules and regulations of the Certificate Registrar shall be deemed to be bound by the terms of this Agreement. Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee, the Certificate Registrar and the Insurer and any agent of the Owner Trustee, the Certificate Registrar and the Insurer, may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to the Sale and Servicing Agreement and the Indenture and for all other purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar or the Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be bound by any notice to the contrary. Section 3.07 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 12 17 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 3.08 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 3.09 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 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 13 18 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 2.01, 2.02, 2.03, 2.04, 3.03 and 3.04 of the Sale and Servicing Agreement, Section 7.01 of the Indenture and under the Mortgage Loans 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. (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. 14 19 ARTICLE IV Voting Rights and Other Actions Section 4.01 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; (g) perform any act which would make it impossible to carry on the ordinary business of the Trust as described in Section 2.03 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. 15 20 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 4.02 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 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 4.03 Action by Certificateholders with Respect to Bankruptcy. Until one year and one day following the day on which the Notes have been paid in full, the Owner Trustee shall not have the power to, and shall not commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of the Insurer (unless an Insurer Default shall have occurred and is continuing) or the Security Majority upon an Insurer Default. Until one year and one day following the day on which the Notes have been paid in full, all amounts due to the Insurer under the Insurance Agreement have been paid in full, the Policy has terminated and the Indenture Trustee has surrendered the Policy to the Insurer, the Owner Trustee shall not have the power to, and shall not, commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of all of the Certificateholders and the delivery to the Owner Trustee 16 21 by each such Certificateholder of a certificate certifying that such Certificateholder reasonably believes that the Trust is insolvent. Section 4.04 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 2.03 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 6.03 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 6.03; 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 4.04, 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 4.05 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 4.06 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 17 22 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 11.01 of this Agreement. Section 4.07 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 5.01 Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others. Subject to Sections 6.01(b)(iii) and 6.01(c) of the Sale and Servicing Agreement, the Sponsor shall (a) maintain (or cause to be maintained) the books of the Trust on a calendar year basis on the accrual method of accounting, including, without limitation, the allocations of net income under Section 2.11 hereof, (b) deliver (or cause to be delivered) to each Certificateholder, as may be required by the Code and applicable Treasury Regulations, such information as may be required (including Schedule K1, if applicable) to enable each Certificateholder to prepare its Federal and state income tax returns, (c) file or cause to be filed, if necessary, such tax returns relating to the Trust (including a partnership information return, Form 1065), and direct the Owner Trustee or the Master Servicer, as the case may be, to make such elections as may from time to time be required or appropriate under any applicable state or Federal statute or rule or regulation thereunder so as to maintain the Trust's characterization as a branch, or if applicable, as a partnership, for Federal income tax purposes and (d) collect or cause to be collected any withholding tax as described in and in accordance with Section 6.01(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 5.01 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 18 23 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 5.02 Signature on Returns; Tax Matters Partner. (a) Notwithstanding the provisions of Section 5.01 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 6.01 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 $200,000,000. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust pursuant to the Operative Documents. The Owner Trustee is further authorized from time to time to take such action as the Instructing Party recommends with respect to the Operative Documents so long as such activities are consistent with the terms of the Operative Documents. Section 6.02 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 6.03 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. 19 24 (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 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 6.04 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 6.03; 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 20 25 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 6.05 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 6.03. Section 6.06 Restrictions. The Owner Trustee shall not take any action (a) that is inconsistent with the purposes of the Trust set forth in Section 2.03 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 6.06. Article VII Concerning the Owner Trustee Section 7.01 Acceptance of Trust and Duties. The Owner Trustee accepts the trust hereby created and agrees to perform its duties hereunder with respect to such trust but only upon the terms of this Agreement. The Owner Trustee also agrees to disburse all monies actually received by it constituting part of the Owner Trust Estate upon the terms of the Operative Documents and this Agreement. The Owner Trustee shall not be answerable or accountable hereunder or under any Operative Document under any circumstances, except (i) for its own willful misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of any representation or warranty contained in Section 7.03 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 6.04 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 21 26 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 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 7.02 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 7.03 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. 22 27 (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 7.04 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of the determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof rely on a certificate, signed by the president or any vice president or by the treasurer, secretary or other authorized officers of the relevant party, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. (b) In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under this Agreement or the Operative Documents, the Owner Trustee (i) may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, and (ii) may consult with counsel, accountants and other skilled persons to be selected with reasonable care and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the written opinion or advice of any such counsel, accountants or other such persons and according to such opinion not contrary to this Agreement or any Operative Document. Section 7.05 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 7.06 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 23 28 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 7.07 Owner Trustee May Own Certificates and Notes. Subject to the provisions of Section 3.01 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 7.08 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. Section 7.09 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 10.05 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 8.01 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 24 29 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 8.02 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 7.01. The indemnities contained in this Section and the rights under Section 8.01 shall survive the resignation or termination of the Owner Trustee or the termination of this Agreement. In any event of any claim, action or proceeding for which indemnity will be sought pursuant to this Section, the Owner Trustee's choice of legal counsel shall be subject to the approval of the Sponsor which approval shall not be unreasonably withheld. Section 8.03 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 8.04 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 9.01 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 10.01(b) and Section 10.01(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 8.02 and the rights under 25 30 Section 8.01 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 9.01. 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 10.01 of the Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Indenture Trustee at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Indenture Trustee shall cause to be distributed to Certificateholders amounts distributable on such Payment Date pursuant to Section 8.06(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 26 31 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 10.01 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 10.01, 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 10.02. Section 10.02 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 10.01 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 10.01 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 10.01 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 27 32 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 10.03 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 4.02(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 10.03 Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor Owner Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Owner Trustee shall become effective and such successor Owner Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement; and the Sponsor and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties and obligations. No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall be eligible pursuant to Section 10.01. 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. 28 33 Section 10.04 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 10.01, 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 10.05 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 Property may at the time be located, the Master Servicer and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with the Owner Trustee, or separate trustee or separate trustees, of all or any part of the Owner Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Master Servicer and the Owner Trustee may consider necessary or desirable. If the Master Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee subject to the approval of the Insurer (which approval shall not be unreasonably withheld) shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 10.01 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.03, 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 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. 29 34 Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Master Servicer and the Insurer. Any separate trustee or co-trustee may at any time appoint the Owner Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Article XI Miscellaneous Section 11.01 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 11.01 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, such amendment shall not (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, (b) reduce the aforesaid percentage of the Outstanding 30 35 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 or (c) cause the Trust to be treated as an association or a publicly traded partnership taxable as a corporation for federal income tax purposes. Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to the Insurer, to each Certificateholder and the Indenture Trustee. It shall not be necessary for the consent of Certificateholders, the Noteholders or the Indenture Trustee pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement or in any other Operative Document) and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe. Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State. Prior to the execution of any amendment to this Agreement or the Certificate of Trust, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee's own rights, duties or immunities under this Agreement or otherwise. The Owner Trustee shall furnish copies of any such amendments to the Rating Agencies. Section 11.02 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 Article VIII of the Indenture and with Article IX of this Agreement. 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 11.03 Limitations on Rights of Others. Except for Section 11.07, 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 11.04 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 31 36 receipt, if to the Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor, addressed to Advanta Conduit Receivables, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127, addressed to Insurer, Ambac Assurance Corporation, One State Street Plaza, New York, New York 10004, Attention: Structured Finance Department - MBS, Telecopy No.:212-363-1459, Confirmation No.: 212-668-0340, if to the Depositor, Advanta Holding Trust 1999-4, c/o Wilmington Trust Company, as Owner Trustee, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890; 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 11.05 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdictional shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 11.06 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 11.07 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 11.08 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 11.09 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 32 37 may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Agreement, the Certificates or the Operative Documents. Section 11.10 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. Section 11.11 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 11.12 Master Servicer. The Master Servicer is authorized to prepare, or cause to be prepared, execute and deliver on behalf of the Trust all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant to the Operative Documents. Upon written request, the Owner Trustee shall execute and deliver to the Master Servicer a limited power of attorney appointing the Master Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be prepared, execute and deliver all such documents, reports, filings, instruments, certificates and opinions. 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. [Remainder of Page Intentionally Left Blank] 33 38 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers hereunto duly authorized as of the day and year first above written. WILMINGTON TRUST COMPANY, as Owner Trustee By: /s/ Donald G. MacKelcan ----------------------------------------- Name: Donald G. MacKelcan Title: Vice President ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By: /s/ Michael Coco ----------------------------------------- Name: Michael Coco Title: Vice President ADVANTA HOLDING TRUST 1999-4, as Depositor By: WILMINGTON TRUST COMPANY, in its capacity as Owner Trustee By: /s/ Donald G. MacKelcan ----------------------------------------- Name: Donald G. MacKelcan Title: Vice President 39 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 SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN A-1 40 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 2.01, 2.02, 2.03, 2.04, 3.03 AND 3.04 OF THE SALE AND SERVICING AGREEMENT, SECTION 7.01 OF THE INDENTURE AND UNDER THE MORTGAGE LOANS 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 STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE A-2 41 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 42 ADVANTA MORTGAGE LOAN TRUST 1999-4 ASSET BACKED CERTIFICATE Percentage Interest: 100% Cut-Off Date: Opening of business on November 1, 1999 First Payment Date: Issue Date: November 17, 1999 December 27, 1999 No. 1 ADVANTA HOLDING TRUST 1999-4 Registered Holder The Trust was created pursuant to a Trust Agreement dated as of November 1, 1999 (the "Trust Agreement"), between Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-4 (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 Mortgage Loan Trust 1999-4 "Asset Backed Certificates." Also issued under the Indenture dated as of November 1, 1999 (the "Indenture") between the Trust and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee") are the Advanta Mortgage 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-rate mortgage loans secured by first deeds of trust or Mortgages on primarily one-to-four family residential properties. Under the Trust Agreement, there will be distributed on the 25th day of each month or, if such 25th day is not a Business Day, the next Business Day (the "Payment Date"), commencing on December 27, 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 43 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 44 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: November 17, 1999 ADVANTA MORTGAGE LOAN TRUST 1999-4 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 45 (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 Owner Trustee, A-7 46 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 47 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 48 EXHIBIT B CERTIFICATE OF TRUST OF ADVANTA MORTGAGE LOAN TRUST 1999-4 This Certificate of Trust of Advanta Mortgage Loan Trust 1999-A (the "Trust") is being duly executed and filed by the undersigned, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. Code Section 3801 et seq.) (the "Act"). 1. Name. The name of the business trust formed hereby is Advanta Mortgage Loan Trust 1999-4. 2. Delaware Trust. The name and business address of the Owner Trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration. 3. This Certificate of Trust will be effective November 17, 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 EX-4.4 6 SALE AND SERVICING AGREEMENT 1 EXHIBIT 4.4 SALE AND SERVICING AGREEMENT Among ADVANTA MORTGAGE LOAN TRUST 1999-4, as Trust, ADVANTA HOLDING TRUST 1999-4, as Holding Trust, ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor, ADVANTA MORTGAGE CORP. USA, as Master Servicer, and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee Dated as of November 1, 1999 2 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.................................1 Section 1.01 Definitions...................................................1 Section 1.02 Use of Words and Phrases......................................1 Section 1.03 Captions; Table of Contents...................................1 Section 1.04 Opinions......................................................2 ARTICLE II CONVEYANCE OF MORTGAGE LOANS......................................2 Section 2.01 Conveyance of the Mortgage Loans..............................2 Section 2.02 Acceptance by the Trust; Certain Substitutions of Mortgage Loans; Certification by Indenture Trustee.........6 Section 2.03 Cooperation Procedures........................................8 Section 2.04 Conveyance of the Subsequent Mortgage Loans...................8 ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER..............................11 Section 3.01 Representations and Warranties of the Sponsor................11 Section 3.02 Representations and Warranties of the Master Servicer........13 Section 3.03 Representations and Warranties of the Sponsor with Respect to the Mortgage Loans.............................15 Section 3.04 Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In Certain Situations................................................16 ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS...................19 Section 4.01 Master Servicer and Sub-Servicers............................19 Section 4.02 Collection of Certain Mortgage Loan Payments.................20 Section 4.03 Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.............................................21 Section 4.04 Successor Sub-Servicers......................................21 Section 4.05 Liability of Master Servicer.................................21 Section 4.06 No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the Noteholders......................22 Section 4.07 Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee......................................23 Section 4.08 Principal and Interest Account...............................23 Section 4.09 Delinquency Advances, Compensating Interest and Servicing Advances........................................25 Section 4.10 Purchase of Mortgage Loans...................................26 Section 4.11 Maintenance of Insurance.....................................26 Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements................................................27 Section 4.13 Realization Upon Defaulted Mortgage Loans....................28 Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files.....................................................29 i 3 Section 4.15 Servicing Compensation.......................................30 Section 4.16 Annual Statement as to Compliance............................30 Section 4.17 Annual Independent Certified Public Accountants' Reports...................................................31 Section 4.18 Access to Certain Documentation and Information Regarding the Mortgage Loans..............................31 Section 4.19 Assignment of Agreement......................................31 Section 4.20 Inspections by the Note Insurer and the Indenture Trustee; Errors and Omissions Insurance...................31 Section 4.21 Merger, Conversion, Consolidation or Succession to Business of Master Servicer...............................31 Section 4.22 Notices to Noteholders.......................................32 Section 4.23 Notices of Material Events...................................32 ARTICLE V SERVICING TERMINATION.............................................33 Section 5.01 Events of Servicer Termination...............................33 ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.....................37 Section 6.01 Administrative Duties with Respect to the Indenture..........37 Section 6.02 Records......................................................39 Section 6.03 Additional Information to be Furnished to the Trust..........39 ARTICLE VII MISCELLANEOUS...................................................39 Section 7.01 Compliance Certificates and Opinions.........................39 Section 7.02 Form of Documents Delivered to the Indenture Trustee.........39 Section 7.03 Acts of Noteholders..........................................40 Section 7.04 Notices to Indenture Trustee.................................41 Section 7.05 Notices and Reports to Noteholders; Waiver of Notices........41 Section 7.06 Rules by Indenture Trustee and Sponsor.......................41 Section 7.07 Successors and Assigns.......................................42 Section 7.08 Severability.................................................42 Section 7.09 Benefits of Agreement........................................42 Section 7.10 Legal Holidays...............................................42 Section 7.11 Governing Law................................................42 Section 7.12 Counterparts.................................................42 Section 7.13 Amendment....................................................42 Section 7.14 The Note Insurer.............................................43 Section 7.15 Notices......................................................43 Section 7.16 Limitation of Liability......................................45 ii 4 SCHEDULE I -- Schedules of Mortgage Loans EXHIBIT A -- Form of Notice of Establishment of Principal and Interest Account EXHIBIT B -- Form of Indenture Trustee's Acknowledgement of Receipt EXHIBIT C -- Form of Indenture Trustee's Certification EXHIBIT D -- Form of Master Servicer's Trust Receipt EXHIBIT E -- Form of Lost Note Affidavit EXHIBIT F -- Form of Power of Attorney EXHIBIT G -- Form of Subsequent Transfer Agreement iii 5 SALE AND SERVICING AGREEMENT, dated as of November 1, 1999 (this "Agreement"), by and among ADVANTA MORTGAGE LOAN TRUST 1999-4, a Delaware business trust, as the trust (the "Trust"), ADVANTA HOLDING TRUST 1999-4, a Delaware business trust, as the holding trust (the "Holding Trust"), ADVANTA CONDUIT RECEIVABLES, INC., a Nevada corporation, in its capacity as sponsor of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware corporation, in its capacity as master servicer (the "Master Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, in its capacity as indenture trustee (the "Indenture Trustee"). WHEREAS, the Holding Trust desires to purchase a portfolio of Mortgage Loans originated by the Originators; WHEREAS, the Sponsor is willing to sell or cause or direct to be sold such Mortgage Loans to the Holding Trust; WHEREAS, the Holding Trust desires to transfer such Mortgage Loans to the Trust and the Trust desires to acquire such Mortgage Loans from the Holding Trust; WHEREAS, the Master Servicer has agreed to service the Mortgage Loans, which constitute the principal assets of the Trust Estate; and WHEREAS, Ambac Assurance Corporation (the "Note Insurer") is intended to be a third party beneficiary of this Agreement and is hereby recognized by the parties hereto to be a third-party beneficiary of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Sponsor, the Master Servicer, the Trust and the Indenture Trustee hereby agree as follows: ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION Section 1.01 Definitions. Capitalized terms used herein shall have their respective meanings as set forth in Annex A attached hereto. Section 1.02 Use of Words and Phrases. "Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this Agreement as a whole and not solely to the particular Section of this Agreement in which any such word is used. The definitions set forth in Annex A hereto include both the singular and the plural. Whenever used in this Agreement, any pronoun shall be deemed to include both singular and plural and to cover all genders. Section 1.03 Captions; Table of Contents. The captions or headings in this Agreement and the Table of Contents are for convenience only and in no way define, limit or describe the scope and intent of any provisions of this Agreement. 