-----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, UWlkWDJwhy/ZijDiMX74akqzf+Pdz7SRQ7tj09yMGIY8VOHibMIV1m1yQ9X2Dawo e9xHFJcTUCR2Nqn6zNFuWQ== 0000893220-99-001150.txt : 19991018 0000893220-99-001150.hdr.sgml : 19991018 ACCESSION NUMBER: 0000893220-99-001150 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19991008 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991008 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999 B CENTRAL INDEX KEY: 0001095226 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: 333-75295-02 FILM NUMBER: 99725666 BUSINESS ADDRESS: STREET 1: ATTN: GENERAL COUNSEL STREET 2: 10790 RANCHO BERNARDO ROAD CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 2156574000 MAIL ADDRESS: STREET 1: ATTN: GENERAL COUNSEL STREET 2: 10790 RANCHO BERNARDO ROAD 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: 99725667 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 REVOLVING HOME EQUITY LOAN TRUST 1999-B 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) October 8, 1999 Advanta Conduit Receivables, Inc., as Sponsor on behalf of Advanta Revolving Home Equity Loan Trust 1999-B (Exact name of registrant as specified in its charter) Delaware 333-75295-02 88-0360305 (State or Other Jurisdiction of (Commission File (I.R.S. Employer 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 (IRS Employer of incorporation) File Number) ID Number) Attention: General Counsel 10790 Rancho Bernardo Road San Diego, California 92127 (Address of principal (Zip Code) executive offices) Registrant's Telephone Number, including area code: (619) 674-1800 (Former name or former address, if changed since last report) 2 Item 2. Acquisition or Disposition of Assets Description of the Notes 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 Advanta Revolving Home Equity Loan Asset Backed Notes 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 Revolving Home Equity Loan Trust 1999-B (the "Trust") which issued $275,000,000 in aggregate principal amount of its Revolving Home Equity Loan Asset Backed Notes (the "Notes"), on September 28, 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 September 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-B. The primary assets of the Trust are pool of adjustable-rate home equity revolving credit line loans (the "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, secured primarily by mortgages on single-family residences (which may be detached, part of a two- to four-family dwelling, 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 dated August 10, 1999, the Preliminary Prospectus Supplement dated September 15, 1999 filed pursuant to Rule 424(b)(3) of the Act with the Commission and the Prospectus Supplement dated September 21, 1999 filed pursuant to Rule 424(b)(2) 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 September 21, 1999, between the Sponsor and Morgan Stanley & Co. Incorporated, as Representative of the Underwriters. 4.1 Indenture, dated as of September 1, 1999, between Advanta Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California, N.A., as Indenture Trustee. 4.2 Trust Agreement, dated as of September 1, 1999, between the Sponsor, and Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta Holding Trust 1999-B. 4.3 Trust Agreement, dated as of September 1, 1999, among the Sponsor, Advanta Holding Trust 1999-B and Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta Revolving Home Equity Loan Trust 1999-B. 4.4 Sale and Servicing Agreement, dated as of September 1, 1999, among the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta Holding Trust 1999-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Issuer, and Bankers Trust Company of California, N.A., as Indenture Trustee. 4.5 Certificate Guaranty Insurance Policy, dated September 28, 1999, and issued and delivered by Ambac Assurance Corporation. 5.1 Opinion of Dewey Ballantine LLP regarding legality, dated September 28, 1999.* 8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated September 28, 1999.* 10.1 Purchase Agreement, dated as of September 1, 1999, between Advanta National Bank and Advanta Finance Corp., as Originators, on one hand, and Advanta Conduit Receivables, Inc., as Purchaser, on the other hand. 10.2 Indemnification Agreement, dated September 28, 1999, among Morgan Stanley & Co. Incorporated and Banc of America Securities LLC, as Underwriters, and Ambac Assurance Corporation, as Insurer. 10.3 Guaranty to Ambac Assurance Corporation and Morgan Stanley & Co. Incorporated, as Representative of the Underwriters, issued by Advanta Mortgage Holding Company. 10.4 Guaranty to Ambac Assurance Corporation and Advanta Revolving Home Equity Loan Trust 1999-B, as Issuer, issued by Advanta Mortgage Holding Company. 4 23.1 Consent of KPMG LLP regarding financial statements of Ambac Assurance Corporation and their report.* 23.2 Consent of Arthur Andersen LLP.* * Previously filed on Form 8-K with the Securities and Exchange Commission. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B By: Advanta Conduit Receivables, Inc. 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: October 8, 1999 6 EXHIBIT INDEX Exhibit No. Description 1.1 Underwriting Agreement, dated September 21, 1999, between the Sponsor, as Originators, and Morgan Stanley & Co. Incorporated, as Representative of the Underwriters. 4.1 Indenture, dated as of September 1, 1999, between Advanta Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California, N.A., as Indenture Trustee. 4.2 Trust Agreement, dated as of September 1, 1999, between the Sponsor, and Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta Holding Trust 1999-B. 4.3 Trust Agreement, dated as of September 1, 1999, among the Sponsor, Advanta Holding Trust 1999-B and Wilmington Trust Company, as Owner Trustee, relating to the formation of Advanta Revolving Home Equity Loan Trust 1999-B. 4.4 Sale and Servicing Agreement, dated as of September 1, 1999, among the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta Holding Trust 1999-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Issuer, and Bankers Trust Company of California, N.A., as Indenture Trustee. 4.5 Certificate Guaranty Insurance Policy, dated September 28, 1999, and issued and delivered by Ambac Assurance Corporation. 10.1 Purchase Agreement, dated as of September 1, 1999, between Advanta National Bank and Advanta Finance Corp., as Originators, on one hand, and Advanta Conduit Receivables, Inc., as Purchaser, on the other hand. 10.2 Indemnification Agreement, dated September 28, 1999, among Morgan Stanley & Co. Incorporated and Banc of America Securities LLC, as Underwriters, and Ambac Assurance Corporation, as Insurer. 10.3 Guaranty to Ambac Assurance Corporation and Morgan Stanley & Co. Incorporated, as Representative of the Underwriters, issued by Advanta Mortgage Holding Company. 10.4 Guaranty to Ambac Assurance Corporation and Advanta Revolving Home Equity Loan Trust 1999-B, as Issuer, issued by Advanta Mortgage Holding Company. EX-1.1 2 UNDERWRITING AGREEMENT 1 Exhibit 1.1 EXECUTION COPY ADVANTA CONDUIT RECEIVABLES, INC. ADVANTA REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES, SERIES 1999-B ADJUSTABLE RATE NOTES UNDERWRITING AGREEMENT September 21, 1999 Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 (for itself and the other Underwriter named in Schedule I hereto) Ladies and Gentlemen: Advanta Conduit Receivables, Inc., as Sponsor (the "Sponsor"), has authorized the issuance and sale of Advanta Revolving Home Equity Loan Asset-Backed Notes, Series 1999-B (the "Notes"). The Notes will be issued pursuant to an indenture (the "Indenture"), dated as of September 1, 1999, between Advanta Revolving Home Equity Loan Trust 1999-B (the "Trust") and Bankers Trust Company of California, N.A., as Indenture Trustee (the "Indenture Trustee"). The Trust will be formed pursuant to a trust agreement (the "Trust Agreement"), dated as of September 1, 1999, among the Sponsor, Advanta Holding Trust 1999-B ("Holding") and Wilmington Trust Company, as Owner Trustee. The Notes will be secured by certain adjustable rate home equity revolving credit line loans (the "Mortgage Loans") made pursuant to certain home equity revolving credit line loan agreements (the "Credit Line Agreements") to be transferred or caused to be transferred by the Sponsor to Holding and by Holding to the Trust pursuant to a sale and servicing agreement (the "Sale and Servicing Agreement"), dated as of September 1, 1999, among the Sponsor, Holding, the Trust, Advanta Mortgage Corp. USA, as Master Servicer (the "Master Servicer"), and the Indenture Trustee. The beneficial ownership interests of Holding will initially be held by Advanta National Bank (the "Bank") and Advanta Finance Residual Corp. ("AFRC"), a special-purpose finance subsidiary of Advanta Finance Corp. ("AFC" together with the Bank, the "Originators"). Such beneficial ownership interests in Holding will represent the remaining undivided interest in the assets of the Trust (the "Residual Interest"), and may be sold or pledged at any 2 time, subject to certain conditions specified in the Trust Agreement. The Notes will be issued on or about September 28, 1999 (the "Closing Date") in the aggregate original principal amount of $275,000,000. The Notes and the Residual Interest are more fully described in a registration statement which the Sponsor has furnished or will furnish to the underwriters named in Schedule I hereto (the "Underwriters"). On or prior to the date of issuance of the Notes, the Sponsor will obtain a 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 Noteholders the timely payment of interest on and ultimate payment of principal of the Notes, excluding certain amounts as specified in the Documents (as defined below). Concurrently therewith, the Sponsor will enter into an Insurance and Indemnity Agreement (the "Insurance Agreement"), dated as of September 28, 1999 among the Sponsor, the Insurer, the Master Servicer, Holding, the Trust, the Indenture Trustee and the Owner Trustee, governing certain matters relating to the issuance of the Policy. The Sponsor will also enter into an Indemnification Agreement, dated as of September 28, 1999 (the "Indemnification Agreement"), among the Sponsor, the Underwriters and the Insurer. As used herein, the "Documents" shall mean the Indenture, the Trust Agreement, the Holding Trust Agreement, the Sale and Servicing Agreement, the Underwriting Agreement, the Insurance Agreement and the Indemnification Agreement. Capitalized terms used but not defined herein shall have the meanings given to them in the Sale and Servicing Agreement. SECTION 1. Representations and Warranties of the Sponsor The Sponsor represents and warrants to, and agrees with each Underwriter that: A. The Sponsor has filed with the Securities and Exchange Commission (the "Commission"), a registration statement (No. 333-75295) on Form S-3 for the registration under the Securities Act of 1933, as amended (the "Act"), of Mortgage Loan Asset Backed Certificates and Notes (issuable in series), which registration statement, as amended at the date hereof, has become effective. Such registration statement, as amended to the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(vii) under the Act and complies in all other material respects with such Rule. The Sponsor proposes to file with the Commission pursuant to Rule 424(b)(3) under the Act a preliminary prospectus supplement dated September 15, 1999 and pursuant to Rule 424(b)(2), a prospectus supplement dated September 21, 1999 to the prospectus dated August 10, 1999 relating to the Notes and the method of distribution thereof and has previously advised or will advise you of all further information (financial and other) with respect to the Notes to be set forth therein. Such registration statement, including the exhibits thereto, as amended at the date hereof, is hereinafter called the "Registration Statement"; such prospectus dated August 10, 1999, in the form in which it will be filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter called the "Basic Prospectus"; such preliminary prospectus supplement dated September 15, 1999, in the form in 2 3 which it will be filed with the Commission pursuant to Rule 424(b)(3) under the Act is hereinafter called the "Preliminary Prospectus Supplement"; such prospectus supplement dated September 21, 1999 to the Basic Prospectus, in the form in which it will be filed with the Commission pursuant to Rule 424(b)(2) of the Act, is hereinafter called the "Prospectus Supplement"; and the Basic Prospectus, the Preliminary Prospectus Supplement and the Prospectus Supplement together are hereinafter called the "Prospectus." The Sponsor will file with the Commission (i) promptly after receipt from each Underwriter of any Computational Materials (as defined herein) (and in any event no later than the Business Day on which the Prospectus Supplement is made available to the Underwriter), a Form 8-K incorporating such Computational Materials and (ii) within fifteen days of the issuance of the Notes a report on Form 8-K setting forth specific information concerning the related Mortgage Loans (the "8-K"). 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 Act and the rules and regulations of the Commission thereunder. 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 (as hereinafter defined), 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, however, 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 Sponsor in writing by the Underwriters expressly for use therein. As used in this Agreement, "Effective Time" means the date and the time as of which such Registration Statement, 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. 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 Act or the Securities Exchange Act of 1934, as amended (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 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 Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue 3 4 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 Sponsor, except as set forth or contemplated in the Prospectus as supplemented or amended as of the Closing Date. E. The Sponsor 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 the Documents to which it is a party, 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 Sponsor is a party or of which any of its properties is the subject (a) which if determined adversely to the Sponsor would have a material adverse effect on the business or financial condition of the Sponsor, (b) which asserts the invalidity of the Documents or the Notes, (c) which seeks to prevent the issuance of the Notes or the consummation by the Sponsor of any of the transactions contemplated by the Documents to which it is a party or (d) which might materially and adversely affect the performance by the Sponsor of its obligations under, or the validity or enforceability of, the Documents to which it is a party or the Notes. G. The Documents, when executed and delivered as contemplated hereby and thereby, will have been duly authorized, executed and delivered by the Sponsor and will constitute legal, valid and binding instruments enforceable against the Sponsor, 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, the Indemnification Agreement and the Insurance Agreement, limitations of public policy under applicable securities laws. H. The execution, delivery and performance of the Documents by the Sponsor and the consummation of the transactions contemplated hereby and thereby, 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 Sponsor is a party, by which the Sponsor is bound or to which any of the property or assets of the Sponsor or any 4 5 of their respective subsidiaries are subject, nor will such actions result in any violation of the provisions of the articles of incorporation or by-laws of the Sponsor or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Sponsor or any of their respective properties or assets. I. Arthur Andersen LLP are independent public accountants with respect to the Sponsor as required by the Act and the Rules and Regulations. J. The direction by the Sponsor to the Indenture Trustee to execute, authenticate, issue and deliver the Notes has been or will be duly authorized by the Sponsor, 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 Sponsor of the other transactions contemplated by the Documents, 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. At the time of execution and delivery of the Sale and Servicing Agreement, the Sponsor will or cause the Trust to: (i) have good title to the interest in the Mortgage Loans and the other rights and properties to be conveyed by the Sponsor thereunder, free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or other security interest (collectively, "Liens"); (ii) except as provided in the Documents, not have assigned to any person any of its right, title or interest in the Mortgage Loans, in the Sale and Servicing Agreement or in the Notes being issued pursuant thereto; and (iii) have the power and authority to sell its interest in the Mortgage Loans or cause the sale of the Mortgage Loans to Holding and to sell the Notes to the Underwriters. Upon execution and delivery of the Sale and Servicing Agreement and the Indenture by the respective parties thereto, the Indenture Trustee will have acquired all of the Sponsor's right, title and interest in and to the Mortgage Loans (excluding any payments of interest collected prior to the Cut-Off Date). Upon delivery to the Underwriters of the Notes, the Underwriters will have good title to the Notes, free of any Liens. M. As of opening of business on September 1, 1999 (the "Cut-Off Date"), each of the Mortgage Loans identified on the Closing Date will meet the eligibility criteria described in the Prospectus Supplement and will conform to the descriptions thereof contained in the Prospectus Supplement. 5 6 N. None of the Sponsor, Holding or the Trust is an "investment company" within the meaning of such term under the Investment Company Act of 1940 (the "1940 Act") and the rules and regulations of the Commission thereunder. O. At the Closing Date, the Notes and the Indenture will conform in all material respects to the descriptions thereof contained in the Prospectus. P. At the Closing Date, the Notes shall have been rated in the highest rating category by at least two nationally recognized rating agencies. Q. Any applicable taxes, fees and other governmental charges in connection with the execution, delivery and issuance of the Documents and the Notes have been paid or will be paid at or prior to the Closing Date. R. At the Closing Date, each of the representations and warranties of the Sponsor set forth in the Sale and Servicing Agreement, the Insurance Agreement and the Indemnification Agreement will be true and correct in all material respects. Any certificate signed by an officer of the Sponsor and delivered to the Underwriters 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 Sponsor agrees to instruct the Trust to issue and agrees to sell to the Underwriters and each Underwriter agrees (except as provided in Sections 6 and 10 hereof) to purchase from the Sponsor, the Notes in the aggregate initial principal amount or amounts 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 Sponsor and a non-defaulting Underwriter shall be as set forth in Section 13 hereof. 6 7 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 Brown & Wood llp, One World Trade Center New York, New York 10048-0557, at 10:00 A.M. New York City time on the Closing Date or at such other time or date as shall be agreed upon in writing by the Underwriters and the Sponsor. Payment shall be made to the Sponsor by wire transfer of same day funds payable to such accounts as they shall designate in writing. Delivery of the Notes shall be made to each Underwriter against payment of the purchase price thereof. The Notes shall be in such denominations and registered in such names as the Underwriters may request in writing at least two business days prior to the Closing Date. The Notes will be made available for examination by the Underwriters no later than 4:00 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 proposes to offer the Notes for sale to the public as set forth in the Prospectus. SECTION 5. Covenants of the Sponsor With respect to the issuance of the Notes, the Sponsor agrees as follows: A. To prepare the Prospectus in a form approved by the Underwriter and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the first use of the Prospectus; 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; to advise the Underwriters, promptly after they receive 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 Underwriters with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Sponsor 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, to promptly advise the Underwriters of its receipt of notice of the issuance by the Commission of any stop order or of: (i) any order preventing or suspending the use of the Prospectus; (ii) the suspension of the qualification of the Notes for offering or sale in any jurisdiction; (iii) the initiation of or threat of any proceeding for any such purpose; (iv) 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 Sponsor promptly shall use its best efforts to obtain the withdrawal of such order or suspension. B. To furnish promptly to the Underwriters and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with 7 8 the Commission, and of each amendment thereto filed with the Commission, including all consents and exhibits filed therewith. C. To deliver promptly to the Underwriters such number of the following documents as the Underwriters 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 Act or the Exchange Act, the Sponsor shall notify the Underwriters and, upon the Underwriters' 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 Underwriters 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 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 Underwriters but at the expense of the Underwriters, the Sponsor shall prepare and deliver to the Underwriters as many copies as the Underwriters may reasonably request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the 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 Sponsor or the Underwriters, be required by the 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 furnish a copy thereof to the Underwriters and counsel for the Underwriters and obtain the consent of the Underwriters to the filing. F. To use their best efforts, in cooperation with the Underwriters, 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 Underwriter 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 Sponsor will file 8 9 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. G. Not, without the Underwriters' prior written consent, to 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 Sponsor for a period of 5 business days following the commencement of the offering of the Notes to the public. H. So long as the Notes shall be outstanding, to deliver to the Underwriters as soon as such statements are furnished to the Indenture Trustee the annual statement as to compliance delivered to the Indenture Trustee pursuant to Section 3.9 of the Indenture. I. To apply the net proceeds from the sale of the Notes in the manner set forth in the Prospectus. SECTION 6. Conditions to the Obligations of the Underwriters The obligation of the Underwriters to purchase the Notes pursuant to this Agreement is subject to: (i) the accuracy as of the Closing Date of the representations and warranties on the part of the Sponsor herein contained; (ii) the performance by the Sponsor its obligations hereunder; and (iii) the following conditions as of the Closing Date: A. The Underwriters 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. The Underwriters shall not have discovered and disclosed to the Sponsor 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 Brown & Wood LLP, 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 the Documents, 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 Sponsor shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. 9 10 D. The Underwriters shall have received the favorable opinion of Dewey Ballantine LLP, special counsel to the Sponsor with respect to the following items, dated the Closing Date, to the effect that: 1. The Sponsor has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, and is qualified to do business in each state necessary to enable it to perform its obligations as Sponsor under the Documents to which it is a party. The Sponsor has the requisite power and authority to execute and deliver, engage in the transactions contemplated by, and perform and observe the conditions of the Documents to which it is a party. 2. The Documents to which the Sponsor is a party have been duly and validly authorized, executed and delivered by the Sponsor and all requisite corporate action by the Sponsor has been taken with respect thereto, and the Notes constitute the valid, legal and binding agreement of the Trust. 3. Neither the transfer of the Mortgage Loans to the Trust, the issuance or sale of the Notes nor the execution, delivery or performance by the Sponsor of the Documents to which it is a party (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 by-laws of the Sponsor; (ii) any term or provision of any material agreement, contract, instrument or indenture, to which the Sponsor 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 Sponsor and known to such counsel; or (B) results in, or will result in the creation or imposition of any lien, charge or encumbrance upon any of the Trust's assets or upon the Notes, except as otherwise contemplated by the Sale and Servicing Agreement. 4. With respect to the Mortgage Loans, the endorsement and delivery of each Credit Line Agreement, and the preparation, delivery and recording of an Assignment, in each case with respect to each Mortgage, is sufficient to fully transfer to the Indenture Trustee for the benefit of the Noteholders all right, title and interest of the Sponsor or its affiliates in the Credit Line Agreement 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 Indenture Trustee to avail itself of all protection available under applicable law against the claims of any present or future creditors of the Sponsor and to prevent any other sale, transfer, assignment, pledge or other encumbrance of the Mortgage Loans by the Sponsor from being enforceable, subject to any exceptions set forth in such opinion. 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 10 11 performance of the Documents or the offer, issuance, sale or delivery of the Notes or the consummation of any other transaction contemplated thereby by the Sponsor, except such which have been obtained. 6. There are no actions, proceedings or investigations, to such counsel's knowledge, pending or threatened against the Sponsor before any court, governmental agency or body or other tribunal (i) asserting the invalidity of the Documents to which the Sponsor is a party or the Notes, (ii) seeking to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by the Documents or (iii) which would materially and adversely affect the performance by the Sponsor of obligations under, or the validity or enforceability of, the Notes or the Documents to which the Sponsor is a party. 7. To the best 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 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. 10. 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 the Mortgage Loans," to the extent that they constitute matters of federal, New York or California law, or federal, New York or California legal conclusions provide a fair and accurate summary of such law or conclusions. 11. 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. 11 12 12. Such other matters as the Underwriters 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 Sponsor and the Originators, 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 Sponsor and the Originators. E. The Underwriters 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 Underwriters and counsel for the Underwriters, to the effect that they have performed certain specified procedures requested by the Underwriters with respect to the information set forth in the Prospectus and certain matters relating to the Master Servicer. F. The Notes shall have been rated in the highest rating category by Standard & Poor's Ratings Services and by Moody's Investors Service, Inc., and such ratings shall not have been rescinded or downgraded. The Underwriters and counsel for the Underwriters shall have received copies of 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 Underwriters shall have received from the Sponsor a certificate, signed by the president, a senior vice president or a vice president of the Sponsor, dated the Closing Date, to the effect that the signer of such certificate has carefully examined the Registration Statement, 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 Sponsor in this Agreement, as of the Closing Date, and in the Sale and Servicing Agreement, the Insurance Agreement, and in all related agreements, as of the date specified in such agreements, are true and correct, and the Sponsor 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 Sponsor which if adversely determined, individually or in the aggregate, would be reasonably likely to adversely affect the Sponsor's obligations under the Documents to which it is a party in any material way; and no merger, liquidation, dissolution or bankruptcy of the Sponsor is pending or contemplated; 12 13 3. the information contained in the Registration Statement and the Prospectus relating to the Sponsor, 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 by-laws of the Sponsor since June 30, 1999, and no such amendment has been authorized. No event has occurred since June 30, 1999, which has affected the good standing of the Sponsor under the laws of the State of Delaware; 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 Sponsor and its subsidiaries, taken as a whole, from June 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, in the rating, if any, accorded the Sponsor or in any rating accorded any securities of the Sponsor, if any, by any "nationally recognized statistical rating organization," as such term is defined for purposes of the Act; and 8. each person who, as an officer or representative of the Sponsor, signed or signs the Registration Statement, the Documents 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 Documents 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 Sponsor shall attach to such certificate a true and correct copy of its certificate or articles of incorporation, as appropriate, and by-laws 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. 13 14 H. The Underwriters shall have received a favorable opinion of counsel to the Indenture Trustee, dated the Closing Date and in form and substance satisfactory to the Underwriters, 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 Documents to which it is a party to; 2. the Documents to which the Indenture Trustee is a party have been duly authorized, executed and delivered by the Indenture Trustee and such Documents 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 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 Documents to which it is a party 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 Documents to which it is a party do not conflict with or result in a violation of any statute or regulation applicable to the Indenture Trustee, or the charter or by-laws 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 Sponsor, 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 Underwriters 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 Sale and Servicing Agreement, the Indenture or any other document delivered 14 15 pursuant hereto, on the date hereof or on the Closing Date, in connection with the transactions described in the Sale and Servicing Agreement and the Indenture 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 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. K. The Underwriters shall have received a favorable opinion of 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 an insurance corporation, duly incorporated and validly existing under the laws of its state of incorporation. The Insurer is validly licensed to do business in New York and is authorized to issue the Policy and perform its obligations under the Policy in accordance with the terms thereof. 2. The execution and delivery by the Insurer of the Policy, the Insurance Agreement and the Indemnification Agreement are within the corporate power of the Insurer and have been authorized by all necessary corporate action on the part of the Insurer; the Policy has been duly executed and is the valid and binding obligation of the Insurer enforceable in accordance with its terms except that the enforcement of the Policy may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law). 3. The Insurer is authorized to deliver the Indemnification Agreement and the Insurance Agreement and such agreements have been duly executed and delivered and constitute the legal, valid and binding obligations of the Insurer enforceable in accordance with its terms except that the enforcement of the Insurance Agreement may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity and, in the case of the Indemnification Agreement, subject to principles of public policy limiting the right to enforce the indemnification provisions contained therein insofar as such provisions relate to indemnification for liabilities arising under securities laws. 4. No consent, approval, authorization or order of any state or federal court or governmental agency or body is required on the part of the Insurer, the lack of which would adversely affect the validity or enforceability of the Policy; to the extent required by applicable legal requirements that would adversely affect validity or enforceability of the Policy, the form of the Policy has been filed with, 15 16 and approved by, all governmental authorities having jurisdiction over the Insurer in connection with the Policy. 5. The execution and delivery of the Insurance Agreement, the Indemnification Agreement and the Policy, and the compliance with the terms and provisions thereof, will not conflict with, result in a breach of or constitute a default under any of the terms, provisions or conditions of the Restated Charter or By-Laws of the Insurer. The execution, delivery and performance by the Insurer of its obligations under the policy do not, to the extent that either of the following would effect the validity or enforceability of the Policy, (a) contravene any law or government regulation or order presently binding on the Insurer or (b) contravene any provision of or constitute a default under any indenture, contract or other instrument to which the Insurer is a party or by which the Insurer is bound. 6. The Policy is not required to be registered under the Act. 7. The information set forth under the caption "The Insurer and the Policy" in the Prospectus Supplement, insofar as such statements constitute a description of the Policy, accurately summarizes the Policy. In rendering this opinion, such counsel may rely, as to matters of fact, on certificates of responsible officers of the Sponsor, 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. L. Since June 30, 1999, 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 Sponsor or in any rating accorded any securities of the Sponsor, if any, by any "nationally recognized statistical rating organization," as such term is defined for purposes of the Act. M. On or prior to the Closing Date, there shall not have occurred any downgrading, nor shall any notice have been given of (A) any intended or potential downgrading or (B) any review or possible change in rating the direction of which has not been indicated, in the rating accorded the Insurer's claims paying ability by any "nationally recognized statistical rating organization," as such term is defined for purposes of the Act. N. 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 June 30, 1999, of (A) the Sponsor and any subsidiaries or (B) the Insurer, that is in the Underwriters' judgment material and adverse and that makes it in the Underwriters' judgment impracticable to market the Notes on the terms and in the manner contemplated in the Prospectus. 16 17 O. The Underwriters shall have received from the Insurer a certificate, signed by the president, a senior vice president or a vice president of the Insurer, dated the Closing Date, to the effect that the signer of such certificate has carefully examined the Policy, the Insurance Agreement, the Indemnification Agreement and the related documents and that, to the best of his or her knowledge based on reasonable investigation: 1. There are no actions, suits, proceedings or investigations pending or, to the best of Insurer's knowledge, threatened against it at law or in equity before or by any court, governmental agency, board or commission or any arbitrator which, if adversely determined, individually or in the aggregate, would materially and adversely affect the Insurer's condition (financial or otherwise) or operations or which would materially and adversely effect its ability to perform its obligations under the Policy, the Insurance Agreement or the Indemnification Agreement; 2. The information contained in the Prospectus Supplement under the caption "The Insurer and the Policy" (the "Insurer Information") is limited and does not purport to provide the scope of disclosure required to be included in a prospectus for a registrant under the Act, in connection with the public offer and sale of securities of such registrant. Within such limited scope of disclosure, the Insurer Information does not contain any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 3. The tables regarding the Insurer's capitalization set forth under the heading "The Insurer and the Policy" in the Prospectus Supplement presents accurately and fairly the capitalization of the Insurer as of June 30, 1999; 4. The consolidated financial statements of the Insurer as of December 31, 1998 and December 31, 1997, and for each of the years in the three-year period ended December 31, 1998, together with the related opinion of an independent certificated public accountant, copies of which are incorporated by reference in the Prospectus Supplement, fairly present in all material respects the financial condition of the Insurer as of such date and for the period covered by such statements in accordance with generally accepted accounting principles consistently applied; the unaudited consolidated financial statements of the Insurer 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, fairly present in all material respects the financial condition of the Insurer as of such date and for the period covered by such statements in accordance with generally accepted accounting principles applied consistently with those principles applied in preparing the December 31, 1998 audited statements; 17 18 5. No material adverse change in such the financial condition of the Insurer which would materially and adversely affect its ability to perform its obligations under the Policy. 6. The execution and delivery of the Insurance Agreement, the Indemnification Agreement and the Policy and the compliance with the terms and provisions thereof will not conflict with, result in a breach of, or constitute a default under any of the terms, provisions or conditions of, the Restated Charter of By-Laws of the Insurer, or any agreement, indenture or other instrument to which the Insurer is a party. 7. The issuance of the Policy and the execution, delivery and performance of the Indemnification Agreement and the Insurance Agreement have been duly authorized by all necessary corporate proceedings. No further approvals or filings of any kind, including, without limitation, any further approvals of or further filing with any governmental agency or other governmental authority, or any approval of the Insurer's board of directors or stockholders, are necessary for the Policy, the Indemnification Agreement and the Insurance Agreement to constitute the legal, valid and binding obligations of the Insurer. 8. To the best knowledge of such officer, since June 30, 1999, no material adverse change has occurred in the financial position of the Insurer other than as may be set forth in the Prospectus Supplement. The officer of the Insurer certifying to items 5-8 shall be an officer in charge of a principal financial function. The Insurer shall attach to such certificate a true and correct copy of its certificate or articles of incorporation, as appropriate, and its by-laws, all of which are in full force and effect on the date of such certificate. P. The Underwriters shall have received from Dewey Ballantine LLP, special counsel to the Sponsor, a survey in form and substance satisfactory to the Underwriters, 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 shall have complied with all such requirements. Q. The Underwriters shall have received from Brown & Wood LLP, 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 Underwriters shall reasonably require. R. The Underwriters shall have received from Dewey Ballantine LLP, special counsel to the Sponsor, such opinion or opinions, dated the Closing Date, with respect to certain tax matters. 18 19 S. The Underwriters and counsel for the Underwriters shall have received copies of any opinions of counsel to the Sponsor or the Insurer supplied to the Indenture Trustee relating to matters with respect to the Notes or the Policy. 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. T. The Underwriters shall have received such further information, certificates and documents as the Underwriters may reasonably have requested not later than the business day prior to the Closing Date. U. There shall have been executed and delivered by Advanta Mortgage Holding Company, the indirect corporate parent of the Sponsor and direct corporate parent of the Master Servicer ("AMHC"), a letter agreement with the Trust and the Insurer substantially in the form of Exhibit A hereto. V. There shall have been executed and delivered by AMHC a letter agreement with the Underwriters and the Insurer substantially in the form of Exhibit B hereto. W. 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 Originators in connection with the issuance and sale of the Notes as herein contemplated shall be satisfactory in form and substance to the Underwriters and counsel for the Underwriters. X. 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; (i) a banking moratorium shall have been declared by Federal or state authorities; (ii) 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 (iii) 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 Underwriters, 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. 19 20 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 Underwriters by notice to the Sponsor 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 Notes 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 Sponsor 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 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 costs of reproducing and distributing this Agreement; (e) the fees and expenses of qualifying the Notes under the securities laws of the several jurisdictions as provided in Section 5(F) hereof and of preparing, printing and distributing any Blue Sky Memorandum or Legal Investment Survey (including related fees and expenses of counsel to the Underwriters); (f) any fees charged by securities rating services for rating the Notes; (g) any amounts in excess of $50,000 of the total of the costs and expenses of Brown & Wood LLP; and (h) all other costs and expenses incident to the performance of the obligations of the Sponsor; provided, however, that, except as provided in this Section 7, the Underwriters shall pay its own costs and expenses, including an amount not to exceed $50,000 of the total of the costs and expenses of Brown & Wood LLP, any transfer taxes on the Notes which they may sell and the expenses of marketing any offering of the Notes made by the Underwriters (including expenses incident to the preparation, printing and distribution of Computational Materials and other Derived Information). If this Agreement is terminated by the Underwriters, in accordance with the provisions of Section 6 or Section 10, the Sponsor shall reimburse the Underwriters for their respective reasonable out-of-pocket expenses, including fees and disbursements of Brown & Wood LLP. SECTION 8. Indemnification and Contribution A. The Sponsor agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls the respective Underwriter within the meaning of Section 15 of the Act from and against any and all loss, claim, damage or liability, severally but not jointly, 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 each such Underwriter or any such controlling person may become subject, under the Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any 20 21 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 and shall reimburse each 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 Sponsor 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 Sponsor by the Underwriters specifically for inclusion therein. For purposes of the last proviso to the immediately preceding sentence, the term "Prospectus" shall not be deemed to include the documents incorporated therein by reference, and the Underwriters shall not be obligated to send or give any supplement or amendment to any document incorporated therein by reference to any person other than a person to whom the Underwriters have delivered such incorporated document or documents in response to a written request therefor. The foregoing indemnity agreement is in addition to any liability which the Sponsor may otherwise have to any Underwriter or any controlling person of any Underwriter. B. Each Underwriter severally but not jointly will indemnify and hold harmless the Sponsor, its directors, its officers who signed the Registration Statement, and each person, if any, who controls the Sponsor within the meaning of Section 15 of the Act against any and all loss, claim, damage or liability, or any action in respect thereof, to which the Sponsor or any such director, officer or controlling person may become subject, under the 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 (excluding any Derived Information which is covered in paragraph (E) below) furnished to the Sponsor by or on behalf of the Underwriters specifically for inclusion therein, and shall 21 22 reimburse the Sponsor, and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Sponsor 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 liability which the Underwriters may otherwise have to the Sponsor 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, however, 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 22 23 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 such Underwriter, if the indemnified parties under this Section 8 consist of such Underwriter or any of its controlling persons, or by the Sponsor if the indemnified parties under this Section 8 consist of the Sponsor or any of the Sponsor'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 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 Sponsor a copy of its Derived Information no later than one (1) business day prior to the date such information is required to be filed, pursuant to the No-Action Letters (as defined herein), with the Commission on Form 8-K. E. Each Underwriter agrees, assuming all Sponsor-Provided Information (defined below) is accurate and complete in all material respects, to severally and not jointly indemnify and hold harmless the Sponsor, each of the Sponsor's officers and directors and each person who controls the Sponsor within the meaning of Section 15 of the Act against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the 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 and when read in conjunction with the Prospectus, 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 23 24 incurred. The obligations of the Underwriters under this Section 8(E) shall be in addition to any liability which the respective Underwriters 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 Sponsor 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 Sponsor-Provided Information; and (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). "Sponsor-Provided Information" means any computer tape furnished to the Underwriters by the Sponsor concerning the Mortgage Loans comprising the Trust. 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 LLP 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 (i) 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, in such proportion as shall be appropriate to reflect the relative benefits received by the Sponsor 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 Sponsor on the one hand and the 24 25 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 Sponsor on the one hand and the Underwriters on the other shall be deemed to be in such proportion as the total net proceeds from the offering (before deducting expenses) received by the Sponsor to the total underwriting discounts and commissions. The relative fault of the Underwriters and the Sponsor 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 Sponsor or by 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. The Sponsor 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. For purposes of this Section 8, in no case shall each 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 Sponsor 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. H. The Underwriters confirm that the information set forth in the third, fourth, fifth, sixth, seventh and ninth paragraphs 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 Sponsor 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 Sponsor submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of such Underwriter or controlling persons thereof, or by or on behalf of the Sponsor and shall survive delivery of any Notes to the Underwriters. 25 26 SECTION 10. Termination of Agreement The Underwriters may terminate this Agreement immediately upon notice to the Sponsor at any time at or prior to the Closing Date if any of the events or conditions described in Section 6(X) of this Agreement shall occur and be continuing. In the event of any such termination, the covenant set forth in the provisions of Section 7, the indemnity agreement set forth in Section 8, and the provisions of Sections 9 and 13 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 Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036; and B. if to the Sponsor, 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: 858-676-3046). SECTION 12. Persons Entitled to the Benefit of this Agreement This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Sponsor 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 controls such Underwriter within the meaning of Section 15 of the Act, and for the benefit of directors of the Sponsor, officers of the Sponsor who have signed the Registration Statement and any person controlling the Sponsor within the meaning of Section 15 of the 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 Notes"), the remaining Underwriter (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 Notes 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 Sponsor shall have the right to postpone the Closing Date for a period not exceeding seven days in order to effect any 26 27 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 Sponsor 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 on which the New York Stock Exchange, Inc. is open for trading. 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. [Signature Page Follows] 27 28 If the foregoing correctly sets forth the agreement between the Sponsor and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, ADVANTA CONDUIT RECEIVABLES, INC. By:_________________________________ Name: Title: CONFIRMED AND ACCEPTED as of the date first above written: MORGAN STANLEY & CO. INCORPORATED (for itself and for the other Underwriter set forth on Schedule I) By:__________________________ Name: Title: EX-4.1 3 INDENTURE, DATED AS OF 09/01/1999: 1999-B 1 EXHIBIT 4.1 EXECUTION COPY ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B Advanta Revolving Home Equity Loan Asset Backed Notes, Series 1999-B, INDENTURE Dated as of September 1, 1999 BANKERS TRUST COMPANY OF CALIFORNIA, N.A. Indenture Trustee 2 Table of Contents
Page ---- ARTICLE I. Definitions and Incorporation by Reference SECTION 1.1. Definitions................................................................................ 2 SECTION 1.2. Incorporation by Reference of the Trust Indenture Act...................................... 2 SECTION 1.3. Rules of Construction...................................................................... 2 SECTION 1.4. Action by or Consent of Noteholders........................................................ 3 SECTION 1.5. Conflict with TIA.......................................................................... 3 ARTICLE II. The Notes SECTION 2.1. Form....................................................................................... 3 SECTION 2.2. Execution, Authentication and Delivery..................................................... 3 SECTION 2.3. Registration; Registration of Transfer and Exchange........................................ 4 SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes................................................. 5 SECTION 2.5. Persons Deemed Owners...................................................................... 6 SECTION 2.6. Payment of Principal and Interest; Defaulted Interest...................................... 6 SECTION 2.7. Cancellation............................................................................... 8 SECTION 2.8. Release of Trust Estate.................................................................... 8 SECTION 2.9. Book-Entry Notes........................................................................... 8 SECTION 2.10. Notices to Clearing Agency................................................................. 9 SECTION 2.11. Definitive Notes........................................................................... 9 ARTICLE III. Covenants SECTION 3.1. Payment of Principal and Interest.......................................................... 10 SECTION 3.2. Maintenance of Office or Agency............................................................ 10 SECTION 3.3. Money for Payments to be Held in Trust..................................................... 10 SECTION 3.4. Existence.................................................................................. 11 SECTION 3.5. Protection of Trust Estate................................................................. 11 SECTION 3.6. Opinions as to Trust Estate................................................................ 12 SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.................................... 12 SECTION 3.8. Negative Covenants......................................................................... 13 SECTION 3.9. Annual Statement as to Compliance.......................................................... 14 SECTION 3.10. Trust May Not Consolidate or Transfer Assets............................................... 15 SECTION 3.11. No Other Business.......................................................................... 15 SECTION 3.12. No Borrowing............................................................................... 15 SECTION 3.13. Guarantees, Loans, Advances and Other Liabilities.......................................... 15 SECTION 3.14. Capital Expenditures....................................................................... 15 SECTION 3.15. Compliance with Laws....................................................................... 15
i 3 SECTION 3.16. Restricted Payments........................................................................ 15 SECTION 3.17. Notice of Rapid Amortization Events, Events of Default and Events of Servicing Termination...................................................................... 16 SECTION 3.18. Further Instruments and Acts............................................................... 16 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 SECTION 4.1. Satisfaction and Discharge of Indenture.................................................... 16 SECTION 4.2. Application of Trust Money................................................................. 18 SECTION 4.3. Repayment of Monies Held by Note Paying Agent.............................................. 18 ARTICLE V. Rapid Amortization Events and Events of Default SECTION 5.1. Rapid Amortization Events.................................................................. 18 SECTION 5.2. Consequences of Rapid Amortization Event................................................... 20 SECTION 5.3. [Reserved]................................................................................. 20 SECTION 5.4. Events of Default. ........................................................................ 20 SECTION 5.5. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.................. 21 SECTION 5.6. Remedies for Event of Default. ............................................................ 21 SECTION 5.7. Indenture Trustee May File Proofs of Claim................................................. 22 SECTION 5.8. Indenture Trustee May Enforce Claims Without Possession of Notes........................... 23 SECTION 5.9. Application of Money Collected............................................................. 23 SECTION 5.10. Limitation of Suits........................................................................ 24 SECTION 5.11. Unconditional Rights of Noteholders To Receive Principal and Interest...................... 25 SECTION 5.12. Restoration of Rights and Remedies......................................................... 25 SECTION 5.13. Rights and Remedies Cumulative............................................................. 25 SECTION 5.14. Delay or Omission Not a Waiver............................................................. 25 SECTION 5.15. Control by Noteholders..................................................................... 25 SECTION 5.16. Undertaking for Costs...................................................................... 26 SECTION 5.17. Waiver of Stay or Extension Laws........................................................... 26 SECTION 5.18. Action on Notes............................................................................ 26 SECTION 5.19. Performance and Enforcement of Certain Obligations......................................... 26 SECTION 5.20. Subrogation................................................................................ 27 SECTION 5.21. Preference Claims.......................................................................... 27 ARTICLE VI. The Indenture Trustee SECTION 6.1. Duties of Indenture Trustee................................................................ 28
ii 4 SECTION 6.2. Rights of Indenture Trustee................................................................ 30 SECTION 6.3. Individual Rights of Indenture Trustee..................................................... 31 SECTION 6.4. Indenture Trustee's Disclaimer............................................................. 31 SECTION 6.5. Notice of Defaults......................................................................... 31 SECTION 6.6. Reports by Indenture Trustee to Noteholders................................................ 31 SECTION 6.7. Compensation and Indemnity................................................................. 32 SECTION 6.8. Replacement of Indenture Trustee........................................................... 32 SECTION 6.9. Successor Indenture Trustee by Merger...................................................... 34 SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.......................... 34 SECTION 6.11. Eligibility: Disqualification.............................................................. 35 SECTION 6.12. Preferential Collection of Claims Against Trust............................................ 36 SECTION 6.13. Appointment and Powers..................................................................... 36 SECTION 6.14. Performance of Duties...................................................................... 36 SECTION 6.15. Limitation on Liability.................................................................... 36 SECTION 6.16. Reliance Upon Documents.................................................................... 37 SECTION 6.17. Representations and Warranties of the Indenture Trustee.................................... 37 SECTION 6.18. Waiver of Setoffs.......................................................................... 37 SECTION 6.19. Control by the Controlling Party........................................................... 37 SECTION 6.20. Trustee May Enforce Claims Without Possession of Notes..................................... 37 SECTION 6.21. Suits for Enforcement...................................................................... 38 SECTION 6.22. Mortgagor Claims........................................................................... 38 ARTICLE VII. Noteholders' Lists and Reports SECTION 7.1. Trust To Furnish To Indenture Trustee Names and Addresses of Noteholders................... 39 SECTION 7.2. Preservation of Information; Communications to Noteholders................................. 39 SECTION 7.3. Reports by Trust........................................................................... 39 SECTION 7.4. Reports by Indenture Trustee............................................................... 40 ARTICLE VIII. Payments and Statements to Noteholders and Certificateholders; Accounts, Disbursements and Releases SECTION 8.1. Collection of Money........................................................................ 40 SECTION 8.2. Release of Trust Estate.................................................................... 41 SECTION 8.3. Establishment of Accounts.................................................................. 41 SECTION 8.4. The Payments Under the Policy.............................................................. 41 SECTION 8.5. Pre-Funding Account and Capitalized Interest Account....................................... 42 SECTION 8.6. Flow of Funds.............................................................................. 42 SECTION 8.7. Investment of Accounts..................................................................... 44 SECTION 8.8. Eligible Investments....................................................................... 45 SECTION 8.9. Reports by Indenture Trustee............................................................... 46 SECTION 8.10. Additional Reports by Indenture Trustee.................................................... 48
iii 5 SECTION 8.11. Opinion of Counsel......................................................................... 49 ARTICLE IX. Supplemental Indentures SECTION 9.1. Supplemental Indentures Without Consent of Noteholders..................................... 49 SECTION 9.2. Supplemental Indentures with Consent of Noteholders........................................ 50 SECTION 9.3. Execution of Supplemental Indentures....................................................... 52 SECTION 9.4. Effect of Supplemental Indenture........................................................... 52 SECTION 9.5. Conformity With Trust Indenture Act........................................................ 52 SECTION 9.6. Reference in Notes to Supplemental Indentures.............................................. 53 ARTICLE X. Redemption of Notes SECTION 10.1. Redemption................................................................................. 53 SECTION 10.2. Surrender of Notes......................................................................... 54 SECTION 10.3. Form of Redemption Notice.................................................................. 55 SECTION 10.4. Notes Payable on Redemption Date........................................................... 55 ARTICLE XI. Miscellaneous SECTION 11.1. Compliance Certificates and Opinions, etc.................................................. 55 SECTION 11.2. Form of Documents Delivered to Indenture Trustee........................................... 56 SECTION 11.3. Acts of Noteholders........................................................................ 57 SECTION 11.4. Notices, etc. to Indenture Trustee, Trust and Rating Agencies.............................. 57 SECTION 11.5. Notices to Noteholders; Waiver............................................................. 58 SECTION 11.6. Alternate Payment and Notice Provisions.................................................... 59 SECTION 11.7. Conflict with Trust Indenture Act.......................................................... 59 SECTION 11.8. Effect of Headings and Table of Contents................................................... 59 SECTION 11.9. Successors and Assigns..................................................................... 59 SECTION 11.10. Separability............................................................................... 59 SECTION 11.11. Benefits of Indenture...................................................................... 59 SECTION 11.12. Legal Holidays............................................................................. 59 SECTION 11.13. Governing Law.............................................................................. 60 SECTION 11.14. Counterparts............................................................................... 60 SECTION 11.15. Recording of Indenture..................................................................... 60 SECTION 11.16. Trust Obligation........................................................................... 60 SECTION 11.17. No Petition................................................................................ 60 SECTION 11.18. Inspection................................................................................. 61 SECTION 11.19. Limitation of Liability.................................................................... 61 SECTION 11.20. Rights of the Insurer to Exercise Rights of Noteholders.................................... 61 SECTION 11.21. Consent and Direction of Insurer........................................................... 62 SECTION 11.22. Rules by Indenture Trustee................................................................. 62
iv 6 SCHEDULE AND EXHIBITS Schedule I Schedule of Mortgage Loans Exhibit A Form of Note Annex 1 Defined Terms v 7 INDENTURE dated as of September 1, 1999, between ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, a Delaware business trust (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 Revolving Home Equity Loan Asset Backed Notes, Series 1999-B (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 assign the Trust Estate (as defined below) to the Indenture Trustee for the benefit of the Noteholders and the Insurer. Ambac Assurance Corporation (the "Insurer") has issued and delivered the certificate guaranty insurance policy, dated as of the Closing Date (the "Policy"), pursuant to which the Insurer guarantees the Insured Amount with respect to the Notes. The Trust and the Insurer have executed and delivered the Insurance and Indemnity Agreement, dated as of September 28, 1999 (as amended from time to time, the "Insurance Agreement"), among the Insurer, Advanta Holding Trust 1999-B, Advanta Mortgage Corp. USA, the Trust, Advanta Conduit Receivables, Inc. and the Indenture Trustee. GRANTING CLAUSE The Trust hereby Grants to the Indenture Trustee at the Closing Date, for the benefit of the Noteholders and the Insurer, all of the Trust's right, title and interest in and to the following (collectively, the "Trust Estate"): (i) certain adjustable-rate home equity revolving credit line loans (the "Mortgage Loans") (including any Additional Balances) made or to be made under certain Credit Line Agreements and conveyed to the Trust; (ii) all principal and interest collected in respect of the Mortgage Loans on and after the related Cut-Off Date; (iii) property that secured a Mortgage Loan to the extent that it has been acquired by foreclosure or deed in lieu of foreclosure; (iv) all rights acquired by the Trust under any Mortgage Insurance Policies covering the Mortgaged Properties; (v) the Policy; (vi) all amounts on deposit from time to time in the Note Account (excluding investment earnings thereon); (vii) all amounts on deposit from time to time in the Principal and Interest Account (excluding any investment earnings thereon); (viii) all rights of the Sponsor under the Purchase Agreement assigned to the Trust pursuant to the Sale and Servicing Agreement (including all of the Sponsor's rights and remedies in the event of certain breaches by the Originators of their respective representations and warranties under the Purchase Agreement); (ix) all rights of the Trust under the Sale and Servicing Agreement; (x) all Mortgage Files and other documents relating to the foregoing; (xi) all amounts on deposit in the Pre-Funding Account; (xii) all amounts on deposit in the Capitalized Interest Account (excluding 1 8 any investment earnings thereon), and (xiii) any and all proceeds of the foregoing except as otherwise provided herein. The foregoing Grant is made in trust to the Indenture Trustee, for the benefit of the Noteholders and the 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 1.1. Definitions. Except as otherwise specified herein, capitalized terms are used in this Indenture as defined in Annex 1. Defined terms that are used only in one section or only in another definition may be omitted from the list of defined terms in Annex 1. Defined terms include, as appropriate, all genders and the plural as well as the singular. SECTION 1.2. Incorporation by Reference of the Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Securities and Exchange Commission. "indenture securities" means the Notes. "indenture security holder" means a Noteholder. "indenture to be qualified" means this Indenture. "Indenture Trustee" or "institutional 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 1.3. Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; 2 9 (iii) "or" is not exclusive; (iv) "including" means "including without limitation"; and (v) words in the singular include the plural and words in the plural include the singular. SECTION 1.4. Action by or Consent of Noteholders. Whenever any provision of this Indenture refers to action to be taken, or consented to, by Noteholders, such provision shall be deemed to refer to the Noteholder of record as of the Record Date immediately preceding the date on which such action is to be taken, or consent given, by Noteholders. SECTION 1.5. Conflict with TIA. If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is required under the TIA to be part of and govern this Indenture, the latter provision shall control and all provisions required by the TIA are hereby incorporated by reference. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provisions shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. ARTICLE II. The Notes SECTION 2.1. Form. 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 2.2. Execution, Authentication and Delivery. The Notes shall be executed on behalf of the Trust by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be original or facsimile. Notes bearing the original or facsimile signature of individuals who were at any time Authorized Officers of the Trust shall bind the Trust, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. 3 10 The Indenture Trustee, upon receipt of a written Issuer Order, shall authenticate and deliver the Notes for original issue in an aggregate principal amount of $275,000,000. The Notes outstanding at any time may not exceed such amounts except as provided in Section 2.6. Each Note shall be dated the date of its authentication. The Notes shall be issuable as registered Notes in the minimum denomination of $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 2.3. Registration; Registration of Transfer and Exchange. The Trust shall cause to be kept a register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Trust shall provide for the registration of Notes and the registration of transfers of Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon any resignation of any Note Registrar, the Trust shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar. 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 3.2, and if the requirements of Section 8-401(a) 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 4 11 surrendered for exchange, and if the requirements of Section 8-401(a) of the UCC are met, the Trust shall execute and upon its request the Indenture Trustee shall authenticate the Notes which the Noteholder making the exchange is entitled to receive. Such requirements shall not be deemed to create a duty in the Indenture Trustee to monitor the compliance by the Trust with Section 8-401 of the UCC. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Trust, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange shall be (i) duly endorsed by, or be accompanied by a written instrument of transfer in the form attached to Exhibit A, duly executed by the 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 2.4 or 9.6 not involving any transfer. The Note Registrar shall not register the transfer of a Note unless the transferee has delivered a representation letter in form and substance satisfactory to the Note Registrar to the effect that either (i) the transferee is not an employee benefit plan or other retirement plan or arrangement subject to Title I of ERISA or Section 4975 of the Code and is not acting on behalf of or investing the assets of any such plan or arrangement or (ii) the transferee's acquisition and continued holding of the Note qualifies for exemptive relief under a prohibited transaction class exemption issued by the U.S. Department of Labor. Each transferee of a Book-Entry Note shall be deemed to make one of the foregoing representations. SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is surrendered to the Note Registrar, or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Trust, the Sponsor, Indenture Trustee and the Insurer such security or indemnity as may be required by it to hold the Trust, the Sponsor, the Indenture Trustee and the 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 5 12 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. 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 Insurer shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Trust or the Indenture Trustee in connection therewith. Upon the issuance of any replacement Note under this Section, the Trust may require the payment by the 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 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Trust, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.5. Persons Deemed Owners. Prior to due presentment for registration of transfer of any Note, the Trust, the Indenture Trustee and the Insurer and any agent of the Trust, the Indenture Trustee and the Insurer may treat the Person in whose name any Note is registered (as of the related Record Date) as the owner of such Note for the purpose of receiving payments of principal of and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Trust, the Insurer, the Indenture Trustee nor any agent of the Trust, the Insurer or the Indenture Trustee shall be affected by notice to the contrary. SECTION 2.6. Payment of Principal and Interest; Defaulted Interest. (a) The Notes shall accrue interest as provided herein, and such amount shall be due and payable on each Payment Date as specified herein. Any installment of interest or principal, if any, payable on any Note which is punctually paid or duly provided for by the Trust on the applicable Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date, by check mailed first-class, postage prepaid, to such Person's address as it appears on the Note Register on such Record Date, except that, unless Definitive Notes have been issued pursuant to Section 2.11, with respect to Notes 6 13 registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire transfer in immediately available funds to the account designated by such nominee and except for the final installment of principal payable with respect to such Note on a Payment Date or on the related Final Scheduled Payment Date (and except for the Redemption Price for any Note called for redemption pursuant to Section 10.1(a)) which shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3. On each Interest Determination Date, the Indenture Trustee shall determine the London interbank offered rate for one-month U.S. dollar deposits ("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 am London time; second, if the rate does not appear on Telerate Screen Page 3750 as of 11:00 am 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) 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 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 10.2. (c) If the Trust defaults in a payment of interest on the Notes, the Trust shall pay interest on such defaulted interest at the applicable Note Interest 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 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 Insurer to the extent not previously cancelled or destroyed. 7 14 SECTION 2.7. Cancellation. Subject to Section 2.6(f), all Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. Subject to Section 2.6(f), the Trust may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Trust may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section, except as expressly permitted by this Indenture. Subject to Section 2.6(f), all canceled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Trust shall direct by an Issuer Order that they be destroyed or returned to it; provided that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. SECTION 2.8. Release of 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 2.8 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 11.1. SECTION 2.9. Book-Entry Notes. The Notes, upon original issuance, will be issued in the form of typewritten Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company or its custodian, the initial Clearing Agency, by, or on behalf of, the Trust. Such Notes shall initially be registered on the Note Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner will receive a Definitive Note representing such Note Owner's interest in such Note, except as provided in Section 2.11. Unless and until definitive, fully registered Notes (the "Definitive Notes") have been issued to Note Owners pursuant to Section 2.11: (i) the provisions of this Section shall be in full force and effect; (ii) the Note Registrar and the Indenture Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of instructions or directions hereunder) as the sole Noteholder, and shall have no obligation to the Note Owners; (iii) to the extent that the provisions of this Section conflict with any other provisions of this Indenture, the provisions of this Section shall control; (iv) the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency and/or the Clearing Agency Participants. 8 15 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; (v) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Noteholders evidencing a specified percentage of the Outstanding Amount of the Notes, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee; and (vi) Note Owners may receive copies of any reports sent to Noteholders pursuant to this Indenture, upon written request, together with a certification that they are Note Owners and payment of reproduction and postage expenses associated with the distribution of such reports, from the Indenture Trustee at the Corporate Trust Office. SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until 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 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 a Rapid Amortization Event, Note Owners representing beneficial interests aggregating at least a majority of the Outstanding Amount of the Notes advise the Indenture Trustee through the Clearing Agency in writing that the continuation of a book entry system through the Clearing Agency is no longer in the best interests of the Note Owners, then the Clearing Agency shall notify all Note Owners and the Indenture Trustee of the occurrence of any such event and of the availability of Definitive Notes to Note Owners requesting the same. Upon surrender to the Indenture Trustee of the typewritten Note or Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Trust shall execute and the Indenture Trustee shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Trust, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions 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. 9 16 ARTICLE III. Covenants SECTION 3.1. Payment of Principal and Interest. The Trust will duly and punctually pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. Amounts properly withheld under the Code or any applicable state tax laws by any Person from a payment to any Noteholder of interest and/or principal shall be considered as having been paid by the Trust to such Noteholder for all purposes of this Indenture. SECTION 3.2. Maintenance of Office or Agency. The Trust will maintain an office or agency where Notes may be surrendered for registration, transfer or exchange of the Notes, and where notices and demands to or upon the Trust in respect of the Notes and this Indenture may be served. The Trust hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Trust will give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Trust shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Trust hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands. SECTION 3.3. Money for Payments to be Held in Trust. The Trust will cause each Note Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee and the Insurer an instrument in which such Note Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject to the provisions of this Section, that such Note Paying Agent will: (i) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; (ii) give the Indenture Trustee written notice of any default by the Trust (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes; (iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Note Paying Agent; (iv) immediately resign as a Note Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Note Paying Agent at the time of its appointment; and 10 17 (v) 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 the Indenture Trustee, such Note Paying Agent shall be released from all further liability with respect to such money. Subject to applicable laws with respect to the escheat of funds, any money held by the Indenture Trustee or any Note Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Trust; and the 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 3.4. Existence. Except as otherwise permitted by the provisions of Section 3.10, the Trust will keep in full effect its existence, rights and franchises as a business trust under the laws of the State of Delaware (unless it becomes, or any successor 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 3.5. 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 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: (i) Grant more effectively all or any portion of the Trust Estate; (ii) maintain or preserve the lien and security interest (and the priority thereof) in favor of the Indenture Trustee for the benefit of the Noteholders and the Insurer created by this Indenture or carry out more effectively the purposes hereof; 11 18 (iii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; (iv) enforce any of the Trust Estate; (v) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee in such Trust Estate against the claims of all persons and parties; and (vi) pay all taxes or assessments levied or assessed upon the Trust Estate when due. The Trust hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required by the Indenture Trustee pursuant to this Section; provided that, such designation shall not be deemed to create a duty in the Indenture Trustee or the Indenture Trustee to monitor the compliance of the Trust with respect to its duties under this Section 3.5 or the adequacy of any financing statement, continuation statement or other instrument prepared by the Trust. SECTION 3.6. Opinions as to Trust Estate. (a) On the Closing Date, the Trust shall furnish to the Indenture Trustee and the Insurer an Opinion of Counsel addressed to the Insurer 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 Insurer, created by this Indenture. (b) Within 90 days after the beginning of each calendar year, beginning with the year 2000, the Trust shall furnish to the Indenture Trustee and the 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 3.7. Performance of Obligations; Servicing of Mortgage Loans. (a) The Trust will not take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations under any instrument or agreement included in the Trust Estate or that 12 19 would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as ordered by any bankruptcy or other court or as expressly provided in this Indenture, the Operative Documents or such other instrument or agreement. (b) The Trust may contract with other Persons acceptable to the 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 Insurer in an Officer's Certificate of the Trust shall be deemed to be action taken by the Trust. Initially, the Trust has contracted with the Master Servicer to assist the Trust in performing its duties under this Indenture. (c) The Trust will punctually perform and observe all of its obligations and agreements contained in this Indenture, the Operative Documents and in the instruments and agreements included in the Trust Estate, including, but not limited to, preparing (or causing to be prepared) and filing (or causing to be filed) all UCC financing statements and continuation statements required to be filed by the terms of this Indenture and the Sale and Servicing Agreement 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 Insurer, the Noteholders representing at least a majority of the Outstanding Amount of the Notes or the Indenture Trustee (with the prior written consent of the 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 Event of Servicing Termination under the Insurance Agreement, the Trust shall promptly notify the Indenture Trustee, the Insurer and the Rating Agencies thereof in accordance with Section 11.4, and shall specify in such notice the action, if any, the Trust is taking in respect of such default. If an Event of 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 Insurer or (y) the Insurer has consented in writing to such waiver but the effect thereof would adversely affect the Noteholders. SECTION 3.8. Negative Covenants. So long as any Notes are Outstanding, the Trust shall not: (i) except as expressly permitted by this Indenture or the Operative Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Trust, including those included in the Trust Estate, without the prior written 13 20 consent of the Insurer (provided, that if an Insurer Default has occurred and is continuing, the Noteholders representing at least 51% of the Note Balance may direct the Indenture Trustee to sell or dispose of the Trust Estate in accordance with Section 5.6). (ii) claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Noteholder or the Insurer by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate; or (iii) (A) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien in favor of the Indenture Trustee created by this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (B) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics' liens and other liens that arise by operation of law, in each case on a Mortgaged Property and arising solely as a result of an action or omission of the related Mortgagor), (C) permit the lien of this Indenture not to constitute a valid first priority (other than with respect to any such tax, mechanics' or other lien) security interest in the Trust Estate or (D) amend, modify or fail to comply with the provisions of the Operative Documents without the prior written consent of the Insurer, which consent may not be unreasonably withheld. SECTION 3.9. Annual Statement as to Compliance. The Trust will deliver to the Indenture Trustee and the Insurer, within 90 days after the end of each fiscal year of the Trust (commencing with the fiscal year ended December 31, 1999), and otherwise in compliance with the requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as to the Authorized Officer signing such Officer's Certificate, that (i) a review of the activities of the Trust during such year and of performance under this Indenture has been made under such Authorized Officer's supervision; and (ii) to the best of such Authorized Officer's knowledge, based on such review, the Trust has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof. 14 21 SECTION 3.10. Trust May Not Consolidate or Transfer Assets. (a) The Trust may not consolidate or merge with or into any other Person. (b) Except as otherwise provided in the Sale and Servicing Agreement, and unless the 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 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 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 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 continently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. SECTION 3.14. Capital Expenditures. The Trust shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty). SECTION 3.15. Compliance with Laws. The Trust shall comply with the requirements of all applicable laws, the non-compliance with which would, individually or in the aggregate, materially and adversely affect the ability of the Trust to perform its obligations under the Notes, this Indenture or any Operative Document. SECTION 3.16. Restricted Payments. 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 15 22 any such ownership or equity interest or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Trust may make, or cause to be made, distributions to the Master Servicer, the Owner Trustee, the Indenture Trustee and the Certificateholders as permitted by, and to the extent funds are available for such purpose under, the Sale and Servicing Agreement, this Indenture, or Trust Agreement. The Trust will not, directly or indirectly, make payments to or distributions from the Note Account except in accordance with this Indenture and the Operative Documents. SECTION 3.17. Notice of Rapid Amortization Events, Events of Default 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 Insurer and the Rating Agencies prompt written notice of each Rapid Amortization Event, 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 Insurer, the Trust will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 3.19. Amendments of Sale and Servicing Agreement and Trust Agreement. The Trust shall not agree to any amendment to Section 9.01 of the Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate the requirements thereunder that the Indenture Trustee, the 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 4.1. 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 3.3, 3.4, 3.5, 3.8, 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 6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vi) the rights of Noteholders and the 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 a 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 16 23 (A) either (1) all Notes theretofore authenticated and delivered (other than (i) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.4 and (ii) Notes for which payment money has theretofore been deposited in trust or segregated and held in trust by the Trust and thereafter repaid to the Trust or discharged from such trust, as provided in Section 3.3) have been delivered to the Indenture Trustee for cancellation and the Policy has terminated and been returned to the Insurer for cancellation and all amounts owing to the Insurer have been paid in full; or (2) all Notes not theretofore delivered to the Indenture Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their respective Final Scheduled Payment Dates within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Trust, and in the case of (i), (ii) or (iii) above (A) 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 respective Final Scheduled Payment Dates or Redemption Date (if Notes shall have been called for redemption pursuant to Section 10.1(a)), as the case may be; (B) the Trust has paid or caused to be paid all amounts due the Insurer and the Indenture Trustee; and (C) the Trust has delivered to the Indenture Trustee and the Insurer an Officer's Certificate, an Opinion of Counsel and if required by the TIA, the Indenture Trustee or the Insurer an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.1(a) and each stating that all conditions precedent herein provided relating to the satisfaction and discharge of this Indenture have been complied with. 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 Insurer pursuant to the terms of the Policy shall be paid by the Insurer pursuant to the Policy, the Notes shall remain 17 24 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 Insurer, and the Insurer shall be subrogated to the rights of such Noteholders. SECTION 4.2. Application of Trust Money. All monies deposited with the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Note Paying Agent, as the Indenture Trustee may determine, to the Noteholders of the particular Notes for the payment or redemption of which such monies have been deposited with the Indenture Trustee. SECTION 4.3. Repayment of Monies Held by Note Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all monies then held by any Note Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall immediately be paid to the Indenture Trustee to be held and applied according to Section 3.3 and thereupon such Note Paying Agent shall be released from all further liability with respect to such monies. ARTICLE V. Rapid Amortization Events and Events of Default SECTION 5.1. Rapid Amortization Events. The following shall constitute "Rapid Amortization Events": (a) failure on the part of the Master Servicer or Sponsor (i) to make a payment or deposit required under the Sale and Servicing Agreement within five Business Days after the date such payment or deposit is required to be made or (ii) to observe or perform in any material respect any other covenants or agreements of the Sponsor set forth in the Sale and Servicing Agreement, which failure continues unremedied for a period of 60 days after written notice; (b) any representation or warranty made by the Sponsor in the Sale and Servicing Agreement proves to have been incorrect in any material respect when made and continues to be incorrect in any material respect for a period of 60 days after written notice and as a result of which the interests of the Noteholders or the Insurer are materially and adversely affected: provided, however, that a Rapid Amortization Event shall not be deemed to occur if such representation or warranty relates to a Mortgage Loan and the Sponsor has reacquired or made a substitution for such Mortgage Loan during such period (or within an additional 60 days with the prior written consent of the Insurer) in accordance with the provisions of the Sale and Servicing Agreement; (c) either (1) the entry of a decree or order for relief by a court having jurisdiction in respect of one of the Originators, or the Sponsor, in an involuntary case under the federal 18 25 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 either of the Originators or the Sponsor 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 a period of 60 consecutive days; or (2) the commencement by one of the Originators or the Sponsor, of a voluntary 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 the consent by either of the Originators or the Sponsor to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Originators or the Sponsor or of any substantial part of its property or the making by the Originators or the Sponsor of an assignment for the benefit of creditors or the failure by the Originators or the Sponsor generally to pay its debts as such debts become due or the taking of corporate action by the Originators or the Sponsor in furtherance of any of the foregoing; (d) the Trust becomes subject to regulation by the Securities and Exchange Commission as an investment company within the meaning of the Investment Company Act of 1940, as amended; (e) the occurrence of an Event of Servicing Termination; (f) a draw is made under the Policy; and (g) a default in the payment of any interest when the same becomes due and payable and the continuance of such default for a period of five days or a default in the payment in full of the Note Balance on the Final Scheduled Payment Date. In the case of any event described in clause (a) through (f), a Rapid Amortization Event will be deemed to have occurred only if, after the applicable grace period, if any, described herein or in the Indenture or the Sale and Servicing Agreement either (i)(A) the Insurer or (B) the Indenture Trustee or Noteholders evidencing at least 51% of the Note Balance, in each case, with the prior written consent of the Insurer, by written notice to the Insurer, the Sponsor, the Originators, the Rating Agencies, and the Master Servicer (and to the Indenture Trustee, if given by the Noteholders or the Insurer; provided that, in the event such a declaration is made by the Insurer, the Insurer shall give notice thereof to the Indenture Trustee and the Indenture Trustee shall forward such notice to each of the above-mentioned parties) declare that a Rapid Amortization Event has occurred as of the date of such notice, or (ii) in the case of any event described in clause (g), the Indenture Trustee or Noteholders evidencing at least 51% of the Note Balance by such written notice declare that a Rapid Amortization Event has occurred as of the date of such notice. Within 15 days, the Indenture Trustee will publish a notice of the occurrence of such event. 19 26 SECTION 5.2. Consequences of Rapid Amortization Event. If a Rapid Amortization Event shall have occurred and be continuing, (a) the Rapid Amortization Period shall immediately commence and the Noteholders shall be entitled on each Payment Date thereafter to an amount equal to the Maximum Principal Payment less the Overcollateralization Reduction Amount and (b) if the Rapid Amortization Event is one described in 5.1(c) above, on the day of any such filing or appointment no further Additional Balances will be transferred to the Trust, and such Originator will promptly give notice to the Indenture Trustee and the Insurer of any such filing or appointment. SECTION 5.3. [Reserved] SECTION 5.4. Events of Default. (a) The following occurrences shall constitute an "Event of Default": (i) a default in the payment of any interest when the same becomes due and payable and the continuance of such default for a period of five days or a default in the payment in full of the Note Balance on the Final Scheduled Payment Date; (ii) failure on the part of the Trust to perform in any material respect any covenant or agreement under the Indenture (other than a covenant in clause (i) hereof) or the breach of a representation or warranty of the Trust, which continues for a period of thirty days after notice thereof is given; and (iii) 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 a period of 60 consecutive days, or (b) If an Event of Default shall have occurred and be continuing, with the prior written consent of the Insurer, the Indenture Trustee may, and at the direction of the Insurer or of Noteholders representing not less than 51% of the Note Balance (with the prior written consent of the 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 Amount of the Notes, together with accrued and unpaid interest thereon to the date of such acceleration, shall become immediately due and payable, all subject to the prior written consent of the Insurer. (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 as hereinafter in this Article; provided, the Insurer or the Noteholders representing at least 51% of the Note Balance, with the prior written consent of the Insurer, by 20 27 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 Notes that have become due solely by such acceleration, have been cured or waived. No such recission shall affect any subsequent Event of Default or impair any right consequent thereon. SECTION 5.5. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. Subject to the following sentence, if an Event of Default with respect to the Notes occurs and is continuing, the Indenture Trustee may, with the prior written consent of the Insurer, and shall, at the written direction of the Insurer, proceed to protect and enforce its rights and the rights of the Noteholders and the 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 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 5.6. Remedies for Event of Default. (a) 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 21 28 rescinded and annulled, the Indenture Trustee, at the written direction of the Insurer, may, for the benefit of the Noteholders and the Insurer, do one or more of the following: (i) institute Proceedings for the collection of all amounts then payable on the Notes, or under this Indenture, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Trust moneys adjudged due; (ii) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; (iii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate; (iv) exercise any remedies of a secured party under the Uniform Commercial Code and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee or the Noteholders and the Insurer hereunder; and (v) refrain from selling the Trust Estate and apply all Monthly Remittance Amounts pursuant to Section 5.9. SECTION 5.7. 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 whether the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand on the Trust for the payment of any overdue principal or interest) shall, at the direction of the 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 Insurer allowed in such Proceeding; and (b) 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 Insurer to make such payments to the Indenture Trustee and, in the event that the Indenture Trustee shall consent to the making of such payments directly to the Noteholders and the 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. 22 29 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 Insurer any plan of reorganization, arrangement, adjustment or composition affecting any of the Notes or the rights of any Noteholder, or the Insurer, or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder or the Insurer in any such Proceeding. Any plan of reorganization, arrangement, adjustment or composition relative to the Trust or any other obligor upon any of the Notes or the property of the Trust or of such obligor or their creditors and affecting the Notes or the rights of the Insurer under this Indenture or the Insurance Agreement must be acceptable to the Insurer and, as long as no Insurer Default exists and is continuing, the Insurer shall be entitled to exercise the voting rights of the Noteholders regarding such plan, reorganization, arrangement, adjustment or composition. SECTION 5.8. 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 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 Insurer in respect of which such judgment has been recovered after payment of amounts required to be paid pursuant to clause (i) of Section 5.9. SECTION 5.9. Application of Money Collected. If the 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 or otherwise and any other monies that may then be held or thereafter received by the Indenture Trustee as security for the Notes shall be applied in the following order, at the date or dates fixed by the Indenture Trustee and, in case of the payment of the entire amount due on account of principal of, and interest on, the Notes, upon presentation and surrender thereof: (i) to the Indenture Trustee and the Owner Trustee, any unpaid Indenture Trustee Fee 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; (ii) to the Insurer, any unpaid Premium Amount, then due and payable pursuant to the Insurance Agreement; (iii) 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; 23 30 (iv) to the payment of the Interest Distribution Amount and Note Interest Shortfall then due and unpaid upon the Outstanding Amount of the Notes through the day preceding the date upon which such payment is made; (v) to the payment of the Note Balance then due and unpaid on the Outstanding Amount of the Notes; (vi) to the Insurer, all amounts due pursuant to the Insurance Agreement; (vii) to the Noteholders, the Net Funds Cap Carry-Forward Amount; (viii) to the Master Servicer, any unreimbursed Servicing Advances, including Nonrecoverable Advances; and (ix) to the Certificateholders, any amount remaining on deposit in the Note Account. SECTION 5.10. 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: (i) the Noteholders of not less than 25% of the Note Balance have made a 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; and (ii) the 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; and (iii) the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such proceedings; and (iv) 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 Note Balance; and (v) an Insurer Default shall 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 24 31 the Note Balance, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture. SECTION 5.11. 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. SECTION 5.12. 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 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 Insurer and the Noteholders shall continue as though no such proceeding had been instituted. SECTION 5.13. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Controlling Party or to the related Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.14. Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee, 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 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 Insurer or by the Noteholders, as the case may be. SECTION 5.15. Control by Noteholders. If the Indenture Trustee is the Controlling Party, the Noteholders of a majority of the Note Balance, with the prior written consent of the Insurer, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided that (i) such direction shall not be in conflict with any rule of law or with this Indenture; (ii) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction; 25 32 provided, however, that, subject to Section 6.1, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any related Noteholders not consenting to such action. SECTION 5.16. 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 the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by the Insurer, any Noteholder, or group of Noteholders with the prior written consent of the Insurer, in each case holding in the aggregate more than 10% of the Note Balance 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 5.17. 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 5.18. 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 Insurer or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee or the 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 5.19. Performance and Enforcement of Certain Obligations. (a) Promptly following a request from the Indenture Trustee (at the direction of the 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 26 33 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 Note Balance shall, exercise all rights, remedies, powers, privileges and claims of the Trust against the Sponsor or the Master Servicer under or in connection with the Sale and Servicing Agreement, including the right or power to take any action to compel or secure performance or observance by the Sponsor or the Master Servicer of each of their obligations to the Trust thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement, and any right of the Trust to take such action shall be suspended. SECTION 5.20. Subrogation. The Indenture Trustee shall receive as attorney-in-fact of each Noteholder any Insured Payment from the 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 Insurer shall, to the extent it makes any payment with respect to the 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 Insurer, the Indenture Trustee shall assign to the 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 Insurer. In addition to the rights of the Insurer set forth in Section 11.20 hereof, the 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 5.21. Preference Claims. (a) In the event that the Indenture Trustee has received a certified copy of an order of the appropriate court that any payment on a Note has been avoided in whole or in part as a preference payment under applicable bankruptcy law, the Indenture Trustee shall so notify the Insurer, shall comply with the provisions of the Policy to obtain payment by the Insurer of such avoided payment, and shall, at the time it provides notice to the 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 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 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. 27 34 (b) The Indenture Trustee shall promptly notify the 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 Insurer Default shall not have occurred and be continuing, the 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 Insurer, but subject to reimbursement as provided in the Insurance Agreement. In addition, and without limitation of the foregoing, as set forth in Section 5.20, the Insurer shall be subrogated to, and each Noteholder and the Indenture Trustee hereby delegate and assign, to the fullest extent permitted by law, the rights of the Indenture Trustee and each Noteholder in the conduct of any proceeding with respect to a Preference Claim, including, without limitation, all rights of any party to an adversary proceeding action with respect to any court order issued in connection with any such Preference Claim. ARTICLE VI. The Indenture Trustee SECTION 6.1. Duties of Indenture Trustee. (a) If an 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. 28 35 (c) The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; (iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.15; and (iv) the Indenture Trustee shall not be charged with knowledge of any failure by the Master Servicer to comply with the obligations of the Master Servicer referred to in clauses (i) and (ii) of Section 5.1 of the Sale and Servicing Agreement unless a Responsible Officer of the Indenture Trustee at the Corporate Trust Office obtains actual knowledge of such failure or occurrence or the Indenture Trustee receives written notice of such failure or occurrence from the Master Servicer, the Insurer or the Noteholders evidencing Voting Rights aggregating not less than 51%. (d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Trust. (e) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or indemnity reasonably satisfactory to it against such risk or liability is not reasonably assured to it. (f) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. (g) The Indenture Trustee shall, upon two Business Days' prior written notice to the Indenture Trustee, permit any representative of the 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. 29 36 (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. SECTION 6.2. Rights of Indenture Trustee. (a) The Indenture Trustee may rely on any document reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in the document. (b) Before the Indenture Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officer's Certificate or Opinion of Counsel. (c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee. (d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful misconduct, negligence or bad faith. (e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel 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 as defined in the Sale and Servicing Agreement (that has not been cured or waived), exercise the rights and powers vested in it by this Indenture or the Sale and Servicing Agreement with reasonable care and skill. 30 37 (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 Insurer or by the Noteholders evidencing not less than 25% of the Note Balance; provided, however, that if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture or the Sale and Servicing Agreement, the Indenture Trustee may require indemnity reasonably satisfactory to it against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Person making such request, or, if paid by the Indenture Trustee shall be reimbursed by the Person making such request upon demand. (h) The Indenture Trustee shall not be accountable, shall have no liability and makes no representation as to any acts or omissions hereunder of the Master Servicer until such time as, and only to the extent that, the Indenture Trustee may be required to act as Master Servicer. SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Trust or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Note Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12. SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Trust Estate or the Notes, it shall not be accountable for the Trust's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Trust in the Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee's certificate of authentication. SECTION 6.5. Notice of Defaults. If an Event of Default, a Rapid Amortization Event, 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 Insurer of such event within 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 6.6. 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. 31 38 SECTION 6.7. Compensation and Indemnity. Pursuant to Section 8.6(c)(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 8.6(c)(xii) 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 4.5(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 6.8. Replacement of Indenture Trustee. The Indenture Trustee may resign at any time by so notifying the Trust and the Insurer by written notice. Upon receiving such notice of resignation, the Trust shall promptly appoint a successor Indenture Trustee (approved in writing by the 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 Trustee. The Trust may (with the prior written consent of the Insurer) and, at the request of the Insurer shall, remove the Indenture Trustee, if: (i) the Indenture Trustee fails to comply with Section 6.11; (ii) a court having jurisdiction in the premises in respect of the Indenture Trustee in an involuntary case or proceeding under federal or state banking or bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, shall have entered a decree or order granting relief or appointing a receiver, liquidator, assignee, custodian, trustee, conservator, sequestrator (or similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee's property, or ordering the winding-up or liquidation of the Indenture Trustee's affairs; (iii) an involuntary case under the federal bankruptcy laws, as now or hereafter in effect, or another present or future federal or state bankruptcy, insolvency or similar law is commenced with respect to the Indenture Trustee and such case is not dismissed within 60 days; (iv) the Indenture Trustee commences a voluntary case under any federal or state banking or bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or consents 32 39 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 (v) 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 as the retiring Indenture Trustee), the Trust shall promptly appoint a successor Indenture Trustee acceptable to the Insurer. If the Trust fails to appoint such a successor Indenture Trustee, the 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 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 Amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee acceptable to the 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 Insurer. Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Indenture Trustee pursuant to Section 6.8. Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Trust's and the Master Servicer's indemnity obligations under Section 6.7 shall continue for the benefit of the retiring Indenture Trustee and the Master Servicer shall pay any amounts owing to the Indenture Trustee. 33 40 SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Indenture Trustee shall have. SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust may at the time be located, the Indenture Trustee with the prior written consent of the 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 Insurer, such title to the Trust, or any part hereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-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 6.8 hereof. 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; 34 41 (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 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. (e) The Master Servicer shall be responsible for the fees of any co-trustee or separate trustee appointed hereunder, and such fees shall not be a responsibility of the Trust. 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 Insurer or, in the event of an Insurer Default, the Sponsor and having (x) short-term, unsecured debt rated at least A-1 by Moody's (or such lower rating as may be acceptable to Moody's and the 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 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 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, 35 42 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 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 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 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 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 6.7 hereof. 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). 36 43 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 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 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. 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 37 44 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 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 Operative Documents shall occur and be continuing, the Indenture Trustee, if the Controlling Party has given is prior written consent (and if not the Controlling Party, with the prior written consent of the Insurer), may proceed to protect and enforce its rights and the rights of the Noteholders and the 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 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: (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 Insurer, the Sponsor, or holders of the Notes in their defense of legal actions by Mortgagors to recover affirmative claims if such cooperation and assistance is not contrary to the interests of the Indenture Trustee as a party to such legal actions and if the Indenture Trustee is satisfactorily indemnified for all liability, costs and expenses arising therefrom. 38 45 (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 7.1. Trust To Furnish To Indenture Trustee Names and Addresses of Noteholders. The Trust will furnish or cause to be furnished to the Indenture Trustee (a) not more than five days after the earlier of (i) each Record Date and (ii) three months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the 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 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 Insurer or the Trust in writing upon their written request and at such other times as the Insurer or the Trust may request a copy of the list. SECTION 7.2. Preservation of Information; Communications to Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Noteholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 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 7.1 upon receipt of a new list so furnished. (b) Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. (c) The Trust, the Indenture Trustee and the Note Registrar shall have the protection of TIA Section 312(c). SECTION 7.3. Reports by Trust. (a) The Trust shall: (i) file with the Indenture Trustee, within 15 days after the Trust is required to file the same with the Commission, copies of the annual reports and copies of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations 39 46 prescribe) which the Trust may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (ii) file with the Indenture Trustee and the Commission in accordance with rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Trust with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA Section 313(c)) such summaries of any information, documents and reports required to be filed by the Trust pursuant to clauses (i) and (ii) of this Section 7.3(a) as may be required by rules and regulations prescribed from time to time by the Commission. (b) Unless the Trust otherwise determines, the fiscal year of the Trust shall end on December 31 of each year. SECTION 7.4. Reports by Indenture Trustee. If required by TIA Section 313(a), within 60 days after each December 31, beginning with December 31, 1999, 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. ARTICLE VIII. Payments and Statements to Noteholders and Certificateholders; Accounts, Disbursements and Releases SECTION 8.1. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the Sale and Servicing Agreement. 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 Insurer, and shall, at the direction of the 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. 40 47 SECTION 8.2. Release of Trust Estate. (a) Subject to Section 8.11 and the payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee may, and when required by the Trust and the provisions of this Indenture shall (in each case, with the prior written consent of the Insurer), execute instruments to release property from the lien of this Indenture, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture or the Sale and Servicing Agreement. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies. (b) The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 and all Reimbursement Amounts due to the Insurer pursuant to the Insurance Agreement have been paid and confirmed in writing by the 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 8.2(b) only upon receipt 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 11.1, and the prior written consent of the Insurer. (c) The foregoing notwithstanding, the Indenture Trustee shall release Mortgage Loans from the lien of this Indenture pursuant to the Sale and Servicing Agreement. SECTION 8.3. 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 Insurer, as their interests may appear. SECTION 8.4. The Payments Under the Policy. (a) On 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 Insurer no later than 12:00 noon 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 Insurer on behalf of the Noteholders, the Indenture Trustee shall deposit such payments in the Note Account and 41 48 shall distribute such payments, or the proceeds thereof, in accordance with Section 8.6(c) hereof to the Noteholders. (d) The Indenture Trustee shall (i) receive payments made pursuant to the Policy as attorney-in-fact for each Noteholder and (ii) disburse such Insured Payment to the Noteholders as set forth in Section 8.6(c) hereof. The Insurer shall be entitled to receive the Reimbursement Amount pursuant to Section 8.6(c)(viii) hereof with respect to each Insured Payment made by the Insurer. The Indenture Trustee hereby agrees on behalf of each Noteholder and the Trust for the benefit of the Insurer that it recognizes that to the extent the Insurer makes payments pursuant to the Policy, either directly or indirectly (as by paying through the Indenture Trustee), to the Noteholders, the Insurer will be subrogated to the Noteholders and will be entitled to receive such Reimbursement Amount. SECTION 8.5. Pre-Funding Account and Capitalized Interest Account. (a) On the Closing Date, the Indenture Trustee will deposit, on behalf of the Noteholders, the Pre-Funded Amount in the Pre-Funding Account and the Capitalized Interest Amount in the Capitalized Interest Account from the proceeds of the sale of the Notes. (b) On any Subsequent Transfer Date, the Sponsor shall instruct the Indenture Trustee in writing pursuant to the Subsequent Transfer Agreement to withdraw from the Pre-Funding Account an amount equal to 100% of the aggregate Principal 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 2.6 of the Sale and Servicing Agreement. (c) On each Payment Date during the Pre-Funding Period, the Indenture Trustee shall transfer the Pre-Funding Earnings and the Capitalized Interest Requirement, if any, for such Payment Date from the Pre-Funding Account or Capitalized Interest Account, respectively, to the Note Account. (d) On the Payment Date immediately following the end of the Pre-Funding Period, the Indenture Trustee shall withdraw any amounts remaining on deposit in the Pre-Funding Account and deposit such amounts in the Note 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 transfer on such Payment Date described in clause (c) above) shall be paid to the Master Servicer, and the Capitalized Interest Account shall be closed. SECTION 8.6. Flow of Funds. (a) The Indenture Trustee shall deposit to the Note Account, without duplication, immediately upon receipt, (i) any Insured Payments, (ii) the proceeds of any final liquidation of the assets of the Trust, (iii) the Monthly Remittance Amount remitted by the Master Servicer or any Sub-Servicer, (iv) on each Payment Date occurring in the Pre-Funding Period, the Pre- 42 49 Funding Earnings and the Capitalized Interest Requirement for such Payment Date, and (v) at the end of the Pre-Funding Period, any Pre-Funded Amount remaining in the Pre-Funding Account in accordance with Section 8.5(d). (b) [Reserved]. (c) On each Payment Date, the Indenture Trustee shall, from funds on deposit in the Note Account (other than funds on deposit relating to any Insured Payments), make the following allocations, disbursements and transfers 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. Insured Payments shall be applied to payments specified under clauses (iii), (iv) and (vii) below and in the case of the Final Scheduled Payment Date, clause (v) below: (i) to the Indenture Trustee, the Indenture Trustee Fee then due and to the Owner Trustee, the Owner Trustee Fee then due; (ii) to the Insurer, the Premium Amount then due; (iii) to the Noteholders, the Interest Distribution Amount; (iv) the Note Interest Shortfall, if any; (v) to the Noteholders, the Scheduled Principal Distribution Amount for such Payment Date; (vi) on the Payment Date following the end of the Pre-Funding Period, to the Noteholders, as a distribution of principal, any Pre-Funded Amount remaining in the Pre-Funding Account; (vii) to the Noteholders, as a distribution of principal, the Overcollateralization Deficit for such Payment Date; (viii) to the Insurer, the Reimbursement Amount, if any, then due to it; (ix) to the Noteholders, the Accelerated Principal Payment with respect to the Notes; (x) to the Noteholders, the amount of any Net Funds Cap Carry-Forward Amount then due; (xi) to the Master Servicer, reimbursement for Servicing Advances to the extent not previously reimbursed and reimbursement for Servicing Advances which have been deemed Nonrecoverable Advances; (xii) to the Indenture Trustee and the Owner Trustee, for the reimbursement of expenses of the Indenture Trustee and the Owner Trustee not reimbursed pursuant 43 50 to (c)(i) above which expenses were incurred in connection with its duties and obligations hereunder; and (xiii) to the Certificateholders, any Available Funds remaining on deposit in the Note Account. (d) On any Payment Date during the continuance of any Insurer Default no Premium Amount shall be paid to the Insurer (unless the 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 Insurer as Premium Amounts shall be retained in the Note Account but segregated from Available Funds. On any Payment Date wherein such Insurer Default has been cured, the Premium Amounts shall be paid to the Insurer. SECTION 8.7. Investment of Accounts. (a) So long as no event described in Section 5.1(a) 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 earnings thereon) held by the Indenture Trustee shall be invested and reinvested by the Indenture Trustee in the name of the Indenture Trustee for the benefit of the Noteholders and the Insurer as directed in writing by the Master Servicer, in one or more Eligible Investments bearing interest or sold at a discount. During the continuance of an event described in Section 5.1(a) of the Sale and Servicing Agreement and following any removal of the Master Servicer, the 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 clause (i) of Section 8.8 upon the occurrence of either of the following events: (i) the Master Servicer or the Insurer shall have failed to give investment directions to the Indenture Trustee; or 44 51 (ii) the Master Servicer or the Insurer shall have failed to give investment directions to the Indenture Trustee by 5:00 PM 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 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 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 as realized. SECTION 8.8. 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. (c) FHLMC participation certificates and senior debt obligations. (d) Federal Home Loan Banks' consolidated senior debt obligations. (e) FNMA 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 Insurer provided: 1. The agreement is with a bank or insurance company which has an unsecured, uninsured and unguaranteed obligation (or claims-paying ability) rated Aa2 or better by Moody's and AA or better by 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 2. Monies invested thereunder may be withdrawn without any penalty, premium or charge upon not more than one day's notice (provided such notice may be amended or canceled at any time prior to the withdrawal date), and 3. The agreement is not subordinated to any other obligations of such insurance company or bank, and 45 52 4. The same guaranteed interest rate will be paid on any future deposits made pursuant to such agreement, and 5. The Indenture Trustee and the 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 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 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 8.9. Reports by Indenture Trustee. (a) On each Payment Date, to the extent that the related report described in Section 4.3 of the Sale and Servicing Agreement has been received by the Indenture Trustee, the Indenture Trustee shall provide to each Noteholder, the Master Servicer, the Insurer, each Underwriter, the Sponsor, S&P and Moody's a written report setting forth, among other things, the following information: (i) the total amount of the distribution with respect to the Notes and the Certificates; (ii) the amount of such distributions allocable to principal; (iii) the amount of such distributions allocable to interest; (iv) the amount of any Note Interest Shortfall in such distribution; (v) the amount of any Insured Payment included in the amounts distributed on such Payment Date; (vi) information furnished by the Sponsor pursuant to Section 6049(d)(7)(C) of the Code and the regulations promulgated thereunder to assist the Noteholders in computing their market discount; 46 53 (vii) the total of any Substitution Amounts and any Loan Reacquisition Price amounts included in such distribution; (viii) the amounts, if any, of any Realized Losses for the related Remittance Period; (ix) the Servicing Fee for the related Remittance Period; (x) the Note Balance and the Pool Factor, each after giving effect to such distribution; (xi) the Pool Principal Balance as of the end of the preceding Remittance Period; (xii) the Note Interest Rate applicable to the distribution on the following Payment Date; (xiii) the number and principal balances of any Mortgage Loans reacquired by the Sponsor pursuant to Sections 2.2(b), 2.5, 3.3(c) and 3.4 of the Sale and Servicing Agreement; (xiv) the Overcollateralization Deficit; (xv) the amount of any Net Funds Cap Carry-Forward Amount; (xvi) the amount of any Overcollateralization Reduction Amount; and (xvii) the current level of the Overcollateralization Amount. (xviii) the total number, aggregate Principal Balance and the percentage (based on the Pool Principal Balance) of all Mortgage Loans that are (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days Delinquent; (xix) the total number, aggregate Principal Balance and percentage (based on the Pool Principal Balance) of all Mortgage Loans in foreclosure proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (xviii)); (xx) the total number, aggregate Principal Balance and percentage (based on the Pool Principal Balance) of all Mortgage Loans relating to Mortgagors in bankruptcy proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (xviii)); and (xxi) during the Pre-Funding Period, (1) the remaining Pre-Funded Amount, (2) Capitalized Interest Amount, and (3) the aggregate Principal Balance of Subsequent Mortgage Loans purchased by the Trust during the related Remittance Period and cumulatively. 47 54 Items (i) through (iii) above shall, with respect to each Note, be presented on the basis of a Note having a $1,000 denomination. In addition, by January 31 of each calendar year following any year during which the Notes are outstanding, the Indenture Trustee shall furnish a report to each holder of record at any time during each calendar year as to the aggregate of amounts reported pursuant to (i), (ii) and (iii) with respect to the Notes for such calendar year. If the Notes are then in book-entry form, DTC will supply such reports to the Noteholders as are in accordance with its procedures. SECTION 8.10. Additional Reports by Indenture Trustee. (a) The Indenture Trustee shall report to the Sponsor, the Master Servicer and the Insurer with respect to the amount then held in each Account (including investment earnings accrued or scheduled to accrue) held by the Indenture Trustee and the identity of the investments included therein, as the Sponsor, the Master Servicer or the 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 Insurer, transmit promptly to the Sponsor, the Master Servicer and the Insurer copies of the Servicer Report in respect of the Mortgage Loans furnished to it by the Master Servicer pursuant to Section 4.3 of the Sale and Servicing Agreement and shall notify the Sponsor, the Master Servicer and the Insurer if any such receipts have not been received by the Indenture Trustee. (b) From time to time, at the request of the Insurer, the Indenture Trustee shall report to the Insurer with respect to its actual knowledge, without independent investigation, of any breach of any of the representations or warranties relating to individual Mortgage Loans set forth in Section 3.3(a) of the Sale and Servicing Agreement. On the date that is eighteen months after the Closing Date, the Indenture Trustee shall provide the Insurer with a written report of all of such inaccuracies to such date of which it has actual knowledge, without independent investigation, and of the action taken by the Sponsors under Section 3.4(b) of the Sale and Servicing Agreement with respect thereto. (c) The Sponsor and the Master Servicer, on behalf of Noteholders and the Trust (the "Trust Parties") may authorize the Indenture Trustee to include the loan level information with respect to the Mortgage Loans, excluding any information relating to the fees or amounts due to the Insurer, contained in reports provided to the Insurer or the Indenture Trustee by the Master Servicer and, if so directed by an Authorized Officer of the Sponsor in writing to the Indenture Trustee, the monthly report to the Noteholders 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 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. In the event the Sponsor and the Master Servicer authorizes the release of the Information, 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 it's affiliates' respective agents, representatives, directors, officers or employees (collectively, the "Designated Parties"), 48 55 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 Trustee's negligence or willful misconduct). The Trust Parties waive their rights to assert any such claims against the Designated Parties and fully and finally release the Designated Parties from any and all such claims, demands, obligations, actions and liabilities (other than in connection with such Designated Parties' negligence or willful misconduct). The Indenture Trustee makes no representations or warranties, expressed or implied, of any kind whatsoever with respect to the accuracy, adequacy, timeliness, completeness, merchantability or fitness for any particular purpose of any Information in any form or manner. The authorizations, covenants and obligations of the Trust Parties under this section shall be irrevocable and shall survive the termination of this Indenture. SECTION 8.11. Opinion of Counsel. The Indenture Trustee shall receive at least seven days' notice when requested by the Trust to take any action pursuant to Section 8.2(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require as a condition to such action, an Opinion of Counsel, stating the legal effect of any such action, outlining the steps required to complete the same, and 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 Insurer in contravention of the provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action. ARTICLE IX. Supplemental Indentures SECTION 9.1. Supplemental Indentures Without Consent of Noteholders. (a) Without the consent of the Noteholders but with the prior written consent of the 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 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; 49 56 (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 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; (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 (2) or as evidenced in writing by the Rating Agencies, 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, also without the consent of any of the Noteholders but with the prior written consent of the 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) as evidenced in writing by the Rating Agencies, delivered to the Indenture Trustee and the Insurer, reduce the then-current rating on the Notes or (2) as evidenced by an Opinion of Counsel addressed to the Insurer and the Indenture Trustee, materially and adversely affect the interests of any Noteholder. SECTION 9.2. Supplemental Indentures with Consent of Noteholders. The Trust and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating 50 57 Agencies, with the prior written consent of the Insurer and with the consent of the Noteholders of at least 51% of the Note Balance, 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 Insurer under the Operative Documents, no such supplemental indenture shall, without the consent of the Noteholder of each Outstanding Note affected thereby: (i) change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the interest rate thereon or the Redemption Price with respect thereto, change the provision of this Indenture relating to the application of collections on, or the proceeds of the sale of, the Trust Estate to payment of principal of or interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable; (ii) impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date); (iii) reduce the percentage of the Outstanding Amount 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; (iv) modify or alter the provisions of the proviso to the definition of the term "Outstanding"; (v) reduce the percentage of the Outstanding Amount of the Notes required to direct the Indenture Trustee to direct the Trust to sell or liquidate the Trust Estate pursuant to Section 5.6; (vi) modify any provision of this Section except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the Operative Documents cannot be modified or waived without the consent of the Noteholder of each Note affected thereby; (vii) modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual components of such calculation); or 51 58 (viii) permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein or in any of the Operative Documents, terminate the lien of this Indenture on any property at any time subject hereto or deprive the 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 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Promptly after the execution by the Trust and the Indenture Trustee of any supplemental indenture pursuant to this Section, the Indenture Trustee shall mail to the 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 Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.3. Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of Counsel (and, if requested, an Officer's Certificate) stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Trust and the 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 9.5. Conformity With Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act. 52 59 SECTION 9.6. Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Trust or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Trust, to any such supplemental indenture may be prepared and executed by the Trust and authenticated and delivered by the Indenture Trustee in exchange for the Notes. ARTICLE X. Redemption of Notes SECTION 10.1. Redemption. (a) The Notes are subject to redemption following the later of (A) the Payment Date following payment in full of all amounts owing to the Insurer and (B) the earliest of (i) the transfer, under the conditions specified in Section 10.1(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 5.6 hereof) or the disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (iii) the Payment Date in January 2024; provided, however, that (x) no such redemption shall occur unless all amounts due and owing to the 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 10.1(a), the Indenture Trustee shall execute such documents and instruments of transfer presented by the Sponsor, in each case without recourse, representation or warranty, and take such other actions as the Sponsor may reasonably request to effect the transfer of the Mortgage Loan to the Sponsor. (b) The Notes shall be subject to optional redemption by the Master Servicer or any Master Servicer Affiliate on any Payment Date after the Payment Date on which the Note Balance has been reduced to an amount less than or equal to 10% of the Original Note Balance and all amounts due and owing to the 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 Balance and accrued and unpaid interest thereon at the Note Interest Rate through the day preceding the final Payment Date plus all related Reimbursement Amounts (such amount, 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. 53 60 (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 Section 10.1(b), 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 five Business Days prior to the Redemption Date whereupon all such Notes shall be due and payable on the Redemption Date upon the furnishing of a notice complying with Section 10.2. SECTION 10.2. Surrender of Notes. (a) Notice of any termination, specifying the Payment Date (which shall be a date that would otherwise be a Payment Date) upon which the Noteholders may surrender their Notes to the Indenture Trustee for payment of the final distribution and cancellation, shall be given promptly by the Indenture Trustee (upon receipt of written directions from the Sponsor, if the Sponsor is exercising its right to transfer of the Mortgage Loans, given not later than the first (1st) day of the month preceding the month of such final distribution) to the Insurer and to the Master Servicer and by letter to Noteholders mailed not earlier than the first (1st) day and not later than the tenth (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 Notes at the office or agency of the Indenture Trustee therein designated, (ii) the amount of any such final distribution and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable, distributions being made only upon presentation and surrender of the Notes at the office or agency of the Indenture Trustee therein specified. (b) Any money held by the Indenture Trustee in trust for the payment of any amount due with respect to any Note and remaining unclaimed by the related Noteholder for the period then specified in the escheat laws of the State of New York after such amount has become due and payable shall be discharged from such trust and be paid first, to the 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 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 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). 54 61 SECTION 10.3. Form of Redemption Notice. Notice of redemption supplied to the Indenture Trustee by the Master Servicer under Section 10.1(a) shall be given by the Indenture Trustee by facsimile or by first-class mail, postage prepaid, transmitted or mailed prior to the applicable Redemption Date to each Noteholder of record, as of the close of business on the date which is not less than 5 days prior to the applicable Redemption Date, at such Noteholder's address appearing in the Note Register. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) that the Record Date otherwise applicable to such Redemption Date is not applicable and that payments shall be made only upon presentation and surrender of such Notes at the place where such Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Trust to be maintained as provided in Section 3.2); and (iv) that interest on the Notes shall cease to accrue on the Redemption Date. Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Trust. Failure to give notice of redemption, or any defect therein, to any Noteholder shall not impair or affect the validity of the redemption of any other Note. SECTION 10.4. Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as required by Section 10.2, on the Redemption Date become due and payable at the related Redemption Price and (unless the Trust shall default in the payment of the related Redemption Price) no interest shall accrue on such Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating such Redemption Price. ARTICLE XI. Miscellaneous SECTION 11.1. Compliance Certificates and Opinions, etc. Upon any application or request by the Trust to the Indenture Trustee to take any action under any provision of this Indenture, and where specified in this Indenture, the Trust shall furnish to the Indenture Trustee and to the 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 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, except that, in the case of any such application or request as to which the furnishing of such documents is 55 62 specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (i) a statement that, 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 (ii) a statement as to whether, in the opinion of each such signatory such condition or covenant has been complied with. SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Authorized Officer of the Trust may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Master Servicer, the Sponsor or the Trust, stating that the information with respect to such factual matters is in the possession of the Master Servicer, the Sponsor or the Trust, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Trust shall deliver any document as a condition of the granting of such application, or as evidence of the Trust's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Trust to have such application granted or to the sufficiency of such certificate or report. The 56 63 foregoing shall not, however, be construed to affect the Indenture Trustee's right to conclusively rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. SECTION 11.3. Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Trust. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Trust, if made in the manner provided in this Section. (b) The fact and date of the execution by any person of any such instrument or writing may be proved in any customary manner of the Indenture Trustee. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by any 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 11.4. Notices, etc. to Indenture Trustee, Trust and Rating Agencies. Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other 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-B and any notice delivered by facsimile shall be addressed to the Corporate Trust Office, telecopy number (949) 253-7577. (b) The Trust by the Indenture Trustee or by any Noteholder addressed to: Advanta Revolving Home Equity Loan Trust 1999-B, 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 the Trust. The Trust shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee. (c) The Insurer by the Trust or the Indenture Trustee as follows: 57 64 To the Insurer: Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: Structured Finance Department -MBS Fax: (212) 363-1459 Confirmation: (212) 668-0340 In each case in which notice or other communication to the Insurer refers to an Event of Servicing Termination, a claim on the Policy or with respect to which failure on the part of the 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". 