1 6 Section 1.04 Opinions. Each opinion with respect to the validity, binding nature and enforceability of documents or Notes may be qualified to the extent that the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law) and may state that no opinion is expressed on the availability of the remedy of specific enforcement, injunctive relief or any other equitable remedy. Any opinion required to be furnished by any Person hereunder must be delivered by counsel upon whose opinion the addressee of such opinion may reasonably rely, and such opinion may state that it is given in reasonable reliance upon an opinion of another, a copy of which must be attached, concerning the laws of a foreign jurisdiction. ARTICLE II CONVEYANCE OF MORTGAGE LOANS Section 2.01 Conveyance of the Mortgage Loans. (a) The Sponsor, concurrently with the execution and delivery hereof, hereby transfers, assigns, sets over and otherwise conveys or shall request or cause to be transferred, sold, assigned, set over and otherwise conveyed, without recourse, for good and valuable consideration, to the Holding Trust, and the Holding Trust hereby transfers, assigns, sets over and otherwise conveys, without recourse, for good and valuable consideration, to the Trust, for pledge to the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, all right, title and interest of the Sponsor or the Holding Trust, as the case may be, in and to (i) the Mortgage Loans, (ii) such amounts in all Accounts including principal collected and interest accrued in respect of the related Mortgage Loans on or after the Initial Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off Date, as applicable, including Eligible Investments, as may from time to time may be held in such Accounts (except any Premium Recapture and interest accrued prior to the Initial Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off Date, as applicable and except for net investment earnings on the Principal and Interest Account, the Capitalized Interest Account and the Note Account), (iii) any Property, the ownership of which has been effected on behalf of the Trust as a result of foreclosure or acceptance by the Master Servicer of a deed in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) any Mortgage Insurance Policies relating to the Mortgage Loans and any rights of the Sponsor or any Originator under any Mortgage Insurance Policies, (v) Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan, (vii) the rights of the Sponsor against any Originator pursuant to the Mortgage Loan Transfer Agreement and (viii) any other assets included or to be included in the Trust Estate for pledge to the Indenture Trustee on behalf of the Noteholders and the Note Insurer. In addition, on or prior to the Closing Date, the Sponsor shall cause the Note Insurer to deliver the Policy to the Indenture Trustee, on behalf of the Noteholders. The transfer of the Initial Mortgage Loans set forth on the Schedule of Mortgage Loans to the Trust is absolute and is intended by the Sponsor, the Holding Trust, the Noteholders and all parties hereto to be treated as a sale by the Sponsor to the Holding Trust, and by the Holding Trust to the Trust. (b) The Sponsor and the Holding Trust agree to take or cause to be taken such actions and execute such documents as are necessary to perfect and protect the Note Owners' and the Note Insurer's interests in each Mortgage Loan and the proceeds thereof (including, without 2 7 limitation, the filing of all necessary continuation statements for the UCC-1 financing statements filed in the appropriate jurisdictions (which shall have been filed within 90 days of the Closing Date or the Subsequent Transfer Date, as the case may be)) and to file in the appropriate jurisdictions any amendments to UCC-1 financing statements required to reflect a change in the name or corporate structure of the debtor or permitted assigns or the filing of any additional UCC-1 financing statements due to a change in the principal office of the debtor or permitted assigns (within 90 days of any event necessitating such filing)). (c) In connection with the transfer and assignment of the Mortgage Loans, the Sponsor and the Holding Trust agree to: (i) cause to be delivered to the Indenture Trustee, without recourse no later than the Closing Date or any Subsequent Transfer Date or any date on which a Qualified Replacement Mortgage Loan is transferred, as applicable, the items listed in the definition of "Mortgage File"; provided, that the assignments of Mortgage listed in such definition shall be delivered to the Indenture Trustee within 75 Business Days of the Closing Date, any Subsequent Transfer Date or date on which a Qualified Replacement Mortgage Loan is transferred, as applicable; and (ii) cause, within 75 Business Days following the Closing Date, any Subsequent Transfer Date or date on which a Qualified Replacement Mortgage Loan is transferred, as applicable, the assignments of Mortgage to be submitted for recording in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof against creditors of or purchasers from the related Originator to the Indenture Trustee; provided, however, that for administrative convenience and facilitation of servicing and to reduce closing costs, assignments of mortgage shall not be required to be submitted for recording with respect to any Mortgage Loan only if the Indenture Trustee, the Note Insurer and each Rating Agency has received an Opinion of Counsel, satisfactory in form and substance to the Note Insurer and to each Rating Agency to the effect that the recordation of such assignments in any specific jurisdiction is not necessary to protect the Indenture Trustee's interest in the related Mortgage. All recording required pursuant to this Section 2.01, shall be accomplished at the expense of the Originators or of the Sponsor. Notwithstanding anything to the contrary contained in this Section 2.01, in those instances where the public recording office retains the original Mortgage, the assignment of a Mortgage or the intervening assignments of the Mortgage after it has been recorded, the Sponsor shall be deemed to have satisfied its obligations hereunder upon delivery to the Indenture Trustee of a copy of such Mortgage, such assignment or assignments of Mortgage certified by the public recording office to be a true copy of the recorded original thereof. Copies of all Mortgage assignments received by the Indenture Trustee shall be kept in the related Mortgage File. Such assignments of mortgage shall, in addition to the requirements specified in the definition of " Mortgage File", be in recordable form. On or before the Closing Date, any Subsequent Transfer Date or date on which a Qualified Replacement Mortgage Loan is 3 8 transferred, as applicable, the Sponsor shall deliver to the Indenture Trustee an original executed power of attorney, from the current recordholders of the related Mortgage substantially in the form of Exhibit F, authorizing the Indenture Trustee and the Master Servicer on behalf of the Indenture Trustee to record the assignments of mortgage as provided in clause (ii) of this Section 2.01(c). Pursuant to such power of attorney, the Indenture Trustee also may execute a new assignment of mortgage for any Mortgage Loan if the original assignment of mortgage delivered by the Sponsor to the Indenture Trustee is not in recordable form at such time as the assignment of mortgage is to be recorded by the Indenture Trustee. (d) As full consideration for the transfer, set-over and conveyance by the Holding Trust to the Trust of all of its right, title and interest in and to the Mortgage Loans and the other rights and properties specified in Section 2.01(a), the Trust shall (x) pay to or upon the order of the Holding Trust that amount in immediately available funds equal to the proceeds of the sale of the Notes, net of any underwriting discounts and other transaction costs (including the cost of obtaining the Policy), and (y) issue to the Holding Trust one or more Certificates evidencing in the aggregate 100% of the beneficial ownership interest in the Trust. As full consideration for the transfer, set-over and conveyance by the Sponsor to the Holding Trust of all of its right, title and interest in and to the Mortgage Loans and the other rights and properties specified in Section 2.01(a), the Holding Trust shall (x) pay to or upon the order of the Sponsor that amount in immediately available funds equal to the proceeds of the sale of the Notes, net of any underwriting discounts, the Original Pre-Funded Amount, the Capitalized Interest Account Deposit and other transaction costs (including the cost of obtaining the Policy), and (y) issue to or at the direction of the Sponsor one or more trust certificates evidencing in the aggregate 100% of the beneficial ownership interest in the Holding Trust. (e) The Sponsor (or any affiliate of the Sponsor) shall transfer, sell, assign, set over and otherwise convey, without recourse, to the Holding Trust, and the Holding Trust shall transfer, sell assign, set over and otherwise convey, without recourse, to the Trust and for pledge to the Indenture Trustee on behalf of the Noteholders all right, title and interest of the Sponsor (or of such affiliate) or the Holding Trust, as the case may be, in and to any Qualified Replacement Mortgage Loan delivered to by the Sponsor to the Holding Trust and by the Holding Trust to the Trust pursuant to Sections 2.02, 3.03 and 3.04 hereof and all its right, title and interest to principal collected and interest accruing on such Qualified Replacement Mortgage Loan on and after the applicable Replacement Cut-Off Date; provided, however, that the Sponsor (or such affiliate) shall reserve and retain all right, title and interest in and to payments of principal due and interest accrued on such Qualified Replacement Mortgage Loan prior to the applicable Replacement Cut-Off Date. (f) If a Mortgage assignment is lost during the process of recording, or is returned from the recorder's office unrecorded due to a defect therein, the Sponsor shall prepare a substitute assignment or cure such defect, as the case may be, and thereafter cause each such assignment to be duly recorded. (g) The Sponsor shall cause to be reflected on the applicable records that the Mortgage Loans have been sold to the Holding Trust and the Holding Trust shall cause to be reflected on the applicable records that the Mortgage Loans have been sold to the Trust. 4 9 (h) To the extent that the ratings, if any, then assigned to the unsecured debt of the Sponsor or of its ultimate corporate parent are satisfactory to the Controlling Party and each Rating Agency then, any of the Document Delivery Requirements described above may be waived by an instrument signed by the Controlling Party and each Rating Agency (or any documents theretofore delivered to the Indenture Trustee returned to the Sponsor) on such terms and subject to such conditions as the Controlling Party and each Rating Agency may permit. (i) It is the express intent of the parties hereto that the conveyance of the Mortgage Loans (including all other rights and properties described in Section 2.01(a) above) by the Sponsor to the Holding Trust and by the Holding Trust to the Trust be construed as a sale of the Mortgage Loans by the Sponsor to the Holding Trust and a sale of the Mortgage Loans by the Holding Trust to the Trust. It is, further, not the intent of the parties that the conveyance from the Sponsor to the Holding Trust or from the Holding Trust to the Trust be deemed a pledge of the Mortgage Loans by the Sponsor to the Holding Trust to secure a debt or other obligation of the Sponsor or any of its assignors or by the Holding Trust to the Trust to secure a debt or other obligation of the Holding Trust or any of its assignors. However, in the event and to the extent that, notwithstanding the intent of the parties hereto, any or all of the Mortgage Loans (including the other rights and properties described in Section 2.01(a) above) are held to be property of the Sponsor or any of its assignors, or the Holding Trust or any of its assignors, then (i) this Agreement shall also be deemed to be a security agreement within the meaning of Article 9 of the New York UCC; (ii) the conveyance provided for herein shall be deemed to be a grant by the Sponsor to the Holding Trust and by the Holding Trust to the Trust of a first priority security interest in all of the Sponsor's and the Holding Trust's, respectively, right, title and interest in and to the Mortgage Loans (including the other rights and properties described in Section 2.01(a) above) and all amounts payable to the holder of the Mortgage Loans and/or such rights or properties in accordance with the terms thereof and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property, including all amounts from time to time held or invested in any Account, whether in the form of cash, instruments, securities or other property; (iii) the possession by the Indenture Trustee or its bailees or agents of items of property that constitute instruments, money, negotiable documents or chattel paper shall be deemed to be "possession by the secured party" for purposes of perfecting the security interest pursuant to Section 9-305 of the New York UCC; (iv) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Indenture Trustee for the purpose of perfecting such security interest under applicable law; and (v) the obligations secured by the first priority security interest described in clause (iii) above shall be deemed to include any and all obligations of the Trust to pay 5 10 the principal of and interest on the Notes to the Noteholders and to pay the fees, expenses and other amounts required to be paid to the Master Servicer, the Indenture Trustee, the Note Insurer and the Noteholders, all in accordance with and otherwise subject to the Operative Documents. Any assignment or other transfer of the interest of the Indenture Trustee under any provision hereof shall also be deemed to be an assignment of any security interest created hereby. Each of the Sponsor, the Holding Trust and the Master Servicer shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans, such security interest would be deemed to be a perfected security interest of first priority under applicable law and would be maintained as such throughout the terms of this Agreement. The Sponsor and the Holding Trust also covenant not to pledge, assign or grant any security interest to any third party in any Mortgage Loan conveyed to the Trust hereunder. Upon the Indenture Trustee's or the Note Insurer's request, the Sponsor and/or the Holding Trust shall perform (or cause to be performed) such further acts and execute, acknowledge and deliver (or cause to be executed, acknowledged and delivered) to the Indenture Trustee such further documents as the Indenture Trustee or the Note Insurer shall deem necessary or advisable in order to evidence, establish, maintain, protect, enforce or defend its rights in and to the Mortgage Loans and other rights and properties transferred hereunder or otherwise to carry out the intent and accomplish the purposes of this Agreement (including UCC-1 financing statements naming the Sponsor or the Holding Trust as debtor and the Indenture Trustee as secured party and any continuation statements relating thereto). Section 2.02 Acceptance by the Trust; Certain Substitutions of Mortgage Loans; Certification by Indenture Trustee. (a) The Indenture Trustee, on behalf of the Trust, hereby acknowledges receipt of the Trust Estate and agrees to execute and deliver no later than the Closing Date, on any Subsequent Transfer Date and on any date on which a Qualified Replacement Mortgage Loan is transferred to the Trust, as applicable, an acknowledgment of receipt in the form attached as Exhibit B hereto of the Mortgage Files delivered by the Sponsor to the Holding Trust and by the Holding Trust to the Indenture Trustee, and declares that it will hold such documents and any amendments, replacement or supplements thereto, as well as any other assets included in the definition of Trust Estate and pledged to it on behalf of the Noteholders and the Note Insurer. On or before the tenth Business Day after the Closing Date, any Subsequent Transfer Date, and any date on which a Qualified Replacement Mortgage Loan is conveyed to the Trust, the Indenture Trustee shall execute and deliver to the Note Insurer and the Master Servicer an acknowledgement of receipt of the original Mortgage Notes for each Mortgage Loan. The Indenture Trustee further agrees to review any documents delivered by the Sponsor within 90 days after the Closing Date (or within 90 days with respect to any Subsequent Mortgage Loan or Qualified Replacement Mortgage Loan after the assignment thereof) and to deliver to the Sponsor, the Holding Trust, the Master Servicer and the Note Insurer a Certification in the form attached hereto as Exhibit C hereto. The Indenture Trustee shall be under no duty or obligation to inspect, review or examine any such documents, instruments, certificates or other papers to determine that they are genuine, enforceable, or appropriate for the 6 11 represented purpose or that they are other than what they purport to be on their face, nor shall the Indenture Trustee be under any duty to determine independently whether there are any intervening assignments or assumption or modification agreements with respect to any Mortgage Loan. (b) If the Indenture Trustee during such 90-day period finds any document constituting a part of a Mortgage File which (i) is not properly executed, (ii) has not been received within the specified period, (iii) is unrelated to the Mortgage Loans identified in the Schedules of Mortgage Loans, (iv) that any Mortgage Loan does not conform in a material respect to the description thereof as set forth in the Schedules of Mortgage Loans, the Indenture Trustee shall promptly so notify the Sponsor, the Master Servicer and the Note Insurer. In performing any such review, the Indenture Trustee may conclusively rely on the Sponsor as to the purported genuineness of any such document and any signature thereon. The Sponsor agrees to use reasonable efforts to remedy a material defect in a document constituting part of a Mortgage File of which it is so notified by the Indenture Trustee. If, however, within 60 days after the Indenture Trustee's notice respecting such defect the Sponsor has not remedied or caused to be remedied the defect and the defect materially and adversely affects the interest of the Noteholders or of the Note Insurer in the related Mortgage Loan, the Sponsor will (or will cause the related Originator or an affiliate of the Sponsor to) on the next succeeding Remittance Date (i) substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage Loan and, deliver the Substitution Amount or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan Purchase Price thereof, which purchase price shall be delivered to the Master Servicer for deposit in the Principal and Interest Account. Upon receipt of any Qualified Replacement Mortgage Loan or of written notification signed by a Servicing Officer to the effect that the Loan Purchase Price in respect of such Mortgage Loan has been deposited into the Principal and Interest Account, then as promptly as practicable, the Indenture Trustee shall execute such documents and instruments of transfer presented by the Sponsor, in each case without recourse, representation or warranty, and take such other actions as shall reasonably be requested by the Sponsor to effect such transfer by the Trust of such Mortgage Loan pursuant to this Section 2.02. It is understood and agreed that the obligation of the Sponsor to accept a transfer of a Mortgage Loan and to either convey a Qualified Replacement Mortgage Loan or to make a deposit of any related Loan Purchase Price into the Principal and Interest Account shall constitute the sole remedy respecting such defect available to Noteholders, the Indenture Trustee, the Trust and the Note Insurer against the Sponsor. The Sponsor, promptly following the transfer of a Mortgage Loan from or to the Trust pursuant to this Section 2.02(b), shall deliver an amended Schedule of Mortgage Loans to the Indenture Trustee and the Note Insurer and shall make appropriate entries in its general account records to reflect such transfer. The Master Servicer shall, following the transfer of a repurchased Mortgage Loan from the Indenture Trustee to the Sponsor, appropriately mark its records to indicate that it is no longer servicing such Mortgage Loan on behalf of the Trust. (c) As to any Qualified Replacement Mortgage Loan, the Sponsor shall deliver to the Indenture Trustee with respect to such Qualified Replacement Mortgage Loan such documents and agreements as are required to be held by the Indenture Trustee in accordance 7 12 with this Section 2.02. For any Remittance Period during which the Sponsor substitutes one or more Qualified Replacement Mortgage Loans, the Master Servicer shall determine the Substitution Amount, which amount shall be deposited by the Sponsor in the Principal and Interest Account at the time of substitution. All amounts received in respect of the Qualified Replacement Mortgage Loan during the Remittance Period in which the circumstances giving rise to such substitution occur shall not be a part of the Trust Estate and shall not be deposited by the Master Servicer in the Principal and Interest Account. All amounts received by the Master Servicer during the Remittance Period in which the circumstances giving rise to such substitution occur in respect of any Mortgage Loan so removed by the Trust Estate shall be deposited by the Master Servicer in the Principal and Interest Account. Upon such substitution, each Qualified Replacement Mortgage Loan shall be subject to the terms of this Agreement in all respects, and the Sponsor shall be deemed (i) to have made with respect to such Qualified Replacement Mortgage Loan, as of the date of substitution, the covenants, representations and warranties set forth in Section 3.03 and (ii) to have certified that such Mortgage Loan(s) is/are Qualified Replacement Mortgage Loan(s). Section 2.03 Cooperation Procedures. The Sponsor, the Master Servicer and the Indenture Trustee covenant to provide each other and to the Note Insurer all data and information required to be provided by them hereunder at the times required hereunder, and additionally covenant reasonably to cooperate with each other in providing any additional information required by any of them in connection with their respective duties hereunder. Section 2.04 Conveyance of the Subsequent Mortgage Loans. (a) On any Subsequent Transfer Date, subject to the conditions set forth in paragraph (b) below, in consideration of the Indenture Trustee's delivery of all or a portion of the balance of funds in the Pre-Funding Account, the Sponsor shall sell, transfer, assign, set over and otherwise convey, without recourse, to the Holding Trust or shall request or cause the Holding Trust to acquire from the Sponsor or an affiliate of the Sponsor, and the Holding Trust shall sell, transfer, assign, set over and otherwise convey to the Trust, without recourse, for pledge to the Indenture Trustee on behalf of the Noteholders and the Note Insurer all right, title and interest of the Sponsor or such affiliate or the Holding Trust, as applicable, in and to each Subsequent Mortgage Loan listed on the Schedule of Mortgage Loans delivered by the Sponsor to the Indenture Trustee on such Subsequent Transfer Date, all right, title and interest in and to principal collected and interest accrued on each such Subsequent Mortgage Loan on and after the related Subsequent Cut-Off Date and all right, title and interest in and to all Mortgage Insurance Policies; provided, however, that the Sponsor reserves and retains all of its right, title and interest in and to principal collected and interest accrued on each such Subsequent Mortgage Loan prior to the related Subsequent Cut-Off Date. Each of the transfer by the Sponsor to the Holding Trust and by the Holding Trust to the Trust of the Subsequent Mortgage Loans set forth on the Schedule of Mortgage Loans shall be absolute and shall be intended by the Sponsor, the Holding Trust the Noteholders and all parties hereto to be treated as a sale. The amount released from the Pre-Funding Account shall be equal to 96.25% of the aggregate Loan Balances of the Subsequent Mortgage Loans so transferred. The Sponsor shall transfer or cause to be transferred to the Indenture Trustee, on behalf of the Trust, the Subsequent Mortgage Loans and the other property and rights related 8 13 thereto described in paragraph (a) above only upon the satisfaction of each of the following conditions on or prior to the related Subsequent Transfer Date: (i) the Sponsor shall have provided the Indenture Trustee, the Note Insurer and each Rating Agency with an Addition Notice and any information in an electronic data file with respect to the Subsequent Mortgage Loans; (ii) the Sponsor and the Holding Trust shall have delivered to the Indenture Trustee a duly executed written assignment (including an acceptance by the Indenture Trustee) in substantially the form of Exhibit G (the "Subsequent Transfer Agreement"), which shall include a Schedule of Mortgage Loans, listing the Subsequent Mortgage Loans and any other exhibits listed thereon; (iii) prior to or on the first Remittance Date following the related Subsequent Transfer Date, the Sponsor shall have deposited in the Principal and Interest Account all principal collected and interest accrued (excluding premium recapture and interest accrued prior to the related Subsequent Cut-Off Date) in respect of the Subsequent Mortgage Loans on or after the related Subsequent Cut-Off Date; (iv) as of each Subsequent Transfer Date, none of the related Originators, the Master Servicer or the Sponsor was insolvent nor will any of them have been made insolvent by such transfer nor is any of them aware of any pending insolvency; (v) such conveyance of Subsequent Mortgage Loans will not result in a material adverse tax consequence to the Trust or the Noteholders; (vi) the Pre-Funding Period shall not have terminated; (vii) the Sponsor shall have delivered to the Indenture Trustee an Officer's Certificate confirming the satisfaction of each condition precedent specified in paragraphs (b), (c) and (d) of this Section 2.04 and in the related Subsequent Transfer Agreement. (viii) the Rating Agencies, the Note Insurer, and the Indenture Trustee shall have received, Opinions of Counsel with respect to certain tax, true sale and bankruptcy matters related to the transfer of the Subsequent Mortgage Loans (which Opinions of Counsel may be delivered on the Closing Date); and (ix) the Note Insurer shall have approved the Subsequent Mortgage Loans to be transferred. (b) The obligation of the Trust to purchase a Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the following requirements: (i) for each Subsequent Mortgage Loan, as of the related Subsequent Cut-Off Date: (A) the applicable Gross Margin is at least 1.90%; 9 14 (B) the final maturity date is not later than February 29, 2030, (C) the Loan-to-Value Ratio is not in excess of 100%; (D) the Loan Balance is not in excess of $500,000.00; and (E) the Mortgage Loan is not more than 30 days Delinquent; and (ii) following the purchase of such Subsequent Mortgage Loans by the Trust, the Mortgage Loans (by aggregate Loan Balance) (including Subsequent Mortgage Loans): (A) will have a weighted average Coupon Rate of at least 9.25%; (B) will have a weighted average Loan-to-Value Ratio of not more than 81.00%; (C) will have not more than 2.00% Mortgage Loans with a Loan-to-Value Ratio of greater than 90.00%; (D) will have at least 92.00% Mortgage Loans that are considered "fully documented" loans; (E) will have at least 87.00% Mortgage Loans that are related to single family detached residences or planned unit developments; (F) will have 100.00% Mortgage Loans which are First Mortgage Loans; (G) will have at least 75.00% Mortgage Loans which are classified "A-" or better; (H) will have not more than 8.00% of Mortgage Loans that are classified "C"; (I) will have not more than 1.50% of Mortgage Loans that are classified "D"; (J) will have a weighted average Gross Margin of at least 5.15%; (K) will have not more than 15.00% of Mortgage Loans for which the related Property is located in any one state. The Note Insurer may waive or modify any of the requirements in this Section 2.04(c) or specify any additional criteria provided that any such modification shall not materially and adversely affect the Sponsor. 10 15 (c) In connection with the transfer and assignment of the Subsequent Mortgage Loans, the Sponsor agrees to satisfy, or cause to be satisfied, the conditions set forth in Sections 2.01(b), (c), (f), (g), (h) and (i), 2.02 and 2.03 hereof and this Section 2.04. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER Section 3.01 Representations and Warranties of the Sponsor. The Sponsor hereby represents, warrants and covenants to the Indenture Trustee, the Note Insurer and to the Noteholders as of the Closing Date that: (a) The Sponsor is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is in good standing as a foreign corporation in each jurisdiction in which the nature of its business, or the properties owned or leased by it make such qualification necessary. The Sponsor has all requisite corporate power and authority to own and operate its properties, to carry out its business as presently conducted and as proposed to be conducted and to enter into and discharge its obligations under this Agreement and the other Operative Documents to which it is a party. (b) The execution and delivery of this Agreement and the other Operative Documents to which the Sponsor is a party by the Sponsor and its performance and compliance with the terms of this Agreement and of the other Operative Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Sponsor and will not violate the Sponsor's Articles of Incorporation or Bylaws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Sponsor is a party or by which the Sponsor is bound, or violate any statute or any order, rule or regulation of any court, governmental agency or body or other tribunal having jurisdiction over the Sponsor or any of its properties. (c) This Agreement and the other Operative Documents to which the Sponsor is a party, assuming due authorization, execution and delivery by the other parties hereto and thereto, each constitutes a valid, legal and binding obligation of the Sponsor, enforceable against it in accordance with the terms hereof and thereof, except as the enforcement hereof and thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law). (d) The Sponsor is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Sponsor or its properties or might have 11 16 consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which it is a party. (e) No litigation is pending or, to the best of the Sponsor's knowledge, threatened against the Sponsor which litigation might have consequences that would prohibit its entering into this Agreement or any other Operative Document to which it is a party or might have consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which it is a party. (f) No certificate of an officer, statement furnished in writing or report delivered pursuant to the terms hereof by the Sponsor contains any untrue statement of a material fact or omits to state any material fact necessary to make the certificate, statement or report not misleading. (g) The statements contained in the Registration Statement which describe the Sponsor or matters or activities for which the Sponsor is responsible in accordance with the Operative Documents or which are attributed to the Sponsor therein are true and correct in all material respects, and the Registration Statement does not contain any untrue statement of a material fact with respect to the Sponsor or omit to state a material fact required to be stated therein or necessary in order to make the statements contained therein with respect to the Sponsor not misleading. To the best of the Sponsor's knowledge and belief, the Registration Statement does not contain any untrue statement of a material fact required to be stated therein or omit to state any material fact required to be stated therein or necessary to make the statements contained therein not misleading. (h) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or "Blue Sky" statutes, as to which the Sponsor makes no such representation or warranty), that are necessary or advisable in connection with the purchase and sale of the Notes and the execution and delivery by the Sponsor of the Operative Documents to which it is a party, have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not subject and are not reasonably expected to be subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other Operative Documents on the part of the Sponsor and the performance by the Sponsor of its obligations under this Agreement and such of the other Operative Documents to which it is a party. (i) The transactions contemplated by this Agreement are in the ordinary course of business of the Sponsor. (j) The Sponsor received fair consideration and reasonably equivalent value in exchange for the sale of the interests in the Mortgage Loans to the Trust. 12 17 (k) The Sponsor did not sell any interest in any Mortgage Loan with any intent to hinder, delay or defraud any of its respective creditors. (l) The Sponsor is solvent and the Sponsor will not be rendered insolvent as a result of the sale of the Mortgage Loans to the Trust or the issuance of the Notes. It is understood and agreed that the representations and warranties set forth in this Section 3.1 shall survive delivery of the Mortgage Loans to the Indenture Trustee. Section 3.02 Representations and Warranties of the Master Servicer. The Master Servicer hereby represents, warrants and covenants to the Indenture Trustee, the Note Insurer and to the Noteholders as of the Closing Date that: (a) The Master Servicer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is, and each Sub-Servicer is, in compliance with the laws of each state in which any Property is located to the extent necessary to enable it to perform its obligations hereunder and is in good standing as a foreign corporation in each jurisdiction in which the nature of its business, or the properties owned or leased by it make such qualification necessary. The Master Servicer and each Sub-Servicer has all requisite corporate power and authority to own and operate its properties, to carry out its business as presently conducted and as proposed to be conducted and to enter into and discharge its obligations under this Agreement and the other Operative Documents to which it is a party. The Master Servicer has, on a consolidated basis with its parent, AMHC, equity of at least $5,000,000, as determined in accordance with generally accepted accounting principles. (b) The execution and delivery of this Agreement by the Master Servicer and its performance and compliance with the terms of this Agreement and the other Operative Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Master Servicer and will not violate the Master Servicer's Articles of Incorporation or Bylaws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Master Servicer is a party or by which the Master Servicer is bound or violate any statute or any order, rule or regulation of any court, governmental agency or body or other tribunal having jurisdiction over the Master Servicer or any of its properties. (c) This Agreement and the other Operative Documents to which the Master Servicer is a party, assuming due authorization, execution and delivery by the other parties hereto and thereto, each constitutes a valid, legal and binding obligation of the Master Servicer, enforceable against it in accordance with the terms hereof, except as the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law). (d) The Master Servicer is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or 13 18 governmental agency, which might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Master Servicer or its properties or might have consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which the Master Servicer is a party. (e) No litigation is pending or, to the best of the Master Servicer's knowledge, threatened against the Master Servicer which litigation might have consequences that would prohibit its entering into this Agreement or any other Operative Document to which it is a party or might have consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which the Master Servicer is a party. (f) No certificate of any an officer, statement furnished in writing or report delivered pursuant to the terms hereof the by the Master Servicer contains any untrue statement of a material fact or omits to state any material fact necessary to make the certificate, statement or report not misleading. (g) The statements contained in the Registration Statement which describe the Master Servicer or matters or activities for which the Master Servicer is responsible in accordance with the Operative Documents or which are attributed to the Master Servicer therein are true and correct in all material respects, and the Registration Statement does not contain any untrue statement of a material fact with respect to the Master Servicer or omit to state a material fact required to be stated therein or necessary to make the statements contained therein with respect to the Master Servicer not misleading. To the best of the Master Servicer's knowledge and belief, the Registration Statement does not contain any untrue statement of a material fact required to be stated therein or omit to state any material fact required to be stated therein or necessary to make the statements contained therein not misleading. (h) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or "Blue Sky" statutes, as to which the Master Servicer makes no such representation or warranty), that are necessary or advisable in connection with the execution and delivery by the Master Servicer of the Operative Documents to which it is a party, have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not reasonably expected to be subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other Operative Documents on the part of the Master Servicer and the performance by the Master Servicer of its obligations under this Agreement and such of the other Operative Documents to which it is a party. 14 19 (i) The collection practices used by the Master Servicer with respect to the Mortgage Loans directly serviced by it have been, in all material respects, legal, proper, prudent and customary in the mortgage loan servicing business. (j) The transactions contemplated by this Agreement are in the ordinary course of business of the Master Servicer. (k) The terms of each existing Sub-Servicing Agreement are acceptable to the Master Servicer and any new Sub-Servicing Agreements or Sub-Servicers will comply with the provisions of Section 4.03. It is understood and agreed that the representations and warranties set forth in this Section 3.2 shall survive delivery of the Mortgage Loans to the Indenture Trustee. Upon discovery by any of the Master Servicer, the Sponsor, any Sub-Servicer, the Note Insurer or the Indenture Trustee of a breach of any of the representations and warranties set forth in this Section 3.02 which materially and adversely affects the interests of the Noteholders or of the Note Insurer, the party discovering such breach shall give prompt written notice to the other parties. Within 30 days of its discovery or its receipt of notice of breach, the Master Servicer shall cure such breach in all material respects and, upon the Master Servicer's continued failure to cure such breach, may thereafter be removed by the Indenture Trustee or the Note Insurer pursuant to Section 5.01 hereof; provided, however, that, if the Master Servicer can demonstrate to the reasonable satisfaction of the Controlling Party that it is diligently pursuing remedial action, then the cure period may be extended with the written approval of the Controlling Party. Section 3.03 Representations and Warranties of the Sponsor with Respect to the Mortgage Loans. (a) The Sponsor makes the following representations and warranties as to the Mortgage Loans on which the Note Insurer relies and the Indenture Trustee relies in accepting the Mortgage Loans in trust and executing and authenticating the Noteholders. Such representations and warranties speak as of the Closing Date with respect to the Initial Mortgage Loans, as of the related Subsequent Transfer Date with respect to any Subsequent Mortgage Loan, or as of the date upon which any Qualified Replacement Mortgage Loan is added to the Trust, but shall in each case survive the sale, transfer and assignment of the Mortgage Loans to the Trust and the pledge of the Mortgage Loans to the Indenture Trustee pursuant to the Indenture: (i) The information with respect to each Mortgage Loan set forth in the Schedule of Mortgage Loans is true and correct as of the Initial Cut-Off Date, the Subsequent Cut-Off Date, or the Replacement Cut-Off Date, as the case may be; (ii) All of the original or certified documentation set forth in Section 2.01 (including all material documents related thereto) with respect to each Mortgage Loan has been or will be delivered to the Indenture Trustee not later than the Closing Date, the related Subsequent Transfer Date, or the date on which any Qualified Replacement Mortgage Loan is added to the Trust, as the case may be, or as otherwise provided in Section 2.01; 15 20 (iii) Each Mortgage Loan is being serviced by the Master Servicer or a Master Servicer Affiliate; (iv) As of the Initial Cut-Off Date, no more than 0.30% of the aggregate principal balances of the Initial Mortgage Loans are 30-59 days Delinquent and no Initial Mortgage Loan is 60 or more days' Delinquent; (v) All of the Mortgage Loan conform, in all material respects, to the description thereof set forth in the Registration Statement; (vi) The credit underwriting guidelines applicable to each Mortgage Loan conform in all material respects to the description thereof set forth in the Prospectus. (b) The Sponsor hereby assigns to the Indenture Trustee for the benefit of the Noteholders and the Note Insurer (so long as a Note Insurer Default has not occurred and is continuing) all of its right, title and interest in respect of the Mortgage Loan Transfer Agreement. Insofar as the Mortgage Loan Transfer Agreement provides for representations and warranties made by the related Originator in respect of a Mortgage Loan and any remedies provided thereunder for any breach of such representations and warranties, such right, title and interest may be enforced by the Master Servicer or by the Indenture Trustee on behalf of the Noteholders and the Note Insurer. Upon the discovery by the Sponsor, the Master Servicer, the Note Insurer or the Indenture Trustee of a breach of any of the representations and warranties made in the Mortgage Loan Transfer Agreement in respect of any Mortgage Loan which materially and adversely affects the interests of the Noteholders or of the Note Insurer in such Mortgage Loan, the party discovering such breach shall give prompt written notice to the other parties. The Master Servicer shall promptly notify the related Originator of such breach and request that such Originator cure such breach or take the actions described in Section 3.04(b) hereof within the time periods required thereby, and if such Originator does not cure such breach in all material respects, the Sponsor shall cure such breach or take such actions. The obligations of the Sponsor or Master Servicer, as the case may be, set forth herein with respect to any Mortgage Loan as to which such a breach has occurred and is continuing shall constitute the sole obligations of the Master Servicer and of the Sponsor in respect of such breach. Section 3.04 Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In Certain Situations. (a) With the provisos and limitations as to remedies set forth in this Section 3.04, upon the discovery by the Sponsor, the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture Trustee that the representations and warranties set forth in Section 3.03 of this Agreement or in the Mortgage Loan Transfer Agreement were untrue in any material respect as of the Closing Date (or the Subsequent Transfer Date, as the case may be) and such breaches of the representations and warranties materially and adversely affect the interests of the Noteholders or of the Note Insurer, the party discovering such breach shall give prompt written notice to the other parties. The Sponsor acknowledges that a breach of any representation or warranty (x) relating to marketability of title sufficient to transfer unencumbered title to a Mortgage Loan or (y) relating to enforceability of the Mortgage Loan against the related Mortgagor or Property, 16 21 constitutes breach of a representation or warranty which materially and adversely affects the interests of the Noteholders or of the Note Insurer in such Mortgage Loan. (b) Upon the earliest to occur of the Sponsor's discovery, its receipt of notice of breach from any one of the other parties hereto or from the Note Insurer or such time as a breach of any representation and warranty materially and adversely affects the interests of the Noteholders or of the Note Insurer as set forth above, the Sponsor hereby covenants and warrants that it shall promptly cure such breach in all material respects or it shall (or shall cause an affiliate of the Sponsor or an Originator to), subject to the further requirements of this paragraph, on the second Remittance Date next succeeding such discovery, or receipt of notice (i) substitute in lieu of each Mortgage Loan which has given rise to the requirement for action by the Sponsor a Qualified Replacement Mortgage Loan and deliver the Substitution Amount applicable thereto, together with the aggregate amount of all Delinquency Advances and Servicing Advances theretofore made with respect to such Mortgage Loan and not previously reimbursed to the Master Servicer for deposit in the Principal and Interest Account or (ii) purchase such Mortgage Loan from the Trust at a purchase price equal to the Loan Purchase Price thereof, which purchase price shall be delivered to the Master Servicer for deposit in the Principal and Interest Account. It is understood and agreed that the obligation of the Sponsor to cure the defect, or substitute for, or purchase any Mortgage Loan as to which a representation or warranty is untrue in any material respect and has not been remedied shall constitute the sole remedy available to the Noteholders, the Indenture Trustee or the Note Insurer. (c) In the event that any Qualified Replacement Mortgage Loan is delivered by an Originator or by the Sponsor (or by an affiliate of the Sponsor, as the case may be) to the Trust pursuant to Sections 3.03, 3.04 or 2.02 hereof, the related Originator and the Sponsor shall be obligated to take the actions described in Section 3.04(b) with respect to such Qualified Replacement Mortgage Loan upon the discovery by any of the Noteholders, the Sponsor, the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture Trustee that the representations and warranties set forth in the Mortgage Loan Transfer Agreement or in Section 3.03 above are untrue in any material respect on the date such Qualified Replacement Mortgage Loan is conveyed to the Trust such that the interests of the Noteholders or the Note Insurer in the related Qualified Replacement Mortgage Loan are materially and adversely affected. (d) In the event that any Qualified Replacement Mortgage Loan is delivered to the Trust, such Qualified Replacement Mortgage Loan must be a Mortgage Loan which: (i) bears an adjustable rate of interest, (ii) has the same interest rate index, a margin over such index and a maximum interest rate equal to or greater than those applicable to the Mortgage Loan being replaced, (iii) is of the same or better property type and the same or better occupancy status as the replaced Mortgage Loan, (iv) shall be of the same or better credit quality classification (determined in accordance with the Originators' credit underwriting guidelines) as the Mortgage Loan being replaced, (v) shall mature no later than February 29, 2030, (vi) has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (vii) has a Loan Balance as of the related Replacement Cut-Off Date equal to or less than the Loan Balance of the replaced Mortgage Loans as of such Replacement Cut-Off Date, (viii) satisfies all of the representations and warranties set forth in Section 3.03 as evidenced by an Officer's Certificate of the Sponsor 17 22 delivered to the Note Insurer, the Sponsor and the Indenture Trustee prior to any such substitution and (ix) is a valid First Mortgage Loan. In the event that one or more mortgage loans are proposed to be substituted for one or more mortgage loans, the Note Insurer may allow the foregoing tests to be met on a weighted average basis with respect to the Mortgage Loans only or other aggregate basis acceptable to the Note Insurer, as evidenced by a written consent delivered to the Indenture Trustee by the Note Insurer, except that the requirement of clause (viii) hereof must be satisfied as to each Qualified Replacement Mortgage Loan. The procedures applied by the Sponsor in selecting each Qualified Replacement Mortgage Loan shall not be materially adverse to the interests of the Indenture Trustee, the Noteholders or the Note Insurer. (e) As to each Mortgage Loan released from the Trust in connection with the conveyance of a Qualified Replacement Mortgage Loan therefor, the Indenture Trustee will transfer, assign, set over and otherwise convey without recourse, all of its right, title and interest in and to such released Mortgage Loan and all of the Trust's right, title and interest to principal collected and interest accruing on such released Mortgage Loan on and after the applicable Replacement Cut-Off Date; provided, however, that the Trust shall reserve and retain all right, title and interest in and to payments of principal collected and interest accrued on such released Mortgage Loan prior to the applicable Replacement Cut-Off Date. (f) In connection with any transfer and assignment of a Qualified Replacement Mortgage Loan to the Trust, the Sponsor agrees to cause to be delivered to the Indenture Trustee the items described in Section 2.01(c) on the date of such transfer and assignment or, if a later delivery time is permitted by Section 2.01(c), then no later than such later delivery time. (g) As to each Mortgage Loan released from the Trust in connection with the conveyance of a Qualified Replacement Mortgage Loan the Indenture Trustee shall deliver no later than the date of conveyance of such Qualified Replacement Mortgage Loan and on the order of the Sponsor (i) the original Mortgage Note, or the certified copy, relating thereto, endorsed without recourse, to the Sponsor and (ii) such other documents as constituted the Mortgage File with respect thereto. (h) The Sponsor shall, in connection with the delivery of each Qualified Replacement Mortgage Loan to the Indenture Trustee, provide the Indenture Trustee with the information set forth in the Schedule of Mortgage Loans with respect to such Qualified Replacement Mortgage Loan. (i) It is understood and agreed that the covenants set forth in this Section 3.04 shall survive delivery of the respective Mortgage Loans (including Subsequent Mortgage Loans and Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of the Trust. 18 23 ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS Section 4.01 Master Servicer and Sub-Servicers. (a) Acting directly or through one or more Sub-Servicers as provided in Section 4.03, the Master Servicer, as master servicer, shall service and administer the Mortgage Loans in accordance with this Agreement and on behalf of the Indenture Trustee and the Note Insurer in accordance with Accepted Servicing Practices, and shall have full power and authority, acting alone, to do or cause to be done any and all things in connection with such servicing and administration which it may deem necessary or desirable. (b) With respect to the Mortgage Loans, the duties of the Master Servicer shall include (i) collecting and posting of all payments, (ii) responding to inquiries of Mortgagors or by federal, state or local government authorities, (iii) investigating delinquencies, (iv) reporting tax information to Mortgagors in accordance with its customary practices, (v) accounting for collections, (vi) furnishing monthly and annual statements to the Indenture Trustee and the Note Insurer, as applicable, with respect to distributions, (vii) paying Compensating Interest and (viii) making Delinquency Advances and Servicing Advances pursuant hereto. The Master Servicer shall follow Accepted Servicing Practices in performing its duties as Master Servicer. The Master Servicer shall cooperate with the Indenture Trustee and furnish to the Indenture Trustee with reasonable promptness information in its possession as may be necessary or appropriate to enable the Indenture Trustee to perform its tax reporting duties hereunder. (c) Without limiting the generality of the foregoing, the Master Servicer (i) shall continue, and is hereby authorized and empowered by the Indenture Trustee, to execute and deliver, on behalf of itself, the Noteholders, the Note Insurer and the Indenture Trustee or any of them, any and all instruments of satisfaction or cancellation, or of full release or discharge and all other comparable instruments, with respect to the Mortgage Loans and with respect to the related Properties; (ii) may consent to any modification of the terms of any Mortgage Note not expressly prohibited hereby if the effect of any such modification will not be to affect materially and adversely the security afforded by the related Property, the timing of receipt of any payments required hereby or the interest of the Note Insurer. (d) The Master Servicer shall, in accordance with Accepted Servicing Practices, have the right to approve applications of Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations to Properties and (iii) removal, demolition or division of Properties. No application for consent may be approved by the Master Servicer unless: (x) the provisions of the related Note and Mortgage have been complied with; (y) the Loan-to-Value Ratio (which may, for this purpose, be determined at the time of any such action in a manner reasonably acceptable to the Indenture Trustee) and the Mortgagor's debt-to-income ratio after any release does not exceed the Loan-to-Value Ratio and debt-to-income ratio applicable to such Mortgage Loan at origination and (z) the lien priority of the related Mortgage is not adversely affected; provided, however, that the foregoing requirements in clauses (x), (y) and (z) shall not apply to 19 24 any such situation described in this paragraph if such situation results from any condemnation or easement activity by a governmental entity. (e) Without limiting the generality of the foregoing, but subject to Sections 4.13 and 4.14, the Master Servicer in its own name or in the name of a Sub-Servicer may be authorized and empowered pursuant to a power of attorney executed and delivered by the Indenture Trustee to execute and deliver, and may be authorized and empowered by the Indenture Trustee, to execute and deliver, on behalf of itself, the Noteholders, the Note Insurer and the Indenture Trustee or any of them, (i) any and all instruments of satisfaction or cancellation or of partial or full release or discharge and all other comparable instruments with respect to the Mortgage Loans and with respect to the Properties, (ii) to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of any Property on behalf of the Indenture Trustee and (iii) to hold title to any Property upon such foreclosure or deed in lieu of foreclosure on behalf of the Indenture Trustee; provided, however, that Section 4.14(a) shall constitute a power of attorney from the Indenture Trustee to the Master Servicer or any Sub-Servicer to execute an instrument of satisfaction (or assignment of mortgage without recourse) with respect to any Mortgage Loan paid in full (or with respect to which payment in full has been escrowed). Subject to Sections 4.13 and 4.14, the Indenture Trustee shall agree in the Indenture to furnish the Master Servicer or any Sub-Servicer with any powers of attorney and other documents as the Master Servicer or such Sub-Servicer shall reasonably request to enable the Master Servicer or any Sub-Servicer to carry out their respective servicing and administrative duties hereunder. (f) The Master Servicer shall give prompt notice to the Indenture Trustee of any action, of which the Master Servicer has actual knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction over the Trust. (g) Servicing Advances incurred by the Master Servicer or any Sub-Servicer in connection with the servicing of the Mortgage Loans (including any penalties in connection with the payment of any taxes and assessments or other charges) on any Property shall be recoverable by the Master Servicer or such Sub-Servicer to the extent described in Section 4.09(c) and in Section 8.06(b)(xii) of the Indenture. (h) The Master Servicer shall modify payments of monthly principal and interest on any Mortgage Loan becoming subject to the terms of the Civil Relief Act in accordance with the Master Servicer's general policies of the comparable mortgage loans subject to the Civil Relief Act. (i) The Master Servicer shall have the right to sell, in whole-loan, third-party sales, any Mortgage Loan that is more than 90 days delinquent if the Master Servicer believes that such means of disposition will provide the largest recovery. Section 4.02 Collection of Certain Mortgage Loan Payments. (a) The Master Servicer shall, to the extent such procedures shall be consistent with this Agreement and the terms and provisions of any applicable Mortgage Insurance Policies, follow Accepted Servicing Practices. The Master Servicer may in its discretion waive any assumption fees, late payment 20 25 charges, charges for checks returned for insufficient funds, prepayment fees, if any, or other fees which may be collected in the ordinary course of servicing the Mortgage Loans, In addition, the Master Servicer may, if a Mortgagor is in default or about to be in default because of a Mortgagor's financial condition, arrange with the Mortgagor a schedule for the payment of delinquent payments due on the related Mortgage Loan; provided, however, the Master Servicer shall not reschedule the payment of delinquent payments more than one time in any twelve consecutive months with respect to any Mortgagor; and, provided, further, that such modifications shall not be made in excess of 10% of the Original Pool Principal Balance without the prior written consent of the Note Insurer; provided, further, however, that, if the Note Insurer has not given its consent within five (5) Business Days after notice from the Master Servicer, the Note Insurer shall be deemed to have given its consent to such modification or rescheduling for payments of delinquent payments; provided, however, that such notice and consent shall not be required in the event that the Master Servicer determines, in its good faith business judgment that such modification is legally required to be made prior to such five (5) day period, in which case the Master Servicer shall give the Note Insurer immediate notice of such action. (b) The Master Servicer shall hold in escrow on behalf of the related Mortgagor all Prepaid Installments received by it, and shall apply such Prepaid Installments as directed by such Mortgagor and as set forth in the related Mortgage Note. Section 4.03 Sub-Servicing Agreements Between Master Servicer and Sub-Servicers. The Master Servicer may and is hereby authorized to perform any of its servicing responsibilities with respect to all or certain of the Mortgage Loans through a Sub-Servicer, which may be an Affiliate. Pursuant to the foregoing, the Master Servicer may enter into Sub-Servicing Agreements for any servicing and administration of Mortgage Loans with any institution and which is in compliance with the laws of each state necessary to enable it to perform its obligations under such Sub-Servicing Agreement. The Master Servicer shall give notice to the Note Insurer and the Indenture Trustee of the appointment of any Sub-Servicer that is not a Master Servicer Affiliate. The Master Servicer shall also furnish to the Note Insurer and the Indenture Trustee a copy of the Sub-Servicing Agreement, except when the Sub-Servicer is a Master Servicer Affiliate. For purposes of this Agreement, the Master Servicer shall be deemed to have received payments on Mortgage Loans when any Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall be consistent with and not violate the provisions of this Agreement. By delivery of the Policy, the Note Insurer is deemed to have approved Advanta National Bank and Advanta Finance Corp. as Sub-Servicers hereunder. Section 4.04 Successor Sub-Servicers. The Master Servicer may terminate any Sub-Servicing Agreement in accordance with the terms and conditions of such Sub-Servicing Agreement and either directly service the related Mortgage Loans itself or enter into a Sub-Servicing Agreement with a successor Sub-Servicers that qualifies under Section 4.03. Section 4.05 Liability of Master Servicer(a) . The Master Servicer shall not be relieved of its obligations under this Agreement notwithstanding any Sub-Servicing Agreement between the Master Servicer and a Sub-Servicer or otherwise and the Master Servicer shall be 21 26 obligated to the same extent and under the same terms and conditions as if it alone were servicing and administering the Mortgage Loans. The Master Servicer shall be entitled to enter into any agreement with a Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be deemed to limit or modify this Agreement. The Trust shall not indemnify the Master Servicer for any losses due to the Master Servicer's negligence. (b) The Master Servicer shall defend, indemnify and hold harmless the Indenture Trustee (including its officers, directors, employees and agents), the Owner Trustee (including its officers, directors, employees and agents), the Noteholders, the Holding Trust and the Trust from and against any and all claims, damages, liabilities, losses, costs and expenses (including the reasonable fees and expenses of counsel) to the extent that such claims, damages, liabilities, losses, costs or expenses arose out of, or were imposed upon the Indenture Trustee, the Owner Trustee, the Noteholders, the Holding Trust or the Trust in connection with or by reason of, (i) any failure by the Master Servicer to perform its duties under this Agreement or any errors or omissions of the Master Servicer related to such duties, including the making of any inaccurate representations or warranties hereunder; or (ii) in the case of the Indenture Trustee or the Owner Trustee, the performance of its duties hereunder or under the other Operative Documents, except to the extent that such claim, damage, liability, loss, cost or expense resulted from the Indenture Trustee's or the Owner Trustee's gross negligence or willful misconduct. The provisions of this Section 4.04(b) shall run directly to and be enforceable by each injured party subject to the limitations hereof, and the indemnification provided by the Master Servicer to the Indenture Trustee, the Owner Trustee, the Noteholders, the Holding Trust and the Trust pursuant to this Section 4.04(b) shall survive the payment in full of the Notes, the termination of the Indenture and the resignation or removal of the Indenture Trustee or the Owner Trustee. The Master Servicer shall pay any amounts owing pursuant to this Section 4.04(b) directly to the indemnified Person, and such amounts shall not be deposited in either the Principal and Interest Account or the Note Account. Indemnification under this Section 4.04(b) shall include reasonable fees and expenses of counsel and expenses of litigation reasonably incurred. If the Master Servicer has made any indemnity payments to the Indenture Trustee, the Owner Trustee, the Noteholders, the Holding Trust or the Trust pursuant to this Section 4.04(b) and such party thereafter collects any of such amounts from others, such party will promptly repay such amounts collected to the Master Servicer, without interest. (c) The Master Servicer shall be the secondary obligor in respect of any Expenses (as defined in the Trust Agreement and the Holding Trust Agreement) owing to any Indemnified Party (as defined in the Trust Agreement and the Holding Trust Agreement) under Section 8.02 of the Trust Agreement and the Holding Trust Agreement. Section 4.06 No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the Noteholders. Any Sub-Servicing Agreement and any other transactions or services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be between the Sub-Servicer and the Master Servicer alone and the Note Insurer, the Indenture Trustee and the Noteholders shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to any Sub-Servicer except as set forth in Section 4.07 hereof. 22 27 Section 4.07 Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee. In connection with the assumption of the responsibilities, duties and liabilities and of the authority, power and rights of the Master Servicer hereunder by the Indenture Trustee pursuant to Section 5.01, it is understood and agreed that the Master Servicer's rights and obligations under any Sub-Servicing Agreement then in force between the Master Servicer and a Sub-Servicer may be assumed or terminated by the Indenture Trustee at its option. Any termination fee due under any such Sub-Servicing agreement shall be paid by the preceding Master Servicer but in no event shall the Indenture Trustee be liable for any such fee. The Master Servicer shall, upon request of the Indenture Trustee, but at the expense of the Master Servicer, deliver to the assuming party documents and records relating to each Sub-Servicing Agreement and an accounting of amounts collected and held by it and otherwise use its best reasonable efforts to effect the orderly and efficient transfer of the Sub-Servicing Agreements to the assuming party, without the payment of any fee by the Indenture Trustee, notwithstanding any contrary provision in any Sub-Servicing Agreement. Section 4.08 Principal and Interest Account(a) . (a) The Master Servicer and/or each Sub-Servicer, as applicable, shall establish and maintain at one or more Designated Depository Institutions in the name of the Trust for the benefit of the Noteholders and the Note Insurer, as their interests may appear, the Principal and Interest Account. The establishment of the Principal and Interest Account shall be evidenced by the Master Servicer's delivery of a notice in the form of Exhibit A hereto, properly completed. Subject to paragraphs (c) and (e) below, the Master Servicer and any Sub-Servicer shall deposit all receipts of principal and accrued interest related to the Mortgage Loans (including, without limitation, Net Liquidation Proceeds) to the Principal and Interest Account on a daily basis (but no later than the second Business Day after receipt). (b) All funds in the Principal and Interest Account may only be held (i) uninvested, up to the limits insured by the FDIC or (ii) invested in Eligible Investments. The Principal and Interest Account shall be held in trust in the name of the Trust and for the benefit of the Noteholders and the Note Insurer. Any investment earnings on funds held in the Principal and Interest Account shall be for the account of the Master Servicer. Any references herein to amounts on deposit in the Principal and Interest Account shall refer to amounts net of such investment earnings. Any investment losses are at the expense of the Master Servicer and shall be replaced on or prior to the Remittance Date. (c) With respect to the Mortgage Loans and subject to paragraph (e) below, the Master Servicer shall deposit to the Principal and Interest Account all principal collected and interest accrued on or after the Cut-Off Date, related Subsequent Cut-Off Date or Replacement Cut-Off Date including any Prepaid Installments, Prepayments, Net Liquidation Proceeds, all Loan Purchase Prices and Substitution Amounts received or paid by the Master Servicer, other recoveries or amounts received by the Master Servicer, Compensating Interest and Delinquency Advances together with any amounts which are reimbursable from the Principal and Interest Account, but net of (i) the Servicing Fee and other servicing compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii) principal (including Prepayments) collected on the related Mortgage Loans prior to the Initial Cut-Off Date, Subsequent Cut-Off Date or 23 28 Replacement Cut-Off Date, (iii) interest accrued on the related Mortgage Loans prior to the Initial Cut-Off Date, Subsequent Cut-Off Date or Replacement Cut-Off Date and (iv) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the Loan Balance of the related Mortgage Loan and accrued and unpaid interest thereon. (d) (i) The Master Servicer may make withdrawals from the Principal and Interest Account only for the following purposes: (A) to effect the timely remittance to the Indenture Trustee of the Monthly Remittance Amount due on the Remittance Date; (B) to reimburse itself pursuant to Section 4.09(a) hereof for unreimbursed Delinquency Advances and Servicing Advances and Nonrecoverable Advances; (C) to withdraw investment earnings on amounts on deposit in the Principal and Interest Account if such investment earnings have been deposited to the Principal and Interest Account; (D) to withdraw amounts that have been deposited to a Principal and Interest Account in error; (E) to clear and terminate each Principal and Interest Account following the termination of the Trust pursuant to Article X of the Indenture; and (F) to invest in Eligible Investments. (ii) On the tenth day of each month, the Master Servicer shall send to the Indenture Trustee a computer tape detailing the payments on the Mortgage Loans during the prior Remittance Period. Such tape shall be in the form and have the specifications as may be agreed to between the Master Servicer and the Indenture Trustee from time to time. The Note Insurer shall have the right to request this computer tape upon providing three (3) Business Days written notice to the Master Servicer. Upon any change in the format of the electronic medium maintained by the Master Servicer in respect of the Mortgage Loans, the Master Servicer shall deliver a copy of such electronic medium to the Indenture Trustee. (iii) On each Remittance Date the Master Servicer shall remit to the Indenture Trustee by wire transfer in immediately available funds for deposit in the Note Account the amounts specified in Section 8.07(a) of the Indenture. (e) To the extent that the ratings, if any, then assigned to the unsecured debt of the Master Servicer or of the Master Servicer's ultimate corporate parent are satisfactory to the Note Insurer and each Rating Agency, then the requirement to maintain the Principal and Interest Account and deposit of principal collections and accrued interest may be waived by an instrument signed by the Note Insurer, each Rating Agency and the Master Servicer may be allowed to co-mingle with its general funds the amounts otherwise required to be deposited to 24 29 the Principal and Interest Account, on such terms and subject to such conditions as the Note Insurer and each Rating Agency may permit. Section 4.09 Delinquency Advances, Compensating Interest and Servicing Advances. (a) The Master Servicer is required, not later than each Remittance Date, to deposit into the Principal and Interest Account an amount equal to the sum of the interest portions accrued (net of the Servicing Fees and certain other administrative amounts, if any) with respect to Delinquent Mortgage Loans during the related Remittance Period but not collected on or prior to such Remittance Date, but only if, in its good faith business judgment, the Master Servicer reasonably believes that such amount will ultimately be recoverable from the related Mortgage Loan. Such amounts are "Delinquency Advances". The Master Servicer shall be permitted to fund its payment of Delinquency Advances on any Remittance Date and to reimburse itself for any Delinquency Advances paid from the Master Servicer's own funds, from subsequent collections on the related Mortgage Loan. The Master Servicer may use funds deposited to the Principal and Interest Account subsequent to the related Remittance Period and shall deposit into the Principal and Interest Account with respect thereto (i) late collections from the Mortgagor whose Delinquency gave rise to the shortfall which resulted in such Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account of the related Mortgage Loan to the extent of the amount of aggregate Delinquency Advances related thereto or (iii) from its own funds. If not therefore recovered from the related Mortgagor or the related Liquidation Proceeds, Delinquency Advances constituting Nonrecoverable Advances shall be recoverable pursuant to Section 8.06(b)(xi) of the Indenture and Section 4.08(d) hereof. (b) On or prior to each Remittance Date, the Master Servicer shall deposit in the Principal and Interest Account with respect to any full Prepayment received on a Mortgage Loan during the related Remittance Period Compensating Interest out of its own funds, without any right of reimbursement therefor. "Compensating Interest" shall equal the lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the related Remittance Period and (ii) the aggregate Servicing Fee received by the Master Servicer with respect to all Mortgage Loans for such Remittance Period; in no event shall the Master Servicer be required to pay Compensating Interest with respect to any Remittance Period in an amount in excess of the aggregate Servicing Fee received by the Master Servicer with respect to all Mortgage Loans for such Remittance Period nor shall it be required to pay Compensating Interest due to partial prepayments or Relief Act Shortfalls. "Prepayment Interest Shortfall" for any prepaid Mortgage Loan shall be an amount equal to the difference between (x) 30 days' interest at the Mortgage Loan's Coupon Rate (less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the first day of the related Remittance Period and (y) the interest (less the Servicing Fee) paid by the Mortgagor with respect to the Mortgage Loan during such Remittance Period (c) The Master Servicer will pay all "out-of-pocket" costs and expenses incurred by the Master Servicer in the performance of its servicing obligations, including, but not limited to, the cost of (i) Preservation Expenses (including the payment of flood insurance premiums), (ii) any enforcement or judicial proceedings, including (a) foreclosures and (b) other legal actions and costs associated therewith that potentially affect the existence, validity, priority, enforceability, or collectibility of the Mortgage Loans, including collection agency fees and costs 25 30 of pursuing or obtaining personal judgments, garnishments, levies, attachment and similar actions, (iii) the conservation, management, liquidation, sale or other disposition of any Property acquired in satisfaction of the related Mortgage Loan, including reasonable fees paid to any independent contractor in connection therewith, and (iv) advances to keep liens current; and with respect to any of the foregoing, the Master Servicer is only required to pay such costs and expenses to the extent the Master Servicer reasonably believes such costs and expense will be recoverable from the related Mortgage Loan. Each such amount so paid will constitute a "Servicing Advance". The Master Servicer may recover Servicing Advances (x) from the Mortgagors to the extent permitted by the Mortgage Notes, (y) from Liquidation Proceeds realized upon the liquidation of the related Mortgage Loan and (z) as provided in Section 4.08(d) hereof. In no case may the Master Servicer recover Servicing Advances from principal and interest payments on any other Mortgage Loan or from any amount relating to any other Mortgage Loan except as provided pursuant to Section 4.08(d) hereof. (d) On the first Remittance Date following the Closing Date, the Master Servicer shall make an advance (a "Special Advance") equal to the sum of (x) one-month's interest, calculated at the Note Interest Rate, applicable to such Payment Date, with respect to all Mortgage Loans not having a payment due prior to the December 1999 Remittance Date; the amounts of such Special Advances shall be included in the Interest Remittance Amount. Reimbursement of Special Advances shall be made only as provided in Section 8.06(b)(xi) of the Indenture. Section 4.10 Purchase of Mortgage Loans. The Master Servicer may, but is not obligated to, purchase for its own account any Mortgage Loan which becomes Delinquent, in whole or in part, as to four consecutive monthly installments or any Mortgage Loan as to which enforcement proceedings have been brought by the Master Servicer or by any Sub-Servicer pursuant to Section 4.13. Any such Mortgage Loan shall be purchased by the Master Servicer on a Remittance Date at a purchase price equal to the Loan Purchase Price thereof, which purchase price shall be deposited in the Principal and Interest Account. Section 4.11 Maintenance of Insurance. (a) The Master Servicer shall cause to be maintained with respect to each Mortgage Loan either a blanket insurance policy as described in Section 4.11(c) hereof or a hazard insurance policy that provides for fire and extended coverage, and which provides for a recovery by the Master Servicer on behalf of the Trust of insurance proceeds relating to such Mortgage Loan in an amount not less than the least of (i) the outstanding principal balance of the Mortgage Loan, (ii) the minimum amount required to compensate for damage or loss on a replacement cost basis and (iii) the full insurable value of the premises. (b) Unless otherwise covered pursuant to Section 4.11(c) hereof, if the Mortgage Loan at the time of origination relates to a Property in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, the Master Servicer will cause to be maintained with respect thereto either a blanket insurance policy as described in Section 4.11(c) hereof or a flood insurance policy in a form meeting the requirements of the current guidelines of the Federal Insurance Administration. Such policy shall provide for a recovery by the Master Servicer on behalf of the Trust of insurance proceeds relating to such Mortgage Loan of not less than the least of (i) the outstanding principal balance 26 31 of the Mortgage Loan, (ii) the minimum amount required to compensate for damage or loss on a replacement cost basis and (iii) the maximum amount of insurance that is available under the Flood Disaster Protection Act of 1973. The Master Servicer shall indemnify the Trust and the Note Insurer out of the Master Servicer's own funds for any loss to the Trust and the Note Insurer resulting from the Master Servicer's failure to maintain the insurance required by this Section 4.11. (c) In the event that the Master Servicer shall obtain and maintain a blanket insurance policy insuring against fire, flood and hazards of extended coverage on all of the Mortgage Loans, then, to the extent such policy names the Master Servicer as loss payee and provides coverage in an amount equal to the aggregate unpaid principal balance on the Mortgage Loans without co-insurance, and otherwise complies with the requirements of this Section 4.11, the Master Servicer shall be deemed conclusively to have satisfied its obligations with respect to fire, flood and hazard insurance coverage under this blanket policy may contain a deductible clause, in which case the Master Servicer shall, in the event that there shall not have been maintained on the related Property a policy complying with paragraphs (a) and (b) of this Section 4.11, and there shall have been a loss which would have been covered by such policy, deposit in the Principal and Interest Account from the Master Servicer's own funds the difference, if any, between the amount that would have been payable under a policy complying with paragraphs (a) and (b) of this Section 4.11 and the amount paid under such blanket policy. Upon the request of the Indenture Trustee or the Note Insurer, the Master Servicer shall cause to be delivered to the Indenture Trustee or the Note Insurer, a certified true copy of such policy. Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements. When a Property has been or is about to be conveyed by the Mortgagor, the Master Servicer shall, to the extent it has knowledge of such conveyance or prospective conveyance, exercise its rights to accelerate the maturity of the related Mortgage Loan under any "due-on-sale" clause contained in the related Mortgage or Mortgage Note; provided, however, that the Master Servicer shall not exercise any such right if (i) the "due-on-sale" clause, in the reasonable belief of the Master Servicer, is not enforceable under applicable law or (ii) the Master Servicer reasonably believes that to permit an assumption of the Mortgage Loan would not materially and adversely affect the interest of the Noteholders or of the Note Insurer. In such event, the Master Servicer shall enter into an assumption and modification agreement with the person to whom such property has been or is about to be conveyed, pursuant to which such person becomes liable under the Mortgage Note and, unless prohibited by applicable law or the Mortgage Documents, the Mortgagor remains liable thereon. If the foregoing is not permitted under applicable law, the Master Servicer is authorized to enter into a substitution of liability agreement with such person, pursuant to which the original Mortgagor is released from liability and such person is substituted as Mortgagor and becomes liable under the Mortgage Note; provided, however, that to the extent any such substitution of liability agreement would be delivered by the Master Servicer outside of its usual procedures for mortgage loans held in its own portfolio the Master Servicer shall, prior to executing and delivering such agreement, obtain the prior written consent of the Controlling Party. The Mortgage Loan, as assumed, shall conform in all respects to the requirements, representations and warranties of this Agreement. The Master Servicer shall notify the Indenture Trustee that any such assumption or substitution agreement has been completed by forwarding to the Indenture Trustee the original copy of such assumption or substitution agreement, which copy shall be added by the Indenture Trustee to the related Mortgage File and which shall, for all 27 32 purposes, be considered a part of such Mortgage File to the same extent as all other documents and instruments constituting a part thereof. The Master Servicer shall be responsible for recording or causing the recordation any such assumption or substitution agreements. In connection with any such assumption or substitution agreement, the required monthly payment on the related Mortgage Loan shall not be changed but shall remain as in effect immediately prior to the assumption or substitution, the stated maturity or outstanding principal amount of such Mortgage Loan shall not be changed nor shall any required monthly payments of principal or interest be deferred or forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for consenting to any such conveyance or entering into an assumption or substitution agreement shall be retained by or paid to the Master Servicer as additional servicing compensation. Notwithstanding the foregoing paragraph or any other provision of this Agreement, the Master Servicer shall not be deemed to be in default, breach or any other violation of its obligations hereunder by reason of any assumption of a Mortgage Loan by operation of law or any assumption which the Master Servicer may be restricted by law from preventing, for any reason whatsoever. Section 4.13 Realization Upon Defaulted Mortgage Loans. (a) The Master Servicer shall foreclose upon or otherwise comparably effect the ownership on behalf of the Trust of Properties relating to defaulted Mortgage Loans as to which no satisfactory arrangements can be made for collection of Delinquent payments and which the Master Servicer has not purchased pursuant to Section 4.10. In connection with such foreclosure or other conversion, the Master Servicer shall exercise such of the rights and powers vested in it hereunder, and use the same degree of care and skill in their exercise or use, as prudent mortgage lenders would exercise or use under the circumstances in the conduct of their own affairs, including, but not limited to, advancing funds for the payment of taxes and insurance premiums. Any amounts so advanced shall constitute "Servicing Advances" within the meaning of Section 4.09(c) hereof. Notwithstanding the generality of the foregoing provisions, the Master Servicer shall manage, conserve, protect and operate each REO Property for the Noteholders solely for the purpose of its prompt disposition and sale. Pursuant to its efforts to sell such REO Property, the Master Servicer shall either itself or through an agent selected by the Master Servicer protect and conserve such REO Property in the same manner and to such extent as is customary in the locality where such REO Property is located and may, incident to its conservation and protection of the interests of the Noteholders, rent the same, or any part thereof, as the Master Servicer deems to be in the best interest of the Noteholders for the period prior to the sale of such REO Property. The Master Servicer shall take into account the existence of any hazardous substances, hazardous wastes or solid wastes, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act of 1976, or other federal, state or local environmental legislation, on an REO Property in determining whether to foreclose upon or otherwise comparably convert the ownership of such REO Property. With respect to any Mortgage Loan secured by a mixed use REO Property, the Master Servicer shall, prior to foreclosing upon or otherwise comparably effecting the ownership in the name of the Master Servicer on behalf of the Trust, either (x) perform a "phase one environmental study" of such REO Property or (y) repurchase such REO Property at the Loan Purchase Price. 28 33 (b) The Master Servicer shall determine, with respect to each defaulted Mortgage Loan, when it has recovered, whether through trustee's sale, foreclosure sale or otherwise, all amounts it expects to recover from or on account of such defaulted Mortgage Loan (exclusive of any possibility of a deficiency judgement), whereupon such Mortgage Loan shall become a Liquidated Mortgage Loan and, if requested, shall promptly deliver to the Note Insurer, and to the Indenture Trustee, a related liquidation report with respect to such Liquidated Mortgage Loan. Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files. (a) Upon the payment in full of any Mortgage Loan (including the repurchase of any Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure or otherwise), or the receipt by the Master Servicer or any Sub-Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Master Servicer or any Sub-Servicer shall deliver to the Indenture Trustee a Master Servicer's Trust Receipt attached hereto as Exhibit D. Upon receipt of such Master Servicer's Trust Receipt, the Indenture Trustee shall promptly release the related Mortgage File, as directed by the Master Servicer in the Master Servicer's Trust Receipt. Upon any such payment in full, or the receipt of such notification that such funds have been placed in escrow, the Master Servicer or any Sub-Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee and the mortgagee under the Mortgage which secured the Note, an instrument of satisfaction (or assignment of Mortgage without recourse) regarding the Property relating to such Mortgage, which instrument of satisfaction or assignment, as the case may be, shall be delivered to the Person or Persons entitled thereto against receipt therefor of payment in full, it being understood and agreed that no expense incurred in connection with such instrument of satisfaction or assignment, as the case may be, shall be chargeable to the Principal and Interest Account. In lieu of executing any such satisfaction or assignment, the Master Servicer or any Sub-Servicer may prepare and submit to the Indenture Trustee, a satisfaction (or assignment without recourse, if requested by the Person or Persons entitled thereto) in form for execution by the Indenture Trustee with all requisite information completed by the Master Servicer or any Sub-Servicer; in such event, the Indenture Trustee shall execute and acknowledge such satisfaction or assignment and deliver the same with the related Mortgage File, as aforesaid. (b) From time to time and as appropriate in the servicing of any Mortgage Loan, including, without limitation, foreclosure or other comparable conversion of a Mortgage Loan or collection under any applicable Mortgage Insurance Policy, the Indenture Trustee shall (except in the case of the payment or liquidation pursuant to which the related Mortgage File is released to an escrow agent or an employee, agent or attorney of the Indenture Trustee), upon request of the Master Servicer or any Sub-Servicer and delivery to the Indenture Trustee of a Master Servicer's Trust Receipt, release the related Mortgage File to the Master Servicer and shall execute such documents as shall be necessary to the prosecution of any such proceedings, including, without limitation, an assignment without recourse of the related Mortgage to the Master Servicer; provided, that the Master Servicer shall not have received and not returned at any one time more than 10% of the entire number of Mortgage Files. The Indenture Trustee shall complete in the name of the Indenture Trustee any endorsement in blank on any Note prior to releasing such Mortgage Note to the Master Servicer or any Sub-Servicer. Such receipt shall obligate the Master Servicer or any Sub-Servicer to return the Mortgage File to the Indenture Trustee when the need therefor by the Master Servicer or any Sub-Servicer no longer exists 29 34 unless the Mortgage Loan shall be liquidated, in which case, upon receipt of the liquidation information, in physical or electronic form acceptable to the Master Servicer and the Indenture Trustee, a copy of the Master Servicer's Trust Receipt shall be released by the Indenture Trustee to the Master Servicer or any Sub-Servicer. (c) No costs associated with the procedures described in this Section 4.14 shall be an expense of the Trust. (d) The provisions set forth in paragraphs (a) and (b) may be superseded by any waiver of the Document Delivery Requirement as may be given by the Controlling Party and the Rating Agencies pursuant to Section 2.01(h) hereof. (e) Each Master Servicer's Trust Receipt may be delivered to the Indenture Trustee (i) via mail or courier, (ii) via facsimile or (iii) by such other means, including, without limitation, electronic or computer readable medium, as the Master Servicer and the Indenture Trustee shall mutually agree. The Indenture Trustee shall promptly release the related Mortgage File(s) no later than seven (7) Business Days of receipt of a properly completed Master Servicer's Trust Receipt or such shorter period as may be agreed upon by the Master Servicer and the Indenture Trustee. Receipt of a Master Servicer's Trust Receipt shall be authorization to the Indenture Trustee to release such Mortgage Files, provided, the Indenture Trustee has determined that such Master Servicer's Trust Receipt has been executed, with respect to clauses (i) or (ii) above, or approved, with respect to clause (iii) above, by an Authorized Officer of the Master Servicer or any Sub-Servicer, and so long as the Indenture Trustee complies with its duties and obligations under this Agreement. If the Indenture Trustee is unable to release the Mortgage Files within the time frames previously specified, the Indenture Trustee shall immediately notify the Master Servicer or any Sub-Servicer indicating the reason for such delay, but in no event shall such notification be later than five business days after receipt of a Master Servicer's Trust Receipt. If the Master Servicer is required to pay penalties or damages due solely to the Indenture Trustee's negligent failure to release the related Mortgage File or the Indenture Trustee's negligent failure to execute and release documents in a timely manner, the Indenture Trustee shall be liable for such penalties or damages. Section 4.15 Servicing Compensation. As compensation for its activities hereunder, the Master Servicer shall be entitled to retain the amount of the Servicing Fee with respect to each Mortgage Loan. Additional servicing compensation in the form of investment income on each Principal and Interest Account, the Capitalized Interest Account, and on the Note Account, prepayment charges, release fees, bad check charges, assumption fees, late payment charges, any other servicing-related fees, Net Liquidation Proceeds not required to be deposited in the Principal and Interest Account pursuant to Section 4.08(c)(iv) and similar items may, to the extent collected from Mortgagors, be retained by the Master Servicer. Section 4.16 Annual Statement as to Compliance. The Master Servicer, at its own expense, will deliver to the Indenture Trustee and the Note Insurer, on or before the last day of March of each year, commencing in the year 2000, an Officer's Certificate stating, as to each signer thereof, that (i) a review of the activities of the Master Servicer during such preceding calendar year and of performance under this Agreement has been made under such officers' supervision, and (ii) to the best of such officers' knowledge, based on such review, the Master 30 35 Servicer has fulfilled all its obligations under this Agreement for such year, or, if there has been a default in the fulfillment of all such obligations, specifying each such default known to such officers and the nature and status thereof including the steps being taken by the Master Servicer to remedy such defaults. Section 4.17 Annual Independent Certified Public Accountants' Reports. On or before the last day of March of each year, commencing in the year 2000, the Master Servicer, at its own expense, shall cause to be delivered to the Indenture Trustee and the Note Insurer a letter or letters of a firm of independent, nationally recognized certified public accountants reasonably acceptable to the Controlling Party stating that such firm has, with respect to the Master Servicer's overall servicing operations (i) performed applicable tests in accordance with the compliance testing procedures as set forth in Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees or (ii) examined such operations in accordance with the requirements of the Uniform Single Audit Program for Mortgage Bankers, and in either case stating such firm's conclusions relating thereto or (iii) examined such operations in accordance with the requirements of SAS 70. Section 4.18 Access to Certain Documentation and Information Regarding the Mortgage Loans. The Master Servicer shall provide to the Indenture Trustee, the Note Insurer, access to the documentation regarding the Mortgage Loans required by applicable state and federal regulations, such access being afforded without charge but only upon reasonable request and during normal business hours at the offices of the Master Servicer. Section 4.19 Assignment of Agreement. The Master Servicer may not assign its obligations under this Agreement, in whole or in part, unless it shall have first obtained the written consent of the Indenture Trustee and the Note Insurer, which such consent shall not be unreasonably withheld; provided, however, that any assignee must meet the eligibility requirements set forth in Section 5.01(g) hereof for a successor servicer; and provided, further, that this Section 4.19 does not apply to the appointment of Sub-Servicers or to the assignment to a Master Servicer Affiliate. Notice of any such assignment shall be given by the Master Servicer to the Indenture Trustee, the Note Insurer and each Rating Agency. Section 4.20 Inspections by the Note Insurer and the Indenture Trustee; Errors and Omissions Insurance. (a) At any reasonable time during business hours and from time to time upon five (5) Business Day's notice, the Note Insurer, the Indenture Trustee, or any agents or representatives thereof may inspect the Master Servicer's servicing operations and discuss the servicing operations of the Master Servicer with any of its officers or directors. The reasonable costs and expenses incurred by the Master Servicer in connection with any such examinations or discussions shall be paid by the Master Servicer. (b) The Master Servicer agrees to maintain errors and omissions coverage and a fidelity bond, each at least to the extent generally maintained by prudent mortgage loan servicers having servicing portfolios of a similar size. Section 4.21 Merger, Conversion, Consolidation or Succession to Business of Master Servicer. Any corporation into which the Master Servicer may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion 31 36 or consolidation to which the Master Servicer shall be a party, or any corporation succeeding to all or substantially all of the business of the Master Servicer, shall be the successor of the Master Servicer hereunder upon notice to the Note Insurer, without the execution or filing of any paper or any further act on the part of any of the parties hereto provided that such corporation is a housing and home finance institution, bank or mortgage servicing institution which has shareholders' equity of not less the $10,000,000, as determined in accordance with generally accepted accounting principles. Section 4.22 Notices to Noteholders. Upon any termination or appointment of a successor to the Master Servicer pursuant to this Article V, the Indenture Trustee shall give prompt written notice thereof to the Noteholders at their respective addresses appearing in the Note Register, the Note Insurer and each Rating Agency. Section 4.23 Notices of Material Events. The Master Servicer shall give prompt notice to the Note Insurer, the Indenture Trustee, and each Rating Agency of the occurrence of any of the following events: (a) Any default or any fact or event which results, or which with notice or the passage of time, or both, would result in the occurrence of a default by the Sponsor, or the Master Servicer under any Operative Document, or would constitute a material breach of a representation, warranty or covenant under any Operative Document, which default would have a material adverse effect on the Noteholders or the Note Insurer; (b) The submission of any claim or the initiation of any legal process, litigation or administrative or judicial investigation against the Sponsor, the Master Servicer or AMHC in any federal, state or local court or before any governmental body or agency, or before any arbitration board, or any such proceedings threatened by any governmental agency, which, if adversely determined, would have a material adverse effect upon any the Sponsor's, the Master Servicer's or AMHC's ability to perform its obligations under any Operative Document; (c) The commencement of any proceedings by or against the Sponsor, the Master Servicer or AMHC under any applicable bankruptcy, reorganization, liquidation, insolvency or other similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator, trustee or other similar official shall have been, or may be, appointed or requested for the Sponsor, the Master Servicer or AMHC; and (d) The receipt of notice from any agency or governmental body having authority over the conduct of any of the Sponsor's the Master Servicer's or the AMHC's business that the Sponsor, the Master Servicer or AMHC is to cease and desist, or to undertake any practice, program, procedure or policy employed by the Sponsor, the Master Servicer or AMHC in the conduct of the business of any of them, and such cessation or undertaking will materially adversely affect the conduct of the Sponsor's, the Master Servicer's or AMHC's business or its ability to perform under the Operative Documents or materially adversely affect the financial affairs of the Sponsor, the Master Servicer or AMHC. 32 37 ARTICLE V SERVICING TERMINATION Section 5.01 Events of Servicer Termination. (a) The Indenture Trustee, with the consent of the Note Insurer (or the Noteholders, if a Note Insurer Default shall have occurred and be continuing) may remove the Master Servicer upon the occurrence of any of the following events (each, an "Event of Servicing Termination"): (i) The Master Servicer shall fail to deliver to the Indenture Trustee any proceeds or required payment, which failure continues unremedied for five (5) Business Days following written notice to an Authorized Officer of the Master Servicer from the Indenture Trustee, the Note Insurer or from Noteholders evidencing Percentage Interests aggregating not less than 25%. (ii) The Master Servicer shall (A) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or similar entity with respect to itself or its property, (B) admit in writing its inability to pay its debts generally as they become due, (C) make a general assignment for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent, (E) commence a voluntary case under the federal bankruptcy laws of the United States of America or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding or (F) take corporate action for the purpose of effecting any of the foregoing; or (iii) If, without the application, approval or consent of the Master Servicer, a proceeding shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect of the Master Servicer an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian or similar entity with respect to the Master Servicer or of all or any substantial part of its assets, or other like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being contested by the Master Servicer in good faith, the same shall (A) result in the entry of an order for relief or any such adjudication or appointment or (B) continue undismissed or pending and unstayed for any period of seventy-five (75) consecutive days. (iv) The Master Servicer shall fail to perform any one or more of its obligations hereunder other than the obligations contemplated by subsection 5.01(i) above, and shall continue in default thereof for a period of sixty (60) days after notice by the Indenture Trustee or the Note Insurer of said failure; provided, however, that if the Master Servicer can demonstrate to the reasonable satisfaction of the Controlling Party that it is diligently pursuing remedial action, then the cure period may be extended with the written approval of the Controlling Party; or 33 38 (v) The Master Servicer shall fail to cure any breach of any of its representations and warranties set forth in Section 3.02 which materially and adversely affects the interests of the Noteholders or the Note Insurer for a period of thirty (30) days after the Master Servicer's discovery or receipt of notice thereof; provided, however, that if the Master Servicer can demonstrate to the reasonable satisfaction of the Controlling Party that it is diligently pursuing remedial action, then the cure period may be extended with the written approval of the Controlling Party. (b) The Note Insurer also may remove the Master Servicer as set forth in the Insurance Agreement or upon the occurrence of any of the following events: (i) upon the making of any Insured Payment; provided, however, that the Note Insurer shall have no right to remove the Master Servicer under this clause (i) if the Master Servicer can demonstrate to the reasonable satisfaction of the Note Insurer that such event was due to circumstances beyond the control of the Master Servicer; or (ii) the failure by the Master Servicer to make any required Servicing Advance; or (iii) the failure by the Master Servicer to perform any one or more of its material obligations hereunder or under the Insurance Agreement, which failure materially and adversely affects the interests of the Note Insurer and the Indenture Trustee; or (iv) the failure by the Master Servicer to make any required Delinquency Advance, any Special Advance or to pay any Compensating Interest; or (v) the occurrence of a Servicer Termination Loss Trigger or of a Servicer Termination Delinquency Trigger, as such terms are defined in the Insurance Agreement; or (vi) the enactment of any law by a legislative body that declares, or any finding or ruling by a court of competent jurisdiction, that the Insurance Agreement or this Agreement is not valid and binding on the Sponsor or the Master Servicer. provided, however, with respect to clause (iv), if the Master Servicer can demonstrate to the reasonable satisfaction of the Note Insurer that any such event was due to circumstances beyond the control of the Master Servicer, such event shall not be considered an event of termination of the Master Servicer; provided, further, however, that (x) prior to any removal of the Master Servicer by the Note Insurer pursuant to clauses (ii) or (iii) of this Section 5.01(b), the Master Servicer shall first have been given by the Note Insurer and by registered or certified mail, notice of the occurrence of one or more of the events set forth in clauses (ii) or (iii) above and the Master Servicer shall not have remedied, or shall not have taken actions satisfactory to the Note Insurer to remedy, such event or events within 30 days (60 days with respect to clause (iii)) after the Master Servicer's receipt of such notice (provided, however, that if the Master Servicer can demonstrate to the reasonable satisfaction of the Note Insurer 34 39 that it is diligently pursuing remedial action, then the cure period in each case may be extended with the written approval of the Note Insurer) and (y) in the event of the refusal or inability of the Master Servicer to make any required Delinquency Advance or Special Advance or to pay any Compensating Interest (as described in clause (iv)) or Monthly Remittance Amount, such removal shall be effective (without the requirement of any action on the part of the Note Insurer or of the Indenture Trustee) at 4:00 p.m. on the second Business Day following the day on which the Indenture Trustee or the Note Insurer notifies an Authorized Officer of the Master Servicer that a required Delinquency Advance or Special Advance or any Compensating Interest or Monthly Remittance Amount has not been received by the Indenture Trustee. Upon the Indenture Trustee's determination that a required Delinquency Advance or Special Advance or any Compensating Interest or Monthly Remittance Amount has not been made by the Master Servicer, the Indenture Trustee shall so notify in writing an Authorized Officer of the Master Servicer and the Note Insurer as soon as is reasonably practical. (c) The Master Servicer shall not resign from the obligations and duties hereby imposed on it, except upon determination that its duties hereunder are no longer permissible under applicable law or are in material conflict by reason of applicable law with any other activities carried on by it, the other activities of the Master Servicer so causing such a conflict being of a type and nature carried on by the Master Servicer at the date of this Agreement. Any such determination permitting the resignation of the Master Servicer shall be evidenced by an opinion of counsel to such effect which shall be delivered to the Indenture Trustee and the Note Insurer. (d) No removal or resignation of the Master Servicer shall become effective until the Indenture Trustee or a successor servicer shall have assumed the Master Servicer's responsibilities and obligations in accordance with this Agreement. If no successor servicer is available, the Indenture Trustee shall act as successor servicer and perform all of the obligations of this Agreement, including, without limitation, making Delinquency Advances, Servicing Advances and paying Compensating Interest; provided, however, that the Indenture Trustee will not be obligated to act as successor servicer if it is legally unable to perform its duties hereunder. (e) Upon removal or resignation of the Master Servicer, the Master Servicer also shall promptly deliver or cause to be delivered to a successor servicer or the Indenture Trustee all the books and records (including, without limitation, records kept in electronic form) that the Master Servicer has maintained for the Mortgage Loans, including all tax bills, assessment notices, insurance premium notices and all other documents as well as all original documents then in the Master Servicer's possession. (f) Any collections received by the Master Servicer after removal or resignation shall be endorsed by it to the Indenture Trustee and remitted directly and immediately to the Indenture Trustee or the successor Master Servicer. (g) Upon removal or resignation of the Master Servicer, the Indenture Trustee (x) may solicit bids for a successor servicer as described below, and (y) pending the appointment of a successor Master Servicer as a result of soliciting such bids, shall serve as Master Servicer. The Indenture Trustee shall, if it is unable to obtain a qualifying bid and is prevented by law 35 40 from acting as Master Servicer, appoint, or petition a court of competent jurisdiction to appoint, any housing and home finance institution, bank or mortgage servicing institution which has shareholders' equity of not less than $10,000,000, as determined in accordance with generally accepted accounting principles, and acceptable to the Note Insurer as the successor to the Master Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Master Servicer hereunder. The compensation of any successor servicer (including, without limitation, the Indenture Trustee) so appointed shall be the aggregate Servicing Fees, together with the other servicing compensation in the form of assumption fees, late payment charges or otherwise as provided in Sections 4.08 and 4.15; provided, however, that if the Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to pay to the Indenture Trustee at such time that the Indenture Trustee becomes such successor Master Servicer a fee of twenty-five dollars ($25.00) for each Mortgage Loan then included in the Trust Estate. The Indenture Trustee shall be obligated to serve as successor Master Servicer whether or not the $25.00 fee described in the preceding sentence is paid by the Sponsor, but shall in any event be entitled to receive, and to enforce payment of, such fee from the Sponsor. (h) In the event the Indenture Trustee solicits bids as provided above, the Indenture Trustee shall solicit, by public announcement, bids from housing and home finance institutions, banks and mortgage servicing institutions meeting the qualifications set forth above. Such public announcement shall specify that the successor Master Servicer shall be entitled to the compensation set forth in clause (g) above. Within thirty (30) days after any such public announcement, the Indenture Trustee shall negotiate and effect the sale, transfer and assignment of the servicing rights and responsibilities hereunder to the qualified party submitting the highest satisfactory bid. The Indenture Trustee shall deduct from any sum received by the Indenture Trustee from the successor to the Master Servicer in respect of such sale, transfer and assignment all costs and expenses of any public announcement and of any sale, transfer and assignment of the servicing rights and responsibilities hereunder. After such deductions, the remainder of such sum shall be paid by the Indenture Trustee to the Master Servicer at the time of such sale, transfer and assignment to the Master Servicer's successor. (i) The Indenture Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. The Master Servicer agrees to cooperate with the Indenture Trustee and any successor Master Servicer in effecting the termination of the Master Servicer's servicing responsibilities and rights hereunder and shall promptly provide the Indenture Trustee or such successor Master Servicer, as applicable, all documents and records reasonably requested by it to enable it to assume the Master Servicer's functions hereunder and shall promptly also transfer to the Indenture Trustee or such successor Master Servicer, as applicable, all amounts which then have been or should have been deposited in the Principal and Interest Account by the Master Servicer or which are thereafter received with respect to the Mortgage Loans. Neither the Indenture Trustee nor any other successor Master Servicer shall be held liable by reason of any failure to make, or any delay in making, any distribution hereunder or any portion thereof caused by (i) the failure of the Master Servicer to deliver, or any delay in delivering, cash, documents or records to it, or (ii) restrictions imposed by any regulatory authority having jurisdiction over the Master Servicer or (iii) any breaches of a predecessor Master Servicer. 36 41 (j) The Indenture Trustee or any other successor Master Servicer, upon assuming the duties of Master Servicer hereunder, shall immediately make all Delinquency Advances and pay all Compensating Interest which the Master Servicer has theretofore failed to remit with respect to the Mortgage Loans; provided, however, that if the Indenture Trustee is acting as successor Master Servicer, the Indenture Trustee shall only be required to make Delinquency Advances (including the Delinquency Advances required to be made by the predecessor Master Servicer but not so deposited) if, in the Indenture Trustee's reasonable good faith judgment, such Delinquency Advances will ultimately be recoverable from the related Mortgage Loans. (k) The Master Servicer that is being removed or is resigning shall give notice to the Mortgagors and to each Rating Agency of the transfer of the servicing to the successor. (l) The Indenture Trustee shall give notice to the Note Insurer, each Rating Agency and to the Note Owners of the occurrence of any event specified in Section 5.01(a) of which the Indenture Trustee has knowledge. (m) Notwithstanding anything herein to the contrary, upon termination of the Master Servicer hereunder, any liabilities of the Master Servicer which accrued prior to such termination shall survive such termination. ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER Section 6.01 Administrative Duties with Respect to the Indenture. The Master Servicer shall perform all its duties and the duties of the Trust pursuant to under the Indenture. In addition, the Master Servicer shall consult with the Owner Trustee as the Master Servicer deems appropriate regarding the duties of the Trust under the Indenture. The Master Servicer shall monitor the performance of the Trust. The Master Servicer shall prepare for execution by the Trust or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust to prepare, file or deliver pursuant to the Indenture. In furtherance of the foregoing, the Master Servicer shall take all necessary action that is the duty of the Trust to take pursuant to the Indenture. (a) Duties with Respect to the Trust. (i) In addition to the duties of the Master Servicer set forth in this Agreement or any of the Operative Documents, the Master Servicer shall perform such calculations and shall prepare for execution by the Trust or the Owner Trustee or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust or the Owner Trustee to prepare, file or deliver pursuant to this Agreement or any of the Operative Documents or under state and federal tax and securities laws, and at the request of the Owner Trustee shall take all appropriate action that it is the duty of the Trust to take pursuant to this Agreement or any of 37 42 the Operative Documents. In accordance with the directions of the Trust or the Owner Trustee, the Master Servicer shall administer, perform or supervise the performance of such other activities in connection with the Mortgage Loans (including the Operative Documents) as are not covered by any of the foregoing provisions and as are expressly requested by the Trust or the Owner Trustee and are reasonably within the capability of the Master Servicer. (ii) Notwithstanding anything in this Agreement or any of the Operative Documents to the contrary, the Master Servicer shall be responsible for promptly notifying the Owner Trustee and the Indenture Trustee in the event that any withholding tax is imposed on the Trust's payments (or allocations of income) with respect to the Notes as contemplated by this Agreement. Any such notice shall be in writing and specify the amount of any withholding tax required to be withheld by the Owner Trustee or the Indenture Trustee pursuant to such provision. (iii) Notwithstanding anything in this Agreement or the Operative Documents to the contrary, the Master Servicer shall be responsible for performance of the duties of the Trust or the Sponsor set forth in Section 5.01(a), (b), (c) and (d) of the Trust Agreement with respect to, among other things, accounting and reports with respect to the Notes. (iv) In carrying out the foregoing duties or any of its other obligations under this Agreement, the Master Servicer may enter into transactions with or otherwise deal with any of its Affiliates; provided, however, that the terms of any such transactions or dealings shall be in accordance with any directions received from the Trust (with the written consent of the Note Insurer) and shall be, in the Master Servicer's opinion, no less favorable to the Trust or the Note Insurer in any material respect. (b) Non-Ministerial Matters. With respect to matters that in the reasonable judgment of the Master Servicer are non-ministerial, the Master Servicer shall not take any action pursuant to this Article VI unless, the Master Servicer shall have notified the Owner Trustee and the Note Insurer of the proposed action and the Owner Trustee and the Note Insurer shall not have withheld consent or provided an alternative direction. For the purpose of the preceding sentence, "non-ministerial matters" shall include: (i) the amendment of or any supplement to the Indenture; (ii) the initiation of any claim or lawsuit by the Trust and the compromise of any action, claim or lawsuit brought by or against the Trust (other than in connection with the collection of the Mortgage Loans); (iii) the amendment, change or modification of this Agreement or any of the Operative Documents; (iv) the appointment of successor Note Registrars, successor Paying Agents and successor Indenture Trustees pursuant to the Indenture or the 38 43 appointment of Successor Servicers or the consent to the assignment by the Note Registrar, Note Paying Agent or Indenture Trustee of its obligations under the Indenture; and (v) the removal of the Indenture Trustee. (c) Exceptions. Notwithstanding anything to the contrary in this Agreement, except as expressly provided herein or in the other Operative Documents, the Master Servicer, in its capacity hereunder, shall not be obligated to, and shall not, (1) make any payments to the Noteholders under the Operative Documents, (2) sell the Trust Estate pursuant to Section 5.01 of the Indenture, (3) take any other action that the Trust directs the Master Servicer not to take on its behalf (unless the Note Insurer so directs) or (4) in connection with its duties hereunder assume any indemnification obligation of any other Person. (d) The Indenture Trustee or any successor Servicer shall not be responsible for any obligations or duties of the Master Servicer under this Section 6.01. Section 6.02 Records. The Master Servicer shall maintain appropriate books of account and records relating to services performed under this Agreement, which books of account and records shall be accessible for inspection by Trust and the Indenture Trustee at any time during normal business hours. Section 6.03 Additional Information to be Furnished to the Trust. The Master Servicer shall furnish to the Trust, the Indenture Trustee and the Note Insurer from time to time such additional information regarding the Mortgage Loans as the Trust, the Indenture Trustee and the Note Insurer shall reasonably request. ARTICLE VII MISCELLANEOUS Section 7.01 Compliance Certificates and Opinions. Upon any application or request by the Sponsor, the Note Insurer or the Noteholders to the Indenture Trustee to take any action under any provision of this Agreement, the Sponsor, the Note Insurer or the Noteholders, as the case may be, shall furnish to the Indenture Trustee a certificate stating that all conditions precedent, if applicable, provided for in this Agreement relating to the proposed action have been complied with, except that in the case of any such application or request as to which the furnishing of any documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate need be furnished. Section 7.02 Form of Documents Delivered to the Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other 39 44 matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate of an Authorized Officer of the Indenture Trustee may be based, insofar as it relates to legal matters, upon an opinion of counsel, unless such Authorized Officer knows, or in the exercise of reasonable care should know, that the opinion is erroneous. Any such certificate of an Authorized Officer of the Indenture Trustee or any opinion of counsel may be based, insofar as it relates to factual matter upon a certificate or opinion of, or representations by, one or more Authorized Officers of the Sponsor or of the Master Servicer, stating that the information with respect to such factual matters is in the possession of the Sponsor or of the Master Servicer, unless such Authorized Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any opinion of counsel may also be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Authorized Officer of the Indenture Trustee, stating that the information with respect to such matters is in the possession of the Indenture Trustee, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any opinion of counsel may be based on the written opinion of other counsel, in which event such opinion of counsel shall be accompanied by a copy of such other counsel's opinion and shall include a statement to the effect that such counsel believes that such counsel and the Indenture Trustee may reasonably rely upon the opinion of such other counsel. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 7.03 Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by the Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Sponsor and/or the Note Insurer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Indenture Trustee and the Trust, if made in the manner provided in this Section 7.03. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. 40 45 (c) The ownership of Notes shall be proved by the Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Noteholders shall bind the Noteholders issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Trust in reliance thereon, whether or not notation of such action is made upon such Notes. Section 7.04 Notices to Indenture Trustee. Any request, demand, authorization, direction, notice, consent, waiver or act of the Notes or other documents provided or permitted by this Agreement to be made upon, given or furnished to, or filed with the Indenture Trustee by any Notes, the Note Insurer or by the Sponsor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to and received by the Indenture Trustee at its corporate trust office as set forth in the Indenture. Section 7.05 Notices and Reports to Noteholders; Waiver of Notices. Where this Agreement provides for notice to Noteholders of any event or the mailing of any report to Noteholders, such notice or report shall be sufficiently given (unless otherwise herein expressly provided) if mailed, first-class postage prepaid, to each Noteholder affected by such event or to whom such report is required to be mailed, at the address of such Noteholder as it appears on the Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice or the mailing of such report. In any case where a notice or report to Noteholders is mailed in the manner provided above, neither the failure to mail such notice or report nor any defect in any notice or report so mailed to any particular Noteholder shall affect the sufficiency of such notice or report with respect to other Noteholders, and any notice or report which is mailed in the manner herein provided shall be conclusively presumed to have been duly given or provided. Where this Agreement provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Agreement, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. Where this Agreement provides for notice to any rating agency that rated any Notes, failure to give such notice shall not affect any other rights or obligations created hereunder. Section 7.06 Rules by Indenture Trustee and Sponsor. The Indenture Trustee may make reasonable rules for any meeting of Noteholders. The Sponsor may make reasonable rules and set reasonable requirements for its functions. 41 46 Section 7.07 Successors and Assigns. All covenants and agreements in this Agreement by any party hereto shall bind its successors and assigns, whether so expressed or not. Section 7.08 Severability. In case any provision in this Agreement or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 7.09 Benefits of Agreement. Nothing in this Agreement or in the Notes, expressed or implied, shall give to any Person, other than the Noteholders, the Note Insurer and the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 7.10 Legal Holidays. In any case where the date of any Payment Date, any other date on which any distribution to any Noteholder is proposed to be paid, or any date on which a notice is required to be sent to any Person pursuant to the terms of this Agreement shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Agreement) payment or mailing need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made or mailed on the nominal date of any such Payment Date, or such other date for the payment of any distribution to any Noteholder or the mailing of such notice, as the case may be, and no interest shall accrue for the period from and after any such nominal date, provided such payment is made in full on such next succeeding Business Day. Section 7.11 Governing Law. In view of the fact that Noteholders are expected to reside in many states and outside the United States and the desire to establish with certainty that this Agreement will be governed by and construed and interpreted in accordance with the law of a state having a well-developed body of commercial and financial law relevant to transactions of the type contemplated herein, this Agreement and each Note shall be construed in accordance with and governed by the laws of the State of New York applicable to agreements made and to be performed therein. Section 7.12 Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Section 7.13 Amendment. (a) The Indenture Trustee, the Sponsor and the Master Servicer, may at any time and from time to time, with the prior written consent of each other and of the Note Insurer but without the giving of notice to or the receipt of the consent of each other and of the Noteholders, and subject to Section 6.01(b) hereof amend this Agreement, and the Indenture Trustee shall consent to such amendment, for the purpose of (i) curing any ambiguity, or correcting or supplementing any provision hereof, which may be inconsistent with any other provision hereof or of the Operative Documents, or to add provisions hereto which are not inconsistent with the provisions hereof, or (ii) complying with the requirements of the Code and the regulations proposed or promulgated thereunder; provided, however, that any such action shall not, as evidenced by an opinion of counsel delivered to the Indenture Trustee, materially and adversely affect the interests of any Noteholder (without its written consent). 42 47 (b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any time and from time to time, with the prior written consent of each other party hereto and the Note Insurer but without the giving of notice to or the receipt of the consent of the Noteholders, and subject to Section 6.01(b) hereof, amend this Agreement, and the Indenture Trustee shall consent to such amendment, for the purpose of changing the definitions of "Specified Overcollateralization Amount"; provided, however, that no such change shall affect the weighted average life of the Notes (assuming an appropriate prepayment speed as determined by the Representative) by more than five percent (5%), as determined by the Representative. (c) This Agreement may also be amended by the Indenture Trustee, the Sponsor, and the Master Servicer at any time and from time to time, with the prior written approval of the Note Insurer and not less than a majority of the Percentage Interest represented by each the Notes then Outstanding, and subject to Section 6.01(b) hereof for the purpose of adding any provisions or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders hereunder; provided, however, that no such amendment shall (a) change in any manner the amount of, or change the timing of, payments which are required to be distributed to any Noteholder without the consent of the Noteholder, (b) reduce the aforesaid percentages of Percentage Interests which are required to consent to any such amendments or (c) result in a down-rating or withdrawal of any ratings then assigned to the Notes, without the consent of the Noteholders of the then Outstanding Notes. (d) The Note Insurer, the Noteholders, the Owner Trustee, the Indenture Trustee, and the Rating Agencies shall be provided with copies of any amendments to this Agreement, together with copies of any opinions or other documents or instruments executed in connection therewith. Section 7.14 The Note Insurer. The Note Insurer is a third-party beneficiary of this Agreement. Any right conferred to the Note Insurer shall be suspended during any period in which the Note Insurer is in default in its payment obligations under the Policy, except with respect to amendments to this Agreement pursuant to Section 7.13. During the continuance of a Note Insurer Default, the Note Insurer's rights hereunder shall vest in the Indenture Trustee on behalf of the Noteholders and shall be exercisable by the Noteholders of at least a majority in Percentage Interest of the Notes then Outstanding. At such time as the Notes are no longer Outstanding hereunder and the Note Insurer has been reimbursed for all Reimbursement Amounts to which it is entitled hereunder, under the Indenture and under the Insurance Agreement and the Policy has expired, the Note Insurer's rights hereunder shall terminate. Section 7.15 Notices. All notices hereunder shall be given as follows, until any superseding instructions are given to all other Persons listed below: The Indenture Trustee: Bankers Trust Company of California, N.A. 1761 E. St. Andrew Place Santa Ana, California 92705 Attention: Advanta 1999-4 43 48 Tel: (714) 247-6286 Fax: (714) 247-6475 The Sponsor: Advanta Conduit Receivables, Inc. 10790 Rancho Bernardo Road San Diego, California 92127 Tel: (858) 674-3317 Fax: (858) 674-3666 Attention: Structured Finance The Master Servicer: Advanta Mortgage Corp. USA 10790 Rancho Bernardo Road San Diego, California 92127 Tel: (858) 674-3317 Fax: (858) 674-3666 Attention: Investor Reporting The Note Insurer: Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: Structured Finance Department Advanta Mortgage Loan Trust 1999-4 In each case in which notice or other communication to the Note Insurer refers to an Event of Servicing Termination, a claim on the Policy or with respect to which failure on the part of the Note Insurer to respond shall be deemed to constitute consent or acceptance, then a copy of such notice or other communication should also be sent to the attention of the general counsel (fax no. 212-208-3558 and with the same confirmation number as stated above) and should be marked "URGENT MATERIAL ENCLOSED". 44 49 Moody's: Moody's Investors Service 99 Church Street New York, New York 10007 Attention: The Mortgage Monitoring Department Standard & Poor's: Standard & Poor's 55 Water Street New York, New York 10041 Attention: Manager, Structured Finance Operations Group Representative: Bear, Stearns & Co. Inc. 245 Park Avenue New York, New York 10167 Attention: Asset-Backed Securities Group The Trust: Advanta Mortgage Loan Trust 1999-4 c/o Wilmington Trust Company, as Owner Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Section 7.16 Limitation of Liability. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust Company, not individually or personally but solely as Owner Trustee of the Trust under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose for binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust Company individually or personally to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties to this Agreement and by any person claiming by, through or under them and (d) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaking by the Trust under this Agreement or any related documents. [Remainder of Page Intentionally Left Blank] 45 50 IN WITNESS WHEREOF, the Sponsor, the Trust, the Master Servicer, the Holding Trust and the Indenture Trustee have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, all as of the day and year first above written. ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By: /s/ Michael Coco ----------------------------------------- Name: Michael Coco Title: Vice President ADVANTA MORTGAGE CORP. USA as Master Servicer By: /s/ Michael Coco ----------------------------------------- Name: Michael Coco Title: Vice President ADVANTA MORTGAGE LOAN TRUST 1999-4, as the Trust By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee, By: /s/ Donald G. MacKelcan ----------------------------------------- Name: Donald G. MacKelcan Title: Vice President ADVANTA HOLDING TRUST 1999-4, as the Holding Trust By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee, By: /s/ Donald G. MacKelcan ----------------------------------------- Name: Donald G. MacKelcan Title: Vice President BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee By: /s/ Whitney Iger ----------------------------------------- Name: Whitney Iger Title: Assistant Vice President 51 SCHEDULE 1 SCHEDULE OF MORTGAGE LOANS 52 EXHIBIT A EVIDENCE OF THE ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNT Advanta Mortgage Loan Trust 1999-4 c/o Wilmington Trust Company, as Owner Trustee One Rodney Square Wilmington, Delaware 19801 Ladies & Gentlemen: In accordance with Section 8.03 of the Indenture, dated as of November 1, 1999, among Advanta Mortgage Loan Trust 1999-4 and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee"), please be advised that the Indenture Trustee has caused the following Principal and Interest Account to be established in the name of the Indenture Trustee for the benefit of the Noteholders: Principal and Interest Account # Institution ________________________________ ___________ ________________________________ ___________ Very truly yours, BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee By: ______________________________ Name: Title: Dated: November 17, 1999 A-1 53 EXHIBIT B FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT Bankers Trust Company of California, N.A., a national banking association, in its capacity as indenture trustee (the "Indenture Trustee") under that certain Sale and Servicing Agreement dated as of November 1, 1999 (the "Sale and Servicing Agreement") by and among Advanta Mortgage Loan Trust 1999-4, Advanta Conduit Receivables, Inc., a Nevada corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware corporation, as master servicer, Advanta Holding Trust 1999-4, as holding trust and the Indenture Trustee, hereby acknowledges receipt of the items delivered to it by the Sponsor with respect to the Mortgage Loans listed on Schedule 1 of the Sale and Servicing Agreement, except as set forth on the exception report (the "Exception Report") attached hereto. The Indenture Trustee hereby additionally acknowledges that it shall review such items (i) to confirm that an original Note is contained in the file within 10 Business Days after the Startup Day and (ii) as required by Section 2.02(a) of the Sale and Servicing Agreement, during the period specified therein, and shall otherwise comply with Section 2.02(b) of the Sale and Servicing Agreement as required thereby. BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee By:_________________________________ Name: Title: Dated: _______________________ B-1 54 SCHEDULE TO EXHIBIT B EXCEPTION REPORT B-2 55 EXHIBIT C FORM OF INDENTURE TRUSTEE'S CERTIFICATION WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company of California, N.A., a national banking association, acting in its capacity as indenture trustee (the "Indenture Trustee") of a certain pool of mortgage loans (the "Pool") heretofore conveyed in trust to the Trustee, pursuant to that certain Sale and Servicing Agreement dated as of November 1, 1999 (the "Sale and Servicing Agreement") by and among Advanta Mortgage Loan Trust 1999-4, Advanta Conduit Receivables, Inc., a Nevada corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware corporation, as master servicer, Advanta Holding Trust 1999-4, as holding trust and the Indenture Trustee; and WHEREAS, the Indenture Trustee is required, pursuant to Section 2.02(a) of the Sale and Servicing Agreement, to review the Mortgage Files relating to the Pool within a specified period following the Startup Day and to notify the Sponsor promptly of any defects with respect to the Pool, and the Sponsor is required to remedy such defects or take certain other action, all as set forth in Section 2.02(b) of the Sale and Servicing Agreement; and WHEREAS, Section 2.02(a) of the Sale and Servicing Agreement requires the Indenture Trustee to deliver this Certification upon the satisfaction of certain conditions set forth therein. NOW, THEREFORE, it has determined that all required documents (or certified copies of documents listed in Section 2.01 of the Sale and Servicing Agreement) have been executed or received, and that such documents relate to the Initial Mortgage Loans identified in the Schedules of Mortgage Loans pursuant to Section 2.01(a) of the Sale and Servicing Agreement. In the event that such documents have not been executed and received or do not relate to the Initial Mortgage Loans, any remedial action by the Sponsor pursuant to Section 2.02(b) of the Sale and Servicing Agreement has been completed. The Indenture Trustee makes no certification hereby, however, with respect to any intervening assignments or assumption and modification agreements. BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as indenture trustee By: ______________________________________ Name: Title: C-1 56 EXHIBIT D FORM OF MASTER SERVICER'S TRUST RECEIPT To: Bankers Trust Company of California, N.A. 7601 E. St. Andrew Place Santa Ana, California 92705 Attn: Corporate Trust Date: In connection with the administration of the Mortgage Loans held by you as Indenture Trustee under a certain Sale and Servicing Agreement dated as of November 1, 1999 by and among Advanta Mortgage Loan Trust 1999-4, Advanta Holding Trust 1999-4, Advanta Mortgage Corp. USA, as master servicer (the "Master Servicer"), Advanta Conduit Receivables, Inc., as sponsor, and you, as indenture trustee (the "Agreement"), the Master Servicer hereby requests a release of the Mortgage File held by you as Indenture Trustee with respect to the following Mortgage Loan for the reason indicated below: Mortgagor's Name: Loan No.: Reason for requesting file: _______ 1. Mortgage Loan paid in full. (The Master Servicer hereby certifies that all amounts received in connection with the loan have been or will be credited to the Note Account (whichever is applicable) pursuant to the Agreement.) _______ 2. Mortgage Loan repurchased pursuant to Section 2.02(b), 3.03, 3.04, or 4.10 of the Agreement. (The Master Servicer hereby certifies that the Loan Purchase Price has been or will be paid to the Note Account pursuant to the Agreement.) _______ 3. Mortgage Loan substituted. (The Master Servicer hereby certifies that a Qualified Replacement Mortgage Loan has been or will be assigned and delivered to you along with the related Mortgage File pursuant to the Agreement.) D-1 57 _______ 4. The Mortgage Loan is being foreclosed. _______ 5. Other. (Describe) The undersigned acknowledges that the above Mortgage File will be held by the Master Servicer in accordance with the provisions of the Agreement and will be returned to you, unless the Mortgage Loan has been (i) paid in full, (ii) repurchased, (iii) substituted by a Qualified Replacement Mortgage (in which case the Mortgage File will be retained by us permanently) or (iv) is being foreclosed, in which case the Mortgage File will be returned when no longer required by us for such purpose. Capitalized terms used herein shall have the meanings ascribed to them in the Agreement. ADVANTA MORTGAGE CORP. USA By__________________________ Name: Title: D-2 58 EXHIBIT E FORM OF LOST NOTE AFFIDAVIT AFFIDAVIT OF LOST NOTE Loan # : Note Date: Current Borrower(s) : I, ___________________, being duly sworn, do hereby state under oath that: 1. I, as [Title] of _________________ (the "Lender"), am authorized to make this affidavit. 2. The Lender is the payee under the mortgage note ("Note"). A mortgage/deed of trust ("Security Instrument") signed by the Borrower(s) refers to the note made of even date. The Security Instrument is attached as Exhibit 1. 3. The Lender is the lawful owner of the Note and has good title to the Note and has the right to convey good title thereto, and the Lender has not canceled, altered, assigned or hypothecated the Note except to the Sponsor and the Indenture trustee. 4. The Note was not located after a thorough and diligent search which consisted of the following actions: Searching of all servicing and collateral loan files Querying the loan servicing employees 5. Attached hereto as Exhibit 1 is a true and correct copy of the Security Instrument with an original note endorsement in blank by Lender. 6. This Affidavit is intended to be relied on by [Advanta entity], its successors, and assigns. 7. Following the assignment of the Note to the Indenture trustee, the Indenture trustee will be entitled to enforce the Note pursuant to Section 3-309 of the Uniform Commercial Code. Executed this ___ day of ______, _____, on behalf of the Lender by: By: ____________________________ Name: Title: E-1 59 ON THIS ____ DAY OF ____________, _____, BEFORE ME APPEARED _____________________________, to me personally known, who being duly sworn did say that he is the [Title] of ___________________________, and that said Affidavit of Lost Note was signed and sealed in behalf of such corporation as Lender and said __________________________ acknowledged this instrument to be the free act and deed of said corporation. ________________________________________________________________ Notary Public in and for the State of ____________ My commission expires _____________________________________ E-2 60 EXHIBIT F SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, _____________, ______________ of Advanta Conduit Receivables, Inc. (the "Sponsor"), do hereby constitute and appoint Bankers Trust Company of California, N.A., as the true and lawful attorney, for the Sponsor and in its name, place and stead, to record the assignments of mortgage with respect to the Mortgage Loans transferred to the Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee"), under that Sale and Servicing Agreement dated as of November 1, 1999 by and among the Advanta Mortgage Loan Trust 1999-4 (the "Trust"), Advanta Holding Trust (the "Holding Trust"), the Sponsor, the Indenture Trustee and Advanta Mortgage Corp. USA, as master servicer, and to do and perform all other things and acts relating to such assignments of mortgage as may be necessary to effectuate the transfer of such Mortgage Loans to the Indenture trustee, including the execution and delivery of new assignments of mortgage where necessary to comply with applicable real estate recording laws at the time of recordation. This power of attorney is irrevocable and is coupled with an interest in the Mortgage Loans, and it may at all times be relied upon by any person, firm or corporation dealing with the attorney named herein as remaining in full force and effect, and such person, firm or corporation shall have no liability to the Sponsor with respect thereto. WITNESS the following signature this ____ day of ___________ _____. ______________________________ By: __________________________ Name: ________________________ Title: _______________________ STATE OF PENNSYLVANIA COUNTY OF MONTGOMERY I, _____________, a Notary Public in and for the jurisdiction aforesaid, do hereby certify that _______________, who acknowledged himself to be the _______________ of Advanta Conduit Receivables, Inc., a Nevada corporation, personally appeared before me in the jurisdiction aforesaid and that he as such ______________ executed the foregoing instrument on behalf of said corporation for the purposes therein contained. Witness my hand and official seal this _____ day of _________________. ____________________________ (SEAL) Notary Public My Commission Expires: F-1 61 EXHIBIT G FORM OF SUBSEQUENT TRANSFER AGREEMENT SUBSEQUENT TRANSFER AGREEMENT Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-4, Advanta Mortgage Loan Trust 1999-4, and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee"), of the Advanta Mortgage Loan Trust 1999-4 (the "Trust"), pursuant to the Sale and Servicing Agreement dated as of November 1, 1999 among Advanta Mortgage Loan Trust 1999-4, Advanta Mortgage Corp. USA, as master servicer (the "Master Servicer"), Advanta Holding Trust 1999-4, the Sponsor and the Indenture trustee (the "Sale and Servicing Agreement"), hereby confirm their understanding with respect to the acquisition by the Trust of those Mortgage Loans listed on the attached Schedule of Mortgage Loans (the "Subsequent Mortgage Loans"). Conveyance of Subsequent Mortgage Loans. The Sponsor does hereby irrevocably transfer, assign, set over and otherwise convey to the Holding Trust, and the Holding Trust does hereby irrevocably transfer, assign, set over and otherwise convey to the Trust, without recourse (except as otherwise explicitly provided for herein) all of their respective right, title and interest in and to the Subsequent Mortgage Loans listed on the attached Schedule of Mortgage Loans, including specifically, without limitation, the Mortgages, the Mortgage Files and all other documents, materials and properties appurtenant thereto, including all principal collected and interest accrued on or after __________, _____ (the "Subsequent Cut-Off Date") and any Mortgage Insurance Policies relating thereto. The Sponsor shall deliver or cause to be delivered the original Mortgage or Mortgage assignment with evidence of recording thereon (except as otherwise provided by the Sale and Servicing Agreement) and other required documentation in accordance with the terms set forth in Section 2.04(b) of the Sale and Servicing Agreement. The costs relating to the delivery of the documents specified in this Subsequent Transfer Agreement and the Sale and Servicing Agreement shall be borne by the Sponsor. The Sponsor hereby affirms the representations and warranties set forth in the Sale and Servicing Agreement that relate to itself and to the Subsequent Mortgage Loans as of the date hereof. All terms and conditions of the Sale and Servicing Agreement are hereby ratified, confirmed and incorporated herein; provided that in the event of any conflict, the provisions of this Subsequent Transfer Agreement shall control over the conflicting provisions of the Sale and Servicing Agreement. G-1 62 Terms and capitalized and not defined herein shall have their respective meanings as set forth in the Sale and Servicing Agreement. IN WITNESS WHEREOF, the parties have executed this Subsequent Transfer Agreement as of this ____ day of ____________, ______. ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By: _______________________________________ Name: Title: ADVANTA MORTGAGE LOAN TRUST 1999-4 By: Wilmington Trust Company not in its individual capacity but solely as Owner Trustee By: _______________________________________ Name: Title: ADVANTA HOLDING TRUST 1999-4 By: Wilmington Trust Company not in its individual capacity but solely as Owner Trustee By: _______________________________________ Name: Title: G-2 63 BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee By: _______________________________________ Name: Title: Dated: Attachments A. Addition Notice. B. Schedule of Mortgage Loans. C. Officer's Certificate. D. Indenture Trustee's Certificate. E. Conveyance Agreement. G-3 EX-4.5 7 CERTIFICATE INSURANCE AGREEMENT 1 Exhibit 4.5 Ambac Assurance Corporation c/o CT Corporation 44 East Mifflin Street, Madison, Wisconsin 53703 Administrative Office: One State Street Plaza, New York, New York 10004 Telephone: (212) 668-0340 AMBAC CERTIFICATE GUARANTY INSURANCE POLICY Insured Obligations: $200,000,000 Policy Number: AB0317BE Advanta Mortgage Loan Trust 1999-4 Mortgage Loan Asset-Backed Notes, Series 1999-4 Premium: Calculated as set forth in Certificate Guaranty Insurance Policy Endorsement attached hereto and made a part hereof AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in consideration of the payment of the premium and subject to the terms of this Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for the benefit of the Holders of the Insured Obligations, that portion of the Insured Amounts which shall become Due for Payment but shall be unpaid by reason of Nonpayment. Ambac will make such payments to the Trustee from its own funds on the later of (a) one (1) Business Day following notification to Ambac of Nonpayment or (b) the Business Day on which the Insured Amounts are Due for Payment. Such payments of principal or interest shall be made only upon presentation of an instrument of assignment in form and substance satisfactory to Ambac, transferring to Ambac all rights under such Insured Obligations to receive the principal of and interest on the Insured Obligation. Ambac shall be subrogated to all the Holders' rights to payment on the Insured Obligations to the extent of the insurance disbursements so made. Once payments of the Insured Amounts have been made to the Trustee, Ambac shall have no further obligation hereunder in respect of such Insured Amounts. In the event the Trustee for the Insured Obligations has notice that any payment of principal or interest on an Insured Obligation which has become Due for Payment and which is made to a Holder by or on behalf of the Trustee has been deemed a preferential transfer and theretofore recovered from its Holder pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such Holder will be entitled to payment from Ambac to the extent of such recovery if sufficient funds are not otherwise available. This Policy is noncancelable by Ambac for any reason, including failure to receive payment of any premium due hereunder. The premium on this Policy is not refundable for any reason. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may become due in respect of any Insured Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment, including failure of the Trustee to make any payment due Holders of Insured Amounts. To the fullest extent permitted by applicable law, Ambac hereby waives and agrees not to assert any and all rights and defenses, to the extent such rights and defenses may be available to Ambac, to avoid payment of its obligations under this Policy in accordance with the express provisions hereof. Any capitalized terms not defined herein shall have the meaning given such terms in the endorsement attached hereto or in the Agreement. In witness whereof, Ambac has caused this Policy to be affixed with its corporate seal and to be signed by its duly authorized officers in facsimile to become effective as their original signatures and binding upon Ambac by virtue of the countersignature of its duly authorized representative. /s/ P. Lassiter /s/ Stephen D. Cooke - ----------------------------- -------------------------------- President Secretary /s/ [Authorized Representative] -------------------------------- Effective Date: November 17, 1999 Authorized Representative EX-10.1 8 INDEMNIFICATION AGREEMENT 1 Exhibit 10.1 AMBAC ASSURANCE CORPORATION, BEAR, STEARNS & CO. INC. and SG COWEN SECURITIES CORPORATION INDEMNIFICATION AGREEMENT ADVANTA MORTGAGE LOAN TRUST 1999-4 Dated as of November 5, 1999 2 TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and shall not be deemed to be part of this Indemnification Agreement. All capitalized terms used in this Indemnification Agreement and not otherwise defined shall have the meanings set forth in Article I of this Indemnification Agreement.)