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 State Street, New York, New York 10041, Attention: Asset Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at his address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. 58 65 Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder. SECTION 11.6. Alternate Payment and Notice Provisions. 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. SECTION 11.7. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. The provisions of TIA Sections 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. SECTION 11.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.9. Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Trust shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors. SECTION 11.10. Separability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.11. Benefits of Indenture. The 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 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 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) 59 66 payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date. SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 11.14. Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.15. Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Trust and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Trust or any other counsel reasonably acceptable to the Indenture Trustee and the 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-B, the Trust, or any Certificateholder or join in any institution against the Sponsor, Advanta Holding Trust, the Trust or any 60 67 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 Insurer, during the Trust's normal business hours, to examine all the books of account, records, reports, and other papers of the Trust, to make copies and extracts therefrom, to cause such books to be audited by independent certified public accountants, and to discuss the Trust's affairs, finances and accounts with the Trust's officers, employees, and independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. SECTION 11.19. Limitation of Liability. It is expressly understood and agreed by the parties hereto that (a) this 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 11.20. Rights of the Insurer to Exercise Rights of Noteholders. By accepting its Notes, each Noteholder agrees that unless an Insurer Default exists, the 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: (i) the right to direct the actions of the Indenture Trustee during the continuance of a an Event of Default; and (ii) the right to vote on proposed amendments to this Indenture. In addition, each Noteholder agrees that, unless an Insurer Default exists, any rights may be exercised by the Noteholders only with the prior written consent of the Insurer. 61 68 Notwithstanding any provision in this Indenture to the contrary, so long as an Insurer Default has occurred and is continuing, the 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 Insurer. SECTION 11.21. Consent and Direction of Insurer. Unless otherwise specified, with respect to (i) each action which requires the consent of the Insurer, such consent shall only be required if no Insurer Default shall have occurred and be continuing and (ii) each action which the Insurer may take or direct another party to take, such action or direction may only be taken or given if no Insurer Default shall have occurred and be continuing. SECTION 11.22. Rules by Indenture Trustee. The Indenture Trustee may make reasonable rules for any meeting of Noteholders. 62 69 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 REVOLVING HOME EQUITY LOAN TRUST 1999-B, By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee, By: ------------------------------------------- Name: Title: BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity but solely as Indenture Trustee By: ------------------------------------------- Name: Title: 70 EXHIBIT A [Form of Note] REGISTERED $__________ No. A-1 SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP NO. __________ Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Trust or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B NOTES Advanta Revolving Home Equity Loan Trust 1999-B, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Trust"), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of _______________________ ($__________), 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 8.6 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the January 2024 Payment Date (the " Final Scheduled Payment Date"). Until the principal of this Note is paid in full 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 preceding 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 A-1 71 Date (in the case of the October 1999 Payment Date, from and including the Closing Date) to but excluding the current Payment Date. Interest will be computed on the basis of 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. 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 "Insurer"), pursuant to which the 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 A-2 72 benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. A-3 73 IN WITNESS WHEREOF, the Trust has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: September 28, 1999 ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee under the Trust Agreement By:_____________________________________ Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture. Date: September 28, 1999 BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity but solely as Indenture Trustee, By:__________________________________________ Name: Title: A-4 74 REVERSE OF NOTE This Note is one of a duly authorized issue of Notes of the Trust, designated as the Advanta Revolving Home Equity Loan Asset Backed Notes, Series 1999-B, (herein called the "Notes"), all issued under an Indenture dated as of September 1, 1999 (such indenture, as supplemented or amended, is herein called the "Indenture"), between the Trust and Bankers Trust Company of California, N.A., as 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 October 25, 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 10.1(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 A-5 75 Record Date preceding such Payment Date by notice mailed prior to such Payment Date and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture Trustee's principal Corporate Trust Office or at the office of the Indenture Trustee's agent appointed for such purposes located in The City of New York. The Trust shall pay interest on overdue installments of interest at the Note Interest Rate to the extent lawful. As provided in the Indenture, the Notes may be redeemed pursuant to Section 10.1(b) of the Indenture, in whole, but not in part, at the option of the Master Servicer or any Master Servicer Affiliate, on any Payment Date following the Payment Date on which the Note Balance has been reduced to 10% or less of the Original Note Balance. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Trust pursuant to the Indenture, (i) duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the 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 Operative Documents. Prior to the due presentment for registration of transfer of this Note, the Trust, the Indenture Trustee and the Insurer and any agent of the Trust, the Indenture Trustee or the Insurer may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Trust, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. A-6 76 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Trust and the rights of the Noteholders under the Indenture at any time by the Trust with the prior written consent of the Insurer and of the Noteholders representing a majority of the Note Balance at the time Outstanding. Any such consent or waiver by the Noteholder (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 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 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-7 77 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: ________________ ___________________________________* Signature Guaranteed: Dated: ________________ ___________________________________ *NOTICE: 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 whatever. A-8 78 ANNEX 1 TO THE INDENTURE Defined Terms "Accelerated Principal Payments": With respect to any Payment Date, a payment to be paid from Excess Cashflow received as a payment of principal by the Noteholders, for the purpose of increasing the Overcollateralization Amount to the Specified Overcollateralization Amount applicable to such Payment Date, and equal to the lesser of (x) the amount of such Excess Cashflow and (y) the Overcollateralization Deficiency Amount. "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 Mortgaged Properties are located. "Account": The Note Account, the Principal and Interest Account, the Pre-Funding Account or the Capitalized Interest Account, each of which shall be established at a Designated Depository Institution in accordance with Section 8.3 of the Indenture or, with respect to the Principal and Interest Account, Section 4.9 of the Sale and Servicing Agreement. "Act": has the meaning specified in Section 11.3(a) of the Indenture. "Addition Notice": With respect to the transfer of Subsequent Mortgage Loans to the Trust pursuant to Section 2.6(b) of the Sale and Servicing Agreement, the notice (which shall be given not later than two Business Days prior to the related Transfer Date), of the Sponsor's designation of Subsequent Mortgage Loans to be sold to the Trust, such notice shall include the aggregate Principal Balance and the approximate weighted average Coupon Rate of such Subsequent Mortgage Loans. "Additional Balance": As to any Mortgage Loan and any day, the aggregate amount of all Draws by the related Mortgagor conveyed to the Trust pursuant to Section 2.1 of the Sale and Servicing Agreement, it being understood that the Trust shall not be required to fund any Additional Balances. "Advanta Bank Corp.": A Utah industrial loan corporation, including any successors and assigns. "Advanta Finance Corp.": A Nevada corporation, including any successors and assigns. "Advanta Holding Trust": Advanta Holding Trust 1999-B, a Delaware business trust created pursuant to the Holding Trust Agreement. 79 "Advanta National Bank": A national banking association located in Delaware. "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": As to any Mortgaged Property, the value established by a drive-by inspection, a full appraisal or a statistical property valuation of such Mortgaged Property. "Assignee": With respect to any Person, any direct or indirect assignee, pledgee or other transferee of such Person. "Assignment of Mortgage": With respect to each Mortgage Loan, an assignment of the Mortgage, notice of transfer or equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the recordation of the pledge of the Mortgage Loan to the Indenture Trustee for the benefit of the Noteholders and the Insurer. "Assignor": With respect to any Person, any immediate or mediate assignor, pledgor or other transferor to such Person of any right, title or interest in or to any property of any kind whatsoever. "Authorized Newspapers": Any of the following, The Wall Street Journal, the New York Times, the Washington Post, the Los Angeles Times or such other newspaper determined by the Indenture Trustee in its sole judgment. "Authorized Officer": With respect to any Person, any person who is authorized to act for such Person in matters relating to this Indenture, and whose action is binding upon such Person and, with respect to the Indenture Trustee, the Master Servicer and the Sponsor, initially including those individuals whose names appear on the lists of Authorized Officers delivered on the Closing Date. "Available Funds": With respect to any Payment Date, the amount then on deposit in the Note Account, after taking into account the deposits thereto made pursuant to Sections 8.5 and 8.6(a) of the Indenture (exclusive of the amount of any related Insured Payment then on deposit in the Note Account), less the sum of the amounts described in clauses (i) and (ii) of Section 8.6(c) of the Indenture on such Payment Date. A-2 80 "Billing Cycle": With respect to any Mortgage Loan and Remittance Period, the billing period specified in the related Credit Line Agreement and with respect to which amounts billed are received during such Remittance Period. "Book Entry Notes": Means a beneficial interest in the Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.9 of the Indenture. "Business Day": Any day that is not a Saturday, Sunday or other day on which any of the Insurer, the Master Servicer or the Sponsor is closed or commercial banking institutions in the State of New York 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. "Capitalized Interest Account": The Capitalized Interest Account established in accordance with Section 8.3 of the Indenture and maintained by the Indenture Trustee. "Capitalized Interest Amount": The amount on deposit in the Capitalized Interest Account, which shall initially be $1,529,038.92. "Capitalized Interest Requirement": As to any Payment Date, an amount equal to the product of (x) the sum of the Note Interest Rate and the rate at which the Insurer premium is calculated and (y) the amount on deposit in the Pre-Funding Account as of the preceding Payment Date (or as of the Closing Date, in the case of the first Payment Date), less investment earnings on the amounts on deposit in the Pre-Funding Account. "Certificateholders": The holders of the Certificates issued pursuant to the Trust Agreement. "Certificates": The trust certificates evidencing the beneficial ownership interests in Holding or the Trust, as applicable. "Charged-Off Mortgage Loan": Any Mortgage Loan that has been Delinquent for a period of 180 consecutive days (irrespective of any grace periods). The Trust will be entitled to recoveries from all Charged-Off Mortgage Loans and such recoveries shall be treated as interest. "Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as amended. "Clean-Up Call Date": The first date on which the Notes may be redeemed pursuant to Section 10.1(b) of the Indenture. "Clearing Agency Participant": Means 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. A-3 81 "Clearing Agency": Means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. "Closing Date": September 28, 1999. "Code": The Internal Revenue Code of 1986, as amended, and any successor statute. "Combined Loan-to-Value Ratio": With respect to any Mortgage Loan as of any date, the percentage equivalent of a fraction, the numerator of which is the sum of (A) the Credit Limit and (B) as of the date of execution of the related Credit Line Agreement (or as of any subsequent date, in connection with an increase in the Credit Limit for such Mortgage Loan) the sum of the outstanding principal balance of any mortgage loan or mortgage loans that are senior in priority to the Mortgage Loan and which are secured by the same Mortgaged Property and the denominator of which is the lesser of (C) the Appraised Value of the related Mortgaged Property as set forth in the Mortgage File on such date of execution or on such subsequent date, if any, or (D) in the case of a Mortgaged Property purchased within one year of the date of execution of the Credit Line Agreement, the purchase price thereof. "Controlling Party": Means (i) the Insurer, so long as no Insurer Default shall have occurred and be continuing, or (ii) the Indenture Trustee, for so long as an Insurer Default shall have occurred and be continuing; provided, however, that the Insurer's rights as Controlling Party shall be immediately reinstated following the cure of any Insurer Default. "Corporate Trust Office": The Indenture Trustee's office at 3 Park Plaza, 16th Floor, Irvine, California 92614. "Coupon Rate": With respect to any Mortgage Loan and as of any day, the per annum rate of interest, as specified in the related Credit Line Agreement, applicable to the calculation of interest on the related Principal Balance. "Coupon Rate Cap": With respect to each Mortgage Loan, the lesser of (i) the Lifetime Rate Cap specified in the Credit Line Agreement, if any, or (ii) the Highest Lawful Rate. "Credit Limit": As to any Mortgage Loan, the maximum principal balance stated under the terms of the related Credit Line Agreement. "Credit Limit Utilization Rate": As to any Mortgage Loan, at any time during the Draw Period, the percentage equivalent of a fraction, the numerator of which is the outstanding Principal Balance and the denominator of which is the related Credit Limit. "Credit Line Agreement": With respect to any Mortgage Loan, the related home equity line of credit agreement or promissory note executed by the related Mortgagor and any amendment or modification thereof. A-4 82 "Cut-Off Date": With respect to each (i) Initial Mortgage Loan, the Initial Cut-Off Date, (ii) Qualified Replacement Mortgage Loan, the related Replacement Cut-Off Date or (iii) Subsequent Mortgage Loan, the related Subsequent Cut-Off Date. "Cut-Off Date Pool Balance": The sum of (x) the aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans ($184,200,196.99), and (y) the initial Pre-Funded Amount ($105,273,487.30), which sum is $289,473,684.21. "Cut-Off Date Principal Balance": With respect to any Mortgage Loan, (a) the unpaid principal balance thereof as of the related Cut-Off Date and (b) for Mortgage Loans originated after the Cut-Off Date but prior to the Closing Date, the unpaid principal balance of such Mortgage Loans as of its origination date. "Debt Service Reduction": With respect to any Mortgage Loan, a reduction by a court of competent jurisdiction of the Minimum Monthly Payment due on such Mortgage Loan. "Deficiency Amount": As defined in the Policy. "Deficient Valuation": With respect to any Mortgage Loan, a valuation of the related Mortgaged Property by a court of competent jurisdiction in an amount less than the then outstanding Principal Balance of the Mortgage Loan, which valuation results from a proceeding initiated under the United States Bankruptcy Code. "Definitive Notes": Has the meaning specified in Section 2.9 of the Indenture. "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, 7 Hanover Square, New York, New York 10004 and any successor Depository hereafter named. "Designated Depository Institution": With respect to any 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 A or better by S&P or A2 or better by Moody's and in the short-term rating 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 Insurer and each of 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 A-5 83 in good standing under the federal banking laws, or (iv) a principal subsidiary of a bank holding company, and, in each case acting or designated by the Master Servicer or the Indenture Trustee as the depository institution for the any Account; provided, however, that any such institution or association shall have combined capital, surplus and undivided profits of at least $100,000,000. Notwithstanding the foregoing, the Principal and Interest Account may be held by an institution otherwise meeting the preceding requirements except that the only applicable rating requirement shall be that the unsecured and uncollateralized debt obligations thereof shall be rated Baa3 or better by Moody's or BBB or better by S&P and has a short-term rating of A-1 by S&P or better. If such institution has trust powers the Account must be held in its trust capacity and not in its commercial capacity. "Determination Date": As to each Payment Date, the third Business Day next preceding such Payment Date or such earlier day as shall be agreed to by the Insurer and Indenture Trustee. "Document Delivery Requirements": The Sponsor's obligations to deliver certain legal documents, to prepare and record certain Assignments of Mortgage or to deliver certain opinions relating to Assignments of Mortgage, in each case with respect to the Mortgage Loans and upon certain conditions as set forth in Section 2.1 of the Sale and Servicing Agreement. "Draw": With respect to any Mortgage Loan, an additional borrowing by the Mortgagor in accordance with the related Credit Line Agreement subsequent to the related Cut-Off Date "Draw Period": With respect to any Mortgage Loan, the period of time specified in the related Credit Line Agreement whereby a Mortgagor may make a Draw. The Draw Period may be extended pursuant to the terms of the Credit Line Agreement (provided that any such extension shall be in accordance with the provisions set forth herein with respect to Mortgage Loan modifications) and the Sale and Servicing Agreement, and will be limited by the provisions set forth in Section 2.2 of the Sale and Servicing Agreement. "Eligible Investments": Those investments so designated pursuant to Section 8.8 of the Indenture. "ERISA": Means the Employee Retirement Income Security Act of 1974, as amended. "Event of Default": As defined in Section 5.4 of the Indenture. "Event of Servicing Termination": As defined in Section 5.1 of the Sale and Servicing Agreement. "Excess Cashflow": With respect to any Payment Date, the Available Funds with respect to such Payment Date which remain on deposit in the Note Account after taking into account the distributions listed in clauses (i) through (viii) of Section 8.6(c) of the Indenture on such Payment Date. A-6 84 "Exchange Act": Means the Securities Exchange Act of 1934, as amended. "FDIC": The Federal Deposit Insurance Corporation, or any successor thereto. "FHLMC": 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. "Final Scheduled Payment Date": The Payment Date in January 2024. "First Mortgage Loan": A Mortgage Loan which constitutes a first priority mortgage lien with respect to any Mortgaged Property. "Fixed Allocation Percentage": With respect to the Mortgage Loans, 95%. "FNMA": The Federal National Mortgage Association, a federally chartered and privately owned corporation existing under the Federal National Mortgage Association Charter Act as amended, and any successor thereto. "Foreclosure Profit": With respect to a Liquidated Mortgage Loan, the amount, if any, by which (x) the aggregate of its Net Liquidation Proceeds exceeds (y) the sum of (i) the related Principal Balance and (ii) accrued and unpaid interest thereon at the applicable Coupon Rate from the date interest was last paid through the date of receipt of the final Liquidation Proceeds. "Formula Rate": For any Interest Accrual Period, (x) with respect to any Payment Date which occurs on or prior to the Clean-Up Call Date, LIBOR plus 0.37% per annum and (y) for any Payment Date thereafter, LIBOR plus 0.74% per annum. "Grant": Means mortgage, pledge, bargain, warrant, alienate, remise, release, convey, assign, transfer, create, grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to this Indenture. A Grant of the 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. "Guaranties": The Letter Agreement, dated as of September 28, 1999, between the Underwriters, the Insurer and AMHC and the Letter Agreement, dated as of September 28, 1999, among the Insurer, the Indenture Trustee and AMHC. A-7 85 "Highest Lawful Rate": As defined in Section 7.12 of the Sale and Servicing Agreement. "Holding": Advanta Holding Trust 1999-B, a Delaware business trust. "Holding Trust Agreement": The trust agreement, dated as of September 1, 1999, between the Sponsor and the Owner Trustee, relating to the formation of Holding. "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 September 28, 1999 among the Insurer and the Underwriters. "Indenture": The Indenture dated as of September 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 this Indenture at 3 Park Plaza, 16th Floor, Irvine, California 92614, not in its individual capacity but solely as Indenture Trustee under the Indenture, and any successor thereunder. "Indenture Trustee Fee": 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": 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 A-8 86 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, trustee, partner, director or Person performing similar functions. "Independent Certificate": A certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture, prepared by an Independent appraiser or other expert appointed pursuant to a Issuer Order, and such opinion or certificate shall state that the signer has read this definition of "Independent" and that the signer is Independent within the meaning thereof. "Initial Cut-Off Date": The close of business on August 31, 1999. "Initial Mortgage Loans": Shall mean the Mortgage Loans conveyed to Holding by the Sponsor and to the Trust by Holding on the Closing Date. "Insurance Agreement": The agreement defined in the Preamble of the Indenture. "Insurance Agreement Event of Servicing Termination": An Event of Servicing Termination as defined in the Insurance Agreement. "Insured Amounts": With respect to the Notes and any Payment Date, the Deficiency Amount for such Payment Date. "Insured Payments": With respect to the Notes and any Payment Date, the aggregate amount actually paid by the Insurer to the Indenture Trustee in respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts for any given Business Day. "Insurer": Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance corporation, or any successor thereto, as issuer of the Policy. "Insurer Default": Means the failure and the continuance of such failure by the Insurer to make a payment required under the Policy in accordance with the terms thereof. "Interest Accrual Period": With respect to any Payment Date, the period from and including the prior Payment Date (or, in the case of the first Payment Date, from and including the Closing Date) to, but excluding, the current Payment Date. "Interest Collections": With respect to any Remittance Date, the sum of all payments by or on behalf of Mortgagors and any other amounts constituting interest collected by the Master Servicer under the Mortgage Loans during the related Remittance Period, including the portion of Net Liquidation Proceeds allocated to interest and all recoveries with respect to Charged-Off Mortgage Loans. The terms of the related Credit Line Agreement shall determine the portion of each payment that constitutes interest. A-9 87 "Interest Determination Date": With respect to any Interest Accrual Period, the second LIBOR Business Day preceding the first day of such Interest Accrual Period. "Interest Distribution Amount": With respect to any Payment Date, the product of (x) the Note Interest Rate times the actual number of days in the Interest Accrual Period divided by 360 days and (y) the Note Balance immediately prior to such Payment Date. "Interest Remittance Amount": With respect to any Remittance Date, the sum, without duplication, of (i) Interest Collections for such Remittance Period less the Servicing Fee for the related Remittance Period, except that with respect to Prepaid Installments, interest shall be remitted in the related Remittance Period, (ii) without duplication, the portion of the Loan Reacquisition Price and the Substitution Amount relating to interest on the Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust Estate (to the extent such proceeds relate to interest) and (iv) any Pre-Funding Earnings. "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. "Junior Mortgage Loan": A Mortgage Loan which constitutes a junior priority mortgage lien with respect to the related Mortgaged Property. "Late Payment Rate": As defined in the Insurance Agreement. "LIBOR": As defined in Section 2.6(b) of the Indenture. "LIBOR Business Day": Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of New York or in the city of London, England are required or authorized by law to be closed. "Lifetime Rate Cap": With respect to each Mortgage Loan for which the related Credit Line Agreement provides for a lifetime rate cap, the maximum Coupon Rate permitted at any time under the terms of the related Credit Line Agreement. "Liquidated Mortgage Loan": A defaulted Mortgage Loan which (i) the Master Servicer, in its reasonable good faith business judgment, has determined that it has recovered all amounts it expects to recover, or (ii) becomes a Charged-Off Mortgage Loan, whichever is the first to occur. A Mortgage Loan which is reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale and Servicing Agreement is not a "Liquidated Mortgage Loan." "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 4.10 and 4.13 of the Sale and Servicing Agreement with respect to the related Mortgage Loan. A-10 88 "Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any amounts (including the proceeds of any Mortgage Insurance Policy but excluding any amounts drawn on the Policy) recovered by the Master Servicer, whether through trustee's sale, foreclosure sale or otherwise. "Liquidation Report": As defined in Section 4.13(b) of the Sale and Servicing Agreement. "Loan Reacquisition Price": With respect to any Mortgage Loan reacquired from the Trust on a Remittance Date pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale and Servicing Agreement, an amount, without duplication, equal to (i) the outstanding Principal Balance of such Mortgage Loan as of the date of reacquisition, (ii) one month's interest on (if not already deposited in the Principal and Interest Account) the outstanding Principal Balance thereof as of the beginning of the preceding Remittance Period computed at the Coupon Rate, (iii) all Servicing Advances theretofore made with respect to such Mortgage Loan and not subsequently recovered from the related Mortgage Loan, including Nonrecoverable Advances and (iv) any Reimbursement Amount relating to such Mortgage Loan. "Losses": Any and all out-of-pocket losses, claims, damages, liabilities or expenses (including reasonable attorneys' fees and disbursements) directly incurred by any person specified in this Agreement, resulting from transactions entered into under this Agreement (other than liability for taxes). Losses must be accounted for and presented for reimbursement and documented in reasonable detail and within a reasonable time. "Managed Amortization Period": The period commencing on the Closing Date ending on the earlier to occur of (x) the end of the Remittance Period related to the October 2002 Payment Date and (y) the end of the Remittance Period related to the Payment Date which immediately precedes the occurrence of a Rapid Amortization Event. "Margin": With respect to each Mortgage Loan, the fixed percentage amount set forth in the related Credit Line Agreement which amount is added to the index specified in the related Credit Line Agreement to determine the Coupon Rate for such Mortgage Loan, subject to any maximum or minimum. "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, (ii) which is qualified to service residential mortgage loans, and (iii) is subservicing the Mortgage Loans. "Master Servicer's Trust Receipt": The Master Servicer's trust receipt in the form set forth as Exhibit F to the Sale and Servicing Agreement. "Maximum Principal Payment": With respect to any Payment Date, the Fixed Allocation Percentage of the Principal Collections relating to such Payment Date. A-11 89 "Minimum Monthly Payment": With respect to any Mortgage Loan and any month, the minimum amount required to be paid by the related Mortgagor in accordance with the Credit Line Agreement. "Monthly Remittance Amount": With respect to each Remittance Date, the sum of the Principal Remittance Amount and the Interest Remittance Amount. "Moody's": Moody's Investors Service, Inc. "Mortgage": The mortgage, deed of trust or other instrument creating a first or junior lien in real property securing each Credit Line Agreement. "Mortgage Files": For each Mortgage Loan: (a) The original Credit Line Agreement, or a certified copy thereof, 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 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]", (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 Credit Line Agreement should be accompanied by any rider made in connection with the origination of the related Mortgage Loan; (b) The original of any guaranty executed in connection with the Credit Line Agreement; (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; (d) The originals of any assumption, modification, consolidation or extension agreements; (e) The original Assignment of Mortgage of each Mortgage Loan to (1) "Bankers Trust Company of California, N.A., as custodian or trustee," (2) "Bankers Trust Company of California, N.A. as trustee or custodian on behalf of the Advanta Conduit", (3) "Bankers Trust Company of California, N.A., as trustee" or (4) in blank. In the event that the Mortgage Loan was acquired by the previous owner in a merger, the Assignment of Mortgage must be the "(previous owner), successor by merger to (names of predecessor)"; and in the event A-12 90 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 (f) The originals of all intervening Assignments of Mortgage, if applicable, showing a complete chain of assignment from origination to the related Seller, 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). "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 Insurance Proceeds": Proceeds paid by any insurer pursuant to any Mortgage Insurance Policy covering a Mortgage Loan, or amounts required to be paid by the Master Servicer pursuant to the last sentence of the first paragraph of Section 4.11(b) of the Sale and Servicing Agreement, or the penultimate sentence of Section 4.11(c) of the Sale and Servicing Agreement, net of any component thereof (i) covering any Liquidation Expenses incurred by or on behalf of the Master Servicer in connection with obtaining such proceeds, (ii) that is applied to the restoration or repair of the related Mortgaged Property, (iii) released to the Mortgagor in accordance with the Master Servicer's normal servicing procedures, or (iv) required to be paid to any holder of a mortgage senior to such Mortgage Loan. "Mortgage Loan": Each mortgage loan transferred and assigned to the Trust pursuant to Section 2.1 or Section 2.6 of the Sale and Servicing Agreement, together with any Qualified Replacement Mortgage Loans substituted therefor in accordance with the Sale and Servicing Agreement, and Subsequent Mortgage Loans as from time to time are held as a part of the Trust Estate. The term "Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to a foreclosure or which relates to a Mortgaged Property that is REO Property prior to such Mortgaged Property's disposition by the Trust and any Mortgage Loan the related Mortgagor of which is in bankruptcy. Any mortgage loan which, although intended by the parties hereto to have been, and which purportedly was, transferred and assigned to the Trust by the Sponsor, 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 this Agreement. "Mortgaged Property": The underlying property securing a Mortgage Loan. "Mortgagor": The obligor under a Credit Line Agreement. "Net Funds Cap Carry-Forward Amount": With respect to any Payment Date, the sum of (i) the excess of the amount of interest accrued during the related Interest Accrual Period based on the Formula Rate, over the interest accrued during the related Interest Accrual Period based on the Net Funds Cap Rate, (ii) any such amounts described in clause (i) for prior Interest Accrual Periods and not previously reimbursed, and (iii) interest on the amounts described in clauses (i) and (ii) at the then-applicable Formula Rate. A-13 91 "Net Funds Cap Rate": The per annum rate equal to (x)(A) the product of (i) twelve and (ii) the interest paid on the Mortgage Loans at the applicable coupon rate during the prior Remittance Period (net of the related Servicing Fee, the Indenture Trustee Fee, the Owner Trustee Fee and the Premium Amount) divided by (B) the Pool Principal Balance as of the opening of such prior Remittance Period, less (y) 0.50%. "Net Liquidation Proceeds": As to any Liquidated Mortgage Loan, Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses other than any such expenses reflected in the calculation of Mortgage Insurance Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and unpaid Servicing Fees with respect to such Mortgage Loan through the date of liquidation. In no event shall Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan be less than zero. "Net Principal Collections": With respect to any Remittance Period, the excess of (x) Principal Collections over (y) the aggregate amount of all Additional Balances arising during such Remittance Period; provided, however, that, in no event will Net Principal Collections be less than zero with respect to any Payment Date. "Nonrecoverable Advance": With respect to any Mortgage Loan, any Servicing Advance previously made and not reimbursed pursuant to Section 4.10 of the Sale and Servicing Agreement or any Servicing Advance proposed to be made in respect of a Mortgage Loan, either of which, in the good faith business judgment of the Master Servicer would not be ultimately recoverable. "Note": Any note executed and authenticated by the Indenture Trustee substantially in the form set forth in Exhibit A to the Indenture. "Note Account": The Note Account established in accordance with Section 8.3 of the Indenture and maintained by the Indenture Trustee. "Note Balance": As of any date of determination, the Original Note Balance, less any amounts actually distributed as principal to the Noteholders on all prior Payment Dates. "Note Interest Rate": As to any Payment Date, the lesser of (i) the Formula Rate and (ii) the Net Funds Cap Rate. "Note Interest Shortfall": As of any Payment Date, the sum of (i) the amount by which the Interest Distribution Amount for such Payment Date exceeds the amount actually distributed to the Noteholders on such Payment Date and (ii) any unreimbursed Note Interest Shortfalls from prior Payment Dates together with interest accrued thereon at the Note Interest Rate. "Note Owner": Means, with respect to a Book-Entry Note, the person who is the owner of such Book-Entry Note or following the issuance of Definitive Notes, the registered owner of the Notes. A-14 92 "Note Paying Agent": Means 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 Register": The register maintained by the Indenture Trustee in accordance with Section 2.3 of the Indenture, in which the names of the Noteholders are set forth. "Note Registrar": The Indenture Trustee, acting in its capacity as Note Registrar appointed pursuant to Section 2.3 of the Indenture, or any duly appointed and eligible successor thereto. "Noteholder": A Person in whose name a Note is registered in the Note Register. "Officer's Certificate": A certificate signed by any Authorized Officer of the Trust, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture and TIA Section 314. "Operative Documents": Collectively, the Indenture, the Guaranties, the Trust Agreement, the Holding Trust Agreement, the Sale and Servicing Agreement, the Subsequent Transfer Agreements, the Policy, the Notes, the Purchase Agreement, the Indemnification Agreement and the Insurance Agreement. "Opinion of Counsel": Means one or more opinions of counsel who may, except as otherwise expressly provided in this Indenture, be employees of or counsel to the Trust or Sponsor and which shall comply with any applicable requirements of Section 11.1 of the Indenture. "Original Note Balance": $275,000,000. "Original Principal Amount": With respect to any particular Note, an amount equal to the product of (i) the Percentage Interest of such Note and (ii) the Original Note Balance. "Originators": Advanta National Bank, and Advanta Finance Corp. "Outstanding": With respect to all Notes, as of any date of determination, all such Notes theretofore executed and delivered hereunder except: (i) Notes theretofore cancelled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation; (ii) Notes or portions thereof for which full and final payment money in the necessary amount has been theretofore deposited with the Indenture Trustee in trust for the Noteholders; A-15 93 (iii) Notes in exchange for or in lieu of which other Notes have been executed and delivered pursuant to this 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 2.4 of the Indenture; provided, however, that to the extent of any payments made under the Policy by the Insurer and not reimbursed, such Notes shall be deemed to be "Outstanding" for all purposes, not defeased or otherwise satisfied and not be considered paid by the Trust. "Outstanding Amount": The aggregate principal amount of all Notes that are Outstanding at the date of determination. "Overcollateralization Amount": As of any Payment Date, the excess, if any, of (x) the Pool Principal Balance at the end of the related Remittance Period over (y) the Note Balance (after taking into account the payment of principal to the Noteholders on such Payment Date). "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 Balance, after taking into account the payment of principal to the Noteholders on such Payment Date, exceeds (ii) the Pool Principal Balance at the end of the related Remittance Period. "Overcollateralization Reduction Amount": With respect to any Payment Date, the lesser of (i) the excess of (x) the Overcollateralization Amount, after taking into account all payments of principal (without taking into account any Overcollateralization Reduction Amount) that were applied as a reduction in the Note Balance on such Payment Date, over (y) the Specified Overcollateralization Amount for such Payment Date and (ii) the Scheduled Principal Distribution Amount (without taking into account any Overcollateralization Reduction Amount). "Owner Trustee": Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee under the Trust Agreement or the Holding Trust Agreement (as applicable), its successors in interest or any successor Owner Trustee under the Trust Agreement or the Holding Trust Agreement (as applicable). "Owner Trustee 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 A-16 94 month following the Closing Date or, if such day is not a Business Day, then on the next succeeding Business Day. "Percentage Interest": As to any Note and as of any date of determination, that amount, expressed as a percentage, equal to a fraction, the numerator of which is the then-outstanding principal balance of such Note and the denominator of which is the Note Balance; and as to any Certificate, the percentage interest set forth on such Certificate. "Person": Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Policy": The certificate guaranty insurance policy (No. AB0299BE) with respect to the Notes, dated September 28, 1999, issued by the Insurer to the Indenture Trustee for the benefit of the Noteholders. "Pool Certification": As defined in Exhibit E attached hereto. "Pool Factor": A seven-digit decimal which the Indenture Trustee shall compute monthly expressing the Note 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 Balance. On the Closing Date, the Pool Factor will be 1.0000000. "Pool Principal Balance": With respect to any date of determination, the aggregate of the Principal Balances of the Mortgage Loans as of such date plus any Pre-Funded Amount. "Predecessor Note": means, with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.4 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. "Pre-Funded Amount": The amount on deposit in the Pre-Funding Account, which shall initially be $105,273,487.30. "Pre-Funding Account": The Pre-Funding Account established in accordance with Section 8.3 of the Indenture and maintained by the Indenture Trustee. "Pre-Funding Earnings": With respect to each Payment Date during the Pre-Funding Period, the investment earnings on the Pre-Funding Account during the related Interest Accrual Period. A-17 95 "Pre-Funding Period": The period commencing on the Closing Date and ending on the earliest to occur of (i) the date on which the Pre-Funded Amount (exclusive of any investment earnings) is less than $100,000, (ii) the date on which any Event of Default or Rapid Amortization Event occurs, and (iii) January 17, 2000. "Preliminary Prospectus Supplement": The preliminary version of the Prospectus Supplement dated September 15, 1999 "Premium Amount": As defined in the Policy. "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. "Prepayment": Any payment of principal of a Mortgage Loan which is received by the Master Servicer in advance of the scheduled due date for the payment of such principal (other than the principal portion of any Prepaid Installment). The proceeds of any Mortgage Insurance Policy or credit life insurance which are to be applied as a payment of principal on the related Mortgage Loan in advance of the scheduled payment shall be deemed to be Prepayments for all purposes of this Agreement. "Preservation Expenses": Expenditures made by the Master Servicer or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the liquidation thereof, including, without limitation, expenditures for real estate property taxes, hazard insurance premiums, property restoration or preservation. "Prime": The prime rate on which the interest charged on a Mortgage Loan from time to time is based, as set forth in the related Credit Line Agreement. "Principal and Interest Account": Collectively, each principal and interest account created by the Master Servicer or any Sub-Servicer pursuant to Section 4.9(a) of the Sale and Servicing Agreement, or pursuant to any Sub-Servicing Agreement. "Principal Balance": As to any Mortgage Loan, other than a Liquidated Mortgage Loan, and as of any date, the related Cut-Off Date Principal Balance, plus (i) any Additional Balance, minus (ii) all collections credited as principal against the Principal Balance of any Mortgage Loan prior to such day in accordance with the Credit Line Agreement. For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to have a Principal Balance of 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. "Principal Collections": With respect to any Payment Date and any Mortgage Loan, the sum of all payments by or on behalf of Mortgagors and any other amounts constituting principal (including, but not limited to, any portion of Mortgage Insurance Proceeds or Net Liquidation Proceeds allocable to principal, but excluding Foreclosure Profits and any recoveries in respect of Charged-Off Mortgage Loans) collected by the Master Servicer during the related A-18 96 Remittance Period. The terms of the related Credit Line Agreement shall determine the portion of each payment in respect of a Mortgage Loan that constitutes principal and the priority of payment. "Principal Remittance Amount": With respect to any Remittance Date, the sum, without duplication, of (i) Principal Collections for such Remittance Period, except that with respect to Prepaid Installments, principal shall be remitted in the scheduled Remittance Period, (ii) without duplication, the portion of the Loan Reacquisition Price and the Substitution Amount relating to principal on the Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust Estate (to the extent such proceeds relate to principal) and (iv) the amount, if any, of the Pre-Funded Amount deposited in the Note Account. "Proceeding": Means any suit in equity, action at law or other judicial or administrative proceeding. "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 September 21, 1999, describing the Notes issued by the Trust. "Purchase Agreement": Means the Purchase Agreement dated as of September 1, 1999 between the Originators and the Sponsor with respect to the Mortgage Loans. "Qualified Replacement Mortgage Loan": As defined in Section 2.3 of the Sale and Servicing Agreement. "Rapid Amortization Period": The period which follows the earlier to occur of (x) the end of the Managed Amortization Period and (y) the occurrence of a Rapid Amortization Event. "Rating Agency": Means 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 Insurer, notice of which designation shall be given by the Insurer to the Indenture Trustee, and the Indenture Trustee shall give such notice to each of the Master Servicer and the Sponsor. References herein to the highest short term unsecured rating category of a Rating Agency shall mean 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. A-19 97 "Realized Loss": As to any Liquidated Mortgage Loan, the amount, if any, by which the Principal Balance as of the date of liquidation is in excess of Net Liquidation Proceeds allocable to the Principal Balance thereof. "Record Date": With respect to each Payment Date, so long as the Notes are Book Entry Notes, the day preceding such Payment Date, and otherwise the last Business Day of the calendar month immediately preceding the calendar month in which such Payment Date occurs. "Redemption Date": Means, in the case of a redemption of the Notes pursuant to Section 10.1(a) of the Indenture, the Payment Date specified by the Master Servicer or the Trust pursuant to Section 10.2(a) of the Indenture. "Redemption Price": As defined in Section 10.1(b) of the Indenture. "Reference Banks": Bankers Trust Company, Barclay's Bank PLC, The Bank of Tokyo and National Westminster Bank PLC; or such banks as are selected by the Indenture Trustee after consultation with the Master Servicer which are engaged in transactions in Eurodollar deposits in the international Eurocurrency market (i) with an established place of business in London, (ii) not controlling, under the control of or under common control with the Sponsors or any affiliate thereof, (iii) whose quotations appear on the Telerate Screen Page 3750 on the relevant Interest Determination Date and (iv) which have been designated as such by the Indenture Trustee. "Registration Statement": The Registration Statement (No. 333-75295) filed by the Sponsor with the Securities and Exchange Commission, including all amendments thereto and including the Prospectus, the Preliminary Prospectus Supplement and the Prospectus Supplement relating to the Notes. "Reimbursement Amount": As of any Payment Date, the sum of (x)(i) all payments made pursuant to the Policy by the Insurer and in each case not previously repaid to the Insurer pursuant to Section 8.6(c)(viii) of the Indenture plus (ii) interest accrued on each such payment made pursuant to the Policy calculated at the Late Payment Rate from the date the Insurer made the payment up to but excluding the date repaid and (y)(i) any other amounts then due and owing to the Insurer under the Insurance Agreement plus (ii) interest on such amounts at the Late Payment Rate. The Insurer shall notify the Indenture Trustee and the Sponsor of the amount of any Reimbursement Amount at least two Business Days prior to the Payment Date. "Relief Act Shortfall": With respect to any Remittance Period and any Mortgage Loan for which there has been a reduction in the amount of interest collectible thereon as a result of the application of the Civil Relief Act, the amount by which (i) interest collectible on such Mortgage Loan is less than (ii) one month's interest on the Principal Balance of such Mortgage Loan at the Coupon Rate. A-20 98 "Remittance Date": With respect to any Payment Date, the date on which the Master Servicer is required to remit monies on deposit in the Principal and Interest Account to the Indenture Trustee for deposit into the Note Account, which shall be the 18th day of each month or, if such day is not a Business Day, the next succeeding Business Day, commencing in the month following the Closing Date. "Remittance Period": As to any Payment Date, the calendar month preceding the month of such Payment Date. "REO Property": A Mortgaged Property acquired by the Master Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan. "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": Shall mean letters to, or agreements with, the Depository to effectuate a book entry system with respect to the Notes registered in the Register under the nominee name of the Depository. "Reserve Interest Rate": Means 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 lending banks in the London interbank market or, in the event that the Indenture 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. "S&P": Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. "Sale and Servicing Agreement": Means the Sale and Servicing Agreement, including the Exhibits thereto, dated as of September 1, 1999, among Holding, the Trust, the Sponsor, the Master Servicer and the Indenture Trustee, as the same may be amended or supplemented from time to time in accordance with the terms thereof. "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 hereof, which may be amended from time to time. "Schedule of Mortgage Loans": The schedule of Mortgage Loans attached hereto as Schedule I, as the same may be supplemented or amended from time to time in connection with substitutions of Qualified Replacement Mortgage Loans and the addition of Subsequent A-21 99 Mortgage Loans. The information contained on the Schedule of Mortgage Loans shall be delivered to the Indenture Trustee in an electronic medium. "Scheduled Principal Distribution Amount": On any Payment Date (A) during the Managed Amortization Period, the excess of (x) the lesser of (i) the Maximum Principal Payment and (ii) the Net Principal Collections over (y) the Overcollateralization Reduction Amount, if any, with respect to such Payment Date and (B) during the Rapid Amortization Period, the excess of (x) the Maximum Principal Payment over (y) the Overcollateralization Reduction Amount, if any, with respect to such Payment Date. In no event will the Scheduled Principal Distribution Amount on any Payment Date be (x) less than zero or (y) greater than the then outstanding Note Balance. "Securities Act": The Securities Act of 1933, as amended. "Senior Lien": With respect to any Junior Mortgage Loan, the mortgage loan(s) relating to the corresponding Mortgaged Property having a senior priority lien. "Servicing Advance": As defined in Section 4.10 and Section 4.13 of the Sale and Servicing Agreement. "Servicing Fee": With respect to any Remittance Period, the product of (i) Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage Loans as of the opening of business on the first day of the related Remittance Period. "Servicing Fee Rate": 0.75% per annum. "Servicing Officer": Any officer of the Master Servicer or a Sub-Servicer. "Specified Overcollateralization Amount": The amount specified in the Insurance Agreement. "Sponsor": Advanta Conduit Receivables, Inc., a Nevada corporation. "Subsequent Cut-Off Date": With respect to any Subsequent Mortgage Loan, the opening of business on the first day of the calendar month in which such Subsequent Mortgage Loan is transferred and assigned to the Trust. "Subsequent Mortgage Loans": The Mortgage Loans transferred and assigned to the Trust pursuant to Section 2.6 of the Sale and Servicing Agreement, which shall be listed on the Schedule of Mortgage Loans attached to the Subsequent Transfer Agreement. "Subsequent Transfer Agreement": Each Subsequent Transfer Agreement executed by the Owner Trustee and the Sponsor substantially in the form of Exhibit H to the Sale and Servicing Agreement, by which Subsequent Mortgage Loans are transferred and assigned to the Trust. A-22 100 "Subsequent Transfer Date": Means, with respect to any Subsequent Mortgage Loans transferred to the Trust, the date set forth in the related Subsequent Transfer Agreement. "Sub-Servicer": Any Person with whom the Master Servicer has entered into a Sub-Servicing Agreement and who satisfies any requirements set forth in Section 4.5 of the Sale and Servicing Agreement in respect of the qualification of a Sub-Servicer. "Sub-Servicing Agreement": The written contract reasonably acceptable to the Insurer between the Master Servicer and any Sub-Servicer (other than an affiliated Sub-Servicer) relating to the servicing and/or administration of certain Mortgage Loans as permitted by Section 4.5 of the Sale and Servicing 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 applicable Replacement Cut-Off Date is less than the related Principal Balance of the Mortgage Loan being replaced, an amount equal to such difference together with accrued and unpaid interest on such amount calculated at the Coupon Rate, net of the Servicing Fee, of the Mortgage Loan being replaced. "Telerate Screen Page 3750": The display designated as page 3750 on the Telerate Service (or such other page as may replace page 3750 on that service for the purpose of displaying London interbank offered rates of major banks). "Termination Date": Means the latest of (i) the termination of the Policy and the return of the Policy to the Insurer for cancellation, (ii) the date on which the Insurer shall have received indefeasible payment of all amounts owed to it under the Insurance Agreement and (iii) the date on which the Indenture Trustee and the Noteholders shall have received payment of all amounts owed to them under the Indenture. "Transfer Date": With respect to (i) a Qualified Replacement Mortgage Loan, the date that such Mortgage Loan is delivered to the Indenture Trustee on behalf of the Trust, (ii) a Mortgage Loan that is reassigned to the Sponsor pursuant to Section 2.5 of the Sale and Servicing Agreement, the date that is specified therein, and (iii) a Subsequent Mortgage Loan, the date specified in the related Subsequent Transfer Agreement. "Transfer Notice Date": As defined in Section 2.5 of the Sale and Servicing Agreement. "Trust": Advanta Revolving Home Equity Loan Trust 1999-B created by the Trust Agreement. "Trust Agreement": The Trust Agreement dated as of September 1, 1999 among the Owner Trustee, the Sponsor and Holding relating to the formation of the Trust. "Trust Estate": As defined in the Granting Clause of the Indenture. A-23 101 "Trust Indenture Act" or "TIA": Means the Trust Indenture Act of 1939, as amended and as in force on the date hereof, unless otherwise specifically provided. "UCC": Unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time. "Underwriters": Morgan Stanley & Co. Incorporated and Banc of America Securities LLC. "Unqualified Mortgage Loan": A Mortgage Loan which is subject to repurchase or substitution pursuant to Section 2.1(b) or Section 3.4(b) of the Sale and Servicing Agreement. "Warehouse Trust": Any trust established by the Sponsor or any affiliate to temporarily finance the mortgage loans. A-24 EX-4.2 4 TRUST AGREEMENT 1 EXHIBIT 4.2 EXECUTION COPY TRUST AGREEMENT between ADVANTA CONDUIT RECEIVABLES, INC. Sponsor and WILMINGTON TRUST COMPANY Owner Trustee Dated as of September 1, 1999 2
Table of Contents Page ---- ARTICLE I. Definitions SECTION 1.1 Capitalized Terms......................................................................1 Section 1.2 Other Definitional Provisions..........................................................4 Section 1.3 Action by or Consent of Noteholders and Certificateholders.............................4 ARTICLE II. Organization Section 2.1 Names..................................................................................5 Section 2.2 Office.................................................................................5 Section 2.3 Purposes and Powers....................................................................5 Section 2.4 Appointment of Owner Trustee...........................................................5 Section 2.5 Initial Capital Contribution of Trust Estate...........................................5 Section 2.6 Declaration of Trust...................................................................6 Section 2.7 Liability..............................................................................6 Section 2.8 Title to Trust Property................................................................6 Section 2.9 Situs of Trust.........................................................................6 Section 2.10 Representations and Warranties of the Sponsor..........................................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 3.1 Initial Ownership......................................................................9 Section 3.2 The Certificates......................................................................10 Section 3.3 Authentication of Certificates........................................................10 Section 3.4 Registration of Transfer and Exchange of Certificates.................................10 Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.....................................10 Section 3.6 Persons Deemed Certificateholders.....................................................11 Section 3.7 Access to List of Certificateholders' Names and Addresses.............................11 Section 3.8 Maintenance of Office or Agency.......................................................11 Section 3.9 ERISA.................................................................................11 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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ARTICLE IV. Voting Rights and Other Actions Section 4.1 Prior Notice to Holders with Respect to Certain Matters...............................13 Section 4.2 Action by Certificateholders with Respect to Certain Matters..........................14 Section 4.3 Action by Certificateholders with Respect to Bankruptcy...............................15 Section 4.4 Restrictions on Certificateholders' Power.............................................15 Section 4.5 Majority Control......................................................................16 Section 4.6 Rights of Insurer.....................................................................16 Section 4.7 Separateness..........................................................................16 ARTICLE V. Certain Duties Section 5.1 Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others............................................................17 ARTICLE VI. Authority and Duties of Owner Trustee Section 6.1 General Authority.....................................................................17 Section 6.2 General Duties........................................................................18 Section 6.3 Action upon Instruction...............................................................18 Section 6.4 No Duties Except as Specified in this Agreement or in Instructions....................19 Section 6.5 No Action Except under Specified Documents or Instructions............................19 Section 6.6 Restrictions..........................................................................19 ARTICLE VII. Concerning the Owner Trustee Section 7.1 Acceptance of Trust and Duties........................................................19 Section 7.2 Furnishing of Documents...............................................................21 Section 7.3 Representations and Warranties........................................................21 Section 7.4 Reliance; Advice of Counsel...........................................................21 Section 7.5 Not Acting in Individual Capacity.....................................................22 Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans...........................22 Section 7.7 Owner Trustee May Own Certificates and Notes..........................................22 Section 7.8 Payments from Owner Trust Estate......................................................22 Section 7.9 Doing Business in Other Jurisdictions.................................................23 ARTICLE VIII. Compensation of Owner Trustee Section 8.1 Owner Trustee's Fees and Expenses.....................................................23 Section 8.2 Indemnification.......................................................................23 Section 8.3 Payments to the Owner Trustee.........................................................24 Section 8.4 Non-recourse Obligations..............................................................24