Page ---- Section 1. Defined Terms 1 Section 2. Other Definitional Provisions 1 Section 3. Representations, Warranties and Covenants of the Underwriters. 2 Section 4. Representations and Warranties of the Note Insurer 2 Section 5. Indemnification. 3 Section 6. Amendments, Etc. 5 Section 7. Notices. 5 Section 8. Severability. 6 Section 9. Governing Law. 6 Section 10. Counterparts. 6 Section 11. Headings. 6
3 INDEMNIFICATION AGREEMENT dated as of November 5, 1999 (the "Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Note Insurer, and BEAR, STEARNS & CO. INC. and SG COWEN SECURITIES CORPORATION (the "Underwriters"). Section 1. Defined Terms. Unless the context clearly requires otherwise, all capitalized terms used but not defined herein shall have the respective meanings assigned to them in Annex A to the Sale and Servicing Agreement, the Insurance Agreement or the Policy. For purposes of this Indemnification Agreement, the following terms shall have the following meanings: "Indenture" means the Indenture (as may be amended or supplemented from time to time) dated as of November 1, 1999, by and among Advanta Mortgage Loan Trust 1999-4, as Trust and Bankers Trust Company of California, N.A., as Indenture Trustee. "Insurance Agreement" means the Insurance and Indemnity Agreement (as may be amended, modified or supplemented from time to time) dated as of November 17, 1999 by and among the Note Insurer, Advanta Conduit Receivables, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta Holding Trust 1999-4, the Trust, as Issuer and Bankers Trust Company of California, N.A., as Trustee. "Note Insurer" means Ambac Assurance Corporation, or any successor thereto, as issuer of the Policy. "Note Insurer Information" has the meaning given such term in Section 4. "Notes" means any of the Notes substantially in the form set forth in Exhibit A to the Indenture. "Offering Document" means the Prospectus Supplement, dated November 5, 1999, in respect of the Notes, and any amendment or supplement thereto, and any other offering document in respect of the Notes that makes reference to the Policy. "Sale and Servicing Agreement" means the Sale and Servicing Agreement, dated as of November 1, 1999, by and among the Trust, Advanta Holding Trust 1999-4, the Sponsor, the Master Servicer and the Indenture Trustee (as may be amended, modified or supplemented from time to time as set forth therein). "Securities Act" means the Securities Act of 1933, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time. "Securities Exchange Act" means the Securities Exchange Act of 1934, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time. 4 "Underwriters" means Bear, Stearns & Co. Inc. and SG Cowen Securities Corporation, severally. 5 "Underwriters' Information" has the meaning given such term in Section 3. Section 2. Other Definitional Provisions. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Indemnification Agreement shall refer to this Indemnification Agreement as a whole and not to any particular provision of this Indemnification Agreement, and Section, subsection, Schedule and Exhibit references are to this Indemnification Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The words "include" and "including" shall be deemed to be followed by the phrase "without limitation." Section 3. Representations, Warranties and Covenants of the Underwriters. Each Underwriter severally represents, warrants and covenants as of the Closing Date as follows: () Compliance With Laws. Such Underwriter will comply in all material respects with all legal requirements in connection with offers and sales of the Notes and will make such offers and sales in the manner to be provided in the Offering Document. (b) Offering Document. Such Underwriter will not use, or distribute to other broker-dealers for use, any Offering Document in connection with the offer and sale of the Notes unless such Offering Document includes such information relating to the Note Insurer as has been furnished by the Note Insurer for inclusion therein and has been approved by the Note Insurer. (c) Underwriters' Information. All material provided by the Underwriters for inclusion in the Offering Document (as revised from time to time), shall be true and correct in all material respects, it being understood and agreed that the only such information furnished by the Underwriters consists of the following information (collectively, the "Underwriters' Information"): the information regarding the Underwriters contained under the heading "Underwriting" in the Offering Document. Section 4. Representations and Warranties of the Note Insurer. The Note Insurer represents and warrants to each Underwriter as follows: () Organization and Licensing. The Note Insurer is a duly organized and licensed and validly existing Wisconsin stock insurance company duly qualified to conduct an insurance business in the State of New York. () Corporate Power. The Note Insurer has the corporate power and authority to issue the Policy and execute this Indemnification Agreement and to perform all of its obligations hereunder and thereunder. 6 () Authorization; Approvals. Proceedings legally required for the issuance of the Policy and the execution, delivery and performance of this Indemnification Agreement have been taken and all material licenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally required for the enforceability of the Policy have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceability of the Policy. () Enforceability. The Policy, when issued, and this Indemnification Agreement will each constitute a legal, valid and binding obligation of the Note Insurer, enforceable in accordance with its terms, subject to insolvency, reorganization, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity and subject to principles of public policy limiting the right to enforce the indemnification provisions contained therein and herein, insofar as such provisions relate to indemnification for liabilities arising under federal securities laws. () Financial Information. The consolidated financial statements of the Note Insurer and subsidiaries as of December 31, 1998 and December 31, 1997, and for each of the years in the three-year period ended December 31, 1998, prepared in accordance with generally accepted accounting principles, included in the Annual Report on Form 10-K of Ambac Financial Group, Inc. (which was filed with the Commission on March 30, 1999; Commission File Number 1-10777) and the unaudited consolidated financial statements of the Note Insurer and subsidiaries as of June 30, 1999 and for the periods ending June 30, 1999 and June 30, 1998 included in the Quarterly Report on Form 10-Q of Ambac Financial Group, Inc. for the period ended June 30, 1999 (which was filed with the Commission on August 13, 1999), which are incorporated by reference in the Offering Document, fairly present in all material respects the financial condition of the Note Insurer as of such dates and for the periods covered by such statements in accordance with generally accepted accounting principles consistently applied. Since June 30, 1999, there has been no material change in such financial condition of the Note Insurer that would materially and adversely affect its ability to perform its obligations under the Policy. () Note Insurer Information. The information in the Offering Document as of the date hereof under the captions "The Note Insurer" and "The Policy" (together, the "Note Insurer Information") is true and correct in all material respects and does not contain any untrue statement of a material fact. () Rating. The Note Insurer is not aware of any facts that if disclosed to Moody's or S&P would be reasonably expected to result in a downgrade of the rating of the financial strength of the Note Insurer by either of such Rating Agencies. () No Litigation. There are no actions, suits, proceedings or investigations pending or, to the best of the Note Insurer's knowledge, threatened against it at law or in equity or before or by any court, governmental agency, board or commission or any 7 arbitrator which, if decided adversely, would result in a Material Adverse Change or would materially and adversely affect its ability to perform its obligations under the Policy or this Indemnification Agreement. () 1933 Act Registration. The Policy is exempt from registration under the Securities Act. Section 5. Indemnification. (a) The Underwriters hereby severally agree to pay, and to protect, indemnify and save harmless, the Note Insurer and its officers, directors, shareholders, employees, agents and each Person, if any, who controls the Note Insurer within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act from and against, any and all claims, losses, liabilities (including penalties), actions, suits, judgments, demands, damages, costs or expenses (including reasonable fees and expenses of attorneys, consultants and auditors and reasonable costs of investigations) of any nature arising out of or by reason of any untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading, contained in the Underwriters' Information or a breach of any of the representations, warranties and covenants of the Underwriters contained in Section 3. (b) The Note Insurer agrees to pay, and to protect, indemnify and save harmless, each Underwriter and their respective officers, directors, shareholders, employees, agents and each Person, if any, who controls either of such Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act from and against, any and all claims, losses, liabilities (including penalties), actions, suits, judgments, demands, damages, costs or expenses (including reasonable fees and expenses of attorneys, consultants and auditors and reasonable costs of investigations) of any nature arising out of or by reason of any untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading, contained in the Note Insurer Information or a breach of any of the representations and warranties of the Note Insurer contained in Section 4. (c) If any action or proceeding (including any governmental investigation) shall be brought or asserted against any Person (individually, an "Indemnified Party" and, collectively, the "Indemnified Parties") in respect of which the indemnification provided in this Section 5(a) or (b) may be sought from either of the Underwriters, on the one hand, or the Note Insurer, on the other (each, an "Indemnifying Party") hereunder, each such Indemnified Party shall promptly notify the Indemnifying Party in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all expenses. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the expense of the Indemnified Party; 8 provided, however, that the fees and expenses of such separate counsel shall be at the expense of the Indemnifying Party if (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) the Indemnifying Party shall have failed to assume the defense of such action or proceeding and employ counsel reasonably satisfactory to the Indemnified Party in any such action or proceeding or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party, and the Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party (in which case, if the Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for the Indemnified Parties, which firm shall be designated in writing by the Indemnified Party). The Indemnifying Party shall not be liable for any settlement of any such action or proceeding effected without its written consent to the extent that any such settlement shall be prejudicial to the Indemnifying Party, but, if settled with its written consent, or if there is a final judgment for the plaintiff in any such action or proceeding with respect to which the Indemnifying Party shall have received notice in accordance with this subsection (c), the Indemnifying Party agrees to indemnify and hold the Indemnified Parties harmless from and against any loss or liability by reason of such settlement or judgment. (d) To provide for just and equitable contribution if the indemnification provided by the Indemnifying Party is determined to be unavailable or insufficient to hold harmless any Indemnified Party (other than due to application of this Section), each Indemnifying Party shall contribute to the losses incurred by the Indemnified Party on the basis of the relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand provided, that neither of the Underwriters shall be liable for any amount in excess of (i) the excess of the sales prices of the Notes to the public over the prices paid therefor by the Underwriters over (ii) the aggregate amount of any damages which the Underwriters have otherwise been required to pay in respect of the same or any substantially similar claim. The relative fault of each Indemnifying Party, on the one hand, and each Indemnified Party, on the other, shall be determined by reference to, among other things, whether the breach of, or alleged breach of, any of its representations, warranties or covenants set forth herein was within the control of, the Indemnifying Party or the Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such breach. 9 No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Section 6. Amendments, Etc. This Indemnification Agreement may be amended, modified, supplemented or terminated only by written instrument or written instruments signed by the parties hereto. Section 7. Notices. All demands, notices and other communications to be given hereunder shall be in writing (except as otherwise specifically provided herein) and shall be mailed by registered mail or personally delivered and telecopied to the recipient as follows: (a) To the Note Insurer: Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: Structured Finance Department - MBS Telecopy No.: 212-363-1459 Confirmation: 212-668-0340 (b) To the Representative of the Underwriters: Bear, Stearns & Co. Inc. 245 Park Avenue, 4th Floor New York, New York 10167 Attention: Asset-Backed Securities Group Telecopy No.: 212-272-7294 Confirmation: 212-272-2000 A party may specify an additional or different address or addresses by writing mailed or delivered to the other parties as aforesaid. All such notices and other communications shall be effective upon receipt. Section 8. Severability. In the event that any provision of this Indemnification Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, the parties hereto agree that such holding shall not invalidate or render unenforceable any other provision hereof. The parties hereto further agree that the holding by any court of competent jurisdiction that any remedy pursued by any party hereto is unavailable or unenforceable shall not affect in any way the ability of such party to pursue any other remedy available to it. Section 9. Governing Law. This Indemnification Agreement shall be governed by and construed in accordance with the laws of the State of New York. 10 Section 10. Counterparts. The Indemnification Agreement may be executed in counterparts by the parties hereto, and all such counterparts shall constitute one and the same instrument. Section 11. Headings. The headings of Sections and the Table of Contents contained in this Indemnification Agreement are provided for convenience only. They form no part of this Indemnification Agreement and shall not affect its construction or interpretation. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 11 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement, all as of the day and year first above mentioned. AMBAC ASSURANCE CORPORATION, as Note Insurer By: /s/ Thomas J. Adams ------------------------------------- Name: Thomas J. Adams --------------------------------- Title: First Vice President --------------------------------- BEAR, STEARNS & CO. INC. By: /s/ Thomas S. Dunstan ------------------------------------- Name: Thomas S. Dunstan --------------------------------- Title: Managing Director --------------------------------- SG COWEN SECURITIES CORPORATION By: /s/ Edward A. Lascala ------------------------------------- Name: Edward A. Lascala --------------------------------- Title: Director --------------------------------- EX-10.2 9 GUARANTY: AMBAC & BEAR, STEARNS & CO. INC. 1 As of November 17, 1999 Exhibit 10.2 Bear, Stearns & Co., Inc. 245 Park Avenue New York, New York 10167 (as Representative of the Underwriters) Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Re: Advanta Mortgage Loan Trust 1999-4 Underwriting Agreement and Insurance Agreement Ladies and Gentlemen: Pursuant to the Underwriting Agreement dated November 5, 1999 (the "Underwriting Agreement") between Advanta Conduit Receivables, Inc. (the "Sponsor" or "ACRI") and Bear, Stearns & Co., Inc., as representative of the underwriters named therein (the "Underwriters"), and the Insurance and Indemnity Agreement dated November 17, 1999 (the "Insurance Agreement" and together with the Underwriting Agreement, the "Designated Agreements") among the Sponsor, Advanta Mortgage Corp. USA, Advanta Holding Trust 1999-4, Advanta Mortgage Loan Trust 1999-4 and Ambac Assurance Corporation (the "Insurer"), ACRI has undertaken certain financial obligations with respect to the indemnification of the Underwriters and of the Note Insurer with respect to the Registration Statement, the Prospectus and the Prospectus Supplement described in the Designated Agreements. Any financial obligations of ACRI under the Designated Agreements, whether or not specifically enumerated in this paragraph, are hereinafter referred to as the "Joint and Several Obligations"; provided, however, that "Joint and Several Obligations" shall mean only the financial obligations of ACRI under the Designated Agreements (including the payment of money damages for a breach of any of ACRI's obligations under the Designated Agreements, whether financial or otherwise) but shall not include any obligations not relating to the payment of money. As a condition of their respective executions of the Underwriting Agreement and of the Insurance Agreement, the Underwriters and the Note Insurer have required the undersigned, Advanta Mortgage Holding Company ("AMHC"), the indirect parent corporation of ACRI, to acknowledge its joint-and-several liability with ACRI for the payment of the Joint and Several Obligations under the Designated Agreements. Now, therefore, the Representative, the Note Insurer and AMHC do hereby agree that: 2 AMHC hereby agrees to be absolutely and unconditionally jointly and severally liable with ACRI to the Underwriters for the payment of the Joint and Several Obligations under the Underwriting Agreement. AHMC hereby agrees to be absolutely and unconditionally and jointly and severally liable with ACRI to the Insurer for payment of the Joint and Several Obligations under the Insurance Agreement. AMHC may honor its obligations hereunder either by direct payment of any Joint and Several Obligations or by causing any Joint and Several Obligations to be paid to the Underwriters or to the Insurer, by ACRI or another affiliate of AMHC. Capitalized terms used herein and not defined herein shall have their respective meanings set forth in the Designated Agreements. This letter and the respective obligations and rights hereunder and thereunder shall not be delegated or assigned by you without the prior written consent of the Insurer. This letter may not be amended or otherwise modified except pursuant to a writing signed by each of the parties hereto. This letter may be executed by the signatories hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same letter. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF OR IN CONNECTION WITH, THIS LETTER, AND ANY OTHER COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH. 2 3 Capitalized terms used herein and not defined herein shall have their respective meanings as set forth in the Designated Agreement. Very truly yours, ADVANTA MORTGAGE HOLDING COMPANY By: /s/ Michael Coco ------------------------------------- Authorized Signatory CONFIRMED AND ACCEPTED, as of the date first above written: AMBAC ASSURANCE CORPORATION By: /s/ Thomas J. Adams ----------------------------------- Authorized Signatory BEAR, STEARNS & CO., INC. By: /s/ Thomas S. Dunstan ----------------------------------- 3 EX-10.3 10 GUARANTY: AMBAC & ADVANTA MORTGAGE LOAN TRUST 1 Exhibit 10.3 As of November 17, 1999 Advanta Mortgage Loan Trust 1999-4 c/o Wilmington Trust Company, as Owner Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Re: Advanta Mortgage Loan Trust 1999-4 Sale and Servicing Agreement Ladies and Gentlemen: Pursuant to the Sale and Servicing Agreement dated as of November 1, 1999 (the "Agreement") among Advanta Conduit Receivables, Inc., as sponsor, Advanta Mortgage Corp. USA, as master servicer ("AMCUSA"), Advanta Mortgage Loan Trust 1999-4 (the "Trust"), Advanta Holding Trust 1999-4 ("Holding") and Bankers Trust Company of California, N.A. as indenture trustee (the "Indenture Trustee"), AMCUSA in its capacity as Master Servicer, has undertaken certain financial obligations with respect to its servicing of the Mortgage Loans, including, but not limited to, the making of Servicing Advances. In addition, the Sponsor has, in the Agreement undertaken certain financial obligations, including, but not limited to, the payment of the Loan Purchase Price relating to the repurchase of non-qualifying Mortgage Loans, the payment of Substitution Amounts in connection with the substitution of Qualified Replacement Mortgage Loans and the payment of certain expenses of the Trust. Any financial obligations of AMCUSA or the Sponsor under the Agreement, whether or not specifically enumerated in this paragraph, are hereinafter referred to as the "Joint and Several Obligations"; provided, however, that "Joint and Several Obligations" shall mean only the financial obligations of AMCUSA and the Sponsor under the Agreement (including the payment of money damages for a breach of any of AMCUSA's or the Sponsor's obligations under the Agreement, whether financial or otherwise) but shall not include any obligations not relating to the payment of money (e.g., the obligation to service the Mortgage Loans). The Insurer has required the undersigned, Advanta Mortgage Holding Company ("AMHC"), the parent corporation of AMCUSA and the indirect corporate parent of the Sponsor, to acknowledge its joint-and-several liability with AMCUSA and the Sponsor for the payment of the Joint and Several Obligations under the Agreement. Now, therefore, the Trust, the Note Insurer and AMHC do hereby agree that: (i) AMHC hereby agrees to be absolutely and unconditionally jointly and severally liable with AMCUSA and the Sponsor to the Trust and the Insurer for the payment of the Joint and Several Obligations under the Agreement. 2 (ii) AMHC may honor its obligations hereunder either by direct payment of any Joint and Several Obligations or by causing any Joint and Several Obligations to be paid to the Trust and the Insurer by AMCUSA, the Sponsor, or another affiliate of AMHC. This letter and the respective obligations and rights hereunder and thereunder shall not be delegated or assigned by you without the prior written consent of the Note Insurer. This letter may not be amended or otherwise modified except pursuant to a writing signed by each of the parties hereto. This letter may be executed by the signatories hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same letter. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF OR IN CONNECTION WITH, THIS LETTER, AND ANY OTHER COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH. 2 3 Capitalized terms used herein and not defined herein shall have their respective meanings as set forth in the Agreement. Very truly yours, ADVANTA MORTGAGE HOLDING COMPANY By: /s/ Michael Coco _______________________________________ Authorized Signatory ADVANTA MORTGAGE LOAN TRUST 1999-4 By: WILMINGTON TRUST COMPANY as Owner Trustee By: /s/ Donald G. MacKelcan _______________________________________ Authorized Signatory AMBAC ASSURANCE CORPORATION By: /s/ Thomas J. Adams _______________________________________ Authorized Signatory -----END PRIVACY-ENHANCED MESSAGE-----