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ARTICLE IX. Termination of Trust Agreement Section 9.1 Termination of Trust Agreement........................................................24 ARTICLE X. Successor Owner Trustees and Additional Owner Trustees Section 10.1 Eligibility Requirements for Owner Trustee............................................25 Section 10.2 Resignation or Removal of Owner Trustee...............................................26 Section 10.3 Successor Owner Trustee...............................................................26 Section 10.4 Merger or Consolidation of Owner Trustee..............................................27 Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.............................27 ARTICLE XI. Miscellaneous Section 11.1 Supplements and Amendments............................................................29 Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders............................30 Section 11.3 Limitations on Rights of Others.......................................................30 Section 11.4 Notices...............................................................................30 Section 11.5 Severability..........................................................................30 Section 11.6 Separate Counterparts.................................................................31 Section 11.7 Assignments; Insurer..................................................................31 Section 11.8 No Petition...........................................................................31 Section 11.9 No Recourse...........................................................................31 Section 11.10 Headings..............................................................................31 Section 11.11 Governing Law.........................................................................31 Section 11.12 Master Servicer.......................................................................31 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 September 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 1.1 Capitalized Terms. For the purposes of this Agreement, the following terms shall have the meanings set forth below. All other capitalized terms used herein but not defined shall have the meanings set forth in the Sale and Servicing Agreement. "Affiliate" shall mean with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, or owns, directly or indirectly, 50% or more of, the Person specified. "Agreement" shall mean this Trust Agreement, as the same may be amended and supplemented from time to time. "Benefit Plan Investor" shall have the meaning assigned to such term in Section 3.9. "Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended from time to time. "Certificate" means a trust certificate evidencing the beneficial ownership interest of a Certificateholder in the Trust, substantially in the form of Exhibit A hereto. "Certificate Account" shall mean the account designated as such as established and maintained pursuant to the Indenture. "Certificate of Trust" shall mean the Certificate of Trust in the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the Business Trust Statute. "Certificate Register" and "Certificate Registrar" shall mean the register maintained and the registrar appointed pursuant to Section 3.4. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. "Corporate Trust Office" shall mean, with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee located at 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 successor Owner Trustee (the address of which the successor owner trustee will notify the Certificateholders, the Insurer and the Sponsor). 6 "Definitive Certificates" shall mean Certificates issued in certificated, fully registered form. "ERISA" shall have the meaning assigned to such term in Section 3.9. "Expenses" shall have the meaning assigned to such term in Section 8.2. "Holder" or "Certificateholder" shall mean the Person in whose name a Certificate is registered on the Certificate Register. "Indemnification Agreement" shall mean the Indemnification Agreement dated as of September 28, 1999 among the Insurer, Morgan Stanley & Co. Incorporated and Banc of America Securities LLC. "Indemnified Parties" shall have the meaning assigned to such term in Section 8.2. "Indenture" shall mean the Indenture dated as of September 1, 1999, between the Issuer and Bankers Trust Company of California, N.A., as Indenture Trustee, as the same may be amended and supplemented from time to time. "Indenture Trustee" shall mean, initially Bankers Trust Company of California, N.A., in its capacity as indenture trustee, including its successors in interest, until and unless a successor Person shall have become the Indenture Trustee pursuant to the Sale and Servicing Agreement and thereafter "Indenture Trustee" shall mean such successor Person. "Instructing Party" shall have the meaning assigned to such term in Section 6.3. "Insurance Agreement" shall mean the Insurance and Indemnity Agreement dated as of September 28, 1999 among the Insurer, the Sponsor, the Issuer, Advanta Holding Trust 1999-B, the Master Servicer and the Indenture Trustee. "Insurer" shall mean Ambac Assurance Corporation, or its successor in interest. "Issuer" shall mean Advanta Revolving Home Equity Loan Trust 1999-B. "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. "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 Underwriter and the Issuer, the AMHC Guaranty to the 2 7 Insurer and the Issuer, the Purchase Agreement and the other documents and certificates delivered in connection therewith. "Originators" shall mean Advanta National Bank and Advanta Finance Corp. "Owner Trust Estate" shall mean all right, title and interest of the Trust in and to the property and rights assigned to the Trust pursuant to Article II of the Sale and Servicing Agreement, all funds on deposit from time to time in the Trust Accounts and the Certificate Account and all other property of the Trust from time to time, including any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing Agreement. "Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as owner trustee under this Agreement, and any successor Owner Trustee hereunder. "Policy" shall mean the certificate guaranty insurance policy with respect to the Notes, dated September 28, 1999, issued by the Insurer to the Indenture Trustee for the benefit of the Noteholders. "Record Date" shall mean with respect to any Payment Date, (i) in the case of the Certificates the close of business on the last Business Day immediately preceding such Payment Date and (ii) in the case of the Notes as defined in the Indenture. "Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement among Advanta Holding Trust 1999-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Issuer, the Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and the Indenture Trustee, dated as of September 1, 1999, as the same may be amended and supplemented from time to time. "Secretary of State" shall mean the Secretary of State of the State of Delaware. "Security Majority" means a majority by principal amount of the Noteholders so long as the Notes are outstanding and a majority by principal amount of the Certificateholders thereafter. "Sponsor" shall mean Advanta Conduit Receivables, Inc., in its capacity as Sponsor hereunder. "Treasury Regulations" shall mean regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations. "Trust" shall mean the trust established by this Agreement. "Trust Accounts" shall have the meaning ascribed thereto in the Sale and Servicing Agreement. 3 8 SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Sale and Servicing Agreement or, if not defined therein, in the Indenture. (b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (c) As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on the date of this Agreement or any such certificate or other document, as applicable. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such certificate or other document shall control. (d) The words "hereof," "herein," "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section and Exhibit references contained in this Agreement are references to Sections and Exhibits in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation." (e) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. SECTION 1.3 Action by or Consent of Noteholders and Certificateholders. Whenever any provision of this Agreement refers to action to be taken, or consented to, by Noteholders or Certificateholders, such provision shall be deemed to refer to the Certificateholder or Noteholder, as the case may be, of record as of the Record Date immediately preceding the date on which such action is to be taken, or consent given, by Noteholders or Certificateholders. Solely for the purposes of any action to be taken, or consented to, by Noteholders or Certificateholders, any Note or Certificate registered in the name of the Sponsor or any Affiliate thereof shall be deemed not to be outstanding; provided, however that, solely for the purpose of determining whether the Indenture Trustee is entitled to rely upon any such action or consent, only Notes or Certificates which the Owner Trustee, or the Indenture Trustee, respectively, knows to be so owned shall be so disregarded. 4 9 ARTICLE II. Organization SECTION 2.1 Names. There is hereby formed a trust to be known as "Advanta Holding Trust 1999-B," 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 2.2 Office. The office of the Trust shall be in care of the Owner Trustee at the Corporate Trust Office or at such other address as the Owner Trustee may designate by written notice to the Certificateholders, the Insurer and the Sponsor. SECTION 2.3 Purposes and Powers. The purpose of the Trust is, and the Trust shall have the power and authority, to engage in the following activities: (i) to issue the Certificates pursuant to this Agreement; (ii) with the proceeds of the sale of the Notes by Advanta Revolving Home Equity Loan Trust 1999-B, 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 Revolving Home Equity Loan Trust 1999-B 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 Revolving Home Equity Loan Trust 1999-B; (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 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints the Owner Trustee as trustee of the Trust effective as of the date hereof, to have all the rights, powers and duties set forth herein and in the Business Trust Statute. SECTION 2.5 Initial Capital Contribution of Trust Estate. The Sponsor hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as of the date hereof, the sum of 5 10 $1. The Owner Trustee hereby acknowledges receipt in trust from the Sponsor, as of the date hereof, of the foregoing contribution, which shall constitute the initial Owner Trust Estate and shall be deposited in the Certificate Account. On or prior to the Closing Date, the Owner Trustee will also, upon receipt thereof, acknowledge on behalf of the Trust, receipt of the Mortgage Loans pursuant to the Sale and Servicing Agreement. The Sponsor shall pay organizational expenses of the Trust as they may arise. SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that it will hold the Owner Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificateholders, subject to the obligations of the Trust under the Operative Documents. It is the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Statute and that this Agreement constitute the governing instrument of such business trust. It is the intention of the parties hereto that, solely for 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 2.7 Liability. No Holder shall have any personal liability for any liability or obligation of the Trust. SECTION 2.8 Title to Trust Property. (a) Legal title to all of the Owner Trust Estate shall be vested at all times in the Trust 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 2.9 Situs of Trust. The Trust will be located and administered in the State of Delaware. All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or the State of New York. Payments will be received by the Trust only in Delaware or New York and payments will be made by the Trust only from Delaware or New York. The Trust shall not have any employees in any state other than Delaware; provided, however, that nothing herein shall restrict or prohibit the Owner Trustee, the Master Servicer or any agent of the Trust from having employees within or without the State of Delaware. The only office of the Trust will be at the Corporate Trust Office in Delaware. 6 11 SECTION 2.10 Representations and Warranties of the Sponsor. The Sponsor makes the following representations and warranties on which the Owner Trustee relies in accepting the Owner Trust Estate in trust and issuing the Certificates and upon which the Insurer relies in issuing the Policy. (a) The Sponsor is duly organized and validly existing as a Delaware corporation with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted and is proposed to be conducted pursuant to this Agreement and the Operative Documents; (b) It is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property, the conduct of its business and the performance of its obligations under this Agreement and the Operative Documents requires such qualification; (c) The Sponsor has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; the Sponsor has full power and authority to sell and assign the property to be sold and assigned to and deposited with the Trust and the Sponsor has duly authorized such sale and assignment and deposit to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Sponsor by all necessary corporate action. The Sponsor has duly executed this Agreement and this Agreement constitutes a legal, valid and binding obligation of the Sponsor enforceable against the Sponsor, in accordance with its terms. (d) To the best knowledge of the Sponsor, no consent, license, approval or authorization or registration or declaration with, any Person or with any governmental authority, bureau or agency is required in connection with the execution, delivery or performance of this Agreement and the Operative Documents, except for such as have been obtained, effected or made; (e) The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or by-laws of the Sponsor, or any material indenture, agreement or other instrument to which the Sponsor is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Operative Documents); nor violate any law or, to the best of the Sponsor's knowledge, any order, rule or regulation applicable to the Sponsor of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Sponsor or its properties; and (f) There are no proceedings or investigations pending or, to its knowledge threatened against it before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over it or its properties (A) asserting the invalidity of this Agreement or any of the Operative Documents, (B) seeking to prevent the issuance of the Certificates or the Notes or the consummation of any of the transactions contemplated by this Agreement or any of the Operative Documents, (C) seeking any 7 12 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 9.1(e) such counterparty shall not institute against, or join any other Person in instituting against, it or the Trust, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States or any state of the United States; and (d) it shall not, for any reason, withdraw or attempt to withdraw from this Agreement, dissolve, institute proceedings for it to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of it or a substantial part of its property, or make any assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or declare or effect a moratorium on its debt or take any action in furtherance of any such action. SECTION 2.12 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 Certificateholder as set forth therein or herein, in all respects as if it were a signatory hereto. 8 13 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 9.1(e), not to, for any reason, institute proceedings for the Trust or the Sponsor to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Trust, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Sponsor or the Trust or a substantial part of its property, or cause or permit the Sponsor or the Trust to make any assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or declare or effect a moratorium on its debt or take any action in furtherance of any such action. Except as provided in Section 2.13, and notwithstanding any other provision to the contrary in this Agreement, no Certificateholder shall be deemed to have adopted, be bound by, or succeed in any way to any representation by, or duty of indemnification by or any other duty of, the Sponsor, including those contained in Sections 2.10, 2.11, 2.12, 8.2 or elsewhere herein. SECTION 2.13 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 3.1 Initial Ownership. Upon the formation of the Trust by the contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee, contemporaneously therewith, having full power, authority, and authorization to do so, has executed, authenticated, dated, issued, and delivered, in the name and on behalf of the Trust, to the Originators, 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 names of Advanta National Bank and Advanta Finance Residual Corp. 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 9 14 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 3.2 The Certificates. The Certificates shall be issued in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of an authorized officer of the Owner Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefit of this Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates. A transferee of a Certificate shall become a Certificateholder, and shall be entitled to the rights and subject to the obligations of a Certificateholder hereunder, upon due registration of such Certificate in such transferee's name pursuant to Section 3.4. SECTION 3.3 Authentication of Certificates. Concurrently with the initial sale of the Mortgage Loans to the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause each Certificate 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 3.4 Registration of Transfer and Exchange of Certificates. The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 3.8, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Owner Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. The Owner Trustee shall be the initial Certificate Registrar. SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate and (b) there shall be delivered to the Certificate Registrar, the Owner Trustee and the Insurer such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like class, tenor and denomination. In connection with the issuance of any new Certificate under this Section, the Owner Trustee or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed 10 15 in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. SECTION 3.6 Persons Deemed Certificateholders. Every Person by virtue of becoming a Certificateholder in accordance with this Agreement and the rules and regulations of the Certificate Registrar shall be deemed to be bound by the terms of this Agreement. Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee, the Certificate Registrar and the Insurer and any agent of the Owner Trustee, the Certificate Registrar and the Insurer, may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to the Sale and Servicing Agreement and the Indenture and for all other purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar or the Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be bound by any notice to the contrary. SECTION 3.7 Access to List of Certificateholders' Names and Addresses. The Owner Trustee shall furnish or cause to be furnished to the Master Servicer, the Sponsor or the Insurer, within 15 days after receipt by the Owner Trustee of a request therefor from such Person in writing, a list, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Holders of Certificates or one or more Holders of Certificates evidencing not less than 25% by Percentage Interest apply in writing to the Owner Trustee, and such application states that the applicants desire to communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Owner Trustee shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the Master Servicer, the Owner Trustee or the Insurer or any agent thereof accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall maintain in Wilmington, Delaware an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Owner Trustee in respect of the Certificates and the Operative Documents may be served. The Owner Trustee initially designates its Corporate Trust Office for such purposes. The Owner Trustee shall give prompt written notice to the Sponsor, the Certificateholders and the Insurer of any change in the location of the Certificate Register or any such office or agency. SECTION 3.9 ERISA. The Certificates may not be acquired by or for the account of (i) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan (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. 11 16 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 2.1, 2.2, 2.3, 2.4, 3.3 and 3.4 of the Sale and Servicing Agreement, Section 7.1 of the Indenture and under the Credit Line Agreements and the Mortgage Notes; (ii) the person that acquires a Certificate shall deliver to the Owner Trustee and the Insurer an Officer's Certificate stating that such transfer and such supplemental agreement comply with this Section 3.10 and that all conditions precedent provided by this 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, 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 Revolving Home Equity Loan Trust 1999-B being subject to tax at the entity level for federal or applicable state tax purposes, (c) such transfer will not have any material adverse impact on the federal or applicable state income taxation of a Noteholder and (d) such transfer will not result in the arrangement created by this Agreement or any "portion" of 12 17 the Advanta Revolving Home Equity Loan Trust 1999-B, being treated as a taxable mortgage pool as defined in Section 7701(i) of the Code; (v) all filings and other actions necessary to continue the perfection of the interest of 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 4.1 Prior Notice to Holders with Respect to Certain Matters. With respect to the following matters, the Owner Trustee shall not take action unless at least 30 days before the taking of such action, the Owner Trustee shall have notified the Certificateholders and the Insurer in writing of the proposed action and (i) the Insurer shall have consented in writing thereto and (ii) the Certificateholders shall not have notified the Owner Trustee in writing prior to the 30th day after such notice is given that such Certificateholders have withheld consent or, with the written consent of the Insurer, provided alternative direction: (a) the election by the Trust to file an amendment to the Certificate of Trust (unless such amendment is required to be filed under the Business Trust Statute or unless such amendment would not materially and adversely affect the interests of the Holders); (b) the amendment of any Operative Document; (c) the appointment pursuant to the Indenture of a successor Note Registrar, Paying Agent or Indenture Trustee or, pursuant to this Trust Agreement, of a successor Certificate Registrar or the consent to the assignment of the Note Registrar, Paying Agent, Indenture Trustee or Certificate 13 18 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 2.3 hereof; (h) confess a judgment against the Trust; (i) possess Trust assets or assign the Trust's right to property for other than a Trust purpose; (j) cause the Trust to lend any funds to any entity; or (k) change the Trust's purpose and powers from those enumerated in this Trust Agreement. The Owner Trustee shall notify the Certificateholders and the Insurer in writing of any appointment of a successor Note Registrar, or Certificate Registrar within five Business Days thereof. In addition, the Owner Trustee shall not (i) cause the Trust to merge or consolidate with or into any other entity, or convey or transfer all or substantially all of the Trust's assets to any other entity; (ii) cause the Trust to incur, assume or guaranty any indebtedness other than as set forth in this Trust Agreement; or (iii) except as provided in Article IX hereof, dissolve, terminate or liquidate the Trust in whole or in part. SECTION 4.2 Action by Certificateholders with Respect to Certain Matters. (a) The Owner Trustee shall not have the power, except upon the written direction of the Insurer or in the event that an Insurer Default shall have occurred and is continuing, the Security Majority in accordance with the Operative Documents, to (i) remove the Master Servicer under the Sale and Servicing Agreement; (ii) except as expressly provided in the Operative Documents, sell the Mortgage Loans after the termination of the Indenture; (iii) institute proceedings to have the Trust declared or adjudicated to be bankrupt or insolvent, (iv) consent to the institution of bankruptcy or insolvency proceedings against the Trust, (v) file a petition or consent to a petition seeking reorganization or relief on behalf of the Trust under any applicable federal or state law relating to bankruptcy, (vi) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or any similar official) of the Trust or a substantial portion of the property of the Trust, (vii) make any assignment for the benefit of the Trust's creditors, (viii) cause the Trust to admit in writing its inability to pay its debts generally as they become due, (ix) take any action or cause the Trust to take any action, in furtherance of 14 19 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 4.3 Action by Certificateholders with Respect to Bankruptcy. Until one year and one day following the day on which the Notes have been paid in full, the Owner Trustee shall not have the power to, and shall not commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of the Insurer (unless an Insurer Default shall have occurred and is continuing) or the Security Majority upon an Insurer Default. Until one year and one day following the day on which the Notes have been paid in full, all amounts due to the Insurer under the Insurance Agreement have been paid in full, the Policies have terminated and the Indenture Trustee has surrendered the Policies to the Insurer, the Owner Trustee shall not have the power to, and shall not, commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of all of the Certificateholders and the delivery to the Owner Trustee by each such Certificateholder of a certificate certifying that such Certificateholder reasonably believes that the Trust is insolvent. SECTION 4.4 Restrictions on Certificateholders' Power. (a) The Certificateholders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligation of the Trust or the Owner Trustee under this Agreement or any of the Operative Documents or would be contrary to Section 2.3 or otherwise contrary to law nor shall the Owner Trustee be obligated to follow any such direction, if given. (b) No Certificateholder (other than the Originators) shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action, or proceeding in equity or at law upon or under or with respect to this Agreement or any Operative Document, unless the Certificateholders are the Instructing Party pursuant to Section 6.3 and unless a Certificateholder previously shall have given to the Owner Trustee a written notice of default and of the continuance thereof, as provided in this Agreement, and also unless Certificateholders evidencing not less than 25% by Percentage Interest shall have made written request upon the Owner Trustee to institute such action, suit or proceeding in its own name as Owner Trustee under this Agreement and shall have offered to the Owner Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Owner Trustee, for 30 days after its receipt of such notice, request, and offer of indemnity, shall 15 20 have neglected or refused to institute any such action, suit, or proceeding, and during such 30-day period no request or waiver inconsistent with such written request has been given to the Owner Trustee pursuant to and in compliance with this Section or Section 6.3; it being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder and the Owner Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to affect, disturb, or prejudice the rights of the Holders of any other of the Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement, except in the manner provided in this Agreement and for the equal, ratable, and common benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section 4.4, each and every Certificateholder and the Owner Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 4.5 Majority Control. No Certificateholder shall have any right to vote or in any manner otherwise control the operation and management of the Trust except as expressly provided in this Agreement. Except as expressly provided herein, any action that may be taken by the Certificateholders under this Agreement may be taken by the Holders of Certificates evidencing not less than a majority interest in the Trust. Except as expressly provided herein, any written notice of the Certificateholders delivered pursuant to this Agreement shall be effective if signed by Certificateholders evidencing not less than a majority interest in the Trust at the time of the delivery of such notice. SECTION 4.6 Rights of Insurer. Notwithstanding anything to the contrary in the Operative Documents, without the prior written consent of the Insurer (or if an Insurer Default shall have occurred and is continuing, the Security Majority) the Owner Trustee shall not (i) remove the Master Servicer, (ii) initiate any claim, suit or proceeding by the Trust or compromise any claim, suit or proceeding brought by or against the Trust, other than with respect to the enforcement of any Mortgage Loan or any rights of the Trust thereunder, (iii) authorize the merger or consolidation of the Trust with or into any other business trust or other entity (other than in accordance with Section 3.10 of the Indenture), (iv) amend the Certificate of Trust or (v) amend this Agreement in accordance with Section 11.1 of this Agreement. SECTION 4.7 Separateness. The Trust shall (i) not commingle its assets with those of any other entity; (ii) maintain its financial and accounting books and records separate from those of any other entity; (iii) maintain appropriate minutes or other records of all appropriate actions and maintain books and records separate from any other entity; (iv) conduct its own business in its own name; (v) except as expressly set forth herein, pay its indebtedness, operating expenses and liabilities from its own funds; (vi) enter into transactions with affiliates only on terms that are commercially reasonable and on the same terms as would be available in an arm's length transaction; (vii) not pay the indebtedness, operating expenses and liabilities of any other entity; (viii) not hold out its credit as being available to satisfy the obligation of any other entity; (ix) not make loans to any other entity or buy or hold evidence of indebtedness issued by any other entity (except for cash and investment-grade securities); (x) use separate stationery, invoices, and checks bearing its own name; (xi) allocate fairly and reasonably any overhead expenses that are shared with an affiliate, including paying for office space and services performed by any employee of any affiliate; (xii) not identify itself as a division of any other entity; (xiii) hold 16 21 itself out as a separate identity; and (xiv) maintain adequate capital in light of its contemplated business operation. ARTICLE V. Certain Duties SECTION 5.1 Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others. Subject to Sections 5.1(b)(iii) and 5.1(c) of the Sale and Servicing Agreement, the Sponsor shall (a) maintain (or cause to be maintained) the books of the Trust on a calendar year basis on the accrual method of accounting, (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 5.1(b)(ii) of the Sale and Servicing Agreement with respect to income or distributions to Certificateholders and the appropriate forms relating thereto. The Owner Trustee or the Master Servicer, as the case may be, shall make all elections pursuant to this Section as directed in writing by the Sponsor. The Owner Trustee shall sign all tax information returns presented to it in final execution form, if any, filed pursuant to this Section 5.1 and any other returns as may be required by law, and in doing so shall rely entirely upon, and shall have no liability for information provided by, or calculations provided by, the Sponsor or the Master Servicer. The Owner Trustee shall elect under Section 1278 of the Code on behalf of the Trust to include in income currently any market discount that accrues with respect to the Mortgage Loans. ARTICLE VI. Authority and Duties of Owner Trustee SECTION 6.1 General Authority. The Owner Trustee is authorized and directed to execute and deliver the Operative Documents to which the Trust is named as a party and each certificate or other document attached as an exhibit to or contemplated by the Operative Documents to which the Trust is named as a party and any amendment thereto, in each case, in such form as the Sponsor shall approve as evidenced conclusively by the Owner Trustee's execution thereof, and on behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver Notes in the aggregate principal amount of $275,000,000. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust pursuant to the Operative Documents. The Owner Trustee is further authorized from time to time to take such action as the Instructing Party recommends with respect to the Operative Documents so long as such activities are consistent with the terms of the Operative Documents. 17 22 SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee to discharge (or cause to be discharged) all of its responsibilities pursuant to the terms of this Agreement and to administer the Trust in the interest of the Holders, subject to the Operative Documents and in accordance with the provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to have discharged its duties and responsibilities hereunder and under the Operative Documents to the extent the Master Servicer has agreed in the Sale and Servicing Agreement to perform any act or to discharge any duty of the Trust or the Owner Trustee hereunder or under any Operative Document, and the Owner Trustee shall not be liable for the default or failure of the Master Servicer to carry out its obligations under the Sale and Servicing Agreement. SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the Insurer (so long as an Insurer Default shall not have occurred and be continuing) or the Certificateholders (if an Insurer Default shall have occurred and be continuing) (the "Instructing Party") shall have the exclusive right to direct the actions of the Owner Trustee in the management of the Trust, so long as such instructions are not inconsistent with the express terms set forth herein or in any Operative Document. The Instructing Party shall not instruct the Owner Trustee in a manner inconsistent with this Agreement or the Operative Documents. (b) The Owner Trustee shall not be required to take any action hereunder or under any Operative Document if the Owner Trustee shall have reasonably determined, or shall have been advised by counsel, that such action is likely to result in liability on the part of the Owner Trustee or is contrary to the terms hereof or of any Operative Document or is otherwise contrary to law. (c) Whenever the Owner Trustee is unable to decide between alternative courses of action permitted or required by the terms of this Agreement or any Operative Document, the Owner Trustee shall promptly give notice (in such form as shall be appropriate under the circumstances) to the Instructing Party requesting instruction as to the course of action to be adopted, and to the extent the Owner Trustee acts in good faith in accordance with any written instruction of the Instructing Party received, the Owner Trustee shall not be liable on account of such action to any Person. If the Owner Trustee shall not have received appropriate instruction within ten days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Operative Documents, as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction. (d) In the event that the Owner Trustee is unsure as to the application of any provision of this Agreement or any Operative Document or any such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement permits any determination by the Owner Trustee or is silent or is incomplete as to the course of action that the Owner Trustee is required to take with respect to a particular set of facts, the Owner Trustee may give notice (in such form as shall be appropriate under the circumstances) to the Instructing Party requesting instruction and, to the extent that the Owner Trustee acts or refrains from acting in good faith in accordance with any such instruction received, the Owner Trustee shall not be liable, on account of such action or inaction, to any 18 23 Person. If the Owner Trustee shall not have received appropriate instruction within 10 days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Operative Documents, as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction. SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions. The Owner Trustee shall not have any duty or obligation to manage, make any payment with respect to, register, record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with, any document contemplated hereby to which the Owner Trustee is a party, except as expressly provided by the terms of this Agreement or in any document or written instruction received by the Owner Trustee pursuant to Section 6.3; and no implied duties or obligations shall be read into this Agreement or any Operative Document against the Owner Trustee. The Owner Trustee shall have no responsibility for filing any financing or continuation statement in any public office at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted to it hereunder or to prepare or file any Commission filing for the Trust or to record this Agreement or any Operative Document. The Owner Trustee nevertheless agrees that it will, at its own cost and expense, promptly take all action as may be necessary to discharge any Liens on any part of the Owner Trust Estate that result from actions by, or claims against, the Owner Trustee (solely in its individual capacity) and that are not related to the ownership or the administration of the Owner Trust Estate. SECTION 6.5 No Action Except under Specified Documents or Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal with any part of the Owner Trust Estate except (i) in accordance with the powers granted to and the authority conferred upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with the Operative Documents and (iii) in accordance with any document or instruction delivered to the Owner Trustee pursuant to Section 6.3. SECTION 6.6 Restrictions. The Owner Trustee shall not take any action that is inconsistent with the purposes of the Trust set forth in Section 2.3. The Certificateholders shall not direct the Owner Trustee to take action that would violate the provisions of this Section. ARTICLE VII. Concerning the Owner Trustee SECTION 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts the trust hereby created and agrees to perform its duties hereunder with respect to such trust but only upon the terms of this Agreement. The Owner Trustee also agrees to disburse all monies actually received by it constituting part of the Owner Trust Estate upon the terms of the Operative Documents and this Agreement. The Owner Trustee shall not be answerable or accountable hereunder or under any Operative Document under any circumstances, except (i) for its own willful misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of any representation or warranty contained in Section 7.3 expressly made by the Owner Trustee in its 19 24 individual capacity, (iii) for liabilities arising from the failure of the Owner Trustee to perform obligations expressly undertaken by it in the last sentence of Section 6.4 hereof, (iv) for any investments issued by the Owner Trustee or any branch or affiliate thereof in its commercial capacity or (v) for taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the Owner Trustee. In particular, but not by way of limitation (and subject to the exceptions set forth in the preceding sentence): (a) the Owner Trustee shall not be liable for any error of judgment, not constituting gross negligence, made by a Responsible Officer of the Owner Trustee; (b) the Owner Trustee shall not be liable with respect to any action taken or omitted to be taken by it if such action or omission is in accordance with the instructions of the Instructing Party, the Sponsor, the Master Servicer or any Certificateholder pursuant to the terms hereof; (c) no provision of this Agreement or any Operative Document shall require the Owner Trustee to expend or risk funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder or under any Operative Document if the Owner Trustee shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it; (d) under no circumstances shall the Owner Trustee be liable for indebtedness evidenced by or arising under any of the Operative Documents, including the principal of and interest on the Notes; (e) the Owner Trustee shall not be responsible for or in respect of the validity or sufficiency of this Agreement or for the due execution hereof by the Sponsor or for the form, character, genuineness, sufficiency, value or validity of any of the Owner Trust Estate or for or in respect of the validity or sufficiency of the Operative Documents, other than the certificate of authentication on the Certificates, and the Owner Trustee shall in no event assume or incur any liability, duty or obligation to the Sponsor, the Insurer, Indenture Trustee, any Certificateholder, other than as expressly provided for herein and in the Operative Documents; (f) the Owner Trustee shall not be liable for the default or misconduct of the Sponsor, the Insurer, the Indenture Trustee, or the Master Servicer under any of the Operative Documents or otherwise and the Owner Trustee shall have no obligation or liability to perform the obligations under this Agreement or the Operative Documents that are required to be performed by the Sponsor under this Agreement, by the Indenture Trustee under the Indenture or the Master Servicer under the Sale and Servicing Agreement; and (g) the Owner Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this Agreement or otherwise or in relation to this Agreement or any Operative Document, at the request, order or direction of the Instructing Party or any of the Certificateholders, unless such Instructing Party or Certificateholders have offered to the Owner Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee to perform any discretionary act enumerated in this Agreement or in any Operative Document shall not be construed as a duty, 20 25 and the Owner Trustee shall not be answerable for other than its negligence, bad faith or willful misconduct in the performance of any such act. SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to the Certificateholders promptly upon receipt of a written request therefor, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee under the Operative Documents. SECTION 7.3 Representations and Warranties. The Owner Trustee hereby represents and warrants, in its individual capacity, to the Sponsor and the Holders (which shall have relied on such representations and warranties in issuing the Policy), that: (a) It is a Delaware banking corporation, duly organized and validly existing in good standing under the laws of the State of Delaware. It has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. (b) It has taken all corporate action necessary to authorize the execution and delivery by it of this Agreement, and this Agreement will be executed and delivered by one of its officers who is duly authorized to execute and deliver this Agreement on its behalf. (c) Neither the execution nor the delivery by it of this Agreement, nor the consummation by it of the transactions contemplated hereby nor compliance by it with any of the terms or provisions hereof will contravene any federal or Delaware state law, governmental rule or regulation governing the banking or trust powers of the Owner Trustee or any judgment or order binding on it, or constitute any default under its charter documents or by-laws or any indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of its properties may be bound. Section 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of the determination of which is not specifically 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 21 26 any such counsel, accountants or other such persons and according to such opinion not contrary to this Agreement or any Operative Document. SECTION 7.5 Not Acting in Individual Capacity. Except as provided in this Agreement, in accepting the trusts hereby created Wilmington Trust Company acts solely as Owner Trustee hereunder and not in its individual capacity and all Persons having any claim against the Owner Trustee by reason of the transactions contemplated by this Agreement or any Operative Document shall look only to the Owner Trust Estate for payment or satisfaction thereof. SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans. The recitals contained herein and in the Certificates (other than the signature and countersignature of the Owner Trustee on the Certificates) shall be taken as the statements of the Sponsor and the Owner Trustee assumes no responsibility for the correctness thereof. The Owner Trustee makes no representations as to the validity or sufficiency of this Agreement, of any Operative Document or of the Certificates (other than the signature and countersignature of the Owner Trustee on the Certificates) or the Notes (other than the signature of the Owner Trustee on the Notes), or of any Mortgage Loan or related documents. The Owner Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of any Mortgage Loan, or the perfection and priority of any security interest created by any Mortgage Loan or the maintenance of any such perfection and priority, or for or with respect to the sufficiency of the Owner Trust Estate or its ability to generate the payments to be distributed to Certificateholders under this Agreement or the Noteholders under the Indenture, including, without limitation: the existence, condition and ownership of any Mortgage Loan; the existence and enforceability of any insurance thereon; the existence and contents of any Mortgage Loan on any computer or other record thereof; the validity of the assignment of any Mortgage Loan to the Trust or of any intervening assignment; the completeness of any Mortgage Loan; the performance or enforcement of any Mortgage Loan; the compliance by the Sponsor, the Master Servicer or any other Person with any warranty or representation made under any Operative Document or in any related document or the accuracy of any such warranty or representation or any action of the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the name of the Owner Trustee. SECTION 7.7 Owner Trustee May Own Certificates and Notes. Subject to the provisions of Section 3.1 hereof, the Owner Trustee in its individual or any other capacity may become the owner or pledgee of Certificates or Notes and may deal with the Sponsor, the Indenture Trustee and the Master Servicer in banking transactions with the same rights as it would have if it were not Owner Trustee. SECTION 7.8 Payments from Owner Trust Estate. All payments to be made by the Owner Trustee under this Agreement or any of the Operative Documents to which the Trust or the Owner Trustee is a party shall be made only from the income and proceeds of the Owner Trust Estate and only to the extent that the Owner Trust shall have received income or proceeds from the Owner Trust Estate to make such payments in accordance with the terms hereof. Wilmington Trust Company, or any successor thereto, in its individual capacity, shall not be liable for any amounts payable under this Agreement or any of the Operative Documents to which the Trust or the Owner Trustee is a party. 22 27 SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding anything contained to the contrary, neither Wilmington Trust Company or any successor thereto, nor the Owner Trustee shall be required to take any action in any jurisdiction other than in the State of Delaware if the taking of such action will, even after the appointment of a co-trustee or separate trustee in accordance with Section 10.5 hereof, (i) require the consent or approval or authorization or order of or the giving of notice to, or the registration with or the taking of any other action in respect of, any state or other governmental authority or agency of any jurisdiction other than the State of Delaware ; (ii) result in any fee, tax or other governmental charge under the laws of the State of Delaware becoming payable by Wilmington Trust Company (or any successor thereto); or (iii) subject Wilmington Trust Company (or any successor thereto) to personal jurisdiction in any jurisdiction other than the State of Delaware for causes of action arising from acts unrelated to the consummation of the transactions by Wilmington Trust Company (or any successor thereto) or the Owner Trustee, as the case may be, contemplated hereby. ARTICLE VIII. Compensation of Owner Trustee SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall receive as compensation for its services hereunder such fees as have been separately agreed upon before the date hereof between the Sponsor and the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor for its other reasonable expenses hereunder, including the reasonable compensation, expenses and disbursements of such agents, representatives, experts and counsel as the Owner Trustee may employ in connection with the exercise and performance of its rights and its duties hereunder and under the Operative Documents. SECTION 8.2 Indemnification. The Sponsor shall be liable as primary obligor for, and the Master Servicer pursuant to the Sale and Servicing Agreement shall be the secondary obligor for, and shall indemnify the Owner Trustee (in its individual and trust capacities) and its officers, directors, successors, assigns, agents and servants (collectively, the "Indemnified Parties") from and against, any and all liabilities, obligations, losses, damages, taxes, claims, actions and suits, and any and all reasonable costs, expenses and disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever (collectively, "Expenses") which may (in its trust or individual capacities) at any time be imposed on, incurred by, or asserted against the Owner Trustee or any Indemnified Party in any way relating to or arising out of this Agreement, the Operative Documents, the Owner Trust Estate, the administration of the Owner Trust Estate or the action or inaction of the Owner Trustee hereunder, except only that the Sponsor shall not be liable for or required to indemnify the Owner Trustee from and against Expenses arising or resulting from any of the matters described in the third sentence of Section 7.1. The indemnities contained in this Section and the rights under Section 8.1 shall survive the resignation or termination of the Owner Trustee or the termination of this Agreement. In any event of any claim, action or proceeding for which indemnity will be sought pursuant to this Section, the Owner Trustee's choice of legal counsel shall be subject to the approval of the Sponsor which approval shall not be unreasonably withheld. 23 28 SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of the Owner Trust Estate immediately after such payment. SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in this Agreement or any Operative Document, the Owner Trustee agrees in its individual capacity and in its capacity as Owner Trustee for the Trust that all obligations of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust shall be recourse to the Owner Trust Estate only and specifically shall not be recourse to the assets of any Certificateholder. ARTICLE IX. Termination of Trust Agreement SECTION 9.1 Termination of Trust Agreement. (a) This Agreement and the Trust shall terminate and be of no further force or effect upon the later of (i) the maturity or other liquidation of the last Mortgage Loan (including the redemption by the Sponsor at its option of the corpus of the Trust as described in Section 10.1(b) of the Indenture) and the subsequent distribution of amounts in respect of such Mortgage Loans as provided in the Operative Documents, (ii) the payment to Certificateholders of all amounts required to be paid to them pursuant to this Agreement and the payment to the Insurer of all amounts payable or reimbursable to it pursuant to the Sale and Servicing Agreement and the Insurance Agreement and (iii) the termination of the Indenture and the Insurance Agreement; provided, however, that the rights to indemnification under Section 8.2 and the rights under Section 8.1 shall survive the termination of the Trust. The Master Servicer shall promptly notify the Owner Trustee and the Insurer of any prospective termination pursuant to this Section 9.1. The bankruptcy, liquidation, dissolution, death or incapacity of any Certificateholder shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of all or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations and liabilities of the parties hereto. (b) Except as provided in clause (a), neither the Sponsor, 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 10.1 of the Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Indenture Trustee at the time such notice is given to Certificateholders. 24 29 Upon presentation and surrender of the Certificates, the Indenture Trustee shall cause to be distributed to Certificateholders amounts distributable on such Payment Date pursuant to Section 8.6(b)(xi) of the Indenture. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above mentioned written notice, the Owner Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Owner Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed, subject to applicable escheat laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the Sponsor for payment. (d) Any funds remaining in the Trust after funds for final distribution have been distributed or set aside for distribution shall be distributed by the Owner Trustee to the 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. (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 10.1 Eligibility Requirements for Owner Trustee. The Owner Trustee shall at all times be a corporation (i) satisfying the provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise corporate trust powers; (iii) having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal or State authorities; (iv) having (or having a parent which has) a rating of at least Baa3 by Moody's or A-1 by Standard & Poor's or being otherwise acceptable to the Rating Agencies; and (v) acceptable to the Insurer in its sole discretion. If such corporation shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of this Section, the Owner Trustee shall resign immediately in the manner and with the effect specified in SECTION 10.2. 25 30 SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to the Sponsor, the Insurer and the Master Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly appoint a successor Owner Trustee, meeting the qualifications set forth in Section 10.1 herein, by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Owner Trustee and one copy to the successor Owner Trustee, provided that the Sponsor shall have received written confirmation from each of the Rating Agencies that the proposed appointment will not result in an increased capital charge to the Insurer by either of the Rating Agencies. If no successor Owner Trustee shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Owner Trustee or the Insurer may petition any court of competent jurisdiction for the appointment of a successor Owner Trustee. If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 10.1 and shall fail to resign after written request therefor by the Sponsor, or if at any time the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Owner Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then a majority of the Certificateholders with the consent of the Insurer (so long as no Insurer Default shall have occurred and is continuing) may remove the Owner Trustee. If a majority of the Certificateholders shall remove the Owner Trustee under the authority of the immediately preceding sentence, the Sponsor shall promptly appoint a successor Owner Trustee acceptable to the Insurer, meeting the qualifications set forth in Section 10.1 herein, by written instrument, in duplicate, one copy of which instrument shall be delivered to the outgoing Owner Trustee so removed, one copy to the Insurer and one copy to the successor Owner Trustee and the Sponsor shall pay all fees owed to the outgoing Owner Trustee, if not previously paid by the Trust. Any resignation or removal of the Owner Trustee and appointment of a successor Owner Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Owner Trustee pursuant to Section 10.3 and payment of all reasonable fees and expenses owed to the outgoing Owner Trustee. The 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 4.2(b) and the subsequent consent of Certificateholders representing no less than a 66-2/3% interest in the Trust, the Owner Trustee may be removed as Owner Trustee, subject to the consent of the Insurer (so long as no Insurer Default shall have occurred and is continuing), which consent is not to be unreasonably withheld. In the event the Owner Trustee is removed pursuant to this paragraph, the provisions of this Agreement, including Article X herein, shall apply as if the Owner Trustee had resigned hereunder. SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor Owner Trustee an instrument accepting such 26 31 appointment under this Agreement, and thereupon the resignation or removal of the predecessor Owner Trustee shall become effective and such successor Owner Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement; and the Sponsor and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties and obligations. No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall be eligible pursuant to Section 10.1. Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section, the Master Servicer shall mail notice of the successor of such Owner Trustee to all Certificateholders, the Indenture Trustee, the Insurer and the Noteholders. If the Master Servicer shall fail to mail such notice within 10 days after acceptance of appointment by the successor Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of the Master Servicer. The successor Owner Trustee shall file an amendment to the Certificate of Trust with the Secretary of State reflecting the name and principal place of business of such successor Owner Trustee in the State of Delaware. SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided such corporation shall be eligible pursuant to Section 10.1, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided further that the Owner Trustee shall mail notice of such merger or consolidation to the Rating Agencies and the Insurer. SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee. Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Owner Trust Estate or any Mortgaged Property may at the time be located, the Master Servicer and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with the Owner Trustee, or separate trustee or separate trustees, of all or any part of the Owner Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Master Servicer and the Owner Trustee may consider necessary or desirable. If the Master Servicer shall not have joined in such appointment within 15 days after the receipt by it 27 32 of a request so to do, the Owner Trustee subject to the approval of the Insurer (which approval shall not be unreasonably withheld) shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 10.1 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.3, except that notice to and written consent of, the Insurer shall be required for the appointment of a co-trustee. Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred upon and exercised or performed by the Owner Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Owner Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Owner Trustee; (ii) no trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; and (iii) the Master Servicer and the Owner Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Master Servicer and the Insurer. Any separate trustee or co-trustee may at any time appoint the Owner Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. 28 33 ARTICLE XI. Miscellaneous SECTION 11.1 Supplements and Amendments. (a) This Agreement may be amended by the Sponsor and the Owner Trustee, with the prior written consent of the Insurer 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 or pursuant to any other provision of this Agreement shall be conclusive and binding on such Holder and on all future Holders of such Certificate or Note and of any Certificate or Note issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Certificate or Note) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided, however, that, subject to the express rights of the Insurer under the Operative Documents, no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Mortgage Loans or distributions that shall be required to be made for the benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes and the Certificates, the Holders of which are required to consent to any such amendment, without the consent of the Holders of all the outstanding Notes and Holders of all outstanding Certificates. Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to the Insurer, to each Certificateholder and the Indenture Trustee. It shall not be necessary for the consent of Certificateholders, the Noteholders or the Indenture Trustee pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement or in any other Operative Document) and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe. Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State. 29 34 Prior to the execution of any amendment to this Agreement or the Certificate of Trust, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee's own rights, duties or immunities under this Agreement or otherwise. The Owner Trustee shall furnish copies of any such amendments to the Rating Agencies. SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders. The Certificateholders shall not have legal title to any part of the Owner Trust Estate. The Certificateholders shall be entitled to receive distributions with respect to their ownership interest therein only in accordance with Article IX. No transfer, by operation of law or otherwise, of any right, title or interest of the Certificateholders to and in their ownership interest in the Owner Trust Estate shall operate to terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Owner Trust Estate. SECTION 11.3 Limitations on Rights of Others. Except for Section 11.7, the provisions of this Agreement are solely for the benefit of the Owner Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to the extent expressly provided herein, the Insurer, the Indenture Trustee and the Noteholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 11.4 Notices. (a) Unless otherwise expressly specified or permitted by the terms hereof, all notices shall be in writing and shall be deemed given upon receipt personally delivered, delivered by overnight courier or mailed first class mail or certified mail, in each case return receipt requested, and shall be deemed to have been duly given upon receipt, if to the Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor, addressed to Advanta Conduit Receivables, Inc., 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 11.5 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdictional shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 30 35 SECTION 11.6 Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.7 Assignments; Insurer. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. This Agreement shall also inure to the benefit of the Insurer for so long as an Insurer Default shall not have occurred and be continuing. Without limiting the generality of the foregoing, all covenants and agreements in this Agreement which confer rights upon the Insurer shall be for the benefit of and run directly to the Insurer, and the Insurer shall be entitled to rely on and enforce such covenants, subject, however, to the limitations on such rights provided in this Agreement and the Operative Documents. The Insurer may disclaim any of its rights and powers under this Agreement (but not its duties and obligations under the Policy) upon delivery of a written notice to the Owner Trustee. SECTION 11.8 No Petition. The Owner Trustee (in its individual capacity and as Owner Trustee), by entering into this Agreement, each Certificateholder, by accepting a Certificate, and the Indenture Trustee, the Originators, and each Noteholder by accepting the benefits of this Agreement, hereby covenants and agrees that they will not at any time institute against the Sponsor or the Trust, or join in any institution against the Sponsor or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States Federal or state bankruptcy or similar law. SECTION 11.9 No Recourse. Each Certificateholder by accepting a Certificate acknowledges that such Certificateholder's Certificates represent beneficial interests in the Trust only and do not represent interests in or obligations of the Master Servicer, the Sponsor, the Owner Trustee, the Indenture Trustee, the Insurer or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Agreement, the Certificates or the Operative Documents. SECTION 11.10 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 11.12 Master Servicer. The Master Servicer is authorized to prepare, or cause to be prepared, execute and deliver on behalf of the Trust all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant to the Operative Documents. Upon written request, the Owner Trustee shall execute and deliver to the Master Servicer a limited power of attorney appointing the Master Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be 31 36 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. 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:________________________________ Name: Title: ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By:________________________________ Name: Title: 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 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 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE AGREEMENTS AND THE MORTGAGE NOTES; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN THE ADVANTA REVOLVING HOME 40 EQUITY LOAN TRUST 1999-B BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF THE ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF 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. 41 ADVANTA HOLDING TRUST 1999-B CERTIFICATE Percentage Interest: [ ]% Cut-Off Date: Close of business August 31, 1999 First Payment Date: Issue Date: September 28, 1999 October 25, 1999 No. 1 ADVANTA NATIONAL BANK Registered Holder The Trust was created pursuant to a Trust Agreement dated as of September 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 Revolving Home Equity Loan Trust 1999-B (the "Issuer") was created pursuant to a Trust Agreement dated as of September 1, 1999 (the "Trust Agreement") between Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B 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-B "Certificates." Pursuant to the Trust Agreement, there is also issued duly authorized Certificates designated as Advanta Revolving Home Equity Loan Trust 1999-B "Asset Backed Certificates". Pursuant to the Indenture dated as of September 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 Revolving Home Equity Loan Asset Backed Notes (the "Notes"). These Certificates are issued under and are subject to the terms, provisions and conditions of the 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 home equity revolving credit line loans secured by first or junior 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 October 25, 1999, to the Person in whose name this Certificate is registered at the close of business on the Business Day preceding such Payment Date (the 42 "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 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. 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: September 28, 1999 ADVANTA HOLDING TRUST 1999-B By: WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee By: ____________________________________ Name: Title: OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within-mentioned Trust Agreement. WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee By:_____________________________ Authenticating Agent 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 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. 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. 47 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 COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE SPONSOR THAT SUCH 48 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 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE AGREEMENTS AND THE MORTGAGE NOTES; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN THE ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH 49 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 REVOLVING HOME EQUITY LOAN TRUST 1999-B, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF 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. 50 ADVANTA HOLDING TRUST 1999-B CERTIFICATE Percentage Interest: [ ]% Cut-Off Date: Close of business August 31, 1999 First Payment Date: Issue Date: September 28, 1999 October 25, 1999 No. 1 ADVANTA FINANCE RESIDUAL CORP. Registered Holder The Trust was created pursuant to a Trust Agreement dated as of September 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 Revolving Home Equity Loan Trust 1999-B (the "Issuer") was created pursuant to a Trust Agreement dated as of September 1, 1999 (the "Trust Agreement") between Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B 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-B "Certificates." Pursuant to the Trust Agreement, there is also issued duly authorized Certificates designated as Advanta Revolving Home Equity Loan Trust 1999-B "Asset Backed Certificates". Pursuant to the Indenture dated as of September 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 Revolving Home Equity Loan Asset Backed Notes (the "Notes"). These Certificates are issued under and are subject to the terms, provisions and conditions of the 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 home equity revolving credit line loans secured by first or junior 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 October 25, 1999, to the Person in whose name this Certificate is registered at the close of business on the Business Day preceding such Payment Date (the 51 "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 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. 52 IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed. Date: September 28, 1999 ADVANTA HOLDING TRUST 1999-B By: WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee By: ____________________________________ Name: Title: OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within-mentioned Trust Agreement. WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee By:_____________________________ Authenticating Agent 53 (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 54 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. 55 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. 56 EXHIBIT B CERTIFICATE OF TRUST OF ADVANTA HOLDING TRUST 1999-B This Certificate of Trust of Advanta Holding Trust 1999-B (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-B. 2. Delaware Trust. The name and business address of the Owner Trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration. 3. This Certificate of Trust will be effective September 28, 1999. IN WITNESS WHEREOF, the undersigned, in accordance with SECTION 3811(a) of the Act, has duly executed this Certificate of Trust. WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee of the Trust By:_________________________________ Name: Title: B-1 EX-4.3 5 TRUST AGREEMENT 1 Exhibit 4.3 TRUST AGREEMENT between ADVANTA CONDUIT RECEIVABLES, INC. Sponsor ADVANTA HOLDING TRUST 1999-B, Depositor and WILMINGTON TRUST COMPANY Owner Trustee Dated as of September 1, 1999 2 Table of Contents Page ARTICLE I. Definitions Section 1.1 Capitalized Terms ..........................................1 Section 1.2 Other Definitional Provisions ..............................4 Section 1.3 Action by or Consent of Noteholders and Certificateholders .4 ARTICLE II. Organization Section 2.1 Names ......................................................4 Section 2.2 Office .....................................................5 Section 2.3 Purposes and Powers ........................................5 Section 2.4 Appointment of Owner Trustee ...............................5 Section 2.5 Initial Capital Contribution of Trust Estate ...............5 Section 2.6 Declaration of Trust .......................................6 Section 2.7 Liability ..................................................6 Section 2.8 Title to Trust Property ....................................6 Section 2.9 Situs of Trust .............................................6 Section 2.10 Representations and Warranties of the Sponsor and the Depositor .................................................7 Section 2.11 Federal Income Tax Allocations .............................9 Section 2.12 Covenants of the Sponsor ...................................9 Section 2.13 Covenants of the Certificateholders .......................10 Section 2.14 Investment Company ........................................11 ARTICLE III. Certificates and Transfer of Interests Section 3.1 Initial Ownership .........................................11 Section 3.2 The Certificates ..........................................11 Section 3.3 Authentication of Certificates ............................12 Section 3.4 Registration of Transfer and Exchange of Certificates .....12 Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates .........12 Section 3.6 Persons Deemed Certificateholders .........................12 Section 3.7 Access to List of Certificateholders' Names and Addresses..13 Section 3.8 Maintenance of Office or Agency ...........................13 Section 3.9 ERISA .....................................................13 Section 3.10 Restrictions on Transfer of Certificates ..................13 Section 3.11 Acceptance of Obligations .................................15 Section 3.12 Payments on Certificates ..................................15 i 3 ARTICLE IV. Voting Rights and Other Actions Section 4.1 Prior Notice to Holders with Respect to Certain Matters ........15 Section 4.2 Action by Certificateholders with Respect to Certain Matters ...16 Section 4.3 Action by Certificateholders with Respect to Bankruptcy ........17 Section 4.4 Restrictions on Certificateholders' Power ......................17 Section 4.5 Majority Control ...............................................18 Section 4.6 Rights of Insurer ..............................................18 Section 4.7 Separateness ...................................................18 ARTICLE V. Certain Duties Section 5.1 Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others ........................18 Section 5.2 Signature on Returns; Tax Matters Partner ......................19 ARTICLE VI. Authority and Duties of Owner Trustee Section 6.1 General Authority ..............................................19 Section 6.2 General Duties .................................................20 Section 6.3 Action upon Instruction ........................................20 Section 6.4 No Duties Except as Specified in this Agreement or in Instructions ..................................................21 Section 6.5 No Action Except under Specified Documents or Instructions .....21 Section 6.6 Restrictions ...................................................21 ARTICLE VII. Concerning the Owner Trustee Section 7.1 Acceptance of Trust and Duties .................................21 Section 7.2 Furnishing of Documents ........................................23 Section 7.3 Representations and Warranties .................................23 Section 7.4 Reliance; Advice of Counsel ....................................23 Section 7.5 Not Acting in Individual Capacity ..............................24 Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans ....24 Section 7.7 Owner Trustee May Own Certificates and Notes ...................24 Section 7.8 Payments from Owner Trust Estate ...............................24 Section 7.9 Doing Business in Other Jurisdictions ..........................25 ii 4 ARTICLE VIII. Compensation of Owner Trustee Section 8.1 Owner Trustee's Fees and Expenses .........................25 Section 8.2 Indemnification ...........................................25 Section 8.3 Payments to the Owner Trustee .............................26 Section 8.4 Non-recourse Obligations ..................................26 ARTICLE IX. Termination of Trust Agreement Section 9.1 Termination of Trust Agreement ............................26 ARTICLE X. Successor Owner Trustees and Additional Owner Trustees Section 10.1 Eligibility Requirements for Owner Trustee ................27 Section 10.2 Resignation or Removal of Owner Trustee ...................28 Section 10.3 Successor Owner Trustee ...................................28 Section 10.4 Merger or Consolidation of Owner Trustee ..................29 Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee .29 ARTICLE XI. Miscellaneous Section 11.1 Supplements and Amendments ................................31 Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders 32 Section 11.3 Limitations on Rights of Others ...........................32 Section 11.4 Notices ...................................................32 Section 11.5 Severability ..............................................32 Section 11.6 Separate Counterparts .....................................33 Section 11.7 Assignments; Insurer ......................................33 Section 11.8 No Petition ...............................................33 Section 11.9 No Recourse ...............................................33 Section 11.10 Headings ..................................................33 Section 11.11 Governing Law .............................................33 Section 11.12 Master Servicer ...........................................33 Section 11.13 No Borrowing ..............................................34 Section 11.14 Nonpetition Covenant ......................................34 EXHIBITS Exhibit A Form of Certificate Exhibit B Form of Certificate of Trust iii 5 TRUST AGREEMENT dated as of September 1, 1999 between ADVANTA CONDUIT RECEIVABLES, INC., a Nevada corporation (the "Sponsor"), ADVANTA HOLDING TRUST 1999-B, a Delaware business trust, as depositor (the "Depositor") and WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner Trustee (the "Owner Trustee"). ARTICLE I. Definitions Section 1.1 Capitalized Terms. For the purposes of this Agreement, the following terms shall have the meanings set forth below. All other capitalized terms used herein but not defined shall have the meanings set forth in the Indenture. "Affiliate" shall mean with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, or owns, directly or indirectly, 50% or more of, the Person specified. "Agreement" shall mean this Trust Agreement, as the same may be amended and supplemented from time to time. "Benefit Plan Investor" shall have the meaning assigned to such term in Section 3.9. "Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended from time to time. "Certificate" means a trust certificate evidencing the beneficial ownership interest of a Certificateholder in the Trust, substantially in the form of Exhibit A hereto. "Certificate Account" shall mean the account designated as such as established and maintained pursuant to the Indenture. "Certificate of Trust" shall mean the Certificate of Trust in the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the Business Trust Statute. "Certificate Register" and "Certificate Registrar" shall mean the register maintained and the registrar appointed pursuant to Section 3.4. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. "Corporate Trust Office" shall mean, with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee located at 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, the Depositor and the Sponsor, or the principal corporate trust 6 office of any successor Owner Trustee (the address of which the successor owner trustee will notify the Certificateholders, the Insurer, the Depositor and the Sponsor). "Definitive Certificates" shall mean Certificates issued in certificated, fully registered form. "Depositor" shall mean Advanta Holding Trust 1999-B in its capacity as Depositor hereunder. "ERISA" shall have the meaning assigned to such term in Section 3.9. "Expenses" shall have the meaning assigned to such term in Section 8.2. "Holder" or "Certificateholder" shall mean the Person in whose name a Certificate is registered on the Certificate Register. "Indemnification Agreement" shall mean the Indemnification Agreement dated as of September 28, 1999 among the Insurer, Morgan Stanley & Co. Incorporated and Banc of America Securities LLC. "Indemnified Parties" shall have the meaning assigned to such term in Section 8.2. "Indenture" shall mean the Indenture dated as of September 1, 1999, between the Trust and Bankers Trust Company of California, N.A., as Indenture Trustee, as the same may be amended and supplemented from time to time. "Indenture Trustee" shall mean, initially Bankers Trust Company of California, N.A., in its capacity as indenture trustee, including its successors in interest, until and unless a successor Person shall have become the Indenture Trustee pursuant to the Sale and Servicing Agreement and thereafter "Indenture Trustee" shall mean such successor Person. "Instructing Party" shall have the meaning assigned to such term in Section 6.3. "Insurance Agreement" shall mean the Insurance and Indemnity Agreement dated as of September 28, 1999 among the Insurer, the Sponsor, the Trust, Advanta Holding Trust 1999-B, the Master Servicer and the Indenture Trustee. "Insurer" shall mean Ambac Assurance Corporation, or its successor in interest. "Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware corporation. "Notes" shall mean any of the Notes issued pursuant to the Indenture. "Noteholder" shall mean the holder of a Note. "Operative Documents" shall mean this Agreement, the Certificate of Trust, the Sale and Servicing Agreement, the Indemnification Agreement, the Insurance Agreement, the 2 7 Indenture, the Purchase Agreement, the AMHC Guaranty to the Underwriter and the Trust, the AMHC Guaranty to the Insurer and the Trust and the other documents and certificates delivered in connection therewith. "Originators" shall mean Advanta National Bank and Advanta Finance Corp. "Owner Trust Estate" shall mean all right, title and interest of the Trust in and to the property and rights assigned to the Trust pursuant to Article II of the Sale and Servicing Agreement, all funds on deposit from time to time in the Trust Accounts and the Certificate Account and all other property of the Trust from time to time, including any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing Agreement. "Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as owner trustee under this Agreement, and any successor Owner Trustee hereunder. "Policy" shall mean the certificate guaranty insurance policy with respect to the Notes, dated September 28, 1999, issued by the Insurer to the Indenture Trustee for the benefit of the Noteholders. "Record Date" shall mean with respect to any Payment Date, (i) in the case of the certificates, the close of business on the last Business Day immediately preceding such Payment Date and (ii) in the case of the Notes as defined in the Indenture. "Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement among Advanta Holding Trust 1999-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Issuer, Advanta Conduit Receivables, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, and the Indenture Trustee, dated as of September 1, 1999, as the same may be amended and supplemented from time to time. "Secretary of State" shall mean the Secretary of State of the State of Delaware. "Security Majority" means a majority by principal amount of the Noteholders so long as the Notes are outstanding and a majority by principal amount of the Certificateholders thereafter. "Sponsor" shall mean Advanta Conduit Receivables, Inc. in its capacity as Sponsor hereunder. "Treasury Regulations" shall mean regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations. "Trust" or "Issuer" shall mean the trust established by this Agreement. "Trust Accounts" shall have the meaning ascribed thereto in the Sale and Servicing Agreement. 3 8 Section 1.2 Other Definitional Provisions. (a) Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Sale and Servicing Agreement or, if not defined therein, in the Indenture. (b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (c) As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on the date of this Agreement or any such certificate or other document, as applicable. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such certificate or other document shall control. (d) The words "hereof," "herein," "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section and Exhibit references contained in this Agreement are references to Sections and Exhibits in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation." (e) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Section 1.3 Action by or Consent of Noteholders and Certificateholders. Whenever any provision of this Agreement refers to action to be taken, or consented to, by Noteholders or Certificateholders, such provision shall be deemed to refer to the Certificateholder or Noteholder, as the case may be, of record as of the Record Date immediately preceding the date on which such action is to be taken, or consent given, by Noteholders or Certificateholders. Solely for the purposes of any action to be taken, or consented to, by Noteholders or Certificateholders, any Note or Certificate registered in the name of the Sponsor or any Affiliate thereof shall be deemed not to be outstanding; provided, however that, solely for the purpose of determining whether the Indenture Trustee is entitled to rely upon any such action or consent, only Notes or Certificates which the Owner Trustee, or the Indenture Trustee, respectively, knows to be so owned shall be so disregarded. ARTICLE II. Organization Section 2.1 Names. There is hereby formed a trust to be known as "Advanta Revolving Home Equity Loan Trust 1999-B," in which name the Owner Trustee may conduct 4 9 the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. Section 2.2 Office. The office of the Trust shall be in care of the Owner Trustee at the Corporate Trust Office or at such other address as the Owner Trustee may designate by written notice to the Certificateholders , the Insurer and the Sponsor. Section 2.3 Purposes and Powers. The purpose of the Trust is, and the Trust shall have the power and authority, to engage in the following activities: (i) to issue the Notes pursuant to the Indenture and the Certificates pursuant to this Agreement, and to sell the Notes; (ii) with the proceeds of the sale of the Notes, to pay the organizational, startup and transactional expenses of the Trust and to pay the balance to the Sponsor pursuant to the Sale and Servicing Agreement; (iii) to assign, grant, transfer, pledge, mortgage and convey the Owner Trust Estate to the Indenture Trustee on behalf of the Noteholders and for the benefit of the Insurer and to hold, manage and distribute to the Certificateholders pursuant to the terms of this Agreement any portion of the Owner Trust Estate released from the Lien of, and remitted to the Trust pursuant to, the Indenture; (iv) to enter into and perform its obligations under the Operative Documents to which it is a party; (v) to engage in those activities, including entering into agreements, that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith; and (vi) subject to compliance with the Operative Documents, to engage in such other activities as may be required in connection with conservation of the Owner Trust Estate and the making of distributions to the Certificateholders and the Noteholders. The Trust is hereby authorized to engage in the foregoing activities. The Trust shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of this Agreement or the Operative Documents. Section 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints the Owner Trustee as trustee of the Trust effective as of the date hereof, to have all the rights, powers and duties set forth herein and in the Business Trust Statute. Section 2.5 Initial Capital Contribution of Trust Estate. The Depositor hereby assigns, transfers, conveys and sets over to the Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt in trust from the Depositor, as of the date hereof, of the foregoing contribution, which shall constitute the initial Owner Trust Estate and shall be deposited in the Certificate Account. On or prior to the Closing Date, the 5 10 Owner Trustee will also, upon receipt thereof, acknowledge on behalf of the Trust, receipt of the Mortgage Loans pursuant to the Sale and Servicing Agreement. The Sponsor shall pay organizational expenses of the Trust as they may arise. Section 2.6 Declaration of Trust. The Owner Trustee hereby declares that it will hold the Owner Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificateholders, subject to the obligations of the Trust under the Operative Documents. It is the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Statute and that this Agreement constitute the governing instrument of such business trust. It is the intention of the parties hereto that, solely for income tax purposes, the Trust shall be treated as a branch; provided, however, that in the event Certificates are owned by more than one Certificateholder, it is the intention of the parties hereto that, solely for income and franchise tax purposes, the Trust shall then be treated as a partnership and that, unless otherwise required by appropriate tax authorities, only after such time the Trust will file or cause to be filed annual or other necessary returns, reports and other forms consistent with the characterization of the Trust as a partnership for such tax purposes. Effective as of the date hereof, the Owner Trustee shall have all rights, powers and duties set forth herein and to the extent not inconsistent herewith, in the Business Trust Statute with respect to accomplishing the purposes of the Trust. The Owner Trustee shall file the Certificate of Trust with the Secretary of State. Section 2.7 Liability. No Holder shall have any personal liability for any liability or obligation of the Trust. Section 2.8 Title to Trust Property. (a) Legal title to all of the Owner Trust Estate shall be vested at all times in the Trust as a separate legal entity except where applicable law in any jurisdiction requires title to any part of the Owner Trust Estate to be vested in a trustee or trustees, in which case title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the case may be. (b) The Holders shall not have legal title to any part of the Trust Property. The Holders shall be entitled to receive distributions with respect to their undivided ownership interest therein only in accordance with Article IX. No transfer, by operation of law or otherwise, of any right, title or interest by any Certificateholder of its ownership interest in the Owner Trust Estate shall operate to terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Trust Property. Section 2.9 Situs of Trust. The Trust will be located and administered in the State of Delaware. All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or the State of New York. Payments will be received by the Trust only in Delaware or New York and payments will be made by the Trust only from Delaware or New York. The Trust shall not have any employees in any state other than Delaware; provided, however, that nothing herein shall restrict or prohibit the Owner Trustee, the Master Servicer or any agent of the Trust from having employees within or without the State of Delaware. The only office of the Trust will be at the Corporate Trust Office in Delaware. 6 11 Section 2.10 Representations and Warranties of the Sponsor and the Depositor. (a) The Sponsor makes the following representations and warranties on which the Owner Trustee relies in accepting the Owner Trust Estate in trust and issuing the Certificates and upon which the Insurer relies in issuing the Policies. (i) The Sponsor is duly organized and validly existing as a Nevada corporation with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted and is proposed to be conducted pursuant to this Agreement and the Operative Documents; (ii) It is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property, the conduct of its business and the performance of its obligations under this Agreement and the Operative Documents requires such qualification; (iii) The Sponsor has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement has been duly authorized by the Sponsor by all necessary corporate action. The Sponsor has duly executed this Agreement and this Agreement constitutes a legal, valid and binding obligation of the Sponsor enforceable against the Sponsor, in accordance with its terms; (iv) To the best knowledge of the Sponsor, no consent, license, approval or authorization or registration or declaration with, any Person or with any governmental authority, bureau or agency is required in connection with the execution, delivery or performance of this Agreement and the Operative Documents, except for such as have been obtained, effected or made; (v) The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or bylaws of the Sponsor, or any material indenture, agreement or other instrument to which the Sponsor is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Operative Documents); nor violate any law or, to the best of the Sponsor's knowledge, any order, rule or regulation applicable to the Sponsor of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Sponsor or its properties; and (vi) There are no proceedings or investigations pending or, to its knowledge threatened against it before any court, regulatory body, 7 12 administrative agency or other tribunal or governmental instrumentality having jurisdiction over it or its properties (A) asserting the invalidity of this Agreement or any of the Operative Documents, (B) seeking to prevent the issuance of the Certificates or the Notes or the consummation of any of the transactions contemplated by this Agreement or any of the Operative Documents, (C) seeking any determination or ruling that might materially and adversely affect its performance of its obligations under, or the validity or enforceability of, this Agreement or any of the Operative Documents, or (D) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Notes or the Certificates. (b) The Depositor makes the following representations and warranties on which the Owner Trustee relies in accepting the Owner Trust Estate in trust and issuing the Certificates and upon which the Insurer relies in issuing the Policies. (i) The Depositor is duly organized and validly existing as a Delaware business trust with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted and is proposed to be conducted pursuant to this Agreement and the Operative Documents; (ii) It is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property, the conduct of its business and the performance of its obligations under this Agreement and the Operative Documents requires such qualification; (iii) The Depositor has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; the Depositor has full power and authority to convey and assign the property to be conveyed and assigned to and deposited with the Trust and the Depositor has duly authorized such conveyance and assignment and deposit to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Depositor by all necessary corporate action. The Depositor has duly executed this Agreement and this Agreement constitutes a legal, valid and binding obligation of the Depositor enforceable against the Depositor, in accordance with its terms; (iv) To the best knowledge of the Depositor, no consent, license, approval or authorization or registration or declaration with, any Person or with any governmental authority, bureau or agency is required in connection with the execution, delivery or performance of this Agreement and the Operative Documents, except for such as have been obtained, effected or made; (v) The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of trust of the Depositor, 8 13 or any material indenture, agreement or other instrument to which the Depositor is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Operative Documents); nor violate any law or, to the best of the Depositor's knowledge, any order, rule or regulation applicable to the Depositor of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties; and (vi) There are no proceedings or investigations pending or, to its knowledge threatened against it before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over it or its properties (A) asserting the invalidity of this Agreement or any of the Operative Documents, (B) seeking to prevent the issuance of the Certificates or the Notes or the consummation of any of the transactions contemplated by this Agreement or any of the Operative Documents, (C) seeking any determination or ruling that might materially and adversely affect its performance of its obligations under, or the validity or enforceability of, this Agreement or any of the Operative Documents, or (D) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Notes or the Certificates. Section 2.11 Federal Income Tax Allocations. In the event that the Trust is treated as a partnership for Federal income tax purposes, net income of the Trust for any month as determined for Federal income tax purposes (and each item of income, gain, loss, credit and deduction entering into the computation thereof) shall be allocated to the extent of available net income, among the Certificateholders as of the first Record Date following the end of such month, in proportion to their ownership percentage of principal amount of Certificates on such date. Net losses of the Trust, if any, for any month as determined for Federal income tax purposes (and each item of income, gain, loss, credit and deduction entering into the computation thereof) shall be allocated among the Certificateholders as of the Record Date in proportion to their ownership percentage of principal amount of Certificates on such Record Date until the principal balance of the Certificates is reduced to zero. The Sponsor, as agent on behalf of the Originators, is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Certificateholders, or as otherwise required by the Code. Section 2.12 Covenants of the Sponsor. The Sponsor agrees and covenants for the benefit of each Certificateholder, the Insurer and the Owner Trustee, during the term of this Agreement, and to the fullest extent permitted by applicable law, that: (a) it shall not create, incur or suffer to exist any indebtedness or engage in any business, except, in each case, as permitted by its certificate of incorporation and the Operative Documents; 9 14 (b) it shall not, for any reason, institute proceedings for the Trust to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Trust, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to the bankruptcy of the Trust, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Trust or a substantial part of the property of the Trust or cause or permit the Trust to make any assignment for the benefit of creditors, or admit in writing the inability of the Trust to pay its debts generally as they become due, or declare or effect a moratorium on the debt of the Trust or take any action in furtherance of any such action; (c) it shall obtain from each counterparty to each Operative Document to which it or the Trust is a party and each other agreement entered into on or after the date hereof to which it or the Trust is a party, an agreement by each such counterparty that prior to the occurrence of the event specified in Section 9.1(e) such counterparty shall not institute against, or join any other Person in instituting against, it or the Trust, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States or any state of the United States; and (d) it shall not, for any reason, withdraw or attempt to withdraw from this Agreement, dissolve, institute proceedings for it to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of it or a substantial part of its property, or make any assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or declare or effect a moratorium on its debt or take any action in furtherance of any such action. Section 2.13 Covenants of the Certificateholders. Each Certificateholder agrees: (a) to be bound by the terms and conditions of the Certificates and of this Agreement, including any supplements or amendments hereto and to perform the obligations of a Certificateholder as set forth therein or herein, in all respects as if it were a signatory hereto. This undertaking is made for the benefit of the Trust, the Owner Trustee, the Insurer and all other Certificateholders present and future; (b) to hereby appoint the Sponsor as such Certificateholder's agent and attorney-in-fact to sign any federal income tax information return filed on behalf of the Trust, if any, and agree that, if requested by the Trust, it will sign such federal income tax information return in its capacity as holder of an interest in the Trust. Each Certificateholder also hereby agrees that in its tax returns it will not take any position inconsistent with those taken in any tax returns that may be filed by the Trust; (c) if such Certificateholder is other than an individual or other entity holding its Certificate through a broker who reports securities sales on Form 1099B, to notify the Owner Trustee of any transfer by it of a Certificate in a taxable sale or exchange, within 30 days of the date of the transfer; and 10 15 (d) until the completion of the events specified in Section 9.1(e), not to, for any reason, institute proceedings for the Trust or the Sponsor to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Trust, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Sponsor or the Trust or a substantial part of its property, or cause or permit the Sponsor or the Trust to make any assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or declare or effect a moratorium on its debt or take any action in furtherance of any such action. Except as provided in Section 2.13, and notwithstanding any other provision to the contrary in this Agreement, no Certificateholder shall be deemed to have adopted, be bound by, or succeed in any way to any representation by, or duty of indemnification by or any other duty of, the Sponsor, including those contained in Sections 2.10, 2.11, 2.12, 8.2 or elsewhere herein. Section 2.14 Investment Company. Neither the Sponsor, the Depositor nor any Holder shall take any action that would cause the Trust to become an "investment company" required to register under the Investment Company Act of 1940, as amended. ARTICLE III. Certificates and Transfer of Interests Section 3.1 Initial Ownership. Upon the formation of the Trust by the contribution by the Depositor pursuant to Section 2.5, the Owner Trustee, contemporaneously therewith, having full power, authority, and authorization to do so, has executed, authenticated, dated, issued, and delivered, in the name and on behalf of the Trust, to the Depositor, one or more Certificates representing in the aggregate a 100% interest in the Trust, and has registered such Certificates on the Certificate Register in the name of the Depositor. The Depositor shall be the sole beneficiary of the Trust. Such Certificates are duly authorized, validly issued, and entitled to the benefits of this Agreement. For so long as the Depositor shall own such 100% interest in the Trust, the Depositor shall be the sole beneficial owner of the Trust. For so long as any Notes remaining outstanding, the Depositor shall not transfer its ownership interest in the Trust, in whole or in part, without the Insurer's prior written consent. Section 3.2 The Certificates. The Certificates shall be issued in denominations of $1,000 and integral multiples of $1000 in excess thereof. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of an authorized officer of the Owner Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefit of this Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates. A transferee of a Certificate shall become a Certificateholder, and shall be entitled to the rights and subject to the obligations of a 11 16 Certificateholder hereunder, upon due registration of such Certificate in such transferee's name pursuant to Section 3.4. Section 3.3 Authentication of Certificates. Concurrently with the initial sale of the Mortgage Loans to the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause each Certificate to be executed on behalf of the Trust, authenticated and delivered to or upon the written order of the Sponsor, signed by its chairman of the board, its president or any vice president, its treasurer or any assistant treasurer without further corporate action by the Sponsor, in authorized denominations. No Certificate shall entitle its holder to any benefit under this Agreement, or shall be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Owner Trustee, by manual signature; such authentication shall constitute conclusive evidence that such Certificate shall have been duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication. The Trust shall not issue any other Certificate without the prior written consent of the Insurer. Section 3.4 Registration of Transfer and Exchange of Certificates. The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 3.8, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Owner Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. The Owner Trustee shall be the initial Certificate Registrar. Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate and (b) there shall be delivered to the Certificate Registrar, the Owner Trustee and the Insurer such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like class, tenor and denomination. In connection with the issuance of any new Certificate under this Section, the Owner Trustee or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. Section 3.6 Persons Deemed Certificateholders. Every Person by virtue of becoming a Certificateholder in accordance with this Agreement and the rules and regulations of the Certificate Registrar shall be deemed to be bound by the terms of this Agreement. Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee, the Certificate Registrar and the Insurer and any agent of the Owner Trustee, the Certificate Registrar and the Insurer, may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to the Sale and Servicing Agreement and the Indenture and for all other purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar or the 12 17 Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be bound by any notice to the contrary. Section 3.7 Access to List of Certificateholders' Names and Addresses. The Owner Trustee shall furnish or cause to be furnished to the Master Servicer, the Sponsor or the Insurer, within 15 days after receipt by the Owner Trustee of a request therefor from such Person in writing, a list, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Holders of Certificates or one or more Holders of Certificates evidencing not less than 25% by Percentage Interest apply in writing to the Owner Trustee, and such application states that the applicants desire to communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Owner Trustee shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the Master Servicer, the Owner Trustee or the Insurer or any agent thereof accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. Section 3.8 Maintenance of Office or Agency. The Owner Trustee shall maintain in Wilmington, Delaware an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Owner Trustee in respect of the Certificates and the Operative Documents may be served. The Owner Trustee initially designates its Corporate Trust Office for such purposes. The Owner Trustee shall give prompt written notice to the Sponsor, the Certificateholders and the Insurer of any change in the location of the Certificate Register or any such office or agency. Section 3.9 ERISA. The Certificates may not be acquired by or for the account of (i) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan as (as defined in Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or (iii) any person acting on behalf of or using the assets of a plan described in (i) or (ii) (each, a "Benefit Plan Investor") above. By accepting and holding its beneficial ownership interest in its Certificate, the Holder thereof shall be deemed to have represented and warranted that it is not a Benefit Plan Investor. Section 3.10 Restrictions on Transfer of Certificates. (a) The Certificates shall be assigned, transferred, exchanged, pledged, financed, hypothecated or otherwise conveyed (collectively, for purposes of this Section 3.10 and any other Section referring to the Certificates, "transferred" or a "transfer") only in accordance with this Section 3.10. (b) No transfer of a Certificate shall be made unless such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws or is made in accordance with said Act and laws. Except for the initial issuance of the Certificates to the Depositor, the Owner Trustee shall require (i) the transferee to execute an investment letter acceptable to and in form and substance satisfactory to the Owner Trustee and the Insurer certifying to the Owner Trustee and the Insurer the facts 13 18 surrounding such transfer, which investment letter shall not be an expense of the Owner Trustee or the Insurer, or (ii) if the investment letter is not delivered, a written Opinion of Counsel acceptable to and in form and substance satisfactory to the Owner Trustee, the Insurer and the Sponsor that such transfer may be made pursuant to an exemption, describing the applicable exemption and the basis therefor from said Act or is being made pursuant to said Act, which Opinion of Counsel shall not be an expense of the Owner Trustee, the Insurer or the Sponsor. The Holder of a Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the Sponsor, the Owner Trustee and the Insurer against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. (c) The Certificates and any interest therein shall not be transferred except upon satisfaction of the following conditions precedent: (i) the Person that acquires a Certificate shall (A) be organized and existing under the laws of the United States of America or any state thereof or the District of Columbia; (B) expressly assume, by an agreement supplemental hereto, executed and delivered to the Owner Trustee, the performance of every covenant and obligation of the Sponsor hereunder except for the covenants and obligations contained in Sections 2.1, 2.2, 2.3, 2.4, 3.3 and 3.4 of the Sale and Servicing Agreement, Section 7.1 of the Indenture and under the Credit Line Agreements and the Mortgage Notes; (ii) the person that acquires a Certificate shall deliver to the Owner Trustee and the Insurer an Officer's Certificate stating that such transfer and such supplemental agreement comply with this Section 3.10 and that all conditions precedent provided by this subsection 3.10 have been complied with and an Opinion of Counsel stating that such transfer and such supplemental agreement comply with this Section 3.10 and that all conditions precedent provided by this Section 3.10 have been complied with, and the Owner Trustee may conclusively rely on such Officer's Certificate, shall have no duty to make inquiries with regard to the matters set forth therein and shall incur no liability in so relying; (iii) the person that acquires a Certificate shall deliver to the Owner Trustee and the Insurer a letter from each Rating Agency confirming that its rating of the Notes, after giving effect to such transfer, will not be reduced or withdrawn without regard to the Policy; (iv) the person that acquires a Certificate shall deliver to the Owner Trustee and the Insurer an Opinion of Counsel to the effect that (a) such transfer will not adversely affect the treatment of the Notes after such transfer as debt for federal and applicable state income tax purposes, (b) such transfer will not result in the Trust being subject to tax at the entity level for federal or applicable state tax purposes, (c) such transfer will not have any material adverse impact on the federal or applicable state income taxation of a Noteholder and (d) such transfer will not result in the arrangement created by this Agreement or any "portion" of the Trust, being treated as a taxable mortgage pool as defined in Section 7701(i) of the Code; (v) all filings and other actions necessary to continue the perfection of the interest of the Trust in the Mortgage Loans and the other property conveyed hereunder shall have been taken or made and (vi) the prior written consent of the Insurer has been obtained, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, the requirement set forth in subclause (i)(A) of this Section 3.10 shall not apply in the event the Owner Trustee and the Insurer shall have received a letter from each Rating Agency confirming that its rating of the Notes, after giving effect to a proposed transfer to a Person that does not meet the requirement set forth in subclause (i)(A), shall not be reduced or withdrawn without regard to the Policy. Notwithstanding the foregoing, the requirements set forth in this paragraph (c) shall not apply to the initial issuance of the Certificates to the Depositor. 14 19 (d) Except for the initial issuance of the Certificates to the Depositor, no transfer of a Certificate shall be made unless the Owner Trustee and the Insurer shall have received a representation letter from the transferee of such Certificate, acceptable to and in form and substance satisfactory to the Owner Trustee and the Insurer, to the effect that such transferee is not a Benefit Plan Investor, which representation letter shall not be an expense of the Owner Trustee. (e) No transfer or pledge of the Certificates shall result in more than 98 other holders of Certificates. Section 3.11 Acceptance of Obligations. The Sponsor agrees to be bound by and to perform all the duties of the Sponsor set forth in this Agreement. Section 3.12 Payments on Certificates. The Holders of the Certificates will be entitled to distributions on each Payment Date, as provided in the Indenture. ARTICLE IV. Voting Rights and Other Actions Section 4.1 Prior Notice to Holders with Respect to Certain Matters. With respect to the following matters, the Owner Trustee shall not take action unless at least 30 days before the taking of such action, the Owner Trustee shall have notified the Certificateholders and the Insurer in writing of the proposed action and (i) the Insurer shall have consented in writing thereto and (ii) the Certificateholders shall not have notified the Owner Trustee in writing prior to the 30th day after such notice is given that such Certificateholders have withheld consent or, with the written consent of the Insurer, provided alternative direction: (a) the election by the Trust to file an amendment to the Certificate of Trust (unless such amendment is required to be filed under the Business Trust Statute or unless such amendment would not materially and adversely affect the interests of the Holders); (b) the amendment of any Operative Document; (c) the appointment pursuant to the Indenture of a successor Note Registrar, Paying Agent or Indenture Trustee or, pursuant to this Trust Agreement, of a successor Certificate Registrar or the consent to the assignment by the Note Registrar, Paying Agent, Indenture Trustee or Certificate Registrar of its obligations under the Indenture or this Trust Agreement, as applicable; (d) the consent to the calling or waiver of any default under any Operative Document; (e) the consent to the assignment by the Indenture Trustee or Master Servicer of their respective obligations under any Operative Document; (f) perform any act that conflicts with any other Operative Document; 15 20 (g) perform any act which would make it impossible to carry on the ordinary business of the Trust as described in Section 2.3 hereof; (h) confess a judgment against the Trust; (i) possess Trust assets or assign the Trust's right to property for other than a Trust purpose; (j) cause the Trust to lend any funds to any entity; or (k) change the Trust's purpose and powers from those enumerated in this Trust Agreement. The Owner Trustee shall notify the Certificateholders and the Insurer in writing of any appointment of a successor Note Registrar, or Certificate Registrar within five Business Days thereof. In addition, the Owner Trustee shall not (i) cause the Trust to merge or consolidate with or into any other entity, or convey or transfer all or substantially all of the Trust's assets to any other entity; (ii) cause the Trust to incur, assume or guaranty any indebtedness other than as set forth in this Trust Agreement or (iii) except as provided in Article IX hereof, dissolve, terminate or liquidate the Trust in whole or in part. Section 4.2 Action by Certificateholders with Respect to Certain Matters. (a) The Owner Trustee shall not have the power, except upon the written direction of the Insurer or in the event that an Insurer Default shall have occurred and is continuing, the Security Majority in accordance with the Operative Documents, to (i) remove the Master Servicer under the Sale and Servicing Agreement, (ii) except as expressly provided in the Operative Documents, sell the Mortgage Loans after the termination of the Indenture, (iii) institute proceedings to have the Trust declared or adjudicated to be bankrupt or insolvent, (iv) consent to the institution of bankruptcy or insolvency proceedings against the Trust, (v) file a petition or consent to a petition seeking reorganization or relief on behalf of the Trust under any applicable federal or state law relating to bankruptcy, (vi) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or any similar official) of the Trust or a substantial portion of the property of the Trust, (vii) make any assignment for the benefit of the Trust's creditors, (viii) cause the Trust to admit in writing its inability to pay its debts generally as they become due, (ix) take any action or cause the Trust to take any action, in furtherance of any of the foregoing clauses (iii) through (ix) (any of such clauses, a "Bankruptcy Action"). So long as the Indenture and the Insurance Agreement remain in effect, no Certificateholder shall have the power to take, and shall not take, any Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take any Bankruptcy Action with respect to the Trust. The Owner Trustee shall take the actions referred to in the preceding sentence only upon written instructions signed by the Insurer or the Securityholders, as the case may be, and the furnishing of indemnification satisfactory to the Owner Trustee by the Certificateholders. (b) Upon the written request of any Certificateholder (a "Proposer"), the Owner Trustee shall distribute promptly to all Certificateholders any request for action or consent of Certificateholders submitted by such Proposer. The Owner Trustee shall provide a 16 21 reasonable method for collecting responses to such request and shall tabulate and report the results thereof to the Certificateholders and the Sponsor. The Owner Trustee shall have no responsibility or duty to determine if any such proposed action or consent is permitted under the terms of this Agreement or applicable law. Section 4.3 Action by Certificateholders with Respect to Bankruptcy. Until one year and one day following the day on which the Notes have been paid in full, the Owner Trustee shall not have the power to, and shall not commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of the Insurer (unless an Insurer Default shall have occurred and is continuing) or the Security Majority upon an Insurer Default. Until one year and one day following the day on which the Notes have been paid in full, all amounts due to the Insurer under the Insurance Agreement have been paid in full, the Policies have terminated and the Indenture Trustee has surrendered the Policies to the Insurer, the Owner Trustee shall not have the power to, and shall not, commence any proceeding or other actions contemplated by Section 2.12(b) relating to the Trust without the prior written consent of all of the Certificateholders and the delivery to the Owner Trustee by each such Certificateholder of a certificate certifying that such Certificateholder reasonably believes that the Trust is insolvent. Section 4.4 Restrictions on Certificateholders' Power. (a) The Certificate-holders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligation of the Trust or the Owner Trustee under this Agreement or any of the Operative Documents or would be contrary to Section 2.3 or otherwise contrary to law nor shall the Owner Trustee be obligated to follow any such direction, if given. (b) No Certificateholder (other than the Originators) shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action, or proceeding in equity or at law upon or under or with respect to this Agreement or any Operative Document, unless the Certificateholders are the Instructing Party pursuant to Section 6.3 and unless a Certificateholder previously shall have given to the Owner Trustee a written notice of default and of the continuance thereof, as provided in this Agreement, and also unless Certificateholders evidencing not less than 25% by Percentage Interest shall have made written request upon the Owner Trustee to institute such action, suit or proceeding in its own name as Owner Trustee under this Agreement and shall have offered to the Owner Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Owner Trustee, for 30 days after its receipt of such notice, request, and offer of indemnity, shall have neglected or refused to institute any such action, suit, or proceeding, and during such 30-day period no request or waiver inconsistent with such written request has been given to the Owner Trustee pursuant to and in compliance with this Section or Section 6.3; it being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder and the Owner Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to affect, disturb, or prejudice the rights of the Holders of any other of the Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement, except in the manner provided in this Agreement and for the equal, ratable, and common benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section 4.4, 17 22 each and every Certificateholder and the Owner Trustee shall be entitled to such relief as can be given either at law or in equity. Section 4.5 Majority Control. No Certificateholder shall have any right to vote or in any manner otherwise control the operation and management of the Trust except as expressly provided in this Agreement. Except as expressly provided herein, any action that may be taken by the Certificateholders under this Agreement may be taken by the Holders of Certificates evidencing not less than a majority interest in the Trust. Except as expressly provided herein, any written notice of the Certificateholders delivered pursuant to this Agreement shall be effective if signed by Certificateholders evidencing not less than a majority interest in the Trust at the time of the delivery of such notice. Section 4.6 Rights of Insurer. Notwithstanding anything to the contrary in the Operative Documents, without the prior written consent of the Insurer (or if an Insurer Default shall have occurred and is continuing, the Security Majority) the Owner Trustee shall not (i) remove the Master Servicer, (ii) initiate any claim, suit or proceeding by the Trust or compromise any claim, suit or proceeding brought by or against the Trust, other than with respect to the enforcement of any Mortgage Loan or any rights of the Trust thereunder, (iii) authorize the merger or consolidation of the Trust with or into any other business trust or other entity (other than in accordance with Section 3.10 of the Indenture), (iv) amend the Certificate of Trust or (v) amend this Agreement in accordance with Section 11.1 of this Agreement. Section 4.7 Separateness. The Trust shall (i) not commingle its assets with those of any other entity; (ii) maintain its financial and accounting books and records separate from those of any other entity; (iii) maintain appropriate minutes or other records of all appropriate actions and maintain books and records separate from any other entity; (iv) conduct its own business in its own name; (v) except as expressly set forth herein, pay its indebtedness, operating expenses and liabilities from its own funds; (vi) enter into transactions with affiliates only on terms that are commercially reasonable and on the same terms as would be available in an arm's length transaction; (vii) not pay the indebtedness, operating expenses and liabilities of any other entity; (viii) not hold out its credit as being available to satisfy the obligation of any other entity; (ix) not make loans to any other entity or buy or hold evidence of indebtedness issued by any other entity (except for cash and investment-grade securities); (x) use separate stationery, invoices, and checks bearing its own name; (xi) allocate fairly and reasonably any overhead expenses that are shared with an affiliate, including paying for office space and services performed by any employee of any affiliate; (xii) not identify itself as a division of any other entity; (xiii) hold itself out as a separate identity; and (xiv) maintain adequate capital in light of its contemplated business operation. ARTICLE V. Certain Duties Section 5.1 Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue Service and Others. Subject to Sections 5.1(b)(iii) and 5.1(c) of the Sale and Servicing Agreement, the Sponsor shall (a) maintain (or cause to be maintained) the books of the Trust on a calendar year basis on the accrual method of accounting, including, without 18 23 limitation, the allocations of net income under Section 2.11 hereof, (b) deliver (or cause to be delivered) to each Certificateholder, as may be required by the Code and applicable Treasury Regulations, such information as may be required (including Schedule K1, if applicable) to enable each Certificateholder to prepare its Federal and state income tax returns, (c) file or cause to be filed, if necessary, such tax returns relating to the Trust (including a partnership information return, Form 1065), and direct the Owner Trustee or the Master Servicer, as the case may be, to make such elections as may from time to time be required or appropriate under any applicable state or Federal statute or rule or regulation thereunder so as to maintain the Trust's characterization as a branch, or if applicable, as a partnership, for Federal income tax purposes and (d) collect or cause to be collected any withholding tax as described in and in accordance with Section 5.1(b)(ii) of the Sale and Servicing Agreement with respect to income or distributions to Certificateholders and the appropriate forms relating thereto. The Owner Trustee or the Master Servicer, as the case may be, shall make all elections pursuant to this Section as directed in writing by the Sponsor. The Owner Trustee shall sign all tax information returns presented to it in final execution form, if any, filed pursuant to this Section 5.1 and any other returns as may be required by law, and in doing so shall rely entirely upon, and shall have no liability for information provided by, or calculations provided by, the Sponsor or the Master Servicer. The Owner Trustee shall elect under Section 1278 of the Code to include in income currently any market discount that accrues with respect to the Mortgage Loans. The Owner Trustee shall not make the election provided under Section 754 of the Code. Section 5.2 Signature on Returns; Tax Matters Partner. (a) Notwithstanding the provisions of Section 5.1 and in the event that the Trust is characterized as a partnership, the Owner Trustee shall sign on behalf of the Trust the tax returns of the Trust presented to it in final execution form, unless applicable law requires a Certificateholder to sign such documents, in which case such documents shall be signed by the Sponsor, as agent, on behalf of the Certificateholders. (b) In the event that the Trust is characterized as a partnership, the Depositor shall be the "tax matters partner" of the Trust pursuant to the Code. ARTICLE VI. Authority and Duties of Owner Trustee Section 6.1 General Authority. The Owner Trustee is authorized and directed to execute and deliver the Operative Documents to which the Trust is named as a party and each certificate or other document attached as an exhibit to or contemplated by the Operative Documents to which the Trust is named as a party and any amendment thereto, in each case, in such form as the Sponsor shall approve as evidenced conclusively by the Owner Trustee's execution thereof, and on behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver Notes in the aggregate principal amount of $275,000,000. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust pursuant to the Operative Documents. The Owner Trustee is further authorized from time to time to take such action as the Instructing Party recommends with respect to the Operative Documents so long as such activities are consistent with the terms of the Operative Documents. 19 24 Section 6.2 General Duties. It shall be the duty of the Owner Trustee to discharge (or cause to be discharged) all of its responsibilities pursuant to the terms of this Agreement and to administer the Trust in the interest of the Holders, subject to the Operative Documents and in accordance with the provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to have discharged its duties and responsibilities hereunder and under the Operative Documents to the extent the Master Servicer has agreed in the Sale and Servicing Agreement to perform any act or to discharge any duty of the Trust or the Owner Trustee hereunder or under any Operative Document, and the Owner Trustee shall not be liable for the default or failure of the Master Servicer to carry out its obligations under the Sale and Servicing Agreement. Section 6.3 Action upon Instruction. (a) Subject to Article IV, the Insurer (so long as an Insurer Default shall not have occurred and be continuing) or the Certificateholders (if an Insurer Default shall have occurred and be continuing) (the "Instructing Party") shall have the exclusive right to direct the actions of the Owner Trustee in the management of the Trust, so long as such instructions are not inconsistent with the express terms set forth herein or in any Operative Document. The Instructing Party shall not instruct the Owner Trustee in a manner inconsistent with this Agreement or the Operative Documents. (b) The Owner Trustee shall not be required to take any action hereunder or under any Operative Document if the Owner Trustee shall have reasonably determined, or shall have been advised by counsel, that such action is likely to result in liability on the part of the Owner Trustee or is contrary to the terms hereof or of any Operative Document or is otherwise contrary to law. (c) Whenever the Owner Trustee is unable to decide between alternative courses of action permitted or required by the terms of this Agreement or any Operative Document, the Owner Trustee shall promptly give notice (in such form as shall be appropriate under the circumstances) to the Instructing Party requesting instruction as to the course of action to be adopted, and to the extent the Owner Trustee acts in good faith in accordance with any written instruction of the Instructing Party received, the Owner Trustee shall not be liable on account of such action to any Person. If the Owner Trustee shall not have received appropriate instruction within ten days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Operative Documents, as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction. (d) In the event that the Owner Trustee is unsure as to the application of any provision of this Agreement or any Operative Document or any such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement permits any determination by the Owner Trustee or is silent or is incomplete as to the course of action that the Owner Trustee is required to take with respect to a particular set of facts, the Owner Trustee may give notice (in such form as shall be appropriate under the circumstances) to the Instructing Party requesting instruction and, to the extent that the Owner Trustee acts or refrains from acting in good faith in accordance with any such instruction received, the Owner Trustee shall not be liable, on account of such action or inaction, to any Person. If the Owner Trustee shall not have received appropriate instruction 20 25 within 10 days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Operative Documents, as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction. Section 6.4 No Duties Except as Specified in this Agreement or in Instructions. The Owner Trustee shall not have any duty or obligation to manage, make any payment with respect to, register, record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with, any document contemplated hereby to which the Owner Trustee is a party, except as expressly provided by the terms of this Agreement or in any document or written instruction received by the Owner Trustee pursuant to Section 6.3; and no implied duties or obligations shall be read into this Agreement or any Operative Document against the Owner Trustee. The Owner Trustee shall have no responsibility for filing any financing or continuation statement in any public office at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted to it hereunder or to prepare or file any Commission filing for the Trust or to record this Agreement or any Operative Document. The Owner Trustee nevertheless agrees that it will, at its own cost and expense, promptly take all action as may be necessary to discharge any Liens on any part of the Owner Trust Estate that result from actions by, or claims against, the Owner Trustee (solely in its individual capacity) and that are not related to the ownership or the administration of the Owner Trust Estate. Section 6.5 No Action Except under Specified Documents or Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal with any part of the Owner Trust Estate except (i) in accordance with the powers granted to and the authority conferred upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with the Operative Documents and (iii) in accordance with any document or instruction delivered to the Owner Trustee pursuant to Section 6.3. Section 6.6 Restrictions. The Owner Trustee shall not take any action (a) that is inconsistent with the purposes of the Trust set forth in Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would result in the Trust's becoming taxable as a corporation or a publicly traded partnership for Federal income tax purposes. The Certificateholders shall not direct the Owner Trustee to take action that would violate the provisions of this Section. ARTICLE VII. Concerning the Owner Trustee Section 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts the trust hereby created and agrees to perform its duties hereunder with respect to such trust but only upon the terms of this Agreement. The Owner Trustee also agrees to disburse all monies actually received by it constituting part of the Owner Trust Estate upon the terms of the Operative Documents and this Agreement. The Owner Trustee shall not be answerable or accountable hereunder or under any Operative Document under any circumstances, except (i) for its own willful misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy 21 26 of any representation or warranty contained in Section 7.3 expressly made by the Owner Trustee in its individual capacity, (iii) for liabilities arising from the failure of the Owner Trustee to perform obligations expressly undertaken by it in the last sentence of Section 6.4 hereof, (iv) for any investments issued by the Owner Trustee or any branch or affiliate thereof in its commercial capacity or (v) for taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the Owner Trustee. In particular, but not by way of limitation (and subject to the exceptions set forth in the preceding sentence): (a) the Owner Trustee shall not be liable for any error of judgment, not constituting gross negligence, made by a Responsible Officer of the Owner Trustee; (b) the Owner Trustee shall not be liable with respect to any action taken or omitted to be taken by it if such action or omission is in accordance with the instructions of the Instructing Party, the Sponsor, the Master Servicer or any Certificateholder pursuant to the terms hereof; (c) no provision of this Agreement or any Operative Document shall require the Owner Trustee to expend or risk funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder or under any Operative Document if the Owner Trustee shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it; (d) under no circumstances shall the Owner Trustee be liable for indebtedness evidenced by or arising under any of the Operative Documents, including the principal of and interest on the Notes; (e) the Owner Trustee shall not be responsible for or in respect of the validity or sufficiency of this Agreement or for the due execution hereof by the Sponsor or for the form, character, genuineness, sufficiency, value or validity of any of the Owner Trust Estate or for or in respect of the validity or sufficiency of the Operative Documents, other than the certificate of authentication on the Certificates, and the Owner Trustee shall in no event assume or incur any liability, duty or obligation to the Sponsor, the Insurer, Indenture Trustee, any Certificateholder, other than as expressly provided for herein and in the Operative Documents; (f) the Owner Trustee shall not be liable for the default or misconduct of the Sponsor, the Insurer, the Indenture Trustee, or the Master Servicer under any of the Operative Documents or otherwise and the Owner Trustee shall have no obligation or liability to perform the obligations under this Agreement or the Operative Documents that are required to be performed by the Sponsor under this Agreement, by the Indenture Trustee under the Indenture or the Master Servicer under the Sale and Servicing Agreement; and (g) the Owner Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this Agreement or otherwise or in relation to this Agreement or any Operative Document, at the request, order or direction of the Instructing Party or any of the Certificateholders, unless such Instructing Party or Certificateholders have offered to the Owner Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee to perform any 22 27 discretionary act enumerated in this Agreement or in any Operative Document shall not be construed as a duty, and the Owner Trustee shall not be answerable for other than its negligence, bad faith or willful misconduct in the performance of any such act. Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish to the Certificateholders promptly upon receipt of a written request therefor, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee under the Operative Documents. Section 7.3 Representations and Warranties. The Owner Trustee hereby represents and warrants, in its individual capacity, to the Sponsor and the Holders (which shall have relied on such representations and warranties in issuing the Policy), that: (a) It is a Delaware banking corporation, duly organized and validly existing in good standing under the laws of the State of Delaware. It has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. (b) It has taken all corporate action necessary to authorize the execution and delivery by it of this Agreement, and this Agreement will be executed and delivered by one of its officers who is duly authorized to execute and deliver this Agreement on its behalf. (c) Neither the execution nor the delivery by it of this Agreement, nor the consummation by it of the transactions contemplated hereby nor compliance by it with any of the terms or provisions hereof will contravene any federal or Delaware state law, governmental rule or regulation governing the banking or trust powers of the Owner Trustee or any judgment or order binding on it, or constitute any default under its charter documents or bylaws or any indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of its properties may be bound. Section 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of the determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof rely on a certificate, signed by the president or any vice president or by the treasurer, secretary or other authorized officers of the relevant party, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. (b) In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under this Agreement or the Operative Documents, the Owner Trustee (i) may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, and (ii) may consult with counsel, accountants and other skilled persons to be selected with reasonable care and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the 23 28 written opinion or advice of any such counsel, accountants or other such persons and according to such opinion not contrary to this Agreement or any Operative Document. Section 7.5 Not Acting in Individual Capacity. Except as provided in this Agreement, in accepting the trusts hereby created Wilmington Trust Company acts solely as Owner Trustee hereunder and not in its individual capacity and all Persons having any claim against the Owner Trustee by reason of the transactions contemplated by this Agreement or any Operative Document shall look only to the Owner Trust Estate for payment or satisfaction thereof. Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage Loans. The recitals contained herein and in the Certificates (other than the signature and countersignature of the Owner Trustee on the Certificates) shall be taken as the statements of the Sponsor and the Owner Trustee assumes no responsibility for the correctness thereof. The Owner Trustee makes no representations as to the validity or sufficiency of this Agreement, of any Operative Document or of the Certificates (other than the signature and countersignature of the Owner Trustee on the Certificates) or the Notes (other than the signature of the Owner Trustee on the Notes), or of any Mortgage Loan or related documents. The Owner Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of any Mortgage Loan, or the perfection and priority of any security interest created by any Mortgage Loan or the maintenance of any such perfection and priority, or for or with respect to the sufficiency of the Owner Trust Estate or its ability to generate the payments to be distributed to Certificateholders under this Agreement or the Noteholders under the Indenture, including, without limitation: the existence, condition and ownership of any Mortgage Loan; the existence and enforceability of any insurance thereon; the existence and contents of any Mortgage Loan on any computer or other record thereof; the validity of the assignment of any Mortgage Loan to the Trust or of any intervening assignment; the completeness of any Mortgage Loan; the performance or enforcement of any Mortgage Loan; the compliance by the Sponsor, the Master Servicer or any other Person with any warranty or representation made under any Operative Document or in any related document or the accuracy of any such warranty or representation or any action of the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the name of the Owner Trustee. Section 7.7 Owner Trustee May Own Certificates and Notes. Subject to the provisions of Section 3.1 hereof, the Owner Trustee in its individual or any other capacity may become the owner or pledgee of Certificates or Notes and may deal with the Sponsor, the Indenture Trustee and the Master Servicer in banking transactions with the same rights as it would have if it were not Owner Trustee. Section 7.8 Payments from Owner Trust Estate. All payments to be made by the Owner Trustee under this Agreement or any of the Operative Documents to which the Trust or the Owner Trustee is a party shall be made only from the income and proceeds of the Owner Trust Estate and only to the extent that the Owner Trust shall have received income or proceeds from the Owner Trust Estate to make such payments in accordance with the terms hereof. Wilmington Trust Company, or any successor thereto, in its individual capacity, shall not be liable for any amounts payable under this Agreement or any of the Operative Documents to which the Trust or the Owner Trustee is a party. 24 29 Section 7.9 Doing Business in Other Jurisdictions. Notwithstanding anything contained to the contrary, neither Wilmington Trust Company or any successor thereto, nor the Owner Trustee shall be required to take any action in any jurisdiction other than in the State of Delaware if the taking of such action will, even after the appointment of a co-trustee or separate trustee in accordance with Section 10.5 hereof, (i) require the consent or approval or authorization or order of or the giving of notice to, or the registration with or the taking of any other action in respect of, any state or other governmental authority or agency of any jurisdiction other than the State of Delaware; (ii) result in any fee, tax or other governmental charge under the laws of the State of Delaware becoming payable by Wilmington Trust Company (or any successor thereto); or (iii) subject Wilmington Trust Company (or any successor thereto) to personal jurisdiction in any jurisdiction other than the State of Delaware for causes of action arising from acts unrelated to the consummation of the transactions by Wilmington Trust Company (or any successor thereto) or the Owner Trustee, as the case may be, contemplated hereby. ARTICLE VIII. Compensation of Owner Trustee Section 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall receive as compensation for its services hereunder such fees as have been separately agreed upon before the date hereof between the Sponsor and the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor for its other reasonable expenses hereunder, including the reasonable compensation, expenses and disbursements of such agents, representatives, experts and counsel as the Owner Trustee may employ in connection with the exercise and performance of its rights and its duties hereunder and under the Operative Documents. Section 8.2 Indemnification. The Sponsor shall be liable as primary obligor for, and the Master Servicer pursuant to the Sale and Servicing Agreement shall be the secondary obligor for, and shall indemnify the Owner Trustee (in its individual and trust capacities) and its officers, directors, successors, assigns, agents and servants (collectively, the "Indemnified Parties") from and against, any and all liabilities, obligations, losses, damages, taxes, claims, actions and suits, and any and all reasonable costs, expenses and disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever (collectively, "Expenses") which may (in its trust or individual capacities) at any time be imposed on, incurred by, or asserted against the Owner Trustee or any Indemnified Party in any way relating to or arising out of this Agreement, the Operative Documents, the Owner Trust Estate, the administration of the Owner Trust Estate or the action or inaction of the Owner Trustee hereunder, except only that the Sponsor shall not be liable for or required to indemnify the Owner Trustee from and against Expenses arising or resulting from any of the matters described in the third sentence of Section 7.1. The indemnities contained in this Section and the rights under Section 8.1 shall survive the resignation or termination of the Owner Trustee or the termination of this Agreement. In any event of any claim, action or proceeding for which indemnity will be sought pursuant to this Section, the Owner Trustee's choice of legal counsel shall be subject to the approval of the Sponsor which approval shall not be unreasonably withheld. 25 30 Section 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of the Owner Trust Estate immediately after such payment. Section 8.4 Non-recourse Obligations. Notwithstanding anything in this Agreement or any Operative Document, the Owner Trustee agrees in its individual capacity and in its capacity as Owner Trustee for the Trust that all obligations of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust shall be recourse to the Owner Trust Estate only and specifically shall not be recourse to the assets of any Certificateholder. ARTICLE IX. Termination of Trust Agreement Section 9.1 Termination of Trust Agreement. (a) This Agreement and the Trust shall terminate and be of no further force or effect upon the later of (i) the maturity or other liquidation of the last Mortgage Loan (including the redemption by the Sponsor at its option of the corpus of the Trust as described in Section 10.1(b) and Section 10.1(c) of the Indenture) and the subsequent distribution of amounts in respect of such Mortgage Loans as provided in the Operative Documents, (ii) the payment to Certificateholders of all amounts required to be paid to them pursuant to this Agreement and the payment to the Insurer of all amounts payable or reimbursable to it pursuant to the Sale and Servicing Agreement and the Insurance Agreement and (iii) the termination of the Indenture and the Insurance Agreement; provided, however, that the rights to indemnification under Section 8.2 and the rights under Section 8.1 shall survive the termination of the Trust. The Master Servicer shall promptly notify the Owner Trustee and the Insurer of any prospective termination pursuant to this Section 9.1. The bankruptcy, liquidation, dissolution, death or incapacity of any Certificateholder shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of all or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations and liabilities of the parties hereto. (b) Except as provided in clause (a), neither the Sponsor, the Depositor nor any other Certificateholder shall be entitled to revoke or terminate the Trust. (c) Notice of any termination of the Trust, specifying the Payment Date upon which the Certificateholders shall surrender their Certificates to the Indenture Trustee for payment of the final distribution and cancellation, shall be given by the Owner Trustee by letter to Certificateholders mailed within five Business Days of receipt of notice of such redemption from the Master Servicer given pursuant to Section 10.1 of the Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Indenture Trustee therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than 26 31 the Owner Trustee) and the Indenture Trustee at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Indenture Trustee shall cause to be distributed to Certificateholders amounts distributable on such Payment Date pursuant to Section 8.6(b)(xi) of the Indenture. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above mentioned written notice, the Owner Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Owner Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed, subject to applicable escheat laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the Sponsor for payment. (d) Any funds remaining in the Trust after funds for final distribution have been distributed or set aside for distribution shall be distributed by the Owner Trustee to the Depositor. (e) Notwithstanding any other provision to the contrary herein, the Trust shall not dissolve or liquidate so long as any Notes are outstanding. (f) Upon the winding up of the Trust and its termination, the Owner Trustee shall cause the Certificate of Trust to be canceled by filing a certificate of cancellation with the Secretary of State in accordance with the provisions of Section 3810 of the Business Trust Statute. ARTICLE X. Successor Owner Trustees and Additional Owner Trustees Section 10.1 Eligibility Requirements for Owner Trustee. The Owner Trustee shall at all times be a corporation (i) satisfying the provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise corporate trust powers; (iii) having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal or State authorities; (iv) having (or having a parent which has) a rating of at least Baa3 by Moody's or A-1 by Standard & Poor's or being otherwise acceptable to the Rating Agencies; and (v) acceptable to the Insurer in its sole discretion. If such corporation shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of this Section, the Owner Trustee shall resign immediately in the manner and with the effect specified in Section 10.2. 27 32 Section 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to the Sponsor, the Insurer and the Master Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly appoint a successor Owner Trustee, meeting the qualifications set forth in Section 10.1 herein, by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Owner Trustee and one copy to the successor Owner Trustee, provided that the Sponsor shall have received written confirmation from each of the Rating Agencies that the proposed appointment will not result in an increased capital charge to the Insurer by either of the Rating Agencies. If no successor Owner Trustee shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Owner Trustee or the Insurer may petition any court of competent jurisdiction for the appointment of a successor Owner Trustee. If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 10.1 and shall fail to resign after written request therefor by the Sponsor, or if at any time the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Owner Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then a majority of the Certificateholders with the consent of the Insurer (so long as no Insurer Default shall have occurred and is continuing) may remove the Owner Trustee. If a majority of the Certificateholders shall remove the Owner Trustee under the authority of the immediately preceding sentence, the Sponsor shall promptly appoint a successor Owner Trustee acceptable to the Insurer, meeting the qualifications set forth in Section 10.1 herein, by written instrument, in duplicate, one copy of which instrument shall be delivered to the outgoing Owner Trustee so removed, one copy to the Insurer and one copy to the successor Owner Trustee and the Sponsor shall pay all fees owed to the outgoing Owner Trustee, if not previously paid by the Trust. Any resignation or removal of the Owner Trustee and appointment of a successor Owner Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Owner Trustee pursuant to Section 10.3 and payment of all reasonable fees and expenses owed to the outgoing Owner Trustee. The Servicer shall provide written notice of such resignation or removal of the Owner Trustee to each of the Rating Agencies and the Insurer. Notwithstanding any other provision of this Agreement, and in addition to any other method of removal of the Owner Trustee contained herein, upon a proposal made pursuant to Section 4.2(b) and the subsequent consent of Certificateholders representing no less than a 66-2/3% interest in the Trust, the Owner Trustee may be removed as Owner Trustee, subject to the consent of the Insurer (so long as no Insurer Default shall have occurred and is continuing), which consent is not to be unreasonably withheld. In the event the Owner Trustee is removed pursuant to this paragraph, the provisions of this Agreement, including Article X herein, shall apply as if the Owner Trustee had resigned hereunder. Section 10.3 Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the Sponsor, the Master Servicer, the Insurer and to its predecessor Owner Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the 28 33 predecessor Owner Trustee shall become effective and such successor Owner Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement; and the Sponsor and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties and obligations. No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall be eligible pursuant to Section 10.1. Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section, the Master Servicer shall mail notice of the successor of such Owner Trustee to all Certificateholders, the Indenture Trustee, the Insurer, and the Noteholders. If the Master Servicer shall fail to mail such notice within 10 days after acceptance of appointment by the successor Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of the Master Servicer. The successor Owner Trustee shall file an amendment to the Certificate of Trust with the Secretary of State reflecting the name and principal place of business of such successor Owner Trustee in the State of Delaware. Section 10.4 Merger or Consolidation of Owner Trustee. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided such corporation shall be eligible pursuant to Section 10.1, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided further that the Owner Trustee shall mail notice of such merger or consolidation to the Rating Agencies and the Insurer. Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee. Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Owner Trust Estate or any Mortgaged Property may at the time be located, the Master Servicer and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with the Owner Trustee, or separate trustee or separate trustees, of all or any part of the Owner Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Master Servicer and the Owner Trustee may consider necessary or desirable. If the Master Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee subject to the approval of the Insurer (which approval shall not be unreasonably withheld) shall have the power to make 29 34 such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 10.1 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.3, except that notice to and written consent of, the Insurer shall be required for the appointment of a co-trustee. Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred upon and exercised or performed by the Owner Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Owner Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Owner Trustee; (ii) no trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; and (iii) the Master Servicer and the Owner Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Master Servicer and the Insurer. Any separate trustee or co-trustee may at any time appoint the Owner Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. 30 35 ARTICLE XI. Miscellaneous Section 11.1 Supplements and Amendments. (a) This Agreement and prior written notice to the Rating Agencies may be amended by the Sponsor and the Owner Trustee, with the prior written consent of the Insurer (so long as no Insurer Default shall have occurred and is continuing), without the consent of any of the Noteholders (i) to cure any ambiguity or defect or (ii) to correct, supplement or modify any provisions in this Agreement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel which may be based upon a certificate of the Master Servicer, adversely affect in any material respect the interests of any Noteholder or Certificateholder. (b) This Agreement may also be amended from time to time, with the prior written consent of the Insurer (so long as no Insurer Default shall have occurred and is continuing) by the Sponsor and the Owner Trustee, with prior written notice to the Rating Agencies, and, to the extent such amendment materially and adversely affects the interests of the Noteholders, with the consent of the Noteholders evidencing not less than a majority of the Outstanding Amount of the Notes and, the consent of the Certificateholders evidencing not less than a majority interest in the Trust (which consent of any Holder of a Certificate or Note given pursuant to this Section or pursuant to any other provision of this Agreement shall be conclusive and binding on such Holder and on all future Holders of such Certificate or Note and of any Certificate or Note issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Certificate or Note) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided, however, that, subject to the express rights of the Insurer under the Operative Documents, no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Mortgage Loans or distributions that shall be required to be made for the benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes and the Certificates, the Holders of which are required to consent to any such amendment, without the consent of the Holders of all the outstanding Notes and Holders of all outstanding Certificates. Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to the Insurer, to each Certificateholder and the Indenture Trustee. It shall not be necessary for the consent of Certificateholders, the Noteholders or the Indenture Trustee pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement or in any other Operative Document) and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe. Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State. 31 36 Prior to the execution of any amendment to this Agreement or the Certificate of Trust, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee's own rights, duties or immunities under this Agreement or otherwise. The Owner Trustee shall furnish copies of any such amendments to the Rating Agencies. Section 11.2 No Legal Title to Owner Trust Estate in Certificateholders. The Certificateholders shall not have legal title to any part of the Owner Trust Estate. The Certificateholders shall be entitled to receive distributions with respect to their ownership interest therein only in accordance with Article IX. No transfer, by operation of law or otherwise, of any right, title or interest of the Certificateholders to and in their ownership interest in the Owner Trust Estate shall operate to terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Owner Trust Estate. Section 11.3 Limitations on Rights of Others. Except for Section 11.7, the provisions of this Agreement are solely for the benefit of the Owner Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to the extent expressly provided herein, the Insurer, the Indenture Trustee and the Noteholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. Section 11.4 Notices. (a) Unless otherwise expressly specified or permitted by the terms hereof, all notices shall be in writing and shall be deemed given upon receipt personally delivered, delivered by overnight courier or mailed first class mail or certified mail, in each case return receipt requested, and shall be deemed to have been duly given upon receipt, if to the Owner Trustee, addressed to the Corporate Trust Office; if to the Sponsor, addressed to Advanta Conduit Receivables, Inc., 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-A, 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 11.5 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdictional shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, 32 37 and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 11.6 Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 11.7 Assignments; Insurer. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. This Agreement shall also inure to the benefit of the Insurer for so long as an Insurer Default shall not have occurred and be continuing. Without limiting the generality of the foregoing, all covenants and agreements in this Agreement which confer rights upon the Insurer shall be for the benefit of and run directly to the Insurer, and the Insurer shall be entitled to rely on and enforce such covenants, subject, however, to the limitations on such rights provided in this Agreement and the Operative Documents. The Insurer may disclaim any of its rights and powers under this Agreement (but not its duties and obligations under the Policy) upon delivery of a written notice to the Owner Trustee. Section 11.8 No Petition. The Owner Trustee (in its individual capacity and as Owner Trustee), by entering into this Agreement, each Certificateholder, by accepting a Certificate, and the Indenture Trustee, the Originators and each Noteholder by accepting the benefits of this Agreement, hereby covenants and agrees that they will not at any time institute against the Sponsor, or the Trust or join in any institution against the Sponsor or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States Federal or state bankruptcy or similar law. Section 11.9 No Recourse. Each Certificateholder by accepting a Certificate acknowledges that such Certificateholder's Certificates represent beneficial interests in the Trust only and do not represent interests in or obligations of the Master Servicer, the Sponsor, the Owner Trustee, the Indenture Trustee, the Insurer or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Agreement, the Certificates or the Operative Documents. Section 11.10 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. Section 11.11 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 11.12 Master Servicer. The Master Servicer is authorized to prepare, or cause to be prepared, execute and deliver on behalf of the Trust all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant to the Operative Documents. Upon written request, the Owner Trustee shall execute and deliver to the Master Servicer a limited power of attorney 33 38 appointing the Master Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be prepared, execute and deliver all such documents, reports, filings, instruments, certificates and opinions. Section 11.13 No Borrowing. The Trust shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any Indebtedness except for (i) the Notes, (ii) obligations owing from time to time to the Insurer under the Insurance Agreement and (iii) any other Indebtedness permitted by or arising under the Operative Documents except that the Trust shall not incur any Indebtedness that would cause it, or any portion thereof, to be treated as a "taxable mortgage pool" under Section 7701(i) of the Code. The proceeds of the Notes shall be used exclusively to fund the Trust's purchase of the Mortgage Loans and the other assets specified in the Sale and Servicing Agreement and to pay the Trust's organizational, transactional and start-up expenses. Section 11.14 Nonpetition Covenant. (a) Until one year plus one day shall have elapsed since the full discharge of all obligations under the Indenture with respect to Noteholders in accordance with its terms, neither the Sponsor or Depositor nor any assignee of the Sponsor or Depositor shall petition or otherwise invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Trust under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Trust or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Trust without the consent of the Owner Trustee. (b) So long as Notes remain outstanding, no voluntary petition for the purpose of commencing or sustaining a case against the Trust under any federal or state bankruptcy, insolvency or similar law shall be filed without the consent of the Owner Trustee. 34 39 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers hereunto duly authorized as of the day and year first above written. WILMINGTON TRUST COMPANY, as Owner Trustee By:_______________________________________________ Name: Title: ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By:_______________________________________________ Name: Title: ADVANTA HOLDING TRUST 1999-B, as Depositor By: WILMINGTON TRUST COMPANY, in its capacity as Owner Trustee By:_______________________________________________ Name: Title: 40 Exhibit A ASSET BACKED CERTIFICATE SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN. THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON. THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.10 OF THE TRUST AGREEMENT REFERRED TO HEREIN. NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE PROVIDES A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, (ii) A PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (iii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN, WHICH REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE INSURER. NO TRANSFER OF A CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH SAID ACT AND LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF THE CERTIFICATE TO THE DEPOSITOR, THE OWNER TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER CERTIFYING TO THE OWNER TRUSTEE AND THE INSURER THE FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE, THE INSURER AND THE A-1 41 SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR, FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE, THE INSURER, THE DEPOSITOR OR THE SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR, THE DEPOSITOR AND THE INSURER AGAINST ANY LIABILITY THAT MAY RESULT IF THE TRANSFER IS NOT SO EXEMPT OR IS NOT MADE IN ACCORDANCE WITH SUCH FEDERAL AND STATE LAWS. THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED EXCEPT UPON SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE OR THE DISTRICT OF COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO THE OWNER TRUSTEE, THE PERFORMANCE OF EVERY COVENANT AND OBLIGATION OF THE SPONSOR UNDER THE TRUST AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS CONTAINED IN SECTIONS 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING AGREEMENT, SECTION 7.1 OF THE INDENTURE AND UNDER THE CREDIT LINE AGREEMENTS AND THE MORTGAGE NOTES; (II) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY CONCLUSIVELY RELY ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO RELYING; (III) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO THE POLICY; (IV) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN THE TRUST BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE A-2 42 STATE TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF THE TRUST, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF THE TRUST IN THE MORTGAGE LOANS AND THE OTHER PROPERTY CONVEYED UNDER THE TRUST AGREEMENT SHALL HAVE BEEN TAKEN OR MADE. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. A-3 43 ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B ASSET BACKED CERTIFICATE Percentage Interest: 100% Cut-Off Date: Close of business on August 31, 1999 First Payment Date: Issue Date: September 28, 1999 October 25, 1999 No. 1 ADVANTA HOLDING TRUST 1999-B Registered Holder The Trust was created pursuant to a Trust Agreement dated as of September 1, 1999 (the "Trust Agreement"), between Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta Holding Trust 1999-B (the "Depositor") and Wilmington Trust Company, as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Trust Agreement. This Certificate is one of the duly authorized Certificates designated as Advanta Revolving Home Equity Loan Trust 1999-B "Asset Backed Certificates." Also issued under the Indenture dated as of September 1, 1999 (the "Indenture") between the Trust and Bankers Trust Company of California, N.A., as indenture trustee (the "Indenture Trustee") are the Advanta Revolving Home Equity Loan Asset Backed Notes (the "Notes"). These Certificates are issued under and are subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the holder of this Certificate by virtue of the acceptance hereof assents and by which such holder is bound. The property of the Trust includes a pool of adjustable-adjustable-rate home equity revolving credit line loans secured by first or second deeds of trust or Mortgages on primarily one-to-four family residential properties. Under the Trust Agreement, there will be distributed on the 25th day of each month or, if such 25th day is not a Business Day, the next Business Day (the "Payment Date"), commencing on October 25, 1999, to the Person in whose name this Certificate is registered at the close of business on the Business Day preceding such Payment Date (the "Record Date") such Certificateholder's Percentage Interest in the amount to be distributed to Certificateholders on such Payment Date. The holder of this Certificate acknowledges and agrees that its rights to receive distributions in respect of this Certificate are subordinated to the rights of the Noteholders as described in the Sale and Servicing Agreement, the Indenture and the Trust Agreement, as applicable. A-4 44 It is the intent of the Sponsor, the Master Servicer, and the Certificateholders that, for purposes of Federal income taxes, the Trust will be treated as a branch. In the event that the Certificates are held by more than one Holder, it is the intent of the Sponsor, the Master Servicer, and the Certificateholders that, for purposes of Federal income taxes, the Trust will be treated as a partnership and the Certificateholders will be treated as partners in that partnership. The Sponsor and any other Certificateholders, by acceptance of a Certificate, agree to treat, and to take no action inconsistent with the treatment of, the Certificates for such tax purposes as partnership interests in the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants and agrees that such Certificateholder will not at any time institute against the Trust or the Sponsor, or join in any institution against the Trust or the Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Certificates, the Notes, the Trust Agreement or any of the Operative Documents. Distributions on this Certificate will be made as provided in the Sale and Servicing Agreement and the Indenture by the Indenture Trustee by wire transfer or check mailed to the Certificateholder of record in the Certificate Register without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Trust Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Owner Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for the purpose by the Owner Trustee in the Corporate Trust Office. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Owner Trustee, by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose. A-5 45 IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed. Date: September 28, 1999 ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B By: WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee By:__________________________________________________ Name: Title: OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within mentioned Trust Agreement. WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee By:_____________________________ Authenticating Agent A-6 46 (Reverse of Certificate) The Certificates do not represent an obligation of, or an interest in, the Originators, the Sponsor, the Master Servicer, the Insurer, the Depositor, the Owner Trustee or any Affiliates of any of them and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated herein or in the Trust Agreement, the Indenture or the Operative Documents. In addition, this Certificate is not guaranteed by any governmental agency or instrumentality and is limited in right of payment to certain collections with respect to the Mortgage Loans, as more specifically set forth herein, in the Sale and Servicing Agreement and in the Indenture. A copy of each of the Sale and Servicing Agreement and the Trust Agreement may be examined during normal business hours at the principal office of the Sponsor, and at such other places, if any, designated by the Sponsor, by any Certificateholder upon written request. The Trust Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Sponsor and the rights of the Certificateholders under the Trust Agreement at any time by the Sponsor and the Owner Trustee with the prior written consent of the Insurer and with the consent of the holders of the Notes and the Certificates evidencing not less than a majority of the outstanding Notes and the Certificates. Any such consent by the holder of this Certificate shall be conclusive and binding on such holder and on all future holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Trust Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the holders of any of the Certificates (other than the Sponsor or the Insurer). As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Owner Trustee in the Corporate Trust Office, accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new Certificates in authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The initial Certificate Registrar appointed under the Trust Agreement is Wilmington Trust Company. Except for Certificates issued to the Sponsor, the Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 or integral multiples of $1,000 in excess thereof. As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates in authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Owner Trustee, the Certificate Registrar, the Insurer and any agent of the Owner Trustee, the Certificate Registrar, the Insurer or the Insurer may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the A-7 47 Owner Trustee, the Certificate Registrar, the Insurer nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Trust Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to be paid to them pursuant to the Trust Agreement and the Sale and Servicing Agreement and the disposition of all property held as part of the Trust. The recitals contained herein shall be taken as the statements of the Sponsor or the Master Servicer, as the case may be, and the Owner Trustee assumes no responsibility for the correctness thereof. The Owner Trustee makes no representations as to the validity or sufficiency of this Certificate or of any Mortgage Loan or related document. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Owner Trustee, by manual or facsimile signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose. A-8 48 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ________________________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) ________________________________________________________________________________ the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing __________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: * ___________________________ Signature Guaranteed: * ___________________________ ____________ * NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Certificate Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-9 49 EXHIBIT B CERTIFICATE OF TRUST OF ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B This Certificate of Trust of Advanta Revolving Home Equity Loan Trust 1999A (the "Trust") is being duly executed and filed by the undersigned, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. Code Section 3801 et seq.) (the "Act"). 1. Name. The name of the business trust formed hereby is Advanta Revolving Home Equity Loan Trust 1999-B. 2. Delaware Trust. The name and business address of the Owner Trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration. 3. This Certificate of Trust will be effective September 28, 1999. IN WITNESS WHEREOF, the undersigned, in accordance with Section 3811(a) of the Act, has duly executed this Certificate of Trust. WILMINGTON TRUST COMPANY not in its individual capacity but solely as Owner Trustee of the Trust By:______________________________________ Name: Title: B-1 EX-4.4 6 SALE AND SERVICING AGREEMENT 1 EXHIBIT 4.4 EXECUTION COPY SALE AND SERVICING AGREEMENT Among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, Trust, ADVANTA HOLDING TRUST 1999-B, 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 September 1, 1999 2 TABLE OF CONTENTS (Not a Part of this Agreement) Parties...................................................................................................1 Recitals..................................................................................................1 ARTICLE I. DEFINITIONS; RULES OF CONSTRUCTION.......................................................1 Section 1.1 Definitions................................................................1 Section 1.2 Use of Words and Phrases...................................................1 Section 1.3 Captions; Table of Contents................................................2 Section 1.4 Opinions...................................................................2 ARTICLE II. CONVEYANCE OF MORTGAGE LOANS............................................................2 Section 2.1 Conveyance of the Mortgage Loans...........................................2 Section 2.2 Acceptance by Indenture Trustee; Certain Substitutions of Mortgage Loans; Certification by Indenture Trustee..................................8 Section 2.3 Qualified Replacement Mortgage Loans.......................................10 Section 2.4 Cooperation Procedures.....................................................12 Section 2.5 Retransfers of Mortgage Loans at Election of Sponsor or the Related Originator.................................................................12 ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER.......16 Section 3.1 Representations and Warranties of the Sponsor..............................16 Section 3.2 Representations and Warranties of the Master Servicer......................18 Section 3.3 Representations and Warranties of the Sponsor with Respect to the Mortgage Loans; Retransfer of Certain Mortgage Loans.......................20 Section 3.4 Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In Certain Situations.......................................27 ARTICLE IV. SERVICING AND ADMINISTRATION OF MORTGAGE LOANS..........................................28 Section 4.1 Master Servicer and Sub-Servicers..........................................28 Section 4.2 Modifications..............................................................30 Section 4.3 Servicer Report............................................................32
i 3 Section 4.4 Liability of Master Servicer...............................................32 Section 4.5 Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.........33 Section 4.6 Successor Sub-Servicers....................................................34 Section 4.7 No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the Noteholders.................................................34 Section 4.8 Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee....................................................................34 Section 4.9 Principal and Interest Account.............................................34 Section 4.10 Servicing Advances.........................................................36 Section 4.11 Maintenance of Insurance...................................................37 Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements................38 Section 4.13 Realization Upon Defaulted Mortgage Loans..................................39 Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files..................40 Section 4.15 Servicing Compensation.....................................................41 Section 4.16 Annual Statement as to Compliance..........................................42 Section 4.17 Annual Independent Certified Public Accountants' Reports...................42 Section 4.18 Access to Certain Documentation and Information Regarding the Mortgage Loans.............................................................42 Section 4.19 Assignment of Agreement....................................................43 Section 4.20 Resignation of the Master Servicer.........................................43 ARTICLE V. SERVICING TERMINATION....................................................................43 Section 5.1 Events of Servicing Termination............................................43 Section 5.2 Inspections by Insurer; Errors and Omissions Insurance.....................47 Section 5.3 Merger, Conversion, Consolidation or Succession to Business of Master Servicer............................................................47 Section 5.4 Notification to Noteholders................................................48 Section 5.5 Notices of Material Events.................................................48 ARTICLE VI. ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.............................................49 Section 6.1 Administrative Duties with Respect to the Indenture........................49 Section 6.2 Records....................................................................51 Section 6.3 Additional Information to be Furnished to the Trust........................51 ARTICLE VII. MISCELLANEOUS..........................................................................51 Section 7.1 Compliance Certificates and Opinions.......................................51
ii 4 Section 7.2 Form of Documents Delivered to the Indenture Trustee.......................52 Section 7.3 Acts of Noteholders........................................................52 Section 7.4 Notices, etc. to Indenture Trustee.........................................53 Section 7.5 Notices and Reports to Noteholders; Waiver of Notices......................53 Section 7.6 Successors and Assigns.....................................................54 Section 7.7 Severability...............................................................54 Section 7.8 Benefits of Agreement......................................................54 Section 7.9 Legal Holidays.............................................................54 Section 7.10 Governing Law..............................................................55 Section 7.11 Counterparts...............................................................55 Section 7.12 Usury......................................................................55 Section 7.13 Amendment..................................................................55 Section 7.14 The Insurer................................................................56 Section 7.15 Notices....................................................................57 Section 7.16 Limitation of Liability....................................................58 SCHEDULE I -- Schedule of Mortgage Loans EXHIBIT A -- [Reserved] EXHIBIT B -- [Reserved] EXHIBIT C -- [Reserved] EXHIBIT D -- Form of Trustee's Acknowledgement of Receipt EXHIBIT E -- Form of Certification EXHIBIT F -- Form of Master Servicer's Trust Receipt EXHIBIT G -- Form of Power of Attorney EXHIBIT H -- Form of Subsequent Transfer Agreement ANNEX 1 -- Copy of Annex 1 to the Indenture
iii 5 SALE AND SERVICING AGREEMENT, dated as of September 1, 1999, by and among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, a Delaware business trust (the "Trust"), ADVANTA HOLDING TRUST 1999-B, a Delaware business trust ("Holding"), 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, Holding desires to purchase a portfolio of Mortgage Loans (as defined herein) originated by the Originators (as defined herein); WHEREAS, the Sponsor is willing to sell or cause or direct to be sold such Mortgage Loans to Holding; WHEREAS, Holding desires to transfer such Mortgage Loans to the Trust and the Trust desires to acquire such Mortgage Loans from Holding; WHEREAS, the Master Servicer has agreed to service such Mortgage Loans, which constitute the principal assets of the Trust Estate; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Sponsor, the Master Servicer, the Trust, Holding and the Indenture Trustee hereby agree as follows: ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION Section 1.1 Definitions.Except as otherwise specified herein, capitalized terms used in this Agreement are defined in Annex 1 to the Indenture, dated as of September 1, 1999 (the "Indenture"), between Advanta Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California, N.A., as Indenture Trustee. A copy of Annex 1 of the Indenture is attached to this Agreement. Defined terms that are used only in one section or only in another definition may be omitted from the list of defined terms in Annex 1. Defined terms include, as appropriate, all genders and the plural as well as the singular. Section 1.2 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. Whenever used in this Agreement, any pronoun shall be deemed to include both singular and plural and to cover all genders. As used herein, any form of the word "include" shall be deemed to be followed by the words "without limitation." 6 Section 1.3 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. Section 1.4 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 2.1 Conveyance of the Mortgage Loans (a) The Sponsor, concurrently with the execution and delivery hereof, hereby sells, assigns, transfers, sets over and otherwise conveys or shall request or cause to be transferred, sold, assigned, set over and otherwise conveyed to Holding, and Holding hereby purchases and acquires, without recourse (subject to the Sponsor's obligations herein), all right, title and interest of the Sponsor in and to: (i) all Mortgage Loans listed on the Schedule of Mortgage Loans, and their respective Principal Balances (including all Additional Balances) and all principal and interest collections in respect thereof on or after the respective Cut-Off Date; (ii) all Mortgaged Properties to the extent that they are acquired by foreclosure or deed in lieu of foreclosure; (iii) all of the Sponsor's rights under any Mortgage Insurance Policies covering the Mortgaged Properties; (iv) all of the Sponsor's rights and benefits, but none of its obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and 4.04 (other than the fourth paragraph thereof) of the Purchase Agreement, including all of the Sponsor's rights and remedies in the event of certain breaches by the Originators of their respective representations and warranties under Sections 4.01 and 4.02 of the Purchase Agreement; (v) all Mortgage Files and other documents relating to the foregoing; (vi) all amounts held in the Accounts (excluding net investment earnings on the Principal and Interest Account, the Note Account and the Capitalized Interest Account); (vii) all proceeds with respect to the foregoing; and (viii) all other assets included or to be included in the Trust Estate created under the Indenture for the benefit of Noteholders and the Insurer; provided, however, that neither 2 7 Holding nor any of its Assignees (including the Trust and the Indenture Trustee) shall assume any obligation under any Credit Line Agreement that provides for the funding of future advances to the Mortgagor thereunder, it being understood that neither Holding nor any of its Assignees (including the Trust and the Indenture Trustee) shall be required or permitted to fund any such future advances. On or before the Closing Date, the Sponsor will cause the Insurer to deliver the Policy to the Indenture Trustee for the benefit of the Noteholders of the Notes. As full consideration for the Sponsor's sale, assignment, transfer, set-over and conveyance to Holding of all of its right, title and interest in and to the Mortgage Loans and the other rights and properties specified above, Holding shall (A) 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 and other transaction costs (including the cost of obtaining the Policy as described above and the expenses referred to in Section 2.01 of the Purchase Agreement), and (B) direct the issuance of one or more Certificates evidencing in the aggregate 100% of the beneficial ownership interest in Holding to or upon the order of the Sponsor or its designees, all in such amounts as the Sponsor shall determine on or before the Closing Date. (b) It is the express intent of the parties hereto that the conveyance of the Mortgage Loans (including the related Mortgage Files and the other rights and properties described in Section 2.1(a) above) by the Sponsor to Holding as contemplated by Section 2.1(a) be construed as a sale of the Mortgage Loans by the Sponsor to Holding. It is not the intent of the parties that such conveyance be deemed a pledge of the Mortgage Loans by the Sponsor to Holding or any of Holding's Assignees (including the Indenture Trustee) to secure a debt or other obligation of the Sponsor or any Assignor of the Sponsor. 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 related Mortgage Files and the other rights and properties described in Section 2.1(a) above) are held to be property of the Sponsor or 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 Holding of a first priority security interest in all of the Sponsor's right, title and interest in and to the Mortgage Loans (including the related Mortgage Files and the other rights and properties described in Section 2.1(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 the Accounts (excluding net investment earnings on the Principal and Interest Account, the Note Account and the Capitalized Interest Account), whether in the form of cash, instruments, securities or other property; 3 8 (iii) the possession by Holding or any of its Assignees or their respective 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 Holding 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 Holding or any of its Assignees (including the Trust) to pay 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 Owner Trustee, the Insurer and the Certificateholders, all in accordance with and otherwise subject to the Operative Documents (including the Indenture). Any assignment or other transfer of the interest of Holding under any provision hereof shall also be deemed to be an assignment of any security interest created hereby. Each of the Sponsor and Holding 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 and the Indenture. The Sponsor also covenants not to pledge, assign or grant any security interest to any third party in any Mortgage Loan conveyed to Holding hereunder. (c) Upon Holding's request, the Sponsor shall perform (or cause to be performed) such further acts and execute, acknowledge and deliver (or cause to be executed, acknowledged and delivered) to Holding such further documents as Holding 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 as debtor and Holding as secured party and any continuation statements relating thereto). (d) Holding, immediately after the purchase and sale described in Section 2.1(a) above but otherwise concurrently with the execution and delivery hereof, hereby transfers, sets over and otherwise conveys, to the Trust, and the Trust hereby acquires without recourse (subject to Holding's obligations herein), all right, title and interest of Holding in and to: (i) all Mortgage Loans listed on the Schedule of Mortgage Loans including their respective Principal Balances (including all Additional Balances) and all principal and interest collected on or after the Cut-Off Date; (ii) all Mortgaged Properties 4 9 to the extent that they are acquired by foreclosure or deed in lieu of foreclosure; (iii) all of the Sponsor's rights under any Mortgage Insurance Policies covering the Mortgaged Properties; (iv) all of the Sponsor's rights and benefits, but none of its obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and 4.04 (other that the fourth paragraph thereof) of the Purchase Agreement, including all of the Sponsor's rights and remedies in the event of certain breaches by the Originators of their respective representations and warranties under Sections 4.01 and 4.02 of the Purchase Agreement (all of which rights and benefits were assigned to Holding pursuant to Section 2.1(a) above); (v) all Mortgage Files and other documents relating to the foregoing; (vi) all amounts held in the Accounts (excluding net investment earnings on the Principal and Interest Account, the Note Account and the Capitalized Interest Account); (vii) all proceeds with respect to the foregoing; and (viii) all other assets included or to be included in the Trust Estate created under the Indenture for the benefit of Noteholders and the Insurer; provided, however, that neither the Trust nor any of its Assignees (including the Indenture Trustee) shall assume any obligation under any Credit Line Agreement that provides for the funding of future advances to the Mortgagor thereunder, it being understood that neither the Trust nor any of its Assignees (including the Indenture Trustee) shall be required or permitted to fund any such future advances. In addition, on or before the Closing Date, Holding will cause the Policy to be delivered to the Indenture Trustee for the benefit of the Noteholders. As full consideration for Holding's transfer, set-over and conveyance to the Trust of all of its right, title and interest in and to the Mortgage Loans and the other rights and properties specified above, the Trust shall (x) pay to or upon the order of Holding 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 as described above and the expenses referred to in Section 2.01 of the Purchase Agreement), and (y) issue to Holding one or more Certificates evidencing in the aggregate 100% of the beneficial ownership interest in the Trust. (e) It is the express intent of the parties hereto that the conveyance of the Mortgage Loans (including the related Mortgage Files and the other rights and properties described in Section 2.1(d) above) by Holding to the Trust as contemplated by Section 2.1(d) be construed as a sale of the Mortgage Loans by Holding to the Trust for certain non-tax purposes. It is, further, not the intent of the parties that such conveyance be deemed a pledge of the Mortgage Loans by Holding to the Trust or any of the Trust's Assignees (including the Indenture Trustee) to secure a debt or other obligation of Holding or any Assignor of Holding. 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 related Mortgage Files and the other rights and properties described in Section 2.1(d) above) are held to be property of Holding 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 Holding to the Trust of a first priority security interest in all of Holding' right, title and interest in and to the Mortgage Loans (including the related Mortgage Files and the other rights and properties described in Section 2.1(a) above) and all amounts payable to the holder of the Mortgage Loans and/or such rights or properties in 5 10 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 the Accounts (excluding net investment earnings on the Principal and Interest Account, the Note Account and the Capitalized Interest Account), whether in the form of cash, instruments, securities or other property; (iii) the possession by the Trust or any of its Assignees or their respective 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 California 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 Trust 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 or any of its Assignees to pay 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 Owner Trustee, the Insurer and the Certificateholders, all in accordance with and otherwise subject to the Operative Documents (including the Indenture). Any assignment or other transfer of the interest of the Trust under any provision hereof shall also be deemed to be an assignment of any security interest created hereby. Each of Holding and the Trust 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 and the Indenture. Holding also covenants not to pledge, assign or grant any security interest to any third party in any Mortgage Loan conveyed to the Trust hereunder. (f) Upon the Trust's request, Holding 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 Trust such further documents as the Trust 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 filing UCC-1 financing statements naming Holding as debtor and the Trust as secured party and any continuation statements relating thereto). (g) In connection with the transfer and assignment of the Mortgage Loans, the Sponsor and Holding agree to: (i) cause to be delivered without recourse to the Indenture Trustee, on the Closing Date with respect to the Initial Mortgage Loans, on the Transfer Date with respect to any Qualified Replacement Mortgage Loan, or the Subsequent Transfer Date with respect to any Subsequent Mortgage Loans, the items listed in the definition of "Mortgage Files"; 6 11 (ii) cause, within 75 Business Days following the Closing Date, the Subsequent Transfer Date or the Transfer Date (as applicable), Assignments of Mortgage to be (x) prepared and copies delivered to the Indenture Trustee and (y) originals submitted for recording in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of or purchasers from the Sponsor to the Indenture Trustee; provided, however, that Assignments of Mortgage shall not be required to be submitted for recording with respect to any Mortgage Loan as to which the recordholder is an Originator unless (A) the related Mortgaged Property is not located in a jurisdiction in which, as evidenced by an Opinion of Counsel acceptable to the Rating Agencies and the Insurer and delivered to the Indenture Trustee and the Insurer within 30 Business Days following the Closing Date, recordation of such Assignment of Mortgage is not necessary to perfect the lien of the Indenture Trustee in the related Mortgage Loan or (B) provided that an Event of Servicing Termination or a Rapid Amortization Event shall have occurred or the long-term unsecured debt of Advanta Corp. shall have been assigned a rating of less than BBB by S&P or less than Baa2 by Moody's, the existence of circumstances discussed in Section 2.1(j) below, or the Insurer otherwise directs the Sponsor in writing; and (iii) cause, within one year after the Closing Date, the Subsequent Transfer Date or the Transfer Date (as applicable), to be delivered to the Indenture Trustee and the Insurer evidence of the recording of such Assignments of Mortgage (provided that such recording is otherwise required pursuant to clause (ii) above). All recording, if required pursuant to this Section 2.1, shall be accomplished at the expense of the Sponsor. Notwithstanding anything to the contrary contained in this Section 2.1, 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 and any Assignment of Mortgage in recordable form received by the Indenture Trustee shall be kept in the related Mortgage File. Within 30 days after the Closing Day, the Master Servicer shall deliver to the Indenture Trustee for signature powers of attorney for execution, substantially in the form of Exhibit G, authorizing the Master Servicer on behalf of the Indenture Trustee to record the Assignments of Mortgage as provided in clause (ii) above. 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. 7 12 (h) If an Assignment of Mortgage 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 or cause to be prepared a substitute assignment or cure such defect, as the case may be, and thereafter cause each such assignment to be duly recorded. (i) The Sponsor shall reflect on its records that the Mortgage Loans have been sold to Holding. (j) If the ultimate consolidating parent of the Master Servicer's shareholders' equity calculated pursuant to generally accepted accounting principles, as evidenced by the Financial Statements (as defined in the Insurance Agreement, and which the Master Servicer hereby agrees to provide to the Insurer on a quarterly basis as requested by the Insurer), falls below $5,000,000, then the Sponsor shall promptly prepare and deliver to the Indenture Trustee Assignments of Mortgage. Upon the direction of the Insurer, the Indenture Trustee shall submit such Assignments of Mortgage for recording in the appropriate jurisdictions. The Master Servicer shall pay the anticipated recording costs to the Indenture Trustee on the date of delivery of such Assignments of Mortgage to the Indenture Trustee, and if the Master Servicer fails to do so or the actual recording costs exceed the anticipated recording costs then the Indenture Trustee shall pay such costs and shall be entitled to reimbursement therefor from amounts otherwise distributable to the Certificateholders. (k) To the extent that the ratings, if any, then assigned to the unsecured debt of the Advanta National Bank or of its ultimate corporate parent are satisfactory to the Insurer, Moody's and S&P, then any of the Document Delivery Requirements described above may be waived by an instrument signed by the Insurer, S&P and Moody's (or any documents theretofore delivered to the Indenture Trustee returned to Advanta National Bank) on such terms and subject to such conditions as the Insurer, Moody's and S&P may permit. Section 2.2 Acceptance by Indenture Trustee; Certain Substitutions of Mortgage Loans; Certification by Indenture Trustee. (a) The Indenture Trustee hereby acknowledges its receipt of the Policy and agrees to execute and deliver on the Closing Date and each Subsequent Transfer Date and each Transfer Date an acknowledgment of receipt of the Credit Line Agreements delivered by the Sponsor and declares that it will hold such documents and any amendments, replacement or supplements thereto, as well as any other assets of the Trust Estate and delivered to the Indenture Trustee, as Indenture Trustee in trust upon and subject to the conditions set forth herein, for the benefit of the Noteholders and the Insurer. The Indenture Trustee further agrees to review any other documents delivered by the Sponsor within 90 days after the Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable, and to deliver to the Sponsor, the Master Servicer and the Insurer a Pool Certification to the effect that, as to each Mortgage Loan listed in the Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in such Pool Certification as not covered by such Pool 8 13 Certification), (i) all documents described in the definition of "Mortgage Files" and required to be delivered to it pursuant to this Agreement are in its possession and (ii) such documents have been reviewed by it and have not been damaged, torn or physically altered and on their face appear to relate to such Mortgage Loan; provided, however, that such Pool Certification shall not be required to be delivered prior to 90 days after the Closing Date. The Indenture Trustee shall be under no duty or obligation to inspect, review or examine any such documents, instruments, certificates or other papers to verify the validity, legality, enforceability, sufficiency, due authorization, recordability or genuineness of same or to determine that they are genuine, enforceable, or appropriate for the 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 from the Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable, finds any document constituting a part of a Mortgage File which is not properly executed, has not been received within the specified period, or is unrelated to the Mortgage Loans identified in the Schedule of Mortgage Loans, or that any Mortgage Loan does not conform in a material respect to the description thereof as set forth in the Schedule of Mortgage Loans, the Indenture Trustee shall promptly so notify the Sponsor and the 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. It is understood that the scope of the Indenture Trustee's review of the items delivered by the Sponsor pursuant to Section 2.1(g)(i) is limited solely to confirming that the documents listed in Section 2.1(g)(i) have been executed and received, on their face, appear to relate to the Mortgage Files identified in the Schedule of Mortgage Loans and conform materially to the description thereof in the Schedule of Mortgage Loans with regard to Mortgagor name and original Credit Limit. 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 to it respecting such defect the Sponsor has not remedied or caused to be remedied the defect and the defect materially and adversely affects the interest in the related Mortgage Loan of the Indenture Trustee, Noteholders or of the Insurer, the Sponsor will then on the next succeeding Business Day (i) substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage Loan pursuant to Section 2.3 and, deliver the Substitution Amount applicable thereto to the Master Servicer for deposit in the Principal and Interest Account or (ii) reacquire such Mortgage Loan at a purchase price equal to the Loan Reacquisition Price thereof, which reacquisition price shall be delivered to the Master Servicer for deposit in the Principal and Interest Account. Upon receipt of any Qualified Replacement Mortgage Loan and written notification of the Substitution Amount, if any, or of written notification signed by a Servicing Officer to the effect that the Loan Reacquisition Price in respect of a 9 14 Unqualified Mortgage Loan has been deposited into the Principal and Interest Account, then within 10 Business Days, the Indenture Trustee shall, at the direction of the Master Servicer, execute such documents and instruments of transfer including preparing an endorsement and assignment of documents, 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 Unqualified Mortgage Loan to the Sponsor or its designee. It is understood and agreed that the obligation of the Sponsor to accept a transfer of a Unqualified Mortgage Loan and to either convey a Qualified Replacement Mortgage Loan or to make a deposit of any related Loan Reacquisition Price into the Principal and Interest Account shall constitute the sole remedy available to Noteholders, the Insurer and the Indenture Trustee against the Sponsor. The Sponsor, promptly following the transfer of an Unqualified Mortgage Loan from the Trust pursuant to this Section, shall deliver an amended Schedule of Mortgage Loans to the Indenture Trustee and the Insurer and shall make appropriate entries in its general account records to reflect such transfer. The Master Servicer shall, following such reacquisition, appropriately mark its records to indicate that it is no longer servicing such Mortgage Loan on behalf of the Trust. The Sponsor, promptly following such transfer, shall appropriately mark its electronic ledger and make appropriate entries in its general account records to reflect such reacquisition. Section 2.3 Qualified Replacement Mortgage Loans (a) A "Qualified Replacement Mortgage Loan" is a Mortgage Loan that substitutes for another pursuant to Section 2.2(b), 3.3 or 3.4 hereof, which with respect to the Mortgage Loan being replaced and as of the Replacement Cut-Off Date (i) has the same interest rate index, a margin over such index and a maximum interest rate at least equal to those applicable to the Mortgage Loan being replaced, (ii) is of the same or better property type and the same or better occupancy status as the replaced Mortgage Loan, (iii) is of the same or better credit quality classification (determined in accordance with the relevant Originator's credit underwriting guidelines), (iv) shall mature no later than the Payment Date occurring in January 2023, (v) has a Combined Loan-to-Value Ratio no higher than that of the replaced Mortgage Loan, (vi) has a Principal Balance equal to or less than that of the replaced Mortgage Loan, (vii) is in the same lien position or better, (viii) is not Delinquent, and (ix) complies with the representations and warranties set forth in Section 3.3(a). Except with respect to clause (vii) above, in the event that one or more mortgage loans are proposed to be substituted for one or more Mortgage Loans, the Insurer may allow the foregoing tests to be met on a weighted average basis or other aggregate basis acceptable to the Insurer, as evidenced by a written approval delivered to the Indenture Trustee and the Sponsor by the Insurer. (b) Each Unqualified Mortgage Loan that is required to be repurchased or substituted pursuant to the provisions of this Agreement or the Purchase Agreement shall, upon such reacquisition or substitution in accordance with the provisions hereof, be 10 15 released from the Trust and from the lien created by the Indenture. As to each Mortgage Loan released from the Trust in connection with the reacquisition thereof or the conveyance of a Qualified Replacement Mortgage Loan therefor, the Indenture Trustee will transfer, assign, set over and otherwise convey without recourse, to or upon the order of the Sponsor, all of its right, title and interest in and to such released Mortgage Loan and all the Trust's right, title and interest to principal and interest collected on such released Mortgage Loan on and after the first day of the calendar month in which such Mortgage Loan is released; as applicable; provided, however, that the Trust shall reserve and retain all right, title and interest in and to payments of principal and interest collected on such released Mortgage Loan prior to such date. (c) 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 on the date of conveyance of such Qualified Replacement Mortgage Loan, to the Sponsor, the Mortgage File, properly endorsed without recourse to the Sponsor. (d) 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. (e) As to any Qualified Replacement Mortgage Loan, the Sponsor shall, if required to deliver any such Qualified Replacement Mortgage Loan, 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 with Section 2.2. 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 the Sponsor shall deposit 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 Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by the Master Servicer in the Principal and Interest Account. Upon such substitution, the 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 or Loans, as of the date of substitution, the covenants, representations and warranties set forth in Section 3.3 and (ii) to have certified that such Mortgage Loan(s) is/are Qualified Replacement Mortgage Loan(s). 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 Insurer. 11 16 Section 2.4 Cooperation Procedures. The Sponsor, the Master Servicer and the Indenture Trustee covenant to provide each other with 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 2.5 Retransfers of Mortgage Loans at Election of Sponsor or the Related Originator. Subject to the conditions set forth below, the Sponsor or the related Originator, may, but shall not be obligated to (except the Sponsor or the related Originator shall be obligated upon a breach of a representation or warranty), accept the reassignment of Mortgage Loans held by the Trust as of the close of business on a Payment Date (the "Transfer Date"). On the fifth Business Day (the "Transfer Notice Date") prior to the Transfer Date designated in such notice, the Sponsor or the related Originator shall give the Indenture Trustee, the Insurer and the Master Servicer a notice of the proposed reassignment that contains a list of the Mortgage Loans to be reassigned. Such reassignment of Mortgage Loans shall be permitted upon satisfaction of the following conditions: (i) No Rapid Amortization Event has occurred or will occur as a result of such removal; (ii) On the Transfer Notice Date the Overcollateralization Amount (after giving effect to the removal from the Trust of the Mortgage Loans proposed to be retransferred) is at least equal to the Specified Overcollateralization Amount; (iii) On or before the Transfer Date, the Sponsor or the related Originator shall have delivered to the Indenture Trustee, the Insurer and the Rating Agencies a revised Schedule of Mortgage Loans, reflecting the proposed retransfer (including any Qualified Replacement Mortgage Loans proposed to be transferred) and the Transfer Date, and the Master Servicer shall have marked its servicing records to show that the Mortgage Loans reassigned to the Sponsor or the related Originator are no longer owned by the Trust; (iv) The Sponsor or the related Originator shall represent and warrant that random selection procedures were used in selecting the Mortgage Loans and no other selection procedures were used which are adverse to the interests of the Noteholders or the Insurer were utilized in selecting the Mortgage Loans to be removed from the Trust; and (v) The Sponsor or the related Originator shall have delivered to the Indenture Trustee and the Insurer an Officer's Certificate certifying that the items 12 17 set forth in subparagraphs (i) through (v), inclusive, have been performed or are true and correct, as the case may be. The Indenture 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. Upon receiving the requisite information from the Sponsor or the related Originator, the Master Servicer shall perform in a timely manner those acts required of it, as specified above. Upon satisfaction of the above conditions, on the Transfer Date the Indenture Trustee shall deliver, or cause to be delivered, to the Sponsor or the related Originator (or their designee) the Mortgage File for each Mortgage Loan being so reassigned, and the Indenture Trustee shall execute and deliver (at the Sponsor's or the related Originator's direction) to the Sponsor or the related Originator such other documents as shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor or the related Originator. Any such transfer of the Trust's right, title and interest in and to Mortgage Loans shall be without recourse, representation or warranty by or of the Indenture Trustee or the Trust to the Sponsor or the related Originator. Section 2.6 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 on deposit in the Pre-Funding Account, the Sponsor shall sell, transfer, assign, set over and otherwise convey, or shall request or cause the Trust to acquire from a Warehouse Trust all right, title and interest 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. In addition, the Sponsor shall transfer, assign and set over all right, title and interest in and to principal and interest collected 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 its right, title and interest in and to principal and interest collected on each such Subsequent Mortgage Loan prior to the related Subsequent Cut-Off Date. The transfer 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 and all parties hereto to be treated as a sale by the Sponsor or such Warehouse Trust. The amount released from the Pre-Funding Account shall be equal to the aggregate Principal Balances of the Subsequent Mortgage Loans so transferred. (b) The Sponsor shall transfer or cause to be transferred to the Trust the Subsequent Mortgage Loans and the other property and rights related 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 Insurer and the Rating Agencies with an Addition Notice and shall have provided information with respect to the Subsequent Mortgage Loans in an electronic data file and in a form agreeable to the foregoing parties; 13 18 (ii) the Sponsor 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 H (the "Subsequent Transfer Agreement"), which shall include a Schedule of Mortgage Loans listing the Subsequent Mortgage Loans and any other exhibits listed thereon; (iii) as of each Subsequent Transfer Date, the Sponsor shall have deposited in the Principal and Interest Account all principal and interest collections in respect of the Subsequent Mortgage Loans received on or after the related Subsequent Cut-Off Date; (iv) as of each Subsequent Transfer Date, none of the related Originator, 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 addition 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 this paragraph (b) and paragraphs (c) and (d) below, and in the related Subsequent Transfer Agreement; (viii)the Sponsor shall have delivered to the Rating Agencies, the Insurer, and the Indenture Trustee, Opinions of Counsel with respect to bankruptcy, corporate and tax matters relating to the Subsequent Mortgage Loans (which opinions may have already been delivered on the Closing Date); and (ix) the Insurer shall have approved the transfer. (c) The obligation of the Trust to purchase a Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the following requirements: (i) with respect to any individual Subsequent Mortgage Loan: (a) such Subsequent Mortgage Loan may not be 59 or more days contractually delinquent as of the related Subsequent Cut-Off Date; (b) the maturity date of such Subsequent Mortgage Loan may not be later than January 2023; (c) such Subsequent Mortgage Loan may not have a combined loan-to-value ratio ("CLTV") in excess of 125%; 14 19 (d) such Subsequent Mortgage Loan may not have a Principal Balance in excess of $200,000; (e) the Coupon Rate of such Subsequent Mortgage Loan may not be below 7.25% per annum; (f) the Margin of such Subsequent Mortgage Loan may not be below 1.00%; and (ii) following the purchase of Subsequent Mortgage Loans, the Mortgage Loans in the aggregate: (a) will have a weighted average Coupon Rate of at least 12.50%; (b) will have a weighted average CLTV of not more than 99.25%; (c) no more than 32.25% by aggregate Principal Balance of the Mortgage Loans will have a CLTV of 100% or greater; (d) no more than 1.00% by aggregate Principal Balance of the Mortgage Loans will be 30 to 59 days delinquent; (e) no more than 0.5% by aggregate Principal Balance of the Mortgage Loans will be secured by Mortgaged Properties within a single zip code; (f) no more than 15.0% by aggregate Principal Balance of the Mortgage Loans will be secured by Mortgaged Properties in California; (g) no more than 96.0% by aggregate Principal Balance of the Mortgage Loans will be in a second lien position; (h) the weighted average FICO score (excluding Mortgage Loans without scores) will be not less than 635; (i) the weighted average Margin will be not less than 4.40% per annum; and (j) the weighted average remaining term to scheduled maturity of the Mortgage Loans will be not more than 275 months. The Insurer may waive or modify any of the above requirements or specify any additional criteria provided that any such modification shall not materially and adversely affect the Sponsor. 15 20 (d) In connection with the transfer and assignment of the Subsequent Mortgage Loans, the Sponsor agrees to satisfy the conditions set forth in Sections 2.1(g)-(k). (e) In connection with each Subsequent Transfer Date and on the Payment Dates occurring in October 1999, November 1999, December 1999 and January 2000, the Master Servicer and the Indenture Trustee shall co-operate in determining (i) the amount and correct dispositions of the Capitalized Interest Requirement, the Pre-Funding Earnings and the amount then on deposit in the Pre-Funding Account, and (ii) any other necessary matters in connection with the administration of the Pre-Funding Account and of the Capitalized Interest Account. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER Section 3.1 Representations and Warranties of the Sponsor. The Sponsor hereby represents, warrants and covenants to the Indenture Trustee, the Master Servicer, the 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 respective 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 respective properties, to carry out its respective business as presently conducted and as proposed to be conducted and to enter into and discharge its respective 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, 16 21 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 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 such statements do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make such statements not misleading. Other than with respect to the statements referred to in the preceding sentence, 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 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 17 22 Sponsor of its respective obligations under this Agreement and such of the other Operative Documents to which it is a party. 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 3.2 Representations and Warranties of the Master Servicer. The Master Servicer hereby represents, warrants and covenants to the Indenture Trustee, the Sponsor, the 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, in compliance with the laws of each state in which any Mortgaged 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 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 direct 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 governmental agency, which might have consequences that would materially and adversely affect the 18 23 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) 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 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. (g) No certificate of an officer, statement furnished in writing or report delivered pursuant to the terms hereof 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. (h) 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 statement contained therein with respect to the Master Servicer not misleading. Other than with respect to the statements referred to in the preceding sentence, to the best of the Master Servicer's knowledge and belief, the Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements contained therein not misleading. 19 24 (i) The Servicing Fee is a "current (normal) servicing fee rate" as that term is used in Statement of Financial Accounting Standards No. 65 issued by the Financial Accounting Standards Board. Neither the Master Servicer nor any affiliate thereof will report on any financial statements any part of the Servicing Fee as an adjustment to the sales price of the Mortgage Loans. (j) 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. (k) The transactions contemplated by this Agreement are in the ordinary course of business of the Master Servicer. (l) The terms of each existing Sub-Servicing Agreement and each designated Sub-Servicer are acceptable to the Master Servicer and any new Sub-Servicing Agreements or Sub-Servicers will comply with the provisions of Section 4.1. It is understood and agreed that the representations and warranties set forth in this Section 3.2 shall survive delivery of the Initial Mortgage Loans and the Subsequent Mortgage Loans to the Indenture Trustee. Upon discovery by the Master Servicer, the Sponsor or the Indenture Trustee of a breach of any of the representations and warranties set forth in this Section 3.2 which materially and adversely affects the interests of the Noteholders or of the Insurer, the party discovering such breach shall give prompt written notice to the other parties. Within 60 days of its discovery or its receipt of notice of breach, the Master Servicer shall cure such breach in all material respects; provided, however, that if the Master Servicer can demonstrate to the reasonable satisfaction of the Insurer that it is diligently pursuing remedial action, then the cure period may be extended with the written approval of the Insurer. Section 3.3 Representations and Warranties of the Sponsor with Respect to the Mortgage Loans; Retransfer of Certain Mortgage Loans. (a) The Sponsor makes the following representations and warranties, and Holding makes the representations and warranties set forth in (iv)(b) below, as to each Mortgage Loan, on which the Trust relies in accepting the Mortgage Loan and on which the Insurer relies in issuing the Policy. Such representations and warranties speak as of the Closing Date, in the case of the Initial Mortgage Loans, the Subsequent Transfer Date, in the case of the Subsequent Mortgage Loans, and the Transfer Date, in the case of the Qualified Replacement Mortgage Loans, but shall survive the transfer of the Mortgage Loans to the Trust and the pledge thereof to the Indenture Trustee pursuant to the Indenture: (i) All of the original or certified documentation set forth in the definition of Mortgage File and in Section 2.1(g)(i) (including all material documents related thereto) with respect to each Mortgage Loan has been or will 20 25 be delivered to the Indenture Trustee on the Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable. All such documentation is true and accurate in all material respects. Each of the documents and instruments specified to be included therein has been duly executed and in due and proper form, and each such document or instrument is in a form generally acceptable to prudent mortgage lenders that regularly originate, purchase or sell mortgage loans comparable to the Mortgage Loans. (ii) Each Mortgage Loan is being serviced by the Master Servicer or a Master Servicer Affiliate. (iii) The information set forth in the Schedule of Mortgage Loans (as amended for Qualified Replacement Mortgage Loans and Subsequent Mortgage Loans) for each Mortgage Loan listed is true and correct in all material respects. (iv) (a) Immediately prior to the transfers and assignments herein contemplated, the Sponsor held good and indefeasible title to, and was the sole owner of, each Mortgage Loan conveyed by the Sponsor to Holding pursuant to Section 2.1 hereof, all monies due or to become due with respect thereto, and all proceeds of such Cut-Off Date Principal Balances with respect to such Mortgage Loans subject to no liens, charges, mortgages, encumbrances or rights of others except liens which will be released simultaneously with such transfers and assignments; and immediately upon the transfers and assignments herein contemplated, the Trust will hold good and indefeasible title to, and be the sole owner of, each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or rights of others except liens which will be released simultaneously with such transfers and assignments and (b) immediately prior to the transfers and assignments herein contemplated, Holding held good and indefeasible title to, and was the sole owner of, each Mortgage Loan (including its Cut-Off Date Principal Balance) conveyed by Holding to the Trust pursuant to Section 2.1 hereof, all monies due or to become due with respect thereto, and all proceeds of such Cut-Off Date Principal Balances with respect to such Mortgage Loans subject to no liens, charges, mortgages, encumbrances or rights of others except liens which will be released simultaneously with such transfers and assignments; and immediately upon the transfers and assignments herein contemplated, the Trust will hold good and indefeasible title to, and be the sole owner of, each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or rights of others except liens which will be released simultaneously with such transfers and assignments. (v) There is no valid offset, defense or counterclaim of any obligor under any Credit Line Agreement or Mortgage. Neither the operation of any of the terms of any such Credit Line Agreement or any such Mortgage nor the exercise of any right thereunder will render either such Credit Line Agreement or such Mortgage unenforceable, in whole or in part, nor subject to any right of rescission, set-off, claim, counterclaim or defense, including, without limitation, 21 26 the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto. (vi) As of the Initial Cut-Off Date and with respect to the Initial Mortgage Loans, no Minimum Monthly Payment is more than 59 days Delinquent (measured on a contractual basis) and no more than 0.60% (by aggregate Cut-Off Date Principal Balance) of the Initial Mortgage Loans were 30-59 days Delinquent (measured on a contractual basis). (vii) Each Credit Line Agreement and each Mortgage relating to the Mortgage Loans is an enforceable obligation of the related Mortgagor, except as the enforceability thereof may be limited by the bankruptcy, insolvency or similar laws affecting creditors' rights generally. (viii)With respect to each Mortgage Loan, on each date that the Coupon Rates have been adjusted, interest rate adjustments on such Mortgage Loans were made in compliance with the related Mortgage and Credit Line Agreement and applicable law. (ix) Each Mortgaged Property is improved by a single (one-to-four) family residential dwelling, which may include manufactured homes, condominiums and townhouses. (x) As of the Initial Cut-Off Date, no Initial Mortgage Loan had a Combined Loan-to-Value Ratio in excess of 125.00%. (xi) Each Mortgage is a valid and subsisting first or junior lien of record on the Mortgaged Property (subject in the case of any Junior Mortgage Loan only to one or more Senior Liens on such Mortgaged Property) and subject in all cases to the exceptions to title set forth in the title insurance policy or title search, with respect to the related Mortgage Loan, which exceptions are generally acceptable to banking institutions in connection with their regular mortgage lending activities, and except for liens for (i) real estate taxes and special assessments not yet delinquent, (ii) income taxes not yet due, (iii) any covenants, conditions and restrictions, rights of way, easements, and other matters of public record and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage. (xii) To the best of the Sponsor's knowledge, there is no delinquent tax or assessment lien or mechanic's lien on any Mortgaged Property relating to a Mortgage Loan, and each such Mortgaged Property is free of substantial damage and is in good repair. 22 27 (xiii) Each Mortgage Loan at the time it was made complied in all material respects with all applicable state and federal laws and regulations, including, without limitation, the federal Truth-in-Lending Act and other consumer protection laws, real estate settlement procedure, usury, equal credit opportunity, disclosure and recording laws. (xiv) With respect to each Mortgage Loan that is a First Mortgage Loan, and, to the best of the Sponsor's knowledge, with respect to each Mortgage Loan that is a Junior Mortgage Loan, (i) a lender's title insurance policy, issued in standard California Land Title Association form or American Land Title Association form, or other form acceptable in a particular jurisdiction by a title insurance company authorized to transact business in the state in which the related Mortgaged Property is situated, was issued on the date of origination of such Mortgage Loan, and as of the Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable, each such policy is valid and remains in full force and effect, or (ii) a title search or guaranty of title customary in the relevant jurisdiction was obtained with respect to any Mortgage Loan as to which no title insurance policy or binder was issued. (xv) Each Credit Line Agreement is the legal, valid, binding and enforceable obligation of the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by 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). (xvi) The terms of each Credit Line Agreement and each related Mortgage have not been impaired, cancelled, subordinated, rescinded, altered or modified in any material respect (except as reflected in the Mortgage File and in the Mortgage Loan Schedule), and the related Mortgaged Property has not been released from the lien of the related Mortgage, in whole or in part and no instrument has been executed that would effect such release, cancellation, subordination or rescission, except by a written instrument which (if such instrument is secured by real property) has been recorded, if necessary, to protect the interest of the Noteholders and which has been delivered to the Indenture Trustee. The substance of any other alteration or modification of a Credit Line Agreement and related Mortgaged Property is reflected on the related Schedule of Mortgage Loans. (xvii) Except as otherwise required by law or the terms of the Credit Line Agreement, pursuant to the statute under which the related Mortgage Loan was made, the related Credit Line Agreement is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage. 23 28 (xviii) Each Mortgaged Property is located in the state identified in the Schedule of Mortgage Loans and consists of one or more parcels of real property with a residential dwelling erected thereon. (xix) To the best of the Sponsor's knowledge, there is no proceeding pending or threatened for the total or partial condemnation of any Mortgaged Property, nor is such a proceeding currently occurring, and each such Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, flood, tornado or other casualty, so as to affect adversely the value of such Mortgaged Property as security for the related Mortgage Loan or the use for which the premises were intended. (xx) To the best of the Sponsor's knowledge, with respect to each Mortgage Loan that is a Junior Mortgage Loan, either (A) no consent for such Mortgage Loan was required by the holder of the related Senior Lien(s) prior to the making of such Mortgage Loan or (B) such consent has been obtained and is contained in the related Mortgage File. (xxi) Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the realization against the related Mortgaged Property of the benefits of the security, including (A) in the case of a Mortgage designated as a deed of trust, by trustee's sale and (B) otherwise by judicial foreclosure. There is no homestead or other exemption available which materially interferes with the right to sell the related Mortgaged Property at a trustee's sale or the right to foreclose the related Mortgage. (xxii) There is no default, breach, violation or event of acceleration existing under any Mortgage or Credit Line Agreement and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and the Sponsor has not waived any default, breach, violation or event of acceleration; provided, however, that the foregoing shall not apply to the extent that the relevant default, breach, violation or other event relates to one or more of the Delinquent Mortgage Loans. (xxiii) To the best of the Sponsor's knowledge, all parties to each Credit Line Agreement and the related Mortgage had legal capacity to execute such Credit Line Agreement and the related Mortgage and each such Credit Line Agreement and the related Mortgage have been duly and properly executed by such parties. (xxiv) No selection procedures reasonably believed by the Sponsor to be adverse to the interests of the Noteholders or the Insurer was utilized in selecting the Mortgage Loans. 24 29 (xxv) No Mortgagor has been released, in whole or in part, except in connection with an assumption agreement which has been approved by the applicable title insurer (to the extent required by such title insurer) and which is part of the related Mortgage File delivered to the Indenture Trustee. (xxvi) To the best of the Sponsor's knowledge, at the time of origination of each Mortgage Loan that is not a First Mortgage Loan, the related senior lien was not more than 30 days delinquent. (xxvii) To the best of the Sponsor's knowledge, all required inspections, licenses and certificates with respect to the use and occupancy of all occupied portions of all property securing the Mortgages have been made, obtained or issued, as applicable. (xxviii) With respect to each Mortgage Loan that is not a First Mortgage Loan, the related senior lien does not provide for negative amortization. (xxix) With respect to each Mortgage Loan that is not a First Mortgage Loan, the maturity date of the Mortgage Loan is prior to the maturity date of the related senior lien if such senior lien provides for a balloon payment. (xxx) With respect to each Mortgage Loan, (1) the improvements upon each related Mortgaged Property are covered by a valid and existing hazard insurance policy with a carrier generally acceptable to the Master Servicer that provides for fire and extended coverage representing coverage not less than (a) the Credit Limit of such Mortgage Loan or (b) the maximum insurable value of the related Mortgaged Property, or (2) the Master Servicer has obtained and will maintain a blanket policy insuring against fire, flood and hazards of extended coverage with respect to all of the Mortgage Loans. (xxxi) With respect to any Mortgage Loan which is a First Mortgage Loan, the Sponsor has caused and will cause to be performed any and all acts required to be performed to preserve the rights and remedies of the Master Servicer and the Indenture Trustee in any Mortgage Insurance Policies applicable to such Mortgage Loan, including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of co-insured, joint loss payee and mortgagee rights in favor of the Trust and its assignees in care of the Indenture Trustee. (xxxii) To the best of the Sponsor's knowledge, each Mortgage Loan was underwritten in all material respects in accordance with the credit underwriting guidelines of the related Originator as set forth in the related Originator's underwriting guidelines, as in effect on the date of origination or acquisition. (xxxiii) The Sponsor has received no notice of default of any First Mortgage Loan secured by any Mortgaged Property that also secures a Mortgage 25 30 Loan which has not been cured by a party other than the Sponsor or the Master Servicer. (xxxiv) As of the respective Cut-Off Date, no Mortgagor had been identified on the records of the Sponsor as being the subject of a current bankruptcy proceeding. (xxxv) To the best of the Sponsor's knowledge, the related Originator, the Master Servicer, the Sponsor and any related Warehouse Trust, is (or, during the period in which such party held and disposed of its interest in a Mortgage Loan, was) in substantial compliance with any and all applicable licensing requirements of the law of the state wherein the property securing the Mortgage Loan is located. (xxxvi) To the best of the Sponsor's knowledge, with respect to the Mortgage Loans, the documents, instruments and agreements submitted by each Mortgagor for loan underwriting were not falsified and contain no untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the information and the statements contained therein not misleading. (xxxvii) Except as previously disclosed in writing to the Indenture Trustee and the Insurer, there is only one originally executed Mortgage and Credit Line Agreement not stamped as a duplicate. (xxxviii) Each Mortgage Loan conforms, and all the Mortgage Loans, in the aggregate, conform, in all material respects to the description thereof set forth in the Registration Statement. (xxxix) During the period from origination to Closing Date, each Mortgage Loan has been serviced in accordance with applicable laws. (b) [Reserved] (c) Upon the discovery by the Master Servicer, any Sub-Servicer, the Sponsor or the Indenture Trustee of a breach of any of the representations and warranties made in respect of any Mortgage Loan which materially and adversely affects the interests of the Noteholders or of the 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 Sponsor of such breach and request that the Sponsor cure such breach or take the actions described in Section 3.4(b) hereof within the time periods required thereby, and the Sponsor shall cure such breach or take such actions; provided, however, that the cure for any breach of a representation and warranty relating to the characteristics of the Mortgage Loans in the aggregate shall be a reassignment of, or substitution for, only those Mortgage Loans necessary to cause such characteristics to be in compliance with the related representation and warranty, unless the Insurer shall waive such breach. Upon accepting such transfer and making any required deposit into the Principal and Interest 26 31 Account or substitution of a Qualified Replacement Mortgage Loan, as the case may be, the Sponsor shall be entitled to receive an instrument of assignment or transfer from the Indenture Trustee to the same extent as set forth in Section 2.2 with respect to the transfer of Mortgage Loans under that Section. It is understood and agreed that the obligation of the Sponsor to accept a transfer of a Mortgage Loan as to which a breach has occurred and is continuing and to deposit the Loan Reacquisition Price in the Principal and Interest Account or to substitute an Qualified Replacement Mortgage Loan, and deposit the Substitution Amount in the Principal and Interest Account, as the case may be, shall constitute the sole remedy against the Sponsor respecting such breach available to Noteholders, the Indenture Trustee on behalf of the Noteholders and the Insurer. Section 3.4 Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In Certain Situations. (a) With respect to the representations and warranties set forth in Section 3.3 that are made to the best of the Sponsor's knowledge or as to which the Sponsor has no knowledge, if it is discovered by the Sponsor, the Master Servicer, the Indenture Trustee or any Sub-Servicer that the substance of such representation or warranty is inaccurate and such inaccuracy materially and adversely affects the value of the related Mortgage Loan then, notwithstanding the Sponsor's lack of knowledge with respect to the substance of such representation and warranty being inaccurate at the time the representation or warranty was made, such inaccuracy shall be deemed a breach of the applicable representation or warranty and the Sponsor shall cure such breach, repurchase the related Mortgage Loan at the Loan Reacquisition Price or substitute a Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b), 3.3(c) or 3.4 hereof. (b) With the provisos and limitations as to remedies set forth in this Section 3.4, upon the discovery by Sponsor, the Master Servicer, the Insurer, any Sub-Servicer or the Indenture Trustee that the representations and warranties set forth in Section 3.3 of this Agreement were untrue in any material respect as of the Closing Date and such breaches of the representations and warranties materially and adversely affect the interests of the Noteholders or of the 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 Mortgaged Property constitutes a breach of a representation or warranty which materially and adversely affects the interests of the Noteholders or of the Insurer in such Mortgage Loan. (c) 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 Insurer or such time as a breach of any representation and warranty materially and adversely affects the interests of 27 32 the Noteholders or the Insurer as set forth above, the Sponsor hereby covenants and warrants that it shall cure such breach in all material respects within 30 days or it shall (or shall cause an affiliate of the Sponsor to), subject to the further requirements of this paragraph, regardless of whether or not it had knowledge of such breach, on the second Remittance Date next succeeding such discovery, receipt of notice or such other time (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 to the Master Servicer for deposit in the Principal and Interest Account or (ii) purchase such Mortgage Loan from the Trust at the Loan Reacquisition 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, 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 Insurer against the Sponsor, except as otherwise provided in the Insurance Agreement. (d) In the event that any Qualified Replacement Mortgage Loan is delivered by the Sponsor to the Trust pursuant to Section 2.2(b), Section 3.3(c) or Section 3.4 hereof, the Sponsor shall be obligated to take the actions described in Section 3.4(b) with respect to such Qualified Replacement Mortgage Loan upon the discovery by any of the Noteholders, the Master Servicer, the Sponsor, the Insurer, or the Indenture Trustee that the representations and warranties set forth in Section 3.3(a) 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 Insurer in the related Qualified Replacement Mortgage Loan are materially and adversely affected. (e) It is understood and agreed that the covenants set forth in this Section 3.4 shall survive the pledge of the Mortgage Loans (including the Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of the Trust. ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS Section 4.1 Master Servicer and Sub-Servicers. (a) Advanta Mortgage Corp. USA agrees to act as the Master Servicer and to perform all servicing duties under this Agreement subject to the terms hereof. (b) The Master Servicer shall service and administer the Mortgage Loans on behalf of the Indenture Trustee and the Insurer and shall have full power and authority, acting alone or through one or more Sub-Servicers, to do any and all things in connection with such servicing and administration which it may deem necessary or desirable. Without limiting the generality of the foregoing, the Master Servicer, in its own name or 28 33 the name of a Sub-Servicer, may, and is hereby authorized and empowered by the Indenture Trustee to, execute and deliver, on behalf of itself, the Noteholders, the Insurer and the Indenture Trustee or any of them, 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 the related Mortgaged Properties, the Mortgage Insurance Policies and Accounts related thereto and the properties subject to the Mortgages in accordance with the terms of this Agreement. Upon the execution and delivery of this Agreement, and from time to time as may be required thereafter, the Indenture Trustee shall furnish the Master Servicer or its Sub-Servicers with any powers of attorney and such other documents as may be necessary or appropriate to enable the Master Servicer to carry out its servicing and administrative duties hereunder. In servicing and administering the Mortgage Loans, the Master Servicer shall employ procedures consistent with Accepted Servicing Practices and in a manner consistent with recovery under any Mortgage Insurance Policy required to be maintained by the Master Servicer pursuant to this Agreement. Costs incurred by the Master Servicer in effectuating the timely payment of taxes and assessments on the property securing a Credit Line Agreement and foreclosure costs may be added by the Master Servicer to the amount owing under such Credit Line Agreement where the terms of such Credit Line Agreement so permit; provided, however, that the addition of any such cost shall not be taken into account for purposes of calculating the principal amount of the Credit Line Agreement and the Mortgage Loan secured by the Credit Line Agreement or distributions to be made to Noteholders. Such costs shall be recoverable by the Master Servicer pursuant to Section 4.10 and 4.13. (c) [reserved] (d) The relationship of the Master Servicer (and of any successor to the Master Servicer as servicer under this Agreement) to the Indenture Trustee under this Agreement is intended by the parties to be that of an independent contractor and not that of a joint venturer, partner or agent. In the event that the rights, duties and obligations of the Master Servicer are terminated hereunder, any successor to the Master Servicer may (with the written consent of the Insurer), to the extent permitted by applicable law, terminate the existing Sub-Servicer arrangements with any Sub-Servicer or assume the terminated Master Servicer's rights under such Sub-Servicing arrangements (with the written consent of the Insurer), which termination or assumption will not violate the terms of such arrangements. (e) Subject to Sections 4.13 and 4.14, the Master Servicer, in its own name, or a Sub-Servicer, in its own name, may be authorized and empowered by the Indenture Trustee, (i) to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect owner of any Mortgaged Property on behalf of the Indenture Trustee and (ii) to hold title to any Mortgaged Property upon such foreclosure or deed in lieu of foreclosure on behalf of the Indenture Trustee; provided, however, that Section 29 34 4.14(a) shall constitute a power of attorney from the Indenture Trustee to the Master 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 furnish the Master Servicer and 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 and such 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 Mortgaged Property shall be recoverable by the Master Servicer or such Sub-Servicer to the extent described in Section 4.10 herein and in Section 8.6(b)(ix) of the Indenture. Section 4.2 Modifications. The Master Servicer may consent to any modification of the terms of any Credit Line Agreement 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 Mortgaged Property, the timing of receipt of any payments required hereby or the interests of Noteholders or the Insurer, unless the Insurer consents in writing, provided, however, that, if the Insurer has not given its written consent within five (5) Business Days after notice from the Master Servicer, the Insurer shall be deemed to have given its consent to such modification; provided, however, that such notice and consent shall not be required in the event that the Master Servicer determines, in its reasonable discretion that such modification is legally required to be made prior to such five day period in which case the Master Servicer shall give the Insurer immediate notice of such action. In accordance with Accepted Servicing Practices and subject to the limitations set forth in Section 4.1, the Master Servicer may in its discretion: (a) waive any assumption fees, late payment charges, charges for checks returned for insufficient funds, prepayment fees, if any, or the fees which may be collected in the ordinary course of servicing the Mortgage Loans, (b) 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 be permitted to reschedule the payment of delinquent payments more than one time in any twelve consecutive months with respect to any Mortgagor and such modifications shall not be made in excess of 10% of the aggregate of the Cut-Off Date 30 35 Pool Balance without the prior written consent of the Insurer; provided, however, that, if the Insurer has not given its written consent within five (5) Business Days after notice from the Master Servicer, the 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 reasonable discretion that such modification is legally required to be made prior to such five day period, in which case the Master Servicer shall give the Insurer immediate notice of such action. (c) 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 comparable mortgage loans subject to the Civil Relief Act, (d) extend the maturity date of any Mortgage Loan in connection with the extension of the related Draw Period (provided, however, that in no event may any such maturity date be extended to a date which is more than 12 months after the original maturity date without the Insurer's written approval or to a date which is later than the Payment Date occurring in January 2023). (e) [reserved] (f) The Master Servicer may, without prior approval from the Rating Agencies or the Insurer (but subject to the 10% limitation described below), increase the Credit Limits on Mortgage Loans provided that (i) new appraisals are obtained and the Combined Loan-to-Value Ratios of the Mortgage Loans after giving effect to such increase are less than or equal to the Combined Loan-to-Value Ratios of the Mortgage Loans as of the related Cut-Off Date, (ii) such increases are consistent with the applicable Originator's underwriting policies, (iii) the related Mortgagor has made Draws on the Credit Line Agreement in the past twelve months and has made timely payments and (iv) the Master Servicer receives verbal verification of employment of the related Mortgagor. In addition, the Master Servicer may increase the Credit Limits on Mortgage Loans having aggregate balances of up to 5% of the Pool Principal Balance without obtaining new appraisals provided that (i) the increase in the Credit Limit does not cause the Combined Loan-to-Value Ratios of the Mortgage Loans to exceed 100%, (ii) the increase is consistent with the applicable Originator's underwriting policies, (iii) the related Mortgagor has used the Credit Line Agreement in the past twelve months and has made timely payments, (iv) the Master Servicer receives verbal verification of employment of the related Mortgagor and (v) the 10% limitation described below is satisfied. (g) The Master Servicer or the related Originator acting on behalf of the Master Servicer may, without prior approval from the Insurer, solicit Mortgagors for a reduction in Coupon Rates of no more than 0.50%; provided that the Master Servicer can only reduce such Coupon Rates in accordance with the 10% limitations described below. Any such solicitations shall not result in a reduction in the weighted average Coupon Rate of the Mortgage Loans by more than 2.5 basis points after taking into account any such prior reductions. 31 36 (h) Subject to the 10% limitations on modifications described below, the Master Servicer shall have the right to approve applications of Mortgagors for consent to partial releases of Mortgages (with the written consent of the Insurer), alterations to Mortgaged Properties; and removal, demolition or division of Mortgaged Properties. If the Insurer has not given its written consent within five (5) Business Days after notice from the Master Servicer, the Insurer shall be deemed to have given its consent to such modification; provided, however, that such notice and consent shall not be required in the event that the Master Servicer determines, in its reasonable discretion that such modification is legally required to be made prior to such five day period, in which case the Master Servicer shall give the Insurer immediate notice of such action. No application for approval shall be considered by the Master Servicer unless: (x) the provisions of the related Credit Line Agreement and Mortgage have been complied with; (y) the Combined 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 Insurer) and the Mortgagor's debt-to-income ratio after any release does not exceed the maximum Combined Loan-to-Value Ratio and debt-to-income ratio specified as the then-current maximum levels under the related Originator's underwriting guidelines for a similar credit grade borrower and (z) the lien priority of the related Mortgage is not adversely affected. (i) The Master Servicer shall have the right to sell, in whole-loan, third-party sales, any Delinquent Mortgage Loan if the Master Servicer believes that such means of disposition will provide the largest recovery. Except as otherwise permitted under this Agreement, the Master Servicer may not, without the prior written consent of the Insurer (which consent shall not be unreasonably delayed), forgive any Mortgage Loan payments, impair any lien position on the Mortgage Loans or extend the maturity of any Mortgage Loan. In addition, unless the Insurer consents in writing, the Master Servicer may not modify Mortgage Loans having an aggregate Principal Balance in excess of 10% of the Cut-Off Date Pool Balance. Section 4.3 Servicer Report On the tenth day of each month, the Master Servicer shall send to the Indenture Trustee a report (the "Servicer Report"), in the form of a computer tape, detailing the aggregate 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. Section 4.4 Liability of Master Servicer. (a) The Master Servicer shall not be relieved of its obligations under this Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions of this Agreement relating to agreements or arrangements between the Master Servicer and a Sub-Servicer or otherwise, and the Master Servicer shall be obligated to the same extent 32 37 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 or any Sub-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, Holding 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, Holding 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 4.4(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, Holding and the Trust pursuant to this Section 4.4(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 4.4(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 4.4(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, Holding or the Trust pursuant to this Section 4.4(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 8.2 of the Trust Agreement and the Holding Trust Agreement. Section 4.5 Sub-Servicing Agreements Between Master Servicer and Sub-Servicers. The Master Servicer may enter into Sub-Servicing Agreements for any servicing and administration of Mortgage Loans with any institution (including affiliates) which is 33 38 acceptable to the Insurer and is in compliance with the laws of each state necessary to enable it to perform its obligations under such Sub-Servicing Agreement. By delivery of the Policy, the Insurer is deemed to have approved the respective Originators as Sub-Servicers hereunder. The Master Servicer shall give notice to the Indenture Trustee, the Insurer and the Rating Agencies of the appointment of any Sub-Servicer and shall furnish to the Insurer and the Rating Agencies a copy of the Sub-Servicing Agreement (unless the Sub-Servicer is an affiliate of the Master Servicer). 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. Section 4.6 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 to either directly service the related Mortgage Loans itself or enter into a Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under Section 4.5. Section 4.7 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 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 4.8. Section 4.8 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, 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. 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. Section 4.9 Principal and Interest Account. (a) The Master Servicer and/or each Sub-Servicer, as applicable, shall establish in the name of the Trust for the benefit of the Noteholders and the Insurer and maintain at 34 39 one or more Designated Depository Institutions the Principal and Interest Account, which may be separate accounts or a single account with sub-accounts. Subject to Subsections (c) and (e) below, the Master Servicer and any Sub-Servicer shall deposit all receipts related to the Mortgage Loans to the Principal and Interest Account on a daily basis (but no later than the second Business Day after receipt). Such receipts shall include Net Liquidation Proceeds, including net recoveries from the disposition or other turning to account of Charged-Off Mortgage Loans. On the Closing Date, the Sponsor shall cause the Master Servicer to deposit within five Business Days after the Closing Date to the Principal and Interest Account all principal and interest collected on the Mortgage Loans on and after the related Cut-Off Dates. 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 Credit Line Agreement. (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 (as defined in the Indenture). 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 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. The Master Servicer shall deposit the amount of any investment losses immediately into the Principal and Interest Account as realized. (c) Subject to Subsection (e) below, the Master Servicer shall deposit to the Principal and Interest Account all principal and interest collected on the Mortgage Loans received on or after the related Cut-Off Dates, including any Prepayments and Net Liquidation Proceeds, all Loan Reacquisition Prices and Substitution Amounts received or paid by the Master Servicer with respect to the Mortgage Loans and other recoveries or amounts related to the Mortgage Loans received by the Master Servicer, together with any amounts which are reimbursable from the Principal and Interest Account, but net of (i) the Servicing Fee with respect to each Mortgage Loan and other servicing compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii) principal (including Prepayments) collected on the Mortgage Loans prior to the related Cut-Off Dates, (iii) interest collected on the Mortgage Loans prior to the related Cut-Off Dates and (iv) Foreclosure Profits. (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; 35 40 (b) to pay to itself from any funds in the Principal and Interest Account with respect to the Mortgage Loans any accrued and unpaid Servicing Fees with respect to Mortgage Loans and reimburse itself pursuant to Section 4.10 hereof for unreimbursed Servicing Advances and Servicing Advances which have been deemed Nonrecoverable Advances; (c) to withdraw investment earnings on amounts on deposit in the Principal and Interest Account; (d) to withdraw amounts that have been deposited to the Principal and Interest Account in error; (e) to clear and terminate the Principal and Interest Account following the termination of the Trust Estate pursuant to Article X or XII of the Indenture; and (f) to invest in Eligible Investments. (ii) On each Remittance Date the Master Servicer shall remit to the Indenture Trustee by wire transfer, or otherwise make funds available in immediately available funds, the Interest Remittance Amount and the Principal Remittance Amount. (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 Insurer, Moody's and S&P, then the requirement to maintain the Principal and Interest Account at a Designated Depository Institution may be waived by an instrument signed by the Insurer, S&P and Moody's, and the Master Servicer may be allowed to co-mingle with its general funds the amounts otherwise required to be deposited to the Principal and Interest Account and make monthly deposits to the Note Account on such terms and subject to such conditions as the Insurer, Moody's and S&P may permit. Section 4.10 Servicing Advances. The Master Servicer will pay all "out-of-pocket" costs and expenses incurred in the performance of its servicing obligations, including, but not limited to, the cost of (i) Preservation Expenses, (ii) the cost of any enforcement or judicial proceedings, including (a) foreclosures, and (b) other legal actions and costs associated herewith that potentially affect the existence, validity, priority, enforceability or collectibility of the Mortgage Loans, including collection agency fees and costs of pursuing or obtaining personal judgments, garnishments, levies, attachment and similar actions, (iii) the cost of the conservation, management, liquidation, sale or other disposition or any Mortgaged Property acquired in satisfaction of the related Mortgage Loan including reasonable fees paid to any independent contractors in connection therewith, and (iv) advances to keep senior liens current, unless with respect to any of the foregoing the Master Servicer has determined that such advance would constitute a Nonrecoverable Advance. Each such 36 41 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 Loans, from Liquidation Proceeds realized upon the liquidation of the related Mortgage Loan and from Mortgage Insurance Proceeds, and (y) as provided in Section 8.6(c)(x) of the Indenture. Section 4.11 Maintenance of Insurance. (a) The Master Servicer shall cause to be maintained with respect to each Mortgage Loan a hazard insurance policy with a generally acceptable carrier that provides for fire and extended coverage which may be in the form of a blanket policy as described in clause (c) below, 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 Credit Limit of the Mortgage Loan or (ii) the maximum insurable value of the Mortgaged Property. (b) If any Mortgage Loan at the time of origination relates to a Mortgaged 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 a flood insurance policy in a form meeting the requirements of the current guidelines of the Federal Insurance Administration with a generally acceptable carrier (which may be in the form of a blanket policy as described in clause (c) below) in an amount representing coverage, and which provides for a recovery by the Master Servicer on behalf of the Trust of Mortgage Insurance Proceeds relating to such Mortgage Loan of not less than the least of (i) the Credit Limit of the Mortgage Loan or (ii) 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 Insurer out of the Master Servicer's own funds for any loss to the Trust and the Insurer resulting from the Master Servicer's failure to maintain the insurance required by this Section; provided, however, that in no event shall the Master Servicer be required to maintain a flood insurance policy in an amount greater than 100% of the value of the related Mortgaged Property. It is understood and agreed that such insurance shall be with insurers approved by the Master Servicer and that no earthquake or other additional insurance is to be required of any Mortgagor or to be maintained on property acquired in respect of a defaulted loan, other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance. Any cost incurred by the Master Servicer in maintaining any such insurance shall be added to the amount owing under the Mortgage Loan where the terms of the Credit Line Agreement so permit; provided, however, that the addition of any such cost shall not be taken into account for purposes of calculating the principal amount of the Credit Line Agreements or the distributions to be made to the Noteholders. Such costs shall be considered a Servicing Advance and shall be recoverable by the Master Servicer pursuant to Section 4.10. 37 42 (c) In the event that the Master Servicer shall obtain and maintain a blanket policy insuring against fire, flood and hazards of extended coverage on all of the Mortgage Loans as set forth above, then, to the extent such policy names the Master Servicer as loss payee and provides coverage in an amount equal to the aggregate Credit Limit 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, hazard and flood insurance coverage under this Section 4.11, it being understood and agreed that such 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 Mortgaged Property a policy complying with the preceding paragraphs 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 the preceding paragraphs of this Section 4.11 and the amount paid under such blanket policy. Upon the request of the Indenture Trustee or the Insurer, the Master Servicer shall cause to be delivered to the Indenture Trustee or the Insurer, a certified true copy of such policy. Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements. Except as provided in Section 4.14(b), when a Mortgaged 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 Credit Line Agreement; 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 materially and adversely affect the interest of the Noteholders or of the Insurer. In such event, the Master Servicer shall enter into an assumption and modification agreement (the terms of which will be consistent with the 10% limitation on modifications described in Section 4.2(h) above) with the person to whom such property has been or is about to be conveyed, pursuant to which such person becomes liable under the Credit Line Agreements and, unless prohibited by applicable law or this Agreement or any of the agreements, guaranties or assignments relating to the Mortgage Loans contained in the Mortgage Files, 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 Credit Line Agreement; 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 Insurer. 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 38 43 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 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 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 anything in this Section 4.12 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 the Mortgaged Properties relating to defaulted Mortgage Loans as to which no satisfactory arrangements can be made for collection of Delinquent payments. If the Master Servicer determines not to bring or to terminate foreclosure proceedings, it will determine in accordance with the Accepted Servicing Practices whether or not to seek a judgment against the Mortgagor. In connection with such foreclosure or other conversion, the Master Servicer shall follow Accepted Servicing Practices. Any amounts advanced pursuant to this Section 4.13 shall constitute "Servicing Advances" within the meaning of Section 4.10 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 a Mortgaged Property in 39 44 determining whether to foreclose upon or otherwise comparably convert the ownership of such Mortgaged Property. (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, whereupon such Mortgage Loan shall become a "Liquidated Mortgage Loan" and shall promptly deliver to the Insurer the Master Servicer's customary liquidation report (each, a "Liquidation Report") with respect to such Mortgage Loan. Any net recoveries from a Liquidated Mortgage Loan shall constitute property of the Trust and shall be deposited by the Master Servicer in the Principal and Interest Account, all in accordance with the provisions of this Agreement. Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files. (a) Upon the payment in full of the Principal Balance 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 of a notification that payment in full will be escrowed in a manner customary for such purposes, the Master Servicer shall deliver to the Indenture Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master Servicer's Trust Receipt, the Indenture Trustee shall promptly release the related Mortgage File, in trust to (i) the Master Servicer, or (ii) an escrow agent for the Master Servicer. Upon any such payment in full, or the receipt of such notification that such funds have been placed in escrow, the Master Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee and the mortgagee under the Mortgage which secured the Credit Line Agreement, an instrument of satisfaction (or assignment of Mortgage without recourse) regarding the Mortgaged 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, as the case may be, the Master 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; in such event, the Indenture Trustee shall execute and acknowledge such satisfaction or assignment, as the case may be, 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, upon request of the Master Servicer and delivery to the Indenture Trustee of a Master Servicer's Trust Receipt in the form of Exhibit F hereto, release the related Mortgage File to the Master Servicer and shall execute such documents as shall be 40 45 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 there shall not be released and unreturned at any one time more than 25 Mortgage Files. The Indenture Trustee shall complete in the name of the Indenture Trustee any endorsement in blank on any Credit Line Agreement prior to releasing such Credit Line Agreement to the Master Servicer. Such receipt shall obligate the Master Servicer to return the Mortgage File to the Indenture Trustee when the need therefor by the Master Servicer no longer exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt of the liquidation information, in physical or electronic form, a copy of the Master Servicer's Trust Receipt shall be released by the Indenture Trustee to the Master 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 Subsections (a) and (b) may be superseded by any waiver of the Document Delivery Requirement as may be given by the Insurer, Moody's and S&P pursuant to Section 2.1(k) 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) within 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 above 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, or approved, as applicable, 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 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 seven 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 pursuant to the provisions of this Agreement. Additional servicing compensation in the form of prepayment charges, Termination Fees, release fees, bad check charges, assumption fees, 41 46 late payment charges, or any other servicing-related fees, Foreclosure Profits, Net Liquidation Proceeds not required to be deposited in the Principal and Interest Account pursuant to Section 4.9(c) 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, Insurer, S&P and Moody's, on or before the fifteenth of April of each year, commencing in 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 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 fifteenth of April of each year, commencing in 2000, the Master Servicer, at its own expense, shall cause to be delivered to the Indenture Trustee, the Insurer, S&P and Moody's a letter or letters of a firm of independent, nationally recognized certified public accountants reasonably acceptable to the Insurer stating that such firm has, with respect to the Master Servicer's overall servicing operations (i) performed applicable tests in accordance substantially in compliance with the testing procedures as set forth in Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees, (ii) examined such operations substantially in compliance with the requirements of the Uniform Single Attestation 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 Insurer and the agents and examiners of each of the foregoing (when accompanied by each of the foregoing) 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. Upon any change in the format of the computer tape maintained by the Master Servicer in respect of the Mortgage Loans, the Master Servicer shall deliver a copy of such computer tape to the Indenture Trustee and in addition shall provide a copy of such 42 47 computer tape to the Indenture Trustee and the Insurer at such other times as the Indenture Trustee or the Insurer may reasonably request. 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 Insurer, which such consent shall not be unreasonably withheld; provided, however, that any assignee must meet the eligibility requirements set forth in Section 5.1(f) 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 any affiliate. Notice of any such assignment shall be given by the Master Servicer to the Indenture Trustee, the Insurer, Moody's and S&P. Section 4.20 Resignation of the Master Servicer. Subject to Section 5.1(c), the Master Servicer shall not resign from the obligations and duties hereby imposed on it except by mutual written consent of the Sponsor, the Master Servicer, the Insurer and the Indenture Trustee or 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 Insurer. ARTICLE V SERVICING TERMINATION Section 5.1 Events of Servicing Termination. (a) If any one of the following events ("Event of Servicing Termination") shall occur and be continuing: (i) The Master Servicer shall fail to deliver to the Indenture Trustee any proceeds or required payment, which failure continues unremedied for three Business Days following written notice to an Authorized Officer of the Master Servicer from the Indenture Trustee or from the Insurer or Noteholders evidencing Percentage Interests aggregating not less than 25%. (ii) The Master Servicer shall (I) apply for or consent to the appointment of a receiver, Indenture Trustee, liquidator or custodian or similar entity with respect to itself or its property, (II) admit in writing its inability to pay its debts generally as they become due, (III) make a general assignment for the benefit of creditors, (IV) be adjudicated a bankrupt or insolvent, (V) commence a voluntary case under the federal bankruptcy laws of the United States of America 43 48 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 (VI) take corporate action for the purpose of effecting any of the foregoing. (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 Indenture 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; or (iv) The Master Servicer shall fail to cure any breach of any of its representations and warranties set forth in Section 3.2 or perform any covenants hereunder, which failure materially and adversely affects the interests of the Noteholders or Insurer for a period of 30 days after the Master Servicer's discovery or receipt of notice thereof from the Indenture Trustee, the Insurer, or Noteholders evidencing not less than 25% of the Note Balance; provided, however, that if the Master Servicer can demonstrate to the reasonable satisfaction of the Insurer that it is diligently pursuing remedial action, then the cure period may be extended with the written consent of the Insurer. (v) The Master Servicer shall fail to make any required Servicing Advance which failure continues for thirty (30) days or more after written notice from the Insurer if such failure has a material and adverse affect on Net Liquidation Proceeds, in the sole determination of the Insurer. then, and in each and every such case, so long as an Event of Servicing Termination shall not have been remedied by the Master Servicer, either the Indenture Trustee or the Noteholders evidencing not less than 51% of the Note Balance in each case with the written consent of the Insurer, or the Insurer, by notice then given in writing to the Master Servicer (and to the Indenture Trustee if given by the Insurer of the Noteholders) may terminate all of the rights and obligations of the Master Servicer as servicer under this Agreement. Any such notice to the Master Servicer shall also be given to each Rating Agency and the Insurer. On and after the receipt by the Master Servicer of such written notice, all authority and power of the Master Servicer under this Agreement, whether with respect to the Notes or the Mortgage Loans or otherwise, shall pass to and be vested in the Indenture Trustee pursuant to and under this Section 5.1 and, without 44 49 limitation, the Indenture Trustee is hereby authorized and empowered to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement of each Mortgage Loan and related documents, or otherwise. The Master Servicer agrees to cooperate with the Indenture Trustee in effecting the termination of the responsibilities and rights of the Master Servicer hereunder, including, without limitation, the transfer to the Indenture Trustee for the administration by it of all cash amounts that shall at the time be held by the Master Servicer and to be deposited by it in the Note Account, or that have been deposited by the Master Servicer in the Note Account or thereafter received by the Master Servicer with respect to the Mortgage Loans. All reasonable costs and expenses (including attorneys' fees) incurred in connection with amending this Agreement to reflect such succession as Master Servicer pursuant to this Section 5.1 shall be paid by the predecessor Master Servicer (or if the predecessor Master Servicer is the Indenture Trustee, the initial Master Servicer) upon presentation of reasonable documentation of such costs and expenses. Nothing herein shall relieve the Master Servicer from using its best efforts to perform its respective obligations in a timely manner in accordance with the terms of this Agreement and the Master Servicer shall provide the Indenture Trustee, the Sponsor, the Insurer and the Noteholders with an Officer's Certificate giving prompt notice of such failure or delay by it, together with a description of its efforts to so perform its obligations. The Master Servicer shall immediately notify the Indenture Trustee and the Insurer in writing of any Events of Servicing Termination. (b) In addition to the foregoing, the Insurer may remove the Master Servicer upon the occurrence of an "Insurance Agreement Event of Servicing Termination" under the Insurance Agreement. (c) No removal or resignation of the Master Servicer shall become effective until the Indenture Trustee or a successor servicer acceptable to the Insurer shall have assumed the Master Servicer's responsibilities and obligations in accordance with this Section. (d) 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. (e) 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. (f) 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 45 50 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 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 $5,000,000, as determined in accordance with generally accepted accounting principles, and acceptable to the 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 4.9 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 Originator. (g) 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 full amount of the aggregate Servicing Fees as servicing compensation, together with the other servicing compensation in the form of assumption fees, late payment charges or otherwise as provided in Sections 4.9 and 4.15. Within thirty 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. (h) 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 46 51 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. (i) The Master Servicer which is being removed or is resigning shall give notice to the Mortgagors and to Moody's and S&P of the transfer of the servicing to the successor. (j) The Indenture Trustee shall give notice to the Insurer, Moody's and S&P and to the Noteholders of the occurrence of any event specified in Section 5.1(a) of which the Indenture Trustee has actual knowledge. (k) The Indenture Trustee or any other successor Master Servicer, upon assuming the duties of Master Servicer hereunder, shall immediately make all Servicing Advances which the Master Servicer has theretofore failed to pay 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 Servicing Advances if, in the Indenture Trustee's reasonable good faith judgment, such Servicing Advances will ultimately be recoverable from the related Mortgage Loans. Section 5.2 Inspections by Insurer; Errors and Omissions Insurance. (a) At any reasonable time and from time to time upon reasonable notice, the 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. (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 5.3 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 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, 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 meets the qualifications set forth in Section 5.1(f). 47 52 Section 5.4 Notification 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 Insurer and each Rating Agency. Section 5.5 Notices of Material Events. The Master Servicer shall give prompt notice to the Insurer, the Indenture Trustee, Moody's and S&P of the occurrence of any of the following events: (a) Any default or any fact or event which results in the occurrence of a default by the Sponsor, any Originator or the Master Servicer under any Operative Document or would constitute a material breach of a representation, warranty or covenant under any Operative Document. (b) The submission of any claim or the initiation of any legal process, litigation or administrative or judicial investigation against any Originator, 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 of such Originator's, 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 any Originator, 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 such Originator, 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 Originator's, the Sponsor's, the Master Servicer's or AMHC's business that such Originator, the Sponsor, the Master Servicer or AMHC is to cease and desist, or to undertake any practice, program, procedure or policy employed by such Originator, 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 such Originator's, 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 such Originator, the Sponsor, the Master Servicer or AMHC. 48 53 ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER Section 6.1 Administrative Duties with Respect to the Indenture The Master Servicer shall perform all its duties and the duties of the Trust 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 and shall advise the Owner Trustee when action is necessary to comply with the Trust's duties under the Indenture. 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 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 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 Certificateholders' interest in the Trust 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. 49 54 (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 5.1(a), (b), (c) and (d) of the Trust Agreement with respect to, among other things, accounting and reports with respect to the Certificateholders' interest in the Trust. (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 Insurer) and shall be, in the Master Servicer's opinion, no less favorable to the Trust or the 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 within a reasonable time before the taking of such action, the Master Servicer shall have notified the Owner Trustee and the Insurer of the proposed action and the Owner Trustee and the Insurer shall have consented in writing thereto 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 appointment of Successor Servicers or the consent to the assignment by the Note Registrar, 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 to the Originator under the Operative Documents, (2) sell the Trust Property pursuant to Section 5.6 of the Indenture, (3) take any other action that the Trust directs the Master Servicer not to take on its behalf (unless the Insurer so 50 55 directs) or (4) in connection with its duties hereunder assume any indemnification obligation of any other Person. (d) Responsibility. The Indenture Trustee or any successor Master Servicer shall not be responsible for any obligations or duties of the Master Servicer under this Section 6.1. Section 6.2 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 the Trust and the Indenture Trustee at any time during normal business hours. Section 6.3 Additional Information to be Furnished to the Trust The Master Servicer shall furnish to the Trust, the Indenture Trustee and the Insurer from time to time such additional information regarding the Mortgage Loans as the Trust, the Indenture Trustee or the Insurer shall reasonably request. ARTICLE VII MISCELLANEOUS Section 7.1 Compliance Certificates and Opinions. Upon any application or request by the Sponsor, the Insurer or the Noteholders to the Indenture Trustee to take any action under any provision of this Agreement, the Sponsor or the Noteholders, as the case may be, shall furnish to the Indenture Trustee a certificate stating that all conditions precedent, if any, 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. Except as otherwise specifically provided herein, each certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto. (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; and 51 56 (c) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 7.2 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 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 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 7.3 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 the Insurer has consented thereto in writing, and, where it is hereby expressly required, to the Sponsor. 52 57 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. (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. (c) The ownership of the Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by any Noteholder shall bind the Noteholder of every Note 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 7.4 Notices, etc. to Indenture Trustee. Any request, demand, authorization, direction, notice, consent, waiver or act of the Noteholders 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 Noteholder, the Insurer or by the Sponsor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Indenture Trustee at its Corporate Trust Office as set forth in the Indenture. Section 7.5 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 Note 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. 53 58 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 7.6 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 7.7 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 7.8 Benefits of Agreement. Nothing in this Agreement or in the Notes, expressed or implied, shall give to any Person, other than the Noteholders, the Insurer and the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 7.9 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. 54 59 Section 7.10 Governing Law. THIS AGREEMENT 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 7.11 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 7.12 Usury. The amount of interest payable or paid on any Note under the terms of this Agreement 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 Noteholder inadvertently in error by the Indenture Trustee acting on behalf of the Trust and the Noteholder 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 Noteholder, apply the excess to the payment of principal of such Note, if any, remaining unpaid in any event, the Indenture Trustee shall not be responsible for any repayment of such excess payments. In addition, all sums paid or agreed to be paid to the Indenture Trustee for the benefit of Noteholders of Notes 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 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 approval of the Insurer but without the giving of notice to or the receipt of the consent of the Noteholders, amend this Agreement, and the Indenture Trustee shall consent to such amendment, for the purpose of (i) curing any ambiguity, or correcting or supplementing any provision hereof which may be inconsistent with any other provision hereof, or to add provisions hereto which are not inconsistent with the provisions hereof, or (ii) complying with the requirements of the Code and the regulations proposed or promulgated thereunder; provided, however, that any such action shall not, (i) as evidenced in writing from the Rating Agencies delivered to the Indenture Trustee, reduce the then-current rating on the Notes or (ii) as 55 60 evidenced by an opinion of counsel delivered to the Indenture Trustee, materially and adversely affect the interests of any Noteholder (without its written consent). (b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any time and from time to time, with the prior written approval of the Insurer but without the giving of notice to or the receipt of the consent of the Noteholders, amend this Agreement, and the Indenture Trustee shall consent to such amendment, for the purpose of changing the definition of "Specified Overcollateralization Amount" (as defined in the Insurance Agreement); provided, however, that no such change shall affect the weighted average life of the Notes (assuming an appropriate prepayment speed as determined by the Underwriters as evidenced in writing) by more than five percent, as determined by the Underwriters. (c) In addition to (a) and (b) 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 Insurer and not less than a majority of the Percentage Interest represented by the Notes then Outstanding, for the purpose of adding any provisions or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders hereunder; provided, however, that no such amendment shall (a) change in any manner the amount of, or change the timing of, payments which are required to be distributed to any Noteholder without the consent of such Noteholder or (b) reduce the aforesaid percentages of Percentage Interests which are required to consent to any such amendments, without the consent of all Noteholders then Outstanding. (d) The Insurer, the Noteholders, Moody's and S&P 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 Insurer. The Insurer is a third-party beneficiary of this Agreement. Any right conferred to the Insurer shall be suspended during any period in which the 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 any period of suspension the Insurer's rights hereunder shall vest in the Noteholders of the Notes 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 Insurer has been reimbursed for all payments made pursuant to the Policy to which it is entitled hereunder, the Insurer's rights hereunder shall terminate. Except at such time as an Insurer Default has occurred and is continuing, the Insurer shall be deemed the 100% Noteholder for purposes of all voting rights, consents, directions, notices and waivers hereunder. 56 61 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. 3 Park Plaza Irvine, CA 92614 Attention: ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B Tel: (949) 253-7575 Fax: (949) 253-7577 The Sponsor: Advanta Conduit Receivables, Inc. 10790 Rancho Bernardo Drive San Diego, CA 92127 Attention: Tel: (858) 676-3099 Fax: (858) 676-3024 with a copy addressed to the attention of the General Counsel at the same address. The Master Servicer: Advanta Mortgage Corp. USA 10790 Rancho Bernardo Drive San Diego, CA 92127 Attention: Senior Vice President, Loan Service Tel: (858) 676-3099 Fax: (858) 674-676-3024 The Insurer: Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: Structured Finance Department-MBS Fax: (212) 363-1459 Confirmation: (212) 668-0340 In each case in which notice or other communication to the Insurer refers to an Event of Servicing Termination, a claim on the Policy or with respect to which failure on 57 62 the part of the 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". Moody's: Moody's Investors Service 99 Church Street New York, New York 10007 Attention: The Home Equity Monitoring Department S&P: Standard & Poor's Ratings Group 55 Water Street New York, New York 10041 Attention: Mortgage Surveillance Group The Trust: Advanta Revolving Home Equity Loan Trust 1999-B 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. [Signature Page Follows] 58 63 IN WITNESS WHEREOF, the parties hereto 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. By:_____________________________________________ Name: Title: ADVANTA MORTGAGE CORP. USA By:_____________________________________________ Name: Title: ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_____________________________________________ Name: Title: ADVANTA HOLDING TRUST 1999-B By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_____________________________________________ Name: Title: BANKERS TRUST COMPANY OF CALIFORNIA, N.A. not in its individual capacity but solely as Indenture Trustee By:_____________________________________________ Name: Title: C-1 64 EXHIBIT B [Reserved] B-1 65 EXHIBIT C [Reserved] C-1 66 EXHIBIT D FORM OF 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 September 1, 1999 (the "Sale and Servicing Agreement"), by and among 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-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Trust, and the Indenture Trustee, hereby acknowledges receipt of the items delivered to it by the Sponsor with respect to the Mortgage Loans. The Schedule of Mortgage Loans is attached to this Receipt. The Indenture Trustee hereby additionally acknowledges that it shall review such items as required by Section 2.2(a) of the Sale and Servicing Agreement and shall otherwise comply with Section 2.2(b) of the Sale and Servicing Agreement as required thereby. BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Indenture Trustee By:___________________________________ Name: Title: Dated:______________ D-1 67 EXHIBIT E FORM OF 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 Indenture Trustee, pursuant to that certain Sale and Servicing Agreement, dated as of September 1, 1999 (the "Sale and Servicing Agreement"), by and among 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-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Trust, and the Indenture Trustee; and WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2(a) of the Sale and Servicing Agreement, to review the Files relating to the Pool within a specified period following the Closing Date and Transfer Date 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 2.2(b) of the Sale and Servicing Agreement; and WHEREAS, Section 2.2(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, the Indenture Trustee has determined that as to each Mortgage Loan listed in the Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in such Pool Certification as not covered by such Pool Certification), (i) all documents required to be delivered to it (contained in a Mortgage File) pursuant to this Agreement are in its possession and (ii) such documents have been reviewed by it and on their face appear to relate to such Mortgage Loan. 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. By:_______________________ Name: Title: Date:_______________ E-1 68 EXHIBIT F FORM OF MASTER SERVICER'S TRUST RECEIPT To: Bankers Trust Company of California, N.A. Three Park Plaza, 16th Floor Irvine, California 92614 Attn: Corporate Trust Date: _________________ In connection with the administration of the mortgage loans held by you as Indenture Trustee under that certain Sale and Servicing Agreement dated as of September 1, 1999 by and among Advanta Conduit Receivables, Inc., a Nevada corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as Master Servicer, Advanta Holding Trust 1999-B, Advanta Revolving Home Equity Loan Trust 1999-B, as Trust, and you (the "Agreement"), the Master Servicer hereby requests a release of the File held by you as Indenture Trustee with respect to the following described 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 reacquired pursuant to Section 3.3(c), 3.4, or 2.2(b) of the Agreement. (The Master Servicer hereby certifies that the Loan Reacquisition 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.) _______ 4. The Mortgage Loan is being foreclosed. F-1 69 _______ 5. Other. (Describe) The undersigned acknowledges that the above Mortgage File will be held by the undersigned in accordance with the provisions of the Agreement and will be returned to you, except if the Mortgage Loan has been paid in full, or purchased or substituted for by a Qualified Replacement Mortgage Loan (in which case the Mortgage File will be retained by us permanently) and except if the Mortgage Loan 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: F-2 70 EXHIBIT G FORM OF POWER OF ATTORNEY G-1 71 EXHIBIT H FORM OF SUBSEQUENT TRANSFER AGREEMENT Pursuant to this Subsequent Transfer Agreement (this "Agreement"), dated as of __________, _____, among Advanta Conduit Receivables, Inc., a Nevada corporation (the "Sponsor"), Advanta Holding Trust 1999-B ("Holding") and Advanta Revolving Home Equity Loan Trust 1999-B (the "Trust"), the Sponsor, Holding and the Trust agree to the sale by the Sponsor to Holding, and the simultaneous sale by Holding to the Trust, of the Mortgage Loans listed on the attached schedule of Mortgage Loans (the "Subsequent Mortgage Loans"). Capitalized terms are used in this Agreement as defined in Annex 1 of the Indenture, dated as of September 1, 1999 (the "Indenture"), between the Trust and Bankers Trust Company of California, N.A., as Indenture Trustee, which meanings are incorporated by reference herein. All other capitalized terms used herein shall have the meanings specified herein. Section 1. Sale of Subsequent Mortgage Loans. (a) The Sponsor does hereby sell, transfer, assign, set over and convey to Holding, without recourse, all of its right, title and interest in and to the Subsequent Mortgage Loans, and including all principal and interest collected on the Subsequent Mortgage Loans on and after the Subsequent Cut-Off Date, and the Mortgage File for each Subsequent Mortgage Loan. The Sponsor, contemporaneously with the delivery of this Agreement, has delivered or caused to be delivered to Holding the Mortgage File for each Subsequent Mortgage Loan. Simultaneously with its acquisition of the Subsequent Mortgage Loans, Holding does hereby sell, transfer, assign, set over and convey to the Trust, without recourse, all of its right, title and interest in and to the Subsequent Mortgage Loans, and including all principal and interest collected on the Subsequent Mortgage Loans on and after the Subsequent Cut-Off Date, and the Mortgage File for each Subsequent Mortgage Loan. Holding, contemporaneously with the delivery of this Agreement, has delivered or caused to be delivered to the Trust the Mortgage File for each Subsequent Mortgage Loan. The transfer to the Trust of the Subsequent Mortgage Loans identified on the Schedule of Subsequent Mortgage Loans shall be absolute and is intended by the parties hereto to constitute a sale by the Sponsor to the Trust on the Subsequent Transfer Date of all the Sponsor's right, title and interest in and to the Subsequent Mortgage Loans, and other property as and to the extent described above. In the event the transactions set forth herein shall be deemed not to be a sale, the Sponsor hereby grants to the Trust as of the Subsequent Transfer Date a security interest in all of the Sponsor's right, title and interest in, to and under the Subsequent Mortgage Loans, and such other property, to secure all of the Sponsor's obligations hereunder, and this Agreement shall constitute a security agreement under applicable law. The Sponsor agrees to take or cause to be taken such H-1 72 actions and to execute such documents, including without limitation the filing of all necessary UCC-1 financing statements and any continuation statements with respect thereto as are necessary to perfect and protect the Trust's interests in each Subsequent Mortgage Loan and the proceeds thereof. (b) The expenses and costs relating to the delivery of the Subsequent Mortgage Loans and this Agreement shall be borne by the Sponsor. Section 2. Representations and Warranties; Conditions Precedent. (a) The Sponsor hereby affirms the representations and warranties set forth in Sections 3.1 and 3.3 of the Sale and Servicing Agreement that relate to the Sponsor or the Subsequent Mortgage Loans as of the date hereof. The Sponsor hereby confirms that each of the conditions set forth in Section 2.6 of the Sale and Servicing Agreement are satisfied as of the date hereof and further represents and warrants that each Subsequent Mortgage Loan complies with the requirements of this Agreement and Section 2.6 of the Sale and Servicing Agreement. (b) The Sponsor is solvent, is able to pay its debts as they become due and has capital sufficient to carry on its business and its obligations hereunder; it will not be rendered insolvent by the execution and delivery of this Agreement or by the performance of its obligations hereunder nor is it aware of any pending insolvency; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against the Sponsor prior to the date hereof. (c) All terms and conditions of the Sale and Servicing Agreement are hereby ratified and confirmed; provided, however, that in the event of any conflict the provisions of this Agreement shall control over the conflicting provisions of the Sale and Servicing Agreement. Section 3. Recordation of Instrument. To the extent permitted by applicable law or a memorandum thereof if permitted under applicable law, this Agreement is subject to recordation in all appropriate public offices for real property records in all of the counties or other comparable jurisdictions in which any or all of the properties subject to the related Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Master Servicer at the Noteholders' expense on direction of the Insurer or Noteholders of at least 51% of the Note Balance, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the Noteholders or the Insurer or is necessary for the administration or servicing of the Subsequent Mortgage Loans. Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. G-2 73 Section 5. Counterparts. This Agreement may be executed in counterparts, each of which, when so executed, shall be deemed to be an original and together shall constitute one and the same instrument. G-3 74 Section 6. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Sponsor, Holding, the Trust and their respective successors and assigns. ADVANTA CONDUIT RECEIVABLES, INC., as Sponsor By:_______________________________________ Name: Title: ADVANTA HOLDING TRUST 1999-B By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________________ Name: Title: ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B, By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________________ Name: Title: G-4 EX-4.5 7 CERTIFICATE GUARANTY INSURANCE POLICY 1 EXHIBIT 4.5 [AMBAC letterhead] Insured Obligations: Policy Number: Advanta Revolving Home Equity Loan Trust 1999-B, AB0299BE Advanta Revolving Home Equity Loan Asset Backed Notes, Series 1999-B Premium: As specified in the endorsement attached hereto 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: September 28, 1999 Authorized Representative ------------------- EX-10.1 8 PURCHASE AGREEMENT 1 Exhibit 10.1 EXECUTION COPY PURCHASE AGREEMENT Between ADVANTA NATIONAL BANK and ADVANTA FINANCE CORP. as the Originators and ADVANTA CONDUIT RECEIVABLES, INC. as Purchaser Dated as of September 1, 1999 2 Table of Contents
Page ---- ARTICLE I Definitions...................................................................................................... 1 ARTICLE II Procedures for Purchases of Mortgage Loans; Conditions Precedent; Settlements Section 2.01. Purchase and Sale.............................................................................. 1 Section 2.02. Delivery of Documents; Purchase of Mortgage Loans.............................................. 3 Section 2.03. Survival of Representations.................................................................... 3 Section 2.04. Proceeds of Mortgage Loans..................................................................... 3 Section 2.05. Repurchased Mortgage Loans..................................................................... 4 ARTICLE III Protective Security Interest..................................................................................... 4 ARTICLE IV Representations and Warranties Section 4.01. Representations and Warranties of Originators.................................................. 5 Section 4.02. Representations and Warranties Regarding Mortgage Loans........................................ 7 Section 4.03. Representations and Warranties of Purchaser.................................................... 7 Section 4.04. Remedies for Breach of Representations and Warranties; Repurchase Obligation................... 8 ARTICLE V Covenants and Warranties of Originators Section 5.01. Affirmative Covenants.......................................................................... 9 Section 5.02. Negative Covenants............................................................................. 10 ARTICLE VI Sale of Mortgage Loans by Purchaser.............................................................................. 10 ARTICLE VII Additional Remedies.............................................................................................. 11 ARTICLE VIII Term............................................................................................................. 11
ii 3 ARTICLE IX Exclusive Benefit of Parties; Assignment......................................................................... 12 ARTICLE X Amendment; Waivers............................................................................................... 12 ARTICLE XI Execution in Counterparts........................................................................................ 12 ARTICLE XII Effect of Invalidity of Provisions............................................................................... 12 ARTICLE XIII Governing Law.................................................................................................... 13 ARTICLE XIV Notices.......................................................................................................... 13 ARTICLE XV Entire Agreement................................................................................................. 13 ARTICLE XVI Indemnities...................................................................................................... 13 ARTICLE XVII RESPA Obligations................................................................................................ 15 ARTICLE XVIII Survival......................................................................................................... 15 ARTICLE XIX Consent to Service............................................................................................... 15 ARTICLE XX Submission to Jurisdiction; Waiver of Trial by Jury.............................................................. 15 ARTICLE XXI Construction..................................................................................................... 16
iii 4 ARTICLE XXII Further Assurances............................................................................................... 16 ARTICLE XXIII Third Party Beneficiary.......................................................................................... 16 ARTICLE XXIV No Petition...................................................................................................... 16 SCHEDULES, EXHIBITS AND ANNEX Schedule I: Schedule of Mortgage Loans............................................................... I-1 Exhibit A: Mortgage Loan Representations and Warranties.............................................. A-1 Exhibit B: Form of Subsequent Transfer Agreement..................................................... B-1 Annex 1: Copy of Annex 1 to the Indenture............................................................ 1-1
iv 5 THIS PURCHASE AGREEMENT (this "Agreement") is made as of September 1, 1999 between Advanta National Bank, a national banking association ("ANB"), and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand, and Advanta Conduit Receivables, Inc., a Nevada corporation ("Purchaser"), on the other hand. ANB and AFC are sometimes individually referred to herein as an "Originator" and sometimes collectively referred to herein as the "Originators." WHEREAS, the Originators desire to sell to Purchaser, and Purchaser desires to purchase from the Originators, the Mortgage Loans, all in accordance with the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises, the mutual promises herein made and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions Except as otherwise specified herein, capitalized terms are used in this Agreement as defined in Annex 1 of the Indenture, dated as of September 1, 1999 (the "Indenture"), between Advanta Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California, N.A., as Indenture Trustee. A copy of Annex 1 of the Indenture is attached to this Agreement. Defined terms that are used only in one section or only in another definition may be omitted from the list of defined terms in Annex 1 of the Indenture. Defined terms include, as appropriate, all genders and the plural as well as the singular. ARTICLE II Procedures for Purchases of Mortgage Loans; Conditions Precedent; Settlements Section 2.01 Purchase and Sale. (a) The Originators hereby agree to sell, assign, transfer, convey and set over to Purchaser, and Purchaser hereby agrees to purchase and acquire from the Originators, without recourse (subject to the Originators' obligations herein, including any obligation to fund Additional Balances with respect to the Initial Mortgage Loans), on the Closing Date, all of the Originators' respective right, title and interest in and to (a) each Initial Mortgage Loan, including its Principal Balance as of the Initial Cut-Off Date and all principal and interest collections in respect of such Initial Mortgage Loan on or after the Initial Cut-Off Date (excluding any payments of principal and interest collected prior to the Initial Cut-Off Date); (b) each related Mortgaged Property that is acquired by foreclosure or deed in lieu of foreclosure; (c) all rights under any Mortgage Insurance Policies covering each related Mortgaged Property; (d) all proceeds with respect to the foregoing; and (e) the Mortgage File and other documents relating to the foregoing; provided, however, that neither Purchaser nor any of its Assignees (including the Trust and the Indenture Trustee) shall be deemed to assume 1 6 any obligation under any Credit Line Agreement that provides for the funding of future advances to the Mortgagor thereunder, it being understood that any such obligation shall remain with the Originators and that neither Purchaser nor any of its Assignees (including the Trust and the Indenture Trustee) shall be required or permitted to fund any such future advances. As full consideration for the Originators' sale, transfer, assignment and conveyance to Purchaser of all of their respective right, title and interest in and to the Initial Mortgage Loans and other properties specified above, on the Closing Date, Purchaser shall (x) pay to or upon the order of the Originators that amount in immediately available funds equal to the Originators' pro rata share of the proceeds of the sale of the Notes, net of any underwriting discounts and other transaction costs, and (y) direct the issuance of the Certificates to or upon the order of the Originators, all in such relative proportions as the Originators shall jointly determine on or before the Closing Date. (b) The Originators hereby agree to sell, assign, transfer, convey and set over to Purchaser, and the Purchaser, subject to the satisfaction of the conditions set forth in Section 2.6 of the Sale and Servicing Agreement, hereby agrees to purchase and acquire from the Originators, without recourse (subject to the Originators' obligations herein, including any obligation to fund Additional Balances with respect to the Subsequent Mortgage Loans), on each Subsequent Transfer Date, all of the Originators' respective right, title and interest in and to (a) each Subsequent Mortgage Loan, including its Principal Balance as of the Subsequent Cut-Off Date and all principal and interest collections in respect of such Subsequent Mortgage Loan on or after the Subsequent Cut-Off Date (excluding any payments of principal and interest collected prior to the Subsequent Cut-Off Date); (b) each related Mortgaged Property that is acquired by foreclosure or deed in lieu of foreclosure; (c) all rights under any Mortgage Insurance Policies covering each related Mortgaged Property; (d) all proceeds with respect to the foregoing; and (e) the Mortgage File and other documents relating to the foregoing; provided, however, that neither Purchaser nor any of its Assignees (including the Trust and the Indenture Trustee) shall be deemed to assume any obligation under any Credit Line Agreement that provides for the funding of future advances to the Mortgagor thereunder, it being understood that any such obligation shall remain with the Originators and that neither Purchaser nor any of its Assignees (including the Trust and the Indenture Trustee) shall be required or permitted to fund any such future advances. As full consideration for the Originators' sale, transfer, assignment and conveyance to Purchaser of all of their respective right, title and interest in and to the Subsequent Mortgage Loans and other properties specified above, on each Subsequent Transfer Date, Purchaser shall direct the Indenture Trustee to pay from funds on deposit in the Pre-Funding Account to or upon the order of the Originators that amount in immediately available funds equal to one-hundred percent (100%) of the aggregate Principal Balance thereof as of the Subsequent Cut-Off Date, all in such relative proportions as the Purchaser and the Originators shall jointly determine on or before each Subsequent Transfer Date. 2 7 Section 2.02 Delivery of Documents; Purchase of Mortgage Loans. Prior to the purchase of the Initial Mortgage Loans and Subsequent Mortgage Loans: (a) Each Originator shall have delivered to Purchaser or any agent appointed by Purchaser the Mortgage File for each of the Mortgage Loans. (b) Purchaser shall have received copies of the Mortgage Loan Schedules. (c) On the Closing Date, Purchaser shall have received copies of the resolutions of the Board of Directors of each Originator, certified by its Secretary, approving this Agreement. (d) On the Closing Date, Purchaser shall have received copies of the articles of incorporation, articles of association or charter of each Originator. (e) On the Closing Date, Purchaser shall have received from each Originator (i) a certificate of the Secretary or Assistant Secretary of such Originator certifying the names and signatures of the officers authorized on its behalf to execute this Agreement and any other documents to be delivered by it hereunder and (ii) a copy of such Originator's by-laws. (f) On the Closing Date, Purchaser shall have received an opinion of counsel to each Originator as to the due authorization, execution and delivery by such Originator of this Agreement and as to the validity and enforceability of the transfers contemplated hereunder and addressing such other matters as Purchaser may reasonably request. (g) Purchaser shall be permitted to perform its standard loan review of each Mortgage Loan to be purchased. (h) On the Closing Date, UCC-1 financing statements duly executed by each Originator as debtor shall have been filed naming Purchaser as secured party and, if Purchaser so requests, the Indenture Trustee on behalf of the Trust as assignee. Section 2.03 Survival of Representations. The terms and conditions of the purchase and sale of each Mortgage Loan shall be as set forth in this Agreement. Each Originator will be deemed on the Closing Date and each Subsequent Transfer Date to have made to Purchaser the representations and warranties set forth in Article IV hereof, and such representations and warranties of such Originator shall be true and correct on and as of the Closing Date and each Subsequent Transfer Date . In addition, such Originator will be deemed to have reaffirmed the representations and warranties contained in Article IV hereof on the date of disposition of the Mortgage Loans by Purchaser pursuant to the Sale and Servicing Agreement. Section 2.04 Proceeds of Mortgage Loans. The sale, assignment, transfer and conveyance hereby of all of the Originators' respective right, title and interest in and to each Mortgage Loan shall include all proceeds, products and profits derived 3 8 therefrom, including all payments of principal of and interest on such Mortgage Loan and other amounts due or payable or to become due or payable in respect thereof and proceeds thereof, including all monies, goods and other tangible or intangible property received upon the liquidation or sale thereof, except any payments in respect of interest collected prior to the Cut-Off Date. Section 2.05 Repurchased Mortgage Loans. If any Mortgage Loan sold by an Originator hereunder is re-transferred to Purchaser pursuant to Section 2.2(b) of the Sale and Servicing Agreement, the Originator shall, at Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan Purchase Price therefor or (b) substitute in lieu thereof a Qualified Replacement Mortgage Loan (provided that the Originator has any such loans available for sale at the time) and deliver to or upon the order of Purchaser the related Substitution Amount, all in accordance with and subject to the applicable terms and conditions of the Sale and Servicing Agreement. ARTICLE III Protective Security Interest It is the express intent of the parties hereto that the conveyance of the Mortgage Loans (including the related Mortgage Files and the other rights and properties described in Section 2.01 hereof) by the Originators to Purchaser as contemplated by this Agreement be construed as a sale of the Mortgage Loans by the Originators to Purchaser. It is, further, not the intent of the parties that such conveyance be deemed a pledge of the Mortgage Loans by the Originators to Purchaser or any of its Assignees (including the Trust and the Indenture Trustee) to secure a debt or other obligation of the Originators. 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 related Mortgage Files and the other rights and properties described in Section 2.01 hereof) are held to be property of either or both of the Originators, then (i) this Agreement shall also be deemed to be a security agreement within the meaning of Article 9 of the New York Uniform Commercial Code; (ii) the conveyance provided for herein shall be deemed to be a grant by the Originators to Purchaser of a first priority security interest in all of the Originators' right, title and interest in and to the Mortgage Loans (including the related Mortgage Files and the other rights and properties described in Section 2.01 hereof) 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 the Accounts (excluding any investment earnings on the Note Account, the Principal and Interest Account and the Capitalized Interest Account), whether in the form of cash, instruments, securities or other property; (iii) the possession by Purchaser or any of its Assignees or their respective 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 Uniform Commercial Code; (iv) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be 4 9 deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of Purchaser 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 (ii) above shall be deemed to include any and all obligations of Purchaser or any of its Assignees (including the Trust and the Indenture Trustee) to pay 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 Owner Trustee, the Insurer and the Certificateholders, all in accordance with and otherwise subject to the Operative Documents (including the Indenture). Any assignment or other transfer of the interest of Purchaser under any provision hereof shall also be deemed to be an assignment of any security interest created hereby. Each of the Originators and Purchaser 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 Sale and Servicing Agreement and the Indenture. Each of the Originators also covenants not to pledge, assign or grant any security interest to any third party in any Mortgage Loan conveyed to Purchaser hereunder. Upon Purchaser's request, each Originator shall perform (or cause to be performed) such further acts and execute, acknowledge and deliver (or cause to be executed, acknowledged and delivered) to Purchaser such further documents as Purchaser 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 such Originator as debtor and Purchaser as secured party and any continuation statements relating thereto). ARTICLE IV Representations and Warranties Section 4.01 Representations and Warranties of Originators. Each of the Originators represents, warrants and covenants to Purchaser as of the Closing Date and each Subsequent Transfer Date that: (a) Such Originator is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly authorized and qualified to transact any and all business contemplated by this Agreement to be conducted by such Originator in any state in which a Mortgaged Property is located to the extent necessary to ensure the enforceability of each Mortgage Loan in accordance with the terms of this Agreement. (b) Such Originator has the full corporate power and authority to originate the Mortgage Loans conveyed by it hereunder and to execute, deliver and perform, and to enter into and consummate the transactions contemplated by, this 5 10 Agreement; the execution, delivery and performance of this Agreement by such Originator has been duly authorized by all necessary corporate action on the part of such Originator; and this Agreement, assuming the due authorization, execution and delivery thereof by Purchaser, constitutes a legal, valid and binding obligation of such Originator, enforceable against such Originator in accordance with its respective terms, except to the extent that (i) the enforceability thereof may be limited by federal or state bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) The execution and delivery of this Agreement by such Originator, the consummation by such Originator of the transactions herein contemplated, and the fulfillment by such Originator of or compliance by such Originator with the terms hereof will not (i) result in a breach of any term or provision of the charter or by-laws of such Originator or (ii) conflict with, result in a breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which such Originator is a party or by which it may be bound, or any statute, order or regulation applicable to such Originator of any court, regulatory body, administrative agency or governmental body having jurisdiction over such Originator, which breach, violation, default or non-compliance would have a material adverse effect on the business, operations, financial condition, properties or assets of such Originator taken as a whole or the ability of such Originator to perform its obligations under this Agreement; and such Originator is not a party to, bound by, or in breach or violation of any material indenture or other material agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which materially and adversely affects or, to such Originator's knowledge, would in the future reasonably be expected to materially and adversely affect, the ability of such Originator to perform its obligations under this Agreement or the business, operations, financial condition, properties or assets of such Originator taken as a whole. (d) Such Originator is, and currently intends to remain, in good standing and qualified to do business in each jurisdiction where failure to be so qualified or licensed would have a material adverse effect on (i) the business, operations, financial condition, properties or assets of such Originator taken as a whole or (ii) the enforceability of any Mortgage Loan in accordance with the terms of this Agreement. (e) There is no litigation pending or, to such Originator's actual knowledge, overtly threatened against such Originator that would materially and adversely affect the execution, delivery or enforceability of this Agreement or the ability of such Originator to perform any of its other obligations hereunder in accordance with the terms hereof. (f) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by such Originator of, or compliance by such Originator with, this Agreement or the 6 11 consummation of the transactions contemplated hereby, or if any such consent, approval, authorization or order is required, such Originator has obtained the same. (g) Such Originator has caused to be performed any and all acts required to preserve the rights and remedies of Purchaser in any Mortgage Insurance Policies of such Originator applicable to the Mortgage Loans conveyed by such Originator hereunder. Section 4.02 Representations and Warranties Regarding Mortgage Loans. Each Originator represents and warrants to Purchaser as of the Closing Date and the Subsequent Transfer Date that, with respect to each Mortgage Loan conveyed by such Originator hereunder on such date, each representation and warranty set forth in Exhibit A hereto is true and correct. Section 4.03 Representations and Warranties of Purchaser. Purchaser hereby makes the following representations and warranties, each of which representations and warranties (i) is material and being relied upon by the Originators and (ii) is true in all respects as of the Closing Date and the Subsequent Transfer Date: (a) Purchaser has been duly organized and is validly existing as a corporation under the laws of the State of Nevada. (b) Purchaser has the requisite power and authority and legal right to execute and deliver, engage in the transactions contemplated by, and perform and observe the terms and conditions of, this Agreement to be performed by it. (c) This Agreement has been duly authorized and executed by Purchaser, is valid, binding and enforceable against Purchaser in accordance with its terms, and the execution, delivery and performance by Purchaser of this Agreement does not conflict with any material term or provision of any other agreement to which Purchaser is a party or any term or provision of the Certificate of Incorporation or the By-laws of Purchaser, or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to Purchaser of any court, regulatory body, administrative agency or governmental body having jurisdiction over Purchaser. (d) No consent, approval, authorization or order of, registration or filing with, or notice to any governmental authority or court is required under applicable law in connection with the execution and delivery by Purchaser of this Agreement. (e) To the best knowledge of Purchaser, there is no action, proceeding or investigation pending or threatened against Purchaser before any court, administrative agency or other tribunal (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, or (iii) which is likely to materially and adversely affect the performance by Purchaser of its obligations under, or the validity or enforceability of, this Agreement. (f) The purchase of the Mortgage Loans hereunder shall constitute a representation by Purchaser to each Originator that Purchaser understands, and that 7 12 Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of, its investment in the relevant Mortgage Loans. Section 4.04 Remedies for Breach of Representations and Warranties; Repurchase Obligation. It is understood and agreed that the representations and warranties set forth in Sections 4.01 and 4.02 shall survive each sale of the Mortgage Loans to Purchaser and shall inure to the benefit of Purchaser and its Assignees notwithstanding any restrictive or qualified endorsement on any related Credit Line Agreement or Assignment of Mortgage or the examination or failure to examine any Mortgage File. With respect to the representations and warranties contained in Sections 4.01 and 4.02 which are made to the best of an Originator's knowledge or to the actual knowledge of an Originator, if it is discovered by such Originator or Purchaser that the substance of such representation and warranty is inaccurate and such inaccuracy materially and adversely affects the value of the related Mortgage Loan or Purchaser's or any Assignee's interest therein, then notwithstanding such Originator's lack of knowledge with respect to the inaccuracy at the time the representation or warranty was made, such Originator shall repurchase the related Mortgage Loan in accordance with this Section 4.04 as if the applicable representation or warranty was breached, subject to the terms and conditions of the Sale and Servicing Agreement. Upon discovery by an Originator or Purchaser of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of any Mortgage Loan or Purchaser's interest therein, the party discovering such breach shall give prompt written notice to the others. Within 60 days of the earlier of either discovery by or notice to an Originator of any breach of a representation or warranty by such Originator which materially and adversely affects the value of any Mortgage Loan or Purchaser's or any Assignee's interest therein, such Originator shall use its best efforts promptly to cure such breach in all material respects and, if such breach cannot be cured or is not cured or is not being diligently pursued as evidenced by a notice acceptable to Purchaser, as evidenced by Purchaser's agreement thereto, at the end of such 60-day period, Originator shall, at Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan Purchase Price therefor or (b) substitute in lieu thereof a Qualified Replacement Mortgage Loan (provided that the Originator has any such loans available for sale at the time) and deliver to or upon the order of Purchaser the related Substitution Amount, all in accordance with and subject to the applicable terms and conditions of the Sale and Servicing Agreement. At the time of repurchase or substitution, Purchaser and such Originator shall arrange for the assignment to such Originator of such Mortgage Loan and the delivery to such Originator of the related Mortgage File. Each Originator shall indemnify and hold harmless Purchaser and its Assignees from and against any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach by such Originator of the representations and warranties contained in this Article IV (notwithstanding any limitation in such representation and 8 13 warranty as to such Originator's knowledge). It is understood and agreed that the obligations of each Originator set forth in this Section 4.04 either to cure or to repurchase or substitute a non-qualifying Mortgage Loan and to indemnify and hold harmless Purchaser as provided in this Section 4.04 constitute the sole remedies of Purchaser respecting a breach by such Originator of the foregoing representations and warranties. Any cause of action against an Originator relating to or arising out of the breach by such Originator of any representations and warranties made in Sections 4.01 and 4.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by Purchaser or notice thereof by the Originator to Purchaser, (ii) failure by the Originator to cure such breach or to repurchase or substitute such Mortgage Loan as specified above, and (iii) demand upon the Originator by Purchaser for compliance with the relevant provisions of this Agreement. ARTICLE V Covenants and Warranties of Originators So long as this Agreement remains in effect or any Originator has obligations hereunder, each Originator hereby covenants and agrees with Purchaser as follows: Section 5.01 Affirmative Covenants. (a) Such Originator shall do all things necessary to remain duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and to maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted except where failure to maintain such authority would not have a material adverse effect on the ability of such Originator to conduct its business or to perform its obligations under this Agreement. (b) At all times during this Agreement, such Originator shall possess sufficient net capital and liquid assets (or ability to access the same) to satisfy its obligations as they become due in the normal course of business. (c) Such Originator shall permit Purchaser, its Assignees and their respective accountants, attorneys and other agents access to all of the books and records relating to the Mortgage Loans purchased and retained by Purchaser for inspection during normal business hours at all places where such Originator conducts business. (d) Such Originator shall be obligated to sell Additional Balances to the Trust( to the extent such Additional Balances are related to the Mortgage Loans). (e) Such Originators will deliver or cause to be delivered the Mortgage File with respect to each Mortgage Loan. 9 14 Section 5.02 Negative Covenants. (a) Such Originator shall not assign or attempt to assign this Agreement or any rights hereunder, without first obtaining the specific written consent of Purchaser. (b) Such Originator shall not amend its articles of incorporation, articles of association or charter or its by-laws if such amendment shall have or is likely to have an adverse effect upon Purchaser or its interests under this Agreement, without the prior written consent of Purchaser. (c) Such Originator shall not (i) dissolve or terminate its existence or (ii) transfer any assets to any affiliate except in the ordinary course of its business or as otherwise expressly permitted or contemplated hereby. (d) Such Originator will not commit any act in violation of applicable laws or regulations promulgated pursuant thereto that relate to the Mortgage Loans or that materially and adversely affect the operations or financial conditions of such Originator. ARTICLE VI Sale of Mortgage Loans by Purchaser It is the intent of the parties hereto that (i) immediately after the sale of the Mortgage Loans by the Originators to Purchaser as provided herein, pursuant to the Sale and Servicing Agreement, Purchaser will sell, assign, transfer, convey and set over to Holding all of Purchaser's right, title and interest in and to the Mortgage Loans (including the other rights and properties conveyed to it hereunder), (ii) immediately after the sale of the Mortgage Loans by Purchaser to Holding, pursuant to the Sale and Servicing Agreement, Holding will sell, assign, transfer, convey and set over to the Trust all of Holding's right, title and interest in and to the Mortgage Loans, and (iii) immediately after the sale of the Mortgage Loans by Holding to the Trust as described above, pursuant to the Indenture, the Trust will Grant to the Indenture Trustee all of the Trust's right, title and interest in and to the Mortgage Loans. With respect to each such sale or other transfer, each Originator hereby agrees: (a) to cooperate fully with Purchaser, Purchaser's Assignees, Holding, the Trust and the Indenture Trustee with respect to all reasonable requests and due diligence procedures, including participating in meetings with rating agencies, insurers and such other parties as Purchaser shall designate and participating in meetings with Purchaser's Assignees, Holding and the Trust and providing information reasonably requested by Purchaser's Assignees, Holding and the Trust; (b) to execute all other necessary documents to effect the transactions contemplated therein; 10 15 (c) to affirm the representations and warranties set forth herein regarding such Originator and the Mortgage Loans as of the date of the transfer to Holding and/or the Trust; (d) to deliver to Purchaser for inclusion in any prospectus or other offering material such publicly available information regarding (i) such Originator, (ii) its financial condition, (iii) the mortgage loan delinquency, foreclosure and loss experience of its portfolio as is customarily set forth in a prospectus supplement with respect to a comparable mortgage pool, (iv) the underwriting guidelines for mortgage loans, (v) the servicer, (vi) the servicing and collection practices regarding mortgage loans, and (vii) any additional information reasonably requested by Purchaser, or as is otherwise reasonably requested by Purchaser and which such Originator is capable of providing without unreasonable effort or expense, and to indemnify Purchaser and its Assignees for material misstatements or omissions contained in such information; (e) to deliver to Purchaser, and to any Person designated by Purchaser, such legal documents and in-house opinions of counsel as are customarily delivered by originators and reasonably determined by Purchaser or its Assignees to be necessary in connection with the transactions contemplated by the Sale and Servicing Agreement, it being understood that the cost of any opinions of outside special counsel that may be required shall be the responsibility of such Originator; and (f) to cooperate fully with Purchaser and its Assignees with respect to the preparation of Mortgage Loan documents and other documents and with respect to servicing requirements reasonably requested by the rating agencies and insurers. ARTICLE VII Additional Remedies Upon the occurrence of a Rapid Amortization Event under the Indenture due to an act or omission of an Originator, Purchaser and any of its Assignees shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Without limiting the foregoing, the occurrence of any such Rapid Amortization Event shall not deny to Purchaser or its Assignees any remedy to which Purchaser or its Assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity. ARTICLE VIII Term This Agreement shall terminate on the date of termination of the Trust as set forth in Article IX of the Trust Agreement. 11 16 ARTICLE IX Exclusive Benefit of Parties; Assignment This Agreement is for the exclusive benefit of the parties hereto and their respective successors and assigns and shall not be deemed to give any legal or equitable right to any other person except Holding, the Trust, the Indenture Trustee, the Noteholders and the Insurer. Neither this Agreement nor any rights hereunder may be assigned by any party hereto without the prior written consent of the others and the Insurer except if assigned by the Purchaser to Holding, the Trust and the Indenture Trustee. ARTICLE X Amendment; Waivers This Agreement may be amended from time to time only by written agreement of the Originators and Purchaser with the prior written consent of the Insurer, which consent shall not be unreasonably withheld. Any forbearance, failure, or delay by a party in exercising any right, power, or remedy hereunder shall not be deemed to be a waiver thereof, and any single or partial exercise by a party of any right, power or remedy hereunder shall not preclude the further exercise thereof. Every right, power and remedy of a party shall continue in full force and effect until specifically waived by it in writing. No right, power or remedy shall be exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred hereby or hereafter available at law or in equity or by statute or otherwise. ARTICLE XI Execution in Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Signatures may be exchanged by facsimile, and each party hereto agrees to be bound by its own facsimile signature and to accept the facsimile signature of the other party. ARTICLE XII Effect of Invalidity of Provisions In case any one or more of the provisions contained in this Agreement should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall in no way be affected, prejudiced or disturbed thereby. 12 17 ARTICLE XIII Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its rules regarding conflict of laws. ARTICLE XIV Notices Any notices, consents, directions, demands and other communications given under this Agreement (unless otherwise specified herein) shall be in writing and shall be deemed to have been duly given when personally delivered at or telecopied to the respective addresses or facsimile numbers, as the case may be. If to the Purchaser, addressed to Advanta Conduit Receivables, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127; if to the AFC, addressed to Advanta Finance Corp., 10790 Rancho Bernardo Road, San Diego, California 92127, if to ANB, addressed to Advanta National Bank, One Righter Parkway, Wilmington, Delaware 19803, or to such other address or facsimile number as either party shall give notice to the other party pursuant to this Article XIV. Notices, consents, and other communications may also be effected by first class mail, postage prepaid sent to the foregoing addresses and will be effective upon receipt by the intended recipient. ARTICLE XV Entire Agreement This Agreement, including the Exhibits and Schedules hereto, contains the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements between them, whether oral or written, of any nature whatsoever with respect to the subject matter hereof. ARTICLE XVI Indemnities Without limiting any other rights which Purchaser or each Originator may have hereunder or under applicable law, and in addition to any other indemnity provided hereunder, each Originator hereby agrees to indemnify Purchaser, its Assignees and their respective officers, directors, agents and employees (each, an "Indemnified Party") from and against any and all Losses incurred by any of them relating to or resulting from: (a) Any representation or warranty made by such Originator (or any officers, employees or agents of such Originator) under or in connection with this Agreement, any periodic report required to be furnished hereunder or any other information or document delivered by such Originator pursuant hereto, which shall have been false or incorrect in any material respect when made or deemed made; 13 18 (b) The failure by such Originator to (i) comply with any applicable law, rule or regulation with respect to any purchase and sale hereunder or (ii) perform or observe any material obligation or covenant hereunder; or (c) The failure by such Originator (if so requested by Purchaser) to execute and properly file, or any delay in executing and properly filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to the Mortgage Loans. Promptly after receipt by an Indemnified Party under this Article XVI of notice of the commencement of any action or other proceeding, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Article XVI, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any Indemnified Party otherwise than under this Article XVI. In case any such action is brought against any Indemnified Party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the Indemnified Party promptly after receiving the aforesaid notice from such Indemnified Party, to assume the defense thereof, with counsel satisfactory to such Indemnified Party; provided, however, that if the defendants in any such action include both the Indemnified Party and the indemnifying party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnified Parties that are different from or additional to those available to the indemnifying party, the Indemnified Party shall have the right to elect separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Party. Upon receipt of notice from the indemnifying party to such Indemnified Party of its election so to assume the defense of such action and approval by the Indemnified Party of counsel, the indemnifying party will not be liable for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, unless (i) the Indemnified Party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Parties under this Article XVI who are parties to such action), (ii) the indemnifying party shall have employed counsel which is not satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the Indemnified Party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall only be in respect of the counsel referred to in such clause (i) or (iii). 14 19 ARTICLE XVII RESPA Obligations Each Originator agrees to discharge, on Purchaser's behalf, all obligations, including all disclosure obligations, which Purchaser may have under the Real Estate Settlement Procedures Act of 1974, as amended, in connection with Purchaser's purchase from such Originator of the Mortgage Loans. Purchaser agrees to provide the Originator with such information as is reasonably necessary for the Originator to discharge such obligations and hereby appoints the Originator as its agent in its name for the purposes of, and only for the purposes of, performing such obligations. Each Originator hereby agrees to indemnify Purchaser, its Assignees and their respective officers, directors, agents and employees from any Losses suffered by any such party in connection with the Originator's obligations under this provision. ARTICLE XVIII Survival All indemnities and undertakings of Originator and Purchaser hereunder shall survive the termination of this Agreement. ARTICLE XIX Consent to Service Each party irrevocably consents to the service of process by registered or certified mail, postage prepaid, to it at its address given pursuant to Article XIV hereof. ARTICLE XX Submission to Jurisdiction; Waiver of Trial by Jury With respect to any claim arising out of this Agreement each party irrevocably submits to the exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan, City of New York, and each party irrevocably waives any objection which it may have at any time to the laying of venue of any suit, action or proceeding arising out of or relating hereto brought in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum and further irrevocably waives the right to object, with respect to such claim, suit, action or proceeding brought in any such court, that such court does not have jurisdiction over such party, provided that service of process is made as set forth in Article XIX hereof or by any other lawful means. To the extent permitted by applicable law, Purchaser and the Originators each irrevocably waive all right of trial by jury in any action, proceeding or counterclaim arising out of or in connection with this Agreement or any matter arising hereunder. 15 20 ARTICLE XXI Construction The headings in this Agreement are for convenience only and are not intended to influence its construction. References to Articles, Sections, Schedules and Exhibits in this Agreement are to the Articles, Sections of and Schedules and Exhibits to this Agreement. The Schedules and Exhibits are hereby incorporated into and form a part of this Agreement. As used in this Agreement, any form of the word "include" shall be deemed to be followed by the words "without limitation," the words "and" and "or" are used in the conjunctive or disjunctive as the sense and circumstances may require, the singular includes the plural and vice-versa, and terms such as "herein," "hereof," "hereby" and "hereunder" refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context clearly indicates otherwise. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." ARTICLE XXII Further Assurances Each party hereto agrees to execute, acknowledge and deliver to the other parties and to Purchaser's Assignees such reasonable and appropriate additional documents, instruments or agreements as any of the other parties may be necessary or appropriate to effectuate the purposes of this Agreement. ARTICLE XXIII Third Party Beneficiary The Insurer shall be deemed to be an express third-party beneficiary of this Agreement and shall be entitled to enforce the terms hereof as if it were a party hereto. ARTICLE XXIV No Petition The Originators, by entering into this Agreement, hereby covenant and agree that they will not at any time institute against the Sponsor, Holding or the Trust, or join in any institution against the Sponsor, Holding 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. ************ 16 21 IN WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto by their respective officers thereunto duly authorized, all as of the date first written above. ADVANTA CONDUIT RECEIVABLES, INC., as Purchaser By: ---------------------------------------- Name: Title: ADVANTA NATIONAL BANK, as an Originator By: ---------------------------------------- Name: Title: ADVANTA FINANCE CORP., as an Originator By: ---------------------------------------- Name: Title: 22 SCHEDULE I SCHEDULE OF MORTGAGE LOANS I-1 23 EXHIBIT A MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES Each Originator makes the following representations and warranties to Purchaser solely with respect to the Mortgage Loans conveyed by such Originator hereunder. Such representations and warranties speak as of the Closing Date for Initial Mortgage Loans or the Subsequent Transfer Date for Subsequent Mortgage Loans, but shall survive the sale, transfer, and assignment of such Mortgage Loans first to Holding and then to the Trust pursuant to the Sale and Servicing Agreement and the pledge of such Mortgage Loans to the Indenture Trustee pursuant to the Indenture: (i) All of the original or certified documentation set forth in the definition of Mortgage File and in Section 2.1(g)(i) of the Sale and Servicing Agreement (including all material documents related thereto) with respect to each Mortgage Loan has been or will be delivered to the Indenture Trustee on the Closing Date for Initial Mortgage Loans or the Subsequent Transfer Date for Subsequent Mortgage Loans. All such documentation is true and accurate in all material respects. Each of the documents and instruments specified to be included therein has been duly executed and is in due and proper form, and each such document or instrument is in a form generally acceptable to prudent mortgage lenders that regularly originate or purchase or sell mortgage loans comparable to the Mortgage Loans. (ii) Each Mortgage Loan is being serviced by the Master Servicer or a Master Servicer Affiliate. (iii) During the period from origination to the Cut-Off Date or Subsequent Cut-Off Date, as applicable, each Mortgage Loan has been serviced in accordance with applicable law. (iv) As of the Closing Date with respect to the Initial Mortgage Loans, as of the Subsequent Cut-Off Date with respect to Subsequent Mortgage Loans and as of the applicable Transfer Date with respect to any Qualified Replacement Mortgage Loan, all action has been taken to validly transfer and assign to the Purchaser all right, title and interest of such Originator in and to such Mortgage Loans and all other related property described in Section 2.01 (including the related Additional Balances); and, in accordance with Article III, all action has been taken to grant a security interest (as defined in the UCC as in effect in New York) in such property to Purchaser, which, if the Indenture Trustee maintains possession of the Mortgage File for each such Mortgage Loan, shall constitute a first priority perfected security interest in such property (to the extent that perfection can be achieved by possession by or on behalf of a secured party), subject to the effect of Section 9-306 of the UCC with respect to collections on such Mortgage Loans that are deposited in the Accounts. (v) As of the Closing Date with respect to the Initial Mortgage Loans, as of the Subsequent Transfer Date with respect to Subsequent Mortgage Loans and as of the A-1 24 applicable Transfer Date with respect to any Qualified Replacement Mortgage Loan, the information set forth in the Schedule of Mortgage Loans for each such Mortgage Loan is true and correct in all material respects. (vi) As of the Cut-Off Date, no more than 0.25% of the aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans is secured by Mortgaged Properties located within any single zip code area. (vii) The Mortgages and the Credit Line Agreements conveyed to Purchaser by the Originators pursuant to Section 2.01 hereof have not been assigned or pledged by such Originator, and such Originator is the owner and holder of such Mortgages and such Credit Line Agreements free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature, and has full right and authority, under all governmental and regulatory bodies having jurisdiction over the holder of the related Mortgage Loans, to sell, assign or transfer the same. (viii) As of the Closing Date with respect to the Initial Mortgage Loans, as of the Subsequent Transfer Date with respect to Subsequent Mortgage Loans and as of the applicable Transfer Date with respect to any Qualified Replacement Mortgage Loan, there is no valid offset, defense or counterclaim of any obligor under any Credit Line Agreement or Mortgage relating to each such Mortgage Loan. Neither the operation of any of the terms of any such Credit Line Agreement or any such Mortgage nor the exercise of any right thereunder will render either such Credit Line Agreement or such Mortgage unenforceable, in whole or in part, nor subject to any right of rescission, set-off, claim, counterclaim or defense, including the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto. (ix) As of the Cut-Off Date with respect to the Initial Mortgage Loans, no Minimum Monthly Payment is more than 59 days Delinquent (measured on a contractual basis) and no more than 0.60% (by aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans) were 30 to 59 days Delinquent (measured on a contractual basis). (x) The weighted average remaining term to maturity of the Initial Mortgage Loans as of the Cut-Off Date is approximately 272 months. (xi) With respect to each Mortgage Loan, on each date that the Coupon Rates have been adjusted, interest rate adjustments on such Mortgage Loans were made in compliance with the related Mortgage and Credit Line Agreement and applicable law. With respect to the Mortgage Loans, the Coupon Rate over the term of each Mortgage Loan may not exceed the related maximum Coupon Rate, if any. (xii) As of the Cut-Off Date, each Mortgaged Property is improved by a single (one-to-four) family residential dwelling, which may include manufactured homes, condominiums and townhouses. (xiii) No Mortgage Loan had a Combined Loan-to-Value Ratio in excess of 125.00 at the time of origination. A-2 25 (xiv) As of the Cut-Off Date with respect to the Initial Mortgage Loans, as of the Subsequent Cut-Off Date with respect to Subsequent Mortgage Loans and as of the applicable Transfer Date with respect to any Qualified Replacement Mortgage Loan, each Mortgage is a valid and subsisting first or second lien of record on the Mortgaged Property (subject in the case of any Junior Mortgage Loan only to a Senior Lien on such Mortgaged Property) and subject in all cases to the exceptions to title set forth in the title insurance policy or title search with respect to the related Mortgage Loan, which exceptions are generally acceptable to banking institutions in connection with their regular mortgage lending activities, and except for liens for (i) real estate taxes and special assessments not yet delinquent, (ii) income taxes, (iii) any covenants, conditions and restrictions, rights of way, easements, and other matters of public record and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage. (xv) Each Mortgage Loan at the time it was made had no delinquent tax or assessment lien or mechanic's lien on the related Mortgaged Property, and each such Mortgaged Property is free of substantial damage and is in good repair. (xvi) Each Mortgage Loan at the time it was made complied in all material respects with all applicable state and federal laws and regulations, including the federal Truth-in-Lending Act and other consumer protection laws, real estate settlement procedure, usury, equal credit opportunity, disclosure and recording laws. (xvii) With respect to each Mortgage Loan that is a First Mortgage Loan, and, to the best of such Originator's knowledge, with respect to each Mortgage Loan that is a Junior Mortgage Loan, a lender's title insurance policy, issued in standard California Land Title Association form or American Land Title Association form, or other form acceptable in a particular jurisdiction by a title insurance company authorized to transact business in the state in which the related Mortgaged Property is situated, was issued on the date of origination of such Mortgage Loan, and as of the Closing Date with respect to the Initial Mortgage Loans, as of the Subsequent Transfer Date with respect to the Subsequent Mortgage Loans and as of each applicable Transfer Date with respect to any Qualified Replacement Mortgage Loan, each such policy is valid and remains in full force and effect, or a title search or guaranty of title customary in the relevant jurisdiction was obtained with respect to any Mortgage Loan as to which no title insurance policy or binder was issued. (xviii) As of the Closing Date with respect to the Initial Mortgage Loans, as of the Subsequent Transfer Date with respect to each Subsequent Mortgage Loans and as of the applicable Transfer Date with respect to any Qualified Replacement Mortgage Loan, each Credit Line Agreement is the legal, valid, binding and enforceable obligation of the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by 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), A-3 26 and all parties to each Mortgage Loan had full legal capacity to execute all documents relating to such Mortgage Loan and convey the estate therein purported to be conveyed. (xix) The terms of each Credit Line Agreement and each related Mortgage have not been impaired, cancelled, subordinated, rescinded, altered or modified in any material respect (except as set forth in the Mortgage File or on the Schedule of Mortgage Loans), and the related Mortgaged Property has not been released from the lien of the related Mortgage, in whole or in part and no instrument has been executed that would effect such release, cancellation, subordination or rescission, except by a written instrument which (if such instrument is secured by real property) has been recorded, if necessary, to protect the interest of the Noteholders and which has been delivered to the Indenture Trustee. (xx) Except as otherwise required by law or the terms of the Credit Line Agreement, pursuant to the statute under which the related Mortgage Loan was made, the related Credit Line Agreement is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage. (xxi) Each Mortgaged Property relating to a Mortgage Loan is located in the state identified in the Schedule of Mortgage Loans and consists of one or more parcels of real property with a residential dwelling erected thereon. (xxii) There is no proceeding pending or threatened for the total or partial condemnation of any Mortgaged Property relating to a Mortgage Loan, nor is such a proceeding currently occurring, and each such Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, flood, tornado or other casualty, so as to affect adversely the value of such Mortgaged Property as security for the related Mortgage Loan or the use for which the premises were intended. (xxiii) With respect to each Mortgage Loan that is a Junior Mortgage Loan, either (A) no consent for such Mortgage Loan was required by the holder of any related Senior Lien prior to the making of such Mortgage Loan or (B) such consent has been obtained and is contained in the related Mortgage File. (xxiv) Each Mortgage relating to a Mortgage Loan contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the realization against the related Mortgaged Property of the benefits of the security, including (A) in the case of a Mortgage designated as a deed of trust, by trustee's sale and (B) otherwise by judicial foreclosure. To the best of such Originator's knowledge, there is no homestead or other exemption available which materially interferes with the right to sell the related Mortgaged Property at a trustee's sale or the right to foreclose the related Mortgage. (xxv) As of the Closing Date with respect to the Initial Mortgage Loans, as of the Subsequent Transfer Date with respect to the Subsequent Mortgage Loans, and as of the applicable Transfer Date with respect to a Qualified Replacement Mortgage Loan, there is no default, breach, violation or event of acceleration existing under any Mortgage A-4 27 or Credit Line Agreement relating thereto and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and such Originator has not waived any default, breach, violation or event of acceleration; provided, however, that the foregoing shall not apply to the extent that the relevant default, breach, violation or other event relates to one or more of the Mortgage Loans being Delinquent. (xxvi) No selection procedures reasonably believed by such Originator to be adverse to the interests of the Noteholders or the Insurer was utilized in selecting the Mortgage Loans. (xxvii) As of the Closing Date with respect to the Initial Mortgage Loans and as of the Subsequent Transfer Date with respect to the Subsequent Mortgage Loans, no Mortgagor has been released, in whole or in part, except in connection with an assumption agreement which has been approved by the applicable title insurer (to the extent required by such title insurer) and which is part of the related Mortgage File delivered to the Indenture Trustee. (xxviii) At the time of origination of each Mortgage Loan that is not a First Mortgage Loan, the related prior lien was not more than 30 days delinquent. (xxix) To the best of such Originator's knowledge, all required inspections, licenses and certificates with respect to the use and occupancy of all occupied portions of all property securing the Mortgages relating to the Mortgage Loans have been made, obtained or issued, as applicable. (xxx) With respect to each Mortgage Loan that is not a First Mortgage Loan, the related prior lien does not provide for negative amortization. (xxxi) With respect to each Mortgage Loan that is not a First Mortgage Loan, the maturity date of the Mortgage Loan is prior to the maturity date of the related prior lien if such prior lien provides for a balloon payment. (xxxii) With respect to each Mortgage Loan, (1) the improvements upon each related Mortgaged Property are covered by a valid and existing hazard insurance policy with a carrier generally acceptable to the Master Servicer that provides for fire and extended coverage representing coverage not less than (a) the Credit Limit of such Mortgage Loan or (b) the maximum insurable value of the related Mortgaged Property, or (2) the Master Servicer has obtained and will maintain a blanket policy insuring against fire, flood and hazards of extended coverage with respect to all of the Mortgage Loans (xxxiii) With respect to any Mortgage Loan which is a Senior Lien, such Originator has caused and will cause to be performed any and all acts required to be performed to preserve the rights and remedies of the Master Servicer and the Indenture Trustee in any Mortgage Insurance Policies applicable to any such Mortgage Loan delivered by such Originator hereunder, including any necessary notifications of insurers, assignments of policies or interests therein and establishments of co-insured, joint loss A-5 28 payee and mortgagee rights in favor of the Trust and its assignees in care of the Master Servicer or the Indenture Trustee. (xxxiv) To the best of such Originator's knowledge, each Mortgage Loan was underwritten in all material respects in accordance with the credit underwriting guidelines of such Originator as in effect on the date of origination. (xxxv) As of the Closing Date or Subsequent Transfer Date (as applicable), to the best of such Originator's knowledge, such Originator has received no notice of default of any First Mortgage Loan secured by any Mortgaged Property that also secures a Mortgage Loan which has not been cured by a party other than such Originator. (xxxvi) At the Cut-Off Date or Subsequent Transfer Date (as applicable) with respect to the Mortgage Loans, no Mortgagor had been identified on the records of such Originator as being the subject of a current bankruptcy proceeding. (xxxvii) To the best of such Originator's knowledge, with respect to the Mortgage Loans, the documents, instruments and agreements submitted by each Mortgagor for loan underwriting were not falsified and contain no untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the information and the statements contained therein not misleading. (xxxviii)Except as previously disclosed in writing to the Indenture Trustee and the Insurer, with respect to each Mortgage Loan, there is only one originally executed Mortgage and Credit Line Agreement not stamped as a duplicate. (xxxix) With respect to the Mortgage Loans as of the Cut-Off Date, each such Mortgage Loan conforms, and all such Mortgage Loans in the aggregate conform, in all material respects to the description thereof set forth in the Registration Statement. A-6 29 EXHIBIT B FORM OF SUBSEQUENT TRANSFER AGREEMENT Pursuant to this Subsequent Transfer Agreement (this "Agreement"), dated as of __________, _____, between Advanta National Bank, a national banking association ("ANB"), and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand, and Advanta Conduit Receivables, Inc., a Nevada corporation ("Purchaser"), on the other hand (ANB and AFC are sometimes individually referred to herein as an "Originator" and sometimes collectively referred to herein as the "Originators"), and pursuant to the purchase agreement dated as of September 1, 1999 (the "Purchase Agreement"), among the Originators and the Purchaser, the Originators and the Purchaser agree to the sale by the Originators and the purchase by the Purchaser of the Mortgage Loans listed on the attached schedule of Mortgage Loans (the "Subsequent Mortgage Loans"). Capitalized terms are used in this Agreement as defined in Annex 1 of the Indenture, dated as of September 1, 1999 (the "Indenture"), between Advanta Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of California, N.A., as Indenture Trustee, which meanings are incorporated by reference herein. All other capitalized terms used herein shall have the meanings specified herein. Section 1. Sale of Subsequent Mortgage Loans. (a) The Originators do hereby sell, transfer, assign, set over and convey to the Purchaser, without recourse, all of their right, title and interest in and to the Subsequent Mortgage Loans, and including all principal and interest collected on the Subsequent Mortgage Loans on and after the Subsequent Cut-Off Date, and all items with respect to the Subsequent Mortgage Loans to be delivered pursuant to Section 2.02 of the Purchase Agreement; provided, however, that the Originators reserves and retains all right, title and interest in and to principal and interest collected on the Subsequent Mortgage Loans prior to the Subsequent Cut-Off Date. The Originators, contemporaneously with the delivery of this Agreement, has delivered or caused to be delivered to the Purchaser each item set forth in Section 2.02 of the Purchase Agreement. The transfer to the Purchaser by the Originators of the Subsequent Mortgage Loans identified on the Schedule of Subsequent Mortgage Loans shall be absolute and is intended by the parties hereto to constitute a sale by the Originators to the Purchaser on the Subsequent Transfer Date of all the Originators' right, title and interest in and to the Subsequent Mortgage Loans, and other property as and to the extent described above. In the event the transactions set forth herein shall be deemed not to be a sale, the Originators hereby grant to the Purchaser as of the Subsequent Transfer Date a security interest in all of the Originators' right, title and interest in, to and under the Subsequent Mortgage Loans, and such other property, to secure all of the Originators' obligations hereunder, and this Agreement shall constitute a security agreement under applicable law. The Originators agree to take or cause to be taken such actions and to execute such documents, including without limitation the filing of all necessary UCC-1 financing statements and any continuation statements with respect thereto as are necessary to perfect and protect the Purchaser's interests in each Subsequent Mortgage Loan and the proceeds thereof. B-1 30 (b) The expenses and costs relating to the delivery of the Subsequent Mortgage Loans, this Agreement and the Purchase Agreement shall be borne by the Originators. Section 2. Representations and Warranties; Conditions Precedent. (a) Each of the Originators hereby affirms the representations and warranties set forth in Sections 4.01 and 4.02 of the Purchase Agreement that relate to the Originators or the Subsequent Mortgage Loans as of the date hereof. The Originators hereby confirms that each of the conditions set forth in Section 2.02 of the Purchase Agreement are satisfied as of the date hereof and further represents and warrants that each Subsequent Mortgage Loan complies with the requirements of this Agreement and Section 2.01(b) of the Purchase Agreement. (b) Each of the Originators is solvent, is able to pay its debts as they become due and has capital sufficient to carry on its business and its obligations hereunder; it will not be rendered insolvent by the execution and delivery of this Agreement or by the performance of its obligations hereunder nor is it aware of any pending insolvency; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against such Originator prior to the date hereof. (c) All terms and conditions of the Purchase Agreement are hereby ratified and confirmed; provided, however, that in the event of any conflict the provisions of this Agreement shall control over the conflicting provisions of the Purchase Agreement. Section 3. Recordation of Instrument. To the extent permitted by applicable law or a memorandum thereof if permitted under applicable law, this Agreement is subject to recordation in all appropriate public offices for real property records in all of the counties or other comparable jurisdictions in which any or all of the properties subject to the related Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Master Servicer at the Noteholders' expense on direction of the Insurer or Noteholders of at least 51% of the Note Balance, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the Noteholders or the Insurer or is necessary for the administration or servicing of the Subsequent Mortgage Loans. Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 5. Counterparts. This Agreement may be executed in counterparts, each of which, when so executed, shall be deemed to be an original and together shall constitute one and the same instrument. Section 6. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Originators and the Purchaser and their respective successors and assigns. B-2 31 ADVANTA CONDUIT RECEIVABLES, INC., as Purchaser By: ------------------------------------------ Name: Title: ADVANTA NATIONAL BANK, as an Originator By: ------------------------------------------ Name: Title: ADVANTA FINANCE CORP., as an Originator By: ------------------------------------------ Name: Title: B-3 EX-10.2 9 INDEMNIFICATION AGREEMENT, DATED SEPT. 28, 1999 1 Exhibit 10.2 AMBAC ASSURANCE CORPORATION, MORGAN STANLEY & CO. INCORPORATED and BANC OF AMERICA SECURITIES LLC INDEMNIFICATION AGREEMENT ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B Dated as of September 28, 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 ---- INDEMNIFICATION AGREEMENT dated as of September 28, 1999 (the "Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Insurer, MORGAN STANLEY & CO. INCORPORATED and BANC OF AMERICA SECURITIES LLC. Unless the context clearly requires otherwise, all capitalized terms used but not defined herein shall have the respective meanings assigned to them in 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, modified or supplemented from time to time) dated as of September 1, 1999 by and among the Advanta Revolving Home Equity Loan Trust 1999-B 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 September 28, 1999 by and among the Advanta Conduit Receivables, Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, the Insurer, Advanta Holding Trust 1999-B, the Trust, as Issuer and Bankers Trust Company of California, N.A., as Indenture Trustee. "Insurer" means Ambac Assurance Corporation, or any successor thereto, as issuer of the Policy. "Insurer Information" has the meaning given such term in Section 4. "Notes" means any one of the Notes substantially in the form set forth in Exhibit A to the Indenture. "Offering Document" means the Prospectus Supplement, dated September 21, 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 September 1, 1999, relating to the Advanta Revolving Home Equity Loan Asset Backed Notes, Series 1999-B, by and among Advanta Revolving Home Equity Loan 3 Trust 1999-B, Advanta Holding Trust 1999-B, 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. "Underwriters" means Morgan Stanley & Co. Incorporated and Banc of America Securities LLC. "Underwriters' Information" has the meaning given such term in Section 3. 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." The Underwriters represent, warrant and covenant as of the Closing Date as follows: (a) Compliance With Laws. The Underwriters 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. The Underwriters 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 Insurer as has been furnished by the Insurer for inclusion therein and has been approved by the 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 contained under the heading "Underwriting" in the Offering Document. 4 . The Insurer represents and warrants to the Underwriters as follows: (a) Organization and Licensing. The 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. (b) Corporate Power. The 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. (c) 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. (d) Enforceability. The Policy, when issued, and this Indemnification Agreement will each constitute a legal, valid and binding obligation of the 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. (e) Financial Information. The consolidated financial statements of the 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 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 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 Insurer that would materially and adversely affect its ability to perform its obligations under the Policy. 5 (f) Insurer Information. The information in the Offering Document as of the date hereof under the caption "The Insurer and The Policy" (the "Insurer Information") is true and correct in all material respects and does not contain any untrue statement of a material fact. (g) Rating. The 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 Insurer by either of such Rating Agencies. (h) No Litigation. There are no actions, suits, proceedings or investigations pending or, to the best of the Insurer's knowledge, threatened against it at law or in equity or before or by any court, governmental agency, board or commission or any 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. (i) 1933 Act Registration. The Policy is exempt from registration under the Securities Act. (a) The Underwriters hereby agree to pay, and to protect, indemnify and save harmless, the Insurer and its officers, directors, shareholders, employees, agents and each Person, if any, who controls the 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 Insurer agrees to pay, and to protect, indemnify and save harmless, the Underwriters and their respective officers, directors, shareholders, employees, agents and each Person, if any, who controls either of the Underwriters 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 6 in the Insurer Information or a breach of any of the representations and warranties of the 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 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; 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 7 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. 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. This Indemnification Agreement may be amended, modified, supplemented or terminated only by written instrument or written instruments signed by the parties hereto. 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 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 Morgan Stanley & Co. Incorporated: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attention: Jessica Bellamy Telecopy No.: 212-761-0782 Confirmation: 212-761-2229 (b) To Banc of America Securities LLC: 8 Banc of America Securities LLC 100 North Tryon Street Charlotte, North Carolina 28255 Attention: Robert Baldwin Telecopy No.: 704-388-0622 Confirmation: 704-388-7508 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. 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. This Indemnification Agreement shall be governed by and construed in accordance with the laws of the State of New York. The Indemnification Agreement may be executed in counterparts by the parties hereto, and all such counterparts shall constitute one and the same instrument. 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] IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the day and year first above mentioned. AMBAC ASSURANCE CORPORATION, as Insurer By: --------------------------------------- Name: Title: 9 MORGAN STANLEY & CO. INCORPORATED By: --------------------------------------- Name: Title: BANC OF AMERICA SECURITIES LLC By: --------------------------------------- Name: Title: EX-10.3 10 GUATANTY TO AMBAC & MORGAN STANLEY & CO. 1 EXHIBIT 10.3 As of September 28, 1999 Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 (as Representative of the Underwriters) Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Re: Advanta Revolving Home Equity Loan Trust 1999-B Underwriting Agreement and Insurance Agreement Ladies and Gentlemen: Pursuant to the Underwriting Agreement dated September 21, 1999 (the "Underwriting Agreement") between Advanta Conduit Receivables, Inc. (the "Sponsor" or "ACRI") and Morgan Stanley & Co. Incorporated, as representative of the underwriters named therein (the "Underwriters"), and the Insurance and Indemnity Agreement dated September 28, 1999 (the "Insurance Agreement" and together with the Underwriting Agreement, the "Designated Agreements") among the Sponsor, Advanta Mortgage Corp. USA, Advanta Revolving Home Equity Loan Trust 1999-B and Ambac Assurance Corporation (the "Insurer"), ACRI has undertaken certain financial obligations with respect to the indemnification of the Underwriters and of the 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 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 Underwriter, the Insurer and AMHC do hereby agree that: 4 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. 5 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: ----------------------------- Authorized Signatory CONFIRMED AND ACCEPTED, as of the date first above written: AMBAC ASSURANCE CORPORATION By: ----------------------------- Authorized Signatory MORGAN STANLEY & CO. INCORPORATED By: ----------------------------- Authorized Signatory 6 EX-10.4 11 GUARANTY TO AMBAC & ADVANTA 1999-B 1 EXHIBIT 10.4 As of September 28, 1999 Advanta Revolving Home Equity Loan Trust 1999-B c/o Bankers Trust Company of California, N.A. Three Park Plaza, 16th Floor Irvine, California 92714 Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Re: Advanta Revolving Home Equity Loan Trust 1999-B Sale and Servicing Agreement Ladies and Gentlemen: Pursuant to the Sale and Servicing Agreement dated as of September 1, 1999 (the "Agreement") among Advanta Conduit Receivables, Inc. as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer ("AMCUSA"), Advanta Revolving Home Equity Loan Trust 1999-B (the "Trust"), Advanta Holding Trust 1999-B ("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 Reacquisition 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. 2 Now, therefore, the Trust, the 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. (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 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:_______________________________________ Authorized Signatory ACKNOWLEDGED AND AGREED: ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B By: WILMINGTON TRUST COMPANY as Owner Trustee By:_______________________________________ Authorized Signatory ACKNOWLEDGED: AMBAC ASSURANCE CORPORATION By:_______________________________________ Authorized Signatory 3 -----END PRIVACY-ENHANCED MESSAGE